NINTH STREET CORP v. FERNANDEZ (2026)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of fiduciary duty, the defendant Iris C. Fernandez appeals from an order of the Supreme Court, Nassau County (Conrad D. Singer, J.), entered September 5, 2024.  The order, insofar as appealed from, denied that branch of the defendants’ motion which was to vacate a judgment of the same court (Randy Sue Marber, J.) entered December 21, 2015, which, upon two orders of the same court (Karen V. Murphy, J.) both dated July 9, 2015, granting those branches of the plaintiff's separate motions which were for leave to enter a default judgment against the defendants, and after an inquest on the issue of damages, is in favor of the plaintiff and against the defendants in the total sum of $581,887.42.

ORDERED that the order entered September 5, 2024, is affirmed insofar as appealed from, with costs.

In 2010, the plaintiff, Ninth Street Corp., commenced an action against the defendants, Iris C. Fernandez and Jorge Miguel Mota, inter alia, to recover damages for breach of their fiduciary duty as officers of EFD Construction Inc. (hereinafter EFD).  In 2013, the plaintiff commenced a separate action against the defendants, among other things, to recover damages for breach of their fiduciary duty as officers of EFD, whose assets the plaintiff had acquired at a sheriff's sale.

In separate orders dated July 9, 2015, the Supreme Court, inter alia, granted those branches of the plaintiff's separate motions which were for leave to enter a default judgment against the defendants in each action.  In August 2015, the actions were consolidated.  After an inquest on the issue of damages, the court entered a judgment on December 21, 2015, in favor of the plaintiff and against the defendants in the total sum of $581,887.42.

In July 2023, the defendants moved, inter alia, to vacate the judgment.  In an order entered September 5, 2024, the Supreme Court, among other things, denied that branch of the defendants’ motion.  Fernandez appeals.

CPLR 5015(a)(3) permits a court to vacate a judgment or order upon the ground of “fraud, misrepresentation, or other misconduct of an adverse party.”  A defendant seeking to vacate a default judgment pursuant to CPLR 5015(a)(3) based upon intrinsic fraud must establish a reasonable excuse of the default and a potentially meritorious defense to the action (see Bank of N.Y., N.A. v. Scarso, 233 AD3d 739, 740;  Wilmington Trust, N.A. v. Mahone, 207 AD3d 600, 602).  Here, the defendants’ contention, in effect, that the allegations in the complaint were false constitutes an allegation of intrinsic fraud (see HSBC Bank USA N.A. v. Kantor, 215 AD3d 643, 645;  Wilmington Trust, N.A. v. Mahone, 207 AD3d at 602;  HSBC Bank USA, N.A. v. Walker, 201 AD3d 795, 797).  Since the defendants did not present any excuse for their default, the Supreme Court properly denied that branch of the defendants’ motion which was to vacate the judgment, and it is unnecessary to consider whether the defendants demonstrated a potentially meritorious defense (see Wilmington Trust, N.A. v. Mahone, 207 AD3d at 602;  HSBC Bank USA, N.A. v. Walker, 201 AD3d at 797).

Furthermore, “[a]lthough the Supreme Court retains inherent discretionary power to relieve a party from a judgment or order for sufficient reason and in the interest of substantial justice, a court's inherent power to do so is not plenary, and should be resorted to only to relieve a party from judgments taken through fraud, mistake, inadvertence, surprise or excusable neglect” (Nationstar Mtge., LLC v. Stracci, 216 AD3d 973, 974–975 [alteration, citation, and internal quotation marks omitted] ).  Here, the defendants failed to provide any evidence of fraud, mistake, inadvertence, surprise, or excusable neglect that would warrant vacating the judgment in the interest of substantial justice (see Equity Inv. & Mtge. Co. v. Smith, 173 AD3d 690, 691).

Fernandez's remaining contentions are either without merit or not properly before this Court.

CONNOLLY, J.P., CHRISTOPHER, VENTURA and GOLIA, JJ., concur.