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 (James P. McCormack, J.), dated December 6, 2023.  The order, insofar as appealed from, denied that branch of the defendants' motion which was to vacate a judgment of the same court (Denise L. Sher, J.) entered June 7, 2018, which, upon an order dated March 6, 2018, granting the plaintiff's motion 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 $149,815.80.

ORDERED that the order dated December 6, 2023, is affirmed insofar as appealed from, with costs.

In 2017, the plaintiff, Ninth Street Corp., commenced this action against the defendants, Iris C. Fernandez and Jorge Miguel Mota, inter alia, to recover damages for breach of the defendants' fiduciary duty as managers of Cabinets and More of Brooklyn, whose assets the plaintiff acquired at a sheriff's sale.  In an order dated March 6, 2018, the Supreme Court granted the plaintiff's motion for leave to enter a default judgment against the defendants.  After an inquest on the issue of damages, the Supreme Court entered a judgment on June 7, 2018, in favor of the plaintiff and against the defendants in the total sum of $149,815.80.

In August 2023, the defendants moved, inter alia, to vacate the judgment.  In an order dated December 6, 2023, 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 pursuant to CPLR 5015(a)(3) based upon intrinsic fraud must establish a reasonable excuse for 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 a reasonable excuse for their default in answering the complaint, the Supreme Court properly denied that branch of the defendants' motion which was to vacate the judgment, and it is unnecessary to consider whether they presented 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).

Fernandez's remaining contentions are without merit.

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