Nationwide Mutual Insurance Company as subrogee of Artimus Construction Corp., Inc., et al., Plaintiffs-Appellants,
U.S. Underwriters Insurance Company, Defendant-Respondent.
Ahmuty, Demers & McManus, Albertson (William J. Mitchell
of counsel), for appellants.
Miranda Sambursky Slone Sklarin Verveniotis LLP, Mineola
(Steven Verveniotis of counsel), for respondent.
Acosta, P.J., Sweeny, Moskowitz, Kapnick, Kahn, JJ.
Supreme Court, New York County (Robert R. Reed, J.), entered
November 19, 2015, which granted defendant's motion to
dismiss the complaint, affirmed, without costs.
dissenting colleague has accurately related the facts of this
case and the general principles of collateral estoppel and
res judicata, and they need not be repeated here. We differ
only in how those principles apply to the facts of this case.
is no dispute that plaintiff Artimus is the subrogee of
nonparty Armadillo's rights and thus is in privity with
Armadillo. As the subrogee of Artimus, plaintiff Nationwide
is in privity with Artimus. Neither Artimus nor Nationwide
can have any greater rights than their subrogors possessed.
It is therefore appropriate at this point to review the legal
concepts of subrogation and privity.
an equitable doctrine, allows an insurer to stand in the
shoes of its insured and seek indemnification from third
parties whose wrongdoing has caused a loss for which the
insurer is bound to reimburse" (Kaf-Kaf, Inc. v
Rodless Decorations, 90 N.Y.2d 654, 660 ).
"The insurer's rights against a third party are
derivative and limited to the rights the insured would have
against that third party" (Westport Ins. Co. v
Altertec Energy Conservation, LLC 82 A.D.3d 1207, 1209
[2d Dept 2011], citing Humbach v Goldstein, 229
A.D.2d 64, 67 [2d Dept 1997]). "Therefore, [an] insurer
can only recover if the insured could have recovered and its
claim as subrogee is subject to whatever defenses the third
party might have asserted against its insured'"
(id., quoting Humbach at 67).
it has been observed, is an amorphous concept not easy of
application. Generally, a nonparty to a prior litigation may
be collaterally estopped by a determination in that
litigation by having a relationship with a party to the prior
litigation such that his own rights or obligations in the
subsequent proceeding are conditioned in one way or another
on, or derivative of, the rights of the party to the prior
litigation" (D'Arata v New York Cent. Mut. Fire
Ins. Co., 76 N.Y.2d 659, 664 )[citation omitted]).
as subrogee of Armadillo, and Nationwide, as Artimus's
subrogee, are therefore subject to whatever rules of
collateral estoppel would be applicable to Armadillo.
motion court correctly determined that the insurance coverage
issues involved in this case were decided in Nationwide's
prior action. The parties were the same in both cases and had
a full and fair opportunity to be heard on the coverage
issues. The doctrine of res judicata "applies not only
to claims actually litigated but also to claims that could
have been raised in the prior litigation" (Matter of
Hunter, 4 N.Y.3d 260, 269 ). We agree with the
dissent that a "transactional analysis" is to be
used in analyzing the appropriateness of applying the
doctrine of res judicata. This approach has been stated as
follows: " [O]nce a claim is brought to a final
conclusion, all other claims arising out of the same
transaction or series of transactions are barred, even if
based upon different theories or if seeking a different
remedy'" (id., quoting O'Brien v
City of Syracuse, 54 N.Y.2d 353, 357 ).
issues raised here were addressed in the prior action. The
court in that action held that U.S. Underwriters had no
obligation to provide insurance coverage in the personal
injury action because the employer liability exclusion
provision in its policy was applicable. In fact, documentary
evidence establishes that plaintiffs in this case had a full
and fair opportunity to litigate this issue in the prior
action, where Nationwide's subrogor, Artimus, was a
plaintiff, and Artimus' subrogor, Armadillo, was a named
defendant. U.S. Underwriters served its pre-answer motion on
Nationwide, Artimus and Armadillo. Nationwide and Artimus
submitted opposition; Armadillo chose not to appear or oppose
the motion. Neither Nationwide nor Artimus appealed from the
prior order. Under New York's transactional approach, any
claims Armadillo had could have, and should have, been
brought at that time (Matter of Hunter, 4 N.Y.3d at
269). Indeed, "a party to a lawsuit cannot sit by idly
while a contract, to which [it] is also a party, is
judicially construed without being precluded by the
result" (see Buechel v Bain, 97 N.Y.2d 295, 305
, cert denied 535 U.S. 1096');">535 U.S. 1096 ). To do so
would be to reward a defaulting party for its inaction.
v Great Am. Ins. Co. (53 A.D.3d 461');">53 A.D.3d 461');">53 A.D.3d 461');">53 A.D.3d 461 [1st Dept 2008],
lv dismissed in part, denied in part, 11 N.Y.3d 912');">11 N.Y.3d 912');">11 N.Y.3d 912');">11 N.Y.3d 912
) is not to the contrary. In Cicero, the prior
declaratory judgment action did not involve coverage issues
raised in that action. We determined that coverage was not
the same issue as in the prior action, which involved a
question of timely notice. Here, by contrast, the issues
involved both claims of untimely notice and whether the
underlying personal injury action within a policy exclusion.
in this case, the parties were afforded a full and fair
opportunity to litigate the insurance coverage issues in the
prior action. Nationwide is therefore collaterally estopped
from litigating the same issues already decided against its
subrogor, Artimus, who in turn is estopped from litigating
the same issues decided against its subrogor, Armadillo, as a
subrogee of the insured.
the principles of res judicata favor defendants herein.
Nationwide and Artimus seek to enforce the judgment that they
were awarded against Armadillo in the third-party personal
injury action. However, as noted above, in the prior action
the court found that the coverage exclusion with respect to
the personal injury action in U.S. Underwriters policy was
applicable. By bringing this action as subrogees of Artimus
and Armadillo under Insurance Law § 3420, Nationwide and
Artimus are essentially seeking to relitigate Artimus's
claims for coverage. "Res judicata is designed to
provide finality in the resolution of disputes, recognizing
that [c]onsiderations of judicial economy as well as fairness
to the parties mandate, at some point, an end to