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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: January 21, 2020

Court Vacates Default Because Lawyer, Not Client, Was to Blame for Failure to Appear at Court Conferences

On January 7, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Elite Limousine Plus Inc. v. RX Med. Dynamics, LLC, 2020 NY Slip Op. 30025(U), vacating a default judgment because the party’s lawyer, not the party, was responsible for the default, explaining:

To vacate a default judgment, RX must show a reasonable excuse for its default and a potentially meritorious defense to the action. Bare allegations of law office failure based upon a prior counsel’s unspecified negligent acts, errors, and omissions do not constitute a reasonable excuse for a default. However, the determination of what constitutes a reasonable excuse for default, as ground for relief from default judgment, generally lies within the sound discretion of the trial court. A court also has the discretion to vacate its own judgment for sufficient reason and in the interest of substantial justice.

Here, as to the reasonable default, Mr. Cerasoli has adequately alleged that he was always ready and willing to defend against this action and, indeed, as soon as he was served with the Marshal’s Notice, which he alleges is the first time he had notice of the default judgment, he obtained new counsel to represent him in this matter. As to a meritorious defense, the court has already found that there are material issues of fact as to whether the defendant received all the services sued on in the action, whether the defendant was properly billed for those services and the extent to which the defendant contested the billing. In addition, the vouchers submitted in connection with the motion are illegible so that the invoices can not be verified against the vouchers when it previously denied Elite’s motion for summary judgment in this action. In addition, as set forth on the record at oral argument, RX has stipulated to depositing the full amount of the default judgment in escrow with its new counsel on or before January 10, 2020 to ensure that Elite’s rights in this action are protected and Elite did not object to the default judgment being vacated upon proof of such escrow deposit. Under these circumstances and keeping in mind the public policy in favor of resolving cases on the merits, the interests of justice require that the default judgment be vacated.

(Internal citations omitted).

If you are served with a complaint and fail timely to answer, or if you answer and do not appear at schedule court appearances, 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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