Dismissal for Failure Timely to Move for Default Judgment, Without More, Not Dismissal for Failure to Prosecute for CPLR 205 Purposes

On February 11, 2021, the Fourth Department issued a decision in Broadway Warehouse Co. v. Buffalo Barn Bd., LLC, 2021 NY Slip Op. 00963, holding that a dismissal for failure timely to move for default judgment, without more, was not a dismissal for failure to prosecute for CPLR 205 purposes, explaining:

In 2012, plaintiff commenced an action against defendant, among others (2012 action), alleging the breach of a lease agreement between plaintiff and defendant and defendant's improper conveyance of certain personal property in which plaintiff held a security interest pursuant to the lease (secured property). Two months after the 2012 action was dismissed, plaintiff commenced this action asserting causes of action for breach of the lease agreement and fraudulent conveyance of the secured property. Defendant moved to dismiss the instant complaint pursuant to CPLR 3211(a)(5), contending that the causes of action were time-barred and that the tolling provisions of CPLR 205(a) did not apply. Supreme Court granted the motion, and we now reverse.

We agree with plaintiff that the tolling provisions of CPLR 205(a) apply inasmuch as the 2012 action was not dismissed for neglect to prosecute. CPLR 205(a) provides, in relevant part, that if an action is timely commenced and is terminated in any other manner than by a dismissal of the complaint for neglect to prosecute the action, the plaintiff may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination, even though the new action would otherwise be barred by the statute of limitations. Where a dismissal is one for neglect to prosecute the action made pursuant to CPLR 3216 or otherwise, the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation.

Here, it is undisputed that the 2012 action was timely commenced and that the instant action was commenced within six months of the termination of the 2012 action. Further, this action is based upon the same transactions and occurrences underlying the 2012 action, i.e., it is based upon the same operative facts. Thus, the appeal turns on whether the 2012 action was terminated for neglect to prosecute. In the decision attached to the court's order dismissing the 2012 action, the court noted that defendant had failed to answer the initial complaint, the amended complaint or the second amended complaint and that plaintiff had failed to move for a default judgment within one year as required by CPLR 3215(c). The court noted no other delays by plaintiff before dismissing the second amended complaint against defendant as abandoned.

The Court of Appeals has written that the neglect to prosecute exception in CPLR 205(a) applies not only where the dismissal of the prior action is for want of prosecution pursuant to CPLR 3216, but whenever neglect to prosecute is in fact the basis for dismissal. A dismissal of a complaint on grounds other than CPLR 3216 could therefore be deemed a dismissal for neglect to prosecute in certain circumstances. The overall determination is based on whether the court, in the initial action, adequately set forth the conduct of the plaintiff that constituted the neglect and demonstrated a general pattern of delay in proceeding.

Here, the court did not outline a general pattern of delay by plaintiff in its order dismissing the 2012 complaint or in the attached decision. It was not until months after the court directed that the 2012 action be dismissed that the court, for the purpose of justifying the dismissal of the complaint in this action, stated that plaintiff's neglect of prosecution of the 2012 action was the basis for the dismissal of the 2012 action. We thus reject the court's attempt to recast the earlier dismissal as a dismissal for neglect to prosecute where the order dismissing the first action and the attached decision did not describe a general pattern of delay by plaintiff, and we conclude that both of the instant causes of action are timely under CPLR 205(a).

(Internal quotations and citations omitted).

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether claims are barred by the statute of limitations.