Judicial Estoppel and Waiver-of-Subrogation Clauses: Subrogated Insurers Bound by Insured’s Prior Positions in Joined Proceedings

I. Introduction

State Farm Fire & Casualty Co. v. Dan Heller Plumbing & Heating, Inc., 2025 NY Slip Op 06635 (App Div 2d Dept, Nov. 26, 2025), is a significant Second Department decision at the intersection of subrogation, commercial lease waiver-of-subrogation provisions, and judicial estoppel.

The case arises out of a commercial fire loss and a web of related subrogation actions brought by multiple insurers. At its core, the decision addresses whether an insurer-subrogee (State Farm), suing in the shoes of its insured landlord (New Age Management, LLC), can take a litigation position about the effect of lease-based waiver-of-subrogation clauses that is inconsistent with the position previously taken—and successfully asserted—by that same insured in related, joined actions.

The Appellate Division affirms that:

An insurer in a subrogation action is bound not only by all substantive defenses that could be asserted against its insured, but may also be bound by the insured’s prior litigation positions under the doctrine of judicial estoppel.
Judicial estoppel can apply within the same joined proceeding even before a final determination, and in any event applies where a final determination has already adopted the earlier position.
Lease-based waiver-of-subrogation clauses can bar subrogation actions by multiple insurers on both sides of the landlord–tenant relationship.

The opinion thus reinforces core subrogation principles while sharpening how New York courts will deploy judicial estoppel when insurers and insureds assume inconsistent positions about the same contract clauses in consolidated litigation.

II. Background and Procedural Posture

A. The Parties

New Age Management, LLC (“New Age”) – The commercial property owner and landlord. New Age is insured by State Farm for the property loss.
State Farm Fire & Casualty Company (“State Farm”) – Plaintiff in the present subrogation action, suing as subrogee of New Age after paying fire-loss benefits.
Brownstones Coffee, Inc. (“Brownstones”) – A commercial tenant of the premises under a lease with New Age.
Country Fare Market, Inc. (“Country Fare”) – Another commercial tenant of the same premises, also leasing from New Age.
Utica First Insurance Company (“Utica First”) – Insurer of Brownstones, pursuing its own subrogation rights.
Graphic Arts Mutual Insurance Company (“Graphic Arts”) – Insurer of Country Fare, also pursuing subrogation.
Dan Heller Plumbing & Heating, Inc. – A named defendant in the caption; not central to the appeal, which focuses on Brownstones and Country Fare.

B. The Fire and Insurance Payments

In August 2015, a fire occurred at commercial premises owned by New Age and leased to Brownstones and Country Fare. State Farm, as New Age’s property insurer, paid insurance benefits to its insured, New Age, under a property policy.

As is typical in such situations, multiple insurers sought to shift or recoup the loss:

State Farm pursued subrogation against parties it contended were responsible for the fire or otherwise liable.
Utica First and Graphic Arts, as insurers of the respective tenants, also brought subrogation actions targeting New Age and others.

C. Multiple Subrogation Actions and Consolidation

Several related actions followed:

State Farm’s Action: State Farm, as subrogee of New Age, commenced this action to recover the sums it paid to New Age. Brownstones and Country Fare were among the defendants.
Utica First’s Action: Utica First, the tenant Brownstones’ insurer, brought a subrogation action against New Age, among others, presumably seeking to shift its own payout for the loss.
Graphic Arts’ Action: Graphic Arts, the tenant Country Fare’s insurer, likewise brought a subrogation action against New Age, among others.

These various actions were joined for all purposes, creating a unified proceeding in which multiple insurers on both sides of the landlord–tenant relationship were simultaneously litigating subrogation claims.

D. Motions in the Supreme Court (Trial Court)

1. New Age’s Motions Against Utica First and Graphic Arts

New Age (the landlord, and State Farm’s insured) moved for summary judgment dismissing the complaints of Utica First and Graphic Arts, arguing that:

Its leases with Brownstones and Country Fare contained waiver-of-subrogation clauses that barred the tenants’ insurers from pursuing subrogation claims against New Age.

In a prior order dated July 12, 2022, the Supreme Court agreed. It granted New Age’s motions, holding that the actions by Utica First and Graphic Arts were precluded by the lease-based waiver-of-subrogation clauses.

2. Brownstones’ and Country Fare’s Motions Against State Farm

Separately, in the present State Farm action:

Brownstones and Country Fare each moved, among other things, for summary judgment dismissing State Farm’s third amended complaint as against them.
They argued that the same waiver-of-subrogation clauses in their leases with New Age also barred State Farm’s subrogation claim.

3. State Farm’s Cross-Motions

State Farm cross-moved for summary judgment, seeking to:

Dismiss Brownstones’ and Country Fare’s affirmative defenses that relied on the waiver-of-subrogation clauses.

In essence, State Farm took the position that the waiver-of-subrogation provisions should not be read in a way that barred its subrogation action against the tenants, even though New Age had just successfully argued that those same provisions barred subrogation claims against it by the tenants’ insurers.

4. The July 18, 2022 Order

In the order appealed from (July 18, 2022), the Supreme Court:

Granted Brownstones’ and Country Fare’s motions, dismissing State Farm’s third amended complaint as against each of them.
Denied State Farm’s cross-motions to strike the waiver-of-subrogation defenses.

State Farm appealed from that order to the Appellate Division, Second Department.

III. Summary of the Appellate Division’s Decision

The Appellate Division (LaSalle, P.J., Ford, Voutsinas & Landicino, JJ.) affirmed the Supreme Court’s order “insofar as appealed from.”

The Court held:

Judicial estoppel barred State Farm (as subrogee) from taking a position inconsistent with that previously taken by its insured, New Age, regarding the effect of the lease-based waiver-of-subrogation clauses.
New Age had successfully argued that these clauses barred subrogation actions by Utica First and Graphic Arts; State Farm could not now, in the same joined proceeding, argue that the clauses did not bar its own subrogation claims against the tenants.
Judicial estoppel in the same proceeding does not require a final determination, but in any event there was one: the July 12, 2022 order granting New Age summary judgment based on the waivers.
Independently, applying standard subrogation principles, Brownstones and Country Fare established that State Farm’s claims were barred by the waiver-of-subrogation clauses in their leases, and State Farm failed to raise any triable issue of fact in opposition.
Consequently, the tenants’ affirmative defenses based on the lease waivers stood, State Farm was not entitled to summary judgment dismissing those defenses, and the tenants were entitled to dismissal of State Farm’s third amended complaint as against them.

Having resolved the appeal on these grounds, the Court found it unnecessary to address State Farm’s remaining contentions.

IV. Detailed Analysis

A. Precedents Cited and Their Role in the Decision

The Court relies on a cluster of New York precedents to articulate and apply doctrines governing judicial estoppel, summary judgment practice, and subrogation.

1. Judicial Estoppel: Cobenas, Cussick, McGlynn, Flanders

The Court quotes and draws on a line of Appellate Division cases to define judicial estoppel:

Cobenas v Ginsburg Dev. Cos., LLC, 133 AD3d 812, 813
– Quoted for the basic doctrine: a party is precluded from “inequitably adopting a position directly contrary to or inconsistent with an earlier assumed position in the same proceeding.”
Cussick v R.L. Baxter Bldg. Corp., 228 AD3d 614, 616
– Emphasizes that judicial estoppel applies where a party has assumed a position in one legal proceeding, prevailed on that position, and later seeks to assume a contrary position in another proceeding because its interests have changed.
McGlynn v Burns & Harris, Esq., 223 AD3d 733, 735
– Another example reinforcing the doctrine against inconsistent positions.
Flanders v E.W. Howell Co., LLC, 193 AD3d 822, 823–824
– Cited to reiterate the “twin purposes” of judicial estoppel: protecting the integrity of the judicial process and avoiding inconsistent results.

From these authorities, the Court distills the following key points:

Judicial estoppel is about positions, not just outcomes.
It seeks to prevent a party from “playing fast and loose” with the courts by shifting legal or factual stances opportunistically.
It protects judicial integrity and the coherence of adjudications, especially in joined or related proceedings.

2. Finality and Same-Proceeding Application: Riconda, Hartsdale, H & R Block, Arriaga

State Farm contended that judicial estoppel should not apply because there was no “final” determination at the time. The Court rejects that argument, citing:

Riconda v Liberty Ins. Underwriters, Inc., 187 AD3d 1081, 1082
– Stands for the proposition that, when judicial estoppel is applied within the same proceeding, a final determination is not required for the doctrine to operate.
Matter of Hartsdale Fire Dist. v Eastland Constr., Inc., 65 AD3d 1345, 1346
– Similarly supports application of the doctrine without a strict final-judgment requirement within a single continuing proceeding.
H & R Block Bank v Page, 199 AD3d 780, 783
– Cited in connection with the notion that a court may rely on a prior determination adopting a party’s position when assessing whether judicial estoppel should apply.
Matter of Arriaga v Dukoff, 123 AD3d 1023, 1025–1026, affd 28 NY3d 1
– Another case showing that, where a party has succeeded in convincing a court to adopt a position, that party may later be estopped from assuming an inconsistent stance.

These authorities collectively support the Court’s two-step conclusion:

As a doctrinal matter, judicial estoppel may apply within the same joined proceeding even before a final judgment or order.
In any event, there was a final determination here—the July 12, 2022 order granting New Age summary judgment by enforcing the waiver-of-subrogation clauses against Utica First and Graphic Arts—so State Farm’s argument was doubly unavailing.

3. Summary Judgment Practice: Winegrad

The Court cites the seminal case:

Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 852
– For the familiar rule that a movant that fails to make a prima facie showing of entitlement to judgment as a matter of law must have its motion denied “regardless of the sufficiency of the opposing papers.”

The Court uses Winegrad in two ways:

To explain why State Farm’s cross-motions to dismiss the waiver-based affirmative defenses failed: State Farm could not establish, as a matter of law, that those defenses were inapplicable because its position was barred by judicial estoppel.
To reinforce that once Brownstones and Country Fare made their prima facie showing, it was State Farm’s burden to raise a triable issue of fact—and it failed to do so.

4. Subrogation Doctrine: Westport, Morin

The Court reaffirms the basic structure of subrogation through:

Westport Ins. Co. v Altertec Energy Conservation, LLC, 82 AD3d 1207, 1209
– Quoted for the principle that an insurer can only recover in subrogation if the insured could have recovered, and the insurer’s claim is subject to all defenses that could have been asserted against the insured.
Morin v Morin, 197 AD3d 1171, 1173
– Cited cf., showing the breadth of this doctrine in other contexts.

These cases support the Court’s conclusion that:

Because the leases’ waiver-of-subrogation clauses barred New Age itself from pursuing claims against Brownstones and Country Fare in respect of the fire loss, State Farm, standing in New Age’s shoes, could not do so either.

B. The Court’s Legal Reasoning

1. Judicial Estoppel and Inconsistent Positions

The starting point is the Court’s description of judicial estoppel:

“Under the doctrine of judicial estoppel, or estoppel against inconsistent positions, a party is precluded from inequitably adopting a position directly contrary to or inconsistent with an earlier assumed position in the same proceeding… The doctrine further precludes a party who assumed a position in one legal proceeding and prevailed in maintaining that position from assuming a contrary position in another proceeding simply because the party’s interests have changed.”

Applying this to the facts:

New Age’s earlier position: In the joined Utica First and Graphic Arts actions, New Age asserted that the waiver-of-subrogation clauses in its leases barred the tenants’ insurers’ subrogation claims against it. New Age moved for summary judgment on that basis and prevailed.
State Farm’s later position: In the same joined proceeding, State Farm argued, in effect, that the same clauses did not bar its subrogation claims against the tenants Brownstones and Country Fare, and sought to strike their waiver-based defenses.

The Court concludes that State Farm’s position is “inconsistent with that previously advanced by New Age, its subrogor,” and thus is precluded by judicial estoppel. The key move is the Court’s willingness to treat the insured’s prior litigation position as binding, for estoppel purposes, on the insurer-subrogee.

2. Subrogation: Insurer “Stands in the Shoes” of the Insured

The Court then brings in the general law of subrogation:

“[An] insurer can only recover if the insured could have recovered and its claim as subrogee is subject to whatever defenses the third party might have asserted against its insured.”

Two related consequences follow:

Substantive defenses travel with the claim.
If New Age’s claims against Brownstones and Country Fare are barred by a contractual waiver-of-subrogation clause, State Farm’s subrogation claims are equally barred. The insurer acquires no greater rights than the insured had.
Procedural / equitable doctrines can also travel with the claim.
Because State Farm’s rights are derivative, defenses such as judicial estoppel that would apply had New Age itself tried to assert inconsistent positions also apply to State Farm.

The Court effectively fuses subrogation doctrine with judicial estoppel: New Age’s successful reliance on the lease waivers to defeat the tenants’ insurers bars State Farm from simultaneously denying or minimizing the effect of those same clauses against the tenants.

3. Waiver-of-Subrogation Clauses in Commercial Leases

Although the opinion does not reproduce the exact language of the lease provisions, it treats them as standard waiver-of-subrogation clauses typically found in commercial leases, under which:

Each party agrees to look first (or exclusively) to its own insurance for certain losses.
Each party waives rights of recovery, and often agrees that its insurer will have no right of subrogation, as between the contracting parties.

By enforcing the clauses in both directions—first to bar tenants’ insurers from suing New Age, and now to bar New Age’s insurer from suing the tenants—the courts give full effect to the parties’ contractual risk allocation:

New Age’s own insurer (State Farm) should bear New Age’s share of the risk, rather than recouping from the tenants.
Tenants’ insurers (Utica First, Graphic Arts) bear the tenants’ share, but cannot turn around and seek reimbursement from the landlord when the lease has allocated the risk otherwise.

This symmetrical enforcement underscores that waiver-of-subrogation clauses are not merely technical insurance provisions but powerful contractual devices that can effectively reallocate post-loss litigation rights.

4. Judicial Estoppel Does Not Require Finality Within the Same Proceeding

State Farm argued that judicial estoppel should not apply because the earlier ruling on New Age’s motions was not “final.” The Court’s response is two-fold:

Doctrinally: When judicial estoppel is applied within the same overall proceeding, “the doctrine… does not require that a final determination have been rendered” (citing Riconda and Hartsdale Fire Dist.).
Factually: Even if finality were required, that requirement was satisfied by the July 12, 2022 order, which was a final determination of the joined Utica First and Graphic Arts claims against New Age on the basis of the lease waivers.

Thus the Court forecloses any attempt by State Farm to temporize around the timing of the decisions: once New Age’s argument about the waivers was accepted and embodied in an order, State Farm was locked in, for estoppel purposes, to a consistent understanding of those clauses in the joined litigation.

5. Application of Summary Judgment Standards

The analysis of the competing motions fits the classic New York summary judgment framework:

Tenants’ motions: Brownstones and Country Fare, as movants, had the initial burden to demonstrate their prima facie entitlement to judgment as a matter of law.
- They did so by showing that their leases with New Age contained waiver-of-subrogation clauses that barred subrogation claims related to the loss at issue, and that State Farm was asserting precisely such a claim.
State Farm’s opposition: Once the tenants met their prima facie burden, State Farm was required to raise a triable issue of fact or a legal basis to avoid the effect of the waivers.
- The Court holds that State Farm “failed to raise a triable issue of fact” and, further, was barred by judicial estoppel from contesting the enforceability of the waivers at all.
State Farm’s cross-motions: As cross-movant attempting to strike the waiver-based defenses, State Farm needed to make a prima facie showing that those defenses were inapplicable as a matter of law.
- Because judicial estoppel precluded State Farm’s arguments about the non-applicability of the clauses, it failed to make the requisite prima facie showing.
- Under Winegrad, once a movant fails to satisfy its initial burden, the motion must be denied “without regard to the sufficiency of the opposition papers.”

The net effect is that:

The tenants’ waiver-based defenses stood.
State Farm’s claims against Brownstones and Country Fare were dismissed.
State Farm’s attempt to strip away those defenses failed at the threshold due to judicial estoppel.

C. Impact and Practical Implications

1. For Subrogated Insurers

The decision is a pointed reminder that:

Insurer and insured litigation positions are interconnected.
When an insured advances a position about contract terms (such as a waiver-of-subrogation clause) and prevails, that position may bind the insurer-subrogee under judicial estoppel as well as under substantive subrogation principles.
Coordinated litigation strategy is essential.
Insurers must anticipate how their insureds’ positions in related actions will affect the insurer’s own subrogation efforts, especially in consolidated or joined proceedings.
Waiver-of-subrogation clauses are two-edged swords.
An insurer may welcome the enforcement of such clauses when they shield its insured from subrogation claims by others, but the same clauses will be enforced symmetrically to block the insurer’s own subrogation efforts on its insured’s behalf.

2. For Commercial Landlords and Tenants

The decision confirms that New York courts will give robust effect to lease-based waiver-of-subrogation provisions:

Landlords and tenants who have agreed, via such clauses, to shift certain risks to their own insurers can expect courts to enforce that allocation both ways.
The presence of a waiver-of-subrogation clause can significantly narrow the scope of potential post-loss litigation between landlord and tenant, and between their respective insurers.

Practically, this:

Encourages robust first-party insurance coverage for both landlord and tenant.
Reduces circular litigation over internally allocated risks that the parties have contractually decided to assign to insurance.

3. For Litigation Strategy in Joined/Consolidated Actions

The case has broader procedural implications:

Joined proceedings magnify estoppel risks.
When multiple related subrogation actions are joined “for all purposes,” positions taken in one branch of the litigation may have immediate and binding consequences in another.
No safe harbor in pending status.
Counsel cannot assume that inconsistent positions are permissible until “final judgment.” This decision confirms that, in the same proceeding, judicial estoppel does not depend on a final determination—and, even where it does, a key interlocutory order may suffice.

4. For Drafting Commercial Leases and Insurance Agreements

On the transactional side, the decision underscores:

Importance of clarity in waiver-of-subrogation language.
Drafters should clearly define the scope of any waiver: which losses, which parties, and which insurers are covered, and whether the waiver is mutual and extends to all forms of negligence.
Alignment between lease provisions and insurance policies.
Parties should ensure that their property and liability policies are compatible with the waivers they agree to in their leases—some policies may require endorsements to permit waiver of subrogation.
Awareness that the waiver binds insurers.
Insurers underwriting risks in the commercial leasing context should assume that commonly used waiver-of-subrogation language, if enforced, can bar subrogation against both landlord and tenant depending on the fact pattern.

V. Key Legal Concepts Explained

Subrogation: A doctrine allowing an insurer that has paid a loss to “step into the shoes” of its insured to sue a third party that allegedly caused or contributed to the loss. The insurer’s rights are no greater than the insured’s rights and are subject to all defenses that the third party could assert against the insured.
Waiver-of-Subrogation Clause: A contractual provision (commonly in commercial leases and construction contracts) where the parties agree that, for certain types of loss, they will look to their own insurance and waive any right of recovery against each other, including any right of their insurers to pursue subrogation. This reallocates risk between the contracting parties and their insurers.
Judicial Estoppel (Estoppel Against Inconsistent Positions): An equitable doctrine that prevents a party from asserting a position in a legal proceeding that is directly contrary to a position it successfully asserted in the same or a prior proceeding. Its purposes are to protect the integrity of the judicial process and avoid inconsistent judicial determinations. In this case, it prevents an insurer-subrogee from contradicting a prior successful interpretation of contract language advanced by its insured.
Summary Judgment: A procedural device under CPLR 3212 by which a party seeks judgment as a matter of law without trial. The movant bears the initial burden of showing, through admissible evidence, the absence of any genuine dispute of material fact and entitlement to judgment. If this burden is not met, the motion must be denied regardless of the opposing papers (Winegrad rule).
Prima Facie Entitlement to Summary Judgment: The initial burden on the party moving for summary judgment to demonstrate, with competent evidence, that it is entitled to judgment as a matter of law. Only after that showing does the burden shift to the opponent to demonstrate a triable issue of fact.
Affirmative Defense: A defense raised by a defendant that, if proved, defeats or mitigates the plaintiff’s claim even if the facts alleged in the complaint are true. Here, Brownstones and Country Fare asserted waiver-of-subrogation clauses as affirmative defenses to State Farm’s subrogation claims.

VI. Conclusion

State Farm Fire & Cas. Co. v. Dan Heller Plumbing & Heating, Inc. confirms and refines key principles in New York law:

A subrogated insurer is strictly confined to the rights and restrictions of its insured; it cannot avoid contractual waivers or equitable doctrines that bind the insured.
Judicial estoppel applies with full force where an insured has obtained favorable rulings based on a particular interpretation of a waiver-of-subrogation clause, and the insurer later seeks to advance a contradictory reading in related, joined litigation.
Within a single, joined proceeding, judicial estoppel does not depend on a formal final judgment, and in any event can be triggered by a prior dispositive order adopting the earlier position.
Lease-based waiver-of-subrogation clauses are potent, enforceable risk-allocation tools that can bar subrogation on both sides of the landlord–tenant relationship.

In the broader legal context, this decision reinforces the importance of consistency in litigation positions, especially in complex, multi-party subrogation environments, and underscores that courts will respect and enforce commercial parties’ negotiated allocation of risk as reflected in their leases and insurance arrangements.

Judicial Estoppel and Waiver-of-Subrogation Clauses: Subrogated Insurers Bound by Insured’s Prior Positions in Joined Proceedings (State Farm v. Dan Heller Plumbing & Heating, Inc.)