Misrepresentation based upon failure to serve last known address

Li Xian v Tat Lee Supplies Co., Inc., 2015 NY Slip Op 01751 (1st Dept. 2015)

“Vacatur was also warranted pursuant to CPLR 5015(a)(3), since the default judgment was obtained through misrepresentation or misconduct. Defendant demonstrated that plaintiffs’ motion for a default judgment was granted, in part, based on plaintiffs’ counsel’s incorrect representation that defendant’s old address was the “only known” address for service of the additional summons required by CPLR 3215(g)(4), when, in fact, plaintiffs’ sublease provided another address for service of legal notices on defendant.”

This is a new twist on CPLR 5015(a)(3) jurisprudence.

Excusable neglect not acceptable

A.B. Med., PLLC v Cna Ins. Co., 2015 NY Slip Op 50199(U)(App. Term 2d Dept. 2015)

“Here, plaintiff failed to demonstrate that it had a reasonable excuse for failing to timely submit written opposition to defendant’s prior motion, pursuant to the parties’ stipulation. In support of plaintiff’s motion to vacate the default order, plaintiff’s attorney alleged that her late submission of an affirmation in opposition to defendant’s motion for summary judgment was the result of her heavy workload. Her explanation to justify the default amounted to nothing more than mere neglect, which is not accepted as an excusable default (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, 11th & 13th Jud Dists 2013]). Moreover, plaintiff’s attorney offered no reason for waiting almost 10 months to move to vacate the default order

Failure to stipulate to an adjournment can be law office failure – sufficient to vacate a summary judgment loss on default

Santiago v Valentin, 2015 NY Slip Op 01159 (1st Dept. 2015)

“Plaintiff provided an attorney’s affirmation describing that the failure to submit opposition was due to a delay in receiving an updated medical report from plaintiff’s treating physician.

Further, plaintiff explained that after defendant denied his third request to stipulate to an adjournment, he believed the only recourse was to wait for a decision and order from the court, and thereafter, make a motion to vacate the default judgment. As such, there is no evidence in the record that plaintiff’s default was due to any deliberate, willful, or contumacious conduct.”

It is not 5015 but 317

Gershman v Midtown Moving & Storrage, Inc., 2014 NY Slip Op 08959 (2d Dept. 2014)

“The defendant did not adequately explain the failure to file with the Secretary of State the current address of the agent designated to receive process on its behalf (see Sussman v Jo-Sta Realty Corp., 99 AD3d 787, 788; Yellow Book of N.Y., Inc. v Weiss, 44 AD3d 755, 756; Franklin v 172 Aububon Corp., 32 AD3d 454[*2]454-455).

Although the defendant did not cite to CPLR 317 in opposition to the plaintiffs’ motion, under the circumstances of this case, this Court may consider CPLR 317 as a basis for vacating the default (see CPLR 2001; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 142-143; Brickhouse Masonry, LLC v Windward Bldrs., Inc., 101 AD3d 919, 920; Brac Constr. Corp. v Di-Com Corp., 51 AD2d 740, 740). CPLR 317 permits a defendant who has been “served with a summons other than by personal delivery” to defend the action upon a finding by the court that the defendant “did not personally receive notice of the summons in time to defend and has a meritorious defense” (CPLR 317; see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d at 141; Taieb v Hilton Hotels Corp., 60 NY2d 725, 728; Fleisher v Kaba, 78 AD3d 1118, 1119; Reyes v DCH Mgt., Inc., 56 AD3d 644). Here, the record reveals that neither the defendant nor its agent received actual notice of the summons, which was delivered to the Secretary of State, in time to defend itself against this action (see Fleisher v Kaba, 78 AD3d at 1119;Calderon v 163 Ocean Tenants Corp., 27 AD3d 410, 411). There is no basis in the record upon which to conclude that the defendant was deliberately attempting to avoid service of process, especially since the plaintiffs had knowledge of the defendant’s actual business address (see Samet v Bedford Flushing Holding Corp., 299 AD2d 404, 405; Stein v A. Matarasso & Co., 143 AD2d 825, 826). In addition, the defendant met its burden of demonstrating the existence of a potentially meritorious defense (see Blake v United States of Am., 109 AD3d at 505).”

I like this case because it one of those rare times where the Second Department explicitly held that while a reasonable excuse was not satisfied, relief in accordance with 317 was appropriate.  I have not seen too many successful 317 challenges, which made this case interesting.

 

Valid excuse for law Office Failure

Madonna Mgt. Servs., Inc. v Naghavi, 2014 NY Slip Op 08965 (2d Dept. 2014)

“Here, the defendants have provided a “detailed and credible” explanation for their failure to appear at the scheduled conference (Henry v Kuveke, 9 AD3d 476, 479; see CPLR 2005; Gironda v Katzen, 19 AD3d 644, 645). Miscommunications that occurred between the defendants, the defendants’ previous counsel, and the defendants’ newly retained attorney constituted a law office failure.”

Default granted where answer is 6 months later

Rosenblatt v New York City Tr. Auth., 2014 NY Slip Op 07575  (1st Dept. 2014)

“Defendants demonstrated an excuse of law office failure through the assigned attorney’s detailed affirmation setting forth the series of mistakes that resulted in the granting of plaintiff’s motion for entry of a default judgment, just after defendants had served an answer, which was about six months late

This case is another illustration of the ease that default judgments can be vacated in the First Department, as opposed to the Second Department, where the Courts take a more stern stance towards vacating default judgments.

Abandoned (3215[c])

Acupuncture Works, PC v New York City Tr., 2014 NY Slip Op 51513(U)(App. Term 1st Dept. 2014)

“Where a plaintiff fails to move for entry of a default judgment within one year of a defendant’s default in answering, dismissal of the underlying action as abandoned is required in the absence of a proper showing by plaintiff of a viable excuse for the delay and a meritorious cause of action (seeCPLR 3215[c][court “shall” dismiss claims for which default judgments are not sought within the requisite one-year period]; Giglio v NTIMP, Inc., 86 AD3d 301, 308 [2011]; Hoppenfeld v Hoppenfeld, 220 AD2d 302, 303 [1995]).”

The failure to answer, appear or move within one year will usually spell the end of a case since dismissal is mandatory.

 

Vacatur of the default granted

M&E 73-75 LLC v 57 Fusion LLC, 2014 NY Slip Op 07077 (1st Dept. 2014)

This outlines the difficulties of obtaining a default in the First Department

“The IAS court providently exercised its discretion by denying plaintiff’s motion (see e.g. Nutley v Skydive the Ranch, 65 AD3d 443, 444 [1st Dept 2009]). Defendant made the requisite showing of a reasonable excuse for failing to answer the complaint (see Whittemore v Yeo, 99 AD3d 496, 496-497 [1st Dept 2012]). The factors to be considered in determining the sufficiency of the excuse all weigh in defendant’s favor (see New Media Holdings Co. LLC v Kagalovsky, 97 AD3d 463, 465 [1st Dept 2012]). Defendant did not willfully default, as it claims that it did not receive plaintiff’s summons and complaint. Further, shortly after plaintiff served defendant, defendant filed its own action against plaintiff (index No. 154700-12), which evidenced its intent to defend plaintiff’s action (see Arrington v Bronx Jean Co., Inc., 76 AD3d 461, 463 [1st Dept 2010]). The order dismissing defendant’s action did not collaterally estop defendant from arguing that it had a reasonable excuse for defaulting in this action. Indeed, whether defendant had a reasonable excuse was neither material nor essential to that decision (see Ryan v New York Tel. Co., 62 NY2d 494, 500 [1984]). Further, defendant was not required to submit an affidavit of merit in opposition to plaintiff’s motion (Arrington, 76 AD3d at 462). Moreover, the motion court had the power to sua sponte allow defendant to interpose a late answer (see Higgins v Bellet Constr. Co., 287 AD2d 377 [1st Dept 2001])”

As a casual observer, it seems common parlance in the Second Department that an allegation of reasonable excuse based upon “non receipt of a summons and complaint” relates solely to service; the failure to controvert same will be fatal to the defaulter.  Here, the Court found this to be a reasonable excuse (upon an allegation of non-receipt) and then stated that filing its own action evinced a desire to defend on the merits.  I believe the First Department’s view makes sense, as it should be easier (rather than harder) to vacate defaults where a party made a mistake in appearing or opposing, as opposed to plainly deciding not to defend.

Default not granted and a questionable appeal

Metropolitan Prop. & Cas. Ins. Co. v Braun, 2014 NY Slip Op 06283 (1st Dept. 2014)

“The motion court providently exercised it discretion in granting defendants’ cross motion for an extension of time to interpose an answer. Under the circumstances, although defendants’ assertion of law office failure “is not particularly compelling, it constitutes good cause for the delay” (Lamar v City of New York, 68 AD3d 449, 449 [1st Dept 2009] [internal quotation marks omitted]). There is no evidence that plaintiffs have been prejudiced, and the record shows that plaintiffs had previously agreed to an extension of time for defendants to answer. Contrary to plaintiffs’ contentions, a meritorious defense was not required for defendants to be granted an extension of time to answer (see Interboro Ins. Co. v Perez, 112 AD3d 483 [1st Dept 2013]; Cirillo v Macy’s, Inc., 61 AD3d 538, 540 [1st Dept 2009]).”

I read this and I asked myself why Plaintiff did not accept the answer and just move for summary judgment?  Interboro/Perez (my contribution) and the litany of other cases shows that a less than a compelling excuse is all that is necessary to defeat a motion for leave to enter a default.  Seems like a suicide march, and for no reason.

Failure to appear may not result in dismissal with prejudice

Farrell Forwarding Co., Inc. v Alison Transp., Inc., 2014 NY Slip Op 05507 (2d Dept. 2014)

“After the plaintiff failed to appear at a court-ordered conference, the defendant moved for leave to enter a default judgment and to dismiss the complaint pursuant to 22 NYCRR 202.27(b). In opposition to the motion, the plaintiff failed to establish either a reasonable excuse for the default or a potentially meritorious cause of action. Accordingly, the motion for leave to enter a default judgment and to dismiss the complaint was properly granted (see Aydiner v Grosfillex, Inc., 111 AD3d 589).

However, the judgment should have dismissed the complaint without prejudice, since dismissal of an action for a default pursuant to 22 NYCRR 202.27 does not constitute a determination on the merits (see Franchise Acquisitions Group Corp. v Jefferson Val. Mall Ltd. Partnership, 73 AD3d 1123; Kalisch v Maple Trade Fin. Corp., 35 AD3d 291).”

This is interesting because the trial court is now without power to dismiss a case with prejudice when a plaintiff (counterclaiming defendant) fails to appear at trial.  Assuming the SOL is 6 years or you are in a fast moving upstate court with a 3 year SOL on a tort case, a dismissal for non-appearance may not be all too bad.