Legal Question in Civil Litigation in New York
technical default
I and another party were served a complaint in September. Before the 30 days to answer my atty sent a letter to the opposing counsel and asked for an extension to answer but was never signed by opposing counsel. At the same time, a letter was sent to the ins co asking to cover us as this was a case of a corporation suing former bd members. There was NO response from the ins co except that when my atty contacted the ins co by phone, he was told that opposing counsel advised the ins co not to cover us. My atty did not want to answer the complaint until he had a formal response from the ins co. My atty sent another letter to opposing counsel on December 10th asking for an extension to answer which met no response. Again, at the same time, a letter went to the ins co advising them that they had 10 days to say yes or no to coverage or we were moving to file a counterclaim. Again no response. The plaintiff's have made no move, not even to file for a default judgment against us. I want to know if the fact that they are not proceeding with any formal motion or judgment against us as an indication that they will rely on a technical default to have our counterclaim dismissed?
2 Answers from Attorneys
Re: technical default
There is something that you should know about plaintiff's lawyers and litigation that may answer your question. Plaintiffs' lawyers usually take cases on a contingency fee basis, which means no fee unless they win. In case a plaintiff's attorney wins he needs a deep pocket- like an insurance company to pay. No deep pocket equals no $.therefore, the plaintiff cares as much (or even more) than you that you have insurance. That may be the reason why they have not moved for default.
Re: technical default
Absent a written confirmation from opposing counsel that the time to answer has been extended, it is, at least in my view, not prudent to fail to file an answer. The cost of the answer is far less than having to defend a motion seeking a default.
If you have D&O insurance, my firm has considerable experience working with insurers. While a letter should have been sufficient to initiate your claim, simply waiting indefinitely for a reply from the insurer is no more prudent than failing to file the answer.
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