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April 27, 1992



The opinion of the court was delivered by: JOHN E. SPRIZZO



 Defendant in the above-captioned action moves to vacate a default judgment entered on September 12, 1988 pursuant to Fed. R. Civ. P. 60. On September 10, 1991, this Court held an evidentiary hearing on defendant's motion to vacate and found that service of process was proper. *fn1" See Order dated September 19, 1991. On November 12, 1991, this Court then heard Oral Argument on the issues of timeliness of defendant's motion to vacate and whether defendant has a meritorious defense to the action. For the reasons that follow, the defendant's motion to vacate the default judgment is denied.


 On July 2, 1986, Pierre DeMalleray ("DeMalleray") applied to Northwestern Mutual Life Insurance Company ("NML") for a disability income insurance policy and a disability overhead expense policy. In his application for the policies, defendant made various representations, including that in 1985, his gross earned income was $ 387,000, his net insurable income was $ 259,000, and his estimated insurable income for 1986 was $ 323,999.60. See Transcript ("Tr."), dated September 10, 1991 at 39 & Plaintiff's Hearing Exhibit ("Pl. Hr. Ex.") 6. Defendant also represented that within the past five years he had not been examined, advised or treated by any physician or practitioner other than Dr. Claude Forkner and that he had not received any medical testing except in connection with an examination by Dr. Forkner in December 1985. See Pl. Hr. Ex. 6. At the conclusion of the underwriting process, which included obtaining reports from Dr. Forkner, *fn2" NML issued the policies with certain exclusions. See Defendant's Notice of Motion to Vacate Default ("Def. Not.") at Ex. F.

 In November 1986, DeMalleray filed a request for disability benefits under the policies, claiming that he had become totally disabled from arthritis. See Pl. Hr. Exs. 15 & 16. NML initiated a routine investigation of defendant's claim, during which NML received a financial statement as well as what was represented to be defendant's 1985 income tax return, both of which were fully consistent with the financial representations defendant had made in his insurance application. See Pl. Hr. Exs. 11 & 14. In March 1987, NML paid defendant $ 27,000 in disability benefits on an accommodation basis, pending completion of its investigation. See Affidavit for Judgment by Default at P3; Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Vacate Default Judgment ("Pl. Opp.") at 5.

 In April 1987, NML received a report from Dr. Leon Root which stated that defendant had tested HIV III positive. See Pl. Opp. at 6; Def. Not. at P17. When questioned about this information, DeMalleray told NML's agent that he did not recall ever being tested for HIV III and that he did not recall mentioning it to Dr. Root. See Def. Not. at P16; Pl. Opp. at 6. Over the next several months, NML attempted to obtain more complete financial and medical information from defendant but was unsuccessful. See Pl. Opp. at 6-7. Consequently, NML commenced this action to rescind the policies and to recover the $ 27,000 paid to the defendant, alleging that DeMalleray had made material misrepresentations as to his income and as to a pre-existing medical condition. Defendant failed to appear and this Court entered a default judgment on September 12, 1988.


 Defendant first argues that the default should be vacated on the ground of defendant's lack of "actual knowledge of an action against him." See Memorandum of Law in Support of Motion to Vacate Default at 9. However, that contention is without merit because this Court has already found, after a full hearing, that DeMalleray was properly served and is therefore deemed to have notice of the claim against him. See Tr. at 157.

 In any event, defendant has failed to meet the criteria established by this Circuit for determining whether a Rule 60 (b) motion should be granted. *fn3" In applying Rule 60(b)(1), "courts have gone beyond the bare wording of the rule" and established certain criteria which should be considered in deciding whether a default should be vacated. Davis v. Musler, 713 F.2d 907, 915 (2d Cir. 1983). These criteria include (1) whether the default was willful; (2) whether defendant has a meritorious defense; and (3) the level of prejudice that may occur to the non-defaulting party if relief is granted. Id. at 915; Action S.A. v. Marc Rich & Co., 951 F.2d 504, 507 (2d Cir. 1991).

 Defendant argues that his default was not willful because service was made on his estranged wife at a residence that he had abandoned in July 1986. This contention is contradicted by the uncontroverted evidence establishing that defendant listed this same address as his domicile in numerous communications with NML subsequent to July 1986, and indeed, listed this address on an official application for a French passport in October 1986, four months after he claims to have abandoned his New York residence. See Pl. Hr. Exs. 15, 16 & 9; Tr. at 129-30.

 Moreover, the Court is unpersuaded as to the merits of DeMalleray's defense. Defendant asserts that his misrepresentation as to his income cannot be found to be material as a matter of law. *fn4" However, New York Insurance Law § 3105(b) states that a misrepresentation shall be material if the misrepresentation would have led to a refusal by the insurer to issue the specific policy it issued. New York Ins. Law § 3105(b) (McKinney 1985). Furthermore, under applicable New York law, although materiality is ordinarily a question of fact, "where the evidence concerning the materiality is clear and substantially uncontradicted, the matter is one of law for the court to determine." Mutual Benefit Life Ins., Co. v. JMR Elecs. Corp., 848 F.2d 30, 32 (2d Cir. 1988) (quoting Process Plants Corp. v. Beneficial Nat'l Life Ins. Co., 53 A.D.2d 214, 216, 385 N.Y.S.2d 308, 310 (1st Dep't 1976), aff'd mem., 42 N.Y.2d 928, 366 N.E.2d 1361, 397 N.Y.S.2d 1007 (1977)). In this case, DeMalleray represented his insurable income for 1985 to be $ 259,000, see Pl. Hr. Ex. 6, when in fact his actual insurable income was zero. *fn5" See Pl. Opp. at 5. Since NML's established company policy regarding disability insurance clearly mandated that no such insurance would issue absent at least $ 10,000 in insurable income, see Affidavit of Patricia D. Westphal (Sworn to Oct. 16, 1991) at 4 & Ex. A, the misrepresentation here was material as a matter of law. *fn6"

 Finally, NML would be prejudiced if the default is vacated. To establish prejudice, it must be shown that delay will result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion. Davis, 713 F.2d at 916. The vacation of the default judgment would prejudice NML because DeMalleray testified at his deposition that he has no records concerning his 1985 income. See Affidavit of Peter Jason ("Jason Aff.") (sworn to Oct. 17, 1991) at Ex. A, p. 89. Moreover, DeMalleray's accountant testified that all records have been sent to a warehouse and probably have been destroyed. See Jason Aff. at Ex. C, pp. 19-20. Thus, since there is a substantial ...

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