Statute of limitations tolled by reason of disability or insanity?

In Jemima O. v Schwartzapfel, P.C., 178 AD3d 474, 475 [1st Dept 2019], the court held that the statute of limitations for the client to bring a legal malpractice was not tolled. The court held:

Plaintiff’s argument that the statute of limitations was tolled by reason of disability or insanity pursuant to CPLR 208 was properly rejected by the motion court, without a hearing. Plaintiff failed to put forth any evidence that would support a finding of disability or insanity sufficient to show that plaintiff was unable to function in society (see Santo B. v Roman Catholic Archdiocese of N.Y., 51 AD3d 956, 958 [2d Dept 2008]). In particular, she did not submit any doctors’ affidavits or medical records documenting the severity of her condition (see Matter of Brigade v Olatoye, 167 AD3d 462 [1st Dept 2018]; Santana v Union Hosp. of Bronx, 300 AD2d 56 [1st Dept 2002]). Moreover, the record does not show that plaintiff was incapable of protecting her legal rights despite her mental health diagnosis (see Burgos v City of New York, 294 AD2d 177, 178 [1st Dept 2002]).

R. A. Klass
Your Court Street Lawyer

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Sanctions against attorneys for failing to notify the court that an appeal has been withdrawn

The Appellate Division made a decision regarding the request for sanctions against attorneys for failing to notify the court that an appeal has been withdrawn as moot. The court reminded counsel of the obligation to monitor the status of cases and keep the Appellate Division informed of developments in cases that may affect a pending appeal. In Guo-Bang Chen v Caesar and Napoli, P.C., 179 AD3d 46, 49-52 [2d Dept 2019], the court held:

This subdivision, by its plain language, imposes a continuing obligation on counsel to monitor the status of the case and to apprise the Appellate Division of certain developments that might affect a pending appeal (see 22 NYCRR 1250.2[c] ). Although, pursuant to this section, only one attorney needs to notify the Court of the relevant developments, all of the attorneys are independently responsible for ensuring that a timely notification actually takes place (see 22 NYCRR 1250.2[c] ). Where, as here, a timely notification is not given by any of the attorneys, they may each be held independently responsible and, absent a showing of good cause for the failure to ensure a timely notification, sanctioned for their respective conduct (see id.Bank of N.Y. Mellon v. Smith, 176 A.D.3d 83, 108 N.Y.S.3d 193).

Here, the record demonstrates that the underlying action was settled on March 1, 2019, as confirmed in an email exchange between the Fixler firm, representing the appellants, and the Sim firm, representing the respondent. In one of those emails, an attorney from the Sim firm expressed his understanding that the Fixler firm would, among other things, withdraw the appeal pending in this Court. By email of March 5, 2019, to the Sim firm, an attorney with the Fixler firm stated that he would advise the appellants and their appellate counsel of the settlement and direct them to withdraw the appeal. However, the Fixler firm did not advise the appellants’ appellate counsel, the Mischel firm, of the settlement until March 26, 2019, at 4:55 p.m.

The Mischel firm, relying at the time exclusively upon its appellate printer for notification of the calendaring of the appeal, was unaware, on March 26, 2019, when notice of the settlement of the action was received, that the appeal had actually been calendared. The appellate printer concedes that, due to an error in entering information into its computerized court calendar tracking system, it failed to notify the Mischel firm that the appeal had been calendared. The appellate printer represents that this was the first time such an error had occurred in relation to the multitude of cases it has worked on with the Mischel firm since 1999. The Mischel firm likewise represents that this was the first time it had missed a calendar date in two decades of appellate practice.

Acting on the erroneous assumption that the appeal had not yet been calendared, the Mischel firm mailed a letter to this Court on Tuesday, April 2, 2019, advising this Court of the settlement and requesting withdrawal of the appeal. By letter dated April 9, 2019, this Court advised counsel that, because the appeal had already been on the calendar, a stipulation withdrawing the appeal and the approval of this Court would be required (see 22 NYCRR 670.2[a][3] ).

When counsel in the underlying action reached a settlement on March 1, 2019, the settlement triggered their mutual obligations to “immediately notify” this Court (22 NYCRR 1250.2[c] ). However, neither the Fixler firm nor the Sim firm ever notified this Court.

The Fixler firm, in its capacity as the appellants’ trial counsel during the pendency of this appeal, had a continuing obligation either to advise this Court directly of the settlement or to ensure that its clients’ appellate counsel, the Mischel firm, advised this Court of the settlement. It is undisputed that, on the very day of the settlement, the Sim firm expressed its understanding that the Fixler firm would take responsibility for securing the withdrawal of the appeal. Within a few days, the Fixler firm confirmed that it would notify its clients’ appellate counsel of the settlement. However, despite this representation, the Fixler firm did not notify the Mischel firm of the settlement until three weeks later.

The Fixler firm asserts that it filed a stipulation of discontinuance with the Supreme Court, on March 29, 2019, after the settlement funds had cleared, and that this Court was notified of the settlement within two business days thereafter. The Fixler firm’s contention that it could await the clearance of the settlement payment and the finalization of other paperwork before notifying this Court of the settlement is unavailing for several reasons.

We note that the Fixler firm committed in its March 5, 2019, email to notify the appellants’ appellate counsel without expressing an intent to delay notification for any period of time or for any reason. More important, 22 NYCRR 1250.2(c) of the statewide Practice Rules of the Appellate Division requires that this Court be notified “immediately” when there has been a settlement of the matter. One of the primary purposes of section 1250.2(c) is to protect the Appellate Courts from spending time reviewing and analyzing matters that have been rendered academic (see Bank of N.Y. Mellon v. Smith, 176 A.D.3d 83, 108 N.Y.S.3d 193). Delayed notification defeats that purpose; providing notification benefits the Court, the Bar, and the public generally by enabling the Court to suspend its review of an appeal that will become academic. There is no adverse impact to the parties and counsel on such an appeal as consideration of the appeal may be readily resumed should the settlement not be implemented.

Precisely in order to alert counsel that their obligation to give immediate notification of a settlement may not be postponed or delayed, this Court adopted its own local rule of practice which states that, for purposes of 22 NYCRR 1250.2(c), settlement includes “any oral or written agreement or understanding which may, once memorialized, render a determination of the cause unnecessary” (22 NYCRR 670.2[b] ). This local rule took effect March 4, 2019, and is thus applicable to the case at hand.

In this case, members of this Court were caused to devote hours of preparation and deliberation on an appeal which, unbeknown to them, had been settled nearly one month earlier. Had this Court been timely advised of the settlement in this case, it could have avoided wasting judicial resources on a settled case and could have redirected those resources to one of the many actual controversies that fill its docket. Since the Fixler firm had an independent obligation to give this Court notice of the settlement and assured the Sim Firm that, as between the attorneys, the Fixler firm would assume responsibility for notification, the imposition of sanctions upon the Fixler firm in the sum of $250 is warranted.

While the Sim firm had its own independent obligation to immediately notify this Court of the settlement, we conclude, under the circumstances, that the Sim firm reasonably relied upon the Fixler firm’s written commitment that the Fixler firm would discharge this obligation on behalf of all counsel. Also, while the Mischel firm did not notify this Court immediately of the settlement, it did act with sufficient promptness that, under the circumstances, renders the imposition of sanctions unwarranted. Accordingly, no sanctions are imposed as against the Sim firm and the Mischel firm.

R. A. Klass
Your Court Street Lawyer

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New book by Richard Klass about RPAPL Section 993: Uniform Partition of Heirs Property Act

Cover of book by Richard Klass called Hug Of War instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act. Features photo of a young mother, father and daughter in front of a beautiful house.

Richard Klass has written a new book in his “Your Court Street Lawyer’s Quick Reference Guide” series. It is called Hug of War Instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act.

View and download Hug of War Instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act as a free E-book in PDF format by clicking this link.
12 pages/236 KB


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Jan. 28 Klass presents “RPAPL Section 993: Uniform Partition of Heirs Property Act” for the General Practice Section and Committee on Professional Discipline CLE program

Man and woman arm in arm, with a young child, standing in front of a beautiful house.

Richard A. Klass will be presenting a lecture on “RPAPL Section 993: Uniform Partition of Heirs Property Act” for the General Practice Section and Committee on Professional Discipline CLE program in New York City.

The program will be held on Tuesday, January 28, 2020 from 9:00 am – 1:00 pm with registration beginning at 8:30 am This program will take place during the 143rd NYSBA Annual Meeting and Exposition.

Registration for the program is available at www.nysba.org/AM2020GEN. Please feel free to tell your networks about this program.

In addition, Richard Klass has written a new book in his series “Your Court Street Lawyer’s Quick Reference Guide” on this subject. It is called Hug of War Instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act. It will soon be available for download from his website at http://www.courtstreetlaw.com/publications/books/.

R. A. Klass
Your Court Street Lawyer

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Brandeis Society hosts annual luncheon for Chanukah

Published in the Brooklyn Daily Eagle
December 18, 2019

by Rob Abruzzese

Men and women in business attire posing for photo. From left: Hon. Katherine Levine, Hon. Ellen Spodek, Richard Klass, Hon. Jeffrey Sunshine, Hon. Anne Swern, Hon. Miriam Cyrulnik, Doron Leiby, Jeffrey Miller and Hon. Esther Morgenstern. Photo by Rob Abruzzese.
From left: Hon. Katherine Levine, Hon. Ellen Spodek, Richard Klass, Hon. Jeffrey Sunshine, Hon. Anne Swern, Hon. Miriam Cyrulnik, Doron Leiby, Jeffrey Miller and Hon. Esther Morgenstern.
Photo by Rob Abruzzese.

“The Brooklyn Brandeis Society held its annual Chanukah luncheon and membership party in Brooklyn Heights on Monday as members gathered together to share latkes and donuts while a pair of rabbis shared stories of their common history….

Two men in business attire, posing for photo. Todd Sandler, director of the Brooklyn Jewish National Fund, on left, and Richard Klass on the right. Photo by Rob Abruzzese.
Todd Sandler, director of the Brooklyn Jewish National Fund, on left, and Richard Klass on the right.
Photo by Rob Abruzzese.

R. A. Klass
Your Court Street Lawyer

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Client may claim that the statute of limitations for legal malpractice has not been triggered

It is important for an attorney to withdraw from an action once the attorney has terminated the attorney-client relationship. If not, then the client may claim that the statute of limitations for legal malpractice has not been triggered, as decided in Courtney v McDonald, 176 AD3d 645 [1st Dept 2019]:

Scales of justice illustrating article about legal malpractice.

The first cause of action in plaintiffs’ complaint alleges legal malpractice with respect to defendants representation of plaintiffs in two underlying actions—the 304 W 18th Street matter and the 175 W 12th Street matter. Contrary to defendants’ argument, the malpractice cause of action with respect to the 175 W 12th Street matter is not time-barred by the three-year statute of limitations applicable to legal malpractice claims (CPLR 214 [6]). Defendants failed to demonstrate that the attorney-client relationship ceased to exist within three years of August 28, 2017, the date plaintiffs filed this action. Although defendants sent a letter, dated August 7, 2014, unilaterally terminating their representation of plaintiffs, they failed to move to withdraw from representation in the foreclosure action (see CPLR 321 [b]) until more than a year after sending the subject letter. Accordingly, to the extent plaintiffs’ first cause of action concerns alleged legal malpractice by defendants in their representation of plaintiffs in the matter concerning 175 W 12th Street, the motion to dismiss that cause of action was properly denied.

R. A. Klass
Your Court Street Lawyer

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Legal malpractice action dismissed based upon doctrines of res judicata and collateral estoppel

The Appellate Division, in Kleinman v Weisman Law Group, P.C., 176 AD3d 1046 [2d Dept 2019], dismissed a former client’s legal malpractice action based upon the doctrines of res judicata and collateral estoppel. The court stated as follows:

In 2013, the defendant Weisman Law Group, P.C. (hereinafter the defendant firm), commenced an action against the plaintiff to recover unpaid legal fees in the Nassau County District Court. The plaintiff asserted a counterclaim, alleging that he was overbilled by the defendant firm. A judgment was entered in favor of the defendant firm and against the plaintiff. The plaintiff appealed the judgment of the Nassau County District Court to the Appellate Term of the Supreme Court for the Ninth and Tenth Judicial Districts, which affirmed the judgment (see Weisman Law Group, P.C. v. Kleinman, 60 Misc.3d 133[A], 2018 N.Y. Slip Op. 51042[U], 2018 WL 3309514 [App Term, 2d Dept, 9th & 10th Jud Dists 2018] ). In 2016, the plaintiff commenced the instant action against the defendants asserting causes of action alleging, inter alia, breach of contract and legal malpractice.

Scales of justice illustrating article about legal malpractice.

The plaintiff contends that the doctrines of res judicata and collateral estoppel do not apply in the instant case, as the Nassau County District Court lacked subject matter jurisdiction over his counterclaim in the prior action. Contrary to the plaintiff’s contention, the Nassau County District Court did have jurisdiction over his counterclaim pursuant to Uniform District Court Act Section 208(b), as the counterclaim was for money only. The doctrine of res judicata precludes the plaintiff from litigating the claims set forth in his complaint, as a judgment on the merits exists in the prior action between the same parties involving the same subject matter (see Matter of Josey v. Goord, 9 N.Y.3d 386, 389, 849 N.Y.S.2d 497, 880 N.E.2d 18; Matter of Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286, 827 N.E.2d 269). New York has adopted the transactional analysis approach to res judicata, so that once a claim is brought to a final conclusion, all other claims between the same parties or those in privity with them arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy (see Matter of Josey v. Goord, 9 N.Y.3d at 389–390, 849 N.Y.S.2d 497, 880 N.E.2d 18; Matter of Hunter, 4 N.Y.3d at 269, 794 N.Y.S.2d 286, 827 N.E.2d 269; *124 O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 429 N.E.2d 1158; Greenstone/Fontana Corp. v. Feldstein, 72 A.D.3d 890, 893, 901 N.Y.S.2d 643).

Furthermore, the plaintiff’s causes of action are barred by the doctrine of collateral estoppel, which precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same (see Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500, 478 N.Y.S.2d 823, 467 N.E.2d 487; Williams v. New York City Tr. Auth., 171 A.D.3d 990, 97 N.Y.S.3d 692). The doctrine of collateral estoppel applies here, as the issues in both actions are identical, the issue in the prior action was actually litigated and decided, there was a full and fair opportunity to litigate the action, the issue previously litigated was necessary to support a valid and final judgment on the merits, and the defendant Rachel J. Weisman was in privity with the defendant firm (see Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 29 N.E.3d 215; Williams v. New York City Tr. Auth., 171 A.D.3d at 991–992, 97 N.Y.S.3d 692; Karimian v. Time Equities, Inc., 164 A.D.3d 486, 83 N.Y.S.3d 227).

R. A. Klass
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…issue of collateral estoppel concerning a matter previously litigated…

In Gobindram v Ruskin Moscou Faltischek, P.C., 175 AD3d 586, 589-91 [2d Dept 2019], the state court considered the issue of collateral estoppel concerning a matter previously litigated in the federal bankruptcy court. The court held:

Scales of justice

“The doctrine of in pari delicto mandates that the courts will not intercede to resolve a dispute between two wrongdoers” (Kirschner v. KPMG LLP, 15 N.Y.3d 446, 464, 912 N.Y.S.2d 508, 938 N.E.2d 941). “[T]he principle that a wrongdoer should not profit from his own misconduct is so strong in New York that … the defense applies even in difficult cases and should not be weakened by exceptions” (id. at 464, 912 N.Y.S.2d 508, 938 N.E.2d 941 [internal quotation marks omitted] ). “The defense requires intentional conduct on the part of the plaintiff” (Sacher v. Beacon Assoc. Mgt. Corp., 114 A.D.3d 655, 657, 980 N.Y.S.2d 121; see Kirschner v. KPMG LLP, 15 N.Y.3d at 474, 912 N.Y.S.2d 508, 938 N.E.2d 941).

Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party, whether or not the tribunals or causes of action are the same (see Buechel v. Bain, 97 N.Y.2d 295, 303, 740 N.Y.S.2d 252, 766 N.E.2d 914; Shifer v. Shifer, 165 A.D.3d 721, 723, 85 N.Y.S.3d 92). There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling (see Buechel v. Bain, 97 N.Y.2d at 303–304, 740 N.Y.S.2d 252, 766 N.E.2d 914; Shifer v. Shifer, 165 A.D.3d at 723, 85 N.Y.S.3d 92).

Here, the federal courts in the plaintiff’s bankruptcy proceeding finally adjudicated a mixed issue of law and fact identical to that raised by the in pari delicto defense asserted by the defendants in the current legal malpractice action, i.e., the plaintiff’s culpability in connection with the filing of the inaccurate bankruptcy petition. Those courts found that the plaintiff knowingly and intentionally made a false and fraudulent statement under oath by swearing that he had read the SOFA and that it was true and correct, and that the plaintiff’s alleged reliance on the defendants to accurately prepare the bankruptcy submissions did not negate his fraudulent intent. These findings established that the plaintiff was in pari delicto with the defendants to the extent that he alleges they acted negligently in preparing and filing the inaccurate bankruptcy petition. Accordingly, we agree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ preparation and filing of the inaccurate bankruptcy petition based on the doctrines of collateral estoppel and in pari delicto.

However, we disagree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ failure to amend the bankruptcy petition. The findings of the federal courts regarding the knowing and fraudulent conduct on the plaintiff’s part related solely to the initial filing; they made no determination that the plaintiff acted knowingly and fraudulently in failing to file an amended petition. Accordingly, that part of the plaintiff’s legal malpractice cause of action is not subject to dismissal on the grounds of collateral estoppel and in pari delicto.

As an alternative ground for affirmance (see Parochial Bus Sys. v. Board of Educ. of City of N.Y., 60 N.Y.2d 539, 545–546, 470 N.Y.S.2d 564, 458 N.E.2d 1241), the defendants contend that the legal malpractice cause of action should have been dismissed in its entirety pursuant to CPLR 3211(a)(7), since the parties’ evidentiary submissions on the motion established that the plaintiff hired subsequent counsel who had ample opportunity to rectify their alleged error in this regard (see e.g. Perks v. Lauto & Garabedian, 306 A.D.2d 261, 262, 760 N.Y.S.2d 231). This contention lacks merit.

On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must “accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511; see Nonnon v. City of New York, 9 N.Y.3d 825, 827, 842 N.Y.S.2d 756, 874 N.E.2d 720). “When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether [she or] he has stated one, and, unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, … dismissal should not eventuate” (Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17).

Here, the record reveals that the plaintiff did not retain the services of new counsel until December 2011. By that time, the bankruptcy trustee had already noted inconsistencies in the petition and requested an accounting relating to the omitted tax refund transfers, and the plaintiff’s creditors had commenced the adversary proceeding. Giving the plaintiff the benefit of every favorable inference (see Leon v. Martinez, 84 N.Y.2d at 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511), this time line suggests that the defendants, not the subsequent attorney, represented the plaintiff at the time when a voluntary amendment to the petition could have significantly reduced the prospect of a finding that the plaintiff made a false and fraudulent statement in the bankruptcy petition (see In re Tully, 818 F.2d 106, 111 [1st Cir.]; Matter of Kilson, 83 B.R. 198, 203 [D. Conn.]). Accordingly, at this preliminary stage of the litigation, the defendants have failed to conclusively demonstrate that the plaintiff’s subsequent attorney had a sufficient opportunity to correct their alleged error in failing to amend the petition, such that they did not proximately cause any damages flowing from that error (see generally Tooma v. Grossbarth, 121 A.D.3d 1093, 1096, 995 N.Y.S.2d 593; Grant v. LaTrace, 119 A.D.3d 646, 647, 990 N.Y.S.2d 227).

We find unpersuasive the defendants’ additional alternative contention that the legal malpractice cause of action was properly dismissed pursuant to CPLR 3211(a)(3) because that cause of action belongs to the bankruptcy estate and the plaintiff lacked standing to assert it. “On a defendant’s motion to dismiss the complaint based upon the plaintiff’s alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing” (BAC Home Loans Servicing, LP v. Rychik, 161 A.D.3d 924, 925, 77 N.Y.S.3d 522; see CPLR 3211[a][3]; MLB Sub I, LLC v. Bains, 148 A.D.3d 881, 881–882). “[T]he motion will be defeated if the plaintiff’s submissions raise a question of fact as to its standing” (U.S. Bank N.A. v. Clement, 163 A.D.3d 742, 743, 81 N.Y.S.3d 116 [internal quotation marks omitted]; see MLB Sub I, LLC v. Bains, 148 A.D.3d at 882, 50 N.Y.S.3d 410).

Here, in response to the defendants’ prima facie showing that the plaintiff’s legal malpractice cause of action was the property of the bankruptcy estate (see Wright v. Meyers & Spencer, LLP, 46 A.D.3d 805, 849 N.Y.S.2d 274; Williams v. Stein, 6 A.D.3d 197, 198, 775 N.Y.S.2d 255; In re Strada Design Assoc., Inc., 326 B.R. 229, 237–240 [S.D. N.Y.]), the plaintiff raised a question of fact as to whether the bankruptcy trustee had abandoned the cause of action in accordance with Bankruptcy Code (11 USC) § 554(a) and had authorized the plaintiff to pursue it. Accordingly, dismissal of the legal malpractice cause of action for lack of standing is not available at this juncture.

R. A. Klass
Your Court Street Lawyer

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Richard A. Klass Selected for the Fifth Time for the New York Metro Super Lawyers List

2019 Super Lawyers logo

We are pleased to announce that Richard Klass, has been selected to the 2019 New York Metro Super Lawyers list. This is an exclusive list, recognizing no more than five percent of attorneys in the New York Metro area.

Super Lawyers, part of Thomson Reuters, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Attorneys are selected from more than 70 practice areas and all firm sizes, assuring a credible and relevant annual list.

The annual selections are made using a patented multiphase process that includes:

·  Peer nominations

·  Independent research by Super Lawyers

·  Evaluations from a highly credentialed panel of attorneys

The objective of the Super Lawyers lists is to create a credible, comprehensive and diverse listing of outstanding attorneys to be used as a resource for both referring attorneys and consumers seeking legal counsel.

For more information about Super Lawyers, go to SuperLawyers.com. Super Lawyers is a registered trademark of Thomson Reuters.

R. A. Klass
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Entry of judgment: You Snooze, You Lose!

Young adult man looking at his smart phone with a shocked, surprised but slightly comical expression. The photo illustrates an article by Richard Klass about default judgment.

The subcontractors brought an action against the general contractor and its principal alleging breach of an oral contract made in January 2007 for failing to pay for construction services rendered on a building located in Flushing. The action was dismissed as to the individual and the subcontractors’ request for a default judgment against the general contractor was denied. The subcontractor then brought an action against the contractor who hired them alleging breach of the oral contract; however,they were unable to collect on the judgment because the corporation was out of business.

Queens County action

The subcontractors then brought an action in the Supreme Court, Queens County only against the property owner, alleging unjust enrichment for the contracting services rendered by them. Despite service of the Summons and Complaint in 2011, the plaintiffs did not seek the entry of a default within one year thereafter.

Kings County action

The subcontractors then brought yet another action in the Supreme Court, Kings County against the general contractor, contractor and property owner, alleging both breach of contract and unjust enrichment. A default judgment was granted in their favor against all of the defendants except for the property owner. The property owner moved for dismissal of the action, which was granted.

Back to Queens

In 2017, the subcontractors moved for a default judgment against the property owner in the 2011 action.

In response to the motion, the property owner retained Richard A. Klass, Your Court Street Lawyer. The property owner cross-moved, pursuant to CPLR 3215(c), for dismissal of the action based upon the failure to take proceedings for entry of judgment within one year after the default. By Order dated April 6, 2018, the Supreme Court denied the motion for a default judgment and granted the cross-motion for dismissal of the action. The Court held that “plaintiff’s counsel fails to proffer a reasonable excuse for its delay in timely making the instant application. After reviewing the extensive procedural history of the case and companion cases, it remains unclear why plaintiffs waited almost two years after [the court] dismissed their identical claim in Kings County to seek a default judgment against the defendant in this action.”

The Court further rejected the claim made in opposition to the cross-motion that the matter should not be deemed abandoned. Specifically, the court held, “While plaintiffs may contend they were in settlement negotiations and other litigation activity with the defendant, those activities ceased in May of 2015 when the matter was dismissed. In addition, plaintiffs fail to explain why it commenced a second action including the defendant in Kings County after it had already commenced the instant action or why they then let the instant matter linger over five and half years.”

Failure to take proceedings within one year after default

The subcontractors appealed the Supreme Court Order to the Appellate Division, Second Department. In affirming the Order and dismissing the appeal, the appellate court held, in Karamuco v Gavriel Plaza, Inc., 172 AD3d 832, 833 [2d Dept 2019]:

“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, 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; see Ibrahim v Nablus Sweets Corp., 161 AD3d 961, 963; HSBC Bank USA, N.A. v Grella, 145 AD3d 669, 671).

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]; see Ibrahim v Nablus Sweets Corp., 161 AD3d 961, 963). 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; see Ibrahim v Nablus Sweets Corp., 161 AD3d at 963; Wells Fargo Bank, N.A. v Bonanno, 146 AD3d 844, 845-846). The determination of whether an excuse is reasonable is committed to the sound discretion of the motion court (see Bank of N.Y. Mellon v Izmirligil, 144 AD3d 1067, 1069; Baruch v Nassau County, 134 AD3d 658, 659).”

Here, the plaintiffs took no proceedings for the entry of a default judgment within one year following the defendant’s default, and they failed to establish a reasonable excuse for their delay in moving for leave to enter a default judgment. Accordingly, the lawsuit was dismissed.

R. A. Klass
Your Court Street Lawyer

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