HARKLESS v. Liberty Mutual Insurance Company, a/k/a Liberty Mutual Group, intervenor-respondent. (2005)

In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Nassau County (Bucaria, J.), dated August 2, 2004, as granted that branch of the motion of the intervenor, Liberty Mutual Insurance Company a/k/a Liberty Mutual Group, which was to vacate a judgment of the same court dated March 9, 2000, entered against the defendants upon their default in answering the complaint.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion which was to vacate the judgment as against the defendants Port Motors Daily Rental Inc., Marvin Oliver, and Trina C. Mathewson, and substituting therefor a provision denying that branch of the motion;  as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

The plaintiff allegedly was injured when the automobile in which she was a passenger, driven by the defendant Sharon Reid and owned by the defendant Port Motors Daily Rental, Inc., was involved in an accident.   When the defendants failed to answer the complaint, the Supreme Court granted the plaintiff leave to enter judgment against them.   After judgment was entered, the plaintiff commenced a separate action against the Liberty Mutual Insurance Company, a/k/a Liberty Mutual Group (hereinafter Liberty Mutual), which insured the vehicle.   Liberty Mutual moved, inter alia, for leave to intervene as a defendant in the personal injury action and to vacate the judgment.   The Supreme Court granted the motion.

Having recognized its obligation to indemnify the defendants, Liberty Mutual is an “interested person” within the meaning of CPLR 5015 (see Halali v. Vista Envs., Inc., 8 A.D.3d 435, 779 N.Y.S.2d 117) and the Supreme Court properly entertained its motion to vacate the judgment entered against its insureds.   The Supreme Court providently exercised its discretion in granting Liberty Mutual's motion to vacate the judgment against the defendant Reid.

 Although a party moving to vacate a default must normally demonstrate a reasonable excuse and a meritorious defense (see CPLR 5015;  Kaufman & Satran v. Sidbern Estates, 4 A.D.3d 454, 771 N.Y.S.2d 693;  Spencer v. Sanko Holding USA, 247 A.D.2d 532, 669 N.Y.S.2d 298), the movant is relieved of that obligation when lack of personal jurisdiction is asserted as the ground for vacatur (see Steele v. Hempstead Pub Taxi, 305 A.D.2d 401, 760 N.Y.S.2d 188;  European Am. Bank & Trust Co. v. Serota, 242 A.D.2d 363, 661 N.Y.S.2d 282;  Laurenzano v. Laurenzano, 222 A.D.2d 560, 635 N.Y.S.2d 668).   Here, the affidavit of the plaintiff's process server failed to demonstrate compliance with the statutory requirements that the process server exercise “due diligence” before serving Reid by “nail and mail” service and that a copy of the summons be mailed to Reid (see CPLR 308[4];  Gurevitch v. Goodman, 269 A.D.2d 355, 702 N.Y.S.2d 634).   As a result, the court did not acquire personal jurisdiction over Reid and the judgment was a nullity as against her (see New York & Presbyt. Hosp. v. Dollar Rent-A-Car Sys., 295 A.D.2d 488, 744 N.Y.S.2d 859;  Laurenzano v. Laurenzano, supra ).

However, the Supreme Court improvidently exercised its discretion in vacating the default judgment insofar as it was entered against the other defendants.   Because Liberty Mutual's motion in this regard was predicated on the plaintiff's purported failure to comply with CPLR 3215(f) and CPLR 3215(g)(4), and not the absence of personal jurisdiction, Liberty Mutual was required to demonstrate a reasonable excuse and a meritorious defense to the complaint (see Kaufman & Satran v. Sidbern Estates, supra at 454, 771 N.Y.S.2d 693;  Crespo v. A.D.A. Mgt., 292 A.D.2d 5, 10, 739 N.Y.S.2d 49).   Since it established neither, the Supreme Court exercised its discretion improvidently in granting the motion to vacate the default with respect to these defendants.