Case Information

ACTIVE MEDIA SERVICES, INC., Appellant, v GRANT PRIDECO, INC., Respondent.

Supreme Court, Appellate Division, First Department, New York

2006

826 N.Y.S.2d 889

Judgment, Supreme Court, New York County (Karla Moskowitz, J.), entered March 8, 2006, dismissing the complaint and awarding defendant the principal amount of $3,250,000 on its first counterclaim, unanimously affirmed, with costs. Appeal from order, same court and Justice, entered on or about February 23, 2006, which granted defendant summary judgment, unanimously dismissed, without costs, as subsumed within the appeal from the ensuing judgment.

In 1998, defendant, a leading manufacturer of oilfield drill pipe and tubular products, purchased from plaintiff, an international corporate trader, certain trade credits, the value of which was insured on a one-dollar-for-one-trade credit basis. A portion of the purchase price for the credits was financed by National Westminister Bank (NatWest) partially in exchange for an assignment of the right to first proceeds of any insurance recovery so that in the event the credits could not be disposed of within their three-year term, the insurance carrier would be required to pay NatWest up to $4.65 million, unless defendant had defaulted on its minimal contractual obligations. Plaintiff failed to retire even one trade credit for defendant, and in 2000 it abandoned altogether its account with defendant by firing the individual who had originated and managed its insured trade credit division, shutting down his department and terminating or reassigning all remaining personnel.

When NatWest thereafter sought to collect on the trade credit insurance coverage, plaintiff prevented any recovery by certifying that defendant was not in compliance with its contractual obligations. Plaintiff subsequently commenced this action to obtain a declaration that defendant has no claim against it, and for recovery of the damages under its claim for breach of contract. Each side moved for summary judgment, which was denied on the ground that the question of liability for the failed trade credit program could not be resolved as a matter of law based on this record. However, it later became known that another similarly situated trade credit holder in the oil and gas business, National-Oilwell, had just prevailed against plaintiff in a Texas arbitration proceeding, after having made claims virtually indistinguishable from defendant's herein. Defendant also learned that plaintiff had withheld from it several material documents produced in that arbitration. Defendant successfully renewed its summary judgment motion based on this material from the Texas arbitration proceeding.

The doctrine of collateral estoppel precludes a party from relitigating an issue previously decided against it in a proceeding where there was a fair opportunity to be heard on the matter (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 455 [1985]). Although plaintiff contends that the Texas arbitration involved wholly unrelated claims, both National-Oilwell and defendant were parties to an agreement whose terms were almost identical, and the claims made by National-Oilwell in Texas were the same as those advanced by defendant herein. The arbitrators found in favor of National-Oilwell after plaintiff had a full and fair opportunity to present its case. Even though they are separate entities, the positions of National-Oilwell and defendant herein, vis-á-vis plaintiff, are largely indistinguishable.

Even if collateral estoppel were unavailable to defendant, the record clearly demonstrates the absence of any triable questions of fact either as to plaintiff's request for declaratory relief or in connection with its cause of action for breach of contract.

Concur—Mazzarelli, J.P., Friedman, Sullivan, Williams and Gonzalez, JJ.