| Gurin v Pogge |
| 2013 NY Slip Op 08174 [112 AD3d 1028] |
| December 5, 2013 |
| Appellate Division, Third Department |
| Marec Gurin et al., Appellants, v Karl Pogge et al.,Respondents. |
—[*1] Law Office of Frank T. Mahady, Albany (Frank T. Mahady of counsel), forrespondents.
Spain, J. Appeal from an order of the Supreme Court (Lynch, J.), entered August 13,2012 in Albany County, which partially granted defendants' motion to vacate a defaultjudgment.
In late 2007, defendant Karl Pogge purchased a dental practice and its assets, leasesand equipment from plaintiffs Marec Gurin and Maria Gurin. In addition to an agreementfor sale, Pogge and the Gurins entered into an indemnification agreement. Poggeoperated the dental business for several months, but then fell behind on rent andequipment payments. The equipment and real estate lessors sued the Gurins and theircompany, plaintiff Marquee Dental Management, LLC, for amounts owed, and plaintiffspaid out over $150,000 to settle those claims and for counsel fees.
In June 2009, plaintiffs commenced this action against Pogge and defendant MarqueManagement, LLC seeking indemnification based upon the indemnification agreement.After defendants failed to appear, plaintiffs obtained a default judgment in June 2010pursuant to CPLR 3215. Following an inquest at which defendants also did not appear, ajudgment was entered against them in the amount of $164,195.81.
In November 2011, defendants moved to vacate the default judgment, putting indispute the contents of the indemnification agreement that Pogge signed. In an affidavitin support of defendants' motion to vacate, Pogge asserted that he knowingly defaultedbecause the indemnification agreement he signed did not contain a fourth handwrittenprovision that would hold him personally responsible for plaintiffs' losses. Defendantsargued that the indemnification [*2]agreement that Poggesigned with plaintiffs contained only three typewritten provisions and no fourthhandwritten provision. In opposition to defendants' motion, plaintiffs asserted that theparties had, in contrast, entered into the indemnification agreement that contained threetypewritten provisions as well as the handwritten provision apparently[FN*]requiring defendants, including Pogge individually, to indemnify plaintiffs "from anycost and expense, including reasonable attorney's fees and litigation expenses, loanpayments, collection costs and all other monies expended." The authenticity of thehandwritten provision is at the center of the parties' dispute.
Supreme Court declined to vacate the default judgment pursuant to CPLR 5015 (a)(1), finding that defendants did not demonstrate a reasonable excuse for their default.Instead, the court vacated the judgment against Pogge individually "for sufficient reasonand in the interests of substantial justice." Plaintiffs now appeal.
In order to obtain vacatur of a default judgment under CPLR 5015 (a) (1), a partymust demonstrate a reasonable excuse for the default and a meritorious defense (seeEugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Wade v Village of Whitehall,46 AD3d 1302, 1303 [2007]). However, the grounds set forth in CPLR 5015 are notexclusive, and courts retain "inherent discretionary power" to vacate their own judgments"for sufficient reason and in the interests of substantial justice" (Woodson v MendonLeasing Corp., 100 NY2d 62, 68 [2003]; Boyd v Town of N. Elba, 28 AD3d 929, 931 [2006], lvdismissed 7 NY3d 783 [2006]; Matter of Culberson, 11 AD3d 859, 861 [2004]). Notably,the decision to vacate "a default judgment lies within the discretion of the trial court. . . [and] should not be disturbed unless it reflects an 'improvident exerciseof discretion' " (Chase Manhattan Automotive Fin. Corp. v Allstate Ins. Co., 272AD2d 772, 773 [2000], quoting Lucas v United Helpers Cedars Nursing Home,239 AD2d 853, 853 [1997]).
Here, Supreme Court vacated the default judgment against Pogge individually inorder to afford him the opportunity to litigate, on the merits, a material question as to thefactual basis for the judgment against him, i.e., the authenticity of a clause handwrittenonto the otherwise typewritten indemnification agreement. Pogge and the attorney whorepresented him on this matter averred that he never signed any document with plaintiffsthat included handwritten additions, nor consented to them. In light of the court's findingthat this raised "significant concerns with regard to the factual basis for and validity ofthe judgment against [Pogge] personally," and in recognition of the strong policypreference for resolving issues on the merits (see Kostun v Gower, 61 AD3d 1307, 1308 [2009];Wade v Village of Whitehall, 46 AD3d at 1303), we cannot conclude that thedecision to vacate the default judgment against Pogge individually was an abuse ofdiscretion.
Stein, J.P., McCarthy and Garry, JJ., concur. Ordered that the order is affirmed, withcosts.
Footnote *: The bottom part of thehandwritten provision of the indemnification agreement contained in the record onappeal is cut off. Consequently, the exact wording of that provision is not entirely clearand is not decided herein.