VW Credit, Inc. v. Michael's Auto. Tech

211 N.Y.S.3d 595

227 A.D.3d 1251

In the Matter of VW CREDIT, INC., Respondent,

v.MICHAEL’S AUTOMOTIVE TECH, Appellant, et al., Respondent.

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: March 29, 2024

Decided and Entered: May 16, 2024

Faraci Lange, LLP, Rochester (Stephen G. Schwarz of counsel), for appellant.

Law Offices of Rudolph J. Meola, Albany (Rudolph J. Meola of counsel), for VW Credit, Inc., respondent.

Before: Garry, P.J., Clark, Pritzker, Ceresia and Mackey, JJ.

MEMORANDUM AND ORDER

Pritzker, J.

Appeal from an order of the Supreme Court (David A. Weinstein, J.), entered February 22, 2023 in Albany County, which, in a combined proceeding pursuant to Lien Law § 201-a, action for declaratory judgment and plenary action, among other things, denied a motion by respondent Michael’s Automotive Tech to vacate a prior judgment.

Respondent Michael’s Automotive Tech (hereinafter respondent), the operator of an automobile repair garage in the City of Rochester, Monroe County, conducted repairs on a vehicle that had been damaged in a collision. The owner of the vehicle refused to pay for the repairs and abandoned the vehicle, causing respondent to obtain a garagekeeper’s lien in Virginia, where the vehicle was titled and registered. Petitioner, who already possessed a lien on the vehicle, commenced this proceeding in Supreme Court in Albany County, seeking, among other things, a court order declaring respondent’s garagekeeper’s lien invalid and physical possession of the vehicle. Specifically, petitioner argued that respondent failed to establish the elements for a proper garagekeeper’s lien and that, in any event, petitioner’s interest in the vehicle was perfected before respondent had possession. In February 2022, after respondent failed to oppose petitioner’s order to show cause, the court entered a default judgment granting petitioner’s application. In doing so, the court declared respondent’s "claims against [petitioner] … cancelled" and ordered respondent to turn over physical possession of the vehicle to petitioner.

In May 2022, respondent commenced a separate action in Supreme Court in Monroe County, seeking damages from petitioner for unjust enrichment related to respondent’s repair and maintenance of the vehicle. In response, petitioner moved in this proceeding to consolidate it with the Monroe County action. Respondent opposed and cross-moved for sanctions, arguing, among other things, that petitioner’s argument was frivolous because this proceeding had been resolved. Ultimately, Supreme Court denied petitioner’s motion to consolidate the proceedings and granted respondent’s cross-motion for sanctions.

Thereafter, respondent moved to vacate Supreme Court’s February 2022 default judgment. The court sua sponte construed respondent’s motion as not only one to vacate the prior judgment but also to clarify it, and granted that portion "to the extent that the provision of the [February 2022] [j]udgment stating that ‘[r]espondent[’s] … claims against [p]etitioner … for garaging, repairing and storing the subject … vehicle are cancelled’ concerns any assertion of a lien as to those items." The court otherwise denied respondent’s motion to vacate based on, among other things, respondent’s failure to discuss the merits of its unjust enrichment claim and its failure to move to vacate rather than moving for sanctions in response to petitioner’s consolidation motion, which essentially waived its rights by acceding to the validity of the judgment.¹ Respondent appeals.

[1–4] "[A] party seeking to vacate a default judgment must show a reasonable excuse for the default and the existence of a meritorious defense to the action" (Matter of Santander Consumer USA, Inc. v. Kobi Auto Collision & Paint Ctr., Inc., 166 A.D.3d 1365, 1365, 89 N.Y.S.3d 344 [3d Dept. 2018]; see CPLR 5015[a][1]). "Whether there is a reasonable excuse for default … turns on a number of factors, including whether there has been willful neglect and prejudice to the opposing party, and the strong public policy in favor of resolving cases on the merits" (Matter of Santander Consumer USA, Inc. v. Kobi Auto Collision & Paint Ctr., Inc., 166 A.D.3d at 1365—1366, 89 N.Y.S.3d 344 [internal quotation marks and citations omitted]; see McCue v. Trifera, LLC, 173 A.D.3d 1416, 1418, 104 N.Y.S.3d 351 [3d Dept. 2019]). "Whether to vacate a prior order or judgment is addressed to the court’s sound discretion, subject to reversal only where there has been a clear abuse of that discretion" (Reverse Mtge. Solutions, Inc. v. Lawrence, 200 A.D.3d 1146, 1148, 159 N.Y.S.3d 526 [3d Dept. 2021] [internal quotation marks and citations omitted]; see Matter of CCAP Auto Lease Ltd. v. Savannah Car Care, Inc., 211 A.D.3d 1210, 1212-1213, 180 N.Y.S.3d 630 [3d Dept. 2022]). "[T]hat discretion[, however,] should not be exercised where … the moving party has demonstrated a lack of good faith, or been dilatory in asserting its rights" (Greenwich Sav. Bank v. JAJ Carpet Mart, Inc., 126 A.D.2d 451, 452, 510 N.Y.S.2d 594 [1st Dept. 1987]; see Calderock Joint...