Opinion
11448/01.
Decided December 19, 2002.
When is "an appearance" a default? This is the question which the Court must consider on these two motions. The defendant, GEICO Insurance Company, seeks vacatur of the plaintiff's demand for a trial de novo. The plaintiff opposes the motions. As the issues are identical in the two motions, the Court has joined them together for decision.
In these two no-fault cases, the plaintiff (a health service provider) seeks a judgment for health services rendered to Hazel McGregor (the assignor in action 1 [the "McGregor action"]) and Ulysses Johnson (the assignor in action 2 [the "Johnson action"]) as a result of automobile accidents occurring on January 24, 2001 and February 6, 2001, respectively. The defendant provided no-fault insurance benefits to the assignors at the time of the accidents. In each action, the plaintiff submitted bills and claims for $621.50, which the defendant did not pay.
The McGregor and Johnson actions were commenced on August 9, 2001 by CPLR 311 service of the summons and complaint upon the defendant. The defendant answered both complaints on August 23 and 24, 2001, denying the main allegations in the complaint and raising several affirmative defenses.
On January 11, 2002, the plaintiff in both actions filed a notice of trial and statement of readiness. Both cases were thereafter assigned to compulsory arbitration pursuant to the Part 28 of the Rules of the Chief Judge ( 22 NYCRR 28.2[b]). An arbitrator was assigned to hear the cases and both the McGregor and Johnson matters were scheduled to be heard on July 9, 2002.
According to Jeanne Boral, Esq., the attorney for the defendant, on July 9th, "the plaintiff's firm informed our office that on both cases they would not proceed, not present witnesses or evidence but would seek that the award be granted in the defendant's favor for failure to state a cause of action. The plaintiff's attorney stated to the arbitrator that they would not proceed and requested that the award be granted in favor of the defendant. Further, the plaintiff presented no excuse for not proceeding with the action" (affirmation dated September 12, 2002).
The plaintiff does not contest the defendant's statement of what occurred at arbitration. In fact, counsel for plaintiff states that "[i]n the interest of judicial economy, all background facts and procedural history are contained in defendant's moving papers and all pleadings annexed thereto" (affirmation of Thomas J. Galan, Esq., dated October 24, 2002).
The report of the arbitrator indicates that counsel for the plaintiff and the defendant appeared. The arbitrator granted an award in favor of defendant against plaintiff for no cause of action. The award was entered with the Clerk's office on August 6, 2002. Thereafter, the plaintiff in both cases filed for a trial de novo. These motions ensued.
"A demand for a trial de novo may be made by any party who was not in default at the compulsory arbitration hearing. 22 NYCRR 28.12," Mineola Mack Distributors, Inc. v. Huntington Fleet Service, Inc., 132 Misc2d 18, 502 NYS2d 651 (Dist. Ct Nassau County 1986). Here, it is undisputed that the plaintiff itself was not present at the arbitration hearing, that the plaintiff presented no evidence and that the plaintiff failed to present any sort of case. Accepting defendant's unrebutted statements as true, the plaintiff requested that the arbitrator enter an award in favor of the defendant for failure to state a cause of action.
"22 NYCRR 28.12(a) limits the right to demand a trial de novo to parties who are not in default (Friedman v. Reagan, 107 AD2d 457, 460 n. 4, 487 NYS2d 431)," Finamore v. Huntington Cardiac Rehabilitation Association, 150 AD2d 426, 541 NYS2d 36 (2nd Dept. 1989). In Finamore, the plaintiff's attorney appeared at arbitration, but the plaintiff did not. Counsel submitted the pleadings and did nothing else. The arbitrator found that the plaintiff had "no cause of action". The Appellate Division, Second Department held that "the failure of the plaintiff to appear at the arbitration proceeding constituted a default on his part, and precludes him from demanding a trial de novo (citations omitted)," Id. at 150 AD2d 427. The Appellate Division, Third Department applied this holding to defendants holding that "[d]efense counsel's appearance at the arbitration hearing without his clients and his refusal to participate in the hearing constituted a default on the part of defendants", Bitzko v. Gamache, 168 AD2d 888, 564 NYS2d 808 (3rd Dept. 1990); cf. San-Dar Associates v. Adams, 167 Misc2d 727, 643 NYS2d 880 (App. Term 1st Dept. 1996) [where defendant's counsel disputed the plaintiff's evidence at arbitration and contested the case, the defendant's appearance by counsel was not a default]; Tripp v. B. Reitman Blacktop, Inc., 188 Misc2d 317, 728 NYS2d 625 (App. Term 9th 10th Jud. Dists. 2001) [while defendant did not appear at arbitration, its attorney participated in the hearing, conducted cross-examination of the plaintiff's witnesses and produced an expert witness, the defendant was not in default for trial de novo purposes].
In these two cases, the plaintiff sues for no-fault benefits allegedly not paid. In each case, the amount sued for is less than $625. There is no counterclaim. The burden was upon the plaintiff to prove its case in arbitration. It failed to produce competent evidence to show entitlement to the relief requested in the complaint. Part 28 is "intended to promote the expeditious resolution of smaller cases on the merits. Because they require an arbitration hearing instead of a trial, they also permit an unsuccessful party who participated in the compulsory arbitration to demand a trial de novo to avoid a constitutional challenge for deprivation of the right to a jury trial. NY Const. Art. 1, § 2," Wagalter v. Constable Merchandising Corp., 179 Misc2d 312, 684 NYS2d 851 (Civil Ct NY County 1998) (emphasis supplied).
Compulsory arbitration can serve many purposes prompt resolution of cases, permitting "informal" discovery, facilitating settlement both pre- and post-arbitration. The mandatory arbitration of civil cases under $6,000 has proven to be highly beneficial to the district court. The vast majority of cases sent to arbitration are resolved there. In 2001, for instance, of the 1,428 cases which were sent for compulsory arbitration in the district court, requests for a trial de novo were received in only 145 instances.
This Court agrees with Judge Saxe who held that a "technical appearance by plaintiff's attorney at arbitration . . . constitutes a default," Cable Films v. Ampro Video Productions, Inc., 125 Misc2d 874,876, 480 NYS2d 458 (Civil Ct NY County 1984). To hold otherwise would be an "abuse of the system which should not be tolerated," Id. "The appearance by an attorney at the hearing does not excuse a default by a party in presenting evidence and proceeding with the hearing. An attorney cannot sit by, listen to his adversaries proof and demand a trial de novo as a result of the failure to affirmatively participate," Honeywell Protection Services v. Tandem Telecommunications, Inc., 130 Misc2d 130, 495 NYS2d 130 (Civil Ct NY County 1985) ["To permit an attorney to appear at a hearing, not present any evidence and then be free to demand a trial de novo, would circumvent the statute providing for compulsory arbitration and render such law a nullity thereby defeating the intent of the arbitration proceeding."] Thus, it is clear that the plaintiff did not participate in the compulsory arbitration. Its participation was almost placeholder-like let's go through the motions and then bring the matter back to the judge. "Allowing such tactics to succeed would entail an expensive waste of time and resources, and might well eventually undermine the entire arbitration program which, as the Court statistics demonstrate, has been of enormous assistance in reducing calendar congestion and speeding the resolution of relatively minor disputes," Doyle v. Amtec Management, 143 Misc2d 292, 540 NYS2d 409 (Civil Ct NY County, 1989).
Accordingly, the Court finds that the plaintiff defaulted in appearing at compulsory arbitration and is thus not entitled to demand a trial de novo. The demand for a trial de novo is vacated and the matter stricken from the trial calendar.
The proper remedy for the plaintiff is to make a motion to vacate its default pursuant to 22 NYCRR 28.7(a) if the defaulting party can establish "good cause", to wit: a valid reason for the plaintiff's failure to proceed to arbitration, Finamore, supra.
This constitutes the decision and order of the Court.