400 West 148th St. Hous. v. Argyle Dev. LLC, INDEX NO. 108624/10

• Decision Date: 27 December 2010
• Docket Number: MOTION SEQ. NO. 002,INDEX NO. 108624/10
• Citation: 2010 NY Slip Op 33713
• Parties: 400 WEST 148th STREET HOUSING DEVELOPMENT FUND CORPORATION Plaintiff, v. ARGYLE DEVELOPMENT, LLC, MARSTAN DEVELOPMENT CORPORATION AND BIERZO CONSTRUCTION CORPORATION, Defendants.
• Court: New York Supreme Court

2010 NY Slip Op 33713

400 WEST 148th STREET HOUSINGDEVELOPMENT FUND CORPORATION Plaintiff,

v. ARGYLE DEVELOPMENT, LLC, MARSTANDEVELOPMENT CORPORATION AND BIERZOCONSTRUCTION CORPORATION, Defendants.

INDEX NO. 108624/10

MOTION SEQ. NO. 002

SUPREME COURT OF THE STATE OF NEW YORK OF NEW YORK COUNTY

Posted: February 1, 2011

Dated: December 27, 2010

PRESENT: HON. PAULWOOTEN

Justice

MOTION DATE ____________________

MOTION CAL. NO. ________________

The following papers, numbered 1 to 2 were read on this motion by Order to Show Cause by defendant Argyle Development, LLC. to vacate a default Judgment.

PAPERS NUMBERED

Notice of Motion/ Order to Show Cause — Affidavits — Exhibits... 1

Answering Affidavits — Exhibits (Memo)_______________________2

Replying Affidavits (Reply Memo)______________________________________

Cross-Motion: □ Yes ■ No

This is an action for a declaratory judgment, permanent injunction and damages for alleged negligent excavation brought by plaintiff 400 West 148yth Street Housing Development Fund Corporation. Pursuant to CPLR § 5015 and CPLR § 2005, defendant Argyle Development, LLC ("Argyle") moves by Order to Show Cause to vacate the default judgment entered against it by an Order dated August 11, 2010.

Background

Argyle and Marstan Development Corp ("Marstan") were involved in a construction project which began in January 2008 to develop a building located at 753 St. Nicholas Avenue, New York, NY ("Construction Site").¹ On April 8, 2008, the owner of the premises immediately next door to the Construction Site brought an action for damages against Argyle and Marstan for negligent excavation and construction, under the Index #: 104973/08 ("2008 Action"). In the 2008 Action, both Argyle and Marstan were represented by counsel retained by Argyle's insurer, Mutual Marine Office Inc. ("MMO"). Marstan and Argyle continued to be represented by counsel retained by MMO until May 6, 2008, when Marstan's insurance carrier, Northland Insurance Co. ("Northland"), accepted the insurance tenders by MMO to provide a defense for Argyle and Marstan. From that point forward, Argyle and Marstan were represented by counsel retained by Northland.

In October 2008, 400 W. 148th St. Housing Development Fund Corporation ("plaintiff"), the owner of the building immediately next door, on the other side of the Construction Site, informally reported to Argyle that its building was damaged as a result of the excavation work performed at the Construction Site. Argyle reported plaintiff's claim to Northland for handling, since it arose out of the same excavation and construction work as the 2008 Action. Northland subsequently settled the 2008 Case, and made partial payment toward remediation of plaintiff's building. Thereafter Northland ceased tendering checks to plaintiff, without the knowledge of Argyle (Argyle exhibit B).

Subsequently, plaintiff moved by an Order to Show Cause ("plaintiff's OSC"), dated July 8, 2010, seeking judicial relief directing the defendants named herein to remediate all damages caused to its building as the result of Argyle's alleged negligent excavation. Argyle received plaintiff's OSC on July 9, 2010 and forwarded it by email that same day to MMO, who in turn directed Argyle to forward same to Northland. Although Northland disclaimed coverage todefend Argyle regarding plaintiffs OSC, MMO reiterated its position that Northland had a duty to provide counsel or oppose plaintiff's application. On August 11, 2010, the return date of plaintiff's OSC, plaintiff was granted a default judgment against Argyle for failure to appear or respond. Argyle received a copy of the default judgment on August 15, 2010, and now moves by Order to Show Cause dated August 20, 2010, to vacate said default.

In support of its motion Argyle submits, inter alia, a copy of this Court's order dated August 11, 2010 which granted a default judgment against Argyle; plaintiff's OSC, Affirmation in Support, and Exhibits thereto; an affidavit of Ryan Alexander ("Alexander"), a founder and managing member of Argyle; email correspondence between Alexander, MMO, and Northland regarding insurance coverage for the defense of Argyle in plaintiffs OSC; an affidavit of David B. Peraza, P.E. ("Peraza"), a structural engineer hired by Argyle to report and assess of the damages caused to plaintiffs building as a result of Argyle's excavation; an affidavit of Charles Lu, loss adjuster employed by MMO; email correspondence between Northland and Alexander regarding Northland's authorization and coverage of the remediation of plaintiff's building; and a copy of Summons with Notice for the herein action. Plaintiff submits an affirmation in opposition.

In support of its motion, Argyle argues that it promptly forwarded copies of plaintiff's OSC to MMO and Northland, and that the default judgment was a result of Northland's failure to timely procure counsel. Additionally, Argyle claims that it has a meritorious defense, as evidenced by the Peraza affidavit. The findings in Peraza's affidavit and report conflict with the report and assessment performed by plaintiff's independent engineer, Dr. Magued Iskander, P.E., regarding the extent of damages to plaintiffs building as a result of Argyle's excavation (Argyle exhibits A, G).

In opposition, plaintiff contends that Argyle lacks a reasonable excuse for vacating the default judgment because Northland disclaimed coverage a day before the return date ofplaintiff's OSC, yet Argyle failed to come to court requesting an extension of time. In addition, plaintiff contends that it is prejudiced by Argyle's delay in vacating the default judgment and that Argyle lacks a meritorious defense.

Standard

Under CPLR § 5015(a)(1) "a party seeking to vacate a judgment on the basis of excusable default must demonstrate both a reasonable excuse and a meritorious defense" (see Benson Park Assoc., LLC. v Herman, 73 A.D.3d 464, 465 [1st Dept 2010]; see also Eugene Di Lorenzo, Inc. v. A. C. Dutton Lumber Co., 67 NY2d 138, 141 [1986]; Goldman v Cotter, 781 NYS2d 28 [1st Dept 2004]). The determination of the sufficiency of the offered excuse rests within the sound discretion of the court (see Goldman v Cotter, 10 A.D.3d 289, 291 [1st Dept 2004]). An insurance carrier's failure to assign counsel for a defendant may constitute a reasonable excuse for vacating a default judgment (see Rodriguez v Dixie N. Y. C, Inc., 26 A.D.3d 199 [1st Dept 2006]). Where a defendant's excuse for delay is not strictly law office failure (see CPLR § 2005), rather it's insurance company failed to assign counsel despite timely receipt of plaintiff's complaint, the Court will analyze it in a similar manner (see Barajas v Toll Bros., Inc., 247 A.D.2d 242 [1st Dept 1998]).

Furthermore, where a defendant's default was not intentional and the delay in moving to vacate the default was not inordinate (cf Chochla v Oak Beach Inn Corp., 115 A, D.2d 584 [2nd Dept 1985] [defendants had an unexplained four and one-half month delay in answering]), nor was the plaintiff prejudiced by such delay, vacating the default judgment may be proper (see Kennedy v Cassmon Realty Co., 139 A.D.2d 629 [2nd Dept 1988]).

Discussion

There was a legitimate dispute as to insurance coverage regarding Argyle's defense in plaintiffs OSC. Argyle...