| State of New York v Williams |
| 2007 NY Slip Op 07803 [44 AD3d 1149] |
| October 18, 2007 |
| Appellate Division, Third Department |
| State of New York, Respondent, v Christine S. Williams, asExecutor of William H. Schacht, Deceased, et al., Defendants, and R.J. Guerrera, Inc., Appellant. |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Kathleen M. Arnold of counsel), forrespondent.
Kane, J. Appeal from an order of the Supreme Court (McCarthy, J.), entered November 3,2006 in Albany County, which, among other things, denied a motion by defendant R.J. Guerrera,Inc. to vacate a default judgment entered against it.
In 1997, plaintiff discovered a petroleum discharge on the property of a service station towhich defendant R.J. Guerrera, Inc. (hereinafter defendant) delivered fuel for more than adecade. The discharge is alleged to have been caused by overfilling and leaking of undergroundstorage tanks. In 2003, Mystic Tank Lines Corporation became defendant's successor in interest.In May 2004, plaintiff commenced this Navigation Law article 12 action against all potential[*2]dischargers on the site, including defendant,[FN*]and properly served defendant through the Secretary of State. After the time for answering hadpassed, plaintiff notified defendant that it was in default. Defendant did not respond.
In September 2004, Mystic informed plaintiff of its acquisition of defendant and that Mystichad filed a petition for bankruptcy on June 1, 2004. Plaintiff advised Mystic's counsel thatdefendant was in default and provided additional copies of the summons with notice, affidavit ofservice and verified complaint. Plaintiff also advised defendant's counsel of a pending settlementconference. No one appeared at the conference on behalf of defendant. In November 2004,Mystic filed a "Suggestion of Bankruptcy" document with the Albany County Clerk, in an effortto inform Supreme Court and the parties of the pending bankruptcy proceeding and stay thisaction. Since Mystic never served this document on plaintiff, it had no legal significance. In June2005, plaintiff gave defendant a final warning of its default, then obtained a default judgment byfiling an application with the County Clerk pursuant to CPLR 3215 (a). Supreme Court denieddefendant's subsequent motion to vacate the default judgment, prompting this appeal.
Initially, Supreme Court was not divested of jurisdiction over this action. State courts andfederal bankruptcy courts have concurrent jurisdiction over certain claims if proceedings arepending in both courts at the same time (see Insurance Co. of State of Pa. v HSBC Bank USA, 37 AD3d251, 258 [2007]; Van Gorder v Van Gorder, 213 AD2d 893, 894 [1995]; seealso 11 USC § 362 [b] [4] [providing exception to statutory stay, permitting agovernmental entity's action to continue despite debtor's bankruptcy filing]). Plaintiff's filing of aproof of claim with Bankruptcy Court merely served to protect its interests and keep that courtapprised of its claim; that filing did not forfeit plaintiff's right to continue prosecuting this statecourt action. In fact, District Court affirmed Bankruptcy Court's allowance of plaintiff's claim,holding that the automatic stay did not apply here and the state court judgment entered during thependency of the bankruptcy proceeding was deemed valid (see In re Mystic Tank LinesCorp., US Dist Ct, NJ, Aug. 22, 2006, Thompson, J., 04-28333 [RTL]).
Supreme Court properly determined that defendant was in default and that it failed to setforth a reasonable excuse for its default. Contrary to defendant's contention, filing a "Suggestionof Bankruptcy" did not constitute an appearance in this action which would entitle defendant tonotice of plaintiff's application for a default judgment (see CPLR 320 [a]; 3215 [g] [1]).Not having appeared in the action, defendant was not entitled to notice of plaintiff's applicationfor a default judgment (see CPLR 3215 [g] [1]). Nevertheless, by letter dated June 15,2005, plaintiff gave defendant notice that it continued to be in default in the state court action andthat if it did not appear by the end of the month, a default judgment would be taken against it.Notwithstanding multiple warnings about the status of the state court action, defendant declinedto appear and answer. Under the circumstances, the court correctly determined that defendant's[*3]failure to appear was not excusable (see CPLR 5015[a] [1]; Hyundai Corp. v Republic ofIraq, 20 AD3d 56, 62-63 [2005], lv dismissed 5 NY3d 783 [2005]; CountyAsphalt v North Rockland Underground Corp., 96 AD2d 570, 570 [1983]).
However, because plaintiff failed to provide facts establishing its claim within its applicationfor a default judgment, we vacate that judgment. An applicant for a default judgment mustsubmit either an affidavit asserting the facts comprising the claim or a verified complaint, so thecourt has nonhearsay confirmation of the factual basis constituting a prima facie case (seeCPLR 3215 [f]; Gagen v Kipany Prods., 289 AD2d 844, 845 [2001]; Matter of Dynov Rose, 260 AD2d 694, 698 [1999], appeal dismissed 93 NY2d 998 [1999], lvdenied 94 NY2d 753 [1999]; Feffer v Malpeso, 210 AD2d 60, 61 [1994]). Despitedefendant's failure to raise this issue before the trial court, we can consider it on appeal becausethe error is apparent on the face of documents in the record and would have been irrefutable hadit been properly raised (see Hann v Morrison, 247 AD2d 706, 708 [1998]; Woodwardv Eighmie Moving & Stor., 151 AD2d 892, 893 [1989]). While plaintiff's statement forjudgment and affidavit of facts supplied sufficient information concerning proper service,defendant's failure to appear and the amount due, the factual assertion regarding the cause ofaction stated only that "[t]he basis for the action is the [d]efendant's failure to pay or repay costsincurred by [plaintiff], pursuant to Navigation Law article 12, in cleanup and removal costs of apetroleum discharge." This brief sentence was insufficient to establish a prima facie case againstdefendant. Although plaintiff filed a complaint which it served on all parties who answered, thatcomplaint was not relied upon in its application for a default judgment. Having failed to meet thestatutory requirements for proof to support an application for a default judgment (seeCPLR 3215 [f]), the default judgment is a nullity and must be vacated, without prejudice toplaintiff renewing its application (see Hann v Morrison, 247 AD2d at 708; Feffer vMalpeso, 210 AD2d at 61; but see Woodson v Mendon Leasing Corp., 100 NY2d62, 71 [2003] [declining to decide "whether noncompliance with CPLR 3215 (f) renders a defaultjudgment a 'nullity' "]).
Cardona, P.J., Mercure, Crew III and Carpinello, JJ., concur. Ordered that the order isreversed, on the law, without costs, motion granted and default judgment vacated, withoutprejudice to plaintiff renewing its application for a default judgment.
Footnote *: Although Mystic wasdefendant's successor in interest, Mystic was never named as a defendant in this action orformally served. Defendant apparently remained registered as an active corporation in New York.