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,.

The DJ as to the provider that never was

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 [2007]; see CPLR 3025 [b]; Lucido v Mancuso, 49 AD3d 220 [2008]; Trataros Constr., Inc. v New York City School Constr. Auth., 46 AD3d 874 [2007])” (Morris v Queens Long Is. Med. Group, P.C., 49 AD3d 827, 828 [2008]). 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.

2 consecutive error disallow default vacatur

 

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.

Default reinstated on utter technicality

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.