HEREFORD INSURANCE COMPANY v. ORTHOPAEDICS SPINE SPORTS MEDICINE LLP (2026)

Goldberg, Miller & Rubin, P.C., New York (Harlan R. Schreiber of counsel), for appellant.

The Odierno Law Firm, P.C., Melville (Kevin T. Griffiths of counsel), for respondent.-

Order, Supreme Court, New York County (David B. Cohen, J.), entered October 16, 2025, which denied plaintiff's motion for summary judgment dismissing defendant's coverage claims on the ground that the claims were barred by res judicata and collateral estoppel, or, in the alternative, for judgment against defendant, and granted defendant's cross-motion to dismiss the complaint, unanimously reversed, on the law, with costs, plaintiff's motion to dismiss the coverage claims granted on res judicata grounds, and defendant's cross-motion denied.

In a separate prior action against defendant medical provider and others, plaintiff sought a declaration that there was no coverage for claims arising from injuries allegedly sustained in a collision involving its insured motor vehicle.  Defendant did not appear in that prior action, but on June 29, 2021, almost two months after the action was commenced, filed a separate claim for arbitration.  Meanwhile, on May 25, 2022, plaintiff moved for a default judgment in the prior action.  Defendant eventually was awarded more than $14,000 in the arbitration, and that award was affirmed on July 8, 2022.  Approximately two weeks later, on July 24, 2022, plaintiff commenced the action underlying this appeal.  In October 2022, Supreme Court entered a default judgment in plaintiff's favor in the prior action, declaring that there was no coverage for defendant's claims.  Defendant moved to vacate that default judgment, the motion was denied, and defendant did not appeal from the resulting order.

Supreme Court should have dismissed defendant's coverage claims as precluded.  The court mistakenly analyzed plaintiff's motion under the framework of collateral estoppel, which generally does not apply to default judgments (Kanat v. Ochsner, 301 A.D.2d 456, 458 [1st Dept 2003] ).  However, res judicata, which can apply to default judgments (Robbins v. Growney, 229 A.D.2d 356, 357 [1st Dept 1996] ), bars claims that were or should have been raised in an earlier suit involving the same parties (see Rojas v. Romanoff, 186 AD3d 103, 107 [1st Dept 2020] ).  As a result, res judicata acts to bar defendant's claims because both this action and the prior action involve plaintiff and defendant as adverse parties and raise the same issues, namely, whether plaintiff properly disclaimed coverage to defendant on the grounds that the alleged injuries and treatment were unrelated to a covered event, and that the treated individuals failed to subscribe to their EUO transcripts and therefore failed to fulfill a condition precedent to coverage.

We reject defendant's argument that the default judgment cannot have preclusive effect because it was issued after the arbitration award was issued and affirmed.  Plaintiff filed the prior declaratory judgment action nearly two months before defendant filed its claim for arbitration (see Ventur Group, LLC v. Finnerty, 80 AD3d 474, 475 [1st Dept 2011];  Hereford Ins. Co. v Iconic Wellness Surgical Servs., LLC, 63 Misc.3d 154[A], 2019 N.Y. Slip Op. 50801[U], *1 [App Term 1st Dept 2019] ).

In view of the foregoing, the remaining arguments are academic.