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A Policyholder Involved In Numerous Lawsuits On Same Subject Matter Can Be Precluded If Default Judgment Is Entered In One Of The Actions Under The Doctrine Of Res Judicata (NY)

December 17, 2021

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<p style="text-align: justify;">Default judgment entered against an insured in one action can impact affirmative litigation by that insured in other lawsuits it they address the same subject matter. In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2021/12/Columbus-Imaging-Center-v.-Country-Wide-Insurance-Company.pdf">Columbus Imaging Center v. Country Wide Insurance Company</a></em>, 2021 WL 4127246 (Civil Ct., Queens County 2021) (“Civil Court Action”), Plaintiff (“Columbus Imaging”) sued Insurance Company (“Country Wide”) to recover unpaid first party No-Fault benefits for medical services provided to Columbus Imaging’s assignor Javier for injuries sustained in an automobile accident. In a separate lawsuit filed with the Supreme Court in New York County (“Supreme Court Action”), Country Wide sued Javier, Columbus Imaging, and other nonparty medical service providers seeking a judgment declaring Country Wide owed no duty to pay No Fault claims arising from Javier’s automobile accident.</p>
<p style="text-align: justify;">In the Supreme Court Action, Country Wide argued they had no duty to pay due to Javier failing to appear for a scheduled examination under oath (“EUO”). Country Wide moved for default judgment against all defendants in the Supreme Court Action, including Javier and Columbus Imaging. The Supreme Court granted Country Wide’s motion for default judgment and declared Country Wide was “not required to provide, pay or honor any current or future claim for no-fault benefits” under Country Wide’s policy to Javier.</p>
<p style="text-align: justify;">After securing the default judgment in the Supreme Court Action, Country Wide moved for summary judgment in the Civil Court Action on the ground that the action is barred by <em>res judicata</em>. Under the doctrine of <em>res judicata</em>, a party may not litigate a claim where a judgment on the merits exists from a prior action between the parties involving the same subject matter. That is, once a claim is brought to a final conclusion in one action, all other claims arising out of the same transaction are barred, even if based on different theories or if seeking a different remedy.</p>
<p style="text-align: justify;">The Civil Court determined the parties and the subject matter in the Civil Court Action were identical to those in the Supreme Court Action. As such, the Civil Court held that any judgment in Columbus Imaging’s favor would adversely affect the rights and interest created by the default judgment in the Supreme Court Action.  Ultimately, <em>res judicata </em>barred Columbus Imaging from continuing with the Civil Court Action, and Country Wide’s motion for summary judgment was granted.</p>
<p style="text-align: justify;">Thanks to Drew Fryhoff for his contribution to this article.  If you have any questions, please contact <a href="mailto:tbracken@wcmlaw.com">Tom Bracken</a>.</p>

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