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Current Developments in the Commercial Divisions of the
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Posted: March 26, 2014

Default Judgment Not Vacated When No Reasonable Excuse is Offered for the Default

On March 25, 2014, the First Department issued a decision in Sunrise Capital Partners Management LLC v. Glattstein, 2014 NY Slip Op. 01994, affirming a default judgment.

In Sunrise Capital Partners, the trial court granted the plaintiff judgment by default when the defendants failed to answer and later denied the defendants’ motion to vacate the default judgment. The First Department affirmed, explaining:

Defendants’ excuse that they did not contact outside counsel because they were relying on in-house counsel to resolve the matter is insufficient, as they offered no facts as to how or why they believed in-house counsel was handling the matter. Moreover, defendants’ excuse that they believed plaintiffs did not intend to proceed with the lawsuit is conclusory. Defendants have not alleged any statements made by plaintiffs that would indicate they were not serious about prosecuting their claim. Accordingly, defendant has failed to proffer an acceptable excuse for the default, and the Court need not determine whether a meritorious defense exists.

(Internal citations omitted).

New York courts can be lenient in vacating defaults.  However, as this decision shows, that leniency is not unlimited.  If your client has an excuse for its default, make sure you take the time fully to explain and document it.

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