Burlington Ins. Co. v C&S Builders, Inc.

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Burlington Ins. Co. v C&S Builders, Inc. 2021 NY Slip Op 32593(U) November 30, 2021 Supreme Court, New York County Docket Number: Index No. 654724/2018 Judge: Lucy Billings Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 " SUPREME COURT. OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 41 --------------- -------- -------------x BURLINGTON INSURANCE COMPANY, Plaintiff Index No. 654724/2018 DECISION AND ORDER -against:C&S BUILDERS, INC., CMR CONSTRUCTION & ROOFING OF NY, LLC, and ANTONIO MARTINEZ, · Defendants ---------------.-------------------x LUCY BILLINGS, J.S.C.: Defendant Martinez moves to·vacate the order,dated July 10, 2020, granting plaintiff's motion for default judgment again.st defendants C&S Builders, Inc., and CMR Construction NY, ~LC. & Roofing of C.P.L.R .. §_5015(a) {l). ·The court grant2d plaintiff's motion without oppo~ition from any defendants. Martinez timely moved to vac~te the order within one year after plaintiff served notice of entry of the order. . Id. • He seeks to vacate the default judgment against C&S Builders. only.· I. THE EXCUSE FOR MARTINEZ'S DEFAULT · To vacate Martinez's default in responding to plaintiff's motion for default judgment, Martine_z must demonstrate a reasonable excuse fo~ his default and.a meritorious defense to plaintiff's motion. GEM Invs. Am., LLC v. Marquez,. 180 A.D.3d 513, 513 (1st Dep't 2020); Country-Wide Ins. Co. v. Power Supply, burlingtonins1121 1 2 of 11 [* 2] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 Inc., 179 A.D.3d 405, 406-407 (1st Dep't 2020); Malon 433, Inc. v. Metro Elec. Contractors, Inc., 178 A.D.3d 439, 439 (1st Dep't 2019); Karimian v. Karlin, 173 A.D.3d 614, 615 {1st Dep't 2019). If Martinez fails to satisfy either requirement of this two-part test, the court need not consider the other requirement. GEM Invs. Am., LLC v. Marquez, 180 A.D.3d at 513; Besler v. Uzieri, 179 A.D.3d 628, 628 (1st Dep't 2020); Country-Wide Ins. Co. v. Power Supply, Inc., 179 A.D.3d at 407; Hyman v. 400 W. 152nd St. Hous. Dev. Fund Corp., 159 A.D.3d 606, 607 (1st Dep't 2018). Martinez's attorney insists that he did not oppose plaintiff's motion because plaintiff moved only against Martinez's co-defendant s, C&S Builders and CMR Construction & Roofing of NY. The attorney's deliberate, willful inaction, however, is not a reasonable excuse that supports vacatur. GEM Invs. Am., LLC v. Marquez, 180 A.D.3d at 513; Gaulsh v. Diefenbach PLLC, 162 A.D.3d 585, 585 (1st Dep't 2018). Even though plaintiff did not move against Martinez directly, a default judgment against his co-defendant s directly threatened his pecuni~ry interests in collecting a judgment against one or both co-defendant s through their insurance. It was impossible for the court to grant the relief plaintiff sought, a declaration that plaintiff did not owe insurance coverage to Martinez's codefendants, without impairing his interests. Plaintiff's action sought no independent relief against burlingtonins1121 2 3 of 11 [* 3] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 . RECEIVED NYSCEF: 12/06/2021 " Martinez. The sole reason he was a necessary named party in this action was to permit him to oppose plaintiff's position on its insurance coverage of his co-defendants. C.P.L.R. § l0Ol(a); Jerusalem Ave. Taxpayer, LLC v. Liberty Mut. Ins. Co., 137 A.D.3d Morgan v. de Blasio, 29 600, 600-601 (1st Dep't 2016). N.Y.3d 559, 560 (2017); Amazing Home Care Servs., LLC v. Applied Underwriters Captive Risk Assur. Co. Inc., 191 A.D.3d 516, 519 (1st Dep't 2021); Cabrera v. City of New York civ. Serv. Commn., 181 A.D.3d 540, 541 {1st Dep't 2020). Plaintiff's motion for a default judgment was the t submitted that oppos and place for Martinez to have ion, rather than now. See Hermitage Ins. Co. v. 186-190 Lenox Rd., LLC, 142 A.D.3d 422, 423 (1st Dep't 2016). II. THE INTERESTS OF SUBSTANTIAL JUSTICE Nevertheless, the court may vacate the default judgment against C&S Builders "for sufficient reason and the interests of substantial justice," Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, .68 (2003); City of New York v. OTR Media Group, Inc., 175 A.D.3d 1163, 1163 (1st Dep't 2019); Smith v. Pataki, 150 A.D.3d 460, 461 (1st Dep't 2017); Goldman v. Cotter, 10 A.D.3d 289, 293 (1st Dep't 2004), particularly when the vacatur will allow the action to be adjudicated on its merits. Aegis SMB Fund II, L.P. v. Rosenfeld, 189 A.D.3d 472, 473 (1st Dep't 2020); 801-803, LLC v. 805 Ninth Ave. Realty Group, LLC, 188 A.D.3d 478, burlingtoninsll21 3 4 of 11 [* 4] INDEX NO. 654724/2018 NYSCEF .DOC. NO. 105 ~· RECEIVED NYSCEF: 12/06/2021 478 (1st Dep~t 2020); Maurice v. Maurice, 183 A.D.3d 455, 456 (1st Dep't 2020); Santiago v .. Valentin, 125 A.D.3d 459, Dep't 2015). 459 (1st A "client will not be deprived of his day in court on account of his'attorney:s 'neglect or inadvertent error, especially where the other party cannot show prejudice and his position has merit.'" Maurice v. Maurice, 183 A.D.3d at 455 ( quoting Chelli v ., Kelly Group," P. C., 63 A. D. 3d 632, 633-34 ( 1st Dep't2009)); Plaintiff ~oes not claim that it will be prejudiced if the judgment against C&S Bu.ilders is vacated. Plaintiff claims only that the "misunderstanding" by Martinez's attorney in faiiing to apprehend the consequences of plaintiff's motion, Santiago v. Valentin, li5 A.D.3d at 459, "tantamount to law office failure," id. at 4 60, is "not particularly compelling," .Aegis SMB Fund IL L.P. v. Rosenfeld, 189 A.D.3d at 474; Marine v. Montefiore Health Sys., I9c., 129 A.D.3d 428, 429 (1st Dep'tr 2015), and that the judgment is meritorious. Martinez, hOwever, as demonstrated below, presents meritorious pefenses. Perhaps more importantly,· other than his attorney's failure to respond to the motion for a default judgment, Martinez continuously showed his interest in litigating this action on its merits. He answered the . complaint,.- requested a ·preliminary conference, and timely f~led the current motiori. He also belatedly requested a conference with the court ·and leave to burlingtoriinsll21 4 5 of 11 [* 5] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 oppose the motion for a defa~lt judgment, but his correspondence was overlooked because it was filed well after th~ motion was submitted and, if mailed or delivered, it was to an incorrect address in Jun~ 2020 du~ing the pandemic . . The record thus shows that Martinez's default was due not to his disinterest in the outcome of this action, but to his attorney''s failure to perc;:eive the consequences of a default judgment against plaintiff's · insureds. Although the attorney unquestionably failed to protect Martinez's interest by neglecting to oppose plaintiff's motion in an insurer'~ standard declaratory judgment action disclaiming coverage of its insureds and the person injured, the attorney's shortcomings need not deprive Martinez of an opportunity to recover his judgment in his under lying personal i"nj ury action. Martinez v. Gorbatv .. Index Number 1812/2015 (Sup. Ct. ·Nassau Co. Mar. 22, 2019). III. THE MERITS 1. Unmeritorious Defenses. Among Martinez's defenses to plaintiff's motion for a default judgment disclaiming coverage of C&S ~uilders, Martinez insists that plaintiff's motion falsely maint~ined that the statute of limiiations had run against any cl~im by C&S Builders that plaintiff had breached its insurance contiact to defend and indemnify C&S Builders. Plaintiff's motion, however, did not apply any statute of limitations to C&S Builders. burlingtoninsll21 5 6 of 11 [* 6] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 -Plaintiff maintained only that CMR Construction & Roofing of NY was prohibited from claiming against plaintiff or C&S Builders because the statute of limitations had run. take the same position against C&S Builders. Plaintiff did not Therefore this defense by Martinez is inapposite. Martinez also points out that plaintiff's disclaimer dated August 1, 2012, d{d not .disclaim coverag~ based on C&S Builders' noncooperation, the ground on ~hich the court grante~ plaintiff's motion ~or a default judgment. The disclaimer ?nly limited· plaintiff's liability to $50,000 base~ on the failure by C&S Builders' subcontractor to obtain insurance as required to trigger full coverage ?f C&S Builders und~r plaintiff's policy. ·Martinez insists that plaintiff therefore is precluded from relying on noncooperation as a basis for a default judgment against C&S Builders. Plaintiff covld not have disclaimed coverage based on C&S Builders' noncooperation, however, because thi alleged noncooperation did not occur until after.plaintiff issued its disclaimer. Country-Wide Ins. Co. v. Preferred Trucking·Servs. Corp., 22 N.Y.3d 571, 577 (2014); Continental Cas. Co. v Stradford, 11 N.Y~3d 443, 449-50 (2008). Plaintiff's disclaimer also included a.reservation of rights, which preserved its right to disclaim coverage later for reasons other than a subcontractor's lack of insurance. burlingtoninsll21 6 7 of 11 [* 7] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 2. RECEIVED NYSCEF: 12/06/2021 Meritorious Defenses Nevertheless, Martinez rebut~ plaintiff's showing that C&S Builders deliberately failed to cooperate in the underlying action. Plaintiff showed C&S Builders' noncooperation through an affidavit by Peter Williams, plaintiff's Regional Claim Manager, that C&S Builders did not respond to two deposition notices. Upon the fuller record Aff. of Mark R. Bernstein Ex. G. presented by the current motion, however, Martinez points out that C&S Builders mounted an active defense thrciughout the underlying action. C&S Builders answered, deposed Martinez and the defendant Gorbaty, opposed Martinez's motions for summary judgment and for reargument, and defended itself 'at the trial. Id. Exs. B, L-O. These efforts belie the "willful and avowed obstruction" required to constitute an insured's deliberate noncooperation. Country-Wide Ins. Co. v. Preferred Trucking Servs. Corp., 22 N.Y.3d at 576; Hunter Roberts Consti, Group, LLC v. Arch Ins. Co., 75 A.D.3d 404, 410 Indem. Co., 58 A.D~3d 429, 430 (1st Dep't 2010); State Farm (1st Dep't 2009); Liberty Mut. Ins. Co. v. Roland-Stine, 21 A.D.3d 771, 773 (1st Dep't 2005) (quoting Thrasher v. U.S. Liab. Ins. Co., 19 N.Y.2d 159, 168 , (1967)). 450. See Continental Cas. Co. v. Stradford, 11 N.Y.3d. at Depending on the circumstances, nonappearance for a deposition does not necessarily amount to the required deliberate noncooperation. burlingtonins1121 New York Cent. Mut. Fire -Ins. Co. v. Salomon, 11 7 8 of 11 [* 8] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 A.D.3d 315, 316 (1st Dep't 2004'); Allcity Ins. Co. v. St. Realty ~orp., 264 A.D.2d 3151 601 Crown. 316-17 (1st Dep't 1999). See Country-Wide Ins. Co. v. Preferred Trucking Servs. Corp., 22 N.Y.3d at 577. Plaintiff suggests.that, when an insured like C&S Builders initially fails to respond to plaintiff during its investigation of a claim, the investigation is obstructed, witnesses lose recollection or become unavailable, or other evidence grows stale, even if the. insured later cooperates. Neither in suppor_t of plaintiff's motion for a default judgment, nor in opposition to Martinez's current motion, however, has plaintiff presented any evidentiary support for such a loss 0£ evidence or of other advantage in the underl.ying astion here. The complaint does not support the second grounq on which plaintiff sought relief: . that C&S Builders failed to provide timely notice of Martinez~s claim. The ~omplaint's causes against C&S Builders include only: (1) noncoverage of C&S Builders due to its failure to cooperate and (2) a $50,000 cap on plaintiff's liability. Plaintiff alleges no _failure to provide timely notice nor any breach of contract claim that ·would encompass such a failure. Because plaintiff did not allege C&S ·Builders' late notice. in the complaint, plaintit:f may not rely on such an allegation as a basis for a default j~dgment. See Idelfonso v. City of New York, 187 A.D.3d 576, 576 (1st Dep't burlingtoninsll21 8. 9 of 11 [* 9] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 •' 2020); Price v. T~neCore, Inc., 182 A.D.3d 481, 481 (1st Dep't 2020); Anonymous v. Mount Sinai Hos9., 164 ·A.D.3d 1167, 1168 (1st Dep't 2018); Shantay P. v. City of ~ew York, 147 A.D.3d 438, 439 (1st Dep't 2017). Although the court did not plainti 's motion for a default judgment based on its· alternative cause of .action, that its liability is Jimited to $50,000, plaintiff did not support this cause of action either. alternative rel Plaintiff moved for this f on the ground that C&S Builders' subcontractor, Renew It Corp., lacked insurance coverage as required policy. C&S B~ilders' full coverage under pla iff' s· Plaintiff's only evidence of Renew It's lack of insurance was a "Pre-Hearing Conference Statement" submitted to the"New York State Workers' Compensauion Board. Karin F. Manalaysay Ex. C, NYSCEF Doc. No. 19. Aff. of Anna Plaintiff failed to authenticate. this document, lay a foundation· for the document's admissibil y, ot explain how the document pertains to anything other than whether Renew It carried Workers' Compensation insurance, as opposed to whether Renew It ca ed general liability insurance in accordance with plaintiff's policy. IV. CONCLUSION For all the reasons explained above, in the interests of substant 1 justice, burlingtonins1121 court grants defe6dant Martinez's mot 9 10 of 11 [* 10] INDEX NO. 654724/2018 NYSCEF DOC. NO. 105 RECEIVED NYSCEF: 12/06/2021 to vacate the order dated July 10, 2020; granting plaintiff a default judgment against defendant C&S Builders, 5015(a); Woodson v. Mendon Leasing Corp., of New York v. OTR Media Group, v. Pataki, 293. Inc., Inc. C.P.L.R. § 100 N.Y.2d at 68; City 175 A.D.3d at 1163; Smith 150 A.D.3d at 461; Goldman v. Cotter, 10 A.D.3d at Because Martinez fails to demonstrate a reasonable excuse for his default, however, the court conditions the vacatur on payment of $2,500.00 by Martinez's attorney to plaintiff for its attorneys' fees and expenses incurred in opposing his belated motion contesting plaintiff~s default judgment, which Martinez ought to have interposed when plaintiff moved for the default judgment. . Inc., C.P.L.R. § 5015(a); Bengal House Ltd. 118 A.D.3d 575, New York, 576 52 A.D.3d 279, 10 A.D.3d at 293. v. 989 3rd Ave., (1st Dep't 2014); Gradaille v. City of 279 (1st Dep't 2008); Goldman v. Cotter, If Martinez's attorney fails to pay this amount to plaintiff within 30 days after entry of this order, plaintiff may enter a judgment against the attorney. The default judgment against defendant CMR Construction & Roofing of NY, LLC, remains unaffected. entitled to attorneys' Plaintiff is not fees and costs attributable to its motion for a default judgm~nt against this defendant. \ DATED: November 30, 2021 LUCY BILLINGS, burlingtonins1121 10 11 of 11 J.S.C. bUCY BlU,Ji'\1GS J.S.C

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