Court Refuses to Vacate Satisfied (paid) Judgment

This situation is relatively common:

  1. A debtor (person who owes money) is surprised by a frozen bank account due to a judgment previously entered;
  2. Debtor enters into settlement agreement to cause quick release of bank account;
  3. Debtor then reconsiders and later attempts to vacate (overturn; invalidate) the judgment based on a defense, such as lack of service.

A debtor would want the judgment vacated versus satisfied usually because vacated means expunging it from your credit reports, versus having it show "paid" by way of a satisfaction.

In today's law journal, we encounter Capital One Bank v. Rodriguez,[1] wherein the court refused to grant a debtor this relief finding that the debtor waived any right to assert lack of service after settling the judgment (and paying a substantial balance of it with monthly payments).

As an initial matter, the court stated that ample case law exists "to support the denial of such a request on the ground that there is no judgment to vacate in light of the satisfaction of judgment." In essence, payment extinguishes the judgment leaving nothing to vacate.

The debtor in Rodriguez argued that since service was bad, the judgment was considered a nullity anyway.

But the court rejected that argument, and affirmed the legal principal that voluntary payments made (even towards an allegedly nullified judgment) without making that argument amounts to a waiver of that argument. Unlike a garnishment, where payments are extracted from a debtor's employer, a debtor's voluntary payments demonstrate a free will. The debtor did argue in Rodriguez that the settlement agreement was entered into within the context under a bank restraint rendering his payments having been made "under duress."

The court, however, dismantled that argument citing the components of duress: 1) threats of an unlawful act by one party, which 2) compels performance by the other party that it had a legal right to abstain from performing.[2] The enforcement of a judgment is not a threat of any unlawful act, found the court.

The lesson here is that when settling a judgment, part of your negotiations should include Plaintiff's promise to consent to vacate the judgment at some point during or after the process.



[1] Bronx County Civil Court, 16211/12, NYLJ, Decided May 27, 2014

[2] Chase Manhattan Bank v. State, 13 A.D. 3d 873 (3d Dep't., 2004). A threat to do that which one has the right to do does not constitute duress. Gerstein v. 532 Broad Hollow Road Co., 75 A.D. 2d 292 (1st Dep't., 1980).

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