Give it up MVAIC

Omega Diagnostic Imaging, P.C. v MVAIC, 2011 NY Slip Op 50867(U)(App. Term 2d Dept. 2011)

“In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court denied a motion by defendant Motor Vehicle Accident Indemnification Corp. (sued herein as MVAIC), pursuant to CPLR 5015, to vacate a default judgment entered against it. MVAIC’s proffered defense lacks merit since Insurance Law § 5214 does not bar the entry of a default judgment against MVAIC in an action in which MVAIC is the named defendant and has defaulted”

If you keeping raising the SAME arguments that fail on appeal, do you really think you will eventually win?  Seriously?

This should have been affirmed with $30 in costs.

Settlement negotiations constitute a reasonable execuse under 3012(d) and 5015(a)(1) by implication

Pena-Vazquez v Beharry, 2011 NY Slip Op 02462 (1st Dept. 2011)

“In any event, the settlement discussions between plaintiffs and defendants’ insurer constitute a reasonable excuse for defendants’ delay in answering (see CPLR 3012[d]; see also Finkelstein v East 65th St. Laundromat, 215 AD2d 178 [1995]). Contrary to plaintiffs’ contention, defendants were not required to demonstrate the existence of a meritorious defense (see Verizon N.Y. Inc. v Case Constr. Co., Inc., 63 AD3d 521 [2009]).

This a really important decision, because there is case law from the Third Department that runs contra.

To share a personal story, I had a series of cases with an unnamed plaintiff firm who put an offer of 85/50 on the table.  I was in default.  Issues arose because of potential policy exhaustion issues.  I made the grave mistake of taking one month to get back to said plaintiff.  When I got back to the Plaintiff, I was told in substance that the matter is in judgment, and this plaintiff attorney would not be doing justice for my client by taking anything less than 100/100; after all, would I sacrifice my client in that regard?

Needless to say, this case is in First Department, I have a meritorious defense and now a reasonable excuse.  So 85/50 now became a deposition of your doctor and a jury trial.  Whose doing justice for their client now?  No, I will not disclose the Plaintiff, although I really should.

CPLR 312-a service was not properly effected: complaint dismissed

Gateway Med., P.C. v Progressive Ins. Co., 2011 NY Slip Op 50336(U)(App. Term 2d Dept. 2011)

“The record reveals that an acknowledgment of receipt was never signed by defendant and returned to plaintiff. “If the acknowledgment of receipt is not mailed or returned to the sender, the sender is required to effect personal service in another manner” (Dominguez v Stimpson Mfg. Corp., 207 AD2d 375 [1994]; see also Patterson v Balaquiot, 188 AD2d 275 [1992]). Plaintiffs did not effect service in another manner. Accordingly, the service was defective and defendant’s motion to dismiss the complaint should have been granted.”

I just put in an answer and write a summary judgment motion.  I do not see the utility in playing this game, especially since 312-a service, unless acknowledged, cannot lead to a clerk’s judgment.  This seems silly.

I also think 312-a allows for costs if service has to be done through traditional Article 3 or Ins. Law 1212 methods.  I wonder if those costs would include Respondent’s appellate brief?

More excusable law office failure

I usually do not post too heavily involving issues of vacatur of defaults via law office failure.  Yet, the last few no-fault cases I have seen involving this issue have me wondering whether there is a manifest double standard involving the vacatur of defaults in PIP litigation.  Here is the latest law office failure case from the First Department that was excusable.

Tsioumas v Time Out Health & Fitness, 2010 NY Slip Op 08804 (1st Dept. 2010)

“Plaintiff demonstrated an intent not to abandon the action by completing initial discovery, attempting to restore the action within nine months of its being marked off the calendar, appearing at a status conference within one year of the action being marked off, stating at the status conference a need to assemble funds for a medical consult and surgery, and appearing at the next scheduled court conference held two months thereafter. In any event, once the complaint was dismissed at the February 3, 2009 court conference, plaintiff expeditiously moved to restore the action after it had been marked off the calendar. Plaintiff’s excuse for the delay in making a formal motion to restore the action was that a paralegal in plaintiff’s counsel’s office allegedly saw the case as “active” on the court’s Web site, thereby leading counsel to believe that no formal motion to restore was needed. Such law office failure may constitute a reasonable excuse for delay in moving to restore an action so as to justify the IAS court’s favorable exercise of discretion here (see e.g. Kaufman v Bauer, 36 AD3d 481 [2007]). The court’s decision to restore the matter to the calendar was consistent with the strong judicial policy  that favors determination of actions on the merits (see Matter of Lancer Ins. Co. v Rovira, 45 AD3d 417 [2007]).

This was excusable law office failure

Goodwin v New York City Hous. Auth., 2010 NY Slip Op 08614 (1st Dept. 2010)

“Order…denied plaintiffs’ motion to vacate a prior order that had dismissed the action pursuant to 22 NYCRR 202.27(b) for their attorney’s failure to appear at a preliminary conference, unanimously reversed, on the law, without costs, the motion granted, and the complaint reinstated.”

“Law office failure may constitute a reasonable excuse for a default (see Dokmecian v ABN AMRO N. Am., 304 AD2d 445 [2003] [counsel inadvertently scheduled the wrong date for the preliminary conference]). Here, under the circumstances (including counsel’s stressful preoccupation with the health of a close family member), a one-time default at a preliminary [*2]conference that plaintiffs had requested after remand from this Court should not result in dismissal of the action (CPLR 2005; see Mediavilla v Gurman, 272 AD2d 146, 148 [2000]), especially in light of the strong public policy in this State for disposing of cases on their merits (see Hyde Park Motor Co., Inc. v Sucato, 24 AD3d 724 [2005]).

This court is all too familiar with this case, having reversed Supreme Court’s wrongful dismissal of the complaint once before for labeling a correction to the original notice of claim as a “second” notice (42 AD3d at 66). The lawsuit stemming from this eight-year-old accident has now survived two mistaken dismissals. No discovery has taken place. It is time for discovery to commence and finish expeditiously so that plaintiffs’ claims may be addressed on their merits.

The First Department seems to understand the Legislative intent behind CPLR 2005.

Is it really the public policy of this state to adjudicate cases on their merits? Ask the Appellate Term, Second Department.

Case #1:

Viviane Etienne Med. Care, P.C. v Alea N. Am. Ins. Co., 2010 NY Slip Op 52011(U)(App. Term 2d Dept. 2010)

“The administrator finally obtained the claim file on or about August 1, 2007 and only then assigned counsel, who served plaintiff with an answer on August 15, 2007. Based on the above facts, defendant failed to proffer a reasonable excuse for its default. A party in jeopardy of defaulting for nonappearance in an action may request an extension of time to file its answer upon good cause shown (see CPLR 2004). Failure to move pursuant to CPLR 2004 for an extension of time to file an answer may eviscerate the grounds for a reasonable excuse (cf. Builders Mechanic Co. v Claiborne, 277 AD2d 193 [2000]; Weiss v Kahan, 209 AD2d 611, 612 [1994]). Here, defendant was served with the summons and complaint on January 15, 2007 and its third-party claims administrator received a copy of the summons and complaint on January 26, 2007. Thereafter, both defendant and its third-party [*2]claims administrator knowingly failed to take any action with respect to this lawsuit for approximately eight months. In the interim, plaintiff applied for a default judgment in March 2007, and a default judgment was entered on September 6, 2007″

The Appellate Division, Second Department a few years ago held in a 3-1 opinion that the concept of law office failure should be extended to insurance company delay.  I guess this panel of the Appellate Term disagrees with that assertion.  What I find interesting is that the legislature created CPLR 2005 to overturn Barasch v. Micucci, 49 NY2d 594 (1980).

Astoria Wellness Med., P.C. v State Farm Mut. Auto Ins. Co., 2010 NY Slip Op 52008(U)(App. Term 2d Dept. 2010)

“Defendant’s excuse of law office failure was not reasonable under the circumstances presented. Defendant failed to adequately explain why it did not re-file its opposition papers in the correct Civil Court part after the court clerk had notified defendant of its filing error and had provided it with instructions on [*2]how to properly re-file. Accordingly, the order of the Civil Court is affirmed.”

The dissent explains what happened in further detail:

“Contrary to the majority, I find that defendant has sufficiently established an excusable default and that there was no prejudice to plaintiff in any sense of the word. Defendant had agreed with plaintiff and the Civil Court to both serve and file a copy of its opposition papers by a certain date.

Although defendant had agreed to submit its opposition by a certain date, its opposition papers were not served and filed until after the agreed-upon date, which was nevertheless still prior to the return date of the motion. There was more than ample time for plaintiff to reply to those opposing papers prior to the return date if plaintiff so chose. Plaintiff did not.

I find that defendant’s failure to submit the opposition papers by the agreed-upon date was de minimis and without any prejudice to plaintiff. It also appears that defendant mistakenly filed the court’s copy in the same calendar part as plaintiff’s motion. I do not find this ministerial error to be grievous fault, and it should not be treated so severely.”

What is interesting about this case – besides it being mine – is that every court except Brooklyn requires the cross motion to follow the main motion.  I filed a cross-motion seeking discovery based relief for the reasons seen in Justice Golia’s opinion.  This was filed in Part 41 because the main motion was filed in that part.

The clerk apparently rejected the motion based on the Brooklyn rule.  The appearing attorney brought the cross-motion/opposition into court and sought to have it treated as opposition to Plaintiff’s motion.  The court for some reason rejected it and granted Plaintiff’s motion.  The rest, as they say, is history.

It is hard to believe that this was not excusable law office failure, but better minds believe otherwise.

The proper mecanism to vacate a motion for summary judgment granted on default is through 5015(a)

Two points of law.

First, late answering papers should be accepted if there is a reasonable basis for their untimeliness.  Absent papers being served a week or less before the return date, it seems unfortunate that attorneys wish to play the “late opp we will not accept game.”  I keep a list of people who do this to me, along with a stack of proposed EBT and SJ motions.

Second, a motion to vacate an order granting an award of summary judgment on default should be addressed through a CPLR 5015(a) motion.  Be aware, however, that there is First Department precedent that suggests that the proper mechanism to address this type of default is through a motion to renew.

Friendly Physician, P.C. v GEICO Ins. Co., 2010 NY Slip Op 51772(U)(App. Term 2d Dept. 2010).

Now the highlights of this case..

“In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment. When defendant attempted to file opposing papers almost a month after their stipulated due date, the Civil Court rejected defendant’s papers and, by order dated October 15, 2007 (Robin D. Garson, J.), granted plaintiff’s motion on default. In November 2007, defendant moved to vacate the October 15, 2007 order pursuant to CPLR 5015 (a) (1). By order entered November 19, 2007 (Peter Paul Sweeney, J.), the Civil Court denied defendant’s motion without prejudice, stating that “[d]efendant is granted leave to submit a motion to reargue or renew before Judge Garson, who initially granted the judgment in dispute.” The instant appeal by defendant ensued.”

“The affirmations of the attorneys employed by the law firm representing defendant satisfied these criteria.”

“We note that, contrary to the Civil Court’s direction, relief from an order granted upon default should be sought by means of a motion pursuant to CPLR 5015, not by a motion to renew or reargue”

Party seeking to vacate a default based upon intrinsic fraud must demonstrate a reasonable excuse

A.M. Med. Servs., P.C. v Liberty Mut. Ins. Co., 2010 NY Slip Op 20416 (App. Term 2d Dept. 2010)

“Defendant argued that the default judgment had been obtained through plaintiff’s fraud, misrepresentation or misconduct since the claim forms plaintiff had annexed to its motions contained handwritten notations which were not on the original claim forms included with the complaint and provided to defendant, and the motions were supported by affidavits containing false statements”

By the way, this “intrinsic fraud” was discussed in:  PDG Psychological, P.C. v. State Farm Ins. Co., 9 Misc.3d 172 (Civ. Ct. Queens Co. 2005).

Here is the rule of law: “CPLR 5015 (a) (3) provides that a judgment may be vacated on the ground of “fraud, misrepresentation, or other misconduct of an adverse party.” When a defendant’s CPLR 5015 (a) [*2](3) motion alleges intrinsic fraud – – i.e., that the plaintiff’s allegations are false – – the defendant must also provide a reasonable excuse for its default (see Bank of NY v Stradford, 55 AD3d 765 [2008]; Bank of NY v Lagakos, 27 AD3d 678 [2006]).

In support of its motion, defendant argued that plaintiff had submitted affidavits which contained false statements and that plaintiff had annexed to its motion papers false documentation. Defendant was, thus, alleging that plaintiff had obtained the default judgment through “intrinsic fraud” (Bank of NY v Lagakos, 27 AD3d at 679). Consequently, defendant was required to show a reasonable excuse for its default (see Bank of NY v Stradford, 55 AD3d at 765-766), which defendant failed to do. The affirmation of defendant’s attorney did not show that counsel had personal knowledge of any facts pertaining to the alleged law office failure and, therefore, the affirmation was insufficient to establish an excuse for the default (see Incorporated Vil. of Hempstead v Jablonsky, 285 AD2d 553, 554 [2001]). Further, since defendant’s attorney’s “supplemental” affirmation was, in fact, a reply affirmation, the factual allegations asserted for the first time therein must be disregarded (see McNair v Lee, 24 AD3d 159 [2005]; Juseinoski v Board of Educ. of City of New York, 15 AD3d 353, 355 [2005]).”

There was a dissent that unearthed certain issues regarding what comprised the law office failure.  The attorneys named in the dissent are competent and good attorneys, having worked with both of them.   As those who practice no-fault or other types of mass collection practices know, the nature and volume of these types of practices sometimes causes things to go awry.

Defaults again

If you remember, the Appellate Term and Appellate Division has been beginning, in no-fault cases, to require the movant of a default judgment to offer proof, somewhat similar to that necessary to prevail on a summary judgment motion, in order to take a default.

Gerdes v Canales, 2010 NY Slip Op 05358 (2d Dept. 2010)

In this personal injury case, the Supreme Court allowed entry of a default based upon the Plaintiff driver rear-ending the Defendant.  For those of you who read this and are unfamiliar with certain aspects of automobile negligence litigation, the rule is simple.  An unexplained rear-end collision raises a presumption of negligence on the part of the rear-ending vehicle.  Thus, under the new rules where the proof in support of a default has to be somewhat similar to that of a summary judgment motion, the Supreme Court should not have granted leave to enter a default judgment.

The Appellate Division reversed.  But, here is where the rub is.  They reversed – not on the ground that the proof presented was insufficient, in the first instance to allow leave to enter a default judgment. Rather, they reversed on the typical 5015(a)(1) grounds.

This is troubling, but nothing surprises me anymore in the world of litigation.  I think this may be DG’s next foray into a law journal article.

Another doozy of a default decision

Balance Chiropractic, P.C. v Property & Cas. Ins. Co. of Hartford, 2010 NY Slip Op 50889(U)(App. Term 2d Dept. 2010)

“The motion was unopposed. The Civil Court denied the motion, and this appeal by plaintiff ensued.

In support of its motion, plaintiff proffered neither an affidavit nor a verified complaint by a party with personal knowledge setting forth the factual basis for the claim, as is required by CPLR 3215 (f). Rather, plaintiff submitted a complaint verified by counsel, who did not demonstrate personal knowledge of the facts, and an affidavit of the president of a third-party billing company, which affidavit did not establish that the documents annexed to plaintiff’s motion were admissible pursuant to CPLR 4518 (see Art of Healing Medicine, P.C. v Travelers [*2]Home & Mar. Ins. Co., 55 AD3d 644 [2008]; Andrew Carothers, M.D., P.C. v Geico Indem. Co., 24 Misc 3d 19 [App Term, 2d, 11th & 13th Jud Dists 2009]; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]).”

It is a motion to enter a default.  The non-answering party admits all traversable allegations.  A bill was sent, it is overdue.  Assuming that a business record foundation is necessary to establish a prima facie case, the failure to object to this “defect” renders it waived.  A default renders the defect waived.

Yet, even if a business record foundation is non-waivable, this “defect” is conceded through the failure to timely answer, appear or otherwise move.

So the court is way off on this one, similar to the decision in New South Insurance, where we (the defense bar) were told that it is easier for us to obtain a jury verdict on a contested staged accident case, then it is to obtain a default judgment in the same case.

Here is the real question, and I asked this one after New South Insurance was decided:  why the heck was this appealed?  Actually, this question is better: how come Plaintiff did not enter a clerk’s judgment, and sought to enter a default on notice?