No Default Judgment When Defendant's Delay in Answering Was Brief, Not Willful, and Did Not Prejudice Plaintiff

On December 23, 2023, Justice Joel M. Cohen of the New York County Commercial Division issued a decision in Forum Gallery Inc. v. Spirits Financial Corp., et al., Index No. 653573/2023, rejecting defendant's argument that it was not properly served, but nonetheless denying plaintiff's motion for entry of a default judgment because the delay in answering was "brief," was "not willful," and did not prejudice plaintiff, explaining:

The next issue is whether Spirits Financial has demonstrated a justifiable excuse for his default and a meritorious defense. Although service was properly completed, the Court credits Spirits Financial' s representation that it genuinely believed it had not been served and accepts that as a rational explanation for the delay in responding to the Crossclaims. Further, the delay in answering was brief (see Settles v One West Bank, 186 AD3d 1551, 1553 [2d Dept 2020]; Harris v City of New York, 30 AD3d 461 [2d Dept 2006]). Finally, Plaintiff has not identified any prejudice from the delay. This action was commenced in July 2023, these two motions which are the first filed in this case-were filed in October 2023. Spirits Financial filed their Answer on October 16, 2023 (NYSCEF 52).

To be clear, the Court does not countenance dilatory behavior. While Spirits Financial's explanation for its failure to meet deadlines is plausible, the Court expects it will not be repeated. In the end, however, public policy favors the resolution of cases on the merits (Bunch v Dollar Budget, Inc., 12 AD3d 391 [2d Dept 2004]). Given that the delay in answering was brief, that the default was not willful, and the lack of prejudice to Camu, Spirits Financial should be "granted an opportunity to defend plaintiffs' claims on the merits" instead of having those claims be resolved on default (Naber Electric v Triton Structural Concrete, Inc., 160 AD3d 507,508 [1st Dept 2018]).

As this case shows, there is a strong presumption that cases should be resolved on their merits, rather than by default. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning a motion for entry of a default judgment.