Opinion
4509/2010
10-12-2011
Chaim Lissauer, Plaintiff, v. Guideone Specialty Mutual Insurance, Defendant.
Attorney for Plaintiff David Ben Haim, Esq. Schindel, Farman, Lipsius, Gardner & Rabinovich LLP. Attorney for Defendant Carl J. Schaerf, Esq. GuideOne Specialty Mutual Insurance.
Attorney for Plaintiff David Ben Haim, Esq. Schindel, Farman, Lipsius, Gardner & Rabinovich LLP.
Attorney for Defendant Carl J. Schaerf, Esq. GuideOne Specialty Mutual Insurance.
Francois A. Rivera, J.
By notice of motion filed on May 13, 2011, defendant Guideone Specialty Mutual Insurance (hereinafter "Guideone") has moved under motion sequence one to dismiss the instant complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action. Guideone has also moved pursuant to CPLR 5015(a)(3) to vacate and set aside a judgment granted to plaintiff in another action and pursuant to CPLR 5240, to permanently enjoin plaintiff from enforcing that judgment. The judgment in question was obtained against Beth Medrash Emek Halacha (hereinafter "Emek"), Guideone's insured, in an action bearing index number 5399/2003 (hereinafter "the underlying action").
Plaintiff opposes defendant's motion.
BACKGROUND
On February 25, 2011, plaintiff commenced the instant action by filing a summons and complaint with the King's County Clerk's Office.Plaintiff is a judgment creditor and Guideone is the insurer of Emek, the judgment debtor. Plaintiffs instant complaint is a direct action against the judgment debtor's insurer, seeking to recover the amount of the unsatisfied judgment obtained in the underlying action pursuant to Insurance Law § 3420(a)(2). Defendant has not interposed an answer to the instant complaint.
The complaint alleges the following salient facts. Guideone is the liability insurer for Emek. Plaintiff commenced an action for damages due to personal injuries against Emek and others bearing index number 5399/03. Guideone denied and disclaimed insurance coverage to Emek in defending the underlying action. A judgment was entered in the underlying action in favor of Chaim Lissauer against Emek.
Pursuant to a stipulation between plaintiff and Emek in the underlying action, Emek agreed to withdraw its answer and the plaintiff agreed to refrain from seeking to enforce any judgment against Emek other than in an action against Guideone pursuant to Insurance Law § 3420(a)(2). A damages inquest was held and Emek was found liable in the amount of $1,041,116.50 inclusive of interest, costs and disbursements. Plaintiff claims in the instant action that Guideone is liable to pay damages in the judgment entered against its insured in the underlying action.
MOTION PAPERS
Defendant's motion papers consist of a notice of motion, an attorney's affirmation and fifteen exhibits, labeled A through O. Exhibit A is a copy of the judgment after inquest of the underlying action. Exhibit B is a copy of the summons and complaint of the instant action. Exhibit C is a copy of the summons and verified complaint in the underlying action. Exhibit D is a copy of the plaintiff's verified bill of particulars in the underlying action. Exhibit E is a copy of the deposition of Yitzchok Kaufman conducted on December 12, 2005, in connection with the underlying action. Exhibit F is a copy of the deposition of Abe Herbst conducted on December 12, 2005, in connection with the underlying action. Exhibit G is a copy of the deposition transcript of Chaim Lissauer conducted on December 1, 2004, in connection with the underlying action. Exhibit H is a copy of the purported lease of the subject premises in the underlying premises where the alleged slip and fall occurred. Exhibit I is a copy of Emek's answer in the underlying matter. Exhibit J consists of various discovery demands of plaintiff in the underlying action. Exhibit K consists of a notice of appeal dated September 25, 2007 by Emek of the order of the Honorable Yvonne Lewis in the underlying action. Exhibit L is a copy of the stipulation between plaintiff and Emek concerning the withdrawal of Emek's answer and the plaintiff's agreement to refrain from seeking to enforce any judgment against Emek in the underlying action. Exhibit M is a copy of the order of the Honorable Donald S. Kurtz dated January 5, 2009 in the underlying action. Exhibit N is a copy of the letter sent to Emek from Guideone disclaiming coverage in the underlying action. Exhibit O consists of an affidavit of the plaintiff.
Plaintiff has opposed the motion with an affirmation of counsel, two annexed exhibits labeled A and B and a memorandum of law. Exhibit A is a copy of the insurance policy between Emek, and GuideOne. Exhibit B is a certificate of liability insurance.
LAW AND APPLICATION
CPLR 5015(a)(3) states in pertinent part as follows:
Relief from judgment or order:
(a) On motion. The court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of: ... (3) fraud, misrepresentation, or other misconduct of an adverse party.
"Under CPLR 5015 (a), a court is empowered to vacate a default judgment for several reasons, including excusable neglect; newly-discovered evidence; fraud, misrepresentation or other misconduct by an adverse party; lack of jurisdiction; or upon the reversal, modification or vacatur of a prior order. These categories represent a codification of the principal grounds upon which courts have traditionally vacated default judgments as part of their "inherent discretionary power" (see Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5015:11, at 476 [1992]).
It thus follows that section 5015 (a) does not provide an exhaustive list as to when a default judgment may be vacated. Indeed, the drafters of that provision intended that courts retain and exercise their inherent discretionary power in situations that warranted vacatur but which the drafters could not easily foresee (see id.; 3d Preliminary Report of Advisory Comm on Practice and Procedure, 1959 NY Legis Doc No. 17, at 204)." (Woodson v. Mendon Leasing Corp., 100 NY2d 62, 68, 760 N.Y.S.2d 727, 733 [2003]).
A court may vacate a default judgment upon proof of a meritorious defense and a reasonable excuse for the default, or upon proof that the judgment resulted from fraud, misrepresentation, or misconduct by an adverse party (Halali v. Vista Environments, Inc., 8 AD3d 435, 779 N.Y.S.2d 117 [2d 2004] citing Chemical Bank v. Vazquez, 234 AD2d 253, 650 N.Y.S.2d 773 [2d 1996]).
To seek relief from a judgment or order, all that is necessary is that some legitimate interest of the moving party will be served and that judicial assistance will avoid injustice (Oppenheimer v. Westcott, 47 NY2d 595, 602, 393 N.E.2d 982, 989 [1979]).
A motion for relief from a default judgment must be brought in the original action or proceeding (Calabrese Bakeries, Inc. v. Rockland Bakery, Inc., 83 AD3d 1060, 1061, 923 N.Y.S.2d 556 [2d 2011] citing James v. Shave, 62 NY2d 712, 714, 476 N.Y.S.2d 532 [1984]). There are virtually no exceptions to this well-established rule (Calabrese Bakeries, Inc. v. Rockland Bakery, Inc., supra citing Oppenheimer v. Westcott, 47 NY2d 595, 602-603, 419 N.Y.S.2d 908).
Guideone's instant motion to vacate the judgment in the underlying action may be denied on procedural grounds because it was not brought in the underlying action or proceeding (Calabrese Bakeries, Inc. v. Rockland Bakery, Inc., 83 AD3d 1060, 1061, 923 N.Y.S.2d 556 [2d 2011]).
Guideone's motion may also be denied on substantive grounds based on its failure to demonstrate that the judgment in the underlying action was procured by a fraud upon the court or through misconduct by the parties. Guideone has cited the case of Huckle v. CDH Corp., 30 AD3d 878, 817 N.Y.S.2d 707 [3d 2006] to support its contention that the stipulation entered into by the plaintiff and Emek in the underlying action was improper on its face.
In the Huckle case, the insured defendant agreed with the injured plaintiff that a default judgment would be entered against the defendant to enable the plaintiff to enforce the judgment against defendant's insurer pursuant to Insurance Law § 3420 (a)(2).
The Appellate Division Third Department found that the defendant was placed in the unenviable position of having to execute the stipulation not only to protect itself, but also to allow plaintiffs to pursue a direct action against the insurer pursuant to Insurance Law § 3420 (a)(2). The Appellate Division Third Department did not find, however, that the stipulation was an act of fraud on the court or that it constituted misconduct by the parties. Rather the Appellate Court found that the Supreme Court had discretionary authority to set aside the judgment under the particular circumstances of this case. The unique circumstance in the Huckle case was that the insurer wanted to withdraw its disclaimer and defend the underlying action. Guideone is not offering to do that in the instant action.Guideone has failed to demonstrate that a fraud was perpetuated upon the court which issued the judgment in the underlying action or that the parties engaged in misconduct in obtaining the judgment. Therefore, the motion is denied as procedurally defective and substantively unsupported.
Guideone also seeks to restrain the plaintiff from collecting upon the judgment in the underlying action pursuant to CPLR 5240 premised upon the same claim of fraud and misconduct.Inasmuch as Guideone has improperly sought to collaterally attack a judgment and has presented no evidence of fraud or misconduct by the parties, Guideone's motion to permanently enjoin and restrain the plaintiff from taking any steps to enforce or collect the judgment must also be denied.
On a motion to dismiss pursuant to CPLR 3211(a)(7) the court will accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (Nonnon v. City of New York, 9 NY3d 825, 827, 842 N.Y.S.2d 756 [2009]; citing, Leon v. Martinez, 84 NY2d 83, 87-88, 614 N.Y.S.2d 972 [1994]).
"[A] court is, of course, permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211(a)(7) (see CPLR 3211[c]). If the court considers evidentiary material, the criterion then becomes "whether the proponent of the pleading has a cause of action, not whether he has stated one."... Yet, affidavits submitted by a defendant "will almost never warrant dismissal under CPLR 3211 unless they establish conclusively that [the plaintiff] has no cause of action."... Indeed, a motion to dismiss pursuant to CPLR 3211(a)(7) must be denied "unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it." (Sokol v. Leader, 74 AD3d 1180, 1181-1182, 904 N.Y.S.2d 153, 155-156 [2d 2010]; [internal citations omitted]).
There is no dispute that the instant complaint is brought by plaintiff as a judgment creditor against Guideone as the alleged insurer of Emek, the judgment debtor. Plaintiffs direct action against the judgment debtor's insurer seeks to recover the amount of the unsatisfied judgment in the underlying action pursuant to Insurance Law § 3420(a)(2).
Following the reasoning in Sokol, Guideone has failed to show that the validity of the judgment in the underlying action—itself a material fact—isno fact at all. Guideone has not demonstrated that plaintiff's complaint fails to state a cause of action.
Defendant's motion for an order pursuant to CPLR 5015(a)(3) vacating and setting aside a judgment in the underlying action is denied.
Defendant's motion for an order pursuant to CPLR 5240 enjoining and restraining plaintiff from taking any steps to enforce or collect the judgment in the underlying action is denied.
Defendant's motion for an order pursuant to CPLR 3211(a)(7) dismissing the instant complaint for failure to state a cause of action is denied. Defendant has twenty days to answer the instant complaint.
The foregoing constitutes the decision and order of this court.
Enter:
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J.S.C.
Enter Forthwith:
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J.S.C.