Default Judgment as the Basis for Collateral Estoppel in New York
Under New York law, a default judgment can serve as the basis for collateral estoppel under certain circumstances.
For example, in In re Abady, 22 A.D.3d 71, 85, 800 N.Y.S.2d 651 (1st Dep't 2005), the First Department held that "collateral estoppel may be properly applied to default judgments where the party against whom preclusion is sought appears in the prior action yet willfully and deliberately refuses to participate in those litigation proceedings or abandons them, despite a full and fair opportunity to do so."
More recently, in Windley v. City of New York, 104 A.D.3d 597, 598, 961 N.Y.S.2d 441 (1st Dep't 2013), the First Department restated the circumstances under which a default judgment will support a finding of collateral estoppel.
The Windley court noted that "the Transit Authority had the requisite full and fair opportunity to litigate the issue in the prior action, but it failed to do so, and it has not offered any explanation for this failure."
The Windley court concluded that "under the circumstances, the Transit Authority willfully and deliberately refused to participate in the prior action and collateral estoppel applies notwithstanding its default." Id.