Grand Mech. Corp. v Skanska USA Bldg. Inc.
Annotate this CaseDecided on June 9, 2021
Supreme Court, New York County
Grand Mechanical Corp., on behalf of itself and all other persons similarly situated as trust fund beneficiaries of lien law trusts of which Skanska USA Building Inc., is trustee, Plaintiff,
against
Skanska USA Building Inc., FIDELITY & DEPOSIT COMPANY OF MARYLAND, ZURICH AMERICAN INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, LIBERTY MUTUAL INSURANCE COMPANY, and CONTINENTAL INSURANCE COMPANY, Defendants.
Index No. 651674/2019
Steinvurzel & Levy Law Group, White Plains, NY (Ronald Steinvurzel and Jennifer K. Church of counsel), for plaintiff.
Peckar & Abramson, P.C., New York, NY (Alan Winkler of counsel), for defendant Skanska USA Building Inc. and for defendants Fidelity & Deposit Company of Maryland, Zurich American Insurance Company, Federal Insurance Company, Liberty Mutual Insurance Company, and the Continental Insurance Company on the fifth cause of action.
Torre, Lentz, Gamell, Gary & Rittmaster, LLP, Jericho, NY (Mark S. Gamell of counsel), for defendants Fidelity & Deposit Company of Maryland, Zurich American Insurance Company, Federal Insurance Company, Liberty Mutual Insurance Company, and the Continental Insurance Company on the sixth cause of action.
Gerald Lebovits, J.
This is an action arising from a dispute over payment for work performed on a construction project. Plaintiff, Grand Mechanical Corp., a subcontractor on the project, is seeking to recover $2.3 million allegedly owed to it by defendant Skanska USA Building Inc. Grand Mechanical is asserting Lien Law, breach-of-contract, and other claims. Grand Mechanical also is seeking to foreclose on a bond to secure Skanska's labor and payment obligations to Grand Mechanical that was issued by defendants Fidelity & Deposit Company of Maryland, Zurich American Insurance Company, Federal Insurance Company, Liberty Mutual Insurance Company, and the Continental Insurance Company (the surety defendants).
In April 2019, Skanska moved to dismiss. (See NYSCEF No. 4.) The motion was accompanied by an RJI. (See NYSCEF No. 14.) The parties later stipulated to withdraw the motion and to extend Skanska's time to answer. (See NYSCEF Nos. 19, 20.) But because an RJI had been filed in the case, the court scheduled the matter for a preliminary conference on September 25, 2019. No party appeared at the preliminary conference, and it was adjourned until December 18, 2019. Again, no party appeared. As a result, this court dismissed the action under 22 NYCRR 202.27 for two successive failures by the parties to appear for a scheduled preliminary conference. The dismissal of the action was entered on E-Courts; but it was not separately memorialized in an order filed on NYSCEF.
The parties, apparently unaware either of the scheduled preliminary conferences or of the action's dismissal, engaged in mediation and settlement negotiations from the fall of 2019 through the end of 2020. Those efforts proved unsuccessful. In early 2021, Grand Mechanical asked this court to schedule a preliminary conference. The court informed the parties that the action had been dismissed and could be restored only through a motion. Grand Mechanical now moves to vacate the action's dismissal and restore it to active status. The motion is granted.
DISCUSSION
As an initial matter, this court disagrees with Grand Mechanical's contention that the court's dismissal of the action itself was improper. (See NYSCEF No. 39 at 2-3.) Grand Mechanical relies on a series of decisions of the Appellate Division, Second Department (later endorsed by the First Department) holding that a court may not "mark off" a pre-note-of-issue case from the court's calendar. But that is not what occurred here. The case was not marked off the calendar. Instead, this court dismissed the action outright under § 202.27—which permits a trial judge to "make such order as appears just" when "no party appears" "[a]t any scheduled call of a calendar or at any conference." (22 NYCRR 202.27 [c] [emphasis added].) Indeed, the Second Department's decision in Lopez v Imperial Delivery Service, on which Grand Mechanical heavily relies, clearly contemplates that a court may impose sanctions under § 202.27 for a party or parties' failure to appear at conferences, up to and including dismissal of the action. (See 282 AD2d 190, 196-197 [2d Dept 2001].)
That this court could properly dismiss the action upon the parties' mutual failures to appear for the scheduled preliminary conference, though, does not end the matter. As Lopez also makes clear, a party may move under CPLR 5015 (a) (1) to restore a case dismissed under § 202.27. To [*2]warrant vacatur, the movant, here Grand Mechanical, must establish a reasonable excuse for its default and a potentially meritorious claim or defense. (See id. at 197.)
Grand Mechanical, through an attorney affirmation, represents that its default in appearing resulted from law office failure: counsel inadvertently failed to register for E-Track notifications for this action, leading Grand Mechanical to be unaware of the scheduled conferences. This court agrees that this oversight constitutes a reasonable excuse. That is particularly true in the circumstances presented here: all parties appear to have been unaware that the action had been scheduled for preliminary conferences [FN1] ; the same oversight leading to Grand Mechanical's default (i.e., not receiving E-Courts/E-Track notifications) would also have led it to be unaware of the dismissal of the action; and all parties treated the action as remaining active for at least a year after it had been dismissed. This court disagrees with Skanska's assertion that Grand Mechanical's default evinced a pattern of acts of neglect, rather than merely a single initial oversight with continuing consequences.
This court also agrees that Grand Mechanical's verified complaint establishes that Grand Mechanical has at least a potentially meritorious claim. Especially given the early procedural stage at which this action was dismissed—before Skanska had even filed an answer—this court is not persuaded by Skanska's contention that a more detailed evidentiary showing is required. Nor does the court agree with Skanska that Grand Mechanical's complaint is conclusory, or insufficient to support the motion to vacate.[FN2]
The surety defendants separately argue in opposition to the motion that Grand Mechanical's sixth cause of action "lacks merit as it is without foundation in the law and is contrary to the facts" as asserted in the surety defendants' answer. (NYSCEF No. 44 at ¶ 3.) The question for present purposes, though, is not whether the surety defendants have reasonable defenses that they may assert in response to Grand Mechanical's allegations against them. It is whether those allegations demonstrate that Grand Mechanical has potentially meritorious claims. And this court agrees with Grand Mechanical that they do. Those claims should be resolved on their merits—not on a default shared by all parties to this action.
Accordingly, for the foregoing reasons it is hereby
ORDERED that Grand Mechanical's motion to vacate the dismissal of this action is granted; and it is further
ORDERED that Grand Mechanical serve a copy of this order with notice of its entry on all parties and on the office of the General Clerk, which is directed to restore this action to active status; and it is further
ORDERED that the parties shall appear before this court for a telephonic preliminary [*3]conference on July 1, 2021.
DATE 6/9/2021 Footnotes
Footnote 1:The record does not reflect an explanation for the default by Skanska and the various surety defendants in appearing for the scheduled conferences—whether the default resulted from a failure to sign up for E-Track notifications or from some other cause.
Footnote 2:In addition to stating in general fashion that the verified complaint is based on "conclusory statements," Skanska attacks Grand Mechanical's "second, third, fourth and sixth causes of action" as lacking any "details to support" those claims. (NYSCEF No. 43 at 7.) This court is skeptical of this criticism. But even if the criticism were well-taken, that would still leave the claim against Skanska asserted in the complaint's first cause of action.
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