Key Takeaway
New York court ruling on declaratory judgment privity in no-fault insurance cases involving assignee providers and material misrepresentation claims.
Ideal Med. Supply v Mercury Cas. Ins. Co., 2013 NY Slip Op 23068 (App. Term 1st Dept. 2013)
“Although plaintiff’s assignor was a named party in the prior action, plaintiff cannot be deemed to be in privity with its assignor, since the declaratory judgment action was commenced after the assignment”
Perhaps the concurrence is more interesting than the per curiam opinion.
(Schoenfeld, J.)
“I write separately to acknowledge that the outcome reached today does not serve to promote the purposes of this State’s no-fault law to provide a less costly, more efficient automobile accident reparation system and to ease court congestion.”
“As (now retired) Justice Golia properly recognized in closely analogous circumstances, no-fault actions do not fit squarely within the Gramatan rule, given “the unique nature and reality of the assignment of claims for first-party benefits under the Insurance Law and the no-fault regulations of this State” (Magic Recovery Med. & Surgical Supply Inc. v State Farm Auto. Ins. Co., 27 Misc 3d 67, 69 ). That being so, and in view of the prior Supreme Court judgment declaring that plaintiff’s assignor and the assignee-providers named as defendants in that action “are not entitled to first-party benefits” stemming from the subject motor vehicle accident due to the assignor’s “material misrepresentations in the procurement of the insurance policy,” it is not unreasonable to say that the denial of summary judgment dismissing this assignee-provider’s claim tends to exalt form over substance, delaying the seemingly inevitable dismissal of the claim until after trial. Nonetheless, on balance, I feel compelled to adhere to the rule set forth in Gramatan without a signal to the contrary from a higher appellate authority”
Related Articles
- Understanding collateral estoppel in New York no-fault insurance cases
- Material misrepresentation in insurance procurement under New York law
- Fraudulent procurement and preclusion issues in coverage disputes
- Policy rescission under Pennsylvania law with insufficient proof
- New York No-Fault Insurance Law
Legal Update (February 2026): Since this 2013 decision, New York’s no-fault regulations and Insurance Law provisions governing assignment of benefits and declaratory judgment procedures may have been amended. Practitioners should verify current provisions regarding privity requirements in post-assignment declaratory judgment actions and any regulatory changes affecting the unique treatment of no-fault benefit assignments.
