| Berardo v Guillet |
| 2011 NY Slip Op 05939 [86 AD3d 459] |
| July 14, 2011 |
| Appellate Division, First Department |
| Stephanie L. Berardo, as Surviving Spouse and Administratrix ofthe Estate of Francis Lindner, Deceased, et al., Respondents, v Jacques Guillet et al., Appellants. |
—[*1] Hill, Betts & Nash LLP, New York (Mary T. Reilly of counsel), for respondents.
Order, Supreme Court, Bronx County (Alan J. Saks, J.), entered September 30, 2009, which,in an action to collect on a judgment rendered 10 years ago, denied defendants' motion to vacatea judgment entered on their default in responding to plaintiffs' motion for summary judgment,reversed, on the law, the facts and in the exercise of discretion, without costs, the judgmentvacated, and the matter remanded for further proceedings.
Given "the strong public policy of this State to dispose of cases on their merits, the motioncourt improvidently exercised its discretion in denying defendants' motion to vacate the defaultorder" (Chelli v Kelly Group, P.C.,63 AD3d 632, 633 [2009] [citation omitted]), made upon a showing of excusable default anda meritorious defense (Chevalier v 368E. 148th St. Assoc., LLC, 80 AD3d 411, 413 [2011]). Defendants demonstrated thattheir failure to oppose summary judgment was not willful (see DaimlerChrysler Ins. Co. v Seck, 82 AD3d 581 [2011]), andthat they had no knowledge of the summary judgment motion or that their attorney, Mr. Deutsch,was so ill that he was unable to defend the motion.
Regarding reasonable excuse, Ms. Turchin, the counsel who represented defendants on theirmotion to vacate, and who had obtained stipulations to adjourn the summary judgment motionwhile acting of counsel for that limited purpose, affirmed to the motion court that Mr. Deutschhad requested that she obtain the adjournments because he was seriously ill. She was surprised tolearn that the motion had been granted on default because he told her he had obtained anadditional adjournment. According to Ms. Turchin, a few months after the summary judgmentmotion was granted on default, the 86-year-old counsel of record died from heart disease andkidney failure. While plaintiffs' counsel denied that an additional adjournment was granted,plaintiffs did not contest the seriousness of Mr. Deutsch's medical condition at the time themotion was filed.
In denying the motion to vacate the default judgment, the motion court merely focused onplaintiffs' denial that there was a consent adjournment, and evidently did not consider that thedefault was inadvertent, apparently caused by the ultimately fatal illness of counsel of record[*2]which negatively impacted his ability to defend the summaryjudgment motion and/or caused his law office failure, leading to the granting of plaintiffs' motionby default in an action that had been vigorously litigated.
Defendants have shown the "existence of a possibly meritorious defense" (Tat SangKwong v Budge-Wood Laundry Serv., 97 AD2d 691, 692 [1983]; compare JP Morgan Chase Bank, N.A. vBruno, 57 AD3d 362 [2008]) in this action which seeks to pierce the corporate veil, bysubmission of their verified answers that deny the allegations pertinent to such a claim, and bytheir affidavits in support of the motion to vacate the judgment entered by default.Concur—Friedman, Catterson, Renwick and Abdus-Salaam, JJ.
Tom, J.P., dissents in a memorandum as follows: A motion to vacate a default judgment isaddressed to the sound discretion of the court (Alliance Prop. Mgt. & Dev. v Andrews Ave.Equities, 70 NY2d 831, 832 [1987]), and no abuse thereof has been established here.Defendants failed to demonstrate both a reasonable excuse and a meritorious defense to warrantvacating their default (see Youni GemsCorp. v Bassco Creations Inc., 70 AD3d 454 [2010], lv dismissed 15 NY3d 863[2010]), which they attribute to their former counsel, Lawrence E. Deutsch, now deceased.Indeed, the record discloses that plaintiffs consented to two prior adjournments of their summaryjudgment motion, each of which was memorialized in a written stipulation signed by defendants'current counsel. Defendants' excuse that they had been misled by a purported oral agreementpresumably obtained by Mr. Deutsch to adjourn the dispositive motion for a third time isunsubstantiated by the requisite stipulation (CPLR 2104) or a probative affirmation. It restsentirely on current counsel's account of a conversation with the deceased attorney. Havingobtained two prior adjournments upon written stipulation, counsel concedes that she had beeninformed by plaintiffs' attorney that they would not consent to any further delay in theproceedings. Yet she now maintains that she was informed by Mr. Deutsch that he had obtained afurther adjournment and that it had been obtained orally, despite the parties' practice ofmemorializing stipulated adjournments in a signed writing. This contention is hearsay and mustbe discounted.
To the extent defendants urge that Mr. Deutsch was too sick to oppose the motion, suchassertion is likewise devoid of evidentiary support (see Legend Travel & Tours, Inc. v Continental Airlines, Inc., 24 AD3d112 [2005]; DeSimone v Barry, Bette & Led Duke, 252 AD2d 948 [1998]). There isno indication that any health issue sufficiently serious to impair his ability to representdefendants' interests was evident to opposing counsel, present counsel or defendants themselves.Defendants reason post hoc ergo propter hoc that because Mr. Deutsch died in August 2008, hispoor health was the cause of their default on May 5th. This suggestion is unsupported by medicalevidence and conclusory.
Regarding a meritorious defense, contrary to defendants' argument raised for the first time onappeal, a verdict exonerating them of liability in the prior wrongful death action in which certaincorporate defendants were found to be liable for negligence, does not warrant application of thedoctrine of res judicata in this action seeking to pierce the corporate veil of entities closely heldby the individual defendants. The necessary elements of proof and evidence required in each ofthe two actions vary so materially as to preclude application of the doctrine in this action (seeFirst Capital Asset Mgt. v N.A. Partners, 260 AD2d 179 [1999], lv denied 93 NY2d817 [1999]). Defendants' contention that the complaint is insufficiently pleaded is also assertedfor the first time on appeal. Contrary to that contention, evidentiary material viewed inconjunction with the pleadings, including deposition testimony of individual defendants/soleshareholders of defendant corporate entities, supports a finding that plaintiffs had indeedadequately pleaded a claim for piercing the corporate veil (see Simplicity Pattern Co. vMiami Tru-Color Off-Set Serv., 210 AD2d 24 [1994]; see also Forum Ins. Co. vTexarkoma Transp. Co., 229 AD2d 341 [1996]). Apart from defendants' bald denial of theallegations of the complaint and counsel's recitation that "the defendants have a meritoriousdefense," the moving papers provided the motion court with no basis upon which to assess themerits of the purported defense.
While there is a preference in law that cases be decided on their merits, it does not dispensewith the need for a reasonable excuse for a default in appearance and a meritorious defense to theaction. While the preference may be invoked "where the proffered excuse is less thancompelling" (Catarine v Beth Israel Med. Ctr., 290 AD2d 213, 215 [2002]), it has noapplication where the excuse is without evidentiary support and the merits of the defense areunstated. It is particularly inappropriate in a case such as this, in which plaintiffs have beenobliged to make numerous applications to the courts in the attempt to overcome defendants'dilatory tactics and evasive and obstructionist conduct during the two actions. Finally, it cannotbe said that vacating defendants' default would not result in prejudice to plaintiffs, whose attemptto collect on a judgment that was entered in August 2000 will be further delayed.
Accordingly, the order should be affirmed.