Court Denies Motion To Vacate Default Judgment

In a Decision and Order, dated January 5, 2023, in Yunjie Frank Yang v. Knights Genesis Group, Index No. 651118/2021, Justice Andrew Borrok denied Defendant’s motion to vacate a default judgment. The Court explained:

Knights Genesis argues that the Court should vacate the Yang Default Judgment because (i) it received no notice of this action, and (ii) it has a meritorious defense. To wit, Knights Genesis asserts certain conclusory denials of the claims made against it and indicates that certain other entities are liable for the alleged scheme.

The arguments fail. Pursuant to CPLR 5015, a Court may vacate a default judgment upon a reasonable excuse and a meritorious defense. Pursuant to CPLR 317, a Court may vacate a default judgment where the movant lacked notice of the claims levelled against them. It is simply false that Knights Genesis had no notice of this action. Jiangcheng Yuan, the majority shareholder and president of Knights Genesis, was served on behalf of Knights Genesis on April 23, 2021 (NYSCEF Doc. No. 54). In addition, Knights Genesis itself was served more than one year ago on September 2, 2021 by personal service on its President, Mr. Yuan (NYSCEF Doc. No. 149) and he has participated in this action since such time. Nor does Knights Genesis present prima facie evidence that a meritorious defense exists (Peacock v Kalikow, 239 AD2d 188, 190 [1st Dept 1997]; East N.Y. Sav. Bank v Sun Beam Enters., 234 AD2d 131, 132 [1st Dept 1996]). This is required (CPLR 5015[a][1]; Matter of Santander Consumer USA, Inc. v Kobi Auto Collision & Paint Ctr., Inc., 166 AD3d 1365, 1365 [3d Dept 2018]; Nulty v Wolff, 291 AD2d 763, 764 [3d Dept 2002]; U.S. Bank Natl. Assn. v Kaufman, 187 AD3d 1456, 1457 [3d Dept 2020]; Toyota Motor Credit Corp. v Impressive Auto Ctr., Inc., 80 AD3d 861, 863 [3d Dept 2011]; Bergen v 791 Park Ave. Corp., 162 AD2d 330, 331 [1st Dept 1990]). All Knights Genesis essentially indicates in conclusory fashion is that someone else is responsible for the alleged fraud. This is plainly insufficient. Therefore, the motion to vacate the Yang Default Judgment must be denied.

While Courts generally prefer to decide cases on the merits, this case demonstrates that the vacatur of a default judgment is not a given. If served with a Complaint, a party should consult with an attorney immediately to make sure there is no default. The attorneys at Schlam Stone & Dolan litigate complex commercial disputes. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning a Complaint you have received.