3211(a)(7) Court of Appeals

CPLR R. 3211(a)(7)  pleading fails to state a cause of action

Miglino v Bally Total Fitness of Greater N.Y., Inc., 2013 NY Slip Op 00780 (2013)

In this case, though, Bally has moved to dismiss under CPLR 3211 (a)
(7), which limits us to an examination of the pleadings to determine
whether they state a cause of action. Further, we must accept facts
alleged as true and interpret them in the light most favorable to
plaintiff; and, as Supreme Court observed, plaintiff may not be
penalized for failure to make an evidentiary showing in support of a
complaint that states a claim on its face (see Rovello v Orofino Realty Co.,
40 NY2d 633, 635 [1976] [as long as a pleading is facially sufficient,
the plaintiff is not obligated to come forward with claim-sustaining
proof in response to a motion to dismiss unless the court treats the
motion as one for summary judgment and so advises the parties]).

2103

CPLR R. 2103 Service of papers

Simon v Usher, 2011 NY Slip Op 07305 (2011)

The question presented for our review is whether the five-day extension under CPLR 2103(b)(2) applies to the 15-day time period prescribed by CPLR 511(b) to move for change of venue when a defendant serves its demand for change of venue by mail. We hold that it does.

On July 17, 2009, plaintiffs Allen and Barbara Simon commenced this medical malpractice action against defendants in Supreme Court, Bronx County. Defendants Sol M. Usher, Sol M. Usher, M.D., Maxwell M. Chait, White Plains Hospital Center and Hartsdale Medical Group, P.C., (collectively, the Usher defendants) served their verified answers and demands to change venue to Westchester County on August 20, 2009. Twenty days later, on September 9th, the Usher defendants moved to change venue to Westchester County on the grounds that, except for Usher and Usher, M.D., P.C., all of the defendants and the plaintiffs reside in Westchester County; Usher's and Usher, M.D., P.C.'s primary offices are in Westchester County; and plaintiff Allen Simon received the medical care at issue in Westchester County. The remaining defendants Sheldon Alter, Mid-Westchester Medical Associates, LLP, Westchester Medical Group, P.C. and Marianne Monahan served their answer on September 3rd and filed an affirmation in support of the motion to change venue on September 15th.

Supreme Court granted the motion to change venue to Westchester because "none of the parties to this action reside in Bronx County." The Appellate Division unanimously reversed and denied the motion. The court, among other things, rejected the Usher defendants' motion for a change of venue as untimely because it was made 20 days after service of the demand. It concluded that CPLR 2103(b)(2)'s five-day extension for time periods measured from service by mail did not apply to CPLR 511. The Appellate Division granted the Usher defendants leave to appeal to this Court and certified the following question for review: "Was the order of this court, which reversed the order of the Supreme Court, properly made?" We answer the certified question in the negative and now reverse.

When construing a statute, we must begin with the language of the statute and "give effect to its plain meaning" (Kramer v Phoenix Life Ins. Co., 15 NY3d 539, 552 [2010]). Pursuant to CPLR 511(a), a defendant shall serve with the answer, or prior to service of the answer, a demand "for change of place of trial on the ground that the county designated for that purpose is not a proper county." Subsection (b) permits defendant to "move to change the place of trial within fifteen days after service of the demand, unless within five days after such service plaintiff serves a written consent to change the place of trial to that specified by the defendant." CPLR 2103 provides "where a period of time prescribed by law is measured from the service of a paper and service is by mail, five days shall be added to the prescribed period." "The extension provided in CPLR 2103(b)(2) constitutes legislative recognition of and compensation for delays inherent in mail delivery" (Sultana v Nassau Hosp., 188 AD2d 627 [2d Dept 1992]).

Here, defendants who served their motion papers by mail 20 days after they served their demand to change venue are entitled to a five-day extension of the 15-day period prescribed in CPLR 511(2). Plaintiffs, citing Sultana, contend that defendants cannot rely upon section 2103(b)(2) for the five-day extension because the motion did not constitute response papers. Section 2103(b) contains no language restricting its application to instances where a party is responding to papers served by an adversary. Moreover, defendants are permitted to move to change venue only in the event that plaintiffs do not consent in writing within five days after service of the demand. Although the motion papers are not directly responding to papers served by plaintiffs, defendants are effectively responding to plaintiffs' lack of consent to the change of venue. Simply put, defendants' motion papers are not initiatory and, because the demand was served by mail, defendants were entitled to the benefit of section 2103(b)(2)'s five-day extension.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the case remitted to that court for consideration of issues raised but not determined on the appeal to that court, and the certified question answered in the negative.

PIGOTT, J. (dissenting):

While I fear adding further confusion to what, up until now, seemed to be a fairly simple statute, I respectfully dissent from the judicial creation of what I will label an "anticipatory five-day rule" amending CPLR § 2103 (b) (2).

On July 17, 2009, plaintiffs commenced this medical malpractice action against multiple defendants by filing their summons and complaint in Supreme Court, Bronx County, basing their choice of venue on the fact that defendant Sol M. Usher had a place of business in the Bronx. Defendants answered by mail on August 20, 2009 and, pursuant to CPLR § 511 (b), simultaneously served a demand for a change of venue from Bronx County to Westchester County. Plaintiffs did not respond within five days after the date of service of the demand, i.e. by August 25, 2009. This permitted defendants, if they so chose, to move to change the place of trial by filing a motion in either Bronx or Westchester County on or before September 4, 2009. However, defendants' motion was served by mail on September 9, 2009.

Plaintiffs objected, and I think properly so, that the motion was untimely, under CPLR 511 (b), which provides that a defendant that has served a written demand for a change of venue "may move to change the place of trial within fifteen days after service of the demand, unless within five days after such service plaintiff serves a written consent" (emphasis added). Defendants enlisted CPLR 2103 (b) (2), to argue that their motion was timely because it was served within twenty days of service of their demand, despite the fact that CPLR § 511 specifies fifteen days. Supreme Court, Bronx County, granted defendants' motion to change the venue, but the Appellate Division reversed, and denied the motion, holding that defendants "were not entitled to the five-day extension in CPLR 2103 (b) (2) for time periods measured from service by mail" (73 AD3d 415 [1st Dept 2010]).

Under CPLR 2103 (b) (2), the statute being mangled here, "where a period of time prescribed by law is measured from the service of a paper and service is by mail, five days shall be added to the prescribed period." The legislative history of the statute makes it abundantly clear that its purpose is to give a party, on whom a paper has been served by mail, additional time to respond, because of the delays inherent in mailing. The five-day extension was created in the early 1980s (L 1982, ch 20, § 1, effective January 1, 1983); it had been three days before. At that time, the Advisory Committee on Civil Practice clearly described the extension as applying to a party's "responding time" or "responding period" (1982 Report of the Advisory Committee on Civil Practice to the Chief Administrator of the Courts of the State of New York, 1982 McKinney's Session Laws of NY, at 2651). The Committee wrote that "[t]he traditional three days by which a responding period is extended when the paper to be responded to is served by mail has proved too short in recent years, as the mails have been increasingly delayed" (id. at 2651-2652 [emphasis added]). The legislative intent could not be more obvious. The purpose of CPLR 2103 (b) (2) was to compensate for mail delays, and allow an adverse party more time to assemble responsive papers.

The Appellate Division has understood this, writing that "[t]he extension provided in CPLR 2103 (b) (2) constitutes legislative recognition of and compensation for delays inherent in mail delivery" (Sultana v Nassau Hosp., 188 AD2d 647 [2d Dept 1992], quoting Corradetti v Dales Used Cars, 102 AD2d 272, 273 [3d Dept 1984]) and "does not benefit the party making the service by mail" (Thompson v Cuadrado, 277 AD2d 151, 152 [1st Dept 2000]; see also Harvey v New York State Dep't of Envtl. Conservation, 235 AD2d 625 [3d Dept 1997]). Consistently, Professor Siegel, recognizing the intent of CPLR 2103, has noted that the statute "provides that whenever a period of time is measured from the service of a paper and the paper is served by mail, the party required to take the responsive step gets 5 additional days. This recognizes that the service was deemed complete upon posting and it compensates for the delay in mail delivery. . . . The 5 days are added to the stated period when any mail-served paper requires a responsive step within a stated period" (Siegel, NY Prac § 202, at 346 [5th ed] [emphases added]).

It is noteworthy that the Legislature, in the context of measuring time from the service of a judgment or order, has taken the trouble to add a provision that clarifies that "[w]here service of the judgment or order to be appealed from and written notice of its entry is made by mail . . . [under CPLR 2103], the additional days provided by such paragraphs shall apply to this action, regardless of which party serves the judgment or order with notice of entry" (CPLR 5513 [d]). This 1999 amendment to CPLR 5513 gives an additional five days to take an appeal when a notice of entry is served by mail, regardless of which party serves the notice of entry. The Legislature has not acted to alter statutes other than CPLR 5513, so as to make corresponding clarifications in areas other than appeals.

Here, defendants benefitted from the rule that papers are deemed served upon mailing – in this case on August 20. Plaintiffs, who would have received the papers some days after that, would have known that, while the statute requires a response within five days, i.e. by August 25, they could add five days and serve their response, if they chose to make one, on or before August 30. The five-day timetable is indisputably subject to extension under CPLR 2103 (b) (2), because it is a responsive deadline (Podolsky by Podolsky v Nevele Winter Sports, 233 AD2d 605, 605-606 [3d Dept 1996]; Hughes v Nigro, 108 AD2d 722, 723 [2d Dept 1985]). Defendants, on the other hand, were "not directly responding" to any papers, as the majority concedes (majority op at 4). Having no doubt marked plaintiffs' August 30 deadline on their calendar, defendants had until September 4, to serve, by mail if they chose, their motion for change of place of trial. That they did not is, in my view, fatal to their motion.

Defendants argue that plaintiffs' reading of CPLR 2103 (b) (2) creates practical difficulties for litigants. Given that plaintiffs have 10 days to decide about consent, the 15-day deadline for the motion means that defendants may have only 5 days between a service by mail of consent to change of venue and the motion deadline. If the mailing delay is 3 days, the time for preparing and filing the motion would end up being 2 days. Giving both parties the benefits of the extended period might be a good idea, practically. But one need only refer to CPLR § 2214 (b), which allows reply papers to be served by mail one day before the return date of a motion, to know that the Rules have not always been drafted with practicality in mind. In such a situation, an appellate court may signal the practical difficulties to the Legislature, so that it may consider amending the statute. But it is up to the Legislature to enact such a law.

In light of the legislative history and standard interpretations of CPLR 2103 (b) (2) in case law and commentary, I think it clear that 2103 (b) benefits only the party responding to the service, and I would therefore affirm the order of the Appellate Division.

A serious injury

Perl v Meher, 2011 NY Slip Op 08452 (2011)

In Pommells v Perez (4 NY3d 566, 571 [2005]), then Chief Judge Kaye described the working of the No-Fault Law (officially the Comprehensive Motor Vehicle Insurance Reparations Act, Insurance Law §§ 5101 et seq.) by saying: "Abuse . . . abounds." That included, she said, "abuse . . . in failing to separate 'serious injury' cases" from others (id.).

No-fault abuse still abounds today. In 2010, no-fault accounted for 53% of all fraud reports received by the Insurance Department (Annual Report to the Governor and the Legislature of the State of New York on the Operations of the Insurance Frauds Prevention Act at 23). "Serious injury" claims are still a source of significant abuse, and it is still true, as it was in 2005, that many courts, including ours, approach claims that soft-tissue injuries are "serious" with a "well-deserved skepticism" (Pommells, 4 NY3d at 571).

Here, we confront three cases in which the Appellate Division rejected allegations of serious injury as a matter of law. We conclude that we must reverse in two of the cases, Perl v Meher and Adler v Bayer, because the evidence plaintiffs have put forward is legally sufficient. We affirm in the third case, Travis v Batchi.

In finding that two of these three claims survive our scrutiny, we by no means signal an end to our skepticism, or suggest that that of lower courts is unjustified. There are cases, however, in which the role of skeptic is properly reserved for the finder of fact, or for a court that, unlike ours, has factual review power.

It's a long decision. Click the link to read the rest.

A rare no fault decision from the court of appeals

New York & Presbyt. Hosp. v Country Wide Ins. Co., 2011 NY Slip Op 07149 (2011)

3216

CPLR R. 3216 Want of prosecution

Umeze v Fidelis Care N.Y., 2011 NY Slip Op 04770 (Ct. App. 2011)

Supreme Court abused its discretion by declining to grant defendants' motion to  dismiss without condition. Plaintiff failed to establish a (1) justifiable excuse for his failure to timely file a note of issue and (2) meritorious cause of action (see CPLR 3216 [e]; see also Baczkowski v Collins Constr. Co., 89 NY2d 499 [1997]).

Banik v Evy Realty, LLC, 2011 NY Slip Op 04185 (App. Div., 2nd 2011)

On September 25, 2009, the Supreme Court, sua sponte, dismissed the action. By notice of motion dated February 3, 2010, the plaintiffs moved, in effect, to vacate the dismissal of the action and to restore the action to active status. The appellant opposed the plaintiffs' motion. In an order dated April 14, 2010, the Supreme Court, inter alia, denied those branches of the plaintiffs' motion which were, in effect, to vacate the dismissal and to restore the action as against the defendant Evy Realty, LLC (hereinafter Evy), to active status. In an order dated August 4, 2010, however, the Supreme Court granted the plaintiffs' motion for leave to reargue and, upon reargument, granted those branches of the plaintiffs' motion which had previously been denied. Evy appeals from the order dated August 4, 2010.

Neither the order dated April 14, 2010, nor the order appealed from contain any explanation for the original denial of those branches of the plaintiffs' motion which were, in effect, to vacate the dismissal and to restore the action as against Evy to active status or the subsequent granting, upon reargument, of those branches of the plaintiffs' motion. In addition, the record is not clear as to why the action was dismissed on September 25, 2009, in the first instance. The record]is devoid of any evidence that there was a conference scheduled for September 25, 2009, and there was no order dismissing the complaint pursuant to 22 NYCRR 202.27. Thus, contrary to Evy's contentions, 22 NYCRR 202.27 could not have provided the basis for the order dated April 14, 2010, denying those branches of the plaintiffs' motion which were to vacate the dismissal and restore the action to active status with respect to it (see Mitskevitch v City of New York, 78 AD3d 1137, 1138; Clark v Great Atl. & Pac. Tea Co., Inc., 23 AD3d 510, 511; Murray v Smith Corp., 296 AD2d 445, 446).

Furthermore, while the failure to comply with a court order directing the filing of a note of issue can, in the proper circumstances, provide the basis for the dismissal of a complaint under CPLR 3216, courts are prohibited from dismissing an action based on neglect to prosecute unless the CPLR 3216 statutory preconditions to dismissal are met (see Baczkowski v Collins Constr. Co., 89 NY2d 499, 502-503; Murray v Smith Corp., 296 AD2d at 447; Schwartz v Nathanson, 261 AD2d 527, 528; Schuering v Stella, 243 AD2d 623, 624). Here, a compliance conference order dated December 9, 2008, which set a date for the filing of the note of issue, did not constitute a valid 90-day demand because there was no warning that failure to file the note of issue by June 5, 2009, would serve as a basis for dismissal under CPLR 3216 (see Sanchez v Serje, 78 AD3d 1155, 1156; Ratway v Donnenfeld, 43 AD3d 465; Patel v MBG Dev., Inc., 41 AD3d 682, 683). Moreover, a so-ordered stipulation dated September 24, 2009, which extended the plaintiffs' time to file a note of issue until January 19, 2010, could not be deemed a 90-day demand since it failed to advise the plaintiffs that the failure to comply therewith would serve as the basis for a motion to dismiss the action (see Wasif v Khan, 82 AD3d 1084; Heifetz v Godoy, 38 AD3d 605; Wollman v Berliner, 29 AD3d 786).

Accordingly, upon reargument, the Supreme Court properly granted those branches of the plaintiffs' motion which were, in effect, to vacate the dismissal of the action as against Evy and to restore the action as against Evy to active status.

 

 

Policy terms and orther language related nuances

Cragg v Allstate Indem. Corp., 2011 NY Slip Op 04767 (Ct. App. 2011)

Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured (see Matter of Mostow v State Farm Ins. Cos., 88 NY2d 321, 326-327 [1996]). To the extent that there is any ambiguity in an exclusionary clause, we construe the provision in favor of the insured. Moreover, "'exclusions or exceptions from policy coverage . . . are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction. Indeed, before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation'" (Pioneer Towner Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 307 [2009], quoting Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984]). Allstate has not met that burden here.

The language of the policy exclusion — excluding coverage "whenever any benefit of this coverage would accrue directly or indirectly to an insured" — is ambiguous. It could be interpreted, as Allstate urges, to mean that bodily injury to an insured is not covered whenever any benefit — including coverage itself in the form of defense and indemnification — would accrue to an insured. However, as plaintiff points out, this interpretation ascribes meaning only to the first clause of the exclusion — "[w]e do not cover bodily injury to an insured person." Since the right to defense and indemnification universally accrues to an insured, under Allstate's interpretation the condition of the second clause of the exclusion would always be met. However, the second part of the exclusion must somehow modify the first part of the clause in order to have any meaning. In this context, a benefit must mean something other than coverage itself and is more naturally read to mean proceeds paid under the policy. In light of our obligation to interpret the exclusion in a manner that gives full force and effect to the policy language and does not render a portion of the provision meaningless (see County of Columbia v Continental Ins. Co., 83 NY2d 618, 628 [1994]), we find plaintiff's interpretation of the clause to be more in keeping with these well-settled principles of contract interpretation.

The current version of the exclusion at issue was brought about in response to the decision in Allstate Ins. Co. v Pestar (168 AD2d 931 [4th Dept 1990]). The prior version of the exclusion had excluded coverage for bodily injury to an insured. In Pestar, a child was injured when she dove into a State-owned lake. Her parents filed a negligence action against the State and the State counterclaimed seeking contribution. Despite the policy exclusion, the Appellate Division determined that Allstate had a duty to defend and indemnify the parents on the State's counterclaim, finding that "the liability at issue . . . is not the parents' liability to [the insured child] but rather the parents' potential liability to the State on a claim of equitable apportionment" (Pestar, 168 AD2d at 931-932). The insurer subsequently added language to the exclusion stating that bodily injury to an insured is not covered "whenever any benefit of this coverage would accrue directly or indirectly to an insured person" (see 9A Couch on Insurance 3d § 128:4).

Assuming the insurer intended this language to exclude coverage under the policy entirely for bodily injury to insureds, it did not accomplish the desired result. Instead of making the exclusion broader, the additional language can be read as limiting the application of the exclusion to situations where an insured would receive a benefit (i.e. payment) under the policy. The amendment, then, can be seen as the insurer's attempt to cut off indirect claims, such as claims for contribution. As relevant to this appeal, however, the exclusion fails to bar unambiguously payment to a noninsured plaintiff, that is to say it does not clearly cut off the nonresident distributee's wrongful death claims arising from the fatal injury to an insured.

Other jurisdictions have observed that there are valid policy reasons for excluding coverage in cases such as this one. They have noted that homeowner's insurance is generally meant to cover bodily injury to noninsureds (see Cincinnati Indem. Co. v Martin, 85 Ohio St 3d 604, 608; 710 NE2d 677, 680 [1999]) and that coverage is excluded in these types of situations in order to avoid imposing liability on the insurer in a case where the insured, due to a close relationship with the injured party, might be unmotivated to assist the insurer in defending against the claim (see Whirlpool Corp. v Ziebert, 197 Wis 2d 144, 149; 539 NW2d 883, 885 [1995])^[FN1]. However, faced with a very similar case addressing the identical exclusion, the Wisconsin Supreme Court recently held that "Allstate has failed to meet its burden to demonstrate that the policy term 'benefit' unambiguously includes the contractual right to receive a defense or the contractual right to indemnification" (Day v Allstate Indem. Co., 2011 WI 24, ¶57 [decided April 29, 2011]). We agree with this analysis.

We therefore find that judgment should have been granted in plaintiff's favor, as the exclusion did not operate to bar coverage for the noninsured plaintiff's wrongful death claim for the death of the insured decedent.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the matter remitted to Supreme Court for further proceedings in accordance with this opinion.

Brennan Beer Gorman/ Architects, LLP v Cappelli Enters., Inc., 2011 NY Slip Op 04825 (App. Div., 1st 2011)

On May 19, 2008, plaintiff submitted a proposal for architectural and engineering services to defendants relating to a proposed casino resort project (the project). Four days later, plaintiff informed defendants that it was still "working on a formal agreement," but nonetheless asked defendants to provide authorization to proceed. Defendants authorized plaintiff to start working, but expressly noted that plaintiff's "proposal and associated pricing" were "still under review and . . . subject to a formal agreement." Although plaintiff proceeded to work on the project, the parties continued to exchange contract drafts and comments for several months, never coming to an express agreement on price and other terms. It is thus evident on this record that the parties' minds never met on the material terms of their agreement, including price (see Yenom Corp. v 155 Wooster St. Inc., 23 AD3d 259, 259-260 [2005], lv denied 6 NY3d 708 [2006]). Accordingly, defendants are entitled to summary judgment dismissing plaintiff's first and third causes of action for breach of an express contract.

Defendants are also entitled to summary judgment dismissing plaintiff's fourth cause of action for breach of an implied contract. As noted, the record establishes that the parties never reached an express agreement on the material term of price. Moreover, defendants' statement that they would be bound only by a formal agreement and their repeated rejection of plaintiff's proposal for lump-sum pricing overrides their act of paying plaintiff's August 2008 invoice, which billed for work performed in June 2008 on a lump-sum basis (see Jordan Panel Sys. Corp. v Turner Constr. Co., 45 AD3d 165, 179 [2007]).

Defendants' consistent objections to plaintiff's invoices requires dismissal of the fifth cause of action for an account stated (cf. Herrick, Feinstein LLP v Stamm, 297 AD2d 477, 478-479 [2002]).

Because plaintiff's express and implied contract claims should be dismissed, plaintiff's second cause of action for attorneys' fees should also be dismissed, as that claim is premised exclusively on the attorneys' fees provision contained in plaintiff's May 2008 proposal.

Supreme Court properly declined to dismiss plaintiff's sixth cause of action for quantum meruit, since triable issues of fact exist as to whether plaintiff could have reasonably expected to be compensated for its services and the reasonable value of those services (see generally Fulbright & Jaworski, LLP v Carucci, 63 AD3d 487, 488-489 [2009]). Although the parties never reached an agreement on price, the record indicates that defendants acknowledged the need to pay plaintiff at least some amount for its services. Indeed, on July 3, 2008, defendants directed plaintiff to bill "for now on a [time and materials] basis until we have reached conclusion on the contract," and, on August 18, 2008, defendants asked plaintiff to prepare a summary of spending and payment status, noting that they wanted "to make sure we are staying current."

We reject defendants' contention that plaintiff cannot establish that defendants benefitted from plaintiff's services. The plaintiff asserting a valid claim in quantum meruit "recovers the reasonable value of his performance whether or not the defendant in any economic sense benefitted from the performance" (Martin H. Bauman Assoc. v H & M Intl. Transp., 171 AD2d 479, 484 [1991] [internal quotation marks and citation omitted]).

We also reject defendants' contention that plaintiff cannot establish the reasonable value of its services because it did not maintain itemized billing records detailing how it spent the asserted 5,800 man-hours of work. There are other means of establishing the reasonable value of services rendered, including the plaintiff's invoices and evidence of the number of hours of service rendered (see Paul F. Vitale, Inc. v Parker's Grille, Inc., 23 AD3d 1147, 1147 [2005], lv denied 6 NY3d 707 [2006]; Clark v Torian, 214 AD2d 938, 938 [1995]), both of which are available in the record. Moreover, plaintiff has submitted the affidavit of a licensed architect who, based on his review of the record, opined that plaintiff's schematic design work had a fair market value of at least $1.3 million.

We note that, on appeal, plaintiff does not seek summary judgment on its quantum meruit claim. In any event, we find that plaintiff is not entitled to such relief due to unresolved issues of material fact. We further note that defendant makes no argument with respect to plaintiff's seventh cause of action for a declaratory judgment.

Goldman Sachs Group, Inc. v Almah LLC, 2011 NY Slip Op 04725 (App. Div. 1st 2011)

Before any discovery was conducted, GS moved to dismiss the counterclaims pursuant to CPLR 3211(a)(1) and (7)(21)^[FN1]. GS argued that it was entitled to dismissal of the first counterclaim (breach of contract) because all the transaction documents submitted established that it "received" no "payment" of any kind as a result of the assignment and sublease. Preliminarily, the motion court acknowledged that, because Art. 12.6(a) of the lease speaks in terms of actual payment, GS's interpretation limiting the profit-sharing obligation to money received was reasonable. Nevertheless, the court denied the motion to dismiss as to the first counterclaim, finding that the term "other consideration" was ambiguous and should be interpreted with the aid of extrinsic evidence, reasoning that, since "sum" means money, if "other consideration" is to have any non-redundant meaning, it must mean more than just money, in accordance with the broad legal concept that consideration may be many forms of value.

Whether a contract is ambiguous is a question of law for the court and is to be determined by looking "within the four corners of the document" (Kass v Kass, 91 NY2d 554, 566 [1998], citing W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162-163 [1990]). A contract is unambiguous if "on its face [it] is reasonably susceptible of only one meaning" (Greenfield v Philles Records, 98 NY2d 562, 570 [2002]; see also Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]). Conversely, "[a] contract is ambiguous if the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings" (Feldman v National Westminster Bank, 303 AD2d 271, 271 [2003], lv denied 100 NY2d 505 [2003] [internal quotation marks and citations omitted]).

The existence of ambiguity is determined by examining the "entire contract and consider[ing] the relation of the parties and the circumstances under which it was executed," with the wording to be considered "in the light of the obligation as a whole and the intention of the parties as manifested thereby" (Kass at 566 [internal quotations marks and citation omitted]). The " intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and the parties' reasonable expectations'" (Del Vecchio v Cohen, 288 AD2d 426, 427 [2001], quoting Slamow v Del Col, 174 AD2d 725, 726 [1991], affd 79 NY2d 1016 [1992]).

Applying these principles, we find that the language of Article 12.6, when considered as an integrated whole and not in isolation, conveys the parties' intent that only actual "payment" made by the assignee and "receipt" by the assignor as consideration would trigger the profit-sharing clause. Indeed, Article 12.6 lists several types of "consideration" and all of the examples consist of amounts payable, for one reason or another, to the Tenant. The examples of "other consideration" include "sums paid for the sale or rental of Tenant's fixtures, leasehold improvements, equipment, furnishings or other personal property . . . " Additionally, Article 12.6 indicates that any "consideration" would consist of "sums" that a Tenant "receives" and against which the Tenant's expenses can be netted. This language in Article 12.6 conveys the parties' clear intent that only tangible consideration such as cash or notes payable to the tenant could trigger the profit-sharing clause, and that any intangible benefits inuring to the tenant from the assignment and sublease, as the owner posits, in the form of inherent "value" does not suffice. Even though the word "consideration" might seem to suggest a broader meaning in general, the word should be limited to the particular object that the parties intended here. Accordingly, because it is undisputed that no "payment" was "received" as consideration for the assignment of the lease, tenant GS was entitled to a dismissal of the counterclaim in its entirety.

Ellington v Sony/ATV Music Publ. LLC, 2011 NY Slip Op 04733 (App. Div., 1st 2011)

Plaintiff failed to set forth a basis for terminating the parties' copyright royalties agreement. Viacom's sale of defendant Famous Music, a party to the agreement, to defendant Sony/ATV did not repudiate the agreement by assigning plaintiff's rights and rendering Famous incapable of performing its obligations. In any event, an assignment is permissible in the absence of an express prohibition (see Eisner Computer Solutions v Gluckstern, 293 AD2d 289 [2002]; Matter of Stralem, 303 AD2d 120, 122 [2003]). Plaintiff's conclusory characterization of the agreement as an unassignable personal services contract (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 482 [2006], cert dismissed 548 US 940 [2006]) was contradicted by the overall tenor of the agreement, which was cast as a sale of "assets" and did not provide for the management of plaintiff's artistic career or talents. The extraordinary remedy of rescission was unwarranted since, among other reasons, there was an adequate remedy at law (see Rudman v Cowles Communications, 30 NY2d 1, 13 [1972]).

The fiduciary breach claim was duplicative of the contract claims (see William Kaufman Org. v Graham & James, 269 AD2d 171, 173 [2000]), plaintiff's artificial separation of the royalty mis-routing allegation from the "negative adjustment" contract claims notwithstanding. The unjust enrichment claim was not viable in light of the undisputedly valid contract claims (see EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 23 [2005]).

Malekan v Sakai, 2011 NY Slip Op 04751 (App. Div., 1st 2011)

Supreme Court correctly determined that Sakai is the rightful owner of the antique. Plaintiff Malekan's contention that the agreement in Farsi was an agreement to forbear, akin to a covenant not to sue, lacks support in the record. Furthermore, there is no dispute that Malekan also signed a bill of sale written in English concerning the antique, and under the circumstances, Malekan is bound by what he signed (see Shklovskiy v Khan, 273 AD2d 371, 372 [2000]).

Suazo v Maple Ridge Assoc., L.L.C., 2011 NY Slip Op 04762 (App. Div., 1st 2011)

The right of a party to recover indemnification on the basis of a contractual provision depends on the intent of the parties and the manner in which that intent is expressed in the contract (see Kurek v Port Chester Hous. Auth., 18 NY2d 450 [1966]). The promise to indemnify should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances (see Hooper Assoc., Ltd., v AGS Computers, 74 NY2d 487 [1989]). A contract that provides for indemnification will be enforced so long as the intent to assume such role is sufficiently clear and unambiguous (see Bradley v Earl B. Feiden, Inc., 8 NY3d 265 [2007]).

999

Release

Arfa v Zamir, 2011 NY Slip Op 04719 (Ct. App. 2011)

In June 2005, plaintiffs Rachel Arfa and Alexander Shpigel executed a general agreement with defendant Gadi Zamir regarding management of their real estate business. The agreement contained a provision in which each party released the others and their related entities from, "any and all claims, demands, actions, rights, suits, liabilities, interests and causes of action, known and unknown, which they have ever had, have or may now have, which in any way pertain to or arise from any matters, facts, occurrences, actions or omissions which occurred prior to" the date of the contract. This general release, which plaintiffs allege was part of a negotiated agreement meant to ease an antagonistic relationship and keep Zamir "from destroying the value of the real estate portfolio," prevents plaintiffs from now bringing an action for fraud based on misrepresentations predating it.

Plaintiffs have failed to allege that the release was induced by a separate fraud (see Centro Empresarial Cempresa S.A., et. al. v América Móvil, S.A.B. de C.V., et al., ___ NY3d ___ [decided ____ ]). Additionally, they have failed to allege that they justifiably relied on Zamir's fraudulent misstatements in executing the release. By their own admission, plaintiffs, who are sophisticated parties, had ample indication prior to June 2005 that defendant was not trustworthy, yet they elected to release him from the very claims they now bring without investigating the extent of his alleged misconduct (see Centro, ____ NY3d at ___; DDJ Mgt., LLC v Rhone Group L.L.C., 15 NY3d 147, 153-154 [2010]). Dismissal of plaintiffs' fraud cause of action is therefore appropriate.

Centro Empresarial Cempresa S.A. v America Movil, S.A.B. de C.V., 2011 NY Slip Op 04720 (Ct. App. 2011)

Having executed this release, plaintiffs cannot now claim that defendants fraudulently misled them regarding the value of their ownership interests in TWE unless the release was itself induced by a separate fraud. The fraud described in the complaint, however, falls squarely within the scope of the release: plaintiffs allege that defendants supplied them with false financial information regarding the value of Conecel and TWE, and that, based on this false information, plaintiffs sold their interests in TWE and released defendants from claims in connection with that sale. Thus, as the Appellate Division observed: "plaintiffs seek to convert the 2003 release into a starting point for new . . . litigation, essentially asking to be relieved of the release on the ground that they did not realize the true value of the claims they were giving up" (Centro, 76 AD3d at 317).

 

That the parties had a fiduciary relationship does not alter our conclusion. It is true that Telmex, as a majority shareholder in a closely held corporation, owed a fiduciary duty to plaintiffs, minority shareholders (see Fender v Prescott, 64 NY2d 1077, 1079 [1985]). Telmex was therefore required to "disclose any information that could reasonably bear on plaintiffs' consideration of [its purchase] offer" (Dubbs v Stribling & Assoc., 96 NY2d 337, 341 [2001]).

 

A sophisticated principal is able to release its fiduciary from claims — at least where, as here, the fiduciary relationship is no longer one of unquestioning trust — so long as the principal understands that the fiduciary is acting in its own interest and the release is knowingly entered into (see Alleghany Corp., 333 F2d at 333 ["There is no prerequisite to the settlement of a fraud case that the (fiduciary) defendant must come forward and confess to all his wrongful acts in connection with the subject matter"]; Consorcio Prodipe, S.A. de C.V., 544 F Supp 2d at 191). To the extent that Appellate Division decisions such as Littman v Magee (54 AD3d 14, 17 [1st Dept 2008]), Blue Chip Emerald v Allied Partners Inc. (299 AD2d 278, 279-280 [1st Dept 2002]), and Collections v Kolber, 256 AD2d 240, 241 [1st Dept 1998]) suggest otherwise, they misapprehend our case law. Plaintiffs here are large corporations engaged in complex transactions in which they were advised by counsel. As sophisticated entities, they negotiated and executed an extraordinarily broad release with their eyes wide open. They cannot now invalidate that release by claiming ignorance of the depth of their fiduciary's misconduct.  

 

In addition to failing to allege that the release was induced by a separate fraud, plaintiffs have failed to allege that they justifiably relied on defendants' fraudulent statements in executing the release. As we recently reiterated:

"If the facts represented are not matters peculiarly within the party's knowledge, and the other party has the means available to him of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentations" (DDJ Mgt., LLC v Rhone Group L.L.C., 15 NY3d 147, 153-154 [2010], quoting Schumaker v Mather, 133 NY 590, 596 [1892]).

Here, according to the facts alleged in the complaint, plaintiffs knew that defendants had not supplied them with the financial information necessary to properly value the TWE units, and that they were entitled to that information. Yet they chose to cash out their interests and release defendants from fraud claims without demanding either access to the information or assurances as to its accuracy in the form of representations and warranties. In short, this is an instance where plaintiffs "have been so lax in protecting themselves that they cannot fairly ask for the law's protection" (id. at 154).

CPLR § 2001 from up on high

CPLR § 2001 Mistakes, omissions, defects, and irregularities

Goldenberg v Westchester County Health Care Corp., 2011 NY Slip Op 02075 (Ct. App. 2011)

The bill that amended CPLR 2001 was introduced at the request of the Chief Administrative Judge upon the recommendation of the Advisory Committee on Civil Practice. Its purpose was to allow trial courts to fix or, where non-prejudicial, overlook defects in the filing process, including the failure to acquire or purchase an index number so long as the applicable fees were eventually paid (see L 2007, ch 529). The Introducer's Memorandum states that the bill was offered in response to our decisions in Harris, Matter of Fry v Village of Tarrytown (89 NY2d 714 [1997]) and Matter of Gershel v Porr (89 NY2d 327 [1996]) (see Senate Introducer Mem in Support, Bill Jacket, L 2007, ch 529, at 5). Gershel and Harris both involved failure to pay the proper filing fee; in Fry, the plaintiff did not file a signed copy of an order to show cause along with his petition ^[FN3]. In each of these cases the correct initiatory papers were filed. As the Introducer's Memorandum emphasizes, the amendments to
section 2001 were not meant to

"excuse a complete failure to file within the statute of limitations. Moreover, in order to properly commence an action, a plaintiff or petitioner would still have to actually file a summons and complaint or a petition. A bare summons, for example, would not constitute a filing. The purpose of this measure is to clarify that a mistake in the method of filing, AS OPPOSED TO A MISTAKE IN WHAT IS FILED, is a mistake subject to correction in the court's discretion" (id. at 5-6 [capitalization in original] [emphasis added]).

Here, plaintiff never filed a summons and complaint. The closest he came was the proposed complaint attached to the petition he filed when seeking permission to file a late notice of claim, itself a prerequisite to the commencement of this action. Given the absence of a summons, there was "a complete failure to file within the statute of limitations," which CPLR 2001 does not allow a trial judge to disregard.^[FN4]

ss

Langan. Kind of important.

State Farm Mut. Auto. Ins. Co. v Langan, 2011 NY Slip Op 02437 (Ct. App. 2011)

This appeal turns on whether decedent's injuries were caused by an accident [*4]within the meaning of the policy. Although the endorsements at issue do not define the term "accident," we have previously held that it is not to be "given a narrow, technical definition," but should be interpreted according to how it would be understood by the average person (Miller v Continental Ins. Co., 40 NY2d 675, 676 [1976]). We have determined that, for purposes of automobile insurance policies, the term "accident" means an event typically involving violence or the application of external force (see Michaels v City of Buffalo, 85 NY2d 754, 758 [1995]). In order to determine whether a particular event was "accidental, 'it is customary to look at the casualty from the point of view of the insured, to see whether or not . . . it was unexpected, unusual and unforeseen'" (Miller, 40 NY2d at 677 [citation omitted]). Although we have noted that the perspective of the injured victim should not be used to determine whether an accident has occurred, "'[b]ecause an injury is always fortuitous to a non-consenting victim'" 
(Michaels, 85 NY2d at 759 [citation omitted]), here we have the situation where the victim is also the insured.

It is clear that, viewed from the insured's perspective, the occurrence was an unexpected or unintended event — and therefore an "accident" — even though Popadich admittedly intended to strike decedent with the vehicle. The language of the policy also suggests that this type of situation would be covered as it was an accident caused by the use of a motor vehicle that did not have an applicable insurance policy. Significantly, Insurance Department regulations require that an automobile owner's liability insurance policy contain a provision specifying "that assault and battery shall be deemed an accident unless committed by or at the direction of the insured" (11 NYCRR § 60-1.1 [f]). Although the provisions at issue here do not involve liability coverage, the regulation is relevant to the understanding of the extent of coverage provided by the endorsements.

The argument against requiring coverage, advanced by State Farm and relied upon by the Appellate Division, is based on the general principle that mandatory uninsured motorist benefits are meant to provide coverage that is coextensive with, and not greater than, that afforded by a standard liability policy. They rely on our statement that the purpose of mandatory UM benefits is "'to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident'" (Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196, 204 [2007], quoting Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687 [1994]).

In support of its position, State Farm relies on McCarthy v Motor Veh. Acc. Indem. Corp. (16 AD2d 35 [4th Dept 1962], affd 12 NY2d 922 [1963]), a case where the plaintiff-victim was injured when the insured motorist committed an intentional assault against her using his vehicle. After the insurer denied coverage because the occurrence was not an [*5]accident within the meaning of the policy, plaintiff sought to recover under the policy's MVAIC endorsement — a statutorily required endorsement intended to afford coverage to a person injured by an uninsured or unidentified motorist, equal to that available to one injured by a motorist covered by an applicable liability policy (see McCarthy, 16 AD2d at 38). MVAIC is funded by assessments levied against all of the insurance companies licensed to conduct business in the state (see McCarthy, 16 AD2d at 39). McCarthy held that since an intentional assault committed by an insured motorist was not an accident subject to coverage under the standard liability policy, such an occurrence would likewise be excluded from coverage under the MVAIC endorsement (see McCarthy, 16 AD2d at 43). The Court also determined that allowing recovery under MVAIC would be inconsistent with the purpose for which the special fund had been established (see McCarthy, 16 AD2d at 44).

This case differs from McCarthy in two important respects. First, UM coverage, although required by statute, is part of the insured's own policy — a policy that the insured selected and for which he pays premiums. Benefits received through coverage under the UM endorsement do not come out of a State fund. Second, the insured is the victim in this case, not the tortfeasor, and the public policy against providing coverage for an insured's criminal acts is not implicated.

We hold that, consistent with the reasonable expectation of the insured under the policy and the stated purpose of the UM endorsement (to provide coverage against damage caused by uninsured motorists), the intentional assault of an innocent insured is an accident within the meaning of his or her own policy. The occurrence at issue was clearly an accident from the insured's point of view and Langan is entitled to benefits under the UM endorsement.

This result is also in keeping with the national trend toward allowing innocent insureds to recover uninsured motorist benefits under their own policies when they have been injured through the intentional conduct of another (see e.g. American Family Mut. Ins. Co. v Petersen, 679 NW2d 571 [Iowa 2004]; Shaw v City of Jersey City, 174 NJ 567, 811 A2d 404 [2002]; Wendell v State Farm Mut. Auto. Ins. Co., 293 Mont 140, 974 P2d 623 [1999]). Although the above decisions are not binding on this Court, we are persuaded that the view that has been adopted by these jurisdictions is the better one.

For many of the same reasons, Langan is entitled to coverage under the PIP endorsement and Coverage S. The average insured's understanding of the term "accident" is unlikely to vary from endorsement to endorsement within the same policy. The occurrence, from the insured's perspective, was certainly unexpected and unforeseen and should be considered an accident subject to coverage. Contrary to State Farm's argument, we perceive no danger that this result will frustrate efforts to fight fraud in the no-fault insurance system. Significantly, there is [*6]no allegation whatsoever of fraud in this case and it is patent that benefits should continue to be denied to those who intentionally cause their own injuries.

The argument that Langan is entitled to attorneys' fees was not addressed by the courts below and should be remitted to Supreme Court for its determination in the first instance.

Accordingly, the order of the Appellate Division should be modified, without costs, by granting defendant judgment declaring in accordance with this opinion and remitting to Supreme Court for further proceedings in accordance with this opinion, and, as so modified, affirmed. The certified question should be answered in the negative. 

There is a dissent from Smith.

Stuff I meant to post but didn’t feel like it at the time.

 

Bonik v Tarrabocchia, 2010 NY Slip Op 07878 (App. Div., 2nd 2010)

The plaintiff failed to rebut the defendant's sworn statement that he never received a copy of the order entered July 1, 2004, which, inter alia, scheduled a conference for September 29, 2004. The assertion of the plaintiff's attorney that she personally served that order upon the then- pro se defendant was not supported by a proper affidavit of service or other proof of service (see Lambert v Schreiber, 69 AD3d 904). A written statement prepared by the plaintiff's attorney on August 4, 2004, was neither sworn to before a notary public nor subscribed and affirmed to be true under the penalties of perjury and, thus, did not constitute competent evidence of service (see CPLR 2106; Moore v Tappen, 242 AD2d 526). Without notice of the conference, the defendant's "default" was a nullity, as was the remedy imposed by the Supreme Court as a consequence (see CPLR 5015[a][4]; Pelaez v Westchester Med. Ctr., 15 AD3d 375, 376; Tragni v Tragni, 21 AD3d 1084, 1085; cf. Hwang v Tam, 72 AD3d 741, 742). In this situation, vacatur of the default is required as a matter of law and due process, and no showing of a potentially meritorious defense is required (see Pelaez v Westchester Med. Ctr., 15 AD3d at 376; Kumer v Passafiume, 258 AD2d 625, 626). Consequently, the subsequent inquest, the judgment entered March 21, 2006, and the order dated July 16, 2007, were all nullities, and must be vacated. In addition, there was no competent proof that the plaintiff served the defendant with notice of the inquest, a copy of the judgment entered March 22, 2006, with notice of entry, or a copy of the order entered July 20, 2007, with notice of entry.

Rizzo v Kay, 2010 NY Slip Op 09493 (App. Div., 2nd 2010)

Furthermore, under the circumstances of this case, it was not error for the trial court to allow testimony on the issue of whether the appellant abandoned treatment of the plaintiff before fully completing her dental work, and, in effect, to conform the pleadings to the proof adduced at trial by submitting a claim of abandonment to the jury. "A trial court generally has broad discretion to deem the pleadings amended to conform to the evidence presented at the [trial], even absent a motion by a party, provided [that] there is no significant prejudice or surprise to the party opposing the amendment" (Matter of Allstate Ins. Co. v Joseph, 35 AD3d 730, 731; see CPLR 3025[c]; A-1 Check Cashing Serv. v Goodman, 148 AD2d 482). Here, the appellant was not prejudiced or surprised by the admission of evidence on the issue of abandonment and the submission of this issue to the jury, since the issue was explored, and relevant evidence obtained, during discovery (see Alomia v New York City Tr. Auth., 292 AD2d 403, 406; Diaz v New York City Health & Hosps. Corp., 289 AD2d 365, 366).

It was also proper for the trial court to dismiss the appellant's cross claim against the defendant Joseph Maniscalco. The plaintiff failed to present any expert evidence that Dr. Maniscalco departed from good and accepted standards of dental practice, and therefore agreed to withdraw her dental malpractice claim against Dr. Maniscalco at the close of her case. While the appellant opposed Dr. Maniscalco's motion to dismiss the cross claim against him upon the ground that there was a factual dispute as to whether Dr. Maniscalco was an independent contractor who could be held liable for his own acts of malpractice, the appellant's expert witness disclosure statement failed to identify any departures from good and accepted standards of dental practice which Dr. Maniscalco may have committed. Under these circumstances, the trial court providently exercised its discretion in ruling that the appellant would be precluded from offering expert testimony as to whether Dr. Maniscalco committed any acts of dental malpractice (see CPLR 3101[d][1][i]; Lucian v Schwartz, 55 AD3d 687, 688; Parlante v Cavallero, 73 AD3d 1001; Schwartzberg v Kingsbridge Hgts. Care Ctr., Inc., 28 AD3d 463, 464), and in concluding that absent such expert testimony, the appellant could not establish a prima facie case of dental malpractice against Dr. Maniscalco, and therefore could not prevail upon his cross claim (see Perricone-Bernovich v Gentle Dental, 60 AD3d 744, 745; Sohn v Sand, 180 AD2d 789, 790.

Comice v Justin's Rest., 2010 NY Slip Op 07884 (App. Div., 2nd 2010)

The Supreme Court properly denied that branch of the plaintiff's motion which was pursuant to CPLR 1003 for leave to amend the summons and complaint to add Andre Suite as a defendant. The statute of limitations expired and the plaintiff failed to demonstrate that the relation-back doctrine was applicable (see CPLR 203[f]; Buran v Coupal, 87 NY2d 173). In order for claims asserted against a new defendant to relate back to the date the claims were filed against an original defendant, the plaintiff must establish, inter alia, that the new party knew or should have known that, but for a mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against that party as well (see Buran v Coupal, 87 NY2d at 178; Arsell v Mass One LLC, 73 AD3d 668, 669; Boodoo v Albee Dental Care, 67 AD3d 717, 718). Here, the plaintiff failed to establish that Suite knew or should have known that, but for a mistake as to the identity of the proper parties, this action would have been brought against him as well (see Boodoo v Albee Dental Care, 67 AD3d at 718; Marino v Westchester Med. Group, P.C., 50 AD3d 861; Yovane v White Plains Hosp. Ctr., 228 AD2d 436, 437; see also Bumpus v New York City Tr. Auth., 66 AD3d 26, 34-35).

Furthermore, the Supreme Court properly denied that branch of the plaintiff's motion which was, in effect, pursuant to CPLR 1024 to name Andre Suite as a defendant in lieu of "John Doe." In order to employ the procedural mechanism made available by CPLR 1024, a plaintiff must show that he or she made timely efforts to identify the correct party before the statute of limitations expired (see Bumpus v New York City Tr. Auth., 66 AD3d at 29-30; Harris v North Shore Univ. Hosp. at Syosset, 16 AD3d 549, 550; Justin v Orshan, 14 AD3d 492, 492-493; Scoma v Doe, 2 AD3d 432, 433; Porter v Kingsbrook OB/GYN Assoc., 209 AD2d 497). Here, the plaintiff failed to make such a showing. 

Sanchez v Avuben Realty LLC, 2010 NY Slip Op 08780 (App. Div., 1st 2010)

An application brought pursuant to CPLR 5015 to be relieved from a judgment or order entered on default requires a showing of a reasonable excuse and legal merit to the defense asserted (see Crespo v A.D.A. Mgt., 292 AD2d 5, 9 [2002]). While the failure to keep a current address with the Secretary of State is generally not a reasonable excuse for default under CPLR 5015(a)(1) (id. at 9-10), where a court finds that a defendant failed to "personally receive notice of the summons in time to defend and has a meritorious defense," relief from a default may be permitted (CPLR 317; see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 142 [1986]).

Here, notwithstanding the Secretary of State's maintenance of the wrong corporate address, the evidence of record demonstrates that defendant did receive notice of the summons in time to interpose a defense, and inexplicably failed to do so. It is undisputed that six months after the complaint's filing, counsel for defendant's insurer contacted plaintiff's counsel to discuss settlement, at which time he was informed of the then-pending motion for default judgment. The very fact that settlement options were discussed at this time evidences that defendant was aware of plaintiff's action. Moreover, vacatur of a default judgment is not warranted merely because the default was occasioned by lapses on the part of an insurance carrier (see Klein v Actors & Directors Lab, 95 AD2d 757 [1983], lv dismissed 60 NY2d 559 [1983];Lemberger v Congregation Yetev Lev D'Satmar, Inc., 33 AD3d 671, 672 [2006]). The evidence of record also indicates that five months after filing of the summons and complaint, copies thereof were delivered to an undisputably valid address for defendant, as was notice of entry of the Supreme Court's March 26, 2007 order granting plaintiff's motion for default judgment and [*2]noticing an inquest as to damages. Still defendant took no action until approximately two-and-a-half years after the complaint's filing, when plaintiff attempted to collect on the Supreme Court's judgment.

Defendant failed to establish entitlement to vacatur of the default judgment under CPLR 5015(a)(3) due to an alleged fraud perpetrated by plaintiff in support of his complaint, as the affidavit it submitted in support of this claim was both conclusory and recounted hearsay.

Gibbs v St. Barnabas Hosp., 2010 NY Slip Op 09198 (Ct. App. 2010)

Under CPLR 3042 (d), a court may invoke the relief set forth in CPLR 3126 when a "party served with a demand for a bill of particulars willfully fails to provide particulars which the court finds ought to have been provided pursuant to this rule." CPLR 3126, in turn, governs discovery penalties and applies where a party "refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed." The statute contains a list of nonexclusive sanctions and further permits courts to fashion orders "as are just." CPLR 3126 therefore broadly empowers a trial court to craft a conditional order — an order "that grants the motion and imposes the sanction 'unless' within a specified time the resisting party submits to the disclosure" (Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3126:10 ["The conditional order is in fact the most popular disposition under CPLR 3126"]; see also CPLR 3042 [d]).

The situation that developed in this case is, unfortunately, a scenario that we have seen before. In Fiore v Galang (64 NY2d 999 [1985], affg 105 AD2d 970 [3d Dept 1984]), a medical malpractice action, the trial court granted a 30-day conditional order of preclusion directing plaintiffs to serve a bill of particulars on the defendant hospital. Following plaintiffs' lack of compliance with the order, the hospital moved for summary judgment dismissing the complaint. The trial court denied the motion on the condition that plaintiffs serve a bill of particulars and pay $415 to the hospital's attorneys ^[FN3]. On appeal, the Appellate Division reversed and dismissed the complaint, concluding that the trial court erred in excusing the default without requiring plaintiff to offer both a reasonable excuse and an affidavit of merit. We affirmed, explaining that "absent an affidavit of merits it was error, as a matter of law, not to grant defendant Hospital's motion for summary judgment" (id. at 1000 [emphasis added]).

***

In reaching this conclusion, we reiterate that "[l]itigation cannot be conducted efficiently if deadlines are not taken seriously, and we make clear again, as we have several times before, that disregard of deadlines should not and will not be tolerated" (Andrea v Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, P.C. [Habiterra Assoc.], 5 NY3d 514, 521 [2005]; see also Wilson v Galicia Contr. & Restoration Corp., 10 NY3d 827, 830 [2008]; Miceli v State Farm Mut. Auto. Ins. Co., 3 NY3d 725, 726-727 [2004]; Brill, 2 NY3d at 652-653; Kihl, 94 NY2d at 123).