This morning brings us the Appellate Division's decision in Westchester Med. Ctr. v. Hartford Cas. Ins. Co., 2009 NY Slip Op 00528 (App. Div., 2d Dep't, 2009).
There is nothing groundbreaking here, although it does potentially add to the insurance carriers' roster of what counts as a "reasonable excuse" for the purposes of vacating a default. Here, Hartford's "employee reasonably believed that the action had been discontinued after she advised the plaintiff's counsel's office that no-fault benefits had been exhausted, thereby demonstrating a reasonable excuse for the short period of time in which they failed either to appear or to answer the complaint." Id.
I'm not exactly sure how one could reasonably believe an action was discontinued based upon merely communicating a defense to plaintiff's counsel, especially where there does not seem to have been a stipulation of discontinuance ever executed, or even an overt communication by plaintiff's counsel that one would be forthcoming. This seems to me to fall somewhere short of being "reasonable." In any event, the vacatur of the default might still be proper, given the apparent "short" delay and, perhaps more importantly, the issue of policy exhaustion.
Footnote: after having vacated the default, the Supreme Court ordered that the matter be transferred to the District Court ("325(d)-ing" the case, in the parlance), as the damages failed to meet the minimum required for Supreme Court jurisdiction.