Baptist Health Nursing & Rehab. Ctr., Inc. v. Baxter

• Decision Date: 09 June 2016
• Citation: 33 N.Y.S.3d 567,140 A.D.3d 1386,2016 N.Y. Slip Op. 04497
• Parties: BAPTIST HEALTH NURSING AND REHABILITATION CENTER, INC., Appellant, v. Ruth BAXTER, Respondent.
• Court: New York Supreme Court — Appellate Division

140 A.D.3d 1386

33 N.Y.S.3d 567

2016 N.Y. Slip Op. 04497

BAPTIST HEALTH NURSING AND REHABILITATION CENTER, INC., Appellant,

v.Ruth BAXTER, Respondent.

Supreme Court, Appellate Division, Third Department, New York.

June 9, 2016.

Bond Schoeneck & King PLLC, Albany (Christopher J. Stevens of counsel), for appellant.

The Baynes Law Firm, PLLC, Ravena (Brendan F. Baynes of counsel), for respondent.

Before: McCARTHY, J.P., EGAN JR., ROSE, LYNCH and AARONS, JJ.

AARONS, J.

Appeal from an order of the Supreme Court (Buchanan, J.), entered August 20, 2015 in Schenectady County, which, among other things, granted defendant's motion to vacate a default judgment entered against her.

Plaintiff, a nursing-residential facility, commenced this action in October 2014, alleging that defendant made material misrepresentations on the admission application for Ruth Pitts, defendant's mother, and that defendant failed to pay plaintiff for services rendered. After defendant failed to answer the complaint or otherwise appear, plaintiff moved for a default judgment, which motion Supreme Court granted in a May 2015 order. Defendant immediately moved to vacate the default judgment. Supreme Court granted defendant's motion and plaintiff appeals. We affirm.

A defendant seeking to vacate a default judgment must demonstrate a reasonable excuse for the default and a potentially meritorious defense (see CPLR 5015[a][1] ; Dodge v. Commander, 18 A.D.3d 943, 945, 794 N.Y.S.2d 482 [2005] ). Whether to grant or deny a motion to vacate lies within the discretion of the trial court (see Cotter v. Dukharan, 110 A.D.3d 1331, 1332, 973 N.Y.S.2d 494 [2013] ; Stow Mfg. Co. v. F & K Supply, 232 A.D.2d 958, 959, 649 N.Y.S.2d 90 [1996] ), and such determination will not be disturbed absent an abuse or improvident exercise of discretion (see Abel v. Estate of Collins, 73 A.D.3d 1423, 1424, 901 N.Y.S.2d 749 [2010] ; Lucas v. United Helpers Cedars Nursing Home, 239 A.D.2d 853, 853, 657 N.Y.S.2d 519 [1997] ). Plaintiff limits its appeal to the issue of whether defendant established a meritorious defense.

A review of the entire record here reveals that defendant has raised a defense of arguable merit to the fraud claim. In plaintiff's preadmission form, defendant listed Pitts' assets and finances and represented, to the best of her knowledge, that no assets had been transferred from Pitts' account in the past five years.¹ While both a determination by the Schenectady County Department of Social Services denying Pitts' application for Medicaid coverage, as well as the administrative law judge's decision upon a fair hearing upholding this determination, indicate that sums of moneys were transferred from Pitts' account between January 2007 and January 2008 in contravention of defendant's representation on the preadmission form, the record also indicates that some of those transfers may have been permissible as fair market payments for services rendered to Pitts (see Matter of Kerner v. Monroe County Dept. of Human Servs., 75 A.D.3d 1085, 1086, 904 N.Y.S.2d 616 [2010] ; cf. Fieldson Lodge Care Ctr. v. Andrews, 79 A.D.3d 552, 552, 912 N.Y.S.2d 405 [2010] ). To the extent that plaintiff disputes the validity of those transfers, such dispute goes to the overall merits of the action. At this juncture, it is unnecessary for defendant to establish that she is entirely absolved from liability. Rather, as relevant here, defendant's burden on a motion to vacate a default judgment is to show a potentially meritorious defense, which we conclude defendant has accomplished (see Dodge v. Commander, 18 A.D.3d at 946, 794 N.Y.S.2d 482 ; Bergen v. 791 Park Ave. Corp., 162 A.D.2d 330, 330, 570 N.Y.S.2d 940 [1990] ).

We reach the same conclusion with respect to the proposed defense to plaintiff's breach of contract cause of action. Personal liability may attach to defendant for breach of contract, if it is shown that defendant, who had access to Pitts' funds, failed to use such funds to pay plaintiff for services rendered to Pitts, a requirement imposed by both the private pay agreement and the net available monthly income agreement (see Presbyterian Home for Cent. NY, Inc. v. Thompson, 136 A.D.3d 1421, 1422–1423, 25 N.Y.S.3d 513 [2016] ; Troy Nursing & Rehabilitation Ctr., LLC v. Naylor, 94 A.D.3d 1353, 1355–1356, 944 N.Y.S.2d 323 [2012], lv....