SUPREME COURT WAS BOUND TO FOLLOW A FIRST DEPARTMENT DECISION BECAUSE THERE WERE NO ON-POINT DECISIONS FROM THE THIRD DEPARTMENT OR THE COURT OF APPEALS; HOWEVER THE THIRD DEPARTMENT IS NOT SO BOUND; SUPREME COURT REVERSED (THIRD DEPT).

The Third Department, reversing Supreme Court, dealt with the issue of stare decisis in this dispute between defendant employer and plaintiff employee over the “demutualization” proceeds of an insurance policy. Plaintiff was employed as a certified nurse midwife by defendant. As part of the employment agreement defendant was required to maintain and pay the premiums for a malpractice insurance policy. When the insurance company converted from a mutual insurance company to a stock insurance company (demutualization) the policyholder was entitled to nearly $50,000. Plaintiff-employee claimed the money was hers and brought an action for a declaratory judgment. Supreme Court agreed with plaintiff but, because there was no on-point appellate decision by the Court of Appeals or the Third Department, Supreme Court was required to follow a First Department decision and, based on that decision, found in favor of defendant-employer. The Third Department noted that it, unlike Supreme Court, was not bound by stare decisis and reversed:

Initially, Supreme Court was “bound by the doctrine of stare decisis to apply precedent established in another Department,” as no relevant precedent was available from this Court or the Court of Appeals … . However, this Court is not so bound … . We agree with Supreme Court’s inclinations — although that court was constrained by stare decisis not to follow them — and disagree with the First Department’s holding in Matter of Schaffer, Schonholz & Drossman, LLP v Title (171 AD3d at 465 …). Therefore, for the reasons stated in our decision in Schoch v Lake Champlain OB-GYN, P.C. (___ AD3d ___ [decided herewith]), we reverse. Shoback v Broome Obstetrics & Gynecology, P.C., 2020 NY Slip Op 03447, Third Dept 6-18-20