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Legal Memorandum: Application of a Collateral Estoppel in NY

Issue: Under New York law, does collateral estoppel apply to tax proceedings brought by New York City and the State of New York?

Area of Law: Litigation & Procedure, Tax Law
Keywords: Collateral estoppel; Tax proceedings
Jurisdiction: New York
Cited Cases: 357 N.Y.S.2d 756; 48 F.3d 359; 740 N.Y.S.2d 252; 902 P.2d 563; 310 U.S. 381
Cited Statutes: None
Date: 07/01/2006

“Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against the party or those in privity.”  Buechel v. Bain, 97 N.Y.2d 295, 303, 740 N.Y.S.2d 252, 257 (2001) (emphasis added).  There are two prerequisites before the bar will be imposed: (1) there must be an identity of issue which was necessarily decided in the prior action and is decisive in the present action; and (2) there must have been a full and fair opportunity to litigate the issue in the first proceeding.  Id.

            An issue is regarded as decisive in a proceeding if the deficiency should be annulled.  See Matter of Metzger (State Tax Appeals Tribunal, Feb. 11, 1993); Matter of Basileo (State Tax Appeals Tribunal, May 9, 1991); Matter of Fokos Lounge (State Tax Appeals Tribunal, Mar. 7, 1991).  With respect to the second prerequisite, the party claiming that collateral estoppel should not apply bears the burden of showing there was no such opportunity.  Buechel, 97 N.Y.2d at 303, 740 N.Y.S.2d at 257.

Although the City of New York may not be a formal party to a State Proceeding, clearly it is bound as one “in privity” with a party to that proceeding, the State Division of Taxation.  See id. at 304-05, 740 N.Y.S.2d at 258; Irizarry v. City of New York, 79 Misc. 2d 346, 357 N.Y.S.2d 756, 757-59 (N.Y. City […]

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