Whether Plaintiff's Assignor Was an "Eligible Injured Person" Is a Coverage Defense Not Subject to Preclusion -- Default Judgment Vacated

NO-FAULT – VACATING DEFAULT JUDGMENT – MERITORIOUS DEFENSE – ELIGIBLE INJURED PERSON
Westchester Med. Ctr. a/a/o Jamel Harris v. Allstate Ins. Co.
(Sup.Ct., Nassau Co., decided 3/25/2009)

Allstate moved to vacate a default judgment entered 15 days after its answer in this medical provider no-fault recovery suit was due.  Allstate contended that the summons and complaint had been "misindexed" by an employee who "did not realize the time sensitive nature of the documents".

Plaintiff opposed the motion on the basis that Allstate had established neither a reasonable excuse for its default nor a meritorious defense to the hospital's claim.  According to Allstate, plaintiff's assignor was not an "eligible injured person" entitled to no-fault coverage benefits because he was not driving either of the two covered autos listed on his grandmother's policy and did not reside with her.  Plaintiff counterargued that Allstate was precluded from raising that defense because it had not issued a denial of claim (NF-10).

In granting Allstate's motion and vacating the default, Nassau County Supreme Court Justice Randy Sue Marber ruled:

The Plaintiff's attorney argues that the defense to the action that the Defendant raises is precluded due to Allstate's failure to have issued a Denial of Claim. In response to this argument, the Defendant's attorney asserts that the insurer's failure to timely disclaim coverage does not preclude it from later denying liability on the ground that the insurance agreement itself does not cover the particular automobile or person. In support of this proposition, the Defendant's counsel cites Zappone v. Home Ins. Co., 55 NY2d 131, 138 (1982). Additionally, the Defendant's counsel points out that at no time did the Defendant ever admit that it provided coverage for the subject vehicle. The affirmation submitted by the Defendant's counsel, dated January 26, 2009, in support of the Order to Show Cause specifically states in paragraphs 14 and 15 that the Plaintiff's assignor drove a 2005 Ford and that the policy insured a 1999 Nissan Maxima and a 1997 Acura. The Defendant's counsel argues that the Plaintiff has failed to put forth any evidence to show that the Plaintiff's assignor was an eligible injured person covered under the subject policy. 

This Court, in its discretion, accepts the Defendant's explanation for the delay incurred in answering the Summons and Complaint in this matter as an excusable delay. Additionally, the Defendant has provided a meritorious defense and sufficient evidence that the default was not willful. The delay was short and the Plaintiff will not be prejudiced by allowing the Defendant to interpose an answer. 

Whether someone qualifies as an "eligible injured person" under the prescribed PIP endorsement is a coverage defense not subject to the 30-day pay or deny preclusion rule.