Goldman v. Cotter

• Decision Date: 12 August 2004
• Docket Number: 3769N.
• Citation: 2004 NY Slip Op 06347,781 N.Y.S.2d 28,10 A.D.3d 289
• Parties: JANE H. GOLDMAN et al., as Executors of SOL GOLDMAN, Deceased, Appellants, v. JAMES COTTER et al., Respondents. JUDITH BRENER, ESQ., Nonparty Appellant.
• Court: New York Supreme Court — Appellate Division

10 A.D.3d 289

781 N.Y.S.2d 28

2004 NY Slip Op 06347

JANE H. GOLDMAN et al., as Executors of SOL GOLDMAN, Deceased, Appellants, v. JAMES COTTER et al., Respondents.

JUDITH BRENER, ESQ., Nonparty Appellant.

3769N.

Appellate Division of the Supreme Court of the State of New York, First Department.

Decided August 12, 2004.

Order, Supreme Court, New York County (Louis B. York, J.), entered April 30, 2003, which, inter alia, denied plaintiffs-appellants' motion to vacate an order entered on default on or about November 21, 2002, confirming the report of a Special Referee which recommended an award in favor of defendants-respondents on their first and second counterclaims in the amount of $59,583 and imposed sanctions against plaintiffs' attorney, unanimously reversed, on the law, the facts and in the exercise of discretion, without costs, the motion granted and the November 21, 2002 order and ensuing judgment, entered March 17, 2003, vacated on condition that plaintiffs-appellants pay $3,000 to counsel for defendants within 30 days of service of a copy of this order with notice of entry.

This appeal arises out of plaintiff executors' efforts, in their capacity as landlord, to deny a renewal lease to defendant James Cotter, Jr., purportedly the rent-stabilized tenant of an apartment building located at 20 Fifth Avenue in Manhattan. In 1998, plaintiffs sent defendants Cotter, Jr. and his father, defendant James Cotter, Sr., a notice of nonrenewal and commenced a Civil Court proceeding (Civil Court action) against them to regain possession of the apartment upon the ground of nonprimary residence. The proceeding was dismissed by Civil Court upon defendants' motion in February 1999.

Thereafter, defendants brought a proceeding before the New York State Division of Housing and Community Renewal (DHCR proceeding) seeking an order directing plaintiffs to provide them with a renewal lease, which was eventually resolved in the Cotters' favor. Plaintiffs did not appeal either the dismissal of the Civil Court action or the DHCR determination.

In June 1999, plaintiffs commenced the instant action in Supreme Court (Supreme Court action) against both Cotters to rescind the lease and for other relief based on the allegation that Cotter, Sr. had fraudulently obtained the rent-stabilized lease by falsely representing that he would occupy it, when, in fact, it was his intention that his son would reside there. Defendants' answer denied the allegations in the complaint and asserted the affirmative defense of collateral estoppel. Defendants alleged that Cotter, Jr.'s rights as the rent-stabilized tenant of the subject apartment were previously determined by the February 1999 dismissal of plaintiffs' Civil Court action and the DHCR determination. Defendants further asserted counterclaims for legal fees, costs and sanctions pursuant to Real Property Law § 234 (first counterclaim) and subpart 130-1 of the Rules of the Chief Administrator of the Courts (22 NYCRR) (second counterclaim).

In March 2000, defendants moved for summary judgment on their first and second counterclaims, and for dismissal of the complaint. In an August 15, 2000 order, Supreme Court granted dismissal of the complaint on collateral estoppel grounds, noting that plaintiffs had not appealed the adverse findings in the Civil Court action and DHCR proceeding. In view of these prior proceedings, the court deemed plaintiffs' present action frivolous and held that attorneys' fees and sanctions were appropriate. The court referred the matter to a Special Referee for a hearing to determine the amount.

Following a hearing, the Special Referee issued a report finding that (1) defendant Cotter, an attorney, was entitled to an award of attorneys' fees for work he performed himself in the amount of $14,490; (2) Cotter was entitled to $6,617 for finance charges on his credit card allegedly incurred as a result of his having to pay his attorneys to defend plaintiffs' actions; (3) Cotter's attorneys were entitled to an award of $38,476 for work performed; and (4) sanctions of $5,000 should be imposed against plaintiffs' counsel.

Defendants moved to confirm the report. However, plaintiffs never responded to the motion. Accordingly, in a November 21, 2002 order, the court granted defendants' motion to confirm on default. Defendants served plaintiffs' counsel with a copy of this order, together with notice of entry, on or about November 22, 2002. The order was reduced to a judgment, entered March 17, 2003, which awarded the sums recommended in the Referee's report and noted that plaintiffs had defaulted on the motion to confirm.

On April 2, 2003, plaintiffs moved by order to show cause to, inter alia, resettle the judgment and to vacate the November 21, 2002 order entered on default. Plaintiffs did not specifically move to vacate the judgment. Supreme Court denied the motion to resettle the judgment as unnecessary, and found plaintiffs' additional arguments to be "without merit."

On appeal, plaintiffs argue that the court erred in refusing to vacate the November 21, 2002 order and the March 17, 2003 judgment, both entered on default, since a reasonable excuse for the default and a meritorious defense have been shown. As we find that Supreme Court improvidently exercised its discretion in denying plaintiffs' motion to vacate its default, we reverse.

A party seeking relief from an order or judgment on the basis of excusable default pursuant to CPLR 5015 (a) (1) must provide a reasonable excuse for the failure to appear and demonstrate the merit of the cause of action or defense (see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Navarro v A. Trenkman Estate, Inc., 279 AD2d 257, 258 [2001]; Mediavilla v Gurman, 272 AD2d 146, 148 [2000]). The determination of the sufficiency of the proffered excuse and the statement of merits rests within the sound discretion of the court (Navarro v A. Trenkman Estate, Inc., 279 AD2d at 258).

In support of the motion to vacate their default, plaintiffs submitted an affidavit of their counsel stating that she prepared opposition...