Key Takeaway
New York court grants vacatur of default judgment in no-fault insurance case where claim was barred by res judicata, demonstrating interests of justice standard.
Understanding “Interest of Justice” Vacatur in New York Courts
Default judgments can be vacated in New York courts under various circumstances, including when substantial justice requires it. The case of New Age Acupuncture, P.C. v Global Liberty Ins. Co. demonstrates how courts may set aside defaults even when traditional excuses aren’t met, particularly when the underlying claim lacks merit due to legal bars like res judicata.
In no-fault insurance litigation, healthcare providers sometimes pursue claims that have already been resolved or dismissed in prior proceedings. When defendants fail to appear and default judgments are entered, courts retain discretion to vacate these defaults if doing so serves substantial justice. This principle, established in cases like Woodson v Mendon Leasing Corp., provides flexibility in situations where technical defaults would lead to unjust results.
The Appellate Term’s decision in this case illustrates the careful balance courts must strike between enforcing procedural requirements and preventing fundamentally unfair outcomes.
Jason Tenenbaum’s Analysis:
New Age Acupuncture, P.C. v Global Liberty Ins. Co.. 2020 NY Slip Op 51225(U)(App. Term 2d Dept. 2020)
“In our view, the Civil Court improvidently exercised its discretion in denying defendant’s motion when this action is barred by the August 1, 2016 order and judgment of the Supreme Court (cf. e.g. Vital Meridian Acupuncture, P.C. v Republic W. Ins. Co., 46 Misc 3d 147, 2015 NY Slip Op 50222 ). Under the circumstances, defendant’s motion should have been granted “for sufficient reason and in the interests of substantial justice” (Woodson v Mendon Leasing Corp., 100 NY2d 62, 68 ).
In this one, the defendant missed the calendar call, yet the claim was barred by res judicata. The court appropriately vacated the default and dismissed the matter on motion.
Key Takeaway
Courts may vacate default judgments in the “interests of substantial justice” even when defendants cannot establish traditional grounds like reasonable excuse. When an underlying claim is legally barred—such as by res judicata—allowing a default judgment to stand would be fundamentally unfair, regardless of the defendant’s failure to appear at calendar call.
