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ALTHOUGH DEFENDANTS’ INSURER OBTAINED A DECLARATORY JUDGMENT (BY DEFAULT) THAT IT WAS NOT OBLIGATED TO PAY NO-FAULT BENEFITS TO PLAINTIFF PEDESTRIAN IN THIS TRAFFIC ACCIDENT CASE, THE DECLARATORY JUDGMENT DID NOT PRECLUDE, UNDER EITHER CLAIM OR ISSUE PRECLUSION, PLAINTIFF’S PERSONAL INJURY ACTION AGAINST DEFENDANTS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Renwick, after a comprehensive analysis of res judicata and collateral estoppel, refusing to follow the Second Department, determined a default judgment in a declaratory judgment action brought against plaintiff by defendant driver/owner’s insurer (Nationwide) did not preclude plaintiff’s subsequent personal injury action against defendants. Plaintiff alleged he was walking his motorcycle across a street when he was struct by defendants’ vehicle. Nationwide brought the declaratory judgment action to obtain a ruling it was not obligated to pay no-fault benefits to plaintiff and plaintiff did not appear in that action:

Claim preclusion prevents relitigation between the same parties, or those in privity with them, of a cause of action arising out of the same transaction or series of transactions that either were raised or could have been raised in the prior proceeding … . As the Court of Appeals has stressed, this “identity” requirement is a “linchpin of res judicata,” which applies “only when a claim between the parties has been previously brought to a final conclusion'” … . Stated differently, the “doctrine of res judicata only bars additional actions between the same parties on the same claims based upon the same harm” … . …

Issue preclusion prohibits the relitigation of issues argued and decided in a previous case, even if the second suit raises different causes of action … . Under issue preclusion, the prior judgment conclusively resolves an issue actually litigated and determined in the first action … . There is a limit to the reach of issue preclusion, however. In accordance with due process, it can be asserted only against a party to the first lawsuit, or one in privity with a party … .

… .”An issue is not actually litigated” for collateral estoppel purposes “if, for example, there has been a default” … . …

Claim preclusion cannot apply here, because plaintiff and defendants are litigating a claim against each other for the first time. * * * Defendants’ rights to be defended and indemnified by Nationwide remained intact regardless of the outcome of the no-fault benefits dispute. Rojas v Romanoff, 2020 NY Slip Op 04237, First Dept 7-23-20

 

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