Default Judgment Against aNew York Business: What Happens Next

A default judgment is a final court order entered against your business because you did not respond to a lawsuit on time. The plaintiff files a summons and complaint, you fail to appear or answer in the right window, and the plaintiff asks the court to enter judgment in their favor with no trial of any kind. The plaintiff must still supply the proof CPLR 3215 requires, including the claim and amount due. The court may need a damages inquest; default does not automatically establish every amount demanded.

For a New York business, the most common route to a default runs through the Secretary of State system. A corporation or LLC formed in this state is deemed served the moment the plaintiff hands papers to the Department of State in Albany, even when the certified mail copy never reaches you because the address on file is old or unstaffed. The clock starts on that date, not when your office finally opens the envelope and reads inside.

A default judgment is not just a piece of paper. Once entered, it becomes a money judgment that your business owes the plaintiff, enforceable through restraining notices on bank accounts, levies by city marshals or sheriffs, liens on receivables, and information subpoenas that force vendors and customers to disclose what they pay you. Money judgments are generally enforceable for twenty years, subject to CPLR 211(b). A real-property judgment lien generally has a separate ten-year period. Renewal requires the applicable CPLR 5014 procedure; do not assume an expired judgment automatically receives another twenty years.

CPLR 320 ordinarily provides twenty days after service to appear, with thirty days after completed service for the methods specified in that rule, including service on an authorized state official and specified out-of-state methods. Entity-specific service rules determine who may receive papers. Delivery to an ordinary worker is not automatically valid corporate or LLC service. Check the summons, service method, and completion date before calculating the response deadline.

A missed deadline to answer in New York does not mean the case is lost the next morning. It means the plaintiff now has the right to apply for a default judgment under CPLR 3215. In practice plaintiffs often wait weeks or even up to a full year before filing the application. During that window your business can still ask the court for permission to file a late answer under CPLR 3012(d) and skip the default.

Speed matters because every step taken before judgment is easier than every step taken after one. A late answer accepted by the court costs your business a single motion. A default judgment vacated after entry costs a motion, affidavits, a proposed answer, and a judge willing to undo something already done. The same facts win or lose depending on when your business decides to show up before the judge.

Once a default judgment is entered against a New York business, CPLR 5015 is the main tool for undoing it. The motion has to be filed within one year of being served with notice of entry of the judgment if the ground is excusable default. If the ground is lack of jurisdiction, meaning service was never properly made on your business, there is no one-year cap, and a motion can be filed whenever the judgment surfaces.

The standard for vacating a default on excusable neglect grounds is two-pronged in this state. Your business has to show a reasonable excuse for the default and a potentially meritorious defense to the underlying claim. Both prongs are required. A great excuse with no defense fails. A strong defense with no excuse fails. New York courts have spent decades refining what counts on each side, and the answer turns on facts.

Non-notice is different from invalid service. CPLR 317 may assist a qualifying defendant served other than by personal delivery to it or its CPLR 318-designated agent, including service through the Secretary of State. The defendant must show no personal receipt of the summons in time to defend and a meritorious defense. The motion must be made within one year after knowledge of entry, never more than five years after entry; no reasonable excuse is required.

Bad service is one of the strongest grounds your business has, because it does not require a reasonable excuse and does not require a meritorious defense to attack the court's jurisdiction directly. Under CPLR 5015(a)(4), a judgment entered without personal jurisdiction is void from the start, and the court must vacate it once that lack of jurisdiction is shown by the defendant in proper form to the judge who signed the original order.

Proper service through the Secretary of State can be valid even if an outdated forwarding address prevents actual notice. That alone does not establish a jurisdictional defect under CPLR 5015(a)(4). Evaluate CPLR 317 separately, including the proof of non-notice, a potentially meritorious defense, and its one-year and five-year deadlines.

A false service affidavit, delivery to an unauthorized recipient, or noncompliance with the applicable entity-service rule may establish a jurisdictional defect. The exact method and records matter: an address problem alone does not invalidate otherwise valid service. A motion to vacate should distinguish defective service from valid service followed by non-notice.