Key Takeaway
Court orders granting motions aren't always final judgments. Learn why failing to include proper declarations in your order can be fatal to your case's preclusive effect.
Declaratory judgment actions are powerful tools in insurance litigation, allowing parties to clarify their rights and obligations before disputes escalate. However, obtaining a favorable court ruling is only half the battle. The technical requirements for creating a binding judgment with preclusive effect are strict, and even experienced attorneys can stumble on seemingly minor procedural details.
This principle becomes particularly important in denial of claims disputes, where insurance companies and healthcare providers often seek declaratory judgments to establish coverage positions or reimbursement obligations. A court order that merely grants a motion without making specific declarations about the parties’ rights may lack the finality needed to prevent future litigation on the same issues.
The Appellate Term’s decision in Active Chiropractic, P.C. v 21st Century Ins. Co. illustrates a critical procedural trap that can undermine otherwise successful litigation. This case demonstrates why careful attention to judgment drafting is essential for achieving lasting resolution in declaratory judgment actions.
Jason Tenenbaum’s Analysis:
Active Chiropractic, P.C. v 21st Century Ins. Co., 2018 NY Slip Op 50200(U)(App. Term 2d Dept. 2018)
Many times the Court will write motion granted settled order, or include certain facts without “adjudging” or “declaring” the rights of the parts.
This case signifies the importance to obtain a signed and entered judgment setting forth the declarations to which you believe you are entitled when the occasion arises. The defaulting defendant’s remedy is to open the DJ.
See below.
“With respect to defendant’s cross motion, as the December 8, 2014 Supreme Court order in the declaratory judgment action merely granted the branch of defendant’s motion for the entry of a default judgment against plaintiff and its assignor, but failed to make a statement declaring the rights of the parties involved (see Hirsch v Lindor Realty Corp., 63 NY2d 878, 881 ; Suburban Bindery Equip. Corp. v Boston Old Colony Ins. Co., 150 AD2d 767 ; Metro Health Prods., Inc. v Nationwide Ins., 48 Misc 3d 85 ), the Supreme Court order cannot be considered a conclusive final determination and, thus, can have no preclusive effect in the action at bar”
The prologue here is that a judgment was eventually signed.
Key Takeaway
Court orders that merely grant motions or recite facts without explicitly “adjudging” or “declaring” the parties’ rights cannot achieve preclusive effect in future litigation. Even a default judgment must contain specific declarations to create binding finality. When drafting proposed orders, attorneys must ensure the court makes clear statements about each party’s rights and obligations, not just procedural rulings. The remedy for a defaulting defendant is to move to reopen the declaratory judgment rather than relitigate the underlying issues.
