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Current Developments in the Commercial Divisions of the
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Posted: January 31, 2015

Court Accepts Late Reply to Counterclaim Where Delay Was Result of Law Office Failure

On January 20, 2015, Justice Kornreich of the New York County Commercial Division issued a decision in West 17th St. & Tenth Ave, Realty, LLC v. The N.E.W. Corp., 2015 NY Slip Op. 30041(U), discussing the standard for law office failure sufficient to justify denying a default judgment.

In West 17th St. & Tenth Ave, Realty, the plaintiff failed timely to reply to the defendant’s counterclaims and then “move[ed] to compel defendant . . . to accept its reply to defendant’s counterclaim, or in the alternative, to extend its time to file a reply to defendant’s counterclaim.” The defendant moved for default judgment. The court granted the plaintiff’s motion, explaining:

The court may accept law office failure as a reasonable excuse for delay. Courts have even held that upon a showing of a lack of prejudice and a meritorious defense, a default judgment may be vacated and the action restored despite the existence of egregious law office failure because New York’s public policy favors the resolution of cases on the merits.

Here, counsel for plaintiff alleges that its managing clerk resigned without docketing the date for the subject reply. Plaintiff; however, had been actively litigating the case under an expedited timetable and made three document productions to defendant, on November 10, November 26, and December 12, 2014. Thus, plaintiffs failure to respond to defendant’s counterclaims was not intentional or a dilatory tactic. Furthermore, the delay only lasted 18 days, at which time plaintiffs counsel promptly notified defendant to acknowledge and remedy the oversight. Defendant contends that plaintiffs law office failure claim should have been supported by a more detailed and credible explanation. Be that as it may, this court finds the excuse sufficient, particularly, here where the delay was short and caused no prejudice to defendant. New York courts favor the resolution of cases on their merits.

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