The opinion of the court was delivered by: LOWE
MEMORANDUM OPINION AND ORDER
This is a diversity action for compensation for legal services rendered and for defamation. Defendants defaulted by failing to file a timely Answer to plaintiffs' Amended Complaint.
This action was thereafter referred to a Magistrate to determine damages under the second and third causes of action alleging defamation. By a Report dated November 1, 1979, United States Magistrate Harold J. Raby recommended that plaintiff John Meehan be awarded $ 1 in compensatory damages and $ 50,000 in punitive damages. Defendants have filed objections to Magistrate Raby's recommendation, and accordingly, this Court must make a de novo determination of the issues considered by the Magistrate. 28 U.S.C.A. § 636(b)(1)(C) (Supp.1980). For the reasons more fully set forth below, the report of Magistrate Raby is adopted with the modifications indicated herein.
Plaintiffs John F. Meehan ("Meehan") and Robert W. Fink are attorneys who formed a partnership in January, 1975, with their principal place of business in the Town of Goshen, County of Orange, New York State. Between December, 1973 and September, 1975, plaintiffs performed professional services for defendants. Plaintiffs allege for their first cause of action in their Amended Complaint, dated April 1, 1976, that defendants agreed to pay plaintiffs the reasonable value of their services together with disbursements, and that the sum of $ 14,339.26 is due and owing to plaintiffs for legal services rendered on defendants' behalf.
The second cause of action is that of plaintiff Meehan against defendant Judy Snow whereby plaintiff alleges that his good reputation as an attorney and his practice in the Town of Goshen, County of Orange, and surrounding counties were injured in that:
"(O)n or about the 28th day of July, 1975, defendant Judy Snow, while in the presence of James Mari and Helen Mari in the Town of Chester, County of Orange, State of New York, and referring to John Meehan's work in behalf of Judy Snow and John Snow, stated: that "He is incompetent', that "He messed up the sale of the house property to the owner of the Montgomery Nursing Home', and that "We lost $ 100,000 because of John Meehan', that "He really screwed everything up', and that "He goofed everything up'."
Plaintiff alleges that the above-quoted words are false and defamatory and "were known to the defendant Judy Snow to be false and defamatory and were spoken recklessly, carelessly, willfully and maliciously and with intent to damage plaintiff's good name and reputation as an attorney."
The third cause of action is that of plaintiff Meehan against defendant John Snow whereby plaintiff alleges that his good reputation as an attorney and his practice in the Town of Goshen, County of Orange, and surrounding counties were injured in that:
"(O)n or about the 7th day of October, 1975, the defendant John Snow, while in the presence of Martyn Taub, Esq., and Arthur Kabinoff in the Village of Suffern, Town of Ramapo, County of Rockland, State of New York, and referring to John Meehan's work in behalf of John Snow and his wife, Judy Snow, stated: that "When John should have been doing the job he was probably out playing golf', that "When he should have been doing the job, John told me he was out of town with his wife', and that "He was probably out drinking because he sounded like he didn't know what he was talking about whenever I spoke with him', and "Whenever I spoke with John he sounded like he was drinking; he didn't seem to remember from one time to the next what he said.' "
Plaintiff alleges that the above-quoted words are false and defamatory and "were known to the defendant John Snow to be false and defamatory, and were spoken recklessly, carelessly, willfully and maliciously and with intent to damage plaintiff's good name and reputation as an attorney."
By his Amended Complaint, plaintiff Meehan requests compensatory and punitive damages as against defendants John Snow and Judy Snow.
The Amended Complaint in this action was served on defendants' attorney on September 15, 1976. The defendants' Answer to the Amended Complaint was not timely served. Accordingly, plaintiffs moved for leave to enter a default judgment against defendants. The Honorable Henry F. Werker, in his Memorandum Decision, dated February 2, 1977, granted plaintiffs' motion for leave to file a default judgment and granted defendants thirty days within which to move to set aside their default. Defendants' motion pursuant to Rule 60(b)(1) to set aside the default judgment was denied by Judge Werker in his Memorandum Decision, filed July 22, 1977, on the grounds that defendants' counsel did not show excusable neglect such as to merit vacating the default.
The judgment entered on March 7, 1977, disposed of the first cause of action by directing that payment be made to plaintiffs for a specific sum of money. Said judgment further directed that a hearing be set to determine the damages claimed by plaintiff Meehan as to the second and third causes of action alleging defamation. By a Memo Endorsement, dated October 11, 1977, and a subsequent Order dated October 14, 1977, plaintiffs were stayed from causing execution and enforcement on the judgment as to the first cause of action until the entry of a final judgment on the second and third causes of action.
On December 12, 1977, Judge Werker ordered that this action be referred to Magistrate Sol Schreiber for purposes of conducting an inquest to determine damages on the second and third causes of action.
By an Order filed June 1, 1978, this action was reassigned to Judge Robert W. Sweet. On August 7, 1978, this action was reassigned to this Court. By an Order dated February 2, 1979, this Court referred this action to Magistrate Harold J. Raby for purposes of conducting an inquest as to damages on the second and third causes of action as set forth in the default judgment ...