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New York’s Appellate Division Reverses Collateral Estoppel Ruling Against Payment Bond Sureties in Suit to Enforce Arbitration Award

On November 24, 2015 by Schnader

A recent decision by the First Department of the Supreme Court, Appellate Division, addresses the preclusive effect of arbitration awards in subsequent judgment enforcement suits against payment bond sureties. In Five Star Electric Corp. v. Federal Insurance Co., 127 A.D.3d 569, 8 N.Y.S.3d 98 (1st Dep’t 2015), the First Department unanimously reversed an order of the New York County Supreme Court (Five Star Elec. Corp. v. Federal Ins. Co., 2014 NY Slip Op 31221 (Sup. Ct. N.Y. Co., May 6, 2014) which had granted partial summary judgment against defendant construction sureties Federal Insurance Company (“Federal”) and St. Paul Fire and Marine Insurance Company (“St. Paul”) based on the collateral estoppel effect of an arbitration award previously rendered in favor of plaintiff Five Star Electrical Corp. (“Five Star”). The lawsuit arose out of a construction contract for the installation of a signage and public address system in various New York City subway stations. Schnader represented Federal on the appeal, and on the underlying summary judgment motion. 

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