## Facts

- June Panniel’s vehicle was struck at an intersection by an ambulance driven by Felix Diaz, Jr. and owned by Robert Wood Johnson University Hospital at Hamilton.
- Both Panniel’s car and the ambulance were insured by the same insurer, New Jersey Manufacturers Insurance Company (NJM).
- Panniel received immediate medical treatment for chest and shoulder pain; she later discovered a laceration on the bottom of her right foot and was hospitalized.
- Panniel’s condition worsened and resulted in amputation of toes on her right foot; she also claimed carpal tunnel syndrome related to the accident.
- Panniel sought first-party PIP medical benefits from NJM and arbitrated the PIP claim.
- In the PIP arbitration, both sides were represented by counsel; the proceeding included discovery, medical records, testimony from Panniel’s treating physician (with cross-examination), and an insurer expert report.
- The arbitrator found the foot injury and resulting amputation were causally related to the accident (awarding PIP benefits) but found the carpal tunnel syndrome was not caused by the accident.
- Separately, Panniel filed a tort action against Diaz and the hospital seeking damages beyond PIP, including non-medical economic losses and pain and suffering.

## Issues

1. Whether defendants Diaz and the hospital were offensively collaterally estopped in the tort action from relitigating proximate causation of Panniel’s foot injury and amputation based on the prior PIP arbitration award between Panniel and NJM.
2. Whether, even if the technical elements of issue preclusion were met, fairness and public-interest considerations justified denying preclusion where the tort defendants were not arbitration parties and PIP arbitration serves a different function than tort litigation.

## Decision

- The court denied Panniel’s motion for partial summary judgment.
- The court held Diaz and the hospital were not barred from contesting proximate causation in the tort case notwithstanding the arbitrator’s causation finding in the PIP dispute.
- The court treated offensive collateral estoppel as discretionary and declined to apply it due to equitable and policy-based exceptions.
- The court rejected the argument that Panniel’s agreement to cap tort recovery at policy limits made NJM the “real party in interest” such that the insurer’s arbitration loss should bind the insured tort defendants.
- The ruling left the underlying tort claims unresolved and permitted causation to be litigated in the tort action.

## Legal Principles

- Offensive collateral estoppel may be denied even when formal requirements appear satisfied; courts may refuse preclusion based on equitable considerations.
- Exceptions permitting a new determination include: (1) a clear and convincing need for redetermination due to potential adverse impact on the public interest or other persons; (2) lack of foreseeability that the issue would arise in later litigation; and (3) insufficient opportunity for a full and fair adjudication by the party to be bound.
- A PIP arbitration deciding contractual entitlement to first-party benefits is not automatically interchangeable with tort litigation over third-party liability and damages.
- An insurer’s participation in PIP arbitration does not necessarily provide a full and fair opportunity to litigate for insured tort defendants, whose interests and objectives may diverge from the insurer’s benefit-payment objectives.
- Courts may consider broader consequences of giving preclusive effect to PIP arbitration findings, including changes to arbitration stakes and effects on the insurance system.

## Conclusion

The court declined to apply offensive issue preclusion to bind jointly insured tort defendants to a PIP arbitrator’s causation finding, holding that fairness, limited party participation, foreseeability, and public-interest concerns justified allowing causation to be relitigated in the tort action.


Panniel v. Diaz, 376 N.J. Super. 597, 871 A.2d 156 (Law Div. 2004)