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Yurkov-Shkolnik v. Allstate Life Insurance Company of New York

September 2, 2008

LARISA YURKOV-SHKOLNIK, PLAINTIFF,
v.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
VALENTINA MINAKOVA, THIRD-PARTY DEFENDANT/COUNTERCLAIMANT AND CROSS-CLAIMANT
v.
EUGENE PERCHIKOV AND PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, ADDITIONAL CROSS-CLAIM DEFENDANTS.



The opinion of the court was delivered by: Robert L. Carter, District Judge

OPINION

INTRODUCTION

Pursuant to Rules 55(c) and 60(b), F.R. Civ. P., plaintiff Larisa Yurkov-Shkolnik ("Yurkov-Shkolnik") moves to vacate the court's December 28, 2006 Order entering default judgment against her with respect to Allstate Life Insurance Company of New York's ("Allstate Life") Counterclaim. The December 28, 2006 Order determined that Allstate Life was not obligated to pay Yurkov-Shkolnik the proceeds of a disputed life insurance policy. Additionally, Yurkov-Shkolnik moves to vacate the court's January 16, 2007 default judgment against her with respect to the Cross-Claim of Valentina Minakova ("Minakova"). Yurkov-Shkolnik argues that both default judgments should be set aside for noncompliance with Federal and Local Rules of Civil Procedure. For the following reasons, Yurkov-Shkolnik's motions to vacate the default judgments in favor of Allstate Life and Minakova are DENIED.

BACKGROUND

Allstate Life issued a life insurance policy for Tatiana Korkhova ("Korkhova"). This policy named Yurkov-Shkolnik as the primary beneficiary and Minakova as the contingent beneficiary. Korkhova is now deceased and Yurkov-Shkolnik claims that she is entitled to the proceeds of the policy as the primary beneficiary. Minakova contends that Yurkov-Shkolnik is not entitled to the proceeds of the policy under New York law because Yurkov-Shkolnik and cross-claim defendant Eugene Perchikov conspired to murder Korkhova in furtherance of an insurance fraud scheme. Allstate Life argues that it is not obligated to pay anyone the proceeds of the insurance policy given these allegations of fraud.

Yurkov-Shkolnik corresponded with Allstate Life from approximately December 2004 to September 2005 in an attempt to claim the insurance proceeds. Ultimately, she was unable to obtain the insurance proceeds from Allstate Life. Consequently, Yurkov-Shkolnik retained the services of Arkady Bukh, Esquire ("Bukh") and his law firm Bukh & Associates to initiate a lawsuit against Allstate Life. Yurkov-Shkolnik executed a statutory short form power of attorney, giving Bukh the power to represent her in all insurance maters. Bukh & Associates initiated Yurkov-Shkolnik's lawsuit against Allstate Life on June 16, 2006 by filing the Verified Complaint in the Supreme Court of the State of New York, New York County.

On July 19, 2006, Yurkov-Shkolnik's case was removed to the Southern District of New York. Allstate Life sought declaratory judgments on July 24, 2006 establishing that both Yurkov-Shkolnik and Minakova were not entitled to the insurance proceeds. Yurkov-Shkolnik did not respond to Allstate Life's action and the court entered an order granting default judgment against her on December 28, 2006. Minakova also moved for an order of default judgment against Yurkov-Shkolnik on January 8, 2007. On January 16, 2007, the court entered an order granting default judgment in favor of Minakova. This default judgment paralleled the December 28, 2006 Order in Allstate Life's favor by disqualifying Yurkov-Shkolnik from receiving any of the insurance proceeds. Yurkov-Shkolnik now moves to vacate the default judgments in favor of Allstate Life and Minakova.

DISCUSSION

Yurkov-Shkolnik contends that both the Allstate Life and the Minakova default judgments should be set aside for the following reasons: (1) Allstate Life and Minakova did not comply with the Federal Rules of Civil Procedure or the Local Rules of the United States District Court for the Southern District of New York for the entry of default or the entry of default judgment; (2) assuming arguendo that default was properly entered pursuant to the Federal Rules of Civil Procedure and Local Rules, both judgments should be set aside pursuant to Rule 55(c), F.R. Civ. P.; and (3) assuming arguendo that both default judgments were properly entered pursuant to the Federal Rules of Civil Procedure and Local Rules, both judgments should be vacated pursuant to Rule 60(b), F.R. Civ. P.

I.

Yurkov-Shkolnik argues that pursuant to Rule 55, F.R. Civ. P. and Local Rules 55.1 and 55.2, the default judgments in favor of Allstate Life and Minakova should be set aside. In the main, she asserts that default was not properly entered with regard to the Allstate Life and the Minakova orders. Rule 55(a), F.R. Civ. P. requires that "when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default." Rule 55(a), F.R. Civ. P. Additionally, Yurkov-Shkolnik argues that Local Rule 55.1 provides that a party seeking default must apply for a certificate of default by submitting an affidavit showing, "(1) that the party against whom a notation of default is sought is not an infant, in the military, or an incompetent person; (2) that the party has failed to plead or otherwise defend the action; and (3) that the pleading to which no response has been made was properly served." Local Civil Rule 55.1. According to Yurkov-Shkolnik, Allstate Life and Minakova have not complied with the above-mentioned rules, especially with regards to the submission of affidavit evidence and proper notice to the defaulting party.

As a result of the improper entry of default for the Allstate Life and Minakova judgments, Yurkov-Shkolnik contends that as a preliminary matter the default judgments at issue are necessarily improper. More specifically, she argues that Allstate Life and Minakova did not comply with Rule 55(b)(1), F.R. Civ. P., which states that "the clerk upon request of the plaintiff and upon affidavit of the amount due shall enter judgment for that amount and costs" where the defaulting party has failed to appear. Rule 55(b)(1), F.R. Civ. P. Yurkov-Shkolnik maintains that Allstate Life and Minakova should have applied for their default judgments with the clerk rather than the court. She adds that Rule 55(b)(2), F.R. Civ. P. mandates that "in all other cases the party entitled to a judgment by default shall apply to the court therefor". Rule 55(b)(2), F.R. Civ. P.

Even assuming that there was noncompliance with Local Rules, the court is not persuaded that noncompliance warrants vacating the default judgments in favor of Allstate Life and Minakova since the United States Court of Appeals for the Second Circuit has made it clear that the court has broad discretion to excuse noncompliance with Local Rules. Wight v. BankAmerica Corp., 219 F.3d 79, 85 (2d Cir. 2000); Association for Retarded Citizens of Connecticut, Inc. v. Garethorne, 68 F.3d 547, 553-54 (2d Cir. 1995); Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1048-49 (2d Cir. 1991). In fact, the Second Circuit has held that the court has such discretion as to all Local Rules, without distinction among them. See Wight v. BankAmerica Corp., 219 F.3d at 85; see also Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d at 1048-49.

As for Rule 55(b)(2), F.R. Civ. P., the court finds that both judgments were properly entered. Contrary to Yurkov-Shkolnik's contentions, Rule 55(b)(2), F.R. Civ. P. states that an application for default judgment must be made to the court. Rule 55(b)(2), F.R. Civ. P. The Allstate Life and Minakova default judgments did not have to be entered by the clerk pursuant to Rule 55(b)(1), F.R. Civ. P. because the judgments were not for "a sum certain or for a sum which can by computation be made certain". Rule 55(b)(1), F.R. Civ. P. Both default judgments declared that Yurkov-Shkolnik was not entitled ...


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