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cd-box-1428586-m.jpg How to vacate a default judgement in New York is something every potential litigant should know. It is a topic filled with cautionary tales of second chances, heartache and redemption, as we have talked about in the past. It also demonstrates the importance of thinking outside the box when you try to solve an otherwise intractable problem.

Normally, when a Defendant comes to you for help vacating a default, he is in a state of panic; the only question is how much. Bad things can happen if the default stands; a defendant might have to pay a judgement on a claim that it could have been able to defeat on the merits. There are ways to ameliorate the damage; but the best course is to avoid a default if possible.

Sometimes, the best way to fix a problem is to view it with an open mind and approach it without any preconceived notions. Sometimes the best way to change the end result is to go back to the beginning. Vacating a default judgement is no different. Sometimes the best way to vacate a default judgement is to determine when exactly the Defendant’s deadline to answer was, and determine how much he missed it by, if he really missed it at all.

When someone, whether a business or a person, is sued, when does it have to answer the complaint or take some other sort of action to make sure it can defend itself, in court, on the merits? In New York, the answer is, as most answers seem to be, dependent on the circumstances: the method of service or how the Defendant receives the summons and complaint; the court in which it is sued; where the Defendant is when it receives the service of process; and how many copies of the summons and complaint it ultimately receives. Maybe the most surprising of all is that in New York, a Defendant’s deadline to answer can depend upon what the Plaintiff does after it serves the summons and complaint on the Defendant.
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IMG_20140309_191535 - Copy.jpgSometimes you learn something new from unexpected places. Sometimes you have to challenge your assumptions if you want to have any hope of solving an otherwise intractable problem. Sometimes, just because common knowledge is widely accepted, does not mean that it should be. A recent appeal I was working on made this clear.

Every New York attorney knows the test for defeating a motion for summary judgement: a party must offer evidence in admissible form sufficient to create a genuine issue of material fact that requires a trial. Most probably know the citation for the rule by heart. Zuckerman v. City of New York, 49 N.Y.2d 557, 404 N.E.2d 718 (1980), is one of the most frequently cited cases in New York. It is common practice, based on that rule, to disregard inadmissible evidence and, most often, to not even offer it in opposition to a summary judgement motion. After all, why should you offer evidence that will not be considered? There is really only one problem with this idea: it is wrong.

The actual quote from Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 404 N.E.2d 718, 720 (1980) is:

We have repeatedly held that one opposing a motion for summary judgment must produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which he rests his claim or must demonstrate acceptable excuse for his failure to meet the requirement of tender in admissible form; mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient (Alvord and Swift v. Stewart M. Muller Constr. Co., 46 N.Y.2d 276, 281-282, 413 N.Y.S.2d 309, 385 N.E.2d 1238; Fried v. Bower & Gardner, 46 N.Y.2d 765, 767, 413 N.Y.S.2d 650, 386 N.E.2d 258; Platzman v. American Totalisator Co., 45 N.Y.2d 910, 912, 411 N.Y.S.2d 230, 383 N.E.2d 876; Mallad Constr. Corp. v. County Fed. Sav. & Loan Ass’n, 32 N.Y.2d 285, 290, 344 N.Y.S.2d 925, 298 N.E.2d 96).

The rule does not mean that a party should self-edit itself from submitting inadmissible evidence in opposition to a motion for summary judgement. Whereas inadmissible evidence is insufficient on its own, it can help turn mere expressions of hope into genuine issues of fact that require a trial.

The case that made this clear is Gier v. CGF Health Sys., Inc., 307 A.D.2d 729, 762 N.Y.S.2d 472 (4th Dept. 2003). It is a medical malpractice/wrongful death action in which the decedent was admitted to the hospital with a diagnosis of a recurrent abdominal hernia and died four hours later of a ruptured abdominal aortic aneurysm. The central issue was whether the Defendant, who was the on-call attending physician at the time the decedent was admitted to the hospital, was notified of her admission before his shift ended. If he was notified then there was the requisite physician-patient relationship; otherwise, there was not. The Defendant testified at his deposition that he had not been notified and he submitted his deposition testimony in support of his motion for summary judgement to dismiss the complaint against him.

In opposition, Plaintiff submitted affidavits of two doctors, Cheng and Bruce. Neither remembered the specific circumstances of decedent’s admission. Instead, they each testified to habit evidence: that it was normal practice and procedure for the attending physician, whoever, that might be, to be notified when a patient is admitted to the hospital. Those two affidavits were insufficient, according to the lower court, to raise a genuine issue of material, triable fact.

Plaintiff also submitted the decedent’s hospital chart, which contained numerous references to the Defendant as the decedent’s attending physician and, more importantly, the last major piece of evidence: an unsworn memorandum of a Dr. Cudmore, which stated that the chief surgical resident told Dr. Cudmore that the Defendant had been notified of the decedent’s admission while he was still on duty. The lower court did not even consider it, because it clearly was inadmissible. It was an unsworn document that relayed two unsworn, hearsay, statements; it was double hearsay, at least.
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garbage can dark - Copy.jpgA contract for the sale of goods: one business, or merchant, buys a part from another. They agree on quantity, price, and delivery. The Seller sends the Buyer a purchase order and delivers the goods, and the Buyer pays. It all sounds easy, but as we previously said, a lot can go wrong in a seemingly simple transaction.

What happens if the Buyer asks the Seller to recommend a part but it doesn’t work because it’s not the right one? What if the Buyer says he needs a part that meets certain specs, the Seller delivers what the Buyer asks for, but the Buyer asks for the wrong thing? What if the Seller says the part meets the specs but it doesn’t? Does the Buyer always have to pay for the part or can he return it, and does the Seller always have to take it back?

Some cases illustrate the complexities involved in a contract for the sale of goods better than others. Many times, you can find the most detailed application of the rules in a lower court opinion. One such case is Kabbalah Jeans, Inc. v. CN USA Int’l Corp., 26 Misc. 3d 1241(A), 907 N.Y.S.2d 438 (Sup. Ct. Kings County 2010). It’s instructive because it shows how rules designed to make things simple can sometimes make things difficult.

In a sale of goods dispute between merchants, the two most important, and meaningful, titles, are Buyer and Seller.
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Box.Outside.book.small - Copy.jpgTrial lawyers are problem solvers. That is what they have to do and what their clients expect them to do. The biggest problem they face is how to persuade a jury. After all, the last time a trial went completely as planned was probably the first time one ever did.

Trial attorneys often rely on experts, and expertise, to win their case. The idea is that the average juror will recognize that the experts, whether lawyers or expert witnesses, know best and will follow along. The best way to solve a problem, though, just might be to think outside the box, which is something experts, including trial attorneys, do not always do best.

New research shows that finding creative solutions, from unexpected places, often leads to the best results, and that average people often can solve even complex, highly technical, problems better than experts and computers alike. Though the research has to do with molecular science, it sheds light on how you can win a trial.

Researchers, from Carnegie Mellon and Stanford University, have set out to better understand how RNA, which is one of the three macromolecules essential for human life, is designed. The hope is that this can lead to better ways to treat, or even cure, diseases or, believe it or not, even lead to building better computers, with RNA.

Normally the researchers would have done what they do best: conduct the research themselves. They would have used their knowledge, training, and experience to try to come up with the best designs. This time, however, they did something different: they invited people who had absolutely no special training, to design RNA. Surprisingly, or maybe not, those average people came up with far better designs than the experts.
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notepad-1066735-m.jpgVacating a default judgement in New York, as we have previously discussed, is not always easy. Often it is up to the discretion of the trial court. There are certain times, however, when the defaulting party may not need a reasonable excuse for failing to appear, as long as it does not wait too long to ask the court to excuse the default. This can include parties, such as corporate defendants, who have failed to receive a summons and complaint at least partially through their own fault.

CPLR §317 provides in relevant part:

A person served with a summons other than by personal delivery to him or to his agent for service designated under rule 318, within or without the state, who does not appear may be allowed to defend the action within one year after he obtains knowledge of entry of the judgment, but in no event more than five years after such entry, upon a finding of the court that he did not personally receive notice of the summons in time to defend and has a meritorious defense. If the defense is successful, the court may direct and enforce restitution in the same manner and subject to the same conditions as where a judgment is reversed or modified on appeal. This section does not apply to an action for divorce, annulment or partition.

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tranquility-1-998521-m.jpgWe’ve spent a decent amount of time discussing how lawyers try to persuade people. That, after all, really is their job: to convince a decision maker, be it a judge, jury, or appellate court, that their client is right and should have won, should live to fight another day, or at least should not have lost quite as badly as he did.

Does the way a lawyer persuades depend on the means by which he has to do it? Does it really make a difference if the lawyer is standing up before a jury or a judge at trial; laying out the case for why his client is entitled to judgement as a matter of law on a summary judgement motion; or is writing a brief on appeal? Does the art of persuasion depend on the means of persuasion, or is it more universal than that?

It’s not always easy to figure out why one side wins and one side loses. A lawyer can only play the hand he’s dealt, but he can do a lot to get everything out of the cards that he’s been given. Whether it’s Victor Sifuentes, Alicia Florrick, Joyce Davenport, or Jack McCoy, no two attorneys approach the same case the same way, and winning is never as easy as it looks on TV. When real life attorneys try to persuade, though, the successful ones always seem to keep the basics in mind.
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Posted in: Business Litigation and Trials
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harvested-corn-field-1404711-m.jpgSummary judgement motions in New York are strange things. When used in the right way they can bring long, arduous litigation to an end merely by submitting papers to the court, without the need to call messy witnesses, susceptible to skillful cross-examination, to trial to be judged by a jury. They can be a lawyer’s best friend, or worst enemy. A lot depends upon the approach a lawyer takes towards them. They can take the place of a trial but how you approach them should be much like a trial. The actual motion depends upon the facts and circumstances of the particular case. There is an acronym that sums it up, one I often say to myself: KISS (as in: keep it simple, stupid). There’s also an apt idiom: break it down. Like a trial, it’s important to stay focused and to keep the decision makers focused on what you believe is important; because you have to give them a reason to rule in your client’s favor.

The legal standard in New York for succeeding on, and for defeating, a motion for summary judgement, is pretty clear. To win a motion for summary judgement, a party has to show that it is entitled to judgement as a matter of law. That sounds right, even if it is kind of a definition without a meaning. What it really means is that there cannot be any material issue of triable fact. That sounds a little more definite; after all, there are more complex, legalistic terms in that definition than in the first. But is it really clear? This is the first place to break it down: it means that there cannot be any real reason to go to trial. If there is something important for the jury to decide, something important enough that the way the jury decides it will go a long way towards determining whether one party or the other will win or lose the case, then that is where you are going: to trial. See Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 404 N.E.2d 718, 720 (1980).
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carrot-and-potato-726930-m.jpgHow do you prepare a witness to testify at trial? That seems like a fair question; but what’s the best way to do it? It seems like there are as many different answers as there are people to answer it.

Everyone knows that when you have a trial, you need witnesses, and, no matter what kind of case, those witnesses need to testify. If a plaintiff sues a defendant, chances are that the plaintiff will testify about how the defendant caused her all sorts of injury, pain and suffering, heartache and grief, and should pay her an awful lot of money as a result. Likewise, the Defendant most likely will testify that he didn’t hurt anyone or anything; maybe it was all her fault, and, no matter whose fault it was, she wasn’t hurt that badly anyway. The same is pretty much true for any commercial dispute: the buyer will say she bought the part the seller recommended and it didn’t work as advertised so she wants her money back. The seller will say he gave the buyer exactly what she asked for and, if the part really didn’t work, the buyer must have installed it the wrong way in the wrong application.
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Posted in: Business Litigation and Trials
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hourglass-7-708473-m.jpgIt is not always easy to obtain a default judgement in New York. It is harder, still, to vacate one, especially when the defaulting party has a history of missing deadlines or otherwise not doing what the court wants. A recent case from the Third Department, Wood v. Tuttle, 106 A.D.3d 1393, 968 N.Y.S.2d 613 (3rd Dept. May 30, 2013), shows just how tough it is. The case has everything you could want in a good story: a bouncer, a bar, and a brawl. Evidently everyone showed up for a good fight, just some forgot to fight it out in court, at least until it was too late. No one knows who was right and who was wrong, at least not from the decision; but somebody won and somebody lost, and therein lies the lesson.

Courts, as we previously mentioned, don’t like to be ignored; they want their orders, and rules, to be followed. Though they often will give a party the benefit of the doubt, and a second, or even a third, chance, that does not always happen. It is far better to establish a track record of complying with the rules, because then when you do make a mistake it often will be forgiven. It’s worse to be known for violating them, because sooner or later the court will penalize you, harshly. It’s important to stay in the trial court’s good graces. Whether to impose or vacate a default is within its sound discretion, and its decision is difficult to overturn on appeal. See Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 68, 790 N.E.2d 1156, 1160 (2003).

It’s really not that hard for a party to default in New York. A court can dismiss a case if the plaintiff fails to appear for a court conference or calendar call. If a defendant fails to appear, it can order an inquest to determine damages or grant the plaintiff a default judgement for everything it asks for in the complaint. See 22 NYCRR 202.27. Perhaps the harshest example is when a defendant is served with a summons and complaint and has only 20 or 30 days to answer or otherwise appear. If he misses the deadline, the plaintiff is well on his way to obtaining a default judgement against him. A court also can grant a motion on default, though it often will closely examine even an unopposed motion before deciding it.

New York courts generally prefer to decide cases on the merits. That, however, does not immunize a party against a history of ignoring rules and foregoing second chances. As the Third Department’s decision in Wood v. Tuttle, supra, points out, if you ask a court to bend over backwards one too many times, it will make sure that you lose because you violated the rules, without even considering whether you might win on the merits.

In Wood v. Tuttle, supra, the plaintiff alleged that he had been seriously injured in a bar fight. He sued the bar’s bouncer and its owner to recover his damages, reportedly because both took part. Neither, however, seemed all that interested in the court case. The defendants answered the complaint, but apparently did not do much of anything else, at least until it was too late. Due to their decided lack of participation, plaintiff obtained a judgement against them, which was based not on the merits of the case, but on their repeated procedural violations:
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careful-899881-m.jpgWe’ve spent a lot of time this past summer talking about how important negotiations are to businesses and individuals alike, and how various negotiation strategies work together to produce desired, and sometimes unintended, results. This time, we’re coming back to one useful strategy in particular, which is known by the ever impressively indecipherable acronym BATNA, to show how it can be used, abused, and overplayed. Put another way: BATNA Beware.

BATNA is shorthand for Best Alternative to a Negotiated Agreement; i.e., your best fallback position if negotiations fail and you have to walk away from the negotiating table without getting a deal done. Everyone’s been involved in that situation before; no negotiator is immune from sometime, someday, someway, simply not being able to reach a deal. For years Verizon Communications and Vodafone could not reach an agreement to end their joint venture in Verizon Wireless. Started in 2000, after Bell Atlantic merged with GTE Corp., both of which had a large East Coast presence, and Vodafone purchased Air Touch Communications, which had a large customer base on the West Coast, Verizon Wireless is the largest cellular service provider in the United States. Verizon Communications reportedly owns 55% and Vodafone 45% of the joint venture. According to those same reports, Verizon Communications had a long standing desire to buy out Vodafone but did not want to pay Vodafone’s $130 billion asking price. It instead wanted to pay only $100 billion for the minority stake in the company. As a result, no agreement was reached until earlier this month when Verizon agreed to buy out Vodafone for the $130 billion Vodafone reportedly had been seeking all along. You can learn a lot by looking at the facts behind this apparent change of heart.

You would think that Verizon Communications had the better bargaining position. The way Verizon Wireless reportedly is structured, Vodafone has little say in the day to operations of the company. With effective control over the company, Verizon Communications apparently should have been able to operate the wireless carrier to its benefit with Vodafone having little say, or veto power, over the decisions. What Vodafone apparently had was an investment, with little opportunity to chart the path of the company to maximize the profits in its own interest. That’s a lot of trust to place in another company. You would think that Verizon Communications could have held out for as long as it needed to in order to pay what it wanted, $100 billion, to get what it wanted, sole ownership of Verizon Wireless. After all, Verizon Communications’ fallback position looked a lot better than Vodafone’s; if they couldn’t reach a deal, then Vodafone would be left with an investment it had little control over, but Verizon Communications would still have effective operational control over the nation’s largest wireless carrier, with its inherent possibilities for growth, marketing, and cross-promotion.

The problem apparently was that Verizon Communications overestimated its bargaining power and underestimated Vodafone’s fallback position. If no deal was done, and everything stayed the same, Verizon Communications would still be in charge, but Vodafone would still receive a large share of the wireless company’s profits. Reportedly, Verizon Communications wanted those profits on its books, not Vodafone’s. When you think about it from Vodafone’s point of view, is it really that bad to have a large investment in a profitable company with a good rate of return? Why walk away unless you can cash-out at or close to your asking price? After all, it might be difficult to find another place to put your money that will get you close to the same return. Maybe Vodafone really could afford to hold out longer than Verizon. What reportedly got the deal done was Verizon Communications’ concern about the effect rising interest rates will have on the cost of raising the money necessary to finance it. When you’re talking about purchases of about $100 billion, even minor fluctuations of bond prices and interest can quickly make a difference.
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