VERDE ELECTRIC CORPORATION v. FEDERAL INSURANCE COMPANY (2008)

In an action, inter alia, to recover on a payment bond issued pursuant to State Finance Law § 137, the defendant Federal Insurance Company appeals from an order of the Supreme Court, Westchester County (Scheinkman, J.), dated September 12, 2007, which denied its motion to vacate a clerk's judgment of the same court dated May 31, 2007, entered upon its default in appearing and answering the complaint, and, in effect, to compel the plaintiff to accept its answer.

ORDERED that the order is reversed, on the law, the facts, and in the exercise of discretion, with costs, the motion of the defendant Federal Insurance Company to vacate the clerk's judgment and, in effect, to compel the plaintiff to accept its answer is granted, the clerk's judgment is vacated, and the answer of the defendant Federal Insurance Company is deemed timely served.

 A defendant seeking to vacate a judgment, including a clerk's judgment, entered upon its default in appearing and answering the complaint must demonstrate a reasonable excuse for its delay in appearing and answering, and a meritorious defense to the action (see CPLR 5015 [a][1];  Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116).   Here, the defendant Federal Insurance Company (hereinafter Federal Insurance) demonstrated a reasonable excuse for the short period of time in which it failed either to appear or answer the complaint (cf. CPLR 2005).   Federal Insurance also demonstrated that it had a potentially meritorious defense (cf. Palcon Indus. v. Travelers Indem. Co., 114 A.D.2d 667, 494 N.Y.S.2d 244).   Moreover, the plaintiff did not demonstrate prejudice from the relatively short delay in answering, which was not willful, and public policy favors the resolution of cases on their merits (see Cooney v. Cambridge Mgt. & Realty Corp., 35 A.D.3d 522, 523, 826 N.Y.S.2d 639;   Ubaydov v. Kenny's Fleet Maintenance, Inc., 31 A.D.3d 536, 817 N.Y.S.2d 518).   Under these circumstances, the Supreme Court improvidently exercised its discretion in denying the motion of Federal Insurance to vacate the clerk's judgment, and, in effect, to compel acceptance of its answer (see CPLR 3012[d] ).

 Furthermore, Federal Insurance correctly contends that, under the circumstances, the clerk did not have the authority to enter a clerk's judgment here, as he was only authorized to enter a clerk's judgment if the plaintiff sought to recover a “sum certain” (CPLR 3215[a];  see Reynolds Sec. v. Underwriters Bank & Trust Co., 44 N.Y.2d 568, 572, 406 N.Y.S.2d 743, 378 N.E.2d 106;  Ayres Mem. Animal Shelter, Inc. v. Montgomery County Socy. for Prevention of Cruelty to Animals, 17 A.D.3d 904, 904-905, 793 N.Y.S.2d 608;  Gaynor & Bass v. Arcadipane, 268 A.D.2d 296, 297, 700 N.Y.S.2d 818;  Maxwell v. First Port Jefferson Corp., 31 A.D.2d 813, 297 N.Y.S.2d 885;  Geer, DuBois & Co. v. Scott & Sons Co., 25 A.D.2d 423, 423-424, 266 N.Y.S.2d 580).   This constitutes another basis for the vacatur of the clerk's judgment (see Ayres Mem. Animal Shelter, Inc. v. Montgomery County Socy. for Prevention of Cruelty to Animals, 17 A.D.3d at 905, 793 N.Y.S.2d 608;  Gibbs v. Hoot Owl Sportsman's Club, 257 A.D.2d 942, 943-944, 684 N.Y.S.2d 359;  Jannon v. Van Buskirk, 227 A.D.2d 844, 844-845, 642 N.Y.S.2d 402).   Although Federal Insurance only sought vacatur of the clerk's judgment pursuant to CPLR 5015(a)(1), this Court can entertain an argument made for the first time on appeal where, as here, it presents an issue of law that appears on the face of the record, and could not have been avoided had it been raised at the proper juncture (see Chrostowski v. Chow, 37 A.D.3d 638, 639, 830 N.Y.S.2d 333;  Beepat v. James, 303 A.D.2d 345, 346, 755 N.Y.S.2d 649;  Hanna v. Ford Motor Co., 252 A.D.2d 478, 675 N.Y.S.2d 125;  cf. White v. Weiler, 255 A.D.2d 952, 952-953, 680 N.Y.S.2d 784).