State Farm Mut. Auto. Ins. Co. v Thompson (2016 NY Slip Op 51222(U))

500177/16

Attorneys for Plaintiff
Bruno, Gerbino & Soriano., P.C.
Richard C. Aitken
445 Broad Hollow Road, Suite 220
Melville, New York 11747
(631) 390-0010

Attorneys for Laurentia St. Rose
Monfort, Healy, McGuire & Salley
840 Franklin Avenue
P.O. Box 7677
Garden City, New York 11530
(516) 747-4082

Pro Se
Tiesha Thompson

Recitation in accordance with CPLR 2219 (a) of the papers considered on the motion of plaintiff State Farm Mutual Automobile Insurance Company (hereinafter State Farm) filed on April 19, 2016, under motion sequence number two, for an order entering a default against the defendants Accelerated DME Recovery, Inc., ( hereinafter DME), Brookdale Hospital Medical Center, (hereinafter Brookdale Hospital), Brookdale ER PHYS Dept. (hereinafter Brookdale ER), DHD Medical, P.C. (hereinafter DHD), Global Health Pharmacy Corp., (hereinafter Global), Integrated Neurological Associates, PLLC, (hereinafter Integrated), Stand up MRI of Brooklyn, P.C. (hereinafter MRI), and Total Neuro Care, P.C., (hereinafter Neuro) (hereinafter jointly the healthcare providers), pursuant to CPLR § 3215 for failure to appear in the instant action.^[FN1]

Notice of Motion
Affirmation in support
Exhibits 1-8

On January 7, 2016, State Farm commenced the instant declaratory judgment action by filing a summons and complaint (hereinafter the commencement papers) with the Kings County Clerk’s office. The complaint alleges the following salient facts: Tiesha Thompson (hereinafter Thompson) is insured under an automobile policy issued by State Farm for a 2012 Chevrolet Tahoe (hereinafter the Tahoe). Laurentia St. Rose (hereinafter St. Rose) claimed that on March 31, 2015, she was a pedestrian involved in an accident with the Tahoe. St. Rose, thereafter, filed for no-fault benefits and received medical services for personal injuries allegedly arising out of the March 31, 2015 accident. The Tahoe owned by Thompson was not involved in the accident of March 31, 2015, nor any other accident that St. Rose can claim personal injuries arising out of. The healthcare provider defendants are entities that treated St. Rose for her injuries that allegedly arose out of the accident on March 31, 2015.

The instant action seeks the following declarations: (1) that the alleged accident of March 31, 2015 is not a covered event under the State Farm policy; (2) that Thompson was not negligent or responsible for the alleged accident of March 31, 2015 or any alleged personal injuries of St. Rose; (3) that State Farm is under no obligation to pay any monies for any alleged medical treatment or economic harm stemming from the alleged accident of March 31, 2015.

State Farm seeks an order pursuant to CPLR 3215 granting a default judgment on its claim for a declaratory judgment as against healthcare provider defendants. CPLR 3215 (a) permits a plaintiff to seek default when the defendant has failed to appear. “On motion for leave to enter a default judgment pursuant to CPLR 3215, the movant is required to submit proof of [*2]service of the summons and complaint, proof of the facts constituting plaintiff’s claim, and proof of the defaulting party’s default in answering and appearance” (Atlantic Cas. Ins. Co. v RJNJ Services, Inc., 89 AD3d 649, 651 [2nd Dept. 2011]). CPLR 3215 (f) states that upon any application for a judgment by default, proof of the facts constituting the claim, the default, and the amount due are to be set forth in an affidavit “made by the party” (HSBC Bank USA, N.A. v Betts, 67 AD3d 735, 736 [2nd Dept. 2009]).

A plaintiff seeking to assert jurisdiction over a defendant must “bear the ultimate burden of proving by a preponderance of the evidence that jurisdiction over the defendant was obtained by proper service of process” (Gottesman v Friedman, 90 AD3d 608, 609 [2nd Dept. 2011] quoting Santiago v Honcraft, 79 AD3d 847, 848 [2nd Dept. 2010]).

The procedure to effectuate service of the commencement papers on Limited Liability Companies is delineated in Limited Liability Company Law § 301 (a). The statute provides in pertinent part that the secretary of state shall be the agent of every domestic limited liability company (see LLC § 302 [a]). Limited Liability Company Law § 302 (a) further provides that in addition to the designation of the secretary of state, each domestic limited liability company or authorized foreign limited liability company may designate a registered agent.

Similarly, the method to effectuate service on corporations is set forth in CPLR 311 and Business Corporations Law § 306 (b) (1). CPLR 311 provides that service upon a corporation shall be made by “delivering the summons on an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service” (CPLR 311). BCL 306 (b) (1) provides that service may be effectuated on corporations by delivery to the Secretary of State.

The affidavits of Heather Morigerato (hereinafter Morigerato), plaintiff’s process server, has established prima facie proof of service of the commencement papers upon six of the healthcare providers pursuant to Limited Liability Company Law § 301 (a) and BCL 306 (b) (1). Morigerato has averred that on January 14, 2016 service of the summons and complaint upon DME, DHD, Global, Integrated, MRI, and Neuro was completed by personal delivery upon the Secretary of State.

The affidavit of Jonathan Cohen (hereinafter Cohen), plaintiff’s other process server, has established prima facie proof of service of the commencement papers upon Brookdale Hospital and Brookdale ER pursuant to CPLR 311. Cohen has averred that Brookdale Hospital was served on January 19, 2016, by personal delivery upon Cecilia Villarama, an administrator in Risk Management Department and authorized agent for receipt of service. Cohen has also averred in a separate affidavit of service that Brookdale ER was served on January 19, 2016, by personal delivery upon Karnie Lee, a manager and authorized agent for receipt of service. A process server’s affidavit ordinarily constitutes a prima facie showing of proper service (S. Point, Inc. v. John, 140 AD3d 1150 [2nd Dept. 2016] citing Aurora Loan Servs., LLC v. Gaines, 104 AD3d 885, 886 [2nd Dept. 2013]). State Farm has established that the healthcare defendants were properly served with the commencement papers.

Plaintiff’s next hurdle is a showing that DME, DHD, Global, Integrated, MRI, Neuro, Brookdale Hospital, and Brookdale ER failed to appear or answer the complaint (see CPLR 3215). Pursuant to CPLR 320, a defendant appears by serving an answer or notice of appearance, or by making a motion which has the effect of extending time to answer. An appearance shall be made within twenty days after service of the summons is complete (CPLR [*3]320 [a]). The affirmation of Richard C. Aitken, State Farm’s counsel, establishes that Accelerated DME Recovery, Inc., Brookdale Hospital Medical Center, Brookdale ER PHYS Dept., DHD Medical P.C., Global Health Pharmacy Corp., Integrated Neurological Associates PLLC, and Stand up MRI of Brooklyn, P.C. did not interpose an answer to the complaint.

Assuming proper service of the commencement papers, a plaintiff is required to set forth the facts constituting the elements of the claim to succeed on a motion to hold a defendant in default (see CPLR 3215 (f), HSBC Bank USA, N.A. v Betts, 67 AD3d 735, 736 [2nd Dept. 2009]). In support of the instant motion State Farm has submitted, among other things, the affidavit of Michael Higgins (hereinafter Higgins), its claim specialist.Higgins has averred that he conducted and completed an investigation and concluded that the Tahoe and Thompson, its insured, were not involved in the alleged accident of March 31, 2015.

Pursuant to CPLR 3001, the Supreme Court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a “justiciable controversy” whether or not further relief is or could be claimed. To constitute a justiciable controversy there must be a real dispute between adverse parties, involving substantial legal interests for which a declaration of rights will have some practical effect (see Chanos v MADAC, LLC, 74 AD3d 1007, 1008 [2nd Dept. 2010]).

The primary purpose of a declaratory judgment is to stabilize an uncertain or disputed jural relationship with respect to present or prospective obligations (Village of Woodbury v Brach, 99 AD3d 697, 699 [2nd Dept. 2012] citing, Chanos v MADAC, LLC, 74 AD3d 1007, 1008 [2nd Dept. 2010]). “Where there is no necessity for resorting to the declaratory judgment it should not be employed” (Hesse v Speece, 204 AD2d 514, 515 [2nd Dept. 1994] citing James v Alderton Dock Yards, 256 NY 298, 305 [1931]). Furthermore, a declaratory judgment is ex vi termini a judgment on the merits (Dupigny v St. Louis, 115 AD3d 638, 640 [2nd Dept. 2014]). Until disputed questions of fact necessary to be determined before judgment can be rendered are settled, it is plant that rights and legal relations cannot be determined, defined and declared (Id).

“[A] default judgment in a declaratory judgment action will not be granted on the default and pleadings alone for it is necessary that plaintiff establish a right to a declaration against… a defendant.” (Dole Food Co., Inc. v Lincoln General Ins. Co., 66 AD3d 1493 [4th Dept. 2009]; see also Levy v Blue Cross and Blue Shield of Greater New York, 124 AD2d 900, 902 [3rd Dept. 1986] citing Nat. Sur. Corp. v Peccichio, 48 Misc 2d 77, 78 [Sup. Ct., Albany County 1965]). This does not mean that the defendant can frustrate the plaintiff’s claim just by defaulting, which would amount to an absurdity, or, on the other hand, that the defendant will be dragged into court (Connors, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7, CPLR 3001:23). It apparently means only that the plaintiff must nonetheless take the stand to attest to all parts of the claim. In ordinary actions, however, proof on a default application can be made solely on paper (Id.).

State Farm annexed an affidavit of Higgins and examination under oath (EUO) of Thomson, its insured. The EUO was conducted on September 17, 2015 over three months before the instant action was commenced. The EUO is not admissible under CPLR 3117. Moreover, it has been recognized that while the transcripts of examinations under oath may be admissible to defeat a summary judgment motion, they are nonetheless hearsay (Rizz Management Inc. v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 1102(A), 2008 NY Slip Op. 51191(U) [NY Dist. Ct. 2008] citing CPT Medical Service, P.C. v Utica Mutual Insurance, 12 [*4]Misc 3d 237, 811 N.Y.S.2d 909 (Civ. Ct. Queens Co.2006). As such, those statements are inadmissible at trial unless, for example, they are used for impeachment purposes upon cross-examination in the event that such declarant or assignor testifies (Id).

As a result, the only admissible testimony in support of a declaratory judgment is Higgins’ affidavit. The Higgins’ affidavit, however, consists of his conclusions based on an investigation which relies primarily on hearsay evidence. Consequently, although State Farm has established that the healthcare provider defendants are in default in answering the complaint it has not established its right to a declaration (Dole Food Co., Inc. v Lincoln General Ins. Co., 66 AD3d 1493 [4th Dept. 2009]). State Farm is directed to file a note of issue and present its proof at an inquest.

State Farm Mutual Automobile Insurance Company’s motion for a declaratory judgment against defendants Accelerated DME Recovery, Inc., Brookdale Hospital Medical Center, Brookdale ER PHYS Dept., DHD Medical P.C., Global Health Pharmacy Corp., Integrated Neurological Associates PLLC, Stand up MRI of Brooklyn, P.C., based on their default in answering the complaint is denied.

The foregoing constitutes the decision and order of this court.

Dated: August 16, 2016

Hon. Francois A. Rivera
J.S.C.

Footnotes

Footnote 1: At oral argument the plaintiff conceded that it accepted a late answer and was no longer seeking a default against from DME and DHD.