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Failure to Enter a Default Judgment within One Year Justified Dismissal of the Complaint as Abandoned

The Second Department determined, pursuant to CPLR 3215 (c), plaintiff’s failure to enter a default judgment within one year, and plaintiff’s failure to explain the delay, warranted dismissal of the complaint as abandoned. The court explained the reasons for the rule:

CPLR 3215(c), which is entitled “Default not entered within one year,” states, as relevant to this appeal: “[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, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed.” The policy underlying the statute is “to prevent parties who have asserted claims from unreasonably delaying the termination of actions, and to avoid inquests on stale claims” … . Upon a showing of the requisite one year of delay, dismissal is mandatory in the first instance … . Failure to take proceedings for entry of judgment may be excused, however, upon a showing of sufficient cause. To establish “sufficient cause,” 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 … . Here, the Supreme Court correctly granted that branch of [defendant’s] motion which was pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against her. [Defendant] demonstrated that the plaintiff had failed to take any proceedings for entry of judgment within one year after she defaulted, and the plaintiff failed to demonstrate sufficient cause why that branch of the motion should be denied. Aurora Loan Servs., LLC v Hiyo, 2015 NY Slip Op 06100, 2nd Dept 7-15-15

 

Court Abused Its Discretion In Exercising Its Inherent Power to Grant a Motion to Vacate a Default Judgment More than a Year After the Judgment Was Entered (Five Years Here)

The Second Department determined Supreme Court should not have exercised its inherent power to vacate a default judgment more than one year after the judgment was entered (five years here):

Pursuant to CPLR 5015(a)(1), a court may relieve a party from a judgment on the ground of excusable default, if a motion for that relief is made within one year after service of a copy of the judgment with written notice of entry (see CPLR 5015[a][1]…). In addition, even after expiration of the one-year limitations period set forth in CPLR 5015, “a court may vacate its own judgment for sufficient reason and in the interests of substantial justice”… .

Here, to the extent the defendant sought to vacate the judgment against her pursuant to CPLR 5015(a)(1), that branch of her motion was untimely because it was not made within one year after service upon her of a copy of the judgment with notice of entry (see CPLR 5015[a][1]… ) . Further, contrary to the Supreme Court’s conclusion, the interests of substantial justice did not warrant vacating the judgment against the defendant in the exercise of the court’s inherent power … . Yung Chong Ho v Uppal, 2015 NY Slip Op 06132, 2nd Dept 7-15-15

 

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Evidence of Post-Accident Elevator-Repairs Not Discoverable

The Second Department determined plaintiff, who was injured in an elevator accident, was not entitled to the post-accident elevator-repair records. Such records are only discoverable if there is a question about whether a defendant actually maintains or has control over an instrumentality, not the case here:

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” … . “[E]vidence of subsequent repairs is not discoverable or admissible in a negligence case” … . An exception to this rule applies if a defendant’s maintenance of, or control over, the subject instrumentality is at issue … .

Here, the plaintiff moved to compel production of post-accident repair records generated during the three-year period between the date of the plaintiff’s accident and the date of the inspection of the subject elevator by the plaintiff’s expert. Yet it is undisputed that the defendant exercised maintenance and control over the elevator. Graham v Kone, Inc., 2015 NY Slip Op 06111, 2nd Dept 7-15-15

 

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Striking Answer for Spoliation of Evidence Too Severe a Sanction—Spoliation Was Not “Willful or Contumacious,” Both Parties Were Prejudiced by the Loss, Plaintiff Was Not Deprived of Means of Proving the Claim

The Second Department determined striking the defendant’s answer was too severe a sanction for spoliation of evidence which was not “willful or contumacious.”  Plaintiff was injured attempting to use a tranquilizer gun. The gun was sent out for repairs after the incident and a portion of the gun was not found after a diligent search.  The sanction was too severe because both parties were prejudiced by the loss and the loss did not deprive plaintiff of the means of proving his claim:

Under the common-law doctrine of spoliation, a party may be sanctioned where it negligently loses or intentionally destroys key evidence (see CPLR 3126…). “The nature and severity of the sanction depends upon a number of factors, including, but not limited to, the knowledge and intent of the spoliator, the existence of proof of an explanation for the loss of the evidence, and the degree of prejudice to the opposing party” … .

“The party requesting sanctions for spoilation has the burden of demonstrating that a litigant intentionally or negligently disposed of critical evidence, and fatally compromised its ability to'” prove its claim or defense … . However, ” striking a pleading is a drastic sanction to impose in the absence of willful or contumacious conduct'” and, thus, the courts must ” consider the prejudice that resulted from the spoliation to determine whether such drastic relief is necessary as a matter of fundamental fairness'” … . When the moving party is still able to establish or defend a case, a less severe sanction is appropriate …. Furthermore, where the plaintiffs and the defendants are equally affected by the loss of the evidence in their investigation of the accident, and neither have reaped an unfair advantage in the litigation, it is improper to dismiss or strike a pleading on the basis of spoliation of evidence … .

The determination of the appropriate sanction for spoliation is within the broad discretion of the court … . This Court will substitute its judgment for that of the Supreme Court only if that court’s discretion was improvidently exercised … .

Here, the Supreme Court, upon renewal and reargument, improvidently exercised its discretion in imposing the sanction of striking the City defendants’ answer, as the plaintiff failed to establish that the City defendants’ failure to preserve the subject tranquilizer gun was willful or contumacious … , or that their conduct deprived him of the means of proving his claim … . The City defendants’ repair of the subject gun prejudiced all parties, but does not prevent the plaintiff from proving his claim … . Morales v City of New York, 2015 NY Slip Op 06121, 2nd Dept 7-15-15

 

Defendant Did Not Waive the Statute of Limitations Defense, Pled In Its Answer, by Failing to Assert It in a Pre-Answer Motion to Dismiss—Although Defendant’s Post-Answer Motion Was Ostensibly Brought Pursuant to CPLR 3211(a)(5), the Parties Laid Bare Their Proof and Supreme Court Properly Treated the Motion as One for Summary Judgment Pursuant to CPLR 3212 Seeking Dismissal of the Complaint as Time-Barred

The Second Department determined defendant did not waive its statute of limitations defense, asserted in its answer, by not making a pre-answer motion to dismiss. Although defendant’s subsequent motion was ostensibly brought pursuant to CPLR 3211(a)(5), the parties laid bare their proof. Therefore Supreme Court properly treated the motion as one for summary judgment pursuant to CPLR 3212, seeking to dismiss the complaint as time-barred:

Initially, contrary to the plaintiff’s contention, the defendant did not waive its statute of limitations defense, asserted in its answer, by failing to make a pre-answer motion to dismiss … . Rather, a statute of limitations defense may be asserted after joinder of issue in a motion for summary judgment pursuant to CPLR 3212 … . Although the defendant’s motion was made pursuant to 3211(a)(5), the parties clearly charted a summary judgment course by submitting extensive documentary evidence and factual affidavits laying bare their proof … . Thus, the defendant’s motion is properly treated as a motion for summary judgment dismissing the complaint as time-barred … . Meredith v Siben & Siben, LLP, 2015 NY Slip Op 06120, 2nd Dept 7-15-15

 

Defendant Did Not Waive the Statute of Limitations Defense, Pled In Its Answer, by Failing to Assert It in a Pre-Answer Motion to Dismiss—Although Defendant’s Post-Answer Motion Was Ostensibly Brought Pursuant to CPLR 3211 Instead of 3212, the Procedural Irregularity Should Have Been Excused under CPLR 2001

The Second Department explained there is no requirement that a statute of limitations defense be raised solely in a pre-answer motion to dismiss.  The defense may be asserted in the answer, and subsequently raised in a summary judgment motion or at trial. Although defendant’s post-answer motion was ostensibly brought pursuant to CPLR 3211 instead of 3212, the procedural irregularity should have been excused under CPLR 2001:

CPLR 3211(a) permits a defendant who wishes to raise a defense based on the statute of limitations to do so by way of a motion to dismiss. That section provides, in relevant part, that “[a] party may move for judgment dismissing one or more causes of action asserted against him [or her] on the ground that . . . the cause of action may not be maintained because of [the] statute of limitations” (CPLR 3211[a][5]). CPLR 3211(e) provides that the defendant may make the motion to dismiss before its answer is required to be served, or may include the defense in its answer and seek relief later. When the defendant does neither, the defense is waived.

“At any time before service of the responsive pleading is required, a party may move on one or more of the grounds set forth in subdivision (a) . . . . Any objection or defense based upon a ground set forth in paragraph[ ] five . . . of subdivision (a) is waived unless raised either by such motion or in the responsive pleading” (CPLR 3211[e]).

Contrary to the Supreme Court’s determination, a defendant who wishes to assert the statute of limitations as a defense is not limited to asserting it by way of a pre-answer motion. The defendant may instead choose to raise that defense in its answer, and either move on that ground later in a motion for summary judgment, or wait until trial to have it determined … .

Here, the defendant did not make a pre-answer motion to dismiss the complaint, but raised the statute of limitations as an affirmative defense in its answer. Then, after the note of issue was filed, the defendant moved to dismiss the complaint on that ground. Although the defendant denominated its motion as a motion pursuant to CPLR 3211(a) to dismiss the complaint, rather than as a motion pursuant to CPLR 3212 for summary judgment dismissing the complaint, that procedural irregularity should have been excused under CPLR 2001, upon proper notice to the parties … . Wan Li Situ v MTA Bus Co., 2015 NY Slip Op 06130, 2nd Dept 7-15-15

 

Second Voluntary Discontinuance Operated as an Adjudication on the Merits Requiring Dismissal of Plaintiff’s Third Attempt to Commence the Same Action

Before bringing the instant proceeding, the plaintiff had voluntarily discontinued two prior proceedings involving the same matter. Pursuant to CPLR 3217 (c), the second voluntary discontinuance operated as an adjudication of the merits requiring dismissal of the third action:

CPLR 3217(c) provides that unless otherwise stated, inter alia, in a notice of discontinuance, a voluntary discontinuance is “without prejudice, except that a discontinuance by means of notice operates as an adjudication on the merits if the party has once before discontinued by any method an action based on or including the same cause of action in a court of any state or the United States.” In this case, the plaintiff voluntarily discontinued the second action, which was based upon the same causes of action as the first action, by notice of discontinuance. Under the circumstances of this case, where there was no legitimate purpose for discontinuing the second action, the second voluntary discontinuance by notice operated as an adjudication on the merits pursuant to CPLR 3217(c)… . Haber v Raso, 2015 NY Slip Op 06113, 2nd Dept 7-15-15

 

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Defendant Not Entitled to Attorney’s Fees after Plaintiff’s Motion for a Voluntary Discontinuance in a Foreclosure Action Was Granted Without Prejudice—Defendant Was Not a “Prevailing Party” within the Meaning of Real Property Law 282—Denial of Attorney’s Fees Was Not an Abuse of Discretion Under CPLR 3217 (c)

After the grant of plaintiff’s motion for a voluntary discontinuance (without prejudice) of a foreclosure action defendant (Rivera) sought the award of attorney’s fees pursuant to Real Property Law 282 and CPLR 3217 (b). The Second Department determined Supreme Court properly denied the request for attorney’s fees. Under the Real Property Law, the prevailing party is entitled to attorney’s fees, but plaintiff’s voluntary discontinuance was not on the merits.  Therefore defendant was not the prevailing party within the meaning of the statute. The award of attorney’s fees under CPLR 3217 (b) is discretionary and Supreme Court did not abuse its discretion in denying the request:

In New York, “attorneys’ fees are deemed incidental to litigation and may not be recovered unless supported by statute, court rule or written agreement of the parties” … .

[Real Property Law 282] provides that “[w]henever a covenant contained in a mortgage on residential real property shall provide that . . . the mortgagee may recover attorneys’ fees and/or expenses incurred as the result of the failure of the mortgagor to perform any covenant or agreement contained in such mortgage . . . there shall be implied in such mortgage a covenant by the mortgagee to pay to the mortgagor the reasonable attorneys’ fees and/or expenses incurred by the mortgagor . . . in the successful defense of any action or proceeding commenced by the mortgagee against the mortgagor arising out of the contract” (Real Property Law § 282). * * *

Here, the voluntary discontinuance of this action pursuant to CPLR 3217(c) was without prejudice and there was no substantive determination on the merits of either the plaintiff’s cause of action or Rivera’s counterclaims and defenses. Accordingly, Rivera was not a prevailing party for the purposes of Real Property Law § 282 and was not entitled to an award of an attorney’s fee for a “successful defense” of this foreclosure action (Real Property Law § 282…).

* * * The determination of whether to award an attorney’s fee [pursuant to CPLR 3217 (c)] as a condition of granting a voluntary discontinuance is a matter left to the sound discretion of the court … . Here, under the circumstances, the Supreme Court providently exercised its discretion in denying that branch of Rivera’s motion which was for an award of an attorney’s fee pursuant to CPLR 3217(b) … . DKR Mtge. Asset Trust 1 v Rivera, 2015 NY Slip Op 06108, 2nd Dept 7-15-15

 

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Constructive Trust Cause of Action Did Not Accrue When Defendant Acquired the Subject Property (In 1995 or 1996), But Rather When Defendant , Who Had Properly Acquired the Property, Breached Her Promise to Transfer an Interest in the Property to Plaintiff (In 2012)

In finding the constructive trust cause of action should not have been dismissed as time-barred, the Second Department explained that a cause of action for a constructive trust accrues (1) when the constructive trustee acquires the property wrongfully, or (2) when the constructive trustee wrongfully withholds property which was lawfully acquired but was to be transferred:

A cause of action “for the imposition of a constructive trust is governed by the six-year Statute of Limitations of CPLR 213(1), which starts to run upon the occurrence of the wrongful act giving rise to a duty of restitution” … . “A determination of when the wrongful act triggering the running of the Statute of Limitations occurs depends upon whether the constructive trustee acquired the property wrongfully, in which case the property would be held adversely from the date of acquisition, or whether the constructive trustee wrongfully withholds property acquired lawfully from the beneficiary, in which case the property would be held adversely from the date the trustee breaches or repudiates the agreement to transfer the property” … .

Here, the gravamen of the plaintiff’s cause of action for the imposition of a constructive trust is not … that the defendants wrongfully acquired the subject properties in or around 1995, or 1996, but rather that subsequent thereto, sometime in 2012, the defendant… breached her promise to the plaintiff that they would be equal partners with respect to those properties … . Barone v Barone, 2015 NY Slip Op 06102, 2nd Dept 7-15-15

 

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Service of an Unverified Petition in Violation of the Court of Claims Act Did Not Constitute a Jurisdictional Defect

Reversing the Court of Claims, the Second Department determined that service of a petition which was not verified was not a jurisdictional defect in a proceeding to recover money placed in escrow by the NYS Comptroller pending claims for the state’s appropriation and use of easements.

In accordance with the Eminent Domain Procedure Law, after the Attorney General determined that there was or might be a conflict with regard to the money allegedly owed as a result of the extended use of these temporary easements, the funds were deposited by the New York State Comptroller into a special interest-bearing eminent domain account (see EDPL 304[E][1]). Upon receiving notice of this deposit, the petitioner commenced this special proceeding for the distribution of the money pursuant to EDPL 304(E)(1) and Court of Claims Act § 23. The State promptly rejected the petition, noting that it was served without a proper verification. Within days, the petitioner provided the missing verification. The Court of Claims, however, dismissed the petition, concluding, inter alia, that the failure to comply with the statutory provisions requiring verification constituted a jurisdictional defect that mandated dismissal, without consideration of the merits. The petitioner appeals, and we reverse.

While the time limitations and service requirements set forth in Court of Claims Act §§ 10 and 11 have been referred to as “jurisdictional” … , the instant matter concerns a special proceeding pursuant to EDPL 304(E) for the distribution of money that had been deposited (see Court of Claims Act § 9[12]), and service of the petition without a verification did not constitute an incurable “jurisdictional” defect … . In this regard, the petitioner, upon notice from the State, cured the omission within a matter of days (see CPLR 3022, 3025[a]…). Moreover, considering that no substantive right of the State was prejudiced by the missing verification, even if the omitted material had not been supplied, the Court of Claims, under the circumstances presented to it, should have disregarded the technical infirmity pursuant to CPLR 2001 and 3026 … . Matter of Mazur Bros. Realty, LLC v State of New York, 2015 NY Slip Op 06149, 2nd Dept 7-15-15

 

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