SHABTAI v. HFZ LLC (2023)

Judgment, Supreme Court, New York County (Andrew Borrok, J.), entered August 1, 2022, in favor of plaintiff Shabtai and against defendants, the Shore Club Entities, for the total sum of $5,054,291.10, unanimously affirmed, with costs.  Appeal from order, same court and Justice, entered July 26, 2022, which granted Shabtai's motion for a default judgment, directed entry of judgment in favor of Shabtai, ordered that a constructive trust be placed upon all of the Shore Club Entities’ assets, and ordered the Shore Club Entities to provide an accounting to Shabtai, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

To vacate a default judgment, a movant must establish both a reasonable excuse for its default and a meritorious defense to the plaintiff's claims (Xiaoyong Zhang v. Jong, 195 A.D.3d 435, 435, 144 N.Y.S.3d 581 [1st Dept. 2021]).  The failure to maintain a current mailing address for service of process is not a reasonable excuse for defaulting (see Majada Inc. v. E & A RE Capital Corp., 205 A.D.3d 648, 649, 170 N.Y.S.3d 18 [1st Dept. 2022];  State Farm Mut. Auto. Ins. Co. v. Dr. Ibrahim Fatiha Chiropractic, P.C., 147 A.D.3d 696, 697, 48 N.Y.S.3d 133 [1st Dept. 2017]).  According to the affidavit submitted by the Shore Club Entities, the dissolution of the Shore Club Entities and the failure to update their agent's address for service of process was not a “high priority.”  Under these circumstances, the motion for a default judgment was providently granted.

Since the Shore Club Entities have no reasonable excuse for defaulting, defendants’ defenses need not be addressed (see Rudd Mech. Assoc., Inc. v. ZDG, LLC, 192 A.D.3d 440, 441, 139 N.Y.S.3d 802 [1st Dept. 2021]).