Fried v. Jacob Holding, Inc.

• Decision Date: 07 August 2013
• Parties: Raizel FRIED, etc., et al., appellants, v. JACOB HOLDING, INC., respondent.
• Court: New York Supreme Court — Appellate Division

110 A.D.3d 56

970 N.Y.S.2d 260

2013 N.Y. Slip Op. 05555

Raizel FRIED, etc., et al., appellants,

v.JACOB HOLDING, INC., respondent.

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

Aug. 7, 2013.

Herschel Kulefsky, New York, N.Y. (Ephrem J. Wertenteil of counsel), for appellants.

Paganini, Cioci, Pinter, Cusumano & Farole (Gannon, Rosenfarb, Balletti & Drossman, New York, N.Y. [Lisa L. Gokhulsingh], of counsel), for respondent.

DANIEL D. ANGIOLILLO, J.P., RUTH C. BALKIN, JOHN M. LEVENTHAL, and PLUMMER E. LOTT, JJ.

BALKIN, J.

The Supreme Court denied the plaintiffs' motion for leave to enter a default judgment and granted the defendant's application, in effect, for leave to serve a late answer, and to compel the plaintiffs to accept service of that answer. The principal issue on this appeal is whether it was proper for the court to consider the defendant's application when the defendant had not made its request for relief in a formal notice of cross motion ( seeCPLR 2215). Our precedent on this subject has been inconsistent, leaving the law unsettled. This appeal gives us an opportunity to clarify it.

The infant plaintiff, Raizel Fried, allegedly was injured on May 22, 2009, while playing with other children on or near a flatbed trailer owned by the defendant, Jacob Holding, Inc. According to the complaint, Raizel was standing near the rear of the trailer when some of her playmates climbed onto it and caused its loading ramp to fall and hit her.

Approximately one year later, on April 30, 2010, Raizel, by her mother, and Raizel's mother individually, commenced this action by filing a summons and complaint. On May 11, 2010, they served the defendant, a corporation, by personal delivery of a copy of the summons and complaint to the Secretary of State ( seeBusiness Corporation Law § 306[b]; CPLR 311[a][1] ). The defendant was required to appear or answer within 30 days ( seeCPLR 320 [a]; Business Corporation Law § 306[b] ). The defendant did not timely appear or answer, and, on July 6, 2010, the plaintiffs served the defendant again, this time by mail at the defendant's last known address.

One week after this second service was effected, the plaintiffs moved pursuant to CPLR 3215 for leave to enter a default judgment on the issue of liability. The defendant timely filed opposing papers, but did not merely oppose the plaintiffs' motion; it also asked the court, in effect, for leave to serve a late answer, and to compel the plaintiffs to accept its untimely answer. The defendant's application for affirmative relief was not, however, set forth in a notice of cross motion duly served pursuant to CPLR 2215. Instead, the defendant included the application in an attorney's affirmation submitted in opposition to the plaintiffs' motion. Counsel recited, on the first page of her affirmation, that the affirmation was being submitted in opposition to the plaintiffs' motion “and in support of the defendant's request that the Court compel the plaintiff[s] to accept service of defendant's answer.” This application for affirmative relief was repeated on the last page, in the affirmation's “wherefore” clause. The defendant's arguments in opposition to the plaintiffs' motion and in support of its own application for affirmative relief were the same: the plaintiffs' motion should be denied and the plaintiffs compelled to accept the defendant's answer “since there has been a very minor delay in responding to the plaintiff[s'] summons and complaint, the [plaintiffs have] suffered no prejudice as a result of the minor delay, and because the defendant has a reasonable excuse for said delay and a meritorious defense.”

The plaintiffs submitted reply papers, in which they opposed the defendant's application for affirmative relief both on the merits and on the ground that the court could not, in the absence of a formal cross motion, grant the defendant the affirmative relief it requested.

The Supreme Court denied the plaintiffs' motion for leave to enter a default judgment, and, in the exercise of discretion, granted the defendant's application, in effect, for leave to serve a late answer, and to compel the plaintiffs to accept that answer. The court concluded that the defendant's explanation for its failure to appear was reasonable and that the defendant had proffered a potentially meritorious defense. The court also referred to the strong public policy favoring resolution of cases on their merits. The court recognized that the defendant had not made a proper cross motion, but it overlooked that flaw under CPLR 2001 because the defendant had clearly stated its request for affirmative relief and the plaintiffs were on notice of it and had responded to it. The plaintiffs appeal.

On a motion for leave to enter a default judgment pursuant to CPLR 3215, a plaintiff is required to file proof of: (1) service of a copy or copies of the summons and the complaint, (2) the facts constituting the claim, and (3) the defendant's default ( seeCPLR 3215[f] ). If, as is the case here, the defendant is a domestic corporation and was originally served with the summons and complaint by personal delivery to the Secretary of State ( seeBusiness Corporation Law § 306[b] ), a plaintiff is also required to serve the defendant a second time, by first-class mail at its last known address ( seeCPLR 3215[g][4][i] ).¹ To demonstrate “the facts constituting the claim” the movant need only submit sufficient proof to enable a court to determine that “a viable cause of action exists” ( Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 71, 760 N.Y.S.2d 727, 790 N.E.2d 1156;see Alterbaum v. Shubert Org., Inc., 80 A.D.3d 635, 636, 914 N.Y.S.2d 681;Neuman v. Zurich N. Am., 36 A.D.3d 601, 602, 828 N.Y.S.2d 169).CPLR 3215(f) expressly provides that a plaintiff may satisfy this requirement by submitting the verified complaint.

To defeat a facially adequate CPLR 3215 motion, a defendant must show either that there was no default, or that it has a reasonable excuse for its delay and a potentially meritorious defense ( see Wassertheil v. Elburg, LLC, 94 A.D.3d 753, 753, 941 N.Y.S.2d 679;New Seven Colors Corp. v. White Bubble Laundromat, Inc., 89 A.D.3d 701, 702, 931 N.Y.S.2d 899;Wells Fargo Bank, N.A. v. Cervini, 84 A.D.3d 789, 789, 921 N.Y.S.2d 643;cf.CPLR 5015[a][1]; Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116). Whether a proffered excuse is “reasonable” is a “sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits” ( Harcztark v. Drive Variety, Inc., 21 A.D.3d 876, 876–877, 800 N.Y.S.2d 613;see Zanelli v. JMM Raceway, LLC, 83 A.D.3d 697, 697, 919 N.Y.S.2d 878;Grinage v. City of New York, 45 A.D.3d 729, 730, 846 N.Y.S.2d 300;Greene v. Mullen, 39 A.D.3d 469, 469–470, 833 N.Y.S.2d 215). This Court has held that, in an appropriate case, a court may take into account insurance-company delay in determining whether there is a reasonable excuse ( see Harcztark v. Drive Variety, Inc., 21 A.D.3d at 876–877, 800 N.Y.S.2d 613).

Here, the plaintiffs satisfied their CPLR 3215 burden of proving service, the facts constituting the claim, and the defendant's default ( see Woodson v. Mendon Leasing Corp., 100 N.Y.2d at 71, 760 N.Y.S.2d 727, 790 N.E.2d 1156;Jackson v. Professional Transp. Corp., 81 A.D.3d 602, 603, 916 N.Y.S.2d 159). In its opposition, the defendant submitted detailed evidence showing that it had immediately faxed a copy of the summons and complaint to its insurance broker, who in turn faxed it to the defendant's insurer, but, apparently, to the wrong department ( cf. Trepel v. Greenman–Pedersen, Inc., 99 A.D.3d 789, 791, 952 N.Y.S.2d 227). When the defendant was served with the plaintiffs' motion for leave to enter a default judgment not long after the answer was due, the defendant immediately investigated the situation and sought to remedy it. This evidence showed that the default was not willful, the period of delay was very short, and there was no prejudice to the plaintiffs resulting from it. Under the circumstances of this case, and in light of the strong public policy in favor of deciding matters on their merits, the Supreme Court's acceptance of the defendant's explanation as a “reasonable excuse” was not an improvident exercise of discretion ( see Gerdes v. Canales, 74 A.D.3d 1017, 1018, 903 N.Y.S.2d 499;Merchants Ins. Group v. Hudson Val. Fire Protection Co., Inc., 72 A.D.3d 762, 764, 898 N.Y.S.2d 242;Klughaupt v. Hi–Tower Contrs., Inc., 64 A.D.3d 545, 546, 882 N.Y.S.2d 313). The defendant also submitted evidence as to a potentially meritorious defense. This evidence contradicted the plaintiffs' account of how the accident occurred; if believed, the defendant's evidence could negate a finding that the defendant's negligence, if any, proximately caused Raizel's injuries. In light of the defendant's sufficient showing in opposition to the motion for leave to enter a default judgment motion, the Supreme Court did not improvidently exercise its discretion in denying the plaintiffs' motion.

We must also determine, however, whether the Supreme Court properly granted the defendant leave to serve a late answer and properly compelled the plaintiffs to accept the defendant's late answer. As already noted, the defendant did not make its application for this relief in a formal cross motion in accordance with CPLR 2215. This issue highlights an important difference between, on the one hand, what a party must do in order to be entitled to have a request for relief adjudicated and, on the other, what a court may do with respect to a request for relief that has not been made in compliance with that statute.

Before 1981, CPLR 2215 (“Relief demanded by other than moving party”) said:

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