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American Ins. Co. v. Messinger

Issue Discussed: Res Judicata / Collateral Estoppel

Submitted by Aluyah I. Imoisili, Claire-Lise Y. Kutlay*

Date Promulgated: November 22, 1977

 

American Ins. Co. v. Messinger, 43 N.Y. 2d 184 (1977)

Court: Court of Appeals of New York

Issues Decided:  Whether a determination made in a prior arbitration proceeding has a preclusive effect in a subsequent court action among the same parties.

Key Holding

Insured motorists sued other motorists to recover for personal injuries resulting from an automobile accident.  The defendants’ insurer disclaimed coverage for late notice and lack of cooperation.  The plaintiffs’ insurer demanded arbitration, pursuant to an intercompany insurance arbitration agreement, against the defendants’ insurer for subrogation with respect to its payment of the plaintiffs’ property damage claim.  The arbitration panel rejected the disclaimer and assessed damages against the defendant’s insurer.  The plaintiffs then demanded uninsured motorist arbitration against their insurer based on the defendants’ insurer’s disclaimer of coverage.  The plaintiffs’ insurer moved in the personal injury action for summary judgment directing the defendants’ insurer to afford coverage on the grounds that the disclaimer issue had been decided in the arbitration against the defendants’ insurer.  The trial court agreed and confirmed the property damage arbitration award.  The Appellate Division affirmed the trial court’s decision.

The Court of Appeals affirmed the lower court decisions and held that the arbitrators’ decision in the property damage arbitration that rejected the defendants’ insurer’s disclaimer was binding in a subsequent personal injury court action involving the same carriers.

Key Takeaways

Arbitration determinations may have preclusive effect in subsequent court actions among the same parties.

 

* Aluyah I. Imoisili is a Partner and Claire-Lise Y. Kutlay is an Associate at Greenberg Gross LLP, where they specialize in commercial litigation and arbitration.