Decided on April 15, 2019

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Decided on April 15, 2019

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Fuld & Karp, P.C. (David Karp of counsel), for appellant. Richard T. Lau & Associates (Linda Filosa and Arthur Kontaxis of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Richard J. Montelione, J.), entered August 31, 2016. The order granted defendant’s motion for summary judgment dismissing the complaint as premature.

ORDERED that the order is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order of the Civil Court which granted defendant’s motion for summary judgment dismissing the complaint as premature, as plaintiff had failed to provide verification which defendant had requested.

Contrary to plaintiff’s argument, it was required to respond to defendant’s verification requests. As plaintiff did not respond to defendant’s verification requests with respect to plaintiff’s claim for the sum of $1,989.85, plaintiff failed to demonstrate a basis to disturb so much of the order as dismissed the complaint insofar as it sought to recover upon the $1,989.85 claim.

While plaintiff did respond in writing to defendant’s verification requests pertaining to the claim for $1,785, plaintiff neither provided the invoices requested by defendant nor stated that it was not in possession or control of those invoices. Rather, plaintiff merely set forth its opinion that the items requested were “not needed,” based upon its own interpretation of how the rate of reimbursement should be calculated. This is not a “reasonable justification for the failure to comply” with a verification request (11 NYCRR 65-3.8 [b] [3]), or a sufficient response (see Village Med. Supply, Inc. v Travelers Prop. Cas. Ins. Co., 61 Misc 3d 126[A], 2018 NY Slip Op 51311[U] [App Term, 1st Dept 2018]; D & R Med. Supply v American Tr. Ins. Co., 32 Misc 3d 144[A], 2011 NY Slip Op 51727[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]; cf. Mount Sinai Hosp. v Auto One Ins. Co., 121 AD3d 869 [2014]).

We note that while the Civil Court dismissed the complaint as premature, the claimed services were rendered after April 1, 2013, and defendant properly denied the claims at issue on the ground that plaintiff had failed to provide the requested verification within 120 days of the initial verification request in this action (see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3]). Therefore, defendant was entitled to dismissal of plaintiff’s complaint with prejudice, but as defendant has not cross-appealed, the order is affirmed.

PESCE, P.J., ALIOTTA and ELLIOT, JJ., concur.

Decided on April 12, 2019

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Decided on April 12, 2019

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Decided on April 12, 2019

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

[*1]

Civil Court of the City of New York, New York County, April 9, 2019

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn (Stefan Belinfanti of counsel), for plaintiff.

Law Offices of Rubin & Nazarian, Long Island City (Tasnim Hassanali of counsel), for defendant.

Background

Plaintiff commenced this action to recover assigned first-party no-fault benefits on behalf of Eric Daniel (assignor) in 2013. In 2018, plaintiff was awarded a judgment for the amount sued for. The action was then assigned to this court for a determination of plaintiff’s claim for attorneys’ fees.

The summons and complaint were filed on February 6, 2013.

On May 6, 2013, defendant appeared, by counsel, and filed an answer asserting 11 affirmative defenses, including that plaintiff’s assignor failed to appear for an independent medical exam (IME) and thus breached a condition precedent for coverage.

On June 25, 2013, defendant moved for summary judgment based on its defense that the assignor failed to appear for an IME. The motion was adjourned to October 4, 2013, April 1, 2014, July 25, 2014, and January 6, 2015. On February 5, 2015, defendant withdrew the motion.

There was a preliminary conference scheduled for October 4, 2013, and further conference dates on April 30, 2014, November 12, 2014, and April 22, 2015.

Plaintiff filed a notice of trial on May 14, 2015.

The action appeared on the trial calendar on May 25, 2016, June 8, 2017, July 5, 2018, September 24, 2018, November 5, 2018, and December 18, 2018. On December 18, 2018, the court (Ramirez, J.) issued a decision which stated in pertinent part:

“Plaintiff has made out a prima facie case. Defendant has failed to establish its defense of IME no show. Thus, judgment for Plaintiff for $944.12, plus statutory interest and filing fees.

“The issue of attorney fees will be severed and heard in Part MP2 on 2/20/19 at 9:30 am (Room 353).”

On February 20, 2019, the action was adjourned to April 1, 2019.

On April 1, 2019, the action was assigned to this court for a hearing to determine plaintiff’s claim for attorneys’ fees. The{**63 Misc 3d at 877} hearing commenced and concluded on that date. The matter was adjourned to April 8, 2019, for the submission of legal memoranda. On April 8, 2019, after the submission of memos by each party via email, the court reserved decision.

The Hearing

Plaintiff presented one witness at the hearing, Jennifer Raheb (JR), an attorney with the law firm representing plaintiff. Plaintiff also submitted a copy of the pleadings, the summary judgment motion papers, a printout from eCourts and the decision entering judgment.

JR testified that she has been admitted to practice law for 15 years, and has worked for Gary Tsirelman, P.C. for approximately five years. JR is familiar with this action and made all the court appearances on the case from at least May 2016 forward. JR testified credibly that each time the action appeared on the trial calendar, she spent approximately one hour preparing the file the night before. For this case, JR testified that the preparation included review of documents related to defendant’s IME no-show defense, including letters requesting an appearance for an IME and proof of mailing. JR testified that she also prepared cross-examination for the two witnesses she expected defendant to produce to establish proof of the assignor’s failure to appear and the scheduling letters.

JR did not do the opposition to the summary judgment motion, nor is there a record of opposition papers having been filed with the court. However, plaintiff did submit a copy of the opposition papers prepared by another attorney at the firm, Douglas Mace, Esq. (exhibit 7).

JR testified that in her experience motions on policy issues are much more complex than motions on medical necessity.

JR is assigned to handle the New York County no-fault cases for her firm and makes daily appearances in New York County Civil Court. JR typically arrives in court at around 9:30 a.m.

JR remembers first appearing on this case in 2015.

While JR had some independent recollection of specific appearances, much of her testimony was based on her general practice and procedures. JR testified that there were six appearances required for defendant’s summary judgment motion and eight appearances required for trial dates.

JR testified that no adjournments were granted without an application before the court on the trial dates, because of the age of the action. JR testified that she called defendant prior to{**63 Misc 3d at 878} each date and on each occasion, defendant stated they were ready to proceed.

JR appeared on May 25, 2016, before Judge Samuels and recalled that the trial was adjourned on defendant’s application.

JR appeared on June 8, 2017, and defendant made an application for an adjournment.

JR appeared on July 5, 2018, before Judge Nock, and defendant made an application to adjourn to secure a witness for the IME no-show defense. Defendant had only one witness available on that date.

JR testified that both parties knew early on that plaintiff would be seeking attorneys’ fees in this litigation, and that the case stood out in her mind for that reason.

On September 24, 2018, both parties appeared in court and conferenced the case with Judge Ramseur and her court attorney. Defendant decided at that time that it was not going to pursue the IME no-show defense and the action was adjourned to discuss a possible resolution including the issue of attorneys’ fees.

On November 5, 2018, defendant made an application for an adjournment and stated it did intend to proceed on the IME no-show defense at trial.

On December 18, 2018, the order entering judgment against defendant was issued. JR testified that plaintiff relied upon a notice to admit to establish its prima facie case. JR estimated that the trial could not have commenced before 11:00 or 11:30 a.m., because the court first went through the calendar calls.

The parties appeared on February 20, 2019, for the attorneys’ fees hearing, but the court had mis-calendered the matter and the hearing was adjourned to April 1, 2019.

On cross-examination, JR acknowledged that she maintained no contemporaneous records of the time she spent working on this case. For example, she did not record on any of the appearance dates the time she left the courthouse.

JR testified that she typically has more than one case on the morning calendar but less than 10 cases. While her office does maintain records of the specific number of cases she was handling on each of the dates in question, JR did not bring those records with her for the purpose of the hearing.{**63 Misc 3d at 879}

Discussion

It is undisputed that in this case defendant designated its IME no-show defense as a policy issue by checking off box 5 on the NF-10 denial of claim form.

11 NYCRR 65-4.6 (c) governs payment by insurers of applicants’ attorneys’ fees for services necessarily performed in the resolution of no-fault disputes and provides in pertinent [*4]part:

“For disputes subject to . . . court proceedings, where one of the issues involves a policy issue as enumerated on the prescribed denial of claim form (NYS form NF-10), subject to this section, the attorney’s fee for the arbitration or litigation of all issues shall be limited to a fee of up to $70 per hour, subject to a maximum fee of $1,400. In addition, an attorney shall be entitled to receive a fee of up to $80 per hour for each personal appearance before the arbitration forum or court.”

While defendant argues that there was no policy issue in this action, the court disagrees. “The failure to appear for IMEs requested by the insurer ‘when, and as often as, [it] may reasonably require’ (Insurance Department Regulations [11 NYCRR] § 65-1.1) is a breach of a condition precedent to coverage under the no-fault policy” (Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [2011]).

Plaintiff has the burden in establishing the amount of hours reasonably spent on legal work in this action. Plaintiff admitted it was aware that it would be seeking attorneys’ fees in this action, and the best evidence of time spent would have been time records contemporaneously maintained by the attorney doing the work.

JR’s testimony on the hours she spent was essentially an educated guess based on her routine and custom. For example, in confirming that she appeared on the dates in question, JR testified that she relied in part on her records of days absent from work, and when she saw she was not absent she determined she would have been the attorney in court on a particular date.

Less guesswork would have been involved had plaintiff provided evidence of the number of other matters she handled on each date she appeared. This evidence was readily available to plaintiff, as acknowledged by JR in her testimony, but not provided to the court, nor subpoenaed by defendant.{**63 Misc 3d at 880}

The court finds that plaintiff’s attorneys spent at least one-half hour in court on each of the trial dates on May 25, 2016, June 8, 2017, July 5, 2018, September 24, 2018, November 5, 2018, and December 18, 2018. This is reduced from the one hour per appearance requested by plaintiff, based on the failure of counsel to maintain contemporaneous time records for the appearances, and the failure of plaintiff to provide the court with evidence on the number of cases the attorney was handling in court on each of the dates in question.

As JR did not testify with certainty that she appeared on the earlier dates, and no other attorney for plaintiff offered evidence of same, no time is awarded for court appearances prior to the initial trial date.

No award is made for appearances after the trial date, as these appearances were solely on the issue of attorneys’ fees and time spent substantiating counsel fees, also known as fees on fees, and are not permitted by the statute (Matter of GEICO Ins. Co. v AAAMG Leasing Corp., 148 AD3d 703 [2017]; Insurance Law § 5106 [a]).

The court further finds that JR spent one hour each night prior to scheduled trial dates in preparation.

Plaintiff is additionally awarded one-half hour for the preparation of opposition papers to defendant’s summary judgment motion. Again since there was no evidence on the amount of time the attorney who prepared the papers spent on the task, and the papers were never filed with the court, the time is more limited than requested by plaintiff.

Based on the foregoing, the court finds plaintiff is entitled to three hours for court appearances totaling $240 and 6.5 hours for trial preparation and the affirmation in opposition totaling $455. Plaintiff is entitled to a total of $695 for attorneys’ fees in this action.

Footnotes

Footnote *:The file was not available to the court at the time of the hearing. The procedural history is based on the case summary maintained by Civil Court as well as the documents and testimony presented at the attorneys’ fees hearing.

CV-130940-03/QU

LAW OFFICES OF DAVID B. O’CONNOR P.C.

Counsel for Plaintiff PDG Psychological P.C. As Assignee of Glendon Steve Antoine

2606 East 15th Street

Brooklyn, New York 11235

By: David Bryon O’Connor, Esq.

MCDONNELL ADELS & KLESTZICK, PLLC

Counsel for Defendant State Farm Mutual Insurance Co.

401 Franklin Avenue

Garden City, New York 11530

By: Julie Andrea Linwood, Esq. and Alisa Ann Burns, Esq.

I. Background

In this action, PDG Psychological P.C. (the “Plaintiff”) seeks to recover no-fault insurance benefits for alleged services rendered to Plaintiff’s assignor, Glendon Steve Antoine, based on an alleged automobile accident that occurred on or about May 5, 2003. Plaintiff served a summons and complaint on defendant State Farm Mutual Insurance Co. (the “Defendant”) on or about November 6, 2003. In turn, Defendant allegedly served its verified answer and discovery demands to Plaintiff on or about December 22, 2003.

Plaintiff moved for summary judgment and Defendant made a cross-motion to dismiss for failure to provide discovery or, in the alternative, to compel discovery. There is no indication that Plaintiff provided any responses to Defendant’s discovery demands prior to Defendant’s cross-motion. On July 8, 2005, the Court issued an order (the “July 8, 2005 Order”) denying Plaintiff’s motion for summary judgment for failure to establish a prima facie case and granting [*2]Defendant’s cross-motion, holding that “the action is dismissed unless with[in] thirty days after service of a copy of this order, with notice of entry, [P]laintiff provides a response to all previously served discovery demands and appears for an examination under oath.” On or about October 24, 2005, Plaintiff provided responses to Defendant’s discovery demands.

A prolonged period of inactivity appears to have followed and, on June 6, 2007, this case was converted to inactive, and the record indicates that both parties subsequently continued to remain inactive. Defendant alleges that in March 2011 it served notice of entry of the July 8, 2005 Order, with an attached copy of the July 8, 2005 Order, to Plaintiff. Plaintiff asserts that it did not receive a copy of the July 8, 2005 Order until March 11, 2011.

Nevertheless, this matter largely remained dormant until, on or about August 10, 2017, Plaintiff served a notice of trial and certificate of readiness, without having appeared for an examination under oath (“EUO”) as required by the July 8, 2005 Order. On August 17, 2017, Defendant moved: (1) to dismiss the complaint for failure to provide complete and meaningful discovery; or, in the alternative, (2) to strike Plaintiff’s notice of trial; (3) to compel Plaintiff to provide responses to Defendant’s discovery demands and appear for an examination before trial (“EBT”); and (4) to stay the accrual of no-fault interest. On April 18, 2018, this Court issued a decision and order (the “April 18, 2018 Decision”) denying Defendant’s motion to dismiss and granting Defendant’s motions to strike the notice of trial and to compel Plaintiff to appear for an EUO within 30 days of service of the order with notice of entry or the case would be dismissed. Defendant now moves to reargue the April 18, 2018 Decision and requests: (1) an order compelling Plaintiff to provide complete and meaningful discovery responses before appearing for an EUO; and (2) staying accrual of no-fault interest.

In accordance with Rule 2219 [a] of the Civil Practice Law and Rules (“CPLR”), the Court considered: (1) Defendant’s motion to reargue, Defendant’s counsel’s affirmation and attached exhibits; (2) Plaintiff’s counsel’s affirmation in opposition to said motion and attached exhibits; and (3) Defendant’s counsel’s affirmation in reply to Plaintiff’s affirmation in opposition and attached exhibits.

II. Discussion

As an initial matter, Defendant argues that Plaintiff could not transfer this action to the Law Offices of David B. O’Connor P.C., which is the third counsel for Plaintiff, because there is no record of Defendant being served with a consent to change attorney form, pursuant to CPLR 321 [b], evidencing the change from original counsel to the second counsel. However, this argument was made for the first time in Defendant’s reply papers, which function to address arguments made in opposition to the position taken by the movant—not to permit the movant to introduce new arguments or new grounds for the requested relief (see Allstate Ins. Co. v. Dawkins, 52 AD3d 826, 827 [2d Dept 2008]). Thus, this Court declines to issue a decision on this argument, but notes that a consent to change attorney form for the transition of this action from second counsel to the Law Offices of David B. O’Connor P.C. was submitted and Defendant has not claimed that Plaintiff’s technical failure in complying with CPLR 321 [b] for the transition from the original counsel to second counsel caused Defendant any prejudice (see Sperry Assocs. Fed. Credit Union v. John, 160 AD3d 1007, 1009 [2d Dept 2018]).

CPLR 2221 (d) states, in pertinent part, that “a motion for leave to reargue . . . shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion.” Defendant asserts that the April 18, 2018 Decision overlooked the deficiencies in [*3]Plaintiff’s October 24, 2005 discovery responses and the portion of Defendant’s motion seeking a stay of the accrued interest. Given that the April 18, 2018 Decision did not specifically address these issues, the Defendant’s motion is granted and the Court amends its April 18, 2019 Decision as explained below.

A. Discovery Responses

Defendant identified only three of the discovery responses provided by Plaintiff, on or about October 24, 2005, as insufficient. Specifically, Defendant asserts that Plaintiff’s responses to Question 5 and Question 7, of Defendant’s Demand for Verified Interrogatories, are insufficient because they indicate that proof of mailing for the bills at issue had been attached to Plaintiff’s responses, but no proof of mailing was attached. Defendant further asserts that Plaintiff’s response to Question 18 is insufficient because Question 18 requests “the name and address of the office manager and/or individual who assisted in preparing and sending the bills and/or verification of treatment forms attached to the Plaintiffs complaint” and, Plaintiff simply responded “not applicable.”

i. Motion to Dismiss

The Court reaffirms the denial of Defendant’s motion to dismiss based on Plaintiff’s alleged failure to comply with the July 8, 2005 Order. The July 8, 2005 Order provides that the 30-day deadline for Plaintiff to respond to Defendant’s discovery demands, and avoid dismissal, could only be initiated by “service of a copy of the order, with notice of entry,” and Plaintiff has not provided proof that the July 8, 2005 Order was ever served with notice of entry beyond Plaintiff’s submission of an unexecuted copy of a notice of entry dated May 1, 2011. Accordingly, Plaintiff’s October 24, 2005 responses were timely.

Furthermore, to the extent that any of Plaintiff’s responses are substantively insufficient, dismissal is not appropriate “where there is no clear showing that the failure to comply with discovery demands was willful or contumacious” (see Walter B. Melvin, Architects, LLC v. 24 Aqueduct Lane Condominium, 51 AD3d 784, 785 [2d Dept 2008] (noting that striking a pleading is a “drastic remedy” and further finding that “while the plaintiff was clearly dissatisfied with the responses to its demands, there was no showing of a pattern of willful failure to respond to discovery demands or comply with disclosure orders, so as to justify striking the defendant’s answer”); Conway v. Brooklyn Gas Union Co., 212 AD2d 498, 498 [2d Dept 1995]). The portion of Plaintiff’s response to Questions 5 and 7 that states “[s]ee attached proof of mailing,” suggests an intent to comply and Plaintiff’s failure to attach proof of mailing could simply be a misunderstanding or oversight. With respect to Plaintiff’s response to Question 18, “not applicable” may simply be an indication that such information is not available, and Plaintiff intends to satisfy its burden by providing evidence of Plaintiff’s “standard office practice or procedure designed to ensure that items are properly addressed and mailed” (Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679, 680 [2d Dept 2001]). Accordingly, dismissal is not proper, and Plaintiff should be given a chance to clarify its responses (see Spiegel v. Goodman, 98 AD2d 815, 815 [2d Dept 1983]; Escobar v. St. Vincent’s Med. Ctr. Of Richmond, 2003 NY Slip Op 51674[U], *1 [App Term, 2nd & 11th Jud Dists 2011]).

ii. Motion to Strike Notice of Trial

The Court reaffirms its grant of Defendant’s motion to strike Plaintiff’s notice of trial. A notice of trial is properly vacated when the certificate of readiness incorrectly states a material fact regarding the completion of discovery (see Amoroso v. City of New York, 66 AD3d 618, 618 [2d Dept 2009]; Garofalo v. Mercy Hosp., 271 AD2d 642, 642 [2d Dept 2000]; Citywide Social [*4]Work & Psychological Servs., PLLC v. Autoone Ins. Co., 2011 NY Slip Op 51308[U], *1 [App Term, 2d Dept, 11th & 13th Jud Dists 2011] (finding that the court properly vacated a notice of trial due to outstanding discovery mandated in a prior order that directed plaintiff to provide discovery responses and appear for an examination before trial). It is undisputed that the EUO compelled in the July 8, 2005 Order has not yet occurred. Accordingly, Plaintiff’s statement that discovery has been completed in the certificate of readiness filed with the notice of trial in the current matter is erroneous and the notice of trial is properly stricken (see Amoroso, 66 AD3d at 618).

iii. Motion to Compel

This Court grants Defendant’s motion to compel sufficient responses to Questions 5, 7 and 18 of Defendant’s Demand for Verified Interrogatories. CPLR 3101 [a] provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” The phrase “material and necessary” is “to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” Allen v. Crowell-Collier Pub. Co., 21 NY2d 403, 406 [1968]. The test in determining whether discovery is material and necessary “is one of usefulness and reason” (Id.).

The information sought by Questions 5, 7 and 18 is material and necessary and Plaintiff’s responses require clarity in light of their aforementioned issues. Thus, Plaintiff must provide sufficient responses to Questions 5, 7 and 18, and Plaintiff must produce any proof of mailing in its possession for the bills at issue. Plaintiff must provide said responses and documents to Defendant by no later than May 16, 2019 or this matter will be dismissed. Plaintiff may only extend this deadline with leave of the Court.

Additionally, although the Court reaffirms its grant of Defendant’s motion to compel Plaintiff to appear for an EUO, this Court finds that Plaintiff’s EUO is not preconditioned on Plaintiff’s discovery responses. The July 8, 2005 Order simply states that the Plaintiff must “respon[d] to all previously served discovery demands and appear[ ] for an examination under oath” to avoid dismissal (emphasis added). Contrary to Defendant’s suggestion otherwise, the July 8, 2005 Order does not address whether Plaintiff is required to respond to the discovery demands prior to being afforded the opportunity to appear for an EUO. Moreover, Defendant has not referred to any law that justifies its inactivity, with respect to both Defendant’s belated objections to Plaintiff’s discovery responses and apparent failure to even attempt to schedule an EUO.

In the over 12 years since the July 8, 2005 Order was issued, there is no evidence that the Defendant has served a notice of taking oral deposition pursuant to CPLR 3107 or even contacted Plaintiff about scheduling an EUO. Defendant seemingly blames its 12 years of inactivity on Plaintiff’s deficient discovery responses. However, the “ultimate determination of compliance [with respect to discovery] is the province of the court” (see Jones v. White Metal Rolling & Stamping Corp., 86 AD2d 687, 687-688 [3d Dept 1982]). Upon receiving responses from Plaintiff that Defendant deemed insufficient on or about October 24, 2005, Defendant could have immediately moved to compel satisfactory answers, but failed to do so (see J.R. Stevenson Corp. v. Dormitory Authority of State of NY, 112 AD2d 113, 117 [1st Dept 1985]). Considering that the July 8, 2005 Order provides that this matter “is” dismissed “unless“ Plaintiff responds to discovery requests and appears for an EUO, Defendant’s dilatory conduct played a significant role in this matter being brought to a standstill because Defendant waited [*5]almost 12 years to object to Plaintiff’s discovery responses and never afforded Plaintiff with an opportunity to appear for an EUO.

In light of Defendant’s delay in conducting an EUO of the Plaintiff and in order to expedite the completion of pretrial preparation, this Court further finds that if the Defendant fails to conduct an EUO of the Plaintiff by July 1, 2019, Defendant will be deemed to have waived it’s right to depose the Plaintiff, Plaintiff will no longer be obligated to appear for an EUO pursuant to the July 8, 2005 Order and Plaintiff will be permitted to file a notice of trial. If Plaintiff fails to appear for an EUO, at a time and place to be specified in written notice from Defendant of not less than 20 days beforehand or at such time and place as the parties may agree, this matter will be dismissed. This deadline may only be extended with leave of the Court.

B. Statutory Interest

The determination as to staying the accrual of no-fault interest cannot be made at this point. Prejudgment interest that accrues on overdue no-fault benefits at a rate of two percent per month “is a statutory penalty designed to encourage prompt adjustments of claims and inflict a punitive economic sanction on those insurers who do not comply” (East Acupuncture P.C. v. Allstate Ins. Co., 61 AD3d 202, 211 [2d Dept 2009]; see Aminov v. Country Wide Ins. Co., 986 NYS2d 909, 910 [App Term, 2d Dept, 11th & 13th Jud Dists 2014] (referring to interest accumulated pursuant to Insurance Department Regulations as prejudgment interest)). The Insurance Department Regulations provide that statutory prejudgment interest shall accumulate “unless the applicant unreasonable delays the . . . court proceeding” (11 NYCRR 65-3.9 [d]; see Aminov, 986 NYS2d at 910; Devonshire Surgical Facility v. Am. Tr. Ins. Co., 2011 NY Slip Op 50793[U], *5 [Civ Ct NY County 2011] (further noting that a “court proceeding ends with entry of judgment”)).

An award of this interest is only available to a prevailing claimant who has proven that that first party benefits are overdue (see Insurance Law § 5106 [a] (“benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained [and] [a]ll overdue payments shall bear interest at the rate of two percent per month”); Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co., 25 NY3d 498, 502 [2015] (noting plaintiff’s “prima facie burden of showing the fact and amount of loss sustained”). Further proceedings in this matter must be conducted to determine whether the benefits at issue are overdue (see Viviane, 25 NY3d at 502; see also Solow v. Wellner, 205 AD2d 339, 341[2nd Dept 1994], affd 86 NY2d 528 [1995] (“[A] determination as to the landlord’s entitlement to prejudgment interest on back rent recovered is premature at this point [because] [a]lthough CPLR 5001 (a) provides that interest shall be recovered on monetary damages awarded for breach of contract . . . such award, like that of attorney’s fees, is generally only available to the prevailing party [and] [f]urther proceedings must be conducted to determine whether any of the parties will attain that status.”).

In fact, the July 8, 2005 Order found that Plaintiff failed to meet its prima facie burden in moving for summary judgment (see Alvarez v. Prospect Hosp., 68 NY2d 320, 324 [1986] (noting that “failure to make such a prima facie showing requires denial of the [summary judgment] motion,” as opposed to the dismissal of a complaint). A determination by this Court on whether interest is tolled would be purely academic when there has not been an initial determination that interest is actually owed and accumulating, and this Court is prohibited from issuing such an advisory opinion (see Saratoga County Chamber of Commerce, Inc. v. Pataki, 100 NY2d 801, 810 [2003]).

Furthermore, this Court also lacks evidence that is critical in determining the parameters of any tolling period in this matter. For example, Defendant has not submitted affidavits of service to prove service of its discovery demands or service of the July 8, 2005 Order with notice of entry. Additional evidence is also needed to determine whether Plaintiff is the cause of any unreasonable delay in this court proceeding, which must be established before interest can be tolled (see 11 NYCRR 65-3.9 [d]). Indeed, the extent to which Plaintiff caused any delay in this matter is questionable because Plaintiff’s ability to move forward in prosecuting this matter after the issuance of the July 8, 2005 Order was arguably limited by Defendant’s failure to provide Plaintiff with an opportunity to appear for an EUO. Notably, Defendant does not deny that it ignored Plaintiff’s alleged attempt to schedule an EUO even 12 years after the issuance of the July 8, 2005 Order.

Therefore, the Court denies Defendant’s motion to stay the accrual of no-fault interest, but Defendant may resubmit its motion on a later date.

III. Conclusion

Accordingly, the Court denies Defendant’s motion to dismiss, grant’s Defendant’s motion to strike, grants Defendant’s motion to compel, and denies Defendant’s motion to stay interest.

This constitutes the decision and order of the Court.

Dated: April 3, 2019

Jamaica, New York

Hon. John C.V. Katsanos

Judge, Civil Court

[*1]

The Rybak Firm, PLLC, Brooklyn, NY (Maksim Leyvi and Andrew S. Fisher of counsel), for appellant.

McCormack & Mattei, P.C., Garden City, NY (Melanie J. Rosen and Debra Ruderman of counsel), for respondents.

In an action, inter alia, for a judgment declaring that the plaintiffs are not obligated to pay certain no-fault claims submitted by the defendant, the defendant appeals from an order of the Supreme Court, Nassau County (Randy Sue Marber, J.), dated May 26, 2017. The order denied the defendant’s motion pursuant to CPLR 317 and 5015 (a) (1) to vacate a judgment of the same court entered September 3, 2015, upon its failure to appear or answer the complaint.

Ordered that the order is affirmed, with costs.

The plaintiffs commenced this action, inter alia, for a judgment declaring that they are not obligated to pay certain no-fault claims submitted by the defendant on the grounds that the defendant failed to comply with conditions precedent to coverage or to verify its claims. The plaintiffs served the defendant by delivering a copy of the summons and complaint to the Secretary of State pursuant to Business Corporation Law § 306. After the defendant failed to answer or appear, the plaintiffs moved for entry of a default judgment. The Supreme Court granted the plaintiffs’ unopposed motion, and a default judgment was entered on September 3, 2015. On September 10, 2015, the plaintiffs served the defendant with a copy of the judgment with notice of entry. In January 2017, the defendant moved pursuant to CPLR 317 and 5015 (a) (1) to vacate the judgment entered September 3, 2015. The court denied the motion, and the defendant appeals.

Pursuant to CPLR 317, a defaulting defendant who was “served with a summons other than by personal delivery” may be permitted to defend the action upon a finding by the court that the defendant did not personally receive notice of the summons in time to defend and has a potentially meritorious defense (CPLR 317; see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]; Booso v Tausik Bros., LLC, 148 AD3d 1108, 1108 [2017]; Gershman v Midtown Moving & Stor., Inc., 123 AD3d 974, 975 [2014]). Service on a corporation through delivery of process to the Secretary of State is not “personal delivery” to the corporation (CPLR 317; see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d at 142; Booso v Tausik Bros., LLC, 148 AD3d at 1108). A defendant seeking to vacate a default in appearing or answering pursuant to CPLR 5015 (a) (1) must demonstrate both a reasonable excuse for the default and a potentially meritorious defense to the action (see Xiao Lou Li v China Cheung Gee Realty, LLC, 139 AD3d 724, 726 [2016]; Sussman v Jo-Sta Realty Corp., 99 AD3d 787, 788 [2012]).

Here, the defendant’s principal submitted an affidavit in support of the motion in which she denied receipt of a copy of the summons and complaint and affirmed that she did not have notice of the action until in or about January 2017. However, the address she listed as the defendant’s office was the same as the address that was on file with the Secretary of State. In addition, affidavits of service submitted by the plaintiffs demonstrated that notice of service and other documents in this action were mailed to that address. Under those circumstances, the conclusory and unsubstantiated denial of receipt of the summons and complaint was insufficient to establish that the defendant did not have actual notice of the action in time to defend (see Stevens v Stepanski, 164 AD3d 935, 937 [2018]; Xiao Lou Li v China Cheung Gee Realty, LLC, 139 AD3d at 726; Capital Source v AKO Med., P.C., 110 AD3d 1026, 1027 [2013]; Udell v Alcamo Supply & Contr. Corp., 275 AD2d 453, 454 [2000]).

Similarly, the affidavit of the defendant’s principal was insufficient to establish a reasonable excuse for the defendant’s default pursuant to CPLR 5015 (a) (1) (see Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d at 141-142; Xiao Lou Li v China Cheung Gee Realty, LLC, 139 AD3d at 726; Gershman v Midtown Moving & Stor., Inc., 123 AD3d at 975). In addition, that branch of the motion which was pursuant to CPLR 5015 (a) (1) was untimely, since the motion was not made within one year after the defendant was served with a copy of the judgment with notice of entry (see CPLR 5015 [a] [1]; Deutsche Bank Natl. Trust Co. v White, 110 AD3d 759, 760 [2013]).

In light of the foregoing, it is unnecessary to determine whether the defendant demonstrated the existence of a potentially meritorious defense for purposes of either CPLR 317 or 5015 (a) (1) (see Xiao Lou Li v China Cheung Gee Realty, LLC, 139 AD3d at 726; Capital Source v AKO Med., P.C., 110 AD3d at 1027).

The defendant’s remaining contentions are improperly raised for the first time on appeal (see Collins v 7-11 Corp., 146 AD3d 931, 932 [2017]).

Accordingly, we agree with the Supreme Court’s denial of the defendant’s motion pursuant to CPLR 317 and 5015 (1) (1) to vacate the judgment. Rivera, J.P., Cohen, Miller and Barros, JJ., concur.

007745/11

Attorney for the Plaintiff: Gary Tsirelman P.C., 129 Livingston Street Brooklyn, Brooklyn, New York 11201

Attorney for the Defendant: Law Offices of Aloy O. Ibuzor, 485 Lexington Avenue, 7th Floor, New York, New York 10017

This is an action seeking reimbursement for medical services provided by Plaintiff under the No-Fault system. By Notice of Motion dated February 15, 2018, Plaintiff moves to vacate an order of administrative dismissal pursuant to CPLR 3215(c) dated March 30, 2017 and for leave to enter a default judgment against Defendant. Defendant opposes the motion.

The history of this case which culminated in the CPLR 3215(c) dismissal commenced with the timely purchase of an index number on January 26, 2011. Plaintiff, however, did not serve the summons and complaint on Defendant until June 5, 2013, over two years after the statutory 120-day service period had expired. Plaintiff attributes the delay to law office failure explaining that the office was unaware that it had failed to serve the summons and complaint due to an error caused by transferring files from an old management system to a new system between 2011 and 2012. In 2013, Plaintiff discovered that it did not possess an affidavit of service relative to this case and a process server was sent to serve Defendant in June of that year. Defendant, to date, has not answered. There is no indication in either the record or the parties’ moving papers that Plaintiff ever moved pursuant to CPLR 306(b) for an extension of time to effectuate service.

Plaintiff claims that the office filed a motion for a default judgment in July of 2014. Plaintiff states that because Defendant was personally served with process on June 5, 2013 and [*2]the affidavit of service was filed on June 6, 2013, it had until July 11, 2014 to move for a default. However, according to Civil Court records maintained for this index number, the motion for a default judgment was filed on August 6, 2014. On that same day, the court issued a “Judgment Rejection Notification.” The reason stated on the notice was “late service.” Plaintiff acknowledges timely receipt of this notice but did not move to cure the defect, claiming that an upgrade in its computer system resulted in the failure to alert a paralegal to draft a motion.

Plaintiff took no further action in this case and, in May of 2017, Plaintiff’s office learned that the action was administratively dismissed by an order of Judge Richard Montelione dated March 30, 2017. The order states:

“[p]laintiff(s) commenced this action to recover assigned first party no-fault benefits. Defendant failed to answer and more than one year had passed. There being no sufficient cause being shown why the complaint should not be dismissed, pursuant to CPLR 3215(c) it is therefore ordered, that the complaint is dismissed.”

Plaintiff now moves to vacate the administrative dismissal arguing that its motion should be granted because the court did not give it prior notice of the impending administrative dismissal. Plaintiff asserts that the court’s failure to give notice deprived the attorneys of an opportunity to be heard. Plaintiff further claims that this lack of notice constitutes its reasonable excuse for the failure to appear on March 30, 2017. Plaintiff also seeks to revive the August 6, 2014 application for a default judgment which it insists the court improperly rejected.

It is noted that the administrative dismissal order of March 30, 2017 was issued pursuant to CPLR 3215(c). The Second Department holds that “CPLR 3215(c) provides that ‘[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned … unless sufficient cause is shown why the complaint should not be dismissed’ ” (Myoung Ja Kim v. Wilson, 150 AD3d 1019, 1020 [2d Dept. 2017] quoting CPLR 3215[c]). This statute is strictly construed, as “[t]he language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one year period, as those claims are then deemed abandoned” (Giglio v. NTIMP, Inc., 86 AD3d 301, 307—308 [2d Dept. 2011]; see HSBC Bank USA, N.A. v. Grella, 145 AD3d 669, 671 [2d Dept. 2016]).

Moreover, CPLR 3215(c) expressly provides that a court may dismiss a complaint as abandoned “upon its own initiative or on motion.” The statute further provides, however, that the failure to timely seek a default may be excused if “‘sufficient cause is shown why the complaint should not be dismissed'” (HSBC Bank USA, N.A. v. Grella, 145 AD3d at 671, quoting CPLR 3215[c]). To establish the sufficient cause required by CPLR 3215(c), “the party opposing dismissal must demonstrate that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action” (Aurora Loan Servs., LLC v. Hiyo, 130 AD3d 763, 764 [2d Dept. 2015]; see Wells Fargo Bank, N.A. v. Bonanno, 146 AD3d 844, 845—846 [2d Dept. 2017]). “‘The determination of whether an excuse is reasonable in any given instance is committed to the sound discretion of the motion [*3]court'” (Pipinias v. J. Sackaris & Sons, Inc., 116 AD3d 749, 752 [2d Dept. 2014] quoting Giglio v. NTIMP, Inc., 86 AD3d at 308; see U.S. Bank, N.A. v. Dorvelus, 140 AD3d 850, 852 [2d Dept. 2016]). While a court has the discretion to accept law office failure as a reasonable excuse, such excuse must be supported by detailed allegations of fact explaining the law office failure (see CPLR 2005; CEO Bus. Brokers, Inc. v. Alqabili, 105 AD3d 989, 990 [2d Dept. 2013]; HSBC Bank USA, N.A. v. Wider, 101 AD3d 683 [2d Dept. 2012]; Ibrahim v. Nablus Sweets Corp., 161 AD3d 961, 963 [2d Dept. 2018]).

Plaintiff’s claim that the court was required to give notice prior to the CPLR 3215(c) dismissal based on Rhodehouse v. CVS Pharmacy, Inc., 151 AD3d 771 (2d Dept. 2017), is erroneous. The dismissal in that case was made pursuant to CPLR 3216, not CPLR 3215(c), which expressly provides that a court may dismiss an action as abandoned “upon its own initiative or on motion” (Ibrahim v Nablus Sweets Corp., 161 AD3d at 961).

This case was properly dismissed, sua sponte, pursuant to CPLR 3215(c) as the case lay dormant in the court system without joinder of issue and without a default judgment against Defendant for over three years. Furthermore, this application must be denied as Plaintiff does not submit an affidavit of merit and the excuse of law office failure is vague, conclusory, and unsubstantiated (see U.S. Bank, N.A. v. Dorvelus, 140 AD3d at 852; Baruch v. Nassau County, 134 AD3d 658, 659 [2d Dept. 2015]; Mattera v. Capric, 54 AD3d 827, 828 [2d Dept. 2008]; Ibrahim v. Nablus Sweets Corp., 161 AD3d at 963; Private Capital Group, LLC, v. Hosseinipour, 2019 WL 1141605 [2d Dept. 2019]).

This case has been riddled with procedural defects since inception. Although Plaintiff purchased the index number within the statute of limitations on January 26, 2011, the summons and complaint were not served on Defendant until June 5, 2013, over two years later. At no time did Plaintiff move for an extension of time to serve Defendant pursuant to CPLR 306(b) and this defect continues to plague this case. Plaintiff offers no reasonable excuse as to why it filed the motion for a default judgement over one year after Defendant defaulted in answering. It is not clear whether the court rejected the default papers because Plaintiff served Defendant beyond the statutory 120-days of filing without leave of court or because Plaintiff filed the motion late. In either case, it is clear that the court rejected Plaintiff’s default judgment as untimely and no motion was made at that time to cure the rejected papers.

All of the above demonstrates a general pattern of neglect for which Plaintiff has consistently failed to provide a reasonable excuse or otherwise remedy. Considering the history of procedural defects, this court cannot accept Plaintiff’s vague excuse that the implementation of a new case management and computer system were valid reasons for the office failures over the years and, specifically for the failure to timely file for default judgment which led to the administrative dismissal of March 30, 2017

Accordingly, Plaintiff’s motion to vacate the March 30, 2017 order of administrative dismissal pursuant to CPLR 3215(c) is denied and the complaint is dismissed with prejudice.

This constitutes the decision and order of this court.

April 1, 2019
Brooklyn, NY
ENTER
__________________________________
CONSUELO MALLAFRE-MELENDEZ
Judge, Civil Court