Justus v. Justus

92 A.D.2d 858, 459 N.Y.S.2d 843, 1983 N.Y. App. Div. LEXIS 17234

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: March 7, 1983
• Status: Published

Opinions

— In an action to recover damages for personal injuries, plaintiff appeals from an order of the Supreme Court, Dutchess County (Rosenblatt, J.), dated January 28, 1982, which granted defendant Hertz Corporation’s motion to vacate the default judgment that had been entered against it. Order reversed, on the law, with $50 costs and disbursements, defendant Hertz Corporation’s motion to vacate its default is denied, and the matter is remitted to the Supreme Court, Dutchess County, for the assessment of damages. Plaintiff commenced this action in January, 1981 to recover damages for injuries she incurred as a passenger in an automobile involved in an accident in Aruba on February 4, 1978. The automobile was rented from defendant De Palm Tours, N. V., in Aruba, by plaintiff’s husband, defendant Franklyn Justus. De Palm Tours is a licensee or franchisee of Hertz Systems, Inc., a subsidiary of Hertz Corporation. The licensing agreement evidently provided that De Palm Tours would defend Hertz and indemnify it for any liability arising out of the agreement. In reliance thereon, Hertz’ casualty manager forwarded the summons and complaint to De Palm Tours in Aruba. The affidavit of the managing director of De Palm Tours affirms that the agreement so provided, but that he misunderstood and did not instruct his New York attorneys to enter a defense on behalf of the Hertz Corporation. A Hertz representative from its casualty department contacted plaintiff’s attornev on January 28, 1981 and this same representative was in turn contacted by the office of plaintiff’s attorney on January 30, 1981 with a request to provide a copy of the car rental agreement made and executed in Aruba. After the decision of the Supreme Court, Dutchess County (Jiudice, J.), dated May 19,1981, which dismissed this action against defendant De Palm Tours, on the ground of forum non conveniens, plaintiff’s counsel notified this same Hertz representative by telephone on June 2,1981 of Hertz’ failure to appear in this action, and the Hertz representative at that time advised plaintiff’s counsel that he would take care of the matter. These allegations were not refuted by defendant Hertz. Nevertheless, no appearance was made nor was an answer submitted on behalf of Hertz. Therefore, in August, 1981, the plaintiff moved for a default judgment and for an assessment of damages. Again Hertz defaulted. In an order dated September 28, 1981, Special Term granted the motion and referred the matter to Trial Term for an assessment of damages. Finally, by order to show cause dated December 8,1981, Hertz moved to vacate the default judgment. In a motion to vacate a default judgment pursuant to CPLR 5015 (subd [a], par 1) a movant is required to demonstrate both a valid excuse for a default and a meritorious defense to the underlying action CEaton v Equitable Life Assur. Soc. of U. S., 56 NY2d 900; Q.P.I. Rests, v Slevin, 58 NY2d 769, revg 88 AD2d 844; Bruno v Village of Port Chester, 77 AD2d 580, opp dsmd 51 NY2d 769). In light of the above circumstances, Special Term abused its discretion as a matter of law in granting Hertz’ motion to vacate the order which granted plaintiff’s motion for a default judgment and referred the matter to Trial Term for an assessment of damages. It was unreasonable for Hertz to rely upon De Palm Tours to provide counsel pursuant to the franchise agreement, without Hertz demonstrating any follow up, particularly after being advised by plaintiff’s counsel on June 2, 1981 of Hertz’ default. The default that arose in the present case was based upon the law office failure of Hertz or its representatives to investigate and to appear in this action after being informed of its default by plaintiff’s attorney. Accordingly, Hertz has failed to demonstrate a valid excuse for its default. The facts in this case, therefore, are distinguishable from Swidler v World-Wide Volkswagen Corp. (85 AD2d 239) wherein the defendant acted promptly to protect itself upon receipt of a summons in a negligence action by forwarding the summons, through its corporate attorney, to its insurance broker, and there was no satisfactory proof in the record that the insurer ever received notice of the action. Mollen, P. J., Bracken and Rubin, JJ., concur.