9 N.Y.3d 124 (2007)
Res judicata and collateral estoppel do not bar a subsequent action where the parties were not directly adverse in the prior action and the specific issue in the subsequent action was not actually litigated and decided in the prior action.
Summary
The City of New York sued Welsbach Electric for indemnification and contribution related to a prior negligence case. Welsbach moved for summary judgment, arguing that res judicata and collateral estoppel barred the City’s action because Welsbach had been dismissed from the prior suit. The Court of Appeals held that neither doctrine applied because the City and Welsbach were not adverse parties in the prior action, and the issue of Welsbach’s contractual obligations to the city was not litigated. This case clarifies that these doctrines require an identity of parties actually litigating claims against each other.
Facts
A traffic accident occurred at an intersection with a traffic signal maintained by Welsbach under contract with the City. The injured parties (Angerome plaintiffs) sued multiple parties including the City and Welsbach, alleging the accident was caused by a malfunctioning traffic signal. Welsbach moved for summary judgment, arguing it owed no duty to the public and had performed its contractual obligations. The City did not cross-claim against Welsbach in that initial action.
Procedural History
The Supreme Court granted Welsbach’s motion for summary judgment, dismissing the claims against it in the original action. The City did not appeal. The case proceeded to trial against the City, and the jury found the City 100% liable. After settling the judgment, the City then sued Welsbach for indemnification and contribution. The Supreme Court initially denied Welsbach’s motion for summary judgment based on res judicata and collateral estoppel. The Appellate Division reversed, but the Court of Appeals then reversed the Appellate Division, reinstating the Supreme Court’s original order.
Issue(s)
1. Whether res judicata bars the City’s action against Welsbach when the City made no claim against Welsbach in the prior action.
2. Whether collateral estoppel bars the City’s action against Welsbach when the issue of Welsbach’s contractual obligations to the City was not actually litigated and decided in the prior action.
Holding
1. No, because res judicata requires an identity of parties actually litigating successive actions against each other; it applies only when a claim between the parties has been previously “brought to a final conclusion.”
2. No, because collateral estoppel applies only “if the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action.”
Court’s Reasoning
The Court of Appeals reasoned that res judicata requires an identity of parties actually litigating claims against each other. Since the City made no claim against Welsbach in the prior action, res judicata does not apply. The court stated, “Here, the City made no claim against Welsbach in the Angerome action.”
Regarding collateral estoppel, the Court found that the issue of Welsbach’s contractual obligations to the City was not actually litigated and decided in the prior action. The Supreme Court’s grant of summary judgment to Welsbach was based solely on the grounds that Welsbach owed no duty to the general public, not on whether Welsbach had properly performed its contractual obligations to the City. The Court emphasized that because the City never cross-claimed against Welsbach, the issue of Welsbach’s contractual obligations was never properly before the court in the first action. The court quoted from Parker v. Blauvelt Volunteer Fire Co., 93 NY2d 343, 349 to clarify the standard for collateral estoppel.