Kanat v. Ochsner

In Kanat v Ochsner, 301 AD2d 456 (1st dept. 2003) the defendants were previously sued in Massachusetts for breach of fiduciary duty and, failed to comply with numerous discovery requests resulting in a default judgment on liability. The Kanat plaintiff thereafter commenced an action in New York alleging similar claims and sought to collaterally estop the defendants from relitigating the issues adjudicated against them in the Massachusetts action. In affirming the trial court's application of collateral estoppel based on the default judgment, the First Department stated): "Although collateral estoppel is generally not available where the judgment in the prior action was obtained on default, such is not the case here. It is undisputed that defendants appeared and answered in the Massachusetts action and engaged in extensive motion practice caused for the most part by defendants' willful and contumacious pattern of selective, partial responses to various pretrial discovery demands. Defendants therein had a full and fair opportunity to fully litigate the underlying merits of the Massachusetts action, but affirmatively chose not to by their own failure to comply with court orders. Defendants therein charted the course of their own litigation, engaging in conduct intentionally calculated to frustrate and impede the court to whose jurisdiction they submitted by their general appearance and by interposing an answer." (301 AD2d at 458.) In Kanat v. Ochsner, while noting that "collateral estoppel is generally not available where the judgment in the prior action was obtained on default" (supra at 458), the court found a default judgment entered in a prior Massachusetts action preclusive on the issue of liability. It reasoned that defendants had a full and fair opportunity to fully litigate the issue of liability, but affirmatively chose not to, having appeared, answered and engaged in extensive motion practice arising from their "wilful and contumacious" failure to comply with discovery demands, which ultimately resulted in a default order against them on the issue of liability.