Opinion
16896/2003.
Decided September 8, 2008.
Jimmy Wagner, Esq., The Law Office of Thaniel J. Beinert, Attorney for Plaintiff.
Neil Sznitken, Esq., Attorney for Defendant.
Third party defendants Steven Marovic ("Marovic") and Grand Piping Inc. ("Grand Piping"), move by order to show cause to vacate a default judgment and dismiss the action.
BACKGROUND
This case arises out of a lengthy and litigious dispute between corporate partners. At issue here is a third party action brought by Nicholas Digiacomo ("Digiacomo") and Quest Mechanical Corp. ("Quest") against several defendants, including Steven Marovic ("Marovic") and Grand Piping Inc. ("Grand Piping"). This third party action was settled as between Digiacomo, Marovic and Grand Piping on October 20, 2005, by an agreement ("Settlement Agreement") signed by both Digiacomo and Marovic, individually and on behalf of Quest and Grand Piping, respectively. The terms of the Settlement Agreement, in essence, were that the parties "shall execute a Stipulation of Dismissal with Prejudice for the Action." Grand Piping would provide Digiacomo with employment as a "Project Manager" for three years, with compensation and terms set forth in the Settlement Agreement. The Settlement Agreement also provided that, "[i]n the event of a breach of the terms of this Agreement, either party may commence a new action or proceeding to enforce the terms of this Agreement." The parties did not file a stipulation of dismissal with the court.
While Digiacomo signed the Settlement Agreement "individually and on behalf of Quest Mechanical Corp.," Quest is not listed in the opening paragraph as a party to the Settlement Agreement. It appears that Quest was an intended party to the Settlement Agreement despite not being included in the opening paragraph as both third-party plaintiffs Digiacomo and Quest would need to have settled with Marovic and Grand Piping for the third party action to be resolved as to Marovic and Grand Piping. Furthermore, Digiacomo clearly signed the settlement agreement on behalf of Quest.
On November 14, 2005, Quest, Gordon Zisholtz ("Zisholtz"), Digiacomo, Steven Aisenbaum ("Aisenbaum"), and Steven Aisenbaum and Company requested to enter a stipulation for discontinuance with prejudice and without costs and disbursements on the record. The attorney for Quest, Aisenbaum and Steven Aisenbaum and Company stated the following on the record: "It is hereby stipulated and agreed by and between the attorneys for the respective parties hereto, and the respective parties, that the within action shall be [and] in the same hereby [is] discontinued with prejudice and without costs by any parties against the other" (November 14, 2005 Transcript at 2-3). This court then confirmed this stipulation to discontinue with Digiacomo, Zisholtz and Aisenbaum. However, Marovic and Grand Piping did not appear or agree to this stipulation to discontinue on the record.
On August 9, 2006, Digiacomo moved for a default judgment to recover damages from Marovic and Grand Piping, alleging that they had not complied with the Settlement Agreement. Specifically, Digiacomo alleged that despite repeated attempts on his part, Marovic and Grand Piping would not allow Digiacomo to begin working for them. This motion was denied without prejudice. Digiacomo moved for a default judgment again on October 18, 2006. This motion was granted, and this court entered a judgment upon a settled order on notice on January 22, 2007 in favor of Digiacomo, for recovery of $257,400.00 from Marovic and Grand Piping. This judgment was not entered by the clerk until March 14, 2007. On December 4, 2007, Marovic and Grand Piping moved to vacate this default judgment by order to show cause. This court denied the application without prejudice, as the accompanying papers were deficient. The papers were refiled with the deficiencies corrected, and the instant order to show cause was then signed on May 21, 2008. Marovic and Grand Piping contend that, contrary to Digiacomo's assertion, they have offered him numerous employment opportunities, and he has declined each one.
DISCUSSION
CPLR 5015 addresses vacatur of default judgments. CPLR 5015(a), states in relevant part, "[t]he 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." As an initial matter, Digiacomo contends that Marovic and Grand Piping's papers are deficient because they have provided an affidavit from Robert Marovic, who is the son of Steven Marovic and is not a party to this action. However, any interested person' in CPLR 5015 does not refer only to parties ( see Oppenheimer v Westcott, 47 NY2d 595,603 [1979]; Harkless v Reid , 23 AD3d 622 [2d Dept 2005]). As the Court of Appeals has stated, "[a]s we view CPLR 5015, it was intended to assure that a broad class of persons, not limited to parties in the formal sense, could move in the original action" ( Oppenheimer, 47 NY2d at 603). Steven Marovic apparently suffered a serious injury recently and it appears he is unable to provide an affidavit himself. As the son of Steven Marovic, and as someone who has sworn he is familiar with the facts of the case and with Grand Piping, Robert Marovic qualifies as an interested person under CPLR 5015(a), and his affidavit is sufficient support for the motion to vacate.
"A defendant seeking to vacate a default judgment pursuant to CPLR 5015 (a) (1) must demonstrate both a reasonable excuse for the default and the existence of a meritorious defense" ( Dominguez v Carioscia , 1 AD3d 396, 397 [2d Dept 2003]). It is well settled that the five grounds listed in CPLR 5015(a) were not intended to displace the court's inherent power to offer relief from judgments. "[S]ection 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 . . . In addition to the grounds set forth in section 5015(a), a court may vacate its own judgment for sufficient reason and in the interests of substantial justice." ( Woodson v Mendon Leasing Corp., 100 NY2d 62, 68; see also Ladd v Stevenson, 112 NY 325, 332; Quigley v Coco's Water Café ,43 AD3d 1132 [2d Dept 2007].)
Marovic and Grand Piping argue that pursuant to the Settlement Agreement, the only relief available to Digiacomo is through a plenary action. However, "[a]n action is not automatically terminated by agreement unless there has been a showing that the parties have executed an express, unconditional stipulation of discontinuance'" ( Pegalis v Gibson, 237 AD2d 420, 421 [2d Dept 1997], citing Teitelbaum Holdings, Ltd. v Gold, 48 NY2d 51, 56). Even where a stipulation of settlement is placed on the record, "[a]bsent . . . an unconditional stipulation of discontinuance, the plaintiffs [are] entitled to seek enforcement of the settlement stipulation by motion in the underlying action" ( Patel v Orma, 190 AD2d 782, 783 [2d Dept 1993], citing Teitelbaum, 48 NY2d at 56; see also Gressin v National Life Ins. Co., 278 AD2d 451, 452 [2d Dept 2000]). In the present action, the Settlement Agreement provides that "[t]he Parties shall execute a Stipulation of Dismissal with Prejudice for the Action." However, it appears that Marovic, Grand Piping, Digiacomo and Quest did not execute such a stipulation which, had they done so, a plenary action would have been required pursuant to Teitelbaum to enforce the terms of the settlement. While Quest, Zisholtz, Digiacomo, Aisenbaum, and Steven Aisenbaum and Company entered a stipulation of discontinuance on the record on November 14, 2005 on the underlying action, third party defendants Marovic and Grand Piping, against whom such stipulation is sought to be enforced, were not present and did not consent to the discontinuance of the third party action addressed in the Settlement Agreement. Therefore, pursuant to Teitelbaum, the Settlement Agreement between Marovic, Grand Piping, Digiacomo, and Quest may be enforced by way of motion herein as the action was not unequivocally terminated by a stipulation of discontinuance ( Teitelbaum, 48 NY2d at 56). Marovic and Grand Piping's objection to the default judgment based upon the failure to bring a separate plenary action is rejected.
However, there is sufficient reason to vacate the default judgment against Marovic and Grand Piping pursuant to CPLR 5015 (a) (1). Based upon attorney Davanand Singh's affidavit stating that he moved his office prior to the notice of motion for default and that the previous office address was the only address listed for the third party defendants to receive notice of the default motion, it appears that Marovic and Grand Piping did not receive notice of the default motion. Although third party plaintiffs have included receipts from certified mail addressed to Davanand Singh in support of their assertion that their notice of motion was proper, it is noted that the receipts are dated Februrary 2, 2006, more than nine months prior to the notice of motion of default. Therefore, Marovic and Grand Piping's assertion that they did not receive notice of the motion for default judgment constitutes a valid and reasonable excuse for the default ( Taborsky v Mercy Med. Ctr., 304 AD2d 559 [2d Dept 2003]; Lohmann v Castleton Gallery, Inc., 252 AD2d 482, 483 [2d Dept 1998]).
Marovic and Grand Piping have also asserted a meritorious defense in their motion to vacate the default judgment. Robert Marovic's affidavit in support of the motion to vacate the default judgment states that Grand Piping offered Digiacomo numerous positions pursuant to the Settlement Agreement and that Digiacomo declined the positions for various reasons. As third party plaintiffs' motion for default judgment was based upon Marovic and Grand Piping's failure to provide Digiacomo with a job pursuant to the Settlement Agreement, Marovic's affidavit demonstrates the existence of a meritorious defense to the underlying motion ( see Goldman v Cotter , 10 AD3d 289, 291 [1st Dept 2004]). Therefore, pursuant to CPLR 5015 (a) (1), the default judgment entered against Marovic and Grand Piping must be vacated.
CONCLUSION
Accordingly, third party defendants' motion is granted to the extent that the default order of January 22, 2007 is hereby vacated. Third party defendants' motion to dismiss is denied. Counsel shall appear for conference in Commercial I at 9:45 am on October 29, 2008.The foregoing constitutes the decision and order of the Court.