Key Takeaway
First Department reverses vacatur of default judgment due to insurer's inadequate excuse for two-year delay and lack of personal knowledge of office procedures.
Default Judgment Reversal: When Excuses Fall Short
Default judgments in New York insurance litigation often hinge on whether defendants can provide reasonable excuses for their failure to respond to complaints. The case of ALFA Med. Supplies, Inc. v Allstate Ins. Co. demonstrates how courts scrutinize both the timeliness of responses and the adequacy of explanations offered by insurance companies.
This First Department decision is particularly noteworthy because reversals of default judgment vacaturs on reasonable excuse grounds are uncommon. The case highlights critical issues that frequently arise in default judgment proceedings involving insurance companies, particularly regarding proper office procedures and the quality of supporting affidavits.
Jason Tenenbaum’s Analysis:
ALFA Med. Supplies, Inc. v Allstate Ins. Co., 2016 NY Slip Op 50942(U)(App. Term 1st Dept. 2016)
(1) “Defendant-insurer failed to offer a reasonable excuse to adequately explain its two-year delay in answering the complaint in this action”
(2)“The affidavit of defendant’s claim representative, who was employed in defendant’s office in Hauppauge, New York, averred that there was no record of the summons and complaint in defendant’s computer system. However, the affiant failed to demonstrate personal knowledge of the office procedures put in place by defendant in connection with the handling of a summons and complaint received at defendant’s office in Lake Success, New York”
It is an infrequent occurrence to see the First Department reverse a vacatur of a default judgment on reasonable excuse grounds. I cannot help, notwithstanding the Philadelphia Insurance Co. case, that the two year delay in seeking to open the default proved fatal. CPLR 5015(a)(1) – the period is limited to one year following service with notice of entry of the order. However, the court has inherent discretion to disregard the one year period contained in the statute.
Key Takeaway
Insurance companies seeking to vacate default judgments must provide both reasonable excuses for delays and supporting affidavits from individuals with personal knowledge of relevant office procedures. A two-year delay in responding combined with inadequate procedural explanations can prove fatal to vacatur attempts, even when courts have discretionary power to overlook statutory time limits.
