Admiral Ins. Co.v.Marriott Intl., Inc.

Supreme Court of the State of New York, New York CountyAug 12, 2008
114048/06 (N.Y. Misc. 2008)
114048/062008 N.Y. Slip Op. 51765


Decided August 12, 2008.

Bivona Cohen, New York, NY Tele. No. (212) 363-3100, Attorneys Plaintiff Admiral.

Fabiani, Cohen Hall, NY 10022 Attorneys for Defendant, Attorneys Defendant Eagle One.

Garbarini Scher, Esqs., New York, NY Attorneys for Defendant, Marriott Int'l.

Talkin, Muccigrosso Roberts, Esqs., New York, NY Attorneys for Defendant, Faith S. Luck.

Joel Zweig, Esq. 1755 York Avenue No. 30F New York, NY 10128, Pine Equity.

In an underlying personal injury action, index no. 111744/04, Marriott employee Faith S. Luck sued for injuries she allegedly sustained in a slip and fall on the premises of 554-556 Third Avenue in Manhattan on October 29, 2003, purportedly due to water accumulation. The alleged accident occurred in a recently constructed building, where Marriott's Execustay division was a tenant and was outfitting temporary corporate apartments. The plaintiff in the underlying personal injury action sued Townhouse Management Company ("Townhouse"), the building management agent, the building owner, and other entities. On May 4, 2006, Townhouse commenced a third-party action, Index no. 590438/06, against Eagle One Roofing Contractors, Inc. ("Eagle One"), which was the roofing contractor for the building project, and Marriott Execustay. Townhouse sought contractual indemnification from Eagle One and Marriott Execustay, premised on the terms of a subcontract between 554-556 Third Avenue, LLC, the building owner, and Eagle One, and the terms of a lease between 554-556 Third Avenue, LLC and Execustay Corporation, Marriott Execustay's predecessor-in-interest. While the personal injury action was ongoing, the court granted the third-party defendants' motion to sever the third-party action on September 27, 2006.

On September 29, 2006, Admiral Insurance Company ("Admiral"), Townhouse's insurer, which had furnished Townhouse with a defense in the underlying action, instituted this action for a declaratory judgment against Marriott International, Execustay Corporation, and Marriott Execustay (collectively, at times, "Marriott"), Eagle One, and their unnamed insurers. Plaintiff also sued Pine Equity International, Pine Equity NY, and Faith S. Luck, all as nominal defendants. Townhouse and Admiral seek a declaration that Townhouse is entitled to reimbursement of all defense costs and settlement monies paid in connection with the underlying action from Eagle One, Marriott, and/or their insurers.

On October 16, 2006, the underlying action settled. Admiral, as Townhouse's insurer, paid the settlement. Subsequently, Townhouse moved for leave to discontinue the third-party action, arguing that Admiral was now the real party in interest. Therefore, Townhouse argued, all issues regarding contractual indemnification and outstanding discovery could be resolved in this declaratory judgment action. The Court, Justice Debra A. James, granted this motion on April 16, 2007.

Now, Townhouse and Admiral (collectively "Plaintiff") move for a default judgment against Marriott International, Inc., Execustay Corporation, Marriott Execustay, and Eagle One. Plaintiff contends to have effected service of the summons and complaint on Marriott International and Execustay Corporation by delivery to the New York Secretary of State pursuant to Business Corporations Law § 306 on October 6, 2006. Plaintiff contends that it served Marriott Execustay by delivery to the Secretary of State pursuant to BCL § 307. As to Eagle One, Plaintiff claims that it effected personal service by delivering copies of the summons and complaint to Eagle One's principal place of business located in Astoria, New York on October 4, 2006. Plaintiff filed affidavits of service with respect to all of these defendants. Plaintiff contends that because these defendants have failed to interpose answers, they are all in default. The Marriott defendants and Eagle One have separately opposed this motion. For the reasons stated, the court denies Plaintiff's motion as it applies to the Marriott defendants and conditionally grants Plaintiff's motion as it applies to Eagle One.

The court first considers Plaintiff's motion as it applies to the Marriott defendants.

In opposition to this motion, Marriott argues that service was improper as to Marriott International, Execustay Corporation, and Marriott Execustay. First, Marriott attacks Plaintiffs' motion as it pertains to Marriott International and Execustay Corporation. Marriott argues, inter alia, that Plaintiff's motion, based on service pursuant to BCL § 306, is defective as to these defendants because it is not properly supported under CPLR § 3215(g)(4)(i), which provides:

When a default judgment based upon non-appearance is sought against a domestic or authorized foreign corporation which has been served pursuant to paragraph (b) of [BCL § 306], an affidavit shall be submitted that an additional service of the summons by first class mail has been made upon the defendant corporation at its last known address at least twenty days before entry of judgment.

Marriott points out that Plaintiff has not submitted affidavits showing service of the summons by first class mail on Marriott International and Execustay Corporation, and argues that this deficiency is fatal to Plaintiff's motion. Plaintiff's reply papers argue that its lack of compliance with CPLR § 3215(g)(4) should not impose a bar to granting its motion because Marriott has not shown a meritorious defense or excusable default.

Plaintiff correctly argues that even total noncompliance with CPLR § 3215(g)(4)(i) need not be fatal to its motion in the absence of a meritorious defense or other objection. See Crespo v. A.D.A. Mgmt., 292 AD2d 5, 10, 739 NYS2d 49, 53(1st Dept. 2002). However, Crespo is distinguishable. In that case, the only defect in the motion for default as it pertained to CPLR § 3215(g)(4) was that the plaintiffs did not attach the affidavits of service to the motion for default. The Crespo plaintiffs did make an additional service of the summons by mail accompanied by notice of the earlier service, and thus substantively complied with CPLR § 3215(g)(4). Id. In the present matter, by contrast, Plaintiff has not shown or even alleged that it complied with this requirement. This is a critical distinction because it pertains to whether the Marriott defendants received adequate notice of this action. Furthermore, the court also points to the strong policy in favor of deciding cases on the merits. See Matter of Lancer Ins. Co. v. Rovira , 45 AD3d 417 , 418, 846 NYS2d 114, 115 (1st Dept. 2007). Accordingly, the court denies Plaintiff's motion as it pertains to Marriott International and Execustay Corporation. See Schilling v. Maren Enterprises, Inc., 302 AD2d 375, 375, 754 NYS2d 564, 564 (2nd Dept. 2003).

Next, Plaintiff contends that it is entitled to a default judgment against Marriott Execustay. Plaintiff contends it served Marriott Execustay on October 19, 2006 pursuant to BCL § 307, which provides that jurisdiction may be obtained over an unauthorized foreign corporation by service on the Secretary of State. Plaintiff's motion papers include affidavits of service showing delivery of the summons and complaint to the Secretary of State and by certified mail, addressed to Marriott Execustay in Bethesda, Maryland. Marriott contends that Marriott Execustay is not a legal entity, but rather a trademark registered and owned by Marriott International, Inc. In response to this assertion, Plaintiff contends that service was accepted by an agent of the Secretary of State, "based on the information maintained by the Division of Corporations at the time, which was verified by an employee of the Division of Corporations during a telephone conversation on October 10, 2007." Reply Aff. of Joseph Boury, ¶ 8. Aside from this statement, which is not based on personal knowledge, and the Affidavit of Service, which merely shows that documents were left with the Secretary of State, Plaintiff has presented no evidence that Marriott Execustay was or is a legal entity doing business in New York. Plaintiff has not identified any documentation demonstrating Marriott Execustay's legal status. Therefore, the Court denies Plaintiff's motion as it applies to Marriott Execustay, as the Court is not satisfied that Marriott Execustay is a properly named defendant.

The Court now considers Plaintiff's motion as it seeks to obtain a default against Eagle One. Plaintiff has submitted an affidavit of service showing that it personally served Eagle One at its principal place of business in Astoria, New York on October 4, 2006. Plaintiff states that service was made on a Betty Koukis upon her representation that she was authorized to accept service on behalf of Eagle One. Eagle One has not answered the complaint. Unlike Marriott, Eagle One does not contest the procedural sufficiency of service, but rather argues that Plaintiff has not properly supported its motion. First, Eagle One argues that the affidavit of John Bergen, an Admiral insurance claims handler, is insufficient to properly support the merits of Plaintiff's claims for purposes of this motion. Under CPLR § 3215(f), "[o]n any application for judgment by default, the applicant shall file . . . proof by affidavit made by the party of the facts constituting the claim, the default, and the amount due." Ordinarily, this requires an affidavit or verified complaint by a person with "firsthand confirmation of the facts." See Zelnik v. Bidermann Indus. U.S.A., Inc. 242 AD2d 227, 233, 662 NYS2d 19, 23(1st Dept. 1997).

Eagle One contends that Mr. Bergen's affidavit was made without personal knowledge of Eagle's alleged negligence concerning its installation of the roof at the premises, which purportedly contributed to Ms. Luck's accident. Moreover, Eagle One argues that Mr. Bergan, as an employee of Admiral, had no personal knowledge of the contract between Eagle and Townhouse and any provisions for indemnification. In response to this contention, Plaintiff has submitted an affidavit with its reply papers from Carolyn Wesstein, a signatory of the subcontract. Because Ms. Wesstein's affidavit attests to her personal knowledge of the subcontract, it cures any deficiency in Plaintiff's motion as it applies to Plaintiff's arguments based on the content of the subcontract. Eagle One's contention that Mr. Bergen does not have personal knowledge of Eagle One's alleged negligence is also unavailing, because Plaintiff's claims do not rest upon Eagle One's negligence, but upon contractual indemnification provisions.

Next, Eagle One contends that Plaintiff's motion is improper because, it argues, the third party action has yet to be discontinued, and thus two actions are pending for the same relief in violation of CPLR § 3211(a)(4). Eagle One points out that it has not executed a stipulation of discontinuance in the third party action. As stated, on April 16, 2007, the Court granted Townhouse's motion for leave to discontinue the third-party action. The decision stated:

[O]n September 27, 2006, Admiral Insurance Company commenced a declaratory judgment action against both third party defendants in this action and their insurer. Since the same discovery is involved in both actions and neither is complete, and as a disposition of the declaratory judgment action will resolve the indemnification questions raised in the action at bar, the court must grant plaintiff's cross-motion [for leave to discontinue] for reasons of judicial economy. Third party defendants have demonstrated absolutely no prejudice in this regard. CPLR 3217(b).

Because the court ordered dismissal pursuant to CPLR § 3217(b), a stipulation of discontinuance is unnecessary, and Eagle's argument that the third-party action has not been discontinued is entirely without merit. The April 16, 2007 order of Justice James displayed a clear intent that all issues raised in the third-party action should be resolved in this action. If Eagle One has remaining concerns about the status of the third-party action and duplicative litigation, it should execute the aforementioned stipulation of discontinuance.

Based on the above, Eagle One is unable to show that Plaintiff's motion is defective. Because Eagle One has failed to interpose an answer, it is in default. The court now considers Eagle One's arguments seeking relief from its default. A party seeking to vacate a default must show a reasonable excuse for default and a meritorious case. Dellagatta v. McGillicuddy , 31 AD3d 549 , 549, 819 NYS2d 69, 71 (2nd Dept. 2006). Here, Eagle One has offered that it did not receive an affidavit of service from Plaintiff until shortly before this motion was filed, but Eagle One never denies that it was served with process in October, 2007. Eagle One also suggests that its failure to obtain an extension of time to file an answer by stipulation "may have been a result of law office failure." Sakow Aff. ¶ 32. However, this vague suggestion fails to establish a viable excuse for law office failure, as it is not supported by a detailed and credible explanation of the failure at issue. See Lugauer v. Forest City Ratner Co. , 44 AD3d 829, 830, 843 NYS2d 456, 456 (2nd Dept. 2007). Therefore, Eagle One has not shown an excusable default.

In addition, the court may not grant relief from a default in the absence of an affidavit of merit made with personal knowledge of the facts, which is necessary to show a meritorious defense. See Delagatta, 31 AD3d. at 549, 819 NYS2d at 71. Here, Eagle One has submitted an attorney's affirmation purportedly setting forth its meritorious defense. However, an attorney's affirmation is insufficient to establish a meritorious defense, as the attorney has no personal knowledge of the facts. Pampalone v. Giant Bldg. Maint., Inc. , 17 AD3d 556, 557, 793 NYS2d 462, 464 (2nd Dept. 2005). Therefore, Eagle One has not shown a meritorious defense.

Because Eagle One has failed to demonstrate any deficiencies with Townhouse's motion, and has not established a viable excuse for its default or a meritorious defense, the court must grant Plaintiff's motion for a default judgment against Eagle One. However, in light of the policy in favor of resolving disputes on the merits, see Matter of Lancer , 45 AD3d 417 at 418, 846 NYS2d 114 at 115, the court stays entry of judgment for 60 days from the date of entry of this order, granting leave to Eagle One to file a properly supported motion to vacate its default. However, unless Eagle One makes a motion within this 60-day period, the clerk shall enter judgment in favor of Plaintiff and against Eagle One.

Based on the above, therefore, it is

ORDERED that Plaintiff's motion for a default judgment against Marriott International, Inc., Execustay Corporation, and Marriott Execustay is denied, and it is further

ORDERED that Plaintiff's motion for a default judgment against Eagle One Roofing Contractors, Inc. is granted, and it is further

ORDERED that entry of judgment against Eagle One is stayed for 60 days from the date of entry of this order.