Upon the foregoing papers, the motion, by Order to Show Cause, by defendant 15 Broad Street, LLC for an order discharging a certain surety bond issued by Fidelity and Deposit Company of Maryland (Fidelity), staying enforcement of a default judgment entered herein until an "ancillary action" commenced under index no. 25826/08 is resolved and declaring that the judgment remain as security pending resolution of that action is granted only to the extent of discharging Fidelity's "Bond to Vacate Default Judgment" (Bond No. CGB 7606096).

This action arises out of a fall by plaintiff on the sidewalk abutting real property allegedly owned by defendant. Although service of process was apparently effected upon defendant by service upon the New York Secretary of State on September 14, 2007, defendant did not answer or otherwise appear in this action. Subsequently, plaintiff moved for leave to enter a default judgment against defendant. The motion was granted by order dated February 4, 2008. An inquest was directed and, ultimately, a judgment was entered in favor of plaintiff and against defendant in the amount of $175,000, plus interest, costs and disbursements. In September 2008, defendant moved to vacate the judgment. By order dated December 4, 2008, that motion was granted. Plaintiff thereafter sought leave to reargue the motion. By order dated December 22, 2008, this court granted reargument, but adhered to its prior decision vacating the default judgment; [*2]however, it conditioned such relief upon the posting of a bond in the amount of $100,000 by defendant. On or about January 21,2009, defendant obtained a bond; however, shortly thereafter, plaintiff appealed "each and every part of both said orders." In a decision and order dated March 16, 2010, the Appellate Division, Second Department, reversed the order of December 22, 2008, vacated the order of December 4, 2008 and denied defendant's motion to vacate the default judgment. The Appellate Division found that defendant had failed to proffer any excuse for its default in appearing or answering the complaint or any reasonable explanation for failing to oppose plaintiff's motion for leave to enter a default judgment. On May 31, 2010, Fidelity's Claim Counsel demanded that defendant make full payment to plaintiff in satisfaction of the judgment or Fidelity would issue such payment pursuant to the terms of the bond and thereafter seek indemnification from defendant. A few days thereafter, the instant application was served.

In its motion, defendant explains that, following service of defendant's answer and the issuance of the bond, plaintiff filed a notice of appeal challenging defendant's right to interpose the answer while at the same time knowing that it would be able to collect upon the default judgment because a bond had been posted. According to defendant, plaintiff was and is attempting to "have it both ways" by rejecting vacatur of the default judgment and service of defendant's answer while seeking to resort to the bond which was given as a condition of vacating the judgment. Therefore, defendant seeks to discharge the bond so that plaintiff cannot collect under it. Defendant also requests that any attempt by plaintiff to enforce his judgment be stayed until such time as an action brought by plaintiff against other alleged tortfeasors is resolved "so as to avoid duplicate or conflicting judgments or awards."

In opposition to the motion, defendant characterizes the bond as "an unconditional undertaking to pay the sum of $100,000.00 on account of any judgment'" entered against defendant, not a promise to pay "a presently non-existent future judgment that may be obtained after adjudication on the merits." According to plaintiff, the bond was not limited to a judgment which might be entered only if he had accepted service of the answer, refrained from appealing the prior orders and eventually succeeded at trial. Plaintiff chastises defendant for failing to apprise the court of correspondence from Dale E. Gorsuch, Fidelity's Claim Counsel, in which counsel advises defendant's attorney that surety bonds are issued only for orders or judgments previously issued by the court, "never solely for new orders and judgments that may exist at some future point in time for liability not yet determined by the court."

In reply, defendant seeks to "enlarge" its request for relief to include vacatur of the default judgment "on very different grounds"; i.e., the fraud allegedly perpetrated by plaintiff in commencing a second action, notwithstanding plaintiff's testimony at inquest that only defendant was responsible for his injuries. With respect to the issue of the surety bond, defendant adds that, accepting the interpretation of Fidelity's Claim Counsel, if there had been no appeal and plaintiff had succeeded at trial, then the verdict would [*3]have represented a "new judgment" and consequently, the new judgment would not have been covered by the bond.

Where a party seeks to vacate a default judgment against it, the court may condition vacatur of the judgment upon the posting of a bond or undertaking (Yadid, LLC v GCW Bell Corp., 48 AD3d 799, 800 [2008]). In this case, plaintiff did not challenge the direction of the court that a bond be posted, only the propriety of vacatur of the judgment. Since the Appellate Division has determined that the default judgment should not have been vacated, the only question is whether plaintiff has the right to resort to the bond, notwithstanding that defendant did not receive a trial on the merits of plaintiff's claims. In its order of December 22, 2008, it was the intent of this court to allow defendant the opportunity to present its defense at trial but, as a condition thereof, to secure the judgment (or, a substantial portion of it) against defendant's failure to prevail at trial, lest plaintiff be unable to collect it (see Reporter Co., Inc. v Tomicki, 60 AD2d 947 [1978]). In Sonju v Continental Garage Management Corp. (108 AD2d 671), Special Term vacated a default judgment and permitted the defendants to serve an answer upon condition that defendants tender a check for $1,500 to plaintiff. Although plaintiff's attorney accepted and cashed the check, defendants' answer was rejected, apparently because it was served after the deadline set by the court, and the judgment was reinstated. After Special Term refused to vacate the reinstated default judgment, defendants appealed. In reversing the lower court, the Appellate Division, First Department, noted that the payment of the $1,500 and service of an answer were to be simultaneous and, therefore, because the condition was a joint one, "plaintiff may not accept the benefit of tender of the check while rejecting tender of the answer, even if tardy" (at 671). Here, plaintiff may not accept defendant's procurement of a bond and also reject its answer by appealing the very decision which set forth those joint obligations. This court sees no conflict with the suggestion of Fidelity's Claim Counsel that surety bonds are issued with reference to orders or judgments previously entered because Fidelity's bond was based upon an order of this court, dated December 22, 2008, rather than a "new order [ ] and judgment [ ] that may exist a some future point." Accordingly, that branch of the motion which seeks to discharge the bond issued by Fidelity is granted. Fidelity and Deposit Company of Maryland's surety bond is vacated and discharged.

To the extent that defendant seeks relief based upon the pendency of an action subsequently commenced by plaintiff, its request is, in all respects, denied. Among other things, defendant has not submitted a copy of the pleadings in that action so it is not possible to review plaintiff's claims in that action and the relationship of defendants therein to 15 Broad Street LLC.If defendant is concerned that it may have to ultimately shoulder the responsibility for plaintiff's injuries for which others should be held liable, it may be entitled to bring an action against them for indemnification.

The foregoing constitutes the decision and order of this court.

E N T E R [*4]

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Robert J. Miller

J. S. C.