Reliance On A Party’s Statement That An Action Had Been “Resolved” Sufficed To Excuse Default

Posted: April 18, 2025 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Category Default Judgment

Reliance On A Party’s Statement That An Action Had Been “Resolved” Sufficed To Excuse Default

On January 31, 2025, Justice Joel M. Cohen granted a motion to vacate default where the defaulting party asserted that it had relied on a statement made by another party that the action had been “resolved in its favor.” In Monex Canada, Inc. v. Bank of America, N.A., et al., Index No. 655076/2023, the plaintiff, Monex Canada, Inc., obtained a default judgment against Defendant Auto Cargo International LLC. Auto Cargo moved to vacate the default, arguing that the Court lacked personal jurisdiction and that it had a reasonable excuse and meritorious defense. The Court agreed that Auto Cargo had a reasonable excuse, explaining:

Auto Cargo, who Monex alleges is a subsequent transferee of a fraudulent conveyance, asserts that the transferor in the relevant transaction, Serwin, advised Auto Cargo that Serwin was resolving the issue with Monex directly and there was no need for Auto Cargo to become involved (NYSCEF 181 ¶¶ 18-19). Serwin and a defendant in this proceeding, MC Logistic LLC, subsequently advised Auto Cargo that this action had been resolved in its favor on the same day that Auto Cargo received notice that its bank account had been unfrozen (NYSCEF 181 ¶¶ 20-21). As a result, Auto Cargo maintains that it was under the false impression that this action was over until it received documents related to Monex’s default judgment. While Auto Cargo’s reliance on other parties was ill-advised, the Court does not find that the default was willful under the circumstances. Further, the delay was not so long as to cause substantial prejudice. For these reasons, and in light of the strong public policy of deciding cases on the merits, the Court finds that Auto Cargo has provided a reasonable excuse for its default.

The attorneys at Schlam Stone & Dolan frequently advise clients concerning default judgments and the process for vacating them. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.