RL 900 Park, LLC v. Ender

Background

RL 900 Park LLC alleged that Simone Ender breached a $1.5 million promissory note. The note was secured by a mortgage on a condominium unit at 900 Park Avenue in Manhattan and by a security interest in personal property. The note and mortgage were later assigned to RL 900 Park LLC. The complaint sought damages, foreclosure of the mortgage, and foreclosure of the security interest.

The remaining claims from the original complaint were against Simone Ender, Monique Ender Silberman, and Brigette Laing. Ender and Silberman were personally served with the initial complaint but did not answer or otherwise respond within the required time. The Clerk entered certificates of default against both defendants. Their counsel later appeared and moved under Federal Rule of Civil Procedure 55(c) to vacate those certificates.

After their counsel withdrew, the court ordered Ender and Silberman to tell the court whether they had retained new counsel or intended to proceed without lawyers. They did not respond to those orders or otherwise communicate with the court.

Legal standard

Rule 55(c) permits a court to set aside an entry of default for “good cause.” Courts weigh three factors: whether the default was willful, whether the defendant has a potentially complete defense, and whether setting aside the default would prejudice the opposing party.

Willfulness

The court found that Ender and Silberman’s default was willful. They acknowledged receiving the complaint, and their own account indicated that they had expected a law firm to respond on their behalf. They did not provide evidence that the failure to respond resulted from circumstances beyond the law firm’s control or show that they monitored the case.

The court also relied on their conduct after counsel withdrew. Despite repeated orders and warnings that noncompliance could independently support default, neither defendant told the court whether she had obtained new counsel or would proceed without a lawyer. The court concluded that this showed a clear and deliberate disregard for the litigation.

Meritorious defense

The defendants argued that money needed to pay Ender’s obligations was tied up in the probate of Paul Ender’s estate and held in escrow. They said Ender had not intentionally withheld payment and that they intended to pay amounts due after the funds were released.

The court found that the defendants did not explain or support how those circumstances would constitute a complete defense to the foreclosure action. It also declined to consider additional defenses first raised in an unauthorized supplemental filing submitted after briefing had ended, because the opposing party had no opportunity to respond.

Prejudice and disposition

Because the court found both that the default was willful and that the defendants had not shown a meritorious defense, it did not decide whether RL 900 Park LLC would suffer prejudice if the defaults were vacated.

The court denied Ender and Silberman’s motion to vacate the Clerk’s certificates of default. It directed the Clerk of Court to terminate the motion at ECF No. 79. This order addressed the request to remove the defaults and did not decide the underlying breach, damages, or foreclosure claims.