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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: September 21, 2019

Court Erred in Vacating Default When There Was No Reasonable Excuse for the Default

On September 11, 2019, the Second Department issued a decision in EMC Mtge. Corp. v. Walker, 2019 NY Slip Op. 06474, holding that it was error to vacate a default when there was no reasonable excuse for the default, explaining:

In order to vacate a default in appearing at a scheduled court conference, a plaintiff must demonstrate both a reasonable excuse for the default and a potentially meritorious cause of action. A determination of whether an excuse is reasonable lies within the sound discretion of the court.

Here, when the plaintiff moved, in effect, to vacate the May 2013 order and to restore the action to the calendar, it failed to proffer a reasonable excuse for its default in appearing at the scheduled court conference, and merely alleged that there was no missed appearance, and as such 22 NYCRR 202.27 does not apply. Moreover, the plaintiff failed to articulate any basis for the more than 2½-year delay in moving to vacate the order of dismissal. In light of the lack of a reasonable excuse, it is unnecessary to determine whether the plaintiff demonstrated the existence of a potentially meritorious cause of action. Thus, we disagree with the Supreme Court’s decision to hold a traverse hearing on June 22, 2016, and its subsequent determination granting the plaintiff’s motion, in effect, pursuant to CPLR 5015(a)(1) to vacate the May 2013 order and to restore the action to the calendar, and that branch of the plaintiff’s separate motion which was to extend the time to serve Walker in the interest of justice.

(Internal quotations and citations omitted).

If you are served with a complaint (or counterclaims, as happened in this case) and fail timely to answer, the court can enter judgment against you: a default judgment. A plaintiff also can be found to have defaulted by failing to prosecute an action. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether you have been properly served or if a default judgment has been entered against you.

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