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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: September 30, 2019

Defendant Fails to Provide Adequate Basis for Vacating Default

On September 25, 2019, the Second Department issued a decision in Redbridge Bedford, LLC v 159 N. 3rd St. Realty Holding Corp., 2019 NY Slip Op 06809, holding that a defendant had failed to provide an adequate basis for vacating its default, explaining:

In order to be entitled to enter a default judgment upon a defendant’s failure to appear or answer the complaint, a plaintiff must submit evidence of service of the summons and complaint upon the defendant, evidence of a viable cause of action, and evidence of the defendant’s default in answering or appearing. Here, the plaintiffs satisfied these requirements.

In order to avoid the entry of a default judgment, a defendant who has failed to appear or answer the complaint must provide a reasonable excuse for the default and demonstrate a potentially meritorious defense to the action. A defendant seeking to vacate a default in appearing or answering is required to make the same showing. The determination of what constitutes a reasonable excuse lies within the discretion of the trial court.

Here, the defendants’ proffered excuse of improper service did not constitute a reasonable excuse. In this regard, they did not contest that they were served with the summons and complaint by delivery to the Secretary of State. Rather, they maintain that such service was improper because proper service could only be made upon their counsel, who had appeared on their behalf in opposition to the plaintiffs’ application for a TRO. However, an attorney is not automatically considered the agent of his or her client for the purposes of the service of process. Moreover, absent proof that a defendant has designated his or her attorney as an agent for the acceptance of process, an attorney lacks the authority to accept service on the defendant’s behalf. The defendants did not provide any evidence that their counsel had the authority to accept service of process on their behalf. As the defendants were properly served, they failed to offer a reasonable excuse for their failure to appear or answer the complaint. The absence of a reasonable excuse for the defendants’ default renders it unnecessary to determine whether they demonstrated the existence of a potentially meritorious defense. Accordingly, we agree with the Supreme Court’s grant of the plaintiffs’ motion for leave to enter a default judgment and denial of those branches of the defendants’ cross motion which were to vacate their default in answering the complaint and to extend their time to answer.

(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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