Sabo v Eisenberg
Attorneys and Parties
Brief Summary
Civil procedure—vacatur of default judgments under CPLR 5015(a)(1) [vacatur for excusable default; requires a reasonable excuse and a potentially meritorious defense] and CPLR 5015(a)(3) [permits vacatur for fraud, misrepresentation, or other misconduct of an adverse party].
The Supreme Court, Rockland County, vacated the default judgment as to Sol and Moshe Eisenberg but denied vacatur as to the corporate defendants.
The Appellate Division reversed the vacatur for Sol and Moshe Eisenberg and affirmed the denial of vacatur for the corporate defendants.
Defendants failed to show a reasonable excuse for their default. A mistaken belief that the suit pertained to a prior action and unsubstantiated claims about moving abroad or lack of day-to-day involvement were inadequate. The alleged nondisclosure of a prior related action was intrinsic fraud under CPLR 5015(a)(3), which still requires a reasonable excuse—absent here.
Background
Plaintiffs commenced the action in August 2022 alleging, among other things, fraud. Defendants were properly served but did not appear or answer. On June 13, 2023, the court granted plaintiffs leave to enter a default judgment, and a judgment was entered on July 7, 2023. In December 2023, defendants moved to vacate under CPLR 5015(a).
Lower Court Decision
By order dated January 9, 2024, the Supreme Court vacated the default judgment as to Sol and Moshe Eisenberg but denied vacatur as to Middletown North Dev., LLC, 48 North Realty 2019, LLC, and Valley View Equities Corp.
Appellate Division Reversal
The Appellate Division held that the Eisenbergs’ excuses—confusion with a prior action and unsubstantiated claims about residence and business involvement—were not reasonable, so vacatur was improper; it reversed as to them and denied their motion. It affirmed the denial of vacatur for the corporate defendants for the same lack of a reasonable excuse. The court further held that the alleged omission of a prior action was intrinsic fraud under CPLR 5015(a)(3), which still requires a reasonable excuse, thus offering no independent basis for vacatur. One bill of costs was awarded to plaintiffs.
Legal Significance
The decision reinforces that to vacate a default under CPLR 5015(a)(1), a party must provide a credible, substantiated reasonable excuse before the court will consider any meritorious defense. Confusion with related litigation or unsupported claims about service or corporate operations are insufficient. It also clarifies that nondisclosure of related litigation constitutes intrinsic fraud under CPLR 5015(a)(3), which, like excusable default, requires a reasonable excuse; absent that, vacatur is unavailable.
Parties who default must present a concrete, documented reasonable excuse; confusion with prior suits or bare assertions about service or business roles will not suffice, and intrinsic-fraud allegations about omissions in motion papers do not bypass the reasonable-excuse requirement.