Deajess Med. Imaging, P.C. v Country-Wide Ins. Co.
Annotate this CaseDecided on October 7, 2008
Civil Court of the City of New York, Kings County
Deajess Medical Imaging, P.C. A/A/O LIA LEBEDEVA, ANNIE SERRANO, KING WONG, OLIVE BROWN, NORA FIGUEROA, ANN GUERRER, CRAIG JONES, NATASHA LAWRENCE, MARYANNA PILLAR, and WO YI WU, Plaintiff(s),
against
Country-Wide Insurance Company, Defendant.
105504/2004
Jaffe & Koumourdas
40 Wall Street -12th Floor
New York, NY 10005
Attorneys for Defendant
Moshe D. Fuld, P.C.
38 west 32nd Street -7th Floor
New York, NY 10001
Attorneys for Plaintiff
George J. Silver, J.
In this action to recover first-party no-fault benefits, interest and attorney's fees
pursuant to New York's Insurance Law and no-fault regulations, defendant Country-Wide
Insurance Company (hereinafter defendant) moves pursuant to CPLR § 5015 [a] [1] [2] and
[3] for an order vacating the judgment entered against it.
Procedural Background
This action was commenced by plaintiff Deajess Medical Imaging PC (hereinafter plaintiff) by service of a summons and complaint upon defendant on or about October 21, 2004. Defendant served its answer on November 16, 2004. On November 4, 2005 summary judgment was granted in plaintiff's favor as to all of plaintiff's claims and judgment was entered against defendant in the amount of $18,694.39 plus statutory interest and attorney's fees. In granting plaintiff's motion for summary judgment, the motion court held that plaintiff had established its prima facie entitlement to no-fault benefits and that defendant failed to submit "admissible proof of any issue of fact." The motion court rejected defendant's argument that plaintiff's motion was premature because discovery was still outstanding and held that defendant failed to annex exhibits in proper form to establish that discovery demands were served and not complied with. Defendant moved to reargue plaintiff's summary judgment motion and on July 10, 2006, the return date of defendant's motion, the parties entered into a written stipulation of settlement. The stipulation resolved defendant's motion to reargue as follows: "[p]laintiff agrees to vacate the judgment for assignor Trinece Summer, defendant agrees to pay the remaining claims as per the Court's Order of November 4, 2005 within 30 days inclusive of interest up until the day of payment." The stipulation, which was a clear and unambiguous statement of the parties' intent, was properly signed by the attorneys of record who were acting in an adversarial relationship. [*2]The stipulation was not so-ordered by the Court. Defendant now moves to have the judgment entered against it pursuant to the November 4, 2005 order vacated on the ground that newly discovered evidence exists which "if introduced at trial would probably have produced a different result and which could not have been discovered in time to move for a new trial under section 4404" (CPLR § 5015 [a] [2]). The newly discovered evidence cited by defendant includes a federal case involving Robert Scott Schepp, M.D., New York State appellate case law involving the plaintiff, a news article from Law.com, as well as the Andrew Carothers, M.D., P.C. trial in the New York City Civil Court, Richmond County, all of which defendant argues establish that plaintiff is fraudulently incorporated. Defendant also agues that the judgment was the product of "fraud, misrepresentation, or other conduct of an adverse party" (CPLR § 5015 [a] [3]) and that there was no meeting of the minds when the parties entered into the written stipulation of settlement. Finally, defendant contends that this case is subject to a stay issued by the Supreme Court, Nassau County in a separate action in which plaintiff and defendant are both parties (hereinafter the Nassau County action).
In opposition plaintiff contends that stipulations of settlement are favored by the courts and should be vacated only upon a showing of that the settlement was the product of fraud, overreaching, mistake or duress and argues that defendant has failed to make such a showing. Plaintiff also contends that this action has not been stayed by Nassau County action.
Discussion
It is well settled that stipulations of settlement are judicially favored and should not be lightly set aside (Cooper v Hempstead Gen. Hosp., 2 AD3d 566 [2d Dept]). "This is all the more so in the case of open court' stipulations within CPLR § 2104, where strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process" (Hallock v State of New York, 64 NY2d 224, 230; 474 NE2d 1178; 485 NYS2d 510 [1984] [citations omitted]). Stipulations of settlement are independent contracts that are subject to the principles of contract law (Hannigan v Hannigan, 2008 NY Slip Op 3589 [2d Dept]) and "[o]nly where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation" (Hallock, 64 NY2d 224, 230). A "party seeking reformation of a contract by reason of a mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party's fraudulent misrepresentation" (Moshe v Town of Ramapo, 2008 NY Slip Op 7238 [2d Dept] quoting Yu Han Young v Chiu, 49 AD3d 535, 536, 853 NYS2d 575 [2d Dept 2008]). "[E]ven a stipulation which was improvident will not be set aside unless it is manifestly unfair or unconscionable" (Cavalli v Cavalli, 226 AD2d 666, 667, 641 NYS2d 724 [2d Dept 1996]; see Wilutis v Wilutis, 184 AD2d 639, 640, 587 NYS2d 171 [2d Dept 1992]).
The only evidence offered by defendant in support of its claim that the settlement was procured through fraud or collusion are the conclusory allegations contained in the affirmations of defendant's attorney. Bare, unsubstantiated allegations such as "[t]he purported judgment premised upon plaintiff's misrepresentations"[FN1] and "[p]laintiff obtained its judgment under false [*3]pretenses"[FN2] and "[t]he judgment was obtained under collusion by the plaintiff and its attorney since plaintiff's attorney was well aware of several litigations pending against their client based on their client's corporate structure"[FN3] are insufficient to vacate the stipulation as a product of collusion or fraud. Such speculation also fails to make the requisite showing to reform the stipulation on the ground that it was executed under a mutual or unilateral mistake (see M.S.B Dev. Co., Inc. v Lopes, 38 AD3d 723 [2d Dept 2007] [A party seeking reformation must show clearly that there has been a mistake] [emphasis added]). Moreover, defendant, a sophisticated insurer well-versed in no-fault litigation and represented by able and competent counsel at the time the stipulation was entered into, does not claim that the settlement was a product of duress or that its counsel lacked the authority to enter into the settlement.
Defendant's claim that the stipulation of settlement should be vacated based upon newly
discovered evidence of plaintiff's allegedly fraudulent incorporation is also without merit.
Plaintiff and defendant entered into a second stipulation, so-ordered on March 26,
2007, in the Nassau County action in which defendant agreed that plaintiff's right "to enforce
voluntary settlements that have been entered into with any of the Insurers," including defendant,
would not be impaired. As a party to the Nassau County action defendant was certainly aware on
March 26, 2007 that the plaintiff professional corporation may be fraudulently incorporated.
Despite that awareness, defendant nevertheless agreed that plaintiff could freely enforce any and
all voluntary settlements which plaintiff had previously entered into. This concession by
defendant to plaintiff belies defendant's argument that had it been aware of plaintiff's allegedly
fraudulent incorporation on July 10, 2006 it would not have entered into the stipulation at issue
here. "Courts will not set aside a stipulation . . . simply because, in hindsight, a party decides that
the agreement was improvident" (Town of Clarkstown v. M.R.O. Pump & Tank, Inc.,
287 AD2d 497, 498, 731 NYS2d 231 [2d Dept 2001]). Therefore, because defendant has failed
to meet any of the criteria necessary for the court to vacate the parties' voluntary stipulation of
settlement, defendant's Order to Show Cause is denied in its entirety.
This constitutes the decision and order of the Court.
Dated: October 7, 2008
George J. Silver, J.C.C.
Jaffe & Koumourdas
40 Wall Street -12th Floor
New York, NY 10005
Attorneys for Defendant
Moshe D. Fuld, P.C.
38 west 32nd Street -7th Floor
New York, NY 10001
Attorneys for Plaintiff
Footnotes
Footnote 1: Defendant'sAffirmation in
Support.
Footnote 2: Defendant'sAffirmation in
Reply.
Footnote 3: Id.
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