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MASSACHUSETTS CAS. INS. CO. v. RENSTROM

September 22, 1993

MASSACHUSETTS CASUALTY INSURANCE COMPANY, Plaintiff,
v.
LOWELL A. RENSTROM, Defendant.



The opinion of the court was delivered by: PIERRE N. LEVAL

 PIERRE N. LEVAL, U.S.D.J.

 Plaintiff Massachusetts Casualty Insurance Company (hereinafter "Insurer") moves for a preliminary injunction to bar defendant Lowell Renstrom from bringing any action pertaining to a disability insurance contract between the parties in small claims court until this court decides a dispute between the parties over the benefits due the defendant under the contract. Defendant challenges the court's jurisdiction to hear the case and argues that the plaintiff does not meet the requisites for a preliminary injunction.

 Background

 Lowell Renstrom holds a disability benefits policy with Massachusetts Casualty Insurance Company. The policy pays benefits for disability resulting from sickness for 30 months, and for disability resulting from accident for life.

 In June 1990, Renstrom became totally disabled from a knee injury. The Insurer and Renstrom disagree over how this injury should be classified. Insurer considers it the result of a "degenerative disease of the knee," and thus paid 30 months of benefits under the "sickness" prong of the disability policy. The final payment was made December 3, 1992. Renstrom maintains that he suffers from an "accidental" injury, caused by repetitive stress of the knee. Accordingly, after receiving the final payment from the Insurer, Renstrom brought an action in the Kings County Small Claims Court for one month's benefits, claiming entitlement to continuing benefits under the "accident" prong of the policy. The small claims judge ruled in his favor, finding that the "events which injured claimant . . . constitute an accident." Judgment, Jan. 28, 1993.

 The Insurer filed a complaint on March 11, 1993 for declaratory judgment to the effect that Renstrom's disability is the result of a sickness, not an accident, and that the Insurer has satisfied its obligations under Renstrom's policy. Renstrom's answer to the complaint challenges this court's jurisdiction and in the alternative brings counterclaims alleging breach of contract and demanding declaratory relief and exemplary and punitive damages.

 On April 1, 1993, after answering Insurer's complaint in this court, Renstrom brought a second small claims court action against the Insurer in Kings County for $ 2,000, claiming this amount is due him under the disability policy. *fn1" On May 4th the Insurer obtained an Order to Show Cause seeking to enjoin Renstrom preliminarily from pursuing the April 1st or any other action against the Insurer until the Insurer's previously filed claim has been adjudicated.

 Discussion

 I. As to any state court action Renstrom has instituted prior to this decision, the Insurer's motion is easily denied. The Anti-Injunction Act, 28 U.S.C. § 2283, bars a United States court from enjoining proceedings in a state court "except as expressly authorized by Act of Congress or where necessary in and of its jurisdiction or to protect or effectuate its judgments." 28 U.S.C. § 2283.

 The exceptions are not present here. Enjoining the small claims actions is not necessary in aid of this court's jurisdiction or to protect or effectuate its judgments. See Mitchum v. Foster, 407 U.S. 225, 243, 92 S. Ct. 2151, 2162, 32 L. Ed. 2d 705 (1972) ("Principles of equity, comity, and federalism . . . must restrain a federal court when asked to enjoin a state court proceeding.").

 Indeed, New York's law limits the res judicata effect of a small claims judgment to the amount involved in the particular action and prevents use of that adjudication to determine facts in any other case. N.Y. Jud. Law § 1808 (McKinney 1989). The Insurer therefore runs no risk that facts hastily determined in the small claims jurisdiction will undermine its right to have its future liability determined in the federal court.

 With respect to actions not yet brought by Renstrom, the Anti-Injunction Act is not a bar, by reason of a further exception created by court decision in Dombrowski v. Pfister, 380 U.S. 479, 484 n.2, 85 S. Ct. 1116, 1119 n.2, 14 L. Ed. 2d 22 (1965). There, the Act was held inapplicable to federal injunctions issued prior to the institution of the state court action. See In re Baldwin-United Corp., 770 F.2d 328, 335 (2d Cir. 1985).

 As to such future actions, therefore, the question is whether the Insurer has shown entitlement, according to the traditional standards, to a preliminary injunction. This turns on whether the moving party has shown irreparable harm and either likelihood of success on the merits or serious questions going to the merits and a balance of hardships tipped decidedly ...


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