KERISLI CHIROPRACTIC, P.C., a/a/o Miguel Cueto, Plaintiff, v. AMERICAN TRANSIT INSURANCE CO., Defendant.
Defendant moves to dismiss the complaint pursuant to CPLR 3211(a)(5), contending that the action is barred by the doctrine of res judicata, or in the alternative, for an order granting defendant summary judgment pursuant to CPLR 3212.
Plaintiff Kerisli Chiropractic P.C. commenced the instant action to recover assigned first-party no-fault benefits for medical services provided to its assignor as a result of injuries sustained in an August 23, 2010 automobile incident.
Defendant insurer commenced a declaratory judgement action in Supreme Court against Kerisli Chiropractic P.C. and moved for summary judgement for an order "adjudging and decreeing that" Kerisli Chiropractic P.C. “is not entitled to no fault benefits” for the August 23, 2010 collision.
Kerisli Chiropractic P.C. did not answer or oppose the motion. The Supreme Court issued an order, reciting the specific declaratory relief requested by the insurer and granting the motion on default.
In the instant no fault action, defendant insurer moves to dismiss the complaint claiming that the Supreme Court's order in the declaratory judgement action is a conclusive final determination, which pursuant to res judicata, bars the instant action.
In opposition, plaintiff contends defendant insurer failed to establish its entitlement to res judicata or collateral estoppel, arguing that orders granted on default are not preclusive, and that res judicata only applies to those issues that have been litigated and determined in a prior action, not to actions where an issue due to a party's default is not litigated. Citing federal cases, plaintiff asserts that Supreme Court's order granted on default, has thus no preclusive effect. (See In re Adler, Coleman Clearing Corp., 205 Fed. Appx. 856, 857 [2d Cir 2006], citing Abrams v. Interco, Inc., 719 F.2d 23, 34 n. 9 [2d Cir 1983] ).
Pursuant to res judicata, a disposition on the merits bars litigation between the same parties of a cause of action arising out of the same transaction or series of transactions as a cause of action that either was raised or could have been raised in the prior action (see Abraham v. Hermitage Ins. Co., 47 AD3d 855, 851 N.Y.S.2d 608 [2nd Dept 2008], affg 2005 WL 6205455 [Sup Ct, Queens County 2005] ).
This court notes plaintiff relies on federal cases in its assertion that default judgements lack preclusive effect. However, under New York state law, default judgments which have not been vacated are final orders, thus preclusive. (See Lazides v. P & G Enters., 58 AD3d 607, 871 N.Y.S.2d 357 [2nd Dept 2009], revg 2007 WL 6861118 [Sup Ct, Kings County 2007] ). The courts have reasoned that to hold otherwise, would destroy or impair the rights or interests established by default judgment. (See Schuylkill Fuel Corp v. Nieberg Realty Corp., 250 NY 304, 306-307 ; Great Health Care Chiropractic, P.C. v. Progressive Ins. Co., 48 Misc 3d 134(A), 18 N.Y.S.3d 579 [App Term, 2nd Dept, 2d, 11th & 13th Jud Dists 2015] ).
As the Supreme Court's declaratory default judgement order against Kerisli Chiropractic P.C. has not been vacated, the order hence constitutes a final determination, which precludes the instant no fault action.
Plaintiff also cites cases holding that a mere entry of default judgment in a declaratory judgment actions “cannot be considered a conclusive final determination and thus, can have no preclusive effect in the action at bar.” (See Active Chiropractic P.C. v. 21st Century Ins. Co., 58 Misc 3d 156(A), 2018 NY Slip Op. 50200(U) [App Term, 2nd Dept, 2d, 11th & 13th Jud Dists, 2018]; Promed Orthocare Supply, Inc. v. AIG Advantage Ins. Co., 50 Misc 3d 128(A), 29 N.Y.S.3d 849 [App Term, 2nd Dept, 2d, 11th & 13th Jud Dists, 2015]; Metro Health Prods., Inc. v. Nationwide Ins., 48 Misc 3d 85, 16 N.Y.S.3d 366 [App. Term, 2nd Dept, 2d, 11th & 13th Jud. Dists., 2015] ).
The above cases are distinguished from the case at bar, as there is no declaration made by the default judgment orders in the declaratory judgment action at issue in each case. This Court takes judicial notice respectively of the default judgement orders in the declaratory judgement actions in Active Chiropractic P.C, from Supreme Court, New York County dated December 8, 2014, and in Promed Orthocare Supply, Inc., from Supreme Court, Nassau County dated March 15, 2010. (See Caffrey v. North Arrow Abstract & Settlement Servs., Inc., 73 N.Y.S.3d 370, 160 AD3d 121 [2d Dept 2018] ).
In Active Chiropractic P.C., the Supreme Court's order in the declaratory judgment action merely states that that an unrelated relief requested by insurer is granted, and that “the remainder of the motion is granted without opposition.” The order does not indicate that a judicial declaration was made by the court, or that a declaration was a relief sought by movant. As the Supreme Court's order merely grants the entry of default judgment, and is devoid of a judicial declaration, the Appellate Term, Second Department found that the order could not be considered a final order. Absent a judicial declaration, in a declaratory judgment action, it would be impossible to deem or enforce the order as preclusive.
Similarly, in Promed Orthocare Supply Inc., the Supreme Court's order in the declaratory judgment action merely states that “plaintiff's unopposed motion for a default judgement” against various defendants “is granted.” The order makes no reference to a judicial declaration or indicate that a declaration was sought in the motion. As with the Supreme Court order at Active Chiropractic Care P.C, the Appellate Term, Second Department in Promed Orthocare Supply Inc. held that the order could not be considered a conclusive final determination, absent declaration of the issues litigated on default. (See Promed Orthocare Supply, Inc. id at 849; Active Chiropractic P.C. id. at 156(A); also, Vital Meridian Acupuncture, P.C. v. Republic W. Ins. Co., 46 Misc 3d 147 [A], 13 N.Y.S.3d 853 [App Term, 2nd Dept, 2d, 11th & 13th Jud. Dists, 2015] ). To have res judicata effect in a declaratory judgment action, the order must specify the issues that were determined so that those issues could be identified as barred in future litigations.
In the instant no fault action, contrary to Active Chiropractic P.C. and Promed Orthocare Supply Inc., the the Supreme Court's declaratory judgment order determines the rights of the parties and is thus preclusive as a final order. The Supreme Court's order recites the specific declaratory relief requested by the insurer, and grants the motion on default, leaving no ambiguity as to substance of the court's declaration.
An order specifying the court's declaratory judgment is a conclusive final determination, notwithstanding that it was entered on default. (See Lazides v. P & G Enters. at 357; Metro Health Prods., Inc. v. Nationwide Ins., 48 Misc 3d 85, 16 N.Y.S.3d 366 [App. Term, 2nd Dept, 2d, 11th & 13th Jud. Dists., 2015] ).
As the Supreme Court order pertaining to the instant no fault action is a conclusive final determination of the rights of the parties herein, plaintiff is barred from relitigating the claim pursuant to the doctrine of res judicata.
Lastly, plaintiff cites Metro Health Products Inc. which is distinguished from the facts of the instant action. Contrary to the case at bar, the order in the declaratory judgment action at issue in Metro Health Products Inc., directed the insurer to settle judgment on notice. The insurer failed to settle judgment on notice, and the Appellate Term, Second Department held that an order to settle judgment on notice is not conclusive final determination and is thus not preclusive. (See Metro Health Products Inc. 48 Misc 3d 85).
As the Supreme Court's declaratory judgement pertaining to the instant action is a final conclusive determination, hence with preclusive effect, defendant's motion is granted. It is hereby ordered that the action is dismissed.
Odessa Kennedy, J.