Motion to Vacate Default Judgment in Foreclosure Action Properly Granted—Criteria Explained

The Second Department determined Supreme Court properly vacated a default judgment in a foreclosure action:

” A foreclosure action is equitable in nature and triggers the equitable powers of the court'” … . “Under CPLR 5015(a), a court is empowered to vacate a default judgment for several reasons, including excusable neglect; newly-discovered evidence; fraud, misrepresentation or other misconduct by an adverse party; lack of jurisdiction; or upon the reversal, modification or vacatur of a prior order” … .

“In addition to the grounds set forth in section 5015(a), a court may vacate its own judgment for sufficient reason and in the interests of substantial justice” … . Indeed, the drafters of CPLR 5015(a) “intended that courts retain and exercise their inherent discretionary power in situations that warranted vacatur but [*2]which the drafters could not easily foresee” … .

“The decision as to the setting aside of a default in answering is generally left to the sound discretion of the Supreme Court, the exercise of which will generally not be disturbed if there is support in the record therefor” … .

Under the unique circumstances of this case, the Supreme Court providently exercised its discretion in vacating the judgment of foreclosure and sale entered on the default of the Cohen defendants “in the interests of substantial justice” … . The documentary evidence submitted in support of the motion raises issues including, among others, whether the plaintiff had “knowledge of facts that would lead a reasonable, prudent lender to make inquiries of the circumstances of the transaction at issue” … . Hudson City Sav Bank v Cohen, 2014 NY Slip Op 06177, 2nd Dept 9-17-14