Bond v. Giebel

• Decision Date: 13 December 2012
• Citation: 2012 N.Y. Slip Op. 08619,956 N.Y.S.2d 267,101 A.D.3d 1340
• Parties: Randy BOND, Respondent, v. Daniel GIEBEL et al., Defendants. Progressive Insurance Company, Proposed Intervenor–Appellant. (Action No. 1.) Randy Bond, Respondent, v. Progressive Insurance Company, Appellant, et al., Defendant. (Action No. 2.)
• Court: New York Supreme Court — Appellate Division

101 A.D.3d 1340
956 N.Y.S.2d 267
2012 N.Y. Slip Op. 08619

Randy BOND, Respondent,
v.
Daniel GIEBEL et al., Defendants.
Progressive Insurance Company, Proposed Intervenor–Appellant. (Action No. 1.)
Randy Bond, Respondent,
v.
Progressive Insurance Company, Appellant, et al., Defendant. (Action No. 2.)

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

Dec. 13, 2012.

Burke, Scolamiero, Mortati & Hurd, LLP, Albany (Sarah B. Brancatella of counsel), for proposed intervenor-appellant in action No. 1 and appellant in action No. 2.

Robert J. Krzys, Amsterdam, for respondent.

[956 N.Y.S.2d 268]

Before: MERCURE, J.P., LAHTINEN, MALONE JR., STEIN and EGAN JR., JJ.

STEIN, J.

[101 A.D.3d 1340]Appeal from an order of the Supreme Court (Reilly Jr., J.), entered January 18, 2012 in Schenectady County, which, among other things, denied a motion by Progressive Insurance Company for, among other things, vacatur of a default judgment and leave to intervene in action No. 1.

In January 1999, plaintiff was injured when the snowmobile he was operating collided with a parked car. Plaintiff thereafter commenced an action (hereinafter action No. 1) in 2002 against the owners of two cars—the car with which he collided and the car parked directly in front of it—alleging, among other things, that both cars had been parked in the roadway. The car with [101 A.D.3d 1341]which plaintiff actually collided was owned by defendant Daniel Giebel and the car parked in front of Giebel's car was owned and/or driven by defendants Theresa O'Rourke and Robert O'Rourke and insured by Progressive Insurance Company. Upon the O'Rourkes' failure to appear in the action, a default judgment on the issue of liability was entered against them in July 2002. Following protracted litigation concerning plaintiff's claims against Giebel ( see generally Bond v. Giebel, 14 A.D.3d 849, 787 N.Y.S.2d 512 [2005] ), an inquest was held with regard to the claims against the O'Rourkes and a default judgment on damages was rendered against them in 2008 for approximately $1.2 million.¹ When the O'Rourkes notified Progressive of the judgment shortly thereafter, Progressive disclaimed coverage on the basis that it never received notice of the lawsuit, as required by the O'Rourkes' policy.

The O'Rourkes subsequently entered into an agreement with plaintiff (hereinafter the assignment agreement) pursuant to which they assigned to plaintiff their rights against Progressive and the O'Rourkes' insurance broker, defendant Hopmeier–Evans–Gage Agency (hereinafter HEG).² In exchange for such assignment, plaintiff agreed to pay the O'Rourkes 40% of any recovery that he received from Progressive in excess of $300,000. Plaintiff then commenced an action (hereinafter action No. 2) in April 2009, as assignee of the O'Rourkes' rights, asserting, as pertinent here, a claim against Progressive pursuant to Insurance Law § 3420(a)(2) to recover part of the unsatisfied default judgment in action No. 1, as well as a bad faith claim based upon Progressive's disclaimer of coverage. Both claims rely primarily upon plaintiff's allegations that the O'Rourkes provided timely notice to Progressive in 2002 and that Progressive failed to defend and/or indemnify them. Progressive moved for, among other things, an order vacating the default judgment against the O'Rourkes in action No. 1 pursuant to CPLR 5015(a)(3) or in the interest of justice. Progressive also sought permission to intervene in action No. 1 and, upon intervention, summary judgment dismissing the complaint in that action against the O'Rourkes. Finding that Progressive's delay in seeking intervention would cause significant

[956 N.Y.S.2d 269]

prejudice to plaintiff, Supreme [101 A.D.3d 1342]Court denied all of the relief requested.³ This appeal by Progressive ensued.

We begin with Progressive's request for vacatur of the default judgment in action No. 1. It is well settled that a judgment may be vacated by a court upon the motion of “any interested person” (CPLR 5015[a]; accord Oppenheimer v. Westcott, 47 N.Y.2d 595, 602, 419 N.Y.S.2d 908, 393 N.E.2d 982 [1979] ). Consistent with the legislative goal of “assur[ing] that a broad class of persons, not limited to parties in the formal sense, could move [for relief pursuant to CPLR 5015]” ( Oppenheimer v. Westcott, 47 N.Y.2d at 603, 419 N.Y.S.2d 908, 393 N.E.2d 982), it has been held in this context that “all that is necessary is that some legitimate interest of the moving party will be served and that judicial assistance will avoid injustice” ( Lane v. Lane, 175 A.D.2d 103, 105, 572 N.Y.S.2d 14 [1991] [internal quotation marks and citation omitted] ). In our view, that purpose will be served under the particular circumstances present here by permitting Progressive to move to vacate the default judgment against the O'Rourkes, notwithstanding its disclaimer of coverage.⁴ Specifically, by virtue of the assignment agreement, Progressive is the only person or entity with an interest in vacating the default judgment, as the O'Rourkes have the potential to benefit financially by allowing that judgment to remain in effect. Without the judgment, neither plaintiff nor the...