What is a Default Judgment?
A default judgment can be entered when a defendant fails to answer a summons, which is required to be served upon the defendant in a manner expected to make them aware of the lawsuit. Defaults happen for many reasons: neglect on the part of the defendant, improper service by the plaintiff, and law firm failure. But what remedies does the law provide when you discover that a default judgment has been entered? The Second Department in 259 Milford , LLC v. FV-1, Inc. recently examined the evidentiary standards required to vacate a default judgment pursuant to CPLR §317 & CPLR Rule 5015(a)(1).
CPLR §317
Available to defendants who were not served by personal delivery (i.e. substitute service was performed), CPLR §317 permits vacatur of a default judgment “within one year after [the defendant] obtains knowledge of entry of the judgment, but in no event more than five years after such entry, upon a finding of the court that [the defendant] did not personally receive notice of the summons in time to defend and has a meritorious defense.”
The requirements are simple, but evidence is required to prove these elements?
Courts have long held that a mere denial of receipt of the summons is insufficient. See 259 Milford, LLC. Instead, a defendant must specifically rebut the alleged service in the affidavit of service. For example, through competent affidavits of employees detailing regular business practice and standard operating procedure to explain how service by mail was never actually received as alleged. See c.f. Levine v. Forgotson’s Cent. Auto & Elec., Inc., 41 AD3d 552 (2nd Dept. 2007).
And be warned – failing to update your address with the Secretary of State will not bail you out when the summons is mailed to your old address. KPG Inc. v. Salinas Group Ltd., 11 AD3d 338 (1st Dept. 2004).
CPLR Rule 5015(a)(1)
CPLR Rule 5015(a)(1) differs from CPLR §317 in that the motion may be brought even if service of the summons is effectuated personally upon the defendant. However, it requires a finding of “excusable default”, a burden not required under CPLR §317. In making a discretionary determination whether to vacate a default, “the court should consider relevant factors, such as the extent of the delay, prejudice or lack of prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits.” Moore v. Day, 55 AD3d 803 (2nd Dept. 2008).
The defendant in 259 Milford, LLC submitted an affidavit from an employee of its loan servicer “averring that the defendant’s agent for process had emailed the summons and complaint to the servicer, and the complaint had been routed in error to the incorrect email address within the servicer, which prevented the servicer from timely notifying its counsel of the instant action”. Despite the more than bare-minimum affidavit, the Second Department denied the applicable, holding that the “conclusory and nondetailed allegation does not constitute a reasonable excuse warranting vacatur of the default.”
So what does constitute reasonable excuse? For one, certainly not ignorance of legal proceedings and the requirement that one must answer a summons. U.S. Bank NA v. Slavinski, 78 AD3d 1167 (2nd Dept. 2010).
Instead, defendants are well served to submit detailed affidavits explaining the normal business procedures of the defendant and where in that chain the default occurred. For example, an “affidavit by the person who had allegedly been served denying service, or for example, setting forth whether that person recalled having received the service in issue and, if he did, what had happened to those papers, or, if he could not recall whether he had received the papers, setting forth the usual business practices and procedures he employed upon the receipt of process… [or] an affidavit explaining why defendant did not proffer an affidavit from that person.” Pierre J. Renelique Physician, P.C., v. Allstate Ins. Co., 64 Misc.3d 98 (Appellate Term., 2nd Dept. 2019).
Word to the Wise – Don’t Default
While it is possible to vacate a default after the vacate, the difficulty, cost, and uncertainty in doing so makes it unwise to wait and see. The best time to defend a lawsuit is before your time to answer or appear has expired, not after. When you receive service of a summons, or learn about a judgment for the first time, act immediately. Hire an attorney who can provide competent advice and minimize your risk.