Court Granted Default Judgment Against LLC That Failed to Retain Counsel

On June 7, 2023, Justice Joel M. Cohen of the New York County Commercial Division issued a decision and order on motion in Downtown Special Situations Holdings, LLC v. Mills Dental-Downtown Brooklyn, PLLC, 2023 NY Slip Op 31930(U), granting plaintiff’s motion for default judgment against defendants after they failed to retain new counsel following the withdrawal of their prior counsel and a 45-day stay. The Court explained:

Pursuant to CPLR 321(a), a limited liability company is required to be represented by counsel to prosecute or defend a litigation (see also Michael Reilly Design, Inc. v Houraney, 40 AD3d 592, 593, 835 N.Y.S.2d 640 [2d Dept 2007]). As such, a limited liability company is subject to a default judgment when the Court relieves the limited liability company's counsel, and the limited liability company then fails to appear by new counsel after a stay of the action is lifted (World on Columbus, Inc. v L.C.K. Rest. Group, Inc., 260 AD2d 323, 324, 689 N.Y.S.2d 64 [1st Dept 1999]; Mail Boxes Etc. USA, Inc. v Higgins, 281 AD2d 176, 721 N.Y.S.2d 524 [1st Dept 2001]; Town of Southold v Basso Motors Mfg. & Equip. Repair, LLC, 2019 NY Slip Op 30839[U], 2 [Sup Ct, Suffolk County 2019]; Griffin v 1869 Utica Ave. Corp., 24 Misc 3d 138(A) [App Term, 2d Dept 2009]).

As noted, the Court stayed this matter for forty-five days to afford all the Defendants sufficient time to retain new counsel. Moreover, even after the stay expired on January 30, 2023, the LLC Defendants has had months to appear through counsel and stand ready to defend this case. To date, the LLC Defendants have not done so.¹ Plaintiff also submitted an affidavit of service demonstrating that the LLC Defendants and the Individual Defendants were served with the Notice for Default Judgment and supporting papers (NYSCEF 100, 101).

A limited liability company, unlike individual defendants, cannot appear pro se. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you are a limited liability company, do not have counsel and may be involved in litigation.