March 12, 2013

Ideal Med. Supply v Mercury Cas. Ins. Co. (2013 NY Slip Op 23068)

Headnote

The main issue in this case was whether or not the plaintiff, Ideal Medical Supply, as assignee of Lee Cuffie, was bound by a previous declaratory judgment action which denied all no-fault claims related to injuries sustained by Cuffie in a motor vehicle accident. The defendant insurer argued that the plaintiff was bound by the judgment, but the court ultimately disagreed. The court ruled that as Ideal Medical Supply was not a party in the previous declaratory judgment action, it was not bound by the outcome. Additionally, the court held that the plaintiff and their assignor were not in "privity", which meant that plaintiff could not be bound by the result of the previous judgment. The court also considered earlier case law, such as in Gramatan Home Invs. Corp. v Lopez, and the unique nature of assignments of claims in first-party no-fault cases, in reaching their decision. Ultimately, the court ruled in favor of the plaintiff, affirming the original order denying summary judgement to the defendant insurer.

Reported in New York Official Reports at Ideal Med. Supply v Mercury Cas. Ins. Co. (2013 NY Slip Op 23068)

Ideal Med. Supply v Mercury Cas. Ins. Co.

2013 NY Slip Op 23068 [39 Misc 3d 15]

Accepted for Miscellaneous Reports Publication

AT1

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, May 8, 2013

[*1]

Ideal Medical Supply, as Assignee of Lee Cuffie, Respondent,
v
Mercury Casualty Insurance Company, Appellant.

Supreme Court, Appellate Term, First Department, March 12, 2013

APPEARANCES OF COUNSEL

Picciano & Scahill, P.C., Westbury (Albert J. Galatan of counsel), for appellant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, LLC, Garden City (Steven J. Neuwirth of counsel), for respondent.

{**39 Misc 3d at 16} OPINION OF THE COURT

Per Curiam.

Order, entered April 17, 2012, affirmed, without costs.

A related Supreme Court action brought by the defendant insurer against various medical providers resulted in a declaration that defendant was entitled to deny all no-fault claims arising from injuries allegedly sustained by plaintiff’s assignor (Cuffie) in the underlying July 2, 2008 motor vehicle accident. Since the plaintiff medical supplies provider was not a party to the declaratory judgment action it is not bound by Supreme Court’s determination, as it did not have a full and fair opportunity to contest the issues in that proceeding (see Gilberg v Barbieri, 53 NY2d 285, 291 [1981]). 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 (see Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 486-487 [1979]).

Schoenfeld, J. (concurring). In light of the Court of Appeals’ holding in Gramatan Home Invs. Corp. v Lopez (46 NY2d 481 [1979]), I join my colleagues in voting to affirm the order denying summary judgment to the defendant insurer. Considerations of due process prohibit binding a party to the result of an action in which that party has not been given an opportunity to be heard. I write separately to [*2]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 (see Montgomery v Daniels, 38 NY2d 41, 50-51 [1975]).

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{**39 Misc 3d at 17} Law and the no-fault regulations of this State” (Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 67, 69 [2010 dissenting op]). 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. Lastly, and parenthetically, it is noted that in the event the plaintiff assignee does not ultimately succeed against defendant on the no-fault claim, plaintiff could seek redress against the assignor under the clear terms of the assignment of benefits form.

Lowe, III, P.J., and Torres, J., concur; Schoenfeld, J., concurs in a separate opinion.