Opinion
015067/05.
Decided July 13, 2006.
Weinstein, Kaplan Cohen, P.C., Garden City, NY, Attorneys for Plaintiff.
Law Offices of Albert DeGregoris, Garden City, NY, Attorneys for Defendant.
Motion by defendant brought by order to show cause dated June 9, 2006 [Phelan, J.] for an order to set aside the default judgment against her or, in the alternative, to dismiss plaintiff's complaint is denied.
Defendant alleges that prior to a gastric bypass surgery performed in December, 2002, the parties reached an agreement under which plaintiff would accept the sum of all disbursements made by defendant's insurance company as full satisfaction for the cost of surgery. Defendant admits that she failed to remit to plaintiff a total of $7,125.00 paid to her in insurance disbursements of $6,000.00 and $1,500.00 each, and cites financial hardship as her reason for that failure. Thereafter, in July 2003, defendant contends that she reached a second oral agreement with plaintiff to remit an initial payment of $1,500.00 followed by monthly installments of $200.00 until the balance of $7,125.00 was paid in full. Defendant asserts that she has abided by this agreement, and that to date she has tendered $4,300.00 to plaintiff.
Plaintiff commenced this action for damages on or about August 19, 2005. Defendant never interposed an answer to the summons and complaint, and plaintiff obtained a default judgment against defendant on or about March 2, 2006. Following receipt of notice of garnishment of her wages, defendant now seeks to have the default judgment set aside on the grounds that she was not properly served with process because she only received a copy of the summons and complaint by mail, or in the alternative for the complaint to be dismissed with prejudice.
A party may move to vacate a default judgment against it under CPLR § 317 or CPLR § 5015. Even where the moving party cites only one statutory provision, the reviewing court may consider whether the application of either statute would warrant the relief requested ( Peacock v. Kalikow, 239 AD2d 188 [1st Dep't., 1997]).
CPLR § 317 states in pertinent part that "[a] person served with a summons other than by personal delivery to him or to his agent . . . may be allowed to defend the action within one year after he obtains knowledge of entry of the judgment . . . upon a finding of the court that he did not personally receive notice of the summons in time to defend and has a meritorious defense" (see, CPLR § 317). Unlike a vacatur motion under CPLR § 5015, it is unnecessary for a defendant seeking relief under CPLR § 317 to demonstrate a reasonable excuse for his default ( NY Presbyterian Hosp. v. Allstate Ins. Co., ___ AD3d ___, 815 NYS2d 478 {29 AD3d 968} [2nd Dep't., 2006]; Rifelli v. Fireside Homes Corp., 152 AD2d 629 [2nd Dep't., 1989]).
Defendant admits in her sworn affidavit that she received a copy of the summons and complaint by regular mail in October 2005. As such, defendant had actual notice of the action in time to defend it irrespective of whether service upon her was proper. Her failure to answer was thus conscious because she had actual notice of the lawsuit pending against her ( Tremont Federal Sav. Loan Asso. v. Ndanusa, 144 AD2d 660 [2nd Dep't., 1988]). Therefore, defendant's motion to vacate the default judgment, if premised upon CPLR § 317, cannot succeed in light of her actual knowledge of the lawsuit.
CPLR § 5015(a)(4) states in pertinent part that "the court which rendered a judgment . . . 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 . . . lack of jurisdiction to render the judgment" (see, CPLR § 5015[a][4]). A lack of personal jurisdiction exists where defendant was not properly served with process pursuant to CPLR § 308. Since, in the absence of proper service of a summons a default judgment is a nullity which must be vacated unconditionally, the existence or lack of a meritorious defense is irrelevant to the question of whether a judgment should be vacated for lack of personal jurisdiction ( Chase Manhattan Bank, N.A. v. Carlson, 113 AD2d 734 [2nd Dep't., 1985]). In that instance, following vacatur of the default, outright dismissal of plaintiff's complaint is also warranted ( Steele v. Hempstead Pub. Taxi, 505 AD2d 401 [2nd Dep't., 2003]).
An affidavit of service by plaintiff's process server which specifies the papers served, the person who was served, and the date, time, address and sets forth facts showing that service was made by an authorized person, and in an authorized manner, constitutes prima facie evidence of proper service ( Maldonado v. County of Suffolk, 229 AD2d 376 [2nd Dep't., 1996]). A sworn denial of service by defendant will rebut the presumption of proper service only where it refutes factual allegations in the process server's affidavit or presents a question of fact rather than baldly denying receipt of process. ( Silverman v. Deutsch, 283 AD2d 478 [2nd Dep't., 2001]; European Am. Bank v. Abramoff, 201 AD2d 611 [2nd Dep't., 1994]; Federal Nat'l Mortg. Asso. v. Rick Mar Constr. Corp., 138 Misc 2d 316 [NY Sup Ct 1988]).
In her affidavit, defendant contends that she was not served with process and only received a copy of the summons and complaint by mail. Plaintiff, however, has produced an affidavit of service indicating that process was served upon an individual of suitable age and discretion at defendant's residence pursuant to CPLR § 308. More specifically, the process server's affidavit states that a copy of the summons and complaint was delivered to Fred Lester, a relative of defendant, on October 7, 2005 and another copy mailed to defendant on October 8, 2005. Plaintiff's denial of service is conclusory insofar as it does not refute the contents of the process server's affidavit, nor does it raise a question of fact as to whether service was properly effectuated. Accordingly, defendant's claim that this court lacks personal jurisdiction over her due to improper service of process must fail.
CPLR § 5015(a)(1) also permits the court to vacate a default judgment where there has been an "excusable default" by defendant (see, CPLR § 5015[a][1]). A defendant seeking to vacate a default judgment on the ground of excusable default bears the burden of demonstrating both a justifiable excuse for the default and a meritorious defense ( Zino v. Joab Taxi, Inc., 20 AD3d 521 [2nd Dep't., 2005]).
The only excuses for default proffered by defendant aside from improper service are that the parties were engaged in settlement discussions and that defendant was abiding by terms of a pre-existing oral agreement at the time the suit was filed.
Defendant has, however, also submitted various bills and correspondence from plaintiff and its representatives that call into question the existence of an underlying oral agreement and settlement discussions. Bills from plaintiff provide an accounting of surgery related fees totaling more than $100,000.00. The earliest of these bills is dated April 30, 2003, approximately one month before plaintiff failed to remit her second insurance disbursement of $1,500.00 to plaintiff and well after the first alleged oral agreement. Additionally, correspondence sent to defendant from a collection agency and plaintiff's counsel indicate that plaintiff consistently attempted to collect an amount in excess of $100,000.00 from defendant from 2003 through the present. Although defendant insists that a representative of the collection agency advised her that she should continue to remit monthly payments pursuant to her alleged oral agreement with plaintiff, the only evidence submitted in support of her contention that a monthly installment arrangement was in place is a letter dated June 6, 2005 to plaintiff's counsel from defendant herself.
Even if the court were to pre-suppose the existence of an underlying oral agreement, defendant's receipt of the summons and complaint in October 2005 should have put defendant on notice that whatever oral agreement she believed existed was clearly in dispute by plaintiff. Defendant's belief that the alleged pre-existing agreement would somehow nullify her need to respond to the lawsuit is unreasonable and inexcusable.
Further, defendant's argument that ongoing settlement negotiations between the parties excuse her from answering must also fail. In her affidavit, defendant did not assert a single instance in which settlement negotiations took place after June 6, 2005, more than two months before this action was commenced. Plaintiff contends that it attempted to settle this matter through July 20, 2005 and that defendant was not responsive at that time. Even after this final attempt to settle the matter, plaintiff waited an additional month before commencing this action. Accordingly, defendant has failed to establish that settlement negotiations took place after the commencement of this lawsuit such that she should be excused from timely filing an answer. Moreover, settlement negotiations generally do not constitute an excuse for default that warrants vacatur (see, People by Abrams v. Scudds, 195 AD2d 778 [3rd Dep't. 1993]; Rondout Valley Pub. Co. v. AM International, Inc., 93 AD2d 912 [3rd Dep't., 1983]). Accordingly, defendant has not proffered a viable excuse for her default.
As defendant has not met her burden of establishing an excuse for her default, the issue of defendant's potential meritorious defense need not be reached.
Defendant's motion to vacate the default judgment against her or dismissal of plaintiff's complaint is denied.
This decision constitutes the order of the court.