Swidler v. World-Wide Volkswagen Corp., WORLD-WIDE

• Decision Date: 15 March 1982
• Docket Number: WORLD-WIDE
• Parties: Steven A. SWIDLER, Respondent, v.VOLKSWAGEN CORP., Appellant, et al., Defendant.
• Court: New York Supreme Court — Appellate Division

Page 20

448 N.Y.S.2d 20

85 A.D.2d 239

Steven A. SWIDLER, Respondent, v. WORLD-WIDE VOLKSWAGEN CORP., Appellant, et al., Defendant.

Supreme Court, Appellate Division Second Department.

March 15, 1982.

William A. Prinsell, New York City, for appellant.

Steiner & Unterman, New York City (Leonard Steiner, New York City, of counsel), for respondent.

Before MANGANO, J. P., and THOMPSON, BROWN and NIEHOFF, JJ.

NIEHOFF, Justice.

This is an appeal from an order of the Supreme Court, Westchester County, entered July 8, 1981, which denied the motion of the defendant World-Wide Volkswagen Corp. to vacate a default judgment in a negligence and strict products liability action. The denial was based upon a holding that "of the file due to an insurance office failure does not constitute a reasonable excuse." For reasons set forth hereinafter we conclude that the default should be vacated.

On or about December 10, 1980, service of process was made upon defendant World-Wide Volkswagen Corp. (World-Wide) by service of a copy of a summons with notice upon the Secretary of State. The notice stated that the object of the action was "to recover for defendant's negligence in design and/or manufacture of an automobile and for strict products liability." The relief sought was compensatory damages in the sum of $50,000. The notice concluded by stating that in the event of a failure to appear judgment would be taken by default "for the sum of $50,000 with interest from March 1, 1979 and the costs of this action." Thus, from the notice one would assume that the incident occurred on or about March 1, 1979, some 21 months prior to the time process was served.

On December 22, 1980, a corporate attorney for defendant World-Wide telephoned plaintiff's counsel to acknowledge receipt of the summons. The summons with notice was then forwarded to Fred S. James & Company, the insurance broker for World-Wide. The record does not satisfactorily disclose what happened to the summons thereafter. The broker either (1) did not forward it to Atlantic Insurance Companies, World-Wide's insurer, (2) forwarded it and it was not received by the carrier, or (3) forwarded it and it was received by the carrier, but was thereafter misplaced or lost by the carrier.

In any event, receiving no notice of appearance or communication from World-Wide after the telephone call of December 22, 1980 from World-Wide's counsel, plaintiff's counsel entered a default judgment on April 13, 1981 which directed an assessment of damages. Thereafter, said judgment came to the attention of the insured and the insurer. Through a telephone call between the insurer's counsel and the plaintiff's counsel it was learned that the claim involved alleged injuries to the plaintiff, an attorney, when he was caused to cut his finger on a hub cap as he was fixing a flat tire on March 1, 1979. Subsequently, on or about May 1, 1981, World-Wide, represented by an attorney furnished by the insurer, served a demand for a complaint (CPLR 3012, subd. ), which was returned by plaintiff's counsel on May 8, 1981. Shortly thereafter, on June 4, 1981, plaintiff's counsel was served with an order to show cause to vacate and set aside the default judgment.

In Barasch v. Micucci, 49 N.Y.2d 594, 427 N.Y.S.2d 732, 404 N.E.2d 1275, the Court of Appeals emphasized that it is incumbent upon a plaintiff seeking to avoid dismissal for failure to prosecute to (1) demonstrate that there was a reasonable excuse for the delay and (2) make a prima facie showing of legal merit. This court has held that the same criteria are applicable to a defendant who seeks to vacate a default judgment (Bruno v. Village of Port Chester, 77 A.D.2d 580, 430 N.Y.S.2d 13). The opinion in Barasch supra, 49 N.Y.2d p. 599, 427 N.Y.S.2d 732, 404 N.E.2d 1275, also emphasized the rule "that those excuses which may be roughly categorized under the heading of 'law office failures' cannot properly serve as a basis for defeating a motion to dismiss under CPLR 3012 (subd. [b])."

The case presently before us does not involve a "saga of indifference" by World-Wide or its agents and, in our judgment, it does not fall within the ambit of the "law office failure" principle.

Upon receiving the summons, the defendant World-Wide, acting through its corporate attorney, promptly caused the summons to be forwarded to its insurance broker. Thus, World-Wide acted diligently on its own behalf and had every reason to believe that the broker would follow through by delivering the summons to the carrier, who would be called upon to give World-Wide legal representation in the suit. But, the record fails to establish that the carrier ever received the summons. It may never have been mailed to the insurer by the broker or it may have been mailed to the insurer and have gone astray in the mail. Of course, it is true...