Entry of judgment: You Snooze, You Lose!

Young adult man looking at his smart phone with a shocked, surprised but slightly comical expression. The photo illustrates an article by Richard Klass about default judgment.

The subcontractors brought an action against the general contractor and its principal alleging breach of an oral contract made in January 2007 for failing to pay for construction services rendered on a building located in Flushing. The action was dismissed as to the individual and the subcontractors’ request for a default judgment against the general contractor was denied. The subcontractor then brought an action against the contractor who hired them alleging breach of the oral contract; however,they were unable to collect on the judgment because the corporation was out of business.

Queens County action

The subcontractors then brought an action in the Supreme Court, Queens County only against the property owner, alleging unjust enrichment for the contracting services rendered by them. Despite service of the Summons and Complaint in 2011, the plaintiffs did not seek the entry of a default within one year thereafter.

Kings County action

The subcontractors then brought yet another action in the Supreme Court, Kings County against the general contractor, contractor and property owner, alleging both breach of contract and unjust enrichment. A default judgment was granted in their favor against all of the defendants except for the property owner. The property owner moved for dismissal of the action, which was granted.

Back to Queens

In 2017, the subcontractors moved for a default judgment against the property owner in the 2011 action.

In response to the motion, the property owner retained Richard A. Klass, Your Court Street Lawyer. The property owner cross-moved, pursuant to CPLR 3215(c), for dismissal of the action based upon the failure to take proceedings for entry of judgment within one year after the default. By Order dated April 6, 2018, the Supreme Court denied the motion for a default judgment and granted the cross-motion for dismissal of the action. The Court held that “plaintiff’s counsel fails to proffer a reasonable excuse for its delay in timely making the instant application. After reviewing the extensive procedural history of the case and companion cases, it remains unclear why plaintiffs waited almost two years after [the court] dismissed their identical claim in Kings County to seek a default judgment against the defendant in this action.”

The Court further rejected the claim made in opposition to the cross-motion that the matter should not be deemed abandoned. Specifically, the court held, “While plaintiffs may contend they were in settlement negotiations and other litigation activity with the defendant, those activities ceased in May of 2015 when the matter was dismissed. In addition, plaintiffs fail to explain why it commenced a second action including the defendant in Kings County after it had already commenced the instant action or why they then let the instant matter linger over five and half years.”

Failure to take proceedings within one year after default

The subcontractors appealed the Supreme Court Order to the Appellate Division, Second Department. In affirming the Order and dismissing the appeal, the appellate court held, in Karamuco v Gavriel Plaza, Inc., 172 AD3d 832, 833 [2d Dept 2019]:

“CPLR 3215(c) provides that ‘[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned . . . unless sufficient cause is shown why the complaint should not be dismissed”’ (Myoung Ja Kim v Wilson, 150 AD3d 1019, 1020, quoting CPLR 3215[c]). This statute is strictly construed, as “[t]he language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned” (Giglio v NTIMP, Inc., 86 AD3d 301, 307-308; see Ibrahim v Nablus Sweets Corp., 161 AD3d 961, 963; HSBC Bank USA, N.A. v Grella, 145 AD3d 669, 671).

The statute further provides, however, that the failure to timely seek a default may be excused if “‘sufficient cause is shown why the complaint should not be dismissed’” (HSBC Bank USA, N.A. v Grella, 145 AD3d at 671, quoting CPLR 3215[c]; see Ibrahim v Nablus Sweets Corp., 161 AD3d 961, 963). To establish the sufficient cause required by CPLR 3215(c), “the party opposing dismissal must demonstrate that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action” (Aurora Loan Servs., LLC v Hiyo, 130 AD3d 763, 764; see Ibrahim v Nablus Sweets Corp., 161 AD3d at 963; Wells Fargo Bank, N.A. v Bonanno, 146 AD3d 844, 845-846). The determination of whether an excuse is reasonable is committed to the sound discretion of the motion court (see Bank of N.Y. Mellon v Izmirligil, 144 AD3d 1067, 1069; Baruch v Nassau County, 134 AD3d 658, 659).”

Here, the plaintiffs took no proceedings for the entry of a default judgment within one year following the defendant’s default, and they failed to establish a reasonable excuse for their delay in moving for leave to enter a default judgment. Accordingly, the lawsuit was dismissed.

R. A. Klass
Your Court Street Lawyer

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Important for parties in litigation to appear before court on all conferences and motion hearing dates

Important for parties in litigation to appear before court on all conferences and motion hearing dates

It is very important for parties in litigation to appear before the court on all conferences and motion hearing dates. In a recent legal malpractice case (Stein v Davidow, Davidow, Siegel & Stern, LLP, 157 AD3d 741, 742–43 [2d Dept 2018] , the court denied the plaintiffs’ motion to vacate their default. The court held that:

In order to vacate a default in appearing at a scheduled court conference, a plaintiff must demonstrate both a reasonable excuse for the default and a potentially meritorious cause of action (see CPLR 5015[a] [1]; Wright v. City of Poughkeepsie, 136 A.D.3d 809, 809, 24 N.Y.S.3d 523; Mazzio v. Jennings, 128 A.D.3d 1032, 1032, 8 N.Y.S.3d 596; Hanscom v. Goldman, 109 A.D.3d 964, 965, 972 N.Y.S.2d 76). A determination of whether an excuse is reasonable lies within the sound discretion of the Supreme Court (see GMAC Mtge., LLC v. Guccione, 127 A.D.3d 1136, 1138, 9 N.Y.S.3d 83; Herrera v. MTA Bus Co., 100 A.D.3d 962, 963, 954 N.Y.S.2d 631).

 Here, the Supreme Court providently exercised its discretion in determining that the plaintiffs did not offer a reasonable excuse for their default. Neither the fact that Stein was proceeding pro se nor his claims that he was unaware of the consequences of failing to appear constitute a reasonable excuse (see U.S. Bank N.A. v. Slavinski, 78 A.D.3d 1167, 1167, 912 N.Y.S.2d 285; Dorrer v. Berry, 37 A.D.3d 519, 520, 830 N.Y.S.2d 277). The plaintiffs’ remaining arguments to support their contention that their default should be excused are improperly raised for the first time on appeal, and have not been considered by this Court *743 see Tulino v. Tulino, 148 A.D.3d 755, 757, 48 N.Y.S.3d 258; Point Holding, LLC v. Crittenden, 119 A.D.3d 918, 920, 990 N.Y.S.2d 575).

As the plaintiffs failed to offer a reasonable excuse for their default, the issue of whether the plaintiffs had a potentially meritorious cause of action need not be addressed (see U.S. Bank, N.A. v. Dorvelus, 140 A.D.3d 850, 852, 32 N.Y.S.3d 631; Vested Bus. Brokers, Ltd. v. Ragone, 131 A.D.3d 1232, 1234, 17 N.Y.S.3d 447; Abdelqader v. Abdelqader, 120 A.D.3d 1275, 1276, 993 N.Y.S.2d 71). Accordingly, the Supreme Court properly denied the plaintiffs’ motion pursuant to CPLR 5015(a)(1) to vacate their default.

– R. A. Klass
Your Court Street Lawyer

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Vacatur of a Default Judgment

Party seeking to vacate its default must act in good faith.

Vacatur of a default judgment

Where a moving party seeking vacatur of a default judgment has exercised a lack of good faith, or has been dilatory in asserting its rights, the court’s discretionary power to relieve a party from its judgment should be subordinated to the policy favoring the finality of judgments. Greenwich Sav. Bank v. JAJ Carpet Mart, Inc., 126 AD2d 451, 453 [1st Dept 1987].

Defendant must provide a reasonable excuse for its lengthy delay in moving to vacate the default judgment. Bekker v. Fleischman, 35 A.D.3d 334 [2d Dept. 2002].

Case law has continually held that a delay of more than a year despite the defendant’s awareness of all the relevant facts surrounding the issue is unreasonable. Bank of New York v. Stradford, 55 A.D.3d 765 [2d Dept. 2008].

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Defendant must prove excusable default

Defendant must prove an excusable default before showing a meritorious defense to vacate his default.

Although CPLR 5015(a) provides that upon defendant’s provision of a reasonable excuse and a meritorious defense, the court may, upon its own discretion, vacate a default within one year of the judgment, if the court does not find that the defendant has provided a reasonable excuse for its default, the court need not reach the question of whether defendant has meritorious defense. If a defendant fails to establish a reasonable excuse for its default it is unnecessary to consider whether it sufficiently demonstrated the existence of a potentially meritorious defense” Reich v. Redley, 96 AD3d 1038, 1039 [2d Dept 2012]; Lane v. Smith, 84 AD3d 746, 748 [2d Dept. 2011]. If defendant failed to demonstrate a reasonable excuse under CPLR 5015 (a)(1) for its pattern of willful default and neglect (see Campbell-Jarvis v. Alves, 68 AD3d 701, 702 [2009]; Roussodimou v. Zafiriadis, 238 AD2d 568, 569 [1997]; Merwitz v. Dental Care Servs., 155 AD2d 748, 750 [1989]), the question of whether the defendant asserted a potentially meritorious defense need not be reached in view of the foregoing. (see Burnett v. Renne, 32 AD3d 449, 450 [2006]). Jackson v. Professional Transp. Corp., 81 AD3d 602, 603 [2d Dept 2011].

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CPLR 3215: default judgment

CPLR 3215: when defendant fails to appear in an action, plaintiff may seek default judgment

Plaintiff must move for a default judgment within one year.

CPLR 3215 provides that, when a defendant has failed to appear in an action, the plaintiff may seek a default judgment against him. However, the plaintiff is required to do so within one year after the default, as required by subsection (c) thereof:

Default not entered within one year:

If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed. A motion by the defendant under this subdivision does not constitute an appearance in the action. According to the provisions of the above subsection, this Court should have dismissed the Complaint as abandoned, based upon Plaintiff’s failure to take proceedings for the entry of default within one year. Numerous cases have held that dismissal of the Complaint is required when there has been a failure to take timely proceedings for entry of default. See, e.g., Saunders v. Central Brooklyn Coordinating Council, Inc., 273 AD2d 294 (2d Dept. 2000); PM-OK Associates v. Britz, 256 AD2d 151 (1st Dept. 1998); Lancaster v. Kindor, 98 AD2d 300 (1st Dept. 1984), dismissal denied 64 NY2d 1013, affirmed 65 NY2d 804.

The Second Department has held, in Winkelman v. H&S Beer and Soda Discounts Inc., 91 AD2d 660 (1982), that, absent a justifiable excuse and a showing that the action is meritorious, the plaintiff’s failure to enter a default judgment against the defendant within one year of the latter’s default mandates dismissal of the action against defendant as abandoned. See, also, Rafiq v. Weston, 171 AD2d 783 (2d Dept. 1991). Plaintiff did not allege any excuse in its motion papers for its failure to take timely proceedings.

Default Judgments

NYCCA Section 1402 authorizes the entry of a default judgment where the requirements of CPLR 3215 are complied with. A default judgment may result when:

• A defendant fails to timely answer a summons and complaint

• A plaintiff or defendant fails to appear for a scheduled court appearance (i.e., trial, pre-trial, pre-arbitration)

• A Third party defendant or a defendant served with a cross-claim defaults in answering or appearing at a trial. (A third-party judgment or cross-claim judgment cannot be entered until a judgment is entered on the original claim between the plaintiff and defendant.)

A default judgment may not be entered against a plaintiff based only on a failure of the plaintiff to reply to a counterclaim (unless court ordered) since the counterclaim is deemed denied by the plaintiff.

Liquidated – Sum Certain

Based on CPLR 3215(a), the judgment clerk may only enter a judgment on amounts for a “sum certain” or for a sum which can be made certain by computation.

If the sum demanded in the cause of action is for a sum certain (i.e., breach of contract, goods sold and delivered, promissory note) or based upon a default on a stipulation pursuant to CPLR Section 3215(i) and 5003-a, you may submit an application for a default judgment directly to the clerk.

Under some circumstances, an account stated can be entered as an agreed upon amount. For more information, you can read the court’s directives on  opens in a new windowEntry of Judgment: Account Stated and  opens in a new windowDefault Judgments on Hospital and Attorney Bills.

Unliquidated – Not a Sum Certain

If the sum demanded is an unliquidated sum (i.e, personal injury, property damage) and does not meet the requirements of CPLR 3215, you must file a Notice of Inquest with the clerk and pay the fee, which is the same fee as a Notice of Trial. To find out the amount of the fee, refer to  opens in a new windowCourt Fees. After the Notice of Inquest is filed, the clerk will place the case on the calendar for an inquest before the Court for assessment of the dollar amount of damages. See Uniform Rules of the Civil Court 208.32. After the assessment, you may file a judgment with the clerk.

More information on:  opens in a new windowInterest opens in a new windowCosts or  opens in a new windowDisbursements.

CPLR 3215(c) provides, in pertinent part…

CPLR 3215(c) provides, in pertinent part, that “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed.”

The Second Department held, in Pipinias v. J. Sackaris & Sons, Inc., 116 A.D.3d 749, 983 N.Y.S.2d 587 [2 Dept. 2014], lv. denied 24 N.Y.3d 990, 995 N.Y.S.2d 707 [2014], “The language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned” (Giglio v. NTIMP, Inc., 86 A.D.3d 301, 307–308, 926 N.Y.S.2d 546; see Butindaro v. Grinberg, 57 A.D.3d 932, 871 N.Y.S.2d 317; DuBois v. Roslyn Natl. Mtge. Corp., 52 A.D.3d 564, 565, 861 N.Y.S.2d 73; County of Nassau v. Chmela, 45 A.D.3d 722, 722, 846 N.Y.S.2d 299; Kay Waterproofing Corp. v. Ray Realty Fulton, Inc., 23 A.D.3d 624, 625, 804 N.Y.S.2d 815).

Plaintiffs have any shown ANY cause for failure to take proceedings within 1 year of default:

As held, in Pipinias v. J. Sackaris & Sons, Inc., supra, “The one exception to the otherwise mandatory language of CPLR 3215(c) is that the failure to timely seek a default on an unanswered complaint or counterclaim may be excused if ‘sufficient cause is shown why the complaint should not be dismissed’ ” (Giglio v. NTIMP, Inc., 86 A.D.3d at 308, 926 N.Y.S.2d 546, quoting CPLR 3215[c] ). “This Court has interpreted this language as requiring both a reasonable excuse for the delay in timely moving for a default judgment, plus a demonstration that the cause of action is potentially meritorious” (Giglio v. NTIMP, Inc., 86 A.D.3d at 308, 926 N.Y.S.2d 546; see Ryant v. Bullock, 77 A.D.3d 811, 811, 908 N.Y.S.2d 884; Solano v. Castro, 72 A.D.3d 932, 932–933, 902 N.Y.S.2d 95; 115–41 St. Albans Holding Corp. v. Estate of Harrison, 71 A.D.3d 653, 653, 894 N.Y.S.2d 896; Sicurella v. 111 Chelsea, LLC, 67 A.D.3d 996, 996, 888 N.Y.S.2d 752; DuBois v. Roslyn Natl. Mtge. Corp., 52 A.D.3d at 565, 861 N.Y.S.2d 73; County of Nassau v. Chmela, 45 A.D.3d at 722, 846 N.Y.S.2d 299; Durr v. New York Community Hosp., 43 A.D.3d 388, 389, 840 N.Y.S.2d 430; Costello v. Reilly, 36 A.D.3d 581, 581, 828 N.Y.S.2d 172; Kay Waterproofing Corp. v. Ray Realty Fulton, Inc., 23 A.D.3d at 625, 804 N.Y.S.2d 815;  London v. Iceland Inc., 306 A.D.2d 517, 517, 761 N.Y.S.2d 862).

Contact the Law Office of Richard Klass for further information about CPLR 3215.

– R. A. Klass
Your Court Street Lawyer

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Defendants Failed to Provide a Reasonable Excuse to Vacate their Default

CPLR 5015(a)(1) provides:

(a) On motion. The court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of: 1. excusable default, if such motion is made within one year after service of a copy of the judgment or order with written notice of its entry upon the moving party, or, if the moving party has entered the judgment or order, within one year after such entry;

Defendants have failed to meet their burden to establish that service upon them of the Summons and Complaint was not proper. In New York, a process server’s affidavit constitutes prima facie evidence of proper service. See Kaywood v. Cigpak, Inc., 258 A.D.2d 623, 685 N.Y.S.2d 770 (2d Dep’t 1999); Wieck v. Halpern, 255 A.D.2d 438, 680 N.Y.S.2d 599 (2d Dep’t 1998); Simmons First Natl. Bank v. Mandracchia, 248 A.D.2d 375, 699 N.Y.S.2d (2d Dep’t 1998); Remington Invs. v. Seiden, 240 A.D.2d 647, 658 N.Y.S. 696 (2d Dep’t 1997).

To rebut the presumption of service, the Defendant is required to provide an affidavit wherein he swears to specific facts to rebut the statements in the process server’s affidavit. See Simmonds v. Grobman, 277 A.D.2d 369, 716 N.Y.S.2d 692 (2d Dep’t 2000); Genway Corp. v. Elgut, 177 A.D.2d 467, 575 N.Y.S.2d 889 (2d Dep’t 1991); Walkes v. Benoit, 257 A.D.2d 508, 684 N.Y.S.2d 533 (1st Dep’t 1999); European Am. Bank v. Abramoff, 201 A.D.2d 611, 608 N.Y.S.2d 233 (2d Dep’t 1994).

A bald denial of receipt of service of process is insufficient to rebut the inference of proper service. See Terlizzese v. Robinson’s Custom Service, Inc., 25 A.D.3d 547, 806 N.Y.S.2d 418 [2d Dept 2006]. European Am. Bank v. Abramoff, supra; Public Adm’r of County of N.Y. v. Markowitz, 163 A.D.2d 100, 557 N.Y.S.2d 348 [1st Dep’t 1990]; Colon v. Beekman Downtown Hosp., 111 A.D.2d 841, 490 N.Y.S.2d 581 [2d Dep’t 1985]; De Forte v. Doctors Hosp., 66 A.D.2d 792, 410 N.Y.S.2d 903 [2d Dep’t 1978].

See this link at New York Courts .gov for more information about Vacating a Default Judgment in New York State, including a section titled Reasons the Court Can Vacate a Default Judgment.

 

R. A. Klass
Your Court Street Lawyer

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