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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: September 15, 2020

Court Gives Defendant Opportunity to Cure Default

On September 1, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Zexin (HK) Leather Co., Ltd. v. Accessories Direct, Intl. USA, Inc., 2020 NY Slip Op. 32895(U), granting a defendant the opportunity to cure its default, explaining:

To establish entitlement to default judgment under CPLR § 3215, a plaintiff must submit proof of service of the summons and complaint, proof of the facts constituting the claim and the amount due, and proof of the defendant’s default in answering, appearing, or making a motion. In support of its motion for default judgment, Zexin submits proof of service of the summons and verified complaint, the affidavit of Liu Hua Bin, Zexin’s owner, General Manager, and CEO and the exhibits thereto, including copies of the unpaid invoices and communications acknowledging the debt in the amount of $571,938.40, and the affirmation of Zexin’s counsel, Michael Goldberg. Zexin argues that it properly served the summons and complaint on the Secretary of State as agent for service of process for ADI and the additional mailing required by CPLR § 3215(g)(4), and ADI nevertheless failed to file an answer or notice of appearance or otherwise make a motion within 30 days after service of the summons and subsequently failed to appear for the preliminary conference. Zexin further argues that ADI knew of this lawsuit prior to receiving the notice of motion for default judgment and supporting papers on February 11, 2020 because counsel for Zexin emailed ADI’s principal, Rody Moreira on February 6, 2020 regarding the February 10, 2020 preliminary conference, and Mr. Moreira responded to the email but still failed to appear. Accordingly, Zexin argues it is entitled to the entry of judgment in the amount of $571,938.40 and statutory interest in the amount of 9% accruing from the date of entry of the judgment.

In its opposition papers and in support of its cross motion, ADI argues that Zexin’s motion is premature as the February 10 Order indicated that Zexin could “move for all appropriate relief’ only if ADI failed to appear at the next preliminary conference. ADI further argues that it should be granted leave to file a late answer because its delay of two months was minimal, there is no prejudice to Zexin, and ADI has a reasonable excuse for its default in that it never actually received the summons and complaint because it was in the process of moving to a new office between January 5 and January 31, 2020.

Pursuant to CPLR § 3012(d), the court has discretion to extend a party’s time to plead or compel the acceptance of an otherwise untimely pleading upon such terms as may be just and upon a showing of reasonable excuse for delay or default. The First Department has set forth certain factors that must be considered and balanced in determining whether it is a provident exercise of the court’s discretion to grant relief under CPLR § 3012(d). These factors include: the length of the delay, the excuse offered, the extent to which the delay was willful, the possibility of prejudice to adverse parties, and the potential merits of any defense. In addition the court notes that the First Department has recognized a strong public policy in favor of resolving cases on the merits.

Accordingly, inasmuch as there is minimal to no prejudice to Zexin, and ADI indicates that it has several meritorious defenses, Zexin’s motion for default judgment is held in abeyance for 20 days and ADI’s cross-motion for leave to file and answer is granted solely to the extent that ADI is given one final opportunity to file an answer or other responsive pleading within 14 days of the date of this decision and order.

(Internal quotations and citations omitted).

If you are served with a complaint and fail timely to answer, the court can enter judgment against you: a default judgment. 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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