Stephan B. Gleich & Assoc. v Gritsipis, 2011 NY Slip Op 05483 (App. Div., 2nd 2011)
The defendant's argument that the clerk of the court lacked authority to enter a judgment is raised for the first time on appeal. However, where, as here, an argument presents an issue of law appearing on the face of the record which could not have been avoided if raised at the proper juncture, it may be considered by an appellate court (see Parry v Murphy, 79 AD3d 713; Verde Elec. Corp. v Federal Ins. Co., 50 AD3d at 673; Chrostowski v Chow, 37 AD3d 638, 639; Beepat v James, 303 AD2d 345, 346; Hanna v Ford Motor Co., 252 AD2d 478). The nature of this appeal warrants the exercise of our discretion in reaching on its merits the issue of the propriety of the clerk's judgment.
CPLR 3215(a) allows a party to seek a default judgment by application to the clerk if the claim is "for a sum certain or for a sum which can by computation be made certain" (CPLR 3215[a]). Where the clerk is presented with the requisite proof, he or she "shall enter judgment for the amount demanded in the complaint or stated in the [summons with notice], plus costs and interest" (CPLR 3215[a]). While the statute directs that the amount of the judgment shall be the amount demanded in the complaint or summons with notice, the language has been interpreted by the Court of Appeals as allowing the plaintiff to elect a lesser sum (see McClelland v Climax Hosiery Mills, 252 NY 347, 352 [interpreting a similar predecessor statute, CPA 485]).
The limitation of clerk's judgments to claims for a "sum certain" "contemplates a situation in which, once liability has been established, there can be no dispute as to the amount due" (Reynolds Sec. v Underwriters Bank & Trust Co., 44 NY2d 568, 572; Pikulin v Mikshakov, 258 AD2d 450, 451). The statute is intended to apply to only the most liquidated and undisputable of claims, such as actions on money judgments and negotiable instruments (see Reynolds Sec. v Underwriters Bank & Trust Co., 44 NY2d at 572; Pikulin v Mikshakov, 258 AD2d at 451; Siegel, David D., NY Practice, at 477 [4th ed]).
On the face of the plaintiff's 1993 summons with notice, the plaintiff did not allege the existence of a written retainer agreement, and did not specifically describe the nature of the action as one for breach of contract. Furthermore, no copy of a retainer agreement was annexed to the affidavit of facts submitted to the clerk. The claim "to recover for legal services" may be viewed as stating a cause of action sounding in quantum meruit, for which there must be evidence of (1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services allegedly rendered (see AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d 6, 19; Cruz v McAneney, 31 AD3d 54, 59; Citibank, N.A. v Walker, 12 AD3d 480, 481). The cause of action alleging unjust enrichment, which is clearly stated in the summons with notice, requires proof that (1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered (see AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d at 19; Cruz v McAneney, 31 AD3d at 59; Citibank, N.A. v Walker, 12 AD3d at 481). Quantum meruit and unjust enrichment theories are equitable in nature, and are appropriate only if there is no valid and enforceable contract between the parties covering the dispute at issue (see AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d at 20; Hochman v LaRea, 14 AD3d 653, 654-655; Zuccarini v Ziff-Davis Media, 306 AD2d 404, 405; Old Salem Dev. Group v Town of Fishkill, 301 AD2d 639). Such causes of action are not for a sum certain and, therefore, are not eligible for the entry of a clerk's judgment under CPLR 3215(a) (see Ayers Mem. Animal Shelter, Inc. v Montgomery County Socy. for Prevention of Cruelty to Animals, 17 AD3d 904, 904-905 [quantum meruit]; Maxwell v First Port Jefferson Corp., 31 AD2d 813 [quantum meruit]).
By contrast, an account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and the balance due (see Landau v Weissman, 78 AD3d 661; Jim-Mar Corp. v Aquatic Constr., 195 AD2d 868, 869). By retaining billing statements and failing to object to the account within a reasonable time, the recipient of the bill implies that he or she agrees with the sender regarding the amount owed (see Rodkinson v Haecker, 248 NY 480, 485; American Express Centurion Bank v Cutler, 81 AD3d 761, 762; Landau v Weissman, 78 AD3d at 661; O'Connell & Aronowitz v Gullo, 229 AD2d 637, 638; Ruskin, Moscou, Evans & Faltischek v FGH Realty Credit Corp., 228 AD2d 294, 295-296; Shea & Gould v Burr, 194 AD2d 369, 370; Rosenman Colin Freund Lewis & Cohen v Edelman, 160 AD2d 626; Brown Rudnick Berlack Israels LLP v Zelmanovitch, 11 Misc 3d 1090[A], 2006 NY Slip Op 50800[U], *5). Generally, an account stated may qualify for relief under CPLR 3215 (see Cavalry Portfolio Servs., LLC v Reisman, 55 AD3d 524; Imperial Medical Supply & Surgical Sup. v Country Wide Ins. Co., 2002 NY Slip Op 50352[U] n 6; cf. Commissioners of State Ins. Fund v Khondoker, 55 AD3d 525).
The Appellate Division, First Department, directly addressed the question of whether a clerk may enter a judgment pursuant to CPLR 3215(a) when one or more causes of action in a plaintiff's pleading is for a sum certain and one or more other causes of action is not. It held, in Geer, Du Bois & Co. v Scott & Sons Co. (25 AD2d 423), that a clerk is without authority to enter a judgment under such circumstances (id.; see Gaynor & Bass v Arcadipane, 268 AD2d 296; Bouker Contr. Co. v Neale, 161 App Div 617). Although the First Department did not explain its reasoning, we find its result to be sound. A clerk entering a judgment for a sum certain, in actions where other nonconforming causes of action also are alleged, would, in effect, be severing the nonconforming causes of action from the pleading or, viewed another way, be rendering academic the nonconforming causes of action. Such action is more in the nature of a judicial function than a ministerial function of the type contemplated for a clerk by CPLR 3215(a) (see Reynolds Sec. v Underwriters Bank & Trust Co., 44 NY2d at 572). Accordingly, as the plaintiff's summons with notice asserted equitable causes of action that were not, by definition, for a sum certain, the Nassau County Clerk was without statutory authority to render a clerk's judgment (see Geer Du Bois & Co. v Scott & Sons, Inc., 25 AD2d at 423; Bouker Contr. Co. v Neale, 161 App Div at 617).
Our finding that the clerk's judgment is void raises a secondary issue, namely, whether vacating the clerk's judgment also requires the vacatur of the underlying finding that the defendant was in default or, alternatively, whether upon vacatur, the underlying default finding remains intact and the matter should be remitted to the Supreme Court only to conduct an inquest on damages. In certain cases, the Appellate Divisions have vacated the clerks' judgments only and remitted the matters for inquests (see Fidelity Natl. Tit. Ins. Co. v Valtech Research, Inc., 73 AD3d 686, 687; General Elec. Tech. Servs. Co. v Perez, 156 AD2d 781, 784; Woodward v Eighmie Moving & Stor., 151 AD2d 892, 893; Falso v Norton, 89 AD2d 635, 635-636). In other cases, the Appellate Divisions made clear that the vacatur of the clerks' judgments has the effect of also vacating the underlying finding that the defendants were in default (see Gaynor & Bass v Arcadipane, 268 AD2d at 297; Gibbs v Hoot Owl Sportsman's Club, 257 AD2d 942, 943; Action Lawn & Landscaping v East Glenville Fire Dist., 254 AD2d 585, 587; Jannon v Van Buskirk, 227 AD2d 844, 844-845; Maxwell v First Port Jefferson Corp., 31 AD2d at 813; Geer, Du Bois & Co. v Scott & Sons Co., 25 AD2d at 423).
These seemingly inconsistent cases can be reconciled. In the first set of cases, the issue of whether to vacate the defendants' defaults pursuant to CPLR 5015, on the basis that a reasonable excuse and a potentially meritorious defense were presented, was before the Courts, and the Appellate Divisions concluded in each instance that the defendants failed to establish either reasonable excuses for their respective defaults or potentially meritorious defenses. Since there was no basis to vacate the underlying defaults on the papers submitted in those cases, the only procedures that remained to be undertaken, where the clerks' judgments were found to be unauthorized, were inquests on damages (see Reynolds Sec. v Underwriters Bank & Trust Co., 44 NY2d at 573-574; General Elec. Tech. Servs. Co. v Perez, 156 AD2d 781; Woodward v Eighmie Moving & Stor. 151 AD2d at 893; Falso v Norton, 89 AD2d at 635-636; Fidelity Natl. Tit. Ins. Co. v Valtech Research, Inc., 73 AD3d at 687). By contrast, in the other set of cases, the vacatur of the defendants' underlying defaults was not raised as an issue (see Gibbs v Hoot Owl Sportsman's Club, 257 AD2d at 943; Maxwell v First Port Jefferson Corp., 31 AD2d at 813; Geer, Du Bois & Co. v Scott & Sons Co., 25 AD2d at 423), the defendants' defaults were found on appeal to be excusable so that the actions reverted to their pre-default status (see Gaynor & Bass v Arcadipane, 268 AD2d at 297; Action Lawn & Landscaping v East Glenville Fire Dist., 254 AD2d at 587), or the defendant's default was unresolved upon further application to the Supreme Court to permit service of a late answer (see Jannon v Van Buskirk, 227 AD2d at 844-845). Accordingly, where a defendant's default is found to be excusable, or at least subject to further proceedings at the Supreme Court, the clerk's judgment must be vacated, along with any underlying finding that the defendant was in default.
Here, the Supreme Court found that in the 1993 action, the defendant has demonstrated neither a reasonable excuse for his underlying default nor a potentially meritorious defense to that action. Its finding, which we are affirming on appeal, establishes the law of the case that the defendant is in default and is not entitled to vacatur of the judgment pursuant to CPLR 5015(a). The only remaining action to be undertaken beyond the vacatur of the clerk's judgment is the conduct of a damages inquest on any cause of action asserted in the 1993 summons with notice (see General Elec. Tech. Servs. Co. v Perez, 156 AD2d at 784; Falso v Norton, 89 AD2d at 635-636; Fidelity Natl. Tit. Ins. Co. v Valtech Research Inc., 73 AD3d at 687).
We note that pursuant to CPLR 3012(d), a defendant who has failed to timely appear in an action may move to compel the plaintiff's acceptance of an untimely answer "upon such terms as may be just and upon a showing of reasonable excuse for [the] delay or default" (CPLR 3012[d]; see New York & Presbyt. Hosp. v Auto One Ins. Co., 28 AD3d 441; Beecher v State Farm Mut. Auto. Ins. Co., 186 AD2d 1012). We find that the showing of reasonable excuse that a defendant must establish to be entitled to serve a late answer under CPLR 3012(d) is the same as that which a defendant must make to be entitled to the vacatur of a default under CPLR 5015(a)(1). Since the defendant here has been found to lack a reasonable excuse for his failure to timely appear on the 1993 action, the law of the case forecloses any further remedy under CPLR 3012(d), again leading to the conclusion that an inquest on damages is all that remains for the Supreme Court (see General Elec. Tech. Servs. Co. v Perez, 156 AD2d at 784; Falso v Norton, 89 AD2d at 635-636; cf. Jannon v Van Buskirk, 227 AD2d at 844-845).
We do not suggest that plaintiffs who assert alternative legal and equitable causes of action are always foreclosed from obtaining clerks' judgments under CPLR 3215(a). Plaintiffs' attorneys do not know at the time they draft summonses with notice or complaints that the defendant will fail to appear and answer, and accordingly, all potential causes of action will typically be included. Plaintiffs who later seek a clerk's judgment, instead of applying to the court itself, may be able to avail themselves of CPLR 3217(a)(1), which allows the voluntary discontinuance of any claim, without leave of court, at any time before a responsive pleading is served or within 20 days after service of the pleading asserting the claim, whichever is earlier. If plaintiffs seeking to discontinue non-sum certain causes of action do not meet the time requirements of CPLR 3217(a)(1), they could then move before the court to discontinue pursuant to CPLR 3217(b). It would seem, however, that seeking court intervention to discontinue non-sum certain causes of action would defeat the purpose of seeking a clerk's judgment in the first instance. In any event, assuming the time requirements for a voluntary discontinuance are met, a plaintiff's affidavit of facts, submitted in support of the entry of the clerk's judgment, can include an expressed voluntary discontinuance of all causes of action except for the cause of action seeking a sum certain. Upon the voluntary discontinuance of all claims that do not fall within the scope of CPLR 3215(a), the clerk would then be authorized to enter a judgment upon the submitted proof of the sum certain amount demanded (cf. Time Warner City Cable v TriState Auto, 5 AD3d 153). Here, the plaintiff did not seek to discontinue the non-sum certain causes of action prior to submitting its affidavit of facts to the clerk, rendering the clerk's judgment infirm.
Given the defendant's default in this action and other circumstances in the record, the 1994 clerk's judgment affected by this opinion and order shall stand as security pending the assessment of damages and, during that time, the plaintiff shall be enjoined from enforcing that judgment (see Reynolds Sec. v Underwriters Bank & Trust Co., 44 NY2d at 574; Woodward v Eighmie Moving & Stor., 151 AD2d at 893).