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DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED.

The First Department, over a dissent, determined the $900,000 default judgment in this Labor Law action should not have been vacated. The court noted that it had the power to overrule Supreme Court, even in the absence of an abuse of discretion. It has been held that a defendant’s reliance on an insurance broker to handle a lawsuit, as argued here, is a valid excuse for a default. However defendant’s principal, Mr. Gjonaj, received, over the course of years, papers sent by plaintiff’s attorney which should have alerted him to fact that the lawsuit was progressing in defendant’s absence. The court further determined plaintiff’s installation of video cameras was a covered activity under the Labor Law and his falling from a ladder was therefore actionable:

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… [Mr.  Gjonaj’s.] assertion in this case that he believed his broker was forwarding the paperwork to the appropriate insurance carrier was unreasonable in light of his conceded receipt of the summons and complaint, two motions for a default judgment, a letter from the court and a court decision reflecting a $900,000 judgment against him. Surely Mr. Gjonaj knew that if his insurance company had retained a lawyer to appear for defendants, he and his corporations would not have continued to receive legal documents directly from plaintiff’s attorney and the court for over three years. The fact that [the broker] kept assuring Mr. Gjonaj “that everything in this matter was under control and that the claim was being handled by the proper insurance company,” does not help to establish reasonableness, objective or otherwise, on the part of Mr. Gjonaj, who should have known that everything was not under control after years of receiving so many legal documents from plaintiff’s counsel relating to the same lawsuit. Gecaj v Gjonaj Realty & Mgt. Corp., 2017 NY Slip Op 03109, 1st Dept 4-25-17

CIVIL PROCEDURE (DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED)/LABOR LAW-CONSTRUCTION LAW (DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED. FALLING FROM A LADDER WHILE INSTALLING VIDEO CAMERAS WAS A COVERED ACTIVITY)/LADDERS (LABOR LAW-CONSTRUCTION LAW DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED. FALLING FROM A LADDER WHILE INSTALLING VIDEO CAMERAS WAS A COVERED ACTIVITY)/VIDEO CAMERAS (LABOR LAW-CONSTRUCTION LAW DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED. FALLING FROM A LADDER WHILE INSTALLING VIDEO CAMERAS WAS A COVERED ACTIVITY)/INSURANCE LAW (DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED)/DEFAULT JUDGMENTS (DEFENDANT’S RELIANCE ON ITS INSURANCE BROKER TO HANDLE A LABOR LAW PERSONAL INJURY CLAIM WAS NOT, UNDER THE FACTS, A SUFFICIENT EXCUSE, THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN VACATED)

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