Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC, 2017 NY Slip Op 06065 (2d Dept. 2017)
I am sure many of you out there have process servers engaging in BLC 307 and LLC 304 service who are not following all of the steps required to effectuate proper service. This is my second time at the rodeo so shame on me. This partner messed up again…
Service can be as difficult as solving a rule against perpetuities question in first year property class. That said, the Court has now told all of you what must be done EXACTLY to effectuate service.
On my end, I told the process servers what they need to do and demanded refunds for cases that need to be refiled. On your end (the reader), DO NOT repeat my mistakes. You have been warned. Here are the rules:
“First, service upon the unauthorized foreign limited liability company may be made by personal delivery of the summons and complaint, with the appropriate fee, to the Secretary of State (see Limited Liability Company Law § 304[b]). Second, in order for the personal delivery to the Secretary of State to be “sufficient,” the plaintiff must also give the defendant direct notice of its delivery of the process to the Secretary of State, along with a copy of the process. The direct notice may be sent to the defendant by registered mail, return receipt requested, to the defendant’s last known address (see Limited Liability Company Law § 304[c]). Third, after process has been delivered to the Secretary of State and direct notice of that service has been sent to the defendant, the plaintiff must file proof of service with the clerk of the court. That proof of service must be in the form of an “affidavit of compliance.” The affidavit of compliance must be filed with the return receipt within 30 days after the plaintiff [*2]has received the return receipt from the post office. Service of process shall be complete 10 days after the affidavit of compliance has been filed with the clerk with a copy of the summons and complaint (Limited Liability Company Law § 304[c]). Strict compliance with Limited Liability Company Law § 304 is required, including as to the filing of an “affidavit of compliance”
What is an affidavit of compliance? Good question, because that is what was not uploaded in Global. This is what one looks like (modify for proper service type):
Have a happy Thursday.
Calderone v Molloy Coll., 2017 NY Slip Op 05932 (2d Dept. 2017)
On June 4, 2015, the return date of the NCAA’s motion, the plaintiff attempted to file a stipulation signed by the NCAA’s counsel, [*2]among others, agreeing to adjourn the return date and extend the plaintiff’s time to submit opposition papers. Later on June 4, 2015, the Supreme Court rejected the stipulation and marked the NCAA’s motion fully submitted without opposition. That night, the plaintiff’s counsel e-filed the opposition papers with the court. Four days after the return date, on June 8, 2015, the plaintiff moved, in effect, pursuant to CPLR 2004 to extend his time to submit opposition papers to the NCAA’s motion. The NCAA did not oppose the plaintiff’s motion. In an order dated June 25, 2015, the court denied the plaintiff’s motion on the ground that he failed to follow the motion schedule set by the court’s rules
CPLR 2004 provides that, “[e]xcept where otherwise expressly prescribed by law, the court may extend the time fixed by any statute, rule or order for doing any act, upon such terms as may be just and upon good cause shown, whether the application for extension is made before or after the expiration of the time fixed.” In considering a motion for an extension of time, “the court may properly consider factors such as the length of the delay, whether the opposing party has been prejudiced by the delay, the reason given for the delay, whether the moving party was in default before seeking the extension, and, if so, the presence or absence of an affidavit of merit” (Tewari v Tsoutsouras, 75 NY2d 1, 12; see Matter of Village of Haverstraw v Ray Riv. Co., 137 AD3d 800, 801).
Here, the plaintiff established good cause for an extension of his time to submit opposition papers to the NCAA’s motion given the brief and unintentional delay, the lack of prejudice to the NCAA, the existence of potentially meritorious defenses to the NCAA’s motion, and “the policy favoring the resolution of cases on their merits” (Nikita v Parfomak, 43 AD3d 892, 893; see Matter of Village of Haverstraw v Ray Riv. Co., 137 AD3d at 801-802; Siracusa v Fitterman, 110 AD3d 1055, 1056-1057; Associates First Capital v Crabill, 51 AD3d 1186, 1188).
Accordingly, the Supreme Court improvidently exercised its discretion in denying the plaintiff’s motion, in effect, pursuant to CPLR 2004 to extend his time to submit opposition papers to the NCAA’s motion, and the order dated June 26, 2015, which consequently was entered upon the plaintiff’s default, must be vacated
The Second Department is notorious for not vacating defaults unless the “reasonable excuse” is highly detailed. The Court, as I sensed, is significantly more empathetic to a party who breaches a briefing schedule, but moves to have the paper accepted. This is significant to the practitioner that gets ensnared in one of those briefing stipulations,.
Ultimate Health Prods., Inc. v Ameriprise Auto & Home, 2017 NY Slip Op 27245 (App. Term 2d Dept. 2017)
(1) ” Generally, [i]n the absence of prejudice or surprise to the opposing party, leave to amend a pleading should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit’ (G.K. Alan Assoc., Inc. v Lazzari, 44 AD3d 95, 99 ; see CPLR 3025 [b]; Lucido v Mancuso, 49 AD3d 220 ; Trataros Constr., Inc. v New York City School Constr. Auth., 46 AD3d 874 )” (Morris v Queens Long Is. Med. Group, P.C., 49 AD3d 827, 828 ). In the instant case, since Ultimate’s assignor executed the assignment of benefits in favor of Ultimate more than three months prior to the commencement of the declaratory judgment action and the Supreme Court did not award Ameriprise a declaratory judgment against Ultimate, the branch of Ameriprise’s cross motion seeking leave to amend the answer to assert that the action is barred by the doctrine of res judicata should have been denied, as the proposed amendment is patently devoid of merit (see Morris, 49 AD3d at 828; Eagle Surgical Supply, Inc. v AIG Ins. Co., 40 Misc 3d 139[A], 2013 NY Slip Op 51449[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). As a result, the branch of Ameriprise’s cross motion seeking summary judgment dismissing the complaint based on the doctrine of res judicata should also have been denied.
(2) Observation. The Dj was brought in Kings because you can get any short form order you want out of the Default Judgment Motion Part. In fact, the DJMP is so bad, judges would rather sit as acting SCJ in Civil then hang out there. But here is a question – could the default motion in Supreme Court have survived a judge reviewing the papers? We will never know.
Here, defendant proffered an affidavit by its [*2]claims examiner, who merely stated that he was supposed to forward the summons and complaint to defense counsel, but did not, and “it was a mistake.” The claims examiner explained defendant’s default in opposing plaintiff’s motion for leave to enter a default judgment by stating that plaintiff’s motion had not been scanned into defendant’s file system until the date the motion was returnable, and that it was forwarded to defense counsel the following day. Under the circumstances presented, we find that defendant failed to establish a reasonable excuse for its default
Here, there were two errors that claims made: (1) The failure to forward the summons and complaint; (2) the failure to forward the default application, on notice. This was not intentional clearly, and fits within the gambit of claims office failure. Harcztark v. Drive Variety, Inc., 21 AD3d 876, 876 (App. Term 2d Dept. 2005)
Yet, under the two strike rule here, these actions on the part of the carrier were fatal. Sadly, this Court and its cousin on Monroe Place pay “lip service” to the pubic policy of cases being heard on their merits. Oh, do I think the courts squeeze insurance carriers harder than civilians who are sued and default? Well you can answer that question. I feel like these decisions read more like Justice Stephen Crane’s dissent in Harcztark than the unsigned majority opinion in that case.
K.O. Med., P.C. v Avis Budget Group, 2017 NY Slip Op 50687(U)(App. Term 2d Dept. 2017)
(1) “On September 11, 2014, defendant served an answer, which plaintiff rejected as untimely. Upon plaintiff’s application, a default judgment awarding plaintiff the principal sum of $2,069.76 was entered on October 1, 2014. Defendant moved by order to show cause, returnable on October 31, 2014, to compel plaintiff to accept the answer.”
(2) “Defendant’s motion should have been denied, as defendant failed to move to vacate the duly entered default judgment and as the court did not treat defendant’s motion as one seeking that relief. In view of the foregoing, we do not consider defendant’s proffered excuse for its default.”
The lesson learned here is that when an answer is rejected as untimely, the motion should always seek the following relief: (1) Motion to vacate pursuant to CPLR 5015(a)(__); (2) Motion to compel acceptance of answer, pursuant to CPLR 3012(d); (3) (sometimes) Motion to vacate any default based upon the Court’s interest of justice jurisdiction (Woodson v. Mendell Leasing).
This is a tough lesson here as the entry of a default occurred on three cases. What I do find disturbing is that assuming Defendant included a general prayer clause in the application, why didn’t the Court consider the CPLR 3012(d) application as a CPLR 5015(a)(1) application? Admittedly, the Court punished Defendant for a technicality that, at most, was just that.
Again, this Court continues to issue decisions that fly in the fact of the public policy that cases be heard on the merits absent intentional conduct. I am thinking Albany needs to revisit CPLR 2005 because the trend of allowing the entry of default from the Second Department (Term and Division) flies in the fact of sound public policy of encouraging cases to be resolved on the merits and encourages entries of default judgments.
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 ; New York Hosp. Med. Ctr. of Queens v Nationwide Mut. Ins. Co., 120 AD3d 1322, 1323 ). 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 ). 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.
Turner v Owens Funeral Home, Inc., 2017 NY Slip Op 03128 (1st Dept. 2017)
“Because plaintiffs did not submit any opposition to the motions to change venue, and the order granting the motions was entered without consideration of any arguments by plaintiffs, whether oral or written, the order was entered upon plaintiffs’ default, and is not appealable (see CPLR 5511; Liberty Community Assoc., LP v DeClemente, 139 AD3d 532, 532 [1st Dept 2016]; cf. Matter of 144 Stuyvesant, LLC v Goncalves, 119 AD3d 695, 696 [2d Dept 2014] [order was not entered upon the respondent’s default where, among other things, the court addressed the arguments presented by the respondent in her oral opposition to the motion]).”
Gecaj v Gjonaj Realty & Mgt. Corp., 2017 NY Slip Op 03109
“While we concede that, generally, when a defendant provides the summons and complaint to its insurance broker, and the insurer, thereafter, fails to appoint counsel to appear in the action on behalf of defendant, this is considered to be a reasonable excuse (see generally Rodgers, 69 AD3d at 510-511) However, on the facts presented here, defendants did not establish a reasonable excuse for their default. An assertion by a defendant that it believed its insurer “was providing a defense is unsubstantiated and unreasonable in light of [the defendant’s] conceded receipt of the plaintiff’s motion for leave to enter a default judgment,” as receipt of such a motion puts the defendant on notice that the insurer has, in fact, not answered the complaint since the commencement of the action (Trepel v Greenman-Pedersen, Inc., 99 AD3d 789, 791 [2d Dept 2012]; see also Spitzer v Landau, 104 AD3d 936, 937 [2d Dept 2013] [finding that the defendant’s belief that the insurer was providing a defense was “unreasonable given that the defendant was served with the plaintiff’s motion for leave to enter a default judgment”]).”
**It is a very interesting discussion.
Healthworx Med., P.C. v Auto One Ins. Co., 2017 NY Slip Op 50559(U)(App. Term 2d Dept. 2017)
The order itself was numbered. Apparently, after the order was written and given to the judge, the numbers of the papers were crossed out and the order in its body said: “[b]oth sides agreed to the above and will not appeal this order.” Out of a fit of rage, I appealed because it was not on consent and there was no appeal waiver. Unless I am taking a plea in a criminal case or settling a civil matter, I never forfeit my right to appeal. The right to appeal is something I cherish and am not afraid to exercise. The attorney who appeared told me it was not on consent. Interestingly, Civil Court (same judge as originally) implicitly saw the lack of logic of consenting to judgment absolute and denied the motion on the lack of reasonable excuse grounds.
The appeal (without costs) was not fruitful. Just so you know, there was no bill for the Camp conference or appeal on this case. The case is worth $500.00 and it will die a less than dignified death. Put an asterisk next to this under the caption “weird things that happen in Civil Kings”.
Geico Ins. v Sullivan, 2017 NY Slip Op 27108 (App. Term 2d Dept. 2017)
This case highlights how disparate the uniform court system is. Here, Plaintiff clearly did not have sufficient facts to establish a default as to liability. I get that clearly, i.e., there was no affidavit or verification from the operator of the Subrogor’s vehicle. But I discuss this case because of what it does not say. Assume I filed the same subrogation case in Civil Queens and the defendant defaults. What do I do?
I file a Notice of Inquest with appropriate fees, put on the inquest calendar, bring whatever evidence of damages the assigned judge requires and knock out judgments and license suspensions. I sense that the District Court Clerk will require a motion for a default, refuses to engage in Civil Court practice and hence this case. That is why counsel here moved for leave to enter a default in the first instance.
Now it looks like the statute has run and Geico will never recover the $12,069.59. Brian Sullivan will keep his license and, yet, never knew how close he came to being in a lifetime payment plan or running to Central Islip to file a chapter 7