Opinion
15712/06.
Decided June 23, 2008.
The plaintiff is represented by the law firm of Mirman, Markovits Landau, P.C. by Thomas P. Markovits, Esq., of counsel.
The defendant is represented by the law firm of Russo, Keane Toner, LLP., of counsel by Fern Flomenhaft Esq., of counsel.
In this personal injury action arising from plaintiff Eduardo Berrios's fall on property allegedly owned by defendant David Wiess, Inc. ("Wiess"), the defendant requests that the Court issue an Order pursuant to CPLR § 5015(a)(1) and § 3215(g)(4)(i), vacating the entry of a default judgment of $50,000.000 on December 20, 2007. In addition, the defendant requests an extension of time to answer the complaint pursuant to CPLR § 2004,§ 2005, and § 3012(d).
The instant case arises from an alleged slip and fall on private property at 621 Metropolitan Avenue, Brooklyn, New York on January 17, 2006, the ownership of which is in dispute. Jacob Rubin ("Rubin") is the principal of both Wiess and NIC Gold, Inc. ("Gold"). Defendant Wiess claims that it conveyed ownership of the property to Gold on October 24, 2002, though the new deed was not officially recorded until July 19, 2006. When Wiess's insurance policy with the Brownstone Agency ("Brownstone") expired in June 2004, Rubin transferred the name of the insured to Gold, the alleged new owner of 621 Metropolitan Avenue.
Thereafter, relying on public records, the plaintiff filed a summons and complaint and served Wiess with copies (1) via the New York Secretary of State pursuant to BCL § 306 on June 1, 2006 and (2) via personal service, which Rubin received on June 13, 2006 and subsequently forwarded, via his broker, to Brownstone. While plaintiff's motion for default judgment initially appeared on the court calendar on October 11, 2006, Brownstone had Russo, Keane, Toner, counsel not yet retained by the defendant, extend the defendant's time to respond until November 2, 2006 so that Brownstone might have time to verify Wiess's coverage. On October 20, 2006, Brownstone returned the summons and complaint to Rubin's broker, indicating Wiess's coverage had expired in June 2004. On November 3, 2006, the court granted plaintiff's motion for default judgment.
Further complicating matters, on November 16, 2006, Brownstone mistakenly sent to Rubin a standard form acknowledging receipt and assignment of the claim, noting it as a claim against Gold, which was covered under the policy. Not until Saturday, November 18, 2006, did plaintiff mail the defendant notice of the November 3, 2006 order for default judgment. Thus, allegedly under the mistaken impression that Brownstone was handling the complaint as per its confirmation letter of November 16, 2006 defendant Wiess did not follow up or supply an answer. On May 17, 2007, judgment was granted for the plaintiff in the sum of $50,000.00 and was entered on December 20, 2007. The plaintiff served a notice of entry on defendant Wiess on January 23, 2008. Wiess subsequently submitted a motion to vacate the judgment on March 12, 2008.
As the plaintiff served the defendant corporation via service on the Secretary of State under BCL § 306, the plaintiff must mail an extra copy of the summons and complaint to the defendant corporation at least twenty (20) days before entry of judgment and submit an affidavit attesting to this additional service. (CPLR § 3215(g)(4)(i)). As no proof of such an affidavit is apparent, service pursuant to CPLR § 3215(g)(4)(i) was insufficient. ( Schilling v. Maren Enterprises, Inc., 302 AD2d 375 [2nd Dept 2003]). However, defendant was personally served on June 13, 2006 by service upon Rubin an officer and shareholder of Weiss. Thus, to vacate the default judgment pursuant to CPLR § 3015(a)(1), the defendant must move "within one year after [the judgment's] entry." As the judgment was entered on December 20, 2007, defendant Wiess's motion to vacate on March 12, 2008 was timely.
The court may vacate a default judgment pursuant to CPLR § 5015(a)(1) if a defendant demonstrates a reasonable excuse and a meritorious defense. ( Curran v. Graf , 13 AD3d 409 [2nd Dept 2004]). If "an insured defendant acts promptly to protect itself, the insurer's failure to interpose an answer during a period when it also fails to disclaim coverage should not preclude an innocent insured from vacating an obviously unintentional default." ( Fire Island Pines, Inc. v. Colonial Dormer Corp., 109 AD2d 815, 816 [2nd Dept 1985]; also see, Seccombe v. Serafina Restaurant Corp., 2 AD3d 516 [2nd Dept 2003]). Ultimately, what constitutes a reasonable excuse is "within the sound discretion of the court." ( Grutman v. Southgate at Bar Home Owners' Ass'n., 207 AD2d 526, 527 [2nd Dept 1994]). Here, the defendant claims that it acted promptly in turning over the summons and complaint to Brownstone and reasonably relied upon Brownstone's confirmation letter of November 16, 2006, resulting in the default via Brownstone's failure to answer. While Brownstone initially disclaimed coverage for Wiess, it subsequently confirmed, 27 days later via the November 16, 2006 letter, that the claim was being processed as a claim against Gold, presumably having been converted to the appropriate name under the policy. As Rubin promptly forwarded the summons and complaint through appropriate channels and Brownstone failed to disclaim coverage for Gold or file an answer, Rubin's assumption that Brownstone was handling the matter was not unreasonable. ( Fire Island Pines, Inc. v. Colonial Dormer Corp., 109 AD2d 815 [2nd Dept 1985]). That Rubin received no notice of the default judgment order prior to Brownstone's November 16, 2006 confirmation letter lends further credence to the defendant's excuse. Admittedly, the instant case is distinguished from the facts of Fire Island Pines, Inc. v. Colonial Dormer Corp., 109 AD2d 815 [2nd Dept 1985], in that defendant Wiess appears not to have followed up with its insurance carrier after receiving additional documents from the plaintiff, such as the notice of the order for default judgment mailed on November 18, 2006. However, defendant's disregard of motion papers and correspondence is not dispositive, but a factor in assessing the reasonableness of the excuse. ( Rios v. Wilcox Construction Corp., 90 AD2d 826 [2nd Dept 1982]). Certainly, following up with Brownstone after defendant's receipt of the November 18th notice would have proven prudent. However, given the totality of the circumstances (that notice was sent on a Saturday just within the requisite fifteen (15) day window and three (3) days after the defendant had received confirmation that Brownstone was handling the claim), ( Fire Island Pines, Inc. v. Colonial Dormer Corp., 109 AD2d 815[2nd Dept 1985]), and the public policy favoring the resolution of cases on their merits, ( Swidler v. World-Wide Volkswagen Corp., 85 AD2d 239, 242 [2nd Dept 1982]), Anolick v. Travelers Insurance Co., 63 AD2d 665 [2nd Dept 1978]) the alleged failure to follow up should not constitute willful or unreasonable default. Indeed, courts have found insurance company failure to be similar to law office failure, thus allowing the court broad discretion to excuse a resulting default. ( McFarland Builders v. Raymond Kelly 107 AD2d 972 [3rd Dept. 1985]).
The defendant's contention that the stairway was not defective is a facially adequate meritorious defense ( Teichman v. Gendelman, 87 AD2d 745 [ 1st Dept 1982]), and the defendant's claim that it did not own the property in question supplies an additional potentially meritorious basis for a defense. ( Greene v. Mullen , 39 AD3d 469 , [2nd Dept 2007]). The plaintiff's counter arguments (that the stairs were not defective and that Wiess was the proper owner) merely contradict the defendant's verified answer and, thus, are insufficient to indicate a lack of a meritorious defense.
Finally, the plaintiff did not allege any prejudice as a result of the default. Accordingly, defendant's motion to vacate the default judgment is granted and the Clerk of the Court is directed to vacate the judgment dated December 20, 2007. Pursuant to CPLR § 3012(d), defendant Wiess shall serve it's answer within ten (10) days of receipt of this order with notice of entry.
The foregoing constitutes the decision and order of the Court.