Scarabaggio v. Olympia & York Estates Co

In Scarabaggio v. Olympia & York Estates Co., 278 AD2d 476 [2d Dept 2000], affd 97 NY2d 95 [2001] the Appellate Division granted an extension for service of process in the interest of justice where one of the defendants had not been served, dismissal would bar a new action on statute of limitations grounds, plaintiff promptly moved for an extension after discovering that defendant had not been timely served, and defendant failed to demonstrate prejudice. Indeed, from the Court of Appeals' recitation of the facts, it appears to have been significant that defendant's insurer had actual notice of plaintiff's substantive claims before her attorney promptly moved for an extension of time within which to serve process and had communicated with plaintiff's counsel regarding the merits of plaintiff's claims. (Scarabaggio v. Olympia & York Estates Co., 97 NY2d at 106.) These facts appeared to belie defendant's later claims of prejudice. In affirming the Leader, Scarabaggio and Hafkin cases, the New York Court of Appeals confirmed that CPLR 306-b "empowers a court faced with the dismissal of a viable claim to consider any factor relevant to the exercise of its discretion [under the interest of justice standard]. No one factor is determinative--the calculus of the court's decision is dependent on the competing interests of the litigants and a clearly expressed desire by the Legislature that the interests of justice be served." (97 NY2d at 106.) Importantly, in this regard, the Court of Appeals clarified that for interest of justice analysis plaintiffs need not demonstrate "reasonable diligence" in the first instance as a trigger for further evaluation of other equitable factors. Rather, the Court held that "under the interest of justice standard, a showing of reasonable diligence in attempting to effect service is not a 'gatekeeper.' It is simply one of many relevant factors to be considered by the court." (97 NY2d at 104.) In other words, when considering the interest of justice, courts should view "diligence" as part of a mix of considerations which may include, among other factors, whether the statute of limitations has expired, the meritorious nature of plaintiff's claims, the length of delay in service, the promptness of plaintiff's request for the extension of time to serve, and any prejudice to the defendant. (97 NY2d at 105.) Courts may look to federal case law for guidance as to other relevant factors. (Id.)