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Current Developments in the Commercial Divisions of the
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Posted: December 4, 2016

Court Excuses Untimely Motion for Default Judgment

On November 21, 2016, Justice Hudson of the Suffolk County Commercial division issued a decision in Ehrenkranz v. 58 MHR LLC, 2016 NY Slip Op. 32322(U), excusing an untimely motion for default judgment, explaining:

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. The one exception to the otherwise mandatory language of CPLR 3215(c) is that the failure to timely seek default on an unanswered complaint or counterclaim may be excused if sufficient cause is shown why the complaint should not be dismissed. 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. The determination of whether an excuse is reasonable in any given instance is committed to the sound discretion of the motion court. Ongoing settlement negotiations between a Plaintiffs attorney and the Defendants’ insurance carrier during the one year period after the default has been considered a reasonable excuse for a delay.

Here, Plaintiff failed to move for a default judgment for approximately 3 years between Dimitri Boylan’s default in appearing or answering and the Plaintiffs’ July 5, 2016 motion. The Court finds, however, that Plaintiffs excuse for the delay is reasonable, inasmuch as the instant action, which was commenced three years after the Opus action, was delayed by Court Order to bifurcate the two related actions, complex litigation which ensued between the parties, numerous attempts to settle before the trial of the Opus action and after the jury awarded Plaintiffs a judgment, the complex issues that attended the jury trial of the Opus action, and the corporate veil trial. The Court further notes that this action was assigned to three different judges over its pendency. In addition, by denying Defendants’ motion to dismiss Plaintiffs’ remaining causes of action for fraudulent conveyance and aiding and abetting fraudulent conveyance the Court has already found that these remaining causes of action have merit and should proceed to trial. Therefore, the Court, in its discretion, finds that Plaintiffs have demonstrated both a reasonable excuse and meritorious causes of action.

(Internal quotations and citations omitted).

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