Another way to take a default

Citimortgage, Inc. v Gill, 2018 NY Slip Op 06512 (2d Dept. 2018)

Most practitioners are accustomed to the downstate method of taking a default: making a motion on notice.  The Local Federal Rules in the EDNY and SDNY also require placing the adverse party on notice when seeking a default following the ex-parte application to the clerk.

But in upstate New York, certain judges demand that the application be made ex-parte.  Another example of a uniform court system but uniform.  The interesting procedural issue that arises  is when the ex-parte application is not signed.

“ORDERED that on the Court’s own motion, the appeal from the order is deemed an application pursuant to CPLR 5704(a) to vacate the order and to grant the plaintiff’s ex parte motion; and it is further,

ORDERED that the application pursuant to CPLR 5704(a) is granted and the plaintiff’s ex parte motion for an order of reference is granted.”

 

A new caveat on the one year period to enter a judgment

Josephson v State Farms Ins. Co., 2018 NY Slip Op 51132(U)(App. Term 2d Dept. 2018)

“In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which granted a motion by defendant State Farm Insurance Company (sued herein as State Farms Insurance Company) to vacate a default judgment that had been entered on February 9, 2016, upon defendant’s failure to appear at a calendar call of the case on June 30, 2008, and to dismiss the complaint pursuant to CPLR 3215 (c) for failure to enter the default judgment within one year. Plaintiff did not rebut defendant’s motion papers by demonstrating that it had taken proceedings for the entry of a judgment within one year of defendant’s calendar default on June 30, 2008 (see CPLR 3215 [a]). As CPLR 3215 (c) provides that “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed,” the Civil Court did not abuse its discretion in [*2]granting defendant’s motion to vacate the default judgment and dismiss the complaint ”

We have seen the one year period to dismiss due to the failure to tale a default judgment when a  judgment it not taken within one year to answer or reply to a counterclaim.  This is a new twist.  When a calendar default occurs, the failure to enter a judgment within one year serves as an abandonment of the action.    I have never seen this one before but I will keep this case on my short list.

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.

 

Guideposts to vacate a trial default

SZ Med., P.C. v Allstate Ins. Co., 2018 NY Slip Op 50497(U)(App. Term 2d Dept. 2018)

“Plaintiff has not demonstrated that the Civil Court’s denial of plaintiff’s request for an adjournment was an abuse of discretion (see Nieves v Tomonska, 306 AD2d 332 [2003]). Plaintiff did not show why it could not have been prepared to proceed on the day set for the trial of the then 11-year-old case, or why it had not attempted to obtain an adjournment in advance, or any other extenuating circumstances. Plaintiff also did not explain why it had waited seven months to move to vacate its default. ”

This in line with the defense cases where a carrier needs to present an excuse why their doctor cannot appear for trial and they cannot be ready.

Meritorious defense not needed

Naber Elec. v Triton Structural Concrete, Inc., 2018 NY Slip Op 02562 (1st Dept. 2018)

“Although the affidavit of merit provided by defendants’ executive lacked any detail concerning their potential defenses to plaintiffs’ claims for payment for work performed on three subcontracts, an affidavit of merit is “not essential to the relief sought” by defendants before entry of a default order or judgment (DeMarco v Wyndham Intl., 299 AD2d 209, 209 [1st Dept 2002]; see Nason v Fisher, 309 AD2d 526 [1st Dept 2003])”

The Court of Appeals should resolve this conflict.  The other Departments hold that a meritorious defense is needed.  The Second Circuit on construing Rule 55 after a clerks marking of default holds the same.  Also, the way around this is to enter an ex-parte judgment on liability, which is something that downstate Courts frown upon unless it is a sum certain matter.

“Detailed and Credible” Explanation for the default

Premier Surgical Servs., P.C. v Allstate Ins. Co., 2018 NY Slip Op 50273(U)(App. Term 2d Dept. 2018)

“[a] court, in its discretion, may accept a claim of law office failure as an excuse (see CPLR 2005; Star Indus., Inc. v Innovative Beverages, Inc., 55 AD3d at 904; Papandrea v Acevedo, 54 AD3d 915 [2008]). The affirmation submitted by defendant’s attorney in support of the motion did not provide a “detailed and credible” explanation of the law office failure that had caused the default”

“We note that, at oral argument, defendant’s attorney asserted that plaintiff had improperly served the summons and complaint on defendant at its Long Island office. However, since this argument was not raised in defendant’s brief, we decline to address it on appeal”

This one hurts, because this was a basis to vacate the default insofar as it is jurisdictional.

An appeal that really went nowhere

Pro-Med Med., P.C. v MVAIC, 2018 NY Slip Op 50152(U)(App. Term 2d Dept, 2018)

I remember a certain attorney who worked at the within Plaintiff firm ([s]he will be nameless for purpose for anonymity) once told me a story about some MVAIC disaster case with an old default, tons of compounded interest and an exasperated defense attorney.  Prior counsel for MVAIC I think made an OSC that did not go anywhere.   Apparently, the new MVAIC defense firm believed that they could vacate this default.  Do pigs fly?  I would say MVAIC would want their money back, but the legal fees at whatever the hourly rate new counsel charged is nothing compared to the judgment amount.  Compound interest folks.

By the way, did anyone talk to the third named partner at 11 Grace Avenue in the Village of Great Neck to see if he would shave some money of the judgment before engaging in what I can tell was an insane OSC and  appeal?  And I mean insane: Crazy Eddy Style…  We all know what happened to Eddy Antar?

“Defendant’s motion was based upon allegations that it had first learned of the action in 2014 and first learned of the judgment in 2015, but those allegations were based neither on personal knowledge nor, apparently, on defendant’s records. Defendant’s claims manager alleged that defendant’s files had been scanned into a computer system in 2006 and implied that the documentation relevant to this claim had not been scanned. He specifically alleged that defendant “has no documentation whatsoever with which to evaluate this claim.” Thus, defendant has not demonstrated that it has a reasonable excuse for its default or a meritorious defense to the action.”

I guess now we seek leave to go the Appellate Division?  Why not… the clock is ticking

Defaults…

Hurgada Physical Therapist, P.C. v NY Cent. Mut. Fire Ins. Co., 2017 NY Slip Op 51449(U)

“In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court (Carolyn E. Wade, J.), by order entered May 2, 2011, granted, on default, defendant’s motion for summary judgment dismissing the complaint, declining to consider plaintiff’s late opposition to the motion. Plaintiff subsequently moved, pursuant to CPLR 5015 (a) (1), to vacate the order entered May 2, 2011. Plaintiff appeals from an order of the Civil Court (Wavny Toussaint, J.), entered March 6, 2012, which denied that motion.

In support of its motion, plaintiff was required to establish, among other things, a reasonable excuse for its default (see CPLR 5015 [a] [1]; Eugene Di Lorenzo Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138 [1986]). Here, plaintiff failed to demonstrate that it had a reasonable excuse for failing to timely submit written opposition to defendant’s prior motion, as the excuse offered by plaintiff’s attorney was, in effect, that her late submission “was the result of her heavy workload,” which “amount[s] to nothing more than mere neglect, which is not accepted as an excusable default” (A.B. Med., PLLC v CNA Ins. Co., 46 Misc 3d 144[A], 2015 NY Slip Op 50199[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; see Strunk v Revenge Cab Corp., 98 AD3d 1029 [2012]; State Farm Mut. Auto. Ins. Co. v Preferred Trucking Serv. Corp., 42 Misc 3d 88 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]).”

It is one thing to give somebody enough rope to hang themselves.  It is another thing to be the hangman. Invariably, in 10 situations where a case is problematic, the former will occur a few times.   If I like the person or the firm, I will throw out a life raft and let them know what they did wrong so they can fix it before judgment day comes.  Otherwise, I will just be there for the ride and snicker to myself.  True story, really.

Here, the plaintiff’s papers were late and I am sure counsel for Defendant was not prejudiced.  I also know this particular counsel for Plaintiff will not go out his way to hurt people, so this type of behavior is troubling  Yet, counsel for Defendant affirmatively screamed out that the ridiculous briefing stipulation was breached and, therefore, Defendant would object to the answering papers.  Congratulations, you got a default and won on appeal.  Wait until the shoe is on the other foot young man.  The hangmen are waiting for you.

Service!

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][2]). 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][2]). 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):

Affidavit of compliance

Have a happy Thursday.

CPLR 2004 offers some relief to the dreaded Civil Kings motion stip

Calderone v Molloy Coll., 2017 NY Slip Op 05932 (2d Dept. 2017)

(1)

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

(2)

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,.