D'Arata v. New York Cent. Mut. Fire Ins. Co.

• Citation: 564 N.E.2d 634,563 N.Y.S.2d 24,76 N.Y.2d 659
• Parties: , 564 N.E.2d 634 Robert D'ARATA et al., Appellants, v. NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY, Respondent.
• Decision Date: 20 November 1990
• Court: New York Court of Appeals

Page 24

563 N.Y.S.2d 24

76 N.Y.2d 659, 564 N.E.2d 634

Robert D'ARATA et al., Appellants, v. NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY, Respondent.

Court of Appeals of New York.

Nov. 20, 1990.

Robert H. Gurbacki, East Aurora, for appellants.

Anthony M. Nosek and Donna M. Lanham, Buffalo, for respondent.

OPINION OF THE COURT

HANCOCK, Judge.

In this action under Insurance Law § 3420(b)(1), plaintiff, a shooting victim, ¹ is seeking to recover from the insurer of the assailant the amount of a default judgment obtained against the assailant who had been convicted of first degree assault for the incident resulting in plaintiff's injuries. Plaintiff, the complaining witness, testified for the prosecution in the criminal case. The insurance policy expressly excludes recovery for bodily injury "expected or intended by the Insured". The issue in plaintiff's appeal is whether the insurer may use the insured's criminal judgment of conviction as a collateral bar to plaintiff's attempt in this case to relitigate the issue of his assailant's intent to injure. For the reasons discussed below, we agree with the Appellate Division that plaintiff should be collaterally estopped and that this action, therefore, was properly dismissed.

I

On March 13, 1984, plaintiff Robert D'Arata, a shopkeeper, was shot by Wayne Luke. Thereafter, Luke was charged in a multicount indictment involving several store robbery-related offenses. Of relevance here is count 16 which charged Luke with the first degree assault ² in that Luke "with intent to cause serious physical injury to another person, caused such injury to Robert D'Arata, by shooting him with a deadly weapon, to wit: a handgun." Luke was convicted after a jury trial during which plaintiff testified for the People. The conviction for first degree assault was affirmed on appeal (People v. Luke, 155 A.D.2d 890, 547 N.Y.S.2d 724, lv. denied 75 N.Y.2d 870, 553 N.Y.S.2d 301, 552 N.E.2d 880).

In March 1985 plaintiff brought an action against Luke, Luke's parents and Luke's sister. He alleged that his injuries resulted from "the negligent, careless, reckless, willful, and unlawful conduct on the part of the Defendant, Wayne Luke." Plaintiff's claims against Luke's relatives were grounded on their negligent entrustment of a handgun to Luke who, defendants knew or should have known, had dangerous propensities.

During the relevant time period, defendant New York Central Mutual Fire Insurance Company insured Luke's parents under a homeowner's policy which, because Luke resided with his parents, also covered Luke as an insured. ³ Defendant, however, sent a letter to Luke's parents and to Luke's criminal attorney informing Luke that it refused to defend or indemnify Luke on the ground that the policy expressly excluded liability coverage for bodily injury "which is expected or intended by the Insured".

On May 13, 1986, after Luke's failure to answer or otherwise appear, plaintiff was granted a default judgment against Luke, for $325,000. ⁴ Plaintiff brought this action pursuant to Insurance Law § 3420(b)(1) to compel defendant to pay the judgment on behalf of Luke up to the limit of the policy. Defendant raised as an affirmative defense that plaintiff should be collaterally estopped from relitigating the issue of the insured's intent to inflict bodily injury. Supreme Court, Erie County, denied defendant's motion to dismiss based on this collateral estoppel defense. The Appellate Division reversed, granted defendant's motion, and dismissed the complaint. 152 A.D.2d 1004, 543 N.Y.S.2d 810. We granted leave and now affirm.

II

Collateral estoppel, an equitable doctrine, is based upon the general notion that a party, or one in privity with a party, should not be permitted to relitigate an issue decided against it (see, Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 485, 414 N.Y.S.2d 308, 386 N.E.2d 1328; see also, Kaufman v. Lilly & Co., 65 N.Y.2d 449, 455, 492 N.Y.S.2d 584, 482 N.E.2d 63). As this doctrine has evolved, only two requirements must be satisfied. First, the party seeking the benefit of collateral estoppel must prove that the identical issue was necessarily decided in the prior action and is decisive in the present action (see, Kaufman v. Lilly & Co., supra, at 455, 492 N.Y.S.2d 584, 482 N.E.2d 63). Second, the party to be precluded from relitigating an issue must have had a full and fair opportunity to contest the prior determination. The burden is on the party attempting to defeat the application of collateral estoppel to establish the absence of a full and fair opportunity to litigate (see, id., at 455-456, 492 N.Y.S.2d 584, 482 N.E.2d 63). Collateral estoppel, we have held, is grounded on concepts of fairness and should not be rigidly or mechanically applied (see, Matter of Halyalkar v. Board of Regents, 72 N.Y.2d 261, 268-269, 532 N.Y.S.2d 85, 527 N.E.2d 1222). We note that this Court has recognized that, in appropriate situations, an issue decided in a criminal proceeding may be given preclusive effect in a subsequent civil action (see, Vavolizza v. Krieger, 33 N.Y.2d 351, 352 N.Y.S.2d 919, 308 N.E.2d 439; S.T. Grand, Inc. v. City of New York, 32 N.Y.2d 300, 344 N.Y.S.2d 938, 298 N.E.2d 105; Brennan v. Mead, 81 A.D.2d 821, 438 N.Y.S.2d 821, affd 54 N.Y.2d 811, 443 N.Y.S.2d 652, 427 N.E.2d 949).

In determining whether collateral estoppel should be applied so as to bar plaintiff from litigating the issue of Luke's intent in this action against Luke's insurer, the initial question is whether plaintiff, a nonparty to the prior criminal proceeding, should, nevertheless, be bound by the adverse determination on intent in that proceeding. In other words, can plaintiff be said to be in legal privity with Luke? Privity, it has been observed, is an amorphous concept not easy of application (see, Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 485, 486, 414 N.Y.S.2d 308, 386 N.E.2d 1328, supra ). 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 (see generally, Green v. Santa Fe Indus., 70 N.Y.2d 244, 253, 519 N.Y.S.2d 793, 514 N.E.2d 105; Restatement [Second] of Judgments, Introductory Note, ch. 4, at 344).

Here, we have no difficulty in concluding that plaintiff, in suing defendant on the judgment he has recovered against Luke, is in privity with Luke for the purpose of the application of collateral estoppel (see, Restatement [Second] of Judgments, Introductory Note, ch. 4, at 344). Under Insurance Law § 3420(b)(1) plaintiff is permitted to maintain a direct action against the insurer on the policy. ⁵ In doing so, plaintiff "stands in the shoes" of the insured and can have no greater rights than the insured (see, Spadaro v. Newark Ins. Co., 21 A.D.2d 226, 230-231, 249 N.Y.S.2d 753, affd. without opn. 15 N.Y.2d 1000, 260 N.Y.S.2d 16, 207 N.E.2d 611; Sperling v. Great Am. Indem. Co., 7 N.Y.2d 442, 199 N.Y.S.2d 465, 166 N.E.2d 482; Wenig v. Glens Falls Indem. Co., 294 N.Y. 195, 61 N.E.2d 442). Plaintiff, by proceeding directly against defendant, does so as subrogee of the insured's rights and is subject to whatever rules of estoppel would apply to the insured (see, Restatement [Second] of Judgments § 57, comment g, at 84-85; id., § 85[2][b], at 294-295, and comment f, at 299-300; accord, State Farm Fire & Cas. Co. v. Reuter, 299 Or. 155, 700 P.2d 236, 239-244 [1985]; Aetna Life & Cas. Ins. Co. v. Johnson, 207 Mont. 409, 673 P.2d 1277, 1281 [1984]. Thus, the inevitable consequence of plaintiff's election to proceed against defendant under Insurance Law § 3420(b)(1) is that he is in legal privity with the claimed insured for the purpose of collateral estoppel analysis. ⁶

We turn to the question of whether the two basic requirements for invoking collateral estoppel have been satisfied: (1) that the identical issue was necessarily decided in the prior proceeding and is decisive of the present action, and (2) that there was a full and fair opportunity to contest that issue in the prior proceeding (see, Matter of Halyalkar v. Board of Regents, supra, 72 N.Y.2d at 266, 532 N.Y.S.2d 85, 527 N.E.2d 1222; Schwartz v. Public Adm'r of County of Bronx, 24 N.Y.2d 65, 71, 73, 298 N.Y.S.2d 955, 246 N.E.2d 725). Here, there can be little question that the "full and fair opportunity" requirement is satisfied. Indeed, plaintiff virtually concedes the point. Plaintiff, we have held, was in privity with Luke and the critical question is whether Luke had a full and fair opportunity to litigate all of the issues in the criminal proceeding including the question of his intention to injure plaintiff. Luke, of course, not only had a full and fair opportunity to defend himself against the assault charge but actually did so in a jury trial which resulted in a verdict in which all of the elements of the crime, including intent, were necessarily proven against him.

The closer question is whether defendant has proven the requisite identity of the issue between this case and the prior criminal proceeding. First, of course--reflecting the doctrine's underlying purpose of preventing repetitious litigation of disputes which are essentially the same--there must be an identity between the particular matter in the second action and that presented in the first (see, Restatement [Second] of Judgments § 27, comment c). And it must be shown that this identical issue was necessarily decided in the first proceeding and is conclusive in the subsequent action (id., § 27). Here, these two requirements are satisfied. A central issue in the criminal proceeding was whether Luke caused injury to plaintiff with "intent to cause serious physical injury to another person" (Penal Law § 120.10[1]. To find...