NEW YORK UNIVERSITY HOSPITAL RUSK INSTITUTE v. ILLINOIS NATIONAL INSURANCE CO (2006)

In an action to recover no-fault insurance benefits, the defendants appeal from an order of the Supreme Court, Nassau County (Bucaria, J.), dated September 7, 2005, which denied their motion to vacate a clerk's judgment of the Supreme Court, Nassau County, entered December 8, 2004, upon their failure to appear or answer the complaint, to quash an information subpoena dated March 28, 2005, and to vacate an order of the same court dated May 26, 2005, directing them to comply with the information subpoena.

ORDERED that the order is reversed, on the law and as a matter of discretion, with costs, the motion is granted, the clerk's judgment entered December 8, 2004, is vacated, the information subpoena dated March 28, 2005, is quashed, and the order dated May 26, 2005, is vacated.

“A [defendant] seeking to vacate a default judgment pursuant to CPLR 5015(a)(1) ‘must demonstrate a reasonable excuse for its delay in appearing and answering the complaint and a meritorious defense to the action’ ” (New York & Presbyt. Hosp. v. American Home Assurance Co., 28 A.D.3d 442, 813 N.Y.S.2d 186, quoting Eugene Di Lorenzo, Inc. v. Dutton Lumber Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116).   The defendants established both a reasonable excuse for their failure to timely appear and answer the complaint and potentially meritorious defenses, namely, the failure of the plaintiff New York University Hospital Rusk Institute to comply with the defendants' demands for verification of the claim (see 11 NYCRR 65-3.8[a] [1];  Mount Sinai Hosp. v. Allstate Ins. Co., 25 A.D.3d 673, 674, 811 N.Y.S.2d 726;  Nyack Hospital v. General Motors Acceptance Corp., 27 A.D.3d 96, 808 N.Y.S.2d 399) and the alleged exhaustion of the policy limits through payment of prior claims (see Mount Sinai v. Allstate Insurance Co., 28 A.D.3d 727, 812 N.Y.S.2d 880;  New York & Presbyterian Hosp. v. Allstate Ins. Co., 12 A.D.3d 579, 786 N.Y.S.2d 68).

Accordingly, in view of the strong public policy that actions be resolved on their merits, the relatively brief delay involved, the defendants' lack of wilfulness, and the absence of prejudice to the plaintiff, the Supreme Court improvidently exercised its discretion in denying the defendants' motion, inter alia, to vacate the December 8, 2004, judgment (see New York & Presbyterian Hosp. v. American Home Assurance Co., supra;  New York & Presbyterian Hosp. v. Auto One Ins. Co., 28 A.D.3d 441, 811 N.Y.S.2d 584;  New York & Presbyt. Hosp. v. Travelers Prop. Cas. Ins. Co., 27 A.D.3d 708, 815 N.Y.S.2d 611;  Hospital for Joint Diseases v. Dollar Rent A Car, 25 A.D.3d 534, 806 N.Y.S.2d 437).