You know DFS does NOT approve of this disclaimer

Hereford Ins. Co. v Forest Hills Med., P.C., 2019 NY Slip Op 03926 (1st Dept. 2019)

” Moreover, movant defendants failed to demonstrate a meritorious defense. The failure by the occupants of the vehicle to subscribe and return the transcripts of their examinations under oath violated a condition precedent to coverage and warranted denial of the claims (see Hertz Vehs., LLC v Gejo, LLC, 161 AD3d 549[1st Dept 2018]). “

I really find this basis to disclaim coverage disingenuous. The EIP came to the EUO, told his or her story, lied or did not lie. We go from there. I cannot fathom how the failure to return an EUO transcript – which is a sworn to document and which may be used against the deponent or the assignee as a matter of course – warrants the loss of no-fault benefits.

I am quite sure that DFS did not put the “and subscribe the same” (11 NYCRR 65-1.1[b]) language in the regulations to authorize the voiding of coverage due to the failure to sign the transcript. I also suspect this case will spur either an emergency amendment from DFS or an opinion letter. Thankfully, this appeared in the context of a motion to vacate a default, which means the Court of Appeals will not touch this matter, i.e., the failure to establish a reasonable excuse is reviewed under an abuse of discretion standard that will not be upset on appeal.

I think this basis for a disclaimer is the colloquial playing with fire.

Trial De Novo defaults

Global Liberty Ins. Co. v Haar Orthopaedics & Sports Med., P.C., 2019 NY Slip Op 02317 (2d Dept. 2019)

(1) ” The plaintiff, a no-fault insurance carrier, commenced this action seeking a de novo adjudication of an insurance dispute concerning the denial of a no-fault claim involving the defendant (see Insurance Law § 5106[c]). The plaintiff sought a judgment declaring that the plaintiff is not obligated to pay the claim for no-fault insurance benefits submitted by the defendant on behalf of its assignor John Thomas, on the grounds that the services were not medically necessary, were not related to the subject motor vehicle accident, and/or were billed in excess of the fee schedule. The defendant had been awarded more than $5,000 against the plaintiff as a result of a master arbitration award. “

(2) “On a motion for leave to enter a default judgment pursuant to CPLR 3215, the movant is required to file proof of (1) service of the summons and complaint, (2) the facts constituting the claim, and (3) the other party’s default (see CPLR 3215[f]; Global Liberty Ins. Co. v W. Joseph Gorum, M.D., P.C., 143 AD3d 768, 769; Liberty County Mut. v Avenue I Med., P.C., 129 AD3d 783, 784-785; Fried v Jacob Holding, Inc., 110 AD3d 56, 59). To demonstrate the facts constituting the claim, the movant need only submit sufficient proof to enable a court to determine if the claim is viable (see Woodson v Mendon Leasing Corp., 100 NY2d 62, 71; Fried v Jacob Holding, Inc., 110 AD3d at 60; Neuman v Zurich N. Am., 36 AD3d 601, 602).”

(3) “It also submitted, inter alia, a copy of the complaint verified by its attorney (see CPLR 105[u]; 3020[d][3]; 3215[f]; Clarke v Liberty Mut. Fire Ins. Co., 150 AD3d 1192, 1195; Martin v Zangrillo, 186 AD2d 724), its expert’s affirmed peer review, the arbitration award in excess of $5,000, and the master arbitration award confirming the original arbitration award, which were sufficient to establish that the plaintiff had a viable cause of action against the defendant (see Woodson v Mendon Leasing Corp., 100 NY2d at 71; Global Liberty Ins. Co. v W. Joseph Gorum, M.D., P.C., 143 AD3d at 770). The defendant failed to oppose the plaintiff’s motion (see Fried v Jacob Holding, Inc., 110 AD3d at 60).”

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


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.