The Rogak Report: 16 Dec 2008 (Part 2) ** Coverage - Collateral Estoppel **
CONFLICTING JUDGMENTS ON COVERAGE IN SUITS BY DIFFERENT CLAIMANTS DO NOT COLLATERALLY ESTOP THE COVERAGE ISSUE IN SUIT BY NEW CLAIMANT
Gaston v American Transit Ins. Co. 2008 NY Slip Op 09853 Decided on December 16, 2008 Court of Appeals Edited by Lawrence N. Rogak
This short decision addresses an interesting question: suppose you have an accident with several injured claimants. Each claimant brings a different suit. Each of those suits results in a different finding as to whether one of the vehicles was insured on the date of the accident. Is the insurer estopped from litigating the coverage issue when yet another claimant sues? The answer is no, and the issue can be re-litigated.
"In this Insurance Law § 3420 action, defendant insurer should not have been collaterally estopped from litigating the issue of whether the car that collided with the bus in which the injured plaintiffs were traveling was insured on the date of the accident. Three prior judgments involving different parties' claims arising from the same bus accident were submitted to the court. The plaintiffs proffered two default judgments that resolved the coverage issue against the insurer while the insurer demonstrated that the same coverage question had been adjudicated in a third proceeding resulting in a judgment in the insurer's favor. In light of these conflicting judgments on the same issue, application of the doctrine of collateral estoppel was not warranted (see Restatement [Second] of Judgments § 29)."
"Since plaintiffs' arguments in opposition to the insurer's cross-motion for summary judgment were not addressed by either of the courts below, we decline to grant the insurer's cross-motion for summary judgment."
Comment: This holding is also consistent with other rulings which hold that when a coverage issue is decided on default, it may not hold up in other litigation on that issue.