Eaton v. Equitable Life Assur. Soc. of U.S., Inc.

• Decision Date: 15 June 1982
• Citation: 56 N.Y.2d 900,453 N.Y.S.2d 404,438 N.E.2d 1119
• Parties: , 438 N.E.2d 1119 Mary EATON et al., Appellants, v. EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, INC., et al., Defendants, and Marine Midland Bank, Inc., Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 404

453 N.Y.S.2d 404

56 N.Y.2d 900, 438 N.E.2d 1119

Mary EATON et al., Appellants, v. EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, INC. et al., Defendants and Marine Midland Bank, Inc., Respondent.

Court of Appeals of New York.

June 15, 1982.

Douglass J. Seidman and Joan Mangones, Staten Island, for appellants.

Walter J. Matt, Jr., Buffalo, and David A. Ferdinand, New York City, for respondent.

OPINION OF THE COURT MEMORANDUM.

The order of the Appellate Division should be reversed, with costs, for the reasons stated in the dissenting opinion of Justice David T. Gibbons in that court (81 A.D.2d 653, 654, 438 N.Y.S.2d 377).

The excuses proffered by respondent amount to nothing more than law office failure, as both courts below recognized. Just as it is an abuse of discretion to accept law office failure as an excuse for a plaintiff's failure to prosecute (Barasch v. Micucci, 49 N.Y.2d 594, 427 N.Y.S.2d 732, 404 N.E.2d 1275), so is it an abuse of discretion to vacate a default on the application of a defendant whose only excuse is law office failure. Each party is entitled to expect the other to observe time requirements during the course of litigation, and both are equally subject to prejudice from failure to observe such requirements. Respondent here could have moved for an extension of time to answer (cf. A & J Concrete Corp. v. Arker, 54 N.Y.2d 870, 444 N.Y.S.2d 905, 429 N.E.2d 412). It could also have sought a written stipulation pursuant to CPLR 2104, the provisions of which are, of course, designed to forestall precisely the difficulties presented in these cases.

WACHTLER, Judge (dissenting).

In my view the courts below had discretion to grant the defendant's application to vacate the default. Although a plaintiff who has commenced an action and then neglects it cannot justifiably claim law office failure (Barasch v. Micucci, 49 N.Y.2d 594, 427 N.Y.S.2d 732, 404 N.E.2d 1275), this kind of mistake by a defendant is more understandable and the courts should not be denied the power to grant relief when the defendant has, in fact, inadvertently failed to make a timely defense in a case where a legitimate defense is tendered (see, e.g., Siegel, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B, CPLR C3215:24, p. 880).

FUCHSBERG, Judge (dissenting).

I write more fully than does Judge Wachtler to express my dismay and concern that Barasch v. Micucci, 49 N.Y.2d 594, 427 N.Y.S.2d 732, 404 N.E.2d 1275, which expressly stated that only in "rare instances" (Barasch, at p. 601, 427 N.Y.S.2d 732, 404 N.E.2d 1275) could or would we superimpose our authority as a court of law in matters relating to the everyday management of litigation, has not stayed within bounds. For, in the hierarchy of New York courts, such issues are, and should be, left essentially in the hands of the four departments of the Appellate Division and, in the first instance, of the courts over which they exercise their supervisory powers.

It is regrettable, therefore, as the majority opinion in the case before us now so well illustrates, that there has resulted the misperception that Barasch enjoins our intermediate appellate courts to substitute harsh and unbending procedural disciplines for sensible, informal, everyday courtesies which, as overburdened Trial Judges and busy litigating lawyers will appreciate, well served important cost and convenience considerations (see, e.g., A & J Concrete Corp. v. Arker, 54 N.Y.2d 870, 872-873, 444 N.Y.S.2d 905, 429 N.E.2d 412 see, also, Cohen v. First Nat. City Bank, 52 N.Y.2d 863, 437 N.Y.S.2d 79, 418 N.E.2d 672; Merchandising Presentation v. Blumenfeld, 52 N.Y.2d 867, 437 N.Y.S.2d 80, 418 N.E.2d 673; Jamaica Buses v. Connor, 52 N.Y.2d 868, 437 N.Y.S.2d 80, 418 N.E.2d 673; Steen v. New Deal Delivery Serv., 54 N.Y.2d 796, 443 N.Y.S.2d 611, 427 N.E.2d 770; Premo v. Cornell, 55 N.Y.2d 962, 449 N.Y.S.2d 195, 434 N.E.2d 264).

In the immediate case, the question is whether the Appellate Division, because, in the interest of justice, it vacated defendant Marine Midland Bank's short default in serving its answer--if default it was--may be said to have abused its discretion as a matter of law. The majority, in summary memorandum, says it did. It appears crystal clear to three members of this court that it did not. The details are instructive.

Plaintiff William Eaton was employed by the bank at age 71. He and his wife commenced this suit to recover $6,780 incurred four months later for his wife's medical treatment, which they claim was covered by the bank's major medical group policy with defendant Equitable Life Insurance Company. Besides nonpayment, plaintiffs' free-wheeling five-count, 74-paragraph complaint alleges, among other things, mutual mistake on the part of the employee and the bank (which they assert is an agent of Equitable), unconscionable conduct on the part of both the bank and Equitable (which is also joined as a defendant), misrepresentations by the bank as to the extent of the coverage and failure of St. Vincent's Medical Center (hospital) (joined as still another defendant) to advise the plaintiffs to apply for Medicaid benefits. The prayer for relief ambitiously demands that the hospital be enjoined for collecting its charges under the provisions of the "Hill-Burton Act * * * under which the Hospital agreed * * * to furnish free and below-cost services to persons unable to pay * * * and to refrain from making collection efforts", that a declaratory judgment issue and the like. The complaint indicates too that all but $124 of the claim was rejected by Equitable as beyond its coverage.

The complaint was served on the bank on December 19, 1979. The bank, as a matter of course, had until January 9 to answer (CPLR 3012), but, before this period expired, and again later that month, counsel for both sides agreed on short extensions and, finally, on February 7, to a third one, which was for no fixed time period. Instead, as the bank's counsel remembers it, the answer was to be served "as soon as I could", while, according to plaintiffs' counsel's later recollection, the agreement was for a seemingly equivalent "put it in the mail soon". All the extensions were arranged by telephone, one being confirmed by letter as well. Four weeks later, on March 7, without notifying the bank's counsel of their intention to do so, plaintiffs entered an ex parte default judgment against it.

When the bank moved to open the default, Special Term, in a brief memorandum in which it chose to treat this train of events as "law office failure", denied the motion in the exercise of its discretion. However, on appeal, the majority at the Appellate Division, persuaded by the "relative shortness of the delay, the nature of appellant's excuse, the apparent existence of a meritorious defense, the promptness with which appellant moved to vacate its default, and the absence of any apparent intention on its part to abandon its defense to the action", reversed and vacated the default, likewise in the interest of justice. (81 A.D.2d 653, 438 N.Y.S.2d 377.) Moreover, to "redress any inconvenience which the plaintiffs may have suffered", it conditioned this relief on the bank's payment of $500 to plaintiff, a condition that was met. But, two dissenting Justices, acting on no more than their own assumption that "soon" means "two weeks" and counsel's explanation for having requested the extensions--essentially, the relatively complex nature of the issues raised by the pleadings, including the interplay between Medicaid coverage and the terms of the policy it had purchased from Equitable, and the inability of the bank to locate the part of the policy containing the provisions governing coverage of persons over age 65--voted to affirm because of what they apparently took to be the compulsions of Barasch v. Micucci (supra ).

But Barasch itself emphasizes that it is only the extraordinary case in which an exercise of discretion by the lower courts, especially in the management of the procedural aspects of litigation, will "give rise to a question of law that is cognizable in this court" (Barasch, 49 N.Y.2d at p. 598, 427 N.Y.S.2d 732, 404 N.E.2d 1275; Elias v. Prudential Inv. Corp., 50 N.Y.2d 924, 431 N.Y.S.2d 524, 409 N.E.2d 996, mot. for rearg. den. 51 N.Y.2d 771, 432 N.Y.S.2d 1030, 411 N.E.2d 800; ...