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Money/Default Judgments in New York City

A judgment, under is a court's final determination of the rights of the parties in an action or proceeding. A judgment is binding until reversed or set aside by direct attack.
A default judgment ("money judgment") arises from a party's failure to appear in court. A default judgment is just as enforceable as a judgment obtained after a trial. Your judgment creditor may enforce it by means of freezing your bank account, garnishing your wages, or placing a lien against your home. Avoiding the entry of a default judgment is highly important.

We always check to see if you were properly notified of the lawsuit that resulted in a judgment. Additional notice requirements are now mandated under the Consumer Credit Fairness Act. For more information about it, see 5 Powerful Lawsuit Defenses for New York Debtors in 2022.

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If you have any indication that a judgment has been entered against you, contact us immediately. You may be able to claim exemptions while we investigate the facts of the case.

The following signs will indicate if a default judgment has been entered against you:

  • You received a notice of garnishment or execution by a marshal or sheriff
  • You received claim exemption forms from your bank
  • You received a restraining notice from a lawyer or your bank
  • You received a letter from any lawyer or creditor claiming it has a judgment

Strategies to Counter an Affidavit of Service in a Motion to Vacate Judgment

  1. Validate the Receiver's Identity: Pay attention to the recipient's identity as per the affidavit of service. If the affidavit suggests that someone with whom you share your living or working space received the documents, it is critical to validate this from the said person. In case the recipient can't recollect the incident, or if they didn't exist or weren't present at the specified time, it can serve as a substantial basis for your challenge.

  2. Examine the Recipient's Description: The affidavit of service often includes a description of the person who is alleged to have received the legal papers. Evaluate the description's accuracy. If you find inconsistencies between the description and the alleged recipient, it offers a compelling counterpoint to the affidavit.

  3. Assess the Service Time and Date: Thoroughly check the time and date of service noted in the affidavit. You have a valid argument if the alleged recipient wasn't present at the designated location during the specified time. Various forms of evidence like employment records, travel documentation, or statements from other parties can back your counter-claim.

  4. Demand Identity Verification: If the service process claims that the documents were delivered to an acceptable substitute on your behalf, they are required to verify the recipient's identity and their relation to you. If they fail to do so, you have another potent rebuttal to the affidavit.

  5. Question the Affidavit's Legitimacy: If the process server hasn't signed the affidavit of service before a notary or if there are any forgery indications, it provides grounds for challenging the affidavit's legitimacy. In such situations, an expert opinion could be crucial in confirming the forgery.

"Time is of the essence" if a judgment has been entered against you. Contact a New York debt defense attorney if you are facing a money judgment.

Click the below graphic to learn more about about how to obtain a default judgment:

https://www.thelangelfirm.com/debt-collection-defense-blog/2022/august/two-clear-ways-to-obtain-a-default-judgment-in-n/

Overview of McKinney's CPLR Rule 5015: Guidelines for Overturning Judgments or Orders

CPLR Rule 5015 empowers a court to revisit and possibly overturn its own ruling if a concerned party submits a request for this action. The court will consider such a request based on certain fair and justified criteria.

The acceptable reasons for making such a request include:

  1. "Reasonable Excuse for Default": If the party makes the request within one year of receiving the judgment or order, or within one year of its official entry into record.

  2. "Newly Found Evidence": If new evidence comes to light after the trial that could have affected the trial's outcome.

  3. "Fraud, Misrepresentation, or Misconduct": If there's proof of fraudulent activity, dishonesty, or inappropriate behavior by the other party.

  4. "Lack of Jurisdiction": If it turns out the court did not have the appropriate authority to make the judgment or order.

  5. "Changes to a Previous Judgment or Order": If an earlier judgment or order, which formed the basis of the current one, gets changed or cancelled.

The court's clerk has the power to overturn a default judgment if all parties involved, through their lawyers or personally, file an agreement to do so.

An administrative judge also has the power to initiate a process to overturn a judgment or order if there's evidence that default judgments were acquired through fraudulent or illegal means, or where such judgments were given in cases where the defendants usually have a defense.

If a judgment or order is overturned, the court may order restitution - a procedure to return the injured party to their previous condition. This is similar to situations where a judgment is changed or cancelled upon appeal.

Understanding Timeframes and Requirements for Vacating Judgments Under CPLR 5015

Five Key Points:

  1. The one-year limit for requests to vacate a judgment under CPLR 5015(a)(1) starts from the service of the judgment or order, not the entry of it.
  2. Courts have inherent authority to reconsider their own orders in the interest of justice, meaning they can accept a request to vacate a judgment beyond the one-year limit.
  3. If a party makes a request to vacate a judgment beyond the one-year limit, they must provide a reasonable explanation for the delay.
  4. CPLR 5015(a)(1) also requires parties moving to vacate defaults to demonstrate a potentially meritorious claim or defense.
  5. Subdivisions of CPLR 5015(a)(2) through (5) do not have a stated time limit but imply a reasonable time for a vacatur application; applications deemed "late" could be subject to the doctrine of laches, meaning a legal delay could harm their case.

In New York, May Debt Buyers Enforce Judgments?

Yes, in New York, debt buyers can generally enforce judgments. A debt buyer, who purchases debts from the original creditor or another debt buyer, essentially steps into the shoes of the original creditor.

When the debt is purchased, the debt buyer acquires the rights and interests of the original creditor, including the right to collect the full amount of the debt and the right to enforce any judgments related to that debt. The debt buyer can then use a variety of methods to enforce the judgment, such as wage garnishment, property liens, and bank account levies.

Enforcement Rights and Limitations for Assignees of Judgments

When a judgment is assigned, the assignee gains all enforcement remedies available to the original holder of the judgment. However, if the assignment is invalid, such as when the judgment has been paid in full and extinguished, the assignee doesn't gain any rights.

Key Points:

  • Upon valid assignment, an assignee of a judgment inherits all enforcement remedies that were available to the assignor.
  • An assignee can't acquire any rights if the assignment is invalid.
  • A judgment gets extinguished when the due amount is paid in satisfaction, entitling the payor to a satisfaction of the judgment, but not to its assignment.

Relevant Case Citations:

Cadle Company v. Calcador, 926 N.Y.S.2d 106 (2d Dep't 2011): This case affirmed the transfer of all enforcement remedies from the assignor to the assignee of a judgment.

Strong Memorial Hosp. v. Almac Bldg. Maintenance, Inc., 470 N.Y.S.2d 542 (N.Y. City Ct. 1983): This case detailed the invalidity of the assignment when the judgment creditor has already recovered the full amount.

Benedictine Hosp. v. Glessing, 935 N.Y.S.2d 683 (3d Dep't 2011): This case underlined that a judgment gets extinguished when the due amount is paid in satisfaction, disallowing its assignment.

Consequences of Breaching Settlement Agreements with Creditors

The Civil Practice Law and Rules (CPLR) allow for a default judgment in cases where there's a failure to comply with a stipulation of settlement. However, this rule is applicable only if the stipulation is established during an ongoing action between parties, and not applicable if an agreement to resolve a dispute is entered while no action is pending.

3 Key Points About Settlement Stipulations:

  1. According to CPLR, a stipulation of settlement violation, after the commencement of an action, allows the clerk to enter a default judgment without further notice [CPLR 3215(i)(1), CPLR 3215(i)(2)].
  2. If a stipulation of settlement is not written or documented in court transcripts, the beneficiary of the settlement cannot take advantage of the simplified judgment process, and instead requires a court application [Bach v. River Restaurant Inc.].
  3. Once an action has been terminated by a stipulation of discontinuance, a full-fledged action is required to enforce a stipulation of settlement as a motion can only be addressed in a pending action [Urso v. Panish].

Understanding the Consequences of Breaching Settlement Agreements in New York

The Law Summarized: CPLR § 3215. Default Judgment.

Default judgment for failure to comply with stipulation of settlement:

1) Specified Amount Judgment:

  • If an action starts and one doesn't uphold a settlement's terms, a specified amount judgment can be entered without more notice.
  • The clerk records the judgment, details of the breach, the complaint, and, if relevant, consumer debt interest rate.

2). Dismissal Judgment:

  • If an action starts and a stipulation for dismissal exists for non-compliance, the clerk records this judgment.
  • The record will have details of the breach and either the original pleadings or a concise summary of the claim and defense facts.
  • Affidavit requirements before Oct. 30, 2023:
    • For a default judgment by the clerk, an affidavit from the plaintiff or their attorney is essential.
      • The affidavit should indicate that the statute of limitations hasn't expired after a reasonable inquiry.
      • The chief administrative judge provides standard affidavits for consumer credit transactions.
  • Affidavit requirements effective from Oct. 30, 2023:
    • The requirements are similar to those before Oct. 30, 2023.
      • The chief administrative judge will give affidavits for both consumer credit transactions and medical debt actions.

The Law Verbatim: CPLR § 3215. Default Judgment.

CPLR § 3215. Default Judgment.

(i) Default judgment for failure to comply with stipulation of settlement. 1. Where, after commencement of an action, a stipulation of settlement is made, providing, in the event of failure to comply with the stipulation, for entry without further notice of a judgment in a specified amount with interest, if any, from a date certain, the clerk shall enter judgment on the stipulation and an affidavit as to the failure to comply with the terms thereof, together with a complaint or a concise statement of the facts on which the claim was based, and, if applicable, a statement that the interest rate for consumer debt pursuant to section five thousand four of this chapter applies.

2. Where, after commencement of an action, a stipulation of settlement is made, providing, in the event of failure to comply with the stipulation, for entry without further notice of a judgment dismissing the action, the clerk shall enter judgment on the stipulation and an affidavit as to the failure to comply with the terms thereof, together with the pleadings or a concise statement of the facts on which the claim and the defense were based.

(j) [Eff. until Oct. 30, 2023. See, also, subd. (j) below.] Affidavit. A request for a default judgment entered by the clerk, must be accompanied by an affidavit by the plaintiff or plaintiff's attorney stating that after reasonable inquiry, he or she has reason to believe that the statute of limitations has not expired. The chief administrative judge shall issue form affidavits to satisfy the requirements of this subdivision for consumer credit transactions.

(j) [Eff. Oct. 30, 2023. See, also, subd. (j) above.] Affidavit. A request for a default judgment entered by the clerk, must be accompanied by an affidavit by the plaintiff or plaintiff's attorney stating that after reasonable inquiry, he or she has reason to believe that the statute of limitations has not expired. The chief administrative judge shall issue form affidavits to satisfy the requirements of this subdivision for consumer credit transactions and actions arising from medical debt.

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