Drip Capital, Inc. v. Big Stock, Inc. and Italo Ligero

Background

Drip Capital, Inc. sued Big Stock, Inc. and Italo Ligero, alleging that they failed to repay inventory financing. The defendants were served in May and June 2024 but did not answer or otherwise appear. The Clerk of Court entered a certificate of default on August 1, 2024. After Drip Capital filed and served a motion for default judgment with a prominent warning about the consequences of continued inaction, the court entered a default judgment against both defendants on October 21, 2024, for $566,086.96 plus post-judgment interest at New York’s statutory rate of 9%.

Ligero moved in June 2025 to set aside the default judgment and to dismiss the complaint against him. He argued that communications about settlement and possible arrangements involving Big Stock’s ownership explained why he had not responded sooner. Drip Capital presented emails and other communications showing that Ligero had been told repeatedly about the lawsuit, his personal exposure, the response deadlines, the default proceedings, and the consequences of failing to act.

Setting Aside the Default Judgment

The court applied Federal Rule of Civil Procedure 60(b), which allows a court to relieve a party from a final judgment for reasons including mistake, surprise, or excusable neglect. In the default-judgment context, courts consider whether the default was willful, whether the defendant has a potentially valid defense, and what prejudice relief would cause. The court explained that a defendant seeking relief must provide highly convincing evidence and show good cause for the delay.

The court found that Ligero did not explain why he failed to answer the complaint or oppose the default-judgment motion. The court also found that the later communications about collecting information, possible refinancing, and settlement did not justify his earlier failure to respond. Because Ligero had been repeatedly warned and still did nothing, the court concluded that his default was willful and that he had not shown excusable neglect. The court therefore denied the motion to set aside the default judgment without needing to address the other default-judgment factors.

Motion to Dismiss

The court denied Ligero’s motion to dismiss as improperly made and moot. It explained that the default judgment remained in effect because the court had declined to vacate it. Ligero’s default admitted the well-pleaded facts in the complaint, and he could not challenge those allegations through a motion to dismiss unless the default judgment were first set aside.

The court added that, if it had reached the motion to dismiss on the merits, it would have denied it because the complaint plainly stated a claim against Ligero. The issues Ligero raised concerning his personal liability for Big Stock’s debts under a corporate-veil or alter-ego theory were factual issues that could not be resolved on a motion to dismiss.

Arbitration Argument and Disposition

The court rejected Ligero’s suggestion that the dispute had to go to arbitration. It held that Ligero forfeited any right to compel arbitration by defaulting without a reasonable excuse. It also found that an earlier loan agreement gave Drip Capital, but not Ligero, the option to require arbitration, while contemplating litigation as an alternative. A later February 3, 2023 agreement contained no arbitration clause.

The court denied the motion to set aside the default judgment. It denied the motion to dismiss as improperly made and moot, directed the Clerk to remove the motion from the list of open motions, and closed the case.