Huckle v. Cdh Corporation

• Decision Date: 22 June 2006
• Docket Number: 99469.
• Citation: 817 N.Y.S.2d 707,2006 NY Slip Op 05085,30 A.D.3d 878
• Parties: ROBERT HUCKLE et al., Appellants, v. CDH CORPORATION, Respondent.
• Court: New York Supreme Court — Appellate Division

30 A.D.3d 878

817 N.Y.S.2d 707

2006 NY Slip Op 05085

ROBERT HUCKLE et al., Appellants, v. CDH CORPORATION, Respondent.

99469.

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

June 22, 2006.

Appeal from an order of the Supreme Court (Relihan, Jr., J.), entered September 26, 2005 in Tompkins County, which, inter alia, denied plaintiffs' motion for a default judgment.

Peters, J.

Plaintiffs, employees of Schweizer Aircraft Corporation, brought this action for personal injuries alleging that they were harmed by noxious fumes emanating from a floor covering applied by defendant at Schweizer on January 24, 2002. Defendant informed its liability carrier, National Grange Mutual Insurance Company, of the incident on April 24, 2002 and it disclaimed coverage on May 21, 2002. After being served with a summons and complaint in January 2005, defendant forwarded these documents to National Grange, which again disclaimed coverage. By letter dated April 7, 2005, defendant notified National Grange that its disclaimer of coverage was without merit and that defendant did not intend to defend the action. It further notified National Grange that it had a conversation with plaintiffs' attorney wherein it was agreed that a default judgment would be entered against defendant to enable plaintiffs to enforce the judgment against National Grange pursuant to Insurance Law § 3420 (a) (2), so long as there would be no enforcement of that judgment against defendant. Acknowledging that there may be serious liability and damages involved with the claim, defendant suggested to National Grange that it enter an appearance in the action. Within a week, defendant entered into a stipulation with plaintiffs memorializing their agreement. Defendant assigned all of its rights and causes of action under its policy with National Grange to plaintiffs, making no representation that it had any rights or causes of action to actually assign. It did, however, state that "the disclaimer made by [its insurer] has not been withdraw [sic], waived or otherwise nullified." Notably, the stipulation stated, in very clear terms, that it was premised upon the fact that plaintiffs were injured and that National Grange disclaimed coverage.

Nothing was done for the next two months until National Grange changed its position about its prior disclaimer. It then contacted plaintiffs' attorney to see if plaintiffs would accept late service of an answer on defendant's behalf. Plaintiffs' counsel refused to accept late service and subsequently moved for, among other things, a default judgment pursuant to CPLR 3215, relying on the stipulation executed by the parties. Defendant successfully cross-moved for an order compelling plaintiffs to accept late service and this appeal ensued.

Acknowledging that public policy favors the resolution of cases on the merits and that Supreme Court is vested with the discretionary authority to permit late service of an answer upon a showing of a reasonable excuse for the delay and a meritorious cause of action (see CPLR 3012 [d]; Amodeo v Gellert & Quartararo, P.C., 26 AD3d 705, 706 [2006]; Loris v S & W Realty Corp., 16 AD3d 729, 730 [2005]; Aabel v Town of Poughkeepsie, 301 AD2d 739, 739 [2003]), we find no error. Supreme Court reasoned that...