In March 2023, a trial court in New York permitted a project owner to vacate a default judgment against it even though it had failed answer a complaint against it for non-payment and foreclosure of a mechanic’s lien. ZDG, LLC v. 174-176 1ST Avenue Owner, 2023 NY Slip Op 30772(U) (Sup. Ct. NY County 2023).
In ZDG, a contractor served a project owner with a lawsuit for breach of contract and foreclosure of its mechanic’s lien at the address maintained by the owner with the New York Secretary of State. After the owner failed to respond to the complaint, the court granted the contractor a default judgment against the owner and ordered a sale of its property to satisfy the mechanic’s lien. Upon learning of the sale, the owner filed a motion to vacate the order claiming that it never received the lawsuit because it had changed its address but never updated it with the Secretary of State.
Although the court noted that the owner was required to notify the Secretary of State of its change of address, it agreed to vacate the default judgment under the unique circumstances that it involved the sale of the owner’s property.
Generally, under New York law, failure to file a change of address with the Secretary of State is not a reasonable excuse for vacating a default judgment. This is especially true where a substantial amount of time has passed since a change of address occurred.
Here, even though years had passed since the defendant moved and failed to notify the Secretary of State of its change of address, the court still vacated the default judgment against it but only because its property was subject to a lien foreclosure sale. Had the sale of a property not been at stake, the court may have not been so accommodating in excusing defendant’s default.
The bottom line is that failing to update your company’s service address with the Secretary of State promptly after relocating could have drastic consequences, including the entry of default judgments against your company or firm for failing to timely respond to legal actions against you.
About the author: George Marco is an attorney practicing in the field of construction law. He also holds a Bachelor of Science in Mechanical Engineering and was previously employed as a Project Manager for a public improvement contractor.
Disclaimer: This article is for informational purposes only and not intended to serve as legal counsel.