Giraldo v Washington Intl. Ins. Co.
Annotate this CaseDecided on September 30, 2011
Supreme Court, Queens County
Edgar Giraldo and Ramon Mendez, Plaintiff,
against
Washington International Ins. Co., Defendant.
6034/2010
Robert J. McDonald, J.
The following papers numbered 1 to 13 were read on this motion by the defendant for an order pursuant to CPLR 5015(a)(1) vacating the order of this court dated July 6, 2011 which granted a money judgment in favor of each plaintiff in the amount of $232,674.42 upon the default of the defendant:
Papers Numbered
Notice of Motion-Affidavits-Exhibits.................1 - 6
Affirmation in Opposition-Affidavits-Exhibits........7 - 10
Reply affirmation...................................11 - 13 _________________________________________________________________
On October 29, 2007, plaintiff Edgar Giraldo was operating his vehicle on Fourth Avenue near its intersection with E. 10th Street in New York County, New York, when his vehicle collided with a yellow taxi cab owned by defendant Fred Weingarten and operated by Koytcho Koev. The plaintiff and his passenger co-plaintiff, Ramon Mendez, were both injured in the accident. [*2]
Plaintiffs commenced an action against Weingarten and Koev in June 2010 under Queens County Index No. 18992/2009. Defendant Weingarten was not served with process, however, defendant Koytcho Koev was properly served and defaulted in answering the complaint. By order of this Court dated October 30, 2009, a default judgment was granted against defendant Koev on the issue of liability and the matter was set down for an inquest on the issue of damages. On December 8, 2009, the inquest proceeded before this Court after which each plaintiff was awarded the total sum of $200,000 as and for past and future pain and suffering. On January 14, 2010, a money judgment was entered in the Queens County Clerk's Office in favor of each plaintiff in the sum of $203,698.63 for damages and interest together with the sum of $1,150.00 in costs and disbursements.
On January 21, 2010, a copy of the judgment with notice of entry was served by the plaintiffs upon Fred Weingarten and Koytcho Koev. By decision and order dated July 30, 2010 this Court vacated the default judgment against Koev pursuant to CPLR 317 and 5015(a)(1)on the ground of excusable default. However, by decision dated February 22, 2011, the Appellate Division, Second Judicial Department reversed this court's decision and upheld the default judgment on the ground that Koev failed to demonstrate a reasonable excuse for his default in opposing the motion for a default judgment and in addition failed to provide a meritorious defense (see Giraldo v Weingarten, 81 AD3d 885 [2d Dept. 2011]).
On March 10, 2010, the plaintiffs commenced the instant plenary action against defendant Washington International Ins. Co. ("Washington"). In the complaint the plaintiffs alleged that Washington is a guarantor under a Self-Insurance Surety Bond for the yellow cab owned by Weingarten which was involved in the accident with the plaintiffs' vehicle. Plaintiffs allege that more than 30 days have elapsed since service of the judgment on Weingarten and Koev and the judgment remains entirely unsatisfied. The complaint alleges a cause of action against Washington based upon VTL § 349 and Insurance Law § 3420(a)(2) which provides that an action shall accrue against an insurer in favor of a judgment creditor of the insured 30 days after a copy of the judgment with notice of entry is served on both the insured and the insurer if the judgment remains unsatisfied. Plaintiffs claim that they are each entitled to a judgment against Washington as insurer in the amount of $204,273.63.
The defendant served a notice of appearance and verified answer with affirmative defense on May 11, 2010. In its affirmative defense Washington states that defendant is a surety company that provides surety bonds for self-insured New York City [*3]taxicab medallion corporations. Defendant contends that it is not responsible for the payment of a claim unless and until there is an unpaid judgment against the principal self-insured corporation for which it has provided the bond, which in this case is Besai Cab Corporation. Washington claims they are not liable on the judgment as Besai was not sued and there is no judgment extant against Besai Cab Corporation the principal on the bond.
A preliminary conference order was signed by Justice Pineda-Kirwan on November 22,2010 and and a compliance conference order was signed by Justice Ritholtz on February 22, 2011. By notice of motion dated March 14, 2011, plaintiffs moved pursuant to CPLR 3212 for an order granting summary judgment in favor of the plaintiffs and against defendant in the amount of $204,273.63. for each plaintiff. In the motion plaintiff asserts that Washington's bond covered the cab involved in the accident and therefore it did not matter that Besai was the insured rather than Weingarten. Moreover, plaintiffs allege that the action sought to recover a judgment against the driver of the offending vehicle, Mr. Koev and not Weingarten and that Koev is an insured under the bond as the operator of the vehicle. The motion which was originally returnable on April 7, 2011 before Justice Pineda-Kirwan was administratively adjourned to Justice Ritholtz's part for May 9, 2011. On May 9, 2011, Michael Pelinsky, Esq. appeared on behalf of Washington and requested an adjournment to file opposition papers. Mr. Mulholland states in his motion papers that he had not been given a briefing schedule by Justice Ritholtz. Defendant's motion to adjourn the motion was denied by Justice Ritholtz and the motion was submitted without opposition.
Justice Ritholtz thereupon referred the motion for summary judgment to Justice Pineda-Kirwan on May 9, 2011 for decision without opposition. On July 6, 2011, Justice Kirwan requested that the motion be referred to this Court as this Court had granted the Judgment against Koev in the underlying action. This court accepted the transfer and by decision and order dated July 6, 2011, this Court granted plaintiff's motion for summary judgment without opposition and awarded a money judgment to each plaintiff against Washington in the amount of $232,674.42. Said judgment was entered in the County Clerk's Office on July 22, 2011. On August 22, 2011, plaintiff's counsel submitted an execution with notice to garnishee to the Sheriff with respect to the defendant's bank accounts.
On August 23, 2011, Justice Markey signed an order to show cause in which the defendant moved pursuant to CPLR 5015(a)(1) to vacate the default judgment issued by this Court on July 22, 2011. The court issued a temporary restraining order staying the [*4]City Marshal from taking any steps to enforce the judgment pending the determination of the motion.
In support of the motion to vacate the default judgment, defendant's counsel Rory T. Mulholland, Esq. contends that the default judgment should be vacated based upon an excusable default and a meritorious defense. Counsel states that the motion for summary judgment was originally returnable on April 7, 2011 before Justice Pineda-Kirwan. The Court then administratively adjourned the motion to May 9, 2011 before Justice Ritholtz. Counsel contends that as his office had not been given a briefing schedule it appeared before Justice Ritholtz to request and adjournment to put in opposition. However, Justice Ritholtz denied the application for an adjournment and sent the motion to Justice Kirwan for decision. Justice Kirwan then requested that the motion be reassigned to this court. Counsel claims that as a result of the motion being administratively adjourned that he did not have the opportunity to submit opposition papers.
With respect to the merits, counsel contends that Washington never received notice of the underlying action in time to defend against it because it only first learned of the underlying action against the bondholder until this action was commenced in March 2010. Counsel contends that it did not have a full and fair opportunity to contest the decision in which the judgment for damages was awarded (citing Jimenez v New York Cent. Mut. Fire Ins. Co., 71 AD3d 637 [2d Dept. 2010]).
In addition, counsel submits an affidavit from Ralph Infante stating that the defendant did not receive the Order with Notice of Entry on the underlying judgment until March 28, 2010 along with the summons and complaint. Counsel contends that the plaintiff failed to serve the judgment on Washington 30 days prior to commencing the action as required by Insurance Law§ 3420(a)(2). Counsel also claims that the judgment of over 232,000 for each plaintiff exceeds the amount of the defendant's liability based upon its policy limits for bodily injury which is $100,000 per person per occurrence with an aggregate of $300,000.
In opposition, Linda T. Ziatz, Esq. counsel for the plaintiffs states that the defendant has failed to proffer a reasonable excuse for the default. Counsel argues that although counsel did request an adjournment to submit opposition papers the application was denied because the defendant's attorney did not provide Justice Ritholtz with a reason why he did not have opposition papers on May 9th when the original return date was two months earlier on April 7th. [*5]
Counsel also claims that the defendant has failed to provide a potentially meritorious defense in that the plaintiffs did in fact serve a copy of he judgment with notice of entry on January 21, 2011 which was more than 30 days prior to the commencement of the action. Counsel also claims that defendant is not entitled to litigate the merits of the underlying judgment because it is a bond company rather than a liability insurance company as was the case in the Jimenez decision cited supra. Counsel contends that although a liability insurance company is responsible to defend an action against its insured for damages a surety company only provides a bond to assure that any judgment against the principal will be paid and does not provide for the defense of an action against its principal.
Lastly, counsel argues that the defendant has not made a sufficient showing that the bond is limited to "100/300" and further that the defendant failed to raise the limits of liability as an affirmative defense.
Upon review and consideration of the defendant's motion, the plaintiffs' affirmation in opposition and the defendant's reply thereto this court finds that the motion to vacate the default judgment rendered by this Court on July 6, 2011 is granted.
A defendant seeking to vacate a default must demonstrate both a reasonable excuse for the default and a potentially meritorious defense to the action (see CPLR 5015 [a][1]; Assael v 15 Broad St., LLC, 71 AD3d 802 [2d Dept. 2010]; Leifer v Pilgreen Corp., 62 AD3d 759 [2d Dept. 2009])
Here, although it appears that the motion was initially noticed by the plaintiffs to be heard by Justice Pineda-Kirwan, it was administratively reassigned to Justice Ritholtz. On May 9, 2011, Justice Ritholtz denied the defendant's request to adjourn the motion and marked the motion submitted without opposition. The motion for summary judgment was not, however, decided by Justice Ritholtz, but rather, after submission it was sent by Justice Ritholtz to Justice Pineda-Kirwan for decision. Justice Pineda-Kirwan then requested that the Administrative Judge reassign the motion to this Court for decision. Before rendering its decision, this Court was not apprised of the fact that the defendant, who had been actively defending this action and had appeared at both the preliminary conference and compliance conference and was in the process of conducting discovery, had in fact requested an adjournment in order to oppose the motion for summary judgment. Had this court been so notified it would have recalendared the motion so that this Court could have had the opportunity to rule on whether defendant had a sufficient reason [*6]for an adjournment to submit opposition papers. Under the circumstances of this case, this court should not be bound by a procedural ruling of a court of collateral jurisdiction to the effect that the motion must be decided without opposition nor be required to determine whether Justice Ritholtz providently exercised his discretion in denying the defendant's application for an adjournment.
In addition, on their motion to vacate the order, the defendant established the existence of a potentially meritorious defense by submitting an affidavit from Ralph Infante, the "attorney-in-fact" for Washington International attesting to the fact that the policy limits for the surety bond are $100,000/$300,000 and that the judgment was therefore improper as it was for an amount in excess of the defendant's policy limits (see Insurance Law § 3420[a][2]).
Accordingly, defendant's motion to vacate the judgment of this court dated July 6, 2011 entered on default, is granted, and the plaintiffs are granted leave to file a new motion for summary judgment should they be so advised.
Dated: September 30, 2011
Long Island City, NY
______________________________
ROBERT J. MCDONALD
J.S.C.
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