If Court Had No Jurisdiction to Enter Judgment, Payment of the Judgment Did Not Extinguish It and so it Could be Vacated

On May 27, 2020, the Second Department issued a decision in Yellowbook, Inc. v. Hedge, 2020 NY Slip Op. 03045, holding that if a court had no jurisdiction to enter judgment, the payment of that judgment did not extinguish the judgment and so the judgment could be vacated, explaining:

In 2011, the plaintiff commenced the instant action to recover damages for breach of contract. Upon the defendant's failure to timely appear or answer the complaint, a judgment dated March 9, 2012, was entered in favor of the plaintiff and against the defendant in the principal sum of $7,878.50 (hereinafter the default judgment). In 2018, the default judgment was satisfied when a sheriff seized funds belonging to the defendant. Thereafter, the defendant moved pursuant to CPLR 5015(a)(4) to vacate the default judgment, to dismiss the complaint for lack of personal jurisdiction, and to direct that the funds seized in satisfaction of the default judgment be returned to the defendant. After a framed-issue hearing, the Supreme Court determined that service of the complaint upon the defendant was improper and granted the defendant's motion.

We agree with the Supreme Court's determination to grant the defendant's motion. Where, as here, a defendant moves to vacate a default judgment on the ground that the court that rendered the judgment lacked personal jurisdiction over the defendant, a finding in favor of the defendant would mean that the judgment was a nullity. It necessarily follows that, if a judgment is a nullity, it never legally existed so as to become extinguished by payment.

(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.