Amica Mut. Ins. Co., Matter of

• Decision Date: 31 December 1981
• Citation: 85 A.D.2d 727,445 N.Y.S.2d 820
• Parties: In the Matter of AMICA MUTUAL INSURANCE COMPANY, Appellant (Theodore Jones et al., Respondents-Respondents, et al., Respondents).
• Court: New York Supreme Court — Appellate Division

Page 820

445 N.Y.S.2d 820

85 A.D.2d 727

In the Matter of AMICA MUTUAL INSURANCE COMPANY, Appellant (Theodore Jones et al., Respondents-Respondents et al., Respondents).

Supreme Court, Appellate Division Second Department.

Dec. 31, 1981.

Cordes, Purcell, Fritz & Ingrao, P. C., Mineola (Stephen A. Fritz, Mineola, of counsel), for appellant.

Bertram Herman, P. C., Forest Hills, for respondent-respondent Jones.

Before COHALAN, J. P., and MARGETT, O'CONNOR and THOMPSON, JJ.

MEMORANDUM BY THE COURT.

In a proceeding to stay arbitration of an uninsured motorist claim, petitioner appeals from a judgment of the Supreme Court, Kings County, entered July 1, 1981, which, inter alia, dismissed the petition and directed the parties to proceed to arbitration.

Judgment affirmed, with $50 costs and disbursements to respondent Jones. The temporary stay issued by this Court, dated July 6, 1981, is hereby vacated.

Petitioner was the issuer of a policy of insurance covering an automobile operated by respondent Jones at the time of an accident, which accident resulted in injuries to both Jones and a passenger named Williams. Because respondent Hartford Insurance Companies disclaimed coverage of the other motor vehicle involved in the accident on the ground it had previously canceled its policy of insurance, Jones and Williams each made separate claims under the uninsured motorist endorsement of the Amica policy on the Jones' vehicle. Petitioner brought separate applications to stay arbitration demanded by the injured parties. The first petition responded to Williams' demand made in May, 1979, and the index number assigned to that application was used in December, 1979 when Amica served its petition responding to Jones' arbitration demand. Petitioner obtained a temporary stay of arbitration on default under the same index number, but Williams was not named in the caption of the order. Amica then filed a note of issue and statement of readiness under the same index number, naming Jones but not Williams. The minutes of the trial directed by the temporary stay order show that only the insurance companies entered appearances; the caption named Williams but not Jones and recorded the same index number. Trial Term directed entry of judgment against Amica, and the judgment drafted by Amica under the same index number named Williams but not Jones. Amica took an appeal from that judgment by serving a notice of appeal, captioned in Williams' name, on Williams, but failed to serve a notice of appeal on Jones despite Jones' service on petitioner of a copy of the judgment with written notice of entry. About the same time, Jones served a second demand for arbitration of his claim, and petitioner responded with another application, under a different index number, to stay arbitration.

In this new application, petitioner anticipatorily objected to resolution of the matter by Special Term under the doctrine of collateral estoppel based upon its previous loss at Trial Term, and expressly requested a stay of all proceedings pending appeal of the Trial Term judgment. Jones, in opposition to the petition, argued that his offensive use of res judicata principles was not as a stranger to the prior proceedings but as a party to them, and that therefore, given petitioner's failure to appeal the Trial Term judgment as to him, that judgment could not be undermined under any circumstances. Special Term, without addressing these arguments, simply ruled that the then-present pendency of the appeal from the Trial Term judgment could not preclude application of res judicata principles; therefore, ruled the court, judgment would be entered for Jones against petitioner. Petitioner then took an appeal from Special Term's judgment and successfully moved this court for a stay of that judgment pending disposition of the appeal.

The appeal from the Trial Term judgment and that from the Special Term judgment were perfected on separate records and briefs and were argued separately on the same day calendar of this court. We have reversed the Trial Term judgment herewith, on the law, and have granted petitioner's application for a permanent stay of arbitration against Williams (Matter of Amica Mut. Ins. Co. ). The issue is how to dispose of the second, "dependent" judgment (see Restatement, Judgments 2d § 41.3, comment a ), for which the Trial Term judgment had been the sole basis.

While respondent Jones does not raise the point expressly in his brief, we note that though Special Term's decision was technically correct as a matter of law, it may not necessarily have been wise. The rule in New York, unlike that in other jurisdictions, is that the mere pendency of an appeal does not prevent the use of the challenged judgment as the basis of collaterally estopping a party to that judgment in a second proceeding (see Parkhurst v. Berdell, 110 N.Y. 386, 392-393, 18 N.E. 123; Sullivan v. Ringler & Co., 69 App.Div. 388, 74 N.Y.S. 978; Mercantile Nat. Bank of City of N. Y. v. Corn Exchange Bank, 73 Hun. 78, 80, 25 N.Y.S. 1068; Stevens v. Stevens, 69 Hun. 332, 336, 23 N.Y.S. 520; Duverney v. State of New York, 96 Misc.2d 898, 410 N.Y.S.2d 237; Matter of Moran, 59 Misc. 133, 112 N.Y.S. 207; Ann., 9 A.L.R.2d 984, 1001; 9 Carmody-Wait 2d, N.Y. Prac., § 63:215, pp. 222-223). At the time it was offered in evidence before Special Term, the Trial Term judgment had yet to be reversed, and it remained unimpeached as of the very day both judgments came before this court for review. Yet, given this court's decisions in Cohn v. Royal Globe Ins. Co., 67 A.D.2d 993, 414 N.Y.S.2d 19, affd. 49 N.Y.2d 942, 428 N.Y.S.2d 881, 406 N.E.2d 739 and Matter of Travelers Ind. Co. v. Kammer, 72 A.D.2d 817, 421 N.Y.S.2d 898, there was substantial doubt that Trial Term's judgment would survive scrutiny on appeal; therefore, assuming Jones was a stranger to the Trial Term judgment offered at Special Term against petitioner, Special Term should have stayed all proceedings, including entry of its judgment, pending disposition of the appeal from the Trial Term judgment (see Ann., 9 A.L.R.2d 984, 988; Restatement, Judgments 2d § 41.3, comment b ). Special Term's failure to do so, however, does not require this court to relegate a party in petitioner's position to a motion to the rendering court for postjudgment relief pursuant to CPLR 5015 (subd. par. 5) once this court has reversed the predicate Trial Term judgment. (See 5 Weinstein-Korn-Miller, N.Y. Civ. Prac., par. 5015.11, p. 50-240.) So inefficient a disposition, once suggested by the Court of Appeals in Parkhurst v. Berdell, 110 N.Y. 386, 18 N.E. 123, supra, as the only...