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Claims office failure is excusable in certain instancesAugust 13, 2009

Urban Radiology, P.C. v American Tr. Ins. Co. 2009 NY Slip Op 51734(U)(App. Term 2d Dept. 2009)

“In the case at bar, defendant’s no-fault supervisor, who was also the claims representative who handled the instant claims, submitted an affidavit in which he stated that defendant had lost the file containing the summons and complaint and had not found out about the default until June 25, 2007. The record also indicates that defendant’s attorney initiated the instant motion to vacate the default judgment promptly in July 2007.”

It is nice to see the courts allowing the claims offices some leeway in vacating defaults. The law in the Second Department used to be that claims office failure was always fatal to the vacatur of a default. The law has steadily evolved, and now under appropriate circumstances, claims office failure may form the basis to vacate a default.

What troubled me, however, was that the default was only partially vacated. Thus, if someone brought a multisuit with many assignors, the default would be vacated only as to the causes of action where there was a meritorious defense. This makes sense in the abstract. But since the causes of action would most likely be severable had a timely answer been interposed, a defendant’s default in answering appears to give the plaintiff an inordinate advantage through promoting the joining of unrelated actions, in the first instance.

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