Key Takeaway
New York Court of Appeals rules that collateral estoppel does not prevent arbitrators from reaching different conclusions on same issues in no-fault vs SUM arbitrations.
Matter of Falzone v New York Cent. Mut. Fire Ins. Co., 2010 NY Slip Op 07417 (2010)
I thought this case was crazy when the Appellate Division, Fourth Department held as it did. Well, the Court of Appeals has joined in the melee, for reasons I do not understand.
Factually, as seen above, this case involved the potential collateral estoppel effect of an adverse arbitration award in the realm of an SUM arbitration. The claimant prevailed at the no-fault arbitration despite the challenge to causation. Cases settled for policy limit and then claimant goes for SUM benefits. SUM arbitrator disregards the no-fault arbitrators finding of causation and rules in favor of carrier.
Third-Department said this is acceptable. The Court of Appeals concured. The big caveat here is that an arbitrator’s finding is collateral issue for judicial actions based upon the same issue.
So in this case, the Claimant should have filed a court action against the SUM insurer. (See Justice Piggot’s dissent). The no-fault arbitrator’s findings would then be collateral estoppel against the SUM carrier. Of course, should the no-fault carrier and the SUM carrier be different, then collateral estoppel is not in play.
Also, this new rule does not seem to apply to res judicata, as opposed to collateral estoppel. Something to keep in mind.
