Default vacated

Government Employees Ins. Co. v Avenue C Med., P.C., 2018 NY Slip Op 08010 (2d Dept. 2018)

(1) “The defendants Salehin Sayeedus, also known as Salehin Sayeedus Suman, Jose Carmen Ma Donna Gloria, also known as Carmen Maria Donna Jose, and Zhi-Yuan Zhong (hereinafter collectively the defaulting defendants) defaulted in appearing and, in April 2014, the plaintiffs filed a motion for leave to enter a default judgment against the defaulting defendants. The motion was unopposed, and was granted on July 23, 2014. In October 2014, the defaulting defendants moved to vacate their default and to compel acceptance of their late answers, asserting that their default was due to law office failure. In support of their motion, the defaulting defendants submitted affidavits from the defendants’ former and present counsel, in which counsel stated that the failure to serve timely answers on behalf of the [*2]defaulting defendants was due to a miscommunication between the defendants’ former and present counsel, upon the transfer of the defendants’ case to their present counsel, regarding the nature of the representation. The Supreme Court denied the motion, and the defaulting defendants appeal.”

(2) “Here, the defaulting defendants demonstrated a reasonable excuse, based upon law office failure arising from a miscommunication between their former counsel and their present counsel, for their default in answering the complaint or otherwise appearing in the action”

(3) “The defaulting defendants submitted affidavits in support of their motion describing their office services and billing practices, in which they stated, among other things, that their patients were required to sign statements acknowledging the treatments that they had received. The defaulting defendants also averred in the affidavits that they did not bill for services that were not rendered”

Now, Avenue C will get its date in Court.

A declaratory judgment to nowhere

Jamaica Wellness Med., P.C. v Mercury Cas. Co., 2018 NY Slip Op 51128(U)(App. Term 2d Dept. 2018)

Upon a review of the record, we find that, as the March 23, 2016 Supreme Court order in the declaratory judgment action merely awarded a default judgment to Mercury against Jamaica’s assignor, but did not declare the rights of Mercury as against Jamaica (see Hirsch v Lindor Realty Corp., 63 NY2d 878 [1984]; Suburban Bindery Equip. Corp. v Boston Old Colony Ins. Co., 150 AD2d 767 [1989]; Metro Health Prods., Inc. v Nationwide Ins., 48 Misc 3d 85[App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]), the Supreme Court order cannot be considered a conclusive final determination of Jamaica’s rights and, thus, can have no preclusive effect on the no-fault action at bar (see Promed Orthocare Supply, Inc. v AIG Advantage Ins. Co., 50 Misc 3d 128[A], 2015 NY Slip Op 51886[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; cf. Vital Meridian Acupuncture, P.C. v Republic W. Ins. Co., 46 Misc 3d 147[A], 2015 NY Slip Op 50222[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; EBM Med. Health Care, P.C. v Republic W. Ins., 38 Misc 3d 1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Consequently, the Civil Court should not have dismissed the complaint based on the Supreme Court order. In light of the foregoing, we reach no other issue.

This embarrassment speaks for itself.

Where was the reasonable excuse?

Two cases, differing fact patterns and no showing at all of a reasonable excuse.

Right Solution Med. Supply, Inc. v Republic W. Ins. Co., 2018 NY Slip Op 51125(U)(App. Term 2d Dept. 2018)

“In support of its motion, defendant submitted an affidavit by plaintiff’s assignor in which plaintiff’s assignor admitted that the December 21, 2009 accident underlying this no-fault proceeding had been staged, and an order dated April 26, 2013, from the Supreme Court, New York County, in a declaratory judgment action, entered on default, finding that defendant herein had no duty to pay any no-fault benefits to plaintiff herein and its assignor, among others, with respect to this accident. The Civil Court denied defendant’s motion, finding that defendant had failed to establish a reasonable excuse for its failure to proceed at trial.

Defendant’s motion should have been granted, as defendant demonstrated both a reasonable excuse for its failure to proceed at trial and a meritorious defense (see CPLR 5015 [a] [1]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]).”

Clearly, the affidavit of the Assignor was powerful tool in opening the default. I wish the Court was more honest and opened the default upon the residual inherent good cause and interest of justice discretion all trial courts and appellate courts have.  That would have been a more honest and better decision.

Allstate Ins. Co. v North Shore Univ. Hosp., 2018 NY Slip Op 05268 (2d Dept. 2018)

(1) “On January 29, 2015, the plaintiff commenced this action pursuant to Insurance Law [*2]§ 5106(c) for a de novo determination of the defendant’s claims for recovery of no-fault benefits. The plaintiff then moved for leave to enter a default judgment because the defendant failed to timely appear or answer the complaint. In an order entered April 21, 2015, the Supreme Court granted the plaintiff’s motion for leave to enter a default judgment. On June 8, 2015, the court entered a default judgment.

In July 2016, the defendant moved pursuant to CPLR 5015(a)(1) to vacate its default, and pursuant to CPLR 2004 and 3012(d) to extend its time to answer the complaint. In an order entered October 19, 2016, the Supreme Court denied the motion, and the defendant appeals”

(2) In July 2016, the defendant moved pursuant to CPLR 5015(a)(1) to vacate its default, and pursuant to CPLR 2004 and 3012(d) to extend its time to answer the complaint. In an order entered October 19, 2016, the Supreme Court denied the motion, and the defendant appeals.

The defendant’s motion was timely made (see CPLR 5015[a][1]; 2103[b][2]). A defendant seeking to vacate a default pursuant to CPLR 5015(a)(1) on the ground of excusable default must demonstrate a reasonable excuse for the default and a potentially meritorious defense to the action (see CPLR 5015[a][1]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141; EMC Mtge. Corp. v Toussaint, 136 AD3d 861, 862; Lane v Smith, 84 AD3d 746, 748). Here, the defendant demonstrated a reasonable excuse for its default and a potentially meritorious defense to the action

When I see 5015(a)(1) and 2103(b)(2) together, I am sensing that the one year period to vacate ran from when the order was mailed on arbitration counsel.  I just cannot tell from this decision, but it definitely opens up the door to vacturs of trial de novo defaults with the presentment of the right facts.

 

An order granting a declaratory judgment suffices for affirmation in opposition

 

Healing Art Acupuncture, P.C. v 21st Century Ins. Co., 2018 NY Slip Op 50583(U)(App. Term 2d Dept. 2018)

(1) “The Supreme Court order granting defendant’s motion for summary judgment held that defendant had established its founded belief that there was no coverage for no-fault benefits arising out of the accident at issue because the collision had been a staged incident.”

(2) “Thereafter, based upon the orders in the Supreme Court declaratory judgment action, the Civil Court, by order entered October 16, 2015, denied plaintiff’s motion for summary judgment, finding that defendant has no duty to provide coverage for the accident at issue. Plaintiff appeals from the October 16, 2015 order of the Civil Court.”

(3) “While defendant did not proffer in the Civil Court an affirmation of its counsel or an affidavit in opposition to plaintiff’s motion, and defendant did not annex the Supreme Court orders as exhibits to any opposition papers, a court “may in general take judicial notice of matters [*2]of public record”

(4) “Consequently, in light of the Supreme Court’s orders and declaratory judgment, of which we take judicial notice, we find that the Civil Court properly denied plaintiff’s motion for summary judgment under the doctrines of res judicata and collateral estoppel”

(5) “[a]nd, upon a search of the record, we find that defendant established its entitlement to judgment as a matter of law. In view of the foregoing, we reach no other issue.”

This says it all I think.

DJ not collateral estoppel

Active Care Med. Supply Corp. v Amica Mut. Ins. Co., 2018 NY Slip Op 50500(U)(App. Term 2d Dept. 2018)

The man who wrote the book glossed over the discussion of Magic Recovery in seeking to backdoor summary judgment win.  Sneaky.

“However, plaintiff herein was neither named nor served in the Supreme Court declaratory judgment action. Moreover, plaintiff was not in privity with the injured party, as the assignment of benefits had been executed before defendant commenced the declaratory judgment action. Thus, plaintiff had no full and fair opportunity to defend its interests in that action”

Failure to include order/judgment with declaration is fatal

Active Chiropractic, P.C. v 21st Century Ins. Co., 2018 NY Slip Op 50200(U)(App. Term 2d Dept. 2018)

Many times the Court will write motion granted settled order, or include certain facts without “adjudging” or “declaring” the rights of the parts.

This case signifies the importance to obtain a signed and entered judgment setting forth the declarations to which you believe you are entitled when the occasion arises.  The defaulting defendant’s remedy is to open the DJ.

See below.

“With respect to defendant’s cross motion, as the December 8, 2014 Supreme Court order in the declaratory judgment action merely granted the branch of defendant’s motion for the entry of a default judgment against plaintiff and its assignor, but failed to make a statement declaring the rights of the parties involved (see Hirsch v Lindor Realty Corp., 63 NY2d 878, 881 [1984]; Suburban Bindery Equip. Corp. v Boston Old Colony Ins. Co., 150 AD2d 767 [1989]; Metro Health Prods., Inc. v Nationwide Ins., 48 Misc 3d 85 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]), the Supreme Court order cannot be considered a conclusive final determination and, thus, can have no preclusive effect in the action at bar”

The prologue here is that a judgment was eventually signed.

Avoiding the 120-day rule to make a summary judgment motion

Active Chiropractic, P.C. v Allstate Ins., 2018 NY Slip Op 50201(U)(App. Term 2d Dept. 2018)

“Initially, we note that, although defendant’s motion was denominated as one to dismiss the complaint pursuant to CPLR 3211 (a) (5), the motion was made after issue had been joined (see generally CPLR 3211 [e]). “Whether or not issue has been joined, the court, after adequate notice to the parties, may treat the motion as a motion for summary judgment” (CPLR 3211 [c]). While the Civil Court never notified the parties that it was treating the motion as one for summary judgment, an exception to the notice requirement is applicable, as defendant’s motion exclusively involved “a purely legal question rather than any issues of fact” (Mihlovan v Grozavu, 72 NY2d 506, 508 [1988]; Four Seasons Hotels v Vinnik, 127 AD2d 310, 320 [1987]; Renelique v State-Wide Ins. Co., 50 Misc 3d 137[A], 2016 NY Slip Op 50095[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]). Consequently, it was proper for the Civil Court, in effect, to treat defendant’s motion to dismiss as one for summary judgment “without first giving notice of its intention to do so” (Four Seasons Hotels, 127 AD2d at 320).”

Upon finding the motion properly brought and timely, judgment on the unpleaded affirmative defense was granted.

Attorneys fees on a DJ

Hertz Vehs., LLC v Cepeda, 2017 NY Slip Op 08603 (1st Dept. 2017)

The question left unanswered in Fiduciary was what happens if the Assignor (or EIP) who succeeds on a DJ is a driver, owner or registered user of the vehicle?  The Court here is clear.

“The insured in the circumstances described above may recover attorneys’ fees because “an insurer’s duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against an insurer’s declaratory judgment action” (U.S. Underwriters, 3 NY3d at 597-598).

There is no such duty in this case, as Innovative is not an insured to which Hertz owes a duty to defend. Although Innovative was assigned the claimants’ rights for reimbursement of no-fault benefits, the claimants were only passengers in the insured vehicle at the time of the accident, and were not parties to whom Hertz owed a duty to defend (Fiduciary Ins. Co. Of Am. v Medical Diagnostic Servs., P.C., 150 AD3d 498 [1st Dept 2017] citing U.S. Underwriters, 3 NY3d at 597-598).”

The Court is sympathetic to the medical provider who must expend tens of thousands on a New York County DJ action for billing, often times less than $5,000.00.  Therefore, an artificial distinction has been made between someone to whom a defense is owed in a third party action and to someone who a duty to defend and indemnify next exists.

I am learning that most states will award reasonable attorneys fees, regardless of who files a lawsuit, when a Claimant prevails in a coverage dispute adjudicated in the Courts.  It appears New York is about 25 % of the way there,

Court addresses lack of meritorious defense and fails to evaluate reasonable excuse

Hu-Nam-Nam v Allstate Ins. Co., 2017 NY Slip Op 50685(U)(App. Term 2d Dept. 2017)

“Defendant moved by order to show cause in the Civil Court to vacate the default judgment, claiming, as an excuse for the default, that it had no record of receiving the summons and complaint, but if defendant had been served, then defendant’s failure to answer the complaint was the result of clerical error and office failure.”

“In support of its motion to vacate the default judgment, defendant was required to [*2]demonstrate both a reasonable excuse for its default and the existence of a potentially meritorious defense (see CPLR 5015 [a]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138 [1986]; New York Hosp. Med. Ctr. of Queens v Nationwide Mut. Ins. Co., 120 AD3d 1322, 1323 [2014]). While plaintiff’s complaint in the Civil Court asserted that the accident at issue had occurred on June 20, 2010, defendant’s proffered evidence of a staged accident referred to a June 21, 2010 collision. Consequently, defendant failed to demonstrate that the alleged injuries did not arise out of the June 20, 2010 insured incident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). Similarly, the Supreme Court declared that defendant is not obligated to reimburse plaintiff for claims “relating to the June 21, 2010 accident.” Thus, we cannot find that the order in the declaratory judgment action, which relieves defendant of liability for claims relating to a June 21, 2010 accident, is a conclusive determination barring plaintiff’s recovery in the Civil Court for injuries sustained by its assignor in a June 20, 2010 accident. In the absence of an explanation of the discrepancy in the dates of the accident, defendant failed to demonstrate the existence of a potentially meritorious defense to the action. In view of the foregoing, it is unnecessary to consider whether defendant proffered a reasonable excuse for its default.”

Aside from a mix up in dates and Plaintiff prevailing on a case it should not have, the court ducked “reasonable excuse”.  It would be a close call on reasonable excuse because denial of receipt is usually not a reasonable excuse in the Second Department.

Notice of Entry

Wells Fargo Bank, N.A. v Frierson, 2017 NY Slip Op 03984 (2d Dept. 2017)

“”[I]t is axiomatic that before an order may be enforced, notice of such order must be given to the party against whom it is sought to be enforced” (Matter of Raes Pharm. v Perales, 181 AD2d 58, 62; see Holmes v Minnamon, 122 AD3d 1285). Thus, ” [w]here the rights of a party are or may be affected by an order, the successful moving party, in order to give validity to the order, [*2]is required to serve it on the adverse party'”

“Contrary to the defendant’s contention before the Supreme Court, the plaintiff’s failure to properly serve a copy of the summary judgment order with notice of entry did not render that order null and void (see CPLR 2004). However, since the plaintiff failed to establish that a copy of the summary judgment order with notice of entry was properly served upon the defendant, its motion to confirm the referee’s report and for a judgment of foreclosure and sale was properly denied on that ground”

This occurs in DJ practice.  The Appellate Term has held that the failure to serve an order with notice of entry is not fatal to the res judicata application.  I will not say this conflicts.  I would say, however, that a dismissal may not be warranted where Notice of Entry was never served.  But,  DJ order without Notice of Entry is clearly a defense to a no-fault action.  CPLR 2004.