State Farm Insurance Co. v. Smith

In State Farm Insurance Co. v. Smith, 277 A.D.2d 390 (2d Dept. 2000), the arbitration agreement contained a clause stating that the arbitrator's decision was to be conclusive "only as to the matters being adjudicated in said arbitration, pertaining to the parties present," and was to have no "collateral estoppel effect as to the same or similar issues in companion claims or actions arising out of the incident which is the subject of said arbitration." In a subsequent claim asserted by Kathleen Smith, one of the arbitrating parties, against State Farm, a third party, State Farm argued that Smith's claim was barred by collateral estoppel arising out of the earlier arbitration. The court disagreed and held that because of the limiting clause in the arbitration agreement, the prior arbitration decision did not preclude Smith from pursuing her claim against State Farm.