Barasch v. Micucci, 110 A.D.2d 649 (2d Dep’t 1985)
A defendant seeking to vacate a default judgment must demonstrate both a reasonable excuse for the default and a meritorious defense to the underlying action.
Summary
This case clarifies the requirements for vacating a default judgment. The defendant failed to provide a reasonable excuse for the delay in appearing and answering the plaintiff’s complaint, nor did they present a meritorious defense to the action itself. The defendant’s insurance carrier’s delay, coupled with a coverage dispute unrelated to the merits of the case, was insufficient to justify vacating the default. Therefore, the court reversed the lower court’s decision, emphasizing the need for both a valid excuse and a substantive defense.
Facts
The plaintiffs served the summons and complaint on the defendant on August 4, 1981.
The defendant promptly forwarded the papers to his personal attorneys.
The personal attorneys then delivered the papers to the defendant’s insurance carrier.
The insurance carrier subsequently delivered the papers to its counsel.
Defense counsel failed to serve a notice of appearance or an answer to the complaint before the plaintiff entered a default judgment in January 1982.
Defense counsel attempted to extend the time to appear by unilaterally serving a stipulation on the plaintiff’s counsel, but it was refused.
Procedural History
The plaintiff obtained a default judgment against the defendant.
The defendant moved to vacate the default judgment.
The lower court granted the defendant’s motion to vacate the default.
The Appellate Division reversed the lower court’s order and denied the motion to vacate the default, which was then appealed to the Court of Appeals.
Issue(s)
Whether the defendant demonstrated an acceptable excuse for the delay in appearing and answering the plaintiff’s complaint.
Whether the defendant presented a meritorious defense to the underlying action.
Holding
No, because the defendant’s moving papers failed to demonstrate an acceptable excuse for the delay caused by the insurance carrier and its counsel.
No, because the alleged defense related to a potential coverage issue, not to the merits of the underlying action.
Court’s Reasoning
The Court of Appeals held that the defendant’s moving papers failed to demonstrate both an acceptable excuse for the delay and a meritorious defense. The court emphasized that it was an error to vacate the default. The court noted that the insured’s prompt action in delivering the papers to his attorneys and subsequently to the insurance carrier did not excuse the counsel’s failure to serve a notice of appearance or answer. The attempted stipulation was refused and did not constitute an appearance to extend the defendant’s time.
The court dismissed the argument that a potential question of coverage constituted a meritorious defense, stating, “That defense does not relate to the merits of the main action and is legally insufficient on this motion.”
This case reaffirms a strict standard for vacating defaults, placing the burden on the defaulting party to demonstrate both a good reason for the delay and a valid reason why they should win on the merits. Excuses related to internal delays within an insurance company, or defenses unrelated to the underlying claim, are insufficient.