July 11, 2006

New York Univ. Hosp. Rusk Inst. v Illinois Natl. Ins. Co. (2006 NY Slip Op 05601)

https://www.beynensonlaw.com/case-law/new-york-univ-hosp-rusk-inst-v-illinois-natl-ins-co-2006-ny-slip-op-05601/

Court
Appellate Division, Second Department
Decided
July 11, 2006
Citation
2006 NY Slip Op 05601 · 31 AD3d 511
Posture
Default or vacatur
Outcome
Insurer prevailed
Later treatment
Followed in 1 later decision (see Cited by)
Issues
Defaults and vacatur
Cite as
New York Univ. Hosp. Rusk Inst. v Illinois Natl. Ins. Co., 31 AD3d 511 (2d Dept 2006)

Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.

Summary

Editorial summary by Beynenson Law, not part of the court’s decision.

The insurers established a reasonable excuse for their default and potentially meritorious verification and policy-exhaustion defenses. The Appellate Division, Second Department, reversed the order denying relief, vacated the clerk's default judgment, quashed the information subpoena, and vacated the order compelling compliance with that subpoena. Under CPLR 5015 (a) (1), the insurers sufficiently showed both an excuse for failing to appear or answer and potential defenses based on outstanding verification under 11 NYCRR 65-3.8 (a) (1) and alleged exhaustion through prior claim payments. The brief delay, lack of willfulness, absence of prejudice to the provider, and policy favoring resolution on the merits warranted vacatur.

Reported in New York Official Reports at New York Univ. Hosp. Rusk Inst. v Illinois Natl. Ins. Co. (2006 NY Slip Op 05601)

New York Univ. Hosp. Rusk Inst. v Illinois Natl. Ins. Co.
2006 NY Slip Op 05601 [31 AD3d 511]
July 11, 2006
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, September 20, 2006
New York University Hospital Rusk Institute et al., Respondents,
v
Illinois National Insurance Co. et al., Appellants.

—[*1]

In an action to recover no-fault insurance benefits, the defendants appeal from an order of the Supreme Court, Nassau County (Bucaria, J.), dated September 7, 2005, which denied their motion to vacate a clerk’s judgment of the Supreme Court, Nassau County, entered December 8, 2004, upon their failure to appear or answer the complaint, to quash an information subpoena dated March 28, 2005, and to vacate an order of the same court dated May 26, 2005 directing them to comply with the information subpoena.

Ordered that the order is reversed, on the law and as a matter of discretion, with costs, the motion is granted, the clerk’s judgment entered December 8, 2004 is vacated, the information subpoena dated March 28, 2005 is quashed, and the order dated May 26, 2005 is vacated.

“A [defendant] seeking to vacate a default judgment pursuant to CPLR 5015 (a) (1) ‘must demonstrate a reasonable excuse for its delay in appearing and answering the complaint and a meritorious defense to the action’ ” (New York & Presbyt. Hosp. v American Home Assur. Co., 28 AD3d 442 [2006], quoting Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]). The defendants established both a reasonable excuse for their failure to timely appear and answer the complaint and potentially meritorious defenses, namely, the failure of the plaintiff New York University Hospital Rusk Institute to comply with the defendants’ demands for verification of the [*2]claim (see 11 NYCRR 65-3.8 [a] [1]; Mount Sinai Hosp. v Allstate Ins. Co., 25 AD3d 673, 674 [2006]; Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96 [2005]) and the alleged exhaustion of the policy limits through payment of prior claims (see Mount Sinai v Allstate Ins. Co., 28 AD3d 727 [2006]; New York & Presbyt. Hosp. v Allstate Ins. Co., 12 AD3d 579 [2004]).

Accordingly, in view of the strong public policy that actions be resolved on their merits, the relatively brief delay involved, the defendants’ lack of wilfulness, and the absence of prejudice to the plaintiff, the Supreme Court improvidently exercised its discretion in denying the defendants’ motion, inter alia, to vacate the December 8, 2004, judgment (see New York & Presbyt. Hosp. v American Home Assur. Co., supra; New York & Presbyt. Hosp. v Auto One Ins. Co., 28 AD3d 441 [2006]; New York & Presbyt. Hosp. v Travelers Prop. Cas. Ins. Co., 27 AD3d 708 [2006]; Hospital for Joint Diseases v Dollar Rent A Car, 25 AD3d 534 [2006]). Miller, J.P., Adams, Goldstein and Covello, JJ., concur.

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