Leader v. Maroney, Ponzini

• Decision Date: 20 November 2001
• Citation: 736 N.Y.S.2d 291,761 N.E.2d 1018,97 N.Y.2d 95
• Parties: SUSAN LEADER, Respondent, v. MARONEY, PONZINI & SPENCER, Also Known as PONZINI, SPENCER & GEIS, et al., Appellants. KATHRYN SCARABAGGIO, Respondent, v. OLYMPIA & YORK ESTATES COMPANY, Appellant, et al., Defendant. RHODA HAFKIN et al., Appellants, v. NORTH SHORE UNIVERSITY HOSPITAL, Respondent. (And Another Action.)
• Court: New York Court of Appeals Court of Appeals

97 N.Y.2d 95

761 N.E.2d 1018

736 N.Y.S.2d 291

SUSAN LEADER, Respondent, v. MARONEY, PONZINI & SPENCER, Also Known as PONZINI, SPENCER & GEIS, et al., Appellants.

KATHRYN SCARABAGGIO, Respondent, v. OLYMPIA & YORK ESTATES COMPANY, Appellant, et al., Defendant.

RHODA HAFKIN et al., Appellants, v. NORTH SHORE UNIVERSITY HOSPITAL, Respondent. (And Another Action.)

Court of Appeals of the State of New York.

Argued October 11, 2001.

Decided November 20, 2001.

Steinberg & Cavaliere, L. L. P., White Plains (Kevin F. Cavaliere of counsel), for appellants in the first above-entitled action.

Foley, Hickey, Gilbert & O'Reilly, New York City (Terrence P. O'Reilly of counsel), for respondent in the first above-entitled action.

Carol R. Finocchio, New York City, Caufield Law Office and Marie R. Hodukavich for appellant in the second above-entitled action. Angiuli, Poznansky, Katkin & Gentile, L. L. P., Staten Island (Joelle L. Jensen of counsel), for respondent in the second above-entitled action.

Pollack, Pollack, Isaac & DeCicco, New York City (Brian J. Isaac of counsel), and Peters Berger Koshel & Goldberg (Richard Goldberg of counsel), for appellants in the third above-entitled action.

Costello, Shea & Gaffney, L. L. P., New York City (Steven E. Garry, Frederick N. Gaffney, Paul E. Blutman and Richard P. Stone of counsel), for respondent in the third above-entitled action.

Chief Judge KAYE and Judges SMITH, LEVINE, CIPARICK, ROSENBLATT and GRAFFEO concur.

OPINION OF THE COURT

WESLEY, J.

In this trio of cases, we are asked to determine the standards by which a court may exercise its discretion to extend a plaintiff's time to effectuate service pursuant to CPLR 306-b.

As originally enacted in 1992, CPLR 306-b transformed New York from a commencement-by-service to a commencement-by-filing jurisdiction (see, CPLR former 306-b, added by L 1992, ch 216, § 7, repealed by L 1997, ch 476, § 1). This sweeping change conferred a considerable benefit upon plaintiffs by making the act of filing the point at which a claim is interposed for Statute of Limitations purposes (see, Matter of Gershel v Porr, 89 NY2d 327, 330; see also, CPLR 203 [c] [1]). Under the statute, a plaintiff who filed an action was given a 120-day grace period within which to effectuate service of the summons and complaint; if proof of service was not timely filed, the action was automatically "deemed dismissed" without prejudice (see, CPLR former 306-b [a]). The plaintiff was free to commence a new action and serve process within a second 120-day period from the date of the automatic dismissal, even if the Statute of Limitations had expired (see, CPLR former 306-b [b]).

This statutory scheme was criticized because it subjected plaintiffs to "the unnecessarily harsh consequences of a peremptory dismissal and the cost of re-filing. Furthermore, the filing of proof of service, a * * * ministerial act, inappropriately took on jurisdictional significance" (Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C306-b:2, at 477; see also, Mem of Off of Ct Admin No. 97-67R [hereinafter OCA Mem], reprinted in 1997 NY Legis Ann, at 318-319; see also, Senate Mem in Support of L 1997, ch 476, reprinted in 1997 McKinney's Session Laws of NY, at 2456-2457 [identical to OCA Mem]). Thus, in 1997, the present version of section 306-b, introduced at the request of the Chief Administrative Judge, was enacted (see, L 1997, ch 476, § 1). Under the new statute, a plaintiff must still serve a defendant within 120 days after the filing of the action. However, if service is not made within the prescribed period, the action is no longer "deemed dismissed." Rather, the statute provides that "[i]f service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service" (CPLR 306-b). An extension of time for service is a matter within the court's discretion (see, OCA Mem, supra).

I.

Leader v Maroney, Ponzini & Spencer

Plaintiff Susan Leader retained the law firm of Maroney, Ponzini & Spencer to represent her in a divorce action. Plaintiff claims that nearly three years after judgment was entered in the divorce proceedings, she first learned that her husband's law license could have been valued as a marital asset, and was subject to a distributive award. Plaintiff commenced this legal malpractice action against her former attorneys pro se, by filing a summons with notice in the Westchester County Clerk's office on March 5, 1998, approximately two months before expiration of the Statute of Limitations. Plaintiff then retained counsel to represent her. Although counsel knew that a summons and notice had been filed, he made no attempt to effectuate service on defendants before the 120-day period expired. Unaware that the amendment to CPLR 306-b became effective on January 1, 1998, the attorney subsequently filed a second summons and a complaint in the County Clerk's office on October 13, 1998. Defendants were served shortly thereafter. Since the second 120-day period from the action's initial commencement did not expire until October 31, 1998—although the Statute of Limitations had long passed—counsel mistakenly believed that defendants had been timely served in accordance with the former statute.

Supreme Court granted defendants' motion to dismiss the second action on Statute of Limitations grounds noting, however, that under the newly-amended CPLR 306-b, the first action remained pending. Plaintiff then successfully moved for an extension of time to serve in the first action. Her attorney acknowledged that he was unaware of the amendment to CPLR 306-b.

The Appellate Division affirmed, concluding that Supreme Court properly exercised its discretion under the circumstances of the case (276 AD2d 194). It identified several factors warranting an interest of justice extension of time to serve the summons and complaint. After a thorough and thoughtful analysis of the statutory framework, the legislative history of the amendment and analogous provisions of Federal law, the Court reasoned that, although law office failure and the lack of reasonable diligence in effectuating service generally do not constitute good cause, the interest of justice standard of the statute was a separate, broader and more flexible provision which could encompass a mistake or oversight as long as there was no prejudice to the defendant. Two Justices disagreed on the ground that plaintiff failed to offer a reasonable explanation or excuse for her failure to be reasonably diligent in attempting service within the 120-day period following the filing of the initial summons.

Scarabaggio v Olympia & York Estates

On July 29, 1999, three months before the expiration of the Statute of Limitations, plaintiff Kathryn Scarabaggio commenced this personal injury action for injuries sustained as the result of a slip and fall on stairs located on property allegedly owned by defendant Olympia & York Estates. Although another defendant was served, Olympia was not. Plaintiff's process server attempted to serve Olympia at its last-known business address, but was unable to do so because Olympia had relocated. The process server did not inform plaintiff's counsel of the failure. Plaintiff's attorneys moved for the extension promptly after the error was discovered, just weeks after the 120-day period expired. The record reflects that Olympia was aware of plaintiff's claim. In fact, Olympia's insurer had communicated with plaintiff's counsel in that regard.

Supreme Court granted plaintiff's motion based on good cause and in the interest of justice. The Appellate Division, again over a two-Justice dissent, affirmed (278 AD2d 476). The Court concluded that Supreme Court appropriately exercised its discretion under the circumstances, emphasizing that, when an interest of justice extension is sought, a court may consider any relevant factor before making its determination and that no one factor is dispositive. The dissenters contended that leave to extend should be granted only in circumstances where plaintiff establishes reasonable diligence in attempting to effect service, a showing, they claimed, that was not made here.

Hafkin v North Shore University Hospital

Plaintiff Rhoda Hafkin underwent a bilateral knee replacement at North Shore University Hospital. On January 22, 1998, one day before the expiration of the Statute of Limitations, plaintiff and her husband commenced a medical malpractice action against North Shore by purchasing an index number and filing a summons and complaint in the Nassau County Clerk's office. North Shore was never served in that action. Plaintiffs thereafter commenced a second action by purchasing another index number and filing a second summons and complaint in the County Clerk's office on September 11, 1998. These papers were served on defendant a few days later, but still within the second 120-day period available under the original version of CPLR 306-b. In early January 1999, defendant moved to dismiss the second action as time-barred. Not until February 4, 1999, did plaintiffs cross-move to extend their time for service in the first action.

Supreme Court granted defendant's motion to dismiss the second action and denied as academic plaintiffs' cross motion to extend their time to serve the summons and complaint in the first action. The Appellate Division affirmed (279 AD2d 86).¹ The Court weighed several factors in making its determination, including the fact that plaintiffs offered no explanation or excuse for their initial failure to serve defendant and defendant did not receive notice of the claims for almost three years. Thus, the Court concluded that the interest of justice would not be served by rewarding the plaintiffs' unexplained and unexcused "complete lack of diligence" (id., at...