Action Must be Dismissed if Plaintiff Fails to Seek a Default Judgment Within One Year

On July 7, 2021, the Second Department issued a decision in US Bank N..A. v. Davis, 2021 NY Slip Op. 04251, holding that a case must be dismissed if a plaintiff fails to take action to seek a default judgment within one year of the default, explaining:

CPLR 3215(a) provides that when a defendant has failed to appear, plead or proceed to trial the plaintiff may seek a default judgment against him or her. However, pursuant to CPLR 3215(c), if the plaintiff fails to take proceedings for the entry of judgment within one year after a defendant's default, the court shall not enter judgment but shall dismiss the complaint as abandoned unless sufficient cause is shown why the complaint should not be dismissed. The language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts "shall" dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned. Failure to take proceedings for entry of judgment may be excused, however, upon a showing of sufficient cause, which requires the plaintiff to demonstrate that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action. The determination of what constitutes a reasonable excuse for a delay in seeking a default judgment is a matter addressed to the sound discretion of the Supreme Court.

Here, the plaintiff served its complaint on Myrtle LLC via the Secretary of State on July 22, 2010, after which Myrtle LLC failed to answer or otherwise appear in the action. Thus, Myrtle LLC was in default as of August 21, 2010. Yet, it was not until August 13, 2013, that the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against Davis, and for leave to enter a default judgment against all non-appearing and non-answering defendants. In its opposition to the defendants' cross motion, among other things, to dismiss the complaint, the plaintiff argued before the Supreme Court that it had a reasonable excuse for not moving for leave to enter a default judgment within a year of Myrtle LLC's default. On appeal, the plaintiff apparently has abandoned that argument and, instead, contends, for the first time on appeal, that the cross motion was properly denied because the plaintiff had moved for summary judgment in 2013, thus manifesting its intent not to abandon this case. The protracted settlement conferences from January 2011 through August 2011 cited by the plaintiff did not constitute a reasonable excuse for its protracted delay, since the case was released from that part on August 17, 2011, almost two years before August 13, 2013, when the plaintiff moved, inter alia, for leave to enter a default judgment. As to the period from October 30, 2012, until March 21, 2013, during which time the area in which the mortgaged property was situated was declared a Federal disaster area pursuant to FEMA Declaration Order DR-4085 due to Hurricane Sandy, and the plaintiff directed its attorney to suspend foreclosure activities until the mortgaged property could be assessed to prevent undue burdens on the borrower, by October 30, 2012, more than a year had already elapsed since the case was released from the foreclosure settlement conference part on August 17, 2011. An excuse which matures after the expiration of the statutory limit for entering a default judgment with the Clerk is legally insufficient to justify a plaintiff's failure to enter the default judgment. The plaintiff's vague and unsubstantiated assertions that it withheld prosecution until such time as it could assess whether the mortgaged premises had been damaged by Hurricane Sandy were also insufficient to establish a reasonable excuse for its failure to initiate proceedings for more than two years after Myrtle LLC's default.

The plaintiff's new argument, raised for the first time on appeal, is that, by moving for summary judgment and leave to enter a default judgment in August 2013, the plaintiff had manifested its intent not to abandon this case. However, while it is not necessary for a plaintiff to actually obtain a default judgment within one year of the default in order to avoid dismissal pursuant to CPLR 3215(c), and a plaintiff is not even required to specifically seek a default judgment within a year, but may take the preliminary step toward obtaining a default judgment of foreclosure and sale by moving for an order of reference pursuant to RPAPL 1321, that preliminary step still must be taken within one year of a defendant's default. Here, since the plaintiff moved for summary judgment and an order of reference almost two years after the default, when the statutory time within which to enter a default had long since expired, it was too late for the plaintiff to manifest an intent not to abandon the case so as to avoid dismissal of the complaint insofar as asserted against Myrtle LLC pursuant to CPLR 3215(c).

(Internal quotations and 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 our attorneys at commercialdivisionblog@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.