Upon the following papers numbered 1 to 11 read on this motion by Utica First Insurance Co. ("Utica"), for a default judgment against plaintiff for plaintiff's failure to answer the counterclaim and for summary judgment declaring that Utica properly disclaimed coverage in the underlying lawsuit; and cross motion by Thomas Foddrell for leave to extend his time to reply to the counterclaims, and to dismiss the counterclaims for failure to join a necessary party, to wit, Joney & Rana Construction Corp. ("J & R").

Papers

Numbered

Notice of Motion - Affidavits - Exhibits........................................1- 4

Notice of Cross Motion/Answering Affidavits - Affidavits - Exhibits 5 - 8

Reply Affidavits . . . . . . . . . . . . . . .9 - 11

Plaintiff in this action is seeking to enforce a judgment it obtained against defendant's [*2]insured. The instant action is based upon an underlying lawsuit commenced by plaintiff against J & R, in Supreme Court, Queens County, for an accident wherein plaintiff claimed monetary damages for injuries sustained as a result of J & R's negligence. A default judgment was taken against J & R and, after inquest, a judgment in the amount of $673,422.71 was entered against J & R on or about August 13, 2013. Plaintiff, in the instant action, seeks to enforce the said judgment against the defendant insurer, as Utica provided J & R with valid insurance coverage at the time of plaintiff's accident, pursuant to a policy of insurance. By the instant motion, Utica seeks a default judgment against plaintiff for plaintiff's failure to answer the counterclaim and for summary judgment declaring that Utica properly disclaimed coverage in the underlying lawsuit. Foddrell opposes the motion and cross moves for leave to extend his time to reply to the counterclaims, and to dismiss the counterclaims for failure to join a necessary party, to wit, J & R. The cross motion is opposed by Utica.

A summons and complaint was filed against J & R by Foddrell in Supreme Court, Queens County, under Index number 28726/2006 ("the Underlying Lawsuit"). In the underlying lawsuit, Foddrell sought money damages from J & R for injuries which Foddrell allegedly sustained in an accident. Utica appointed Milber Makris Plousadis and Sieden ("Milber"), to defend J & R. Utica also hired Alternative Adjusters (AA), to conduct an initial investigation of the loss. After trying to locate Gardeep Singh, the owner of J & R, at the address identified on the policy of insurance of 9 Laura Drive, AA finally made contact with Singh at 135-25 118th Street, in Ozone Park, NY ("the Ozone Park residence"). AA obtained a signed statement from Singh which provided, inter alia, that Singh resided at 135-25 118th Street, Ozone Park, New York.

During the course of the Underlying Lawsuit, Milber made several attempts to contact J & R and Singh, its principal by letters and telephone calls. On one occasion, Milber was able to speak with "Rosie" (Singh's sister), and advised that a deposition had been court-ordered to go forward on October 8, 2008. Singh did not appear for the deposition.

In December, 2008, Milber advised Utica that Milber was having problems contacting Singh to schedule his deposition, and requested that Utica once again retain AA to obtain Singh's cooperation. In late December, 2008, Utica retained AA once again to obtain Singh's cooperation. AA made several attempts to contact the insured through phone calls and in-person visits. Lloyd Klee, of AA, has previously affirmed that upon being retained by Utica, he called every single telephone number for J & R and Singh but did not make direct contact and never received a return call. On January 21, 2009, Klee made a cold call to the Ozone Park residence and spoke with "Rosie". He requested that she have Singh contact Milber and handed Rosie a letter requesting that Singh contact Milber. No response was received from Singh.

On February 11, 2009, Klee went to the Ozone Park residence to contact J & R and again spoke with "Rosie". Klee handed a second letter to Rosie to deliver to Singh again requesting his cooperation in his defense of the Underlying Lawsuit. Rosie said she would give the letter to Singh and confirmed that the telephone number in AA's possession was a correct number for Singh. Klee confirmed that he attempted to contact Singh on the telephone number confirmed by [*3]Rosie to be correct on January 15, 2009, January 16, 2009, January 20, 2009, February 6, 2009, April 2, 2009, April 14, 2009 and again on April 23, 2009. No return calls were ever received.On February 15, 2009, however, John P. Grisafi, Esq. (Of Milber), spoke with Singh via telephone and informed him that a deposition had been scheduled for April 15, 2009, and that it was imperative that Singh attend. Singh agreed to attend. Milber called again on March 25, 2009, to confirm the deposition and left a voicemail. According to Milber's report to Utica dated April 2, 2009, Milber had received no further communication from Singh after the phone call in which he agreed to attend the deposition.

On April 3, 2009, Utica sent a letter to Singh, advising him that he had an obligation pursuant to the Utica First Policy to cooperate with J & R's defense counsel ("the April 3, 2009 letter"). The April 3, 2009 letter further advised Singh that his deposition for the Underlying Lawsuit was schedule for April 13, 2009; that Singh must attend the deposition or it would jeopardize Utica's defense of the Underlying Lawsuit; and that if Singh failed to appear, Utica would have a sufficient basis to deny coverage to J & R for the Underlying Lawsuit. On April 8, 2009, Klee made another "cold call" to Singh's residence, met with Singh and advised Singh that he needed to appear for the deposition scheduled for April 13, 2009. On April 10, 2009, Grisafi spoke directly with Singh, and Singh agreed to attend the April 13, 2009 deposition. Notwithstanding these attempts, however, Singh did not appear for his deposition. On April 15, 2009, Utica issued a denial of coverage letter to Singh, advising that because of his failure to cooperate and appear at his deposition, that he had breached the cooperation clause of the Utica First Policy.

J & R was in danger of having its Answer stricken if the deposition did no go forward. Thus, Singh's failure to appear for his deposition, despite multiple overtures on the part of Utica, AA and J & R's defense counsel, prejudiced Utica's defense of the Underlying Lawsuit. In fact, ultimately a default judgment was taken against J & R.

By way of Order to Show Cause dated April 29, 2009, Milber requested that the Court relieve them as counsel for J & R. The application was granted.

In a separate Order dated August 4, 2009, J & R's answer was stricken unless it appeared for a deposition by December 4, 2009. Since J & R did not appear for the deposition, a default was granted against J & R and an inquest ordered.

An Inquest was held on December 4, 2012, resulting in a judgment of $633,000, as against J & R. On August 13, 2013, a Judgment was entered in the amount of $673,422.71 against J & R. ("the Judgment"). A settlement with plaintiff was reached between J & R's co-defendant, Marasa, for $25,000.

Foddrell commenced the instant action by Summons and Complaint dated November 27, 2013, and filed on December 11, 2013. In the instant action, Foddrell alleges that he brought the Underlying Lawsuit against J & R; that an Inquest was held and judgment awarded; that the [*4]Judgment was entered on August 13, 2013; that a copy of the Judgment was served on Utica on October 9, 2013; that Utica breached its duty to defend and indemnify J & R; and that Foddrell timely notified Utica of the accident and Underlying Lawsuit. Foddrell alleges that Utica is "equitably estopped from failing to pay the outstanding Judgment as [Utica] never obtained a Court Order deeming their insured in violation of policy provisions nor did they obtain a Court Order declaring that they did not have to defend and indemnify its insured." Foddrell, therefore, demands judgment against Utica in the amount of $673,422.71.

Following an extension of time to respond to the complaint, Utica moved to dismiss the complaint and for summary judgment declaring that its disclaimer was proper. The motion by Utica was denied. Utica then interposed an Answer with two counterclaims. No reply to Utica's counterclaims were ever filed or served by plaintiff. Discovery progressed in the action and a compliance conference was held on November 26, 2014.

Utica moved to compel plaintiff to respond to Utica's outstanding discovery responses, and to extend the time by which the Note of Issue was to be filed. Via Stipulation dated February 27, 2015, the Note of Issue date was extended to May 29, 2015. However, plaintiff filed the Note of Issue on February 23, 2015. Depositions were held on March 16, 2015 and March 31, 2015. The instant motion and cross motions are timely.

Utica seeks an order pursuant to CPLR 3025 granting judgment on its counterclaim for a declaratory judgment as against Foddrell. In particular, Utica seeks an order declaring: that

"Utica has no obligation to indemnify J & R in connection with an accident that occurred on November 28, 2006 ("the Accident"), involving Thomas Foddrell and the lawsuit instituted by Foddrell against J & R ("the Underlying Lawsuit"); that Utica properly disclaimed coverage to its insured, J & R, in connection with the accident and the Underlying Lawsuit; and that Utica, therefore, has no obligation to pay the money judgment awarded to Foddrell in the Underlying Lawsuit, in the amount of $673,422.71."

Pursuant to CPLR 3001, the Supreme Court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a "justiciable controversy" whether or not further relief is or could be claimed. To constitute a justiciable controversy, there must be a real dispute between adverse parties, involving substantial legal interests for which a declaration of rights will have some practical effect (see Chanos v MADAC, LLC, 74 AD3d 1007, 1008 [2d Dept 2010]). The primary purpose of a declaratory judgment is to stabilize an uncertain or disputed jural relationship with respect to present or prospective obligations (Village of Woodbury v Brach, 99 AD3d 697, 699 [2d Dept 2012] citing, Chanos v MADAC, LLC, 74 AD3d 1007, 1008 [2d Dept 2010]). "Where there is no necessity for resorting to the declaratory judgment it should not be employed" (Hesse v Speece, 204 AD2d 514, 515 [2d Dept 1994] citing James v Alderton Dock Yards, 256 NY 298, 305 [1931]). Furthermore, a declaratory judgment is ex vi termini a judgment on the merits (Dupigny v St. Louis, 115 AD3d 638, 640 [2d Dept 2014]). Until disputed questions of fact necessary to be determined before [*5]judgment can be rendered are settled, it is plain that rights and legal relations cannot be determined, defined and declared (Id). The main purpose of CPLR 3011 is to state the instances in which a responsive pleading is required (Siegel, New York Practice § 229, 4th Ed). It specifically provides, in pertinent part, that a counterclaim requires a reply. An amended pleading, once served, supersedes the initial pleading and becomes the only pleading in the case as though the initial pleading was never served (see Elegante Leasing, Ltd. v Cross Trans Svc, Inc., 11 AD3d 650 [2d Dept 2004]; see also, Titus v Titus, 275 AD2d 409 [2d Dept 2000]). A default judgment in a declaratory judgment action will not be granted on the default and pleadings alone. (Patrick M. Connors, Practice Commentaries, McKinney's Cons. Laws of NY, Book 7B, CPLR, C3001:23). Rather, it is necessary that the party establish a right to a declaration by taking the stand to attest to all parts of the claim. A declaratory action is unlike ordinary actions where proof on a default application can be made solely on paper (Id. see also CPLR 3215[f]).

Furthermore, the record indicates that Utica did not adequately support its application for a default judgment with "proof of service of the summons and the complaint, ... proof of the facts constituting the claim, the default and ... [p]roof of mailing the notice required by [CPLR 3215(g)(4)(I) ]" (CPLR 3215[f]; see 333 Cherry LLC v. N. Resorts, Inc., 66 AD3d 1176, 1178 [2009]). Accordingly, it is

ORDERED, that the branch of defendant Utica First Insurance Co.'s motion for a default judgment against plaintiff for plaintiff's failure to answer the counterclaim is denied; and it is further

ORDERED, that the branch of defendant Utica First Insurance Co.'s motion for summary judgment declaring that Utica properly disclaimed coverage in the underlying lawsuit is denied, without prejudice and with leave to renew, following the joinder of J & R as a defendant on the counterclaim as directed below; and it is further

ORDERED that the branch of the cross motion by plaintiff which is to extend that time to file a reply to defendant's counterclaims, is granted. In order to successfully oppose a motion for leave to enter a default judgment based upon the plaintiff's failure to serve a reply to a counterclaim, a plaintiff must establish a reasonable excuse for the delay and demonstrate a meritorious defense (see Bensimon v Fishman, 242 AD2d 551 [1997]). It is generally left to the sound discretion of the Supreme Court to determine what constitutes a reasonable excuse (see Scarlett v McCarthy, 2 AD3d 623 [2003]) and a meritorious defense (see Fidelity & Deposit Co. of Md. v Andersen & Co., 60 NY2d 693, 695 [1983]). Here, plaintiff proffered an excuse of law office failure (see CPLR 2005) and referenced his verified complaint to demonstrate a meritorious defense (see CPLR 105 [u]; Salch v Paratore, 60 NY2d 851 [1983]; Matter of Ajamian, 225 AD2d 992 [1996]). Where, as here, there is no evidence of willfulness, deliberate default, or prejudice to the defendants, the interest of justice is best served by permitting the case [*6]to be decided on its merits (see Beizer v Funk, 5 AD3d 619, 620 [2004]; Photovision Intl. v Thayer, 235 AD2d 467 [1997]; Matter of Ajamian, supra); and it is furtherORDERED that the branch of the cross motion which is to dismiss defendant's counterclaims is denied, provided Utica joins J & R, the insured, as a defendant on the counterclaim (see CPLR §1003; 3019[d]), within sixty days of the date of service of this Order with note of entry. CPLR 3019[d] provides, as herein relevant, that " . . .where a person not a party is alleged to be liable a summons and answer containing the counterclaim or cross-claim shall be filed, whereupon he or she shall become a defendant. Service upon such a defendant shall be by serving a summons and answer containing the counterclaim or cross-claim. Such defendant shall serve a reply or answer as if he or she were originally a party (NY CPLR §3019 (McKinney).