No Safe Harbor in Post-Default Litigation: First Department Holds General Litigation Activity Does Not Satisfy CPLR 3215(c) Absent an Explicit “Sufficient Cause” Showing

Introduction

In 938 St. Nicholas Avenue Lender LLC v. 936-938 Cliffcrest Housing Development Fund Corp., the Appellate Division, First Department, confronted a recurring trap in New York practice: what counts as “tak[ing] proceedings for the entry of judgment” under CPLR 3215(c) after a defendant defaults on an operative pleading, and what a plaintiff must do to avoid dismissal as “abandoned” if it fails to act within one year. The case arises from a complex foreclosure and third-party litigation over a failed rehabilitation and cooperative conversion of a building at 936–938 St. Nicholas Avenue and implicates the City’s Department of Housing Preservation and Development (HPD).

The key issues:

• Whether years of discovery, motion practice, mediation, and settlement negotiations can satisfy CPLR 3215(c)’s one-year requirement to “take proceedings for the entry of judgment” after a default.
• Whether, and how, a plaintiff can avoid CPLR 3215(c) dismissal by showing “sufficient cause,” and the consequences of not explicitly making that argument.
• To what extent a defendant’s active participation in litigation after default waives or estops it from invoking CPLR 3215(c).
• How amended pleadings reset the clock and define the operative default.

The First Department modified the Supreme Court’s order to grant HPD’s CPLR 3215(c) cross-motion and directed dismissal of Cliffcrest’s third amended third-party complaint as abandoned. A dissent would have affirmed, concluding equity and precedent supported denying dismissal in light of extensive post-default litigation on the merits.

Summary of the Opinion

The Supreme Court (James, J.) denied (i) Cliffcrest’s motion for a default judgment against HPD for not answering the third amended third-party complaint, and (ii) HPD’s cross-motion to dismiss under CPLR 3215(c). On appeal, the First Department:

• Affirmed the denial of Cliffcrest’s default-judgment motion as untimely and inappropriate given the parties’ litigation on the merits.
• Modified to grant HPD’s cross-motion to dismiss the third amended third-party complaint under CPLR 3215(c), holding that:
  • Cliffcrest did not take “proceedings for the entry of judgment” within one year of HPD’s default on the operative third amended third-party complaint.
  • Cliffcrest’s reliance on general litigation activity did not satisfy the statute because none of it was directed at entering a default judgment and much of it occurred outside the one-year window.
  • Cliffcrest did not argue the only viable statutory escape hatch—“sufficient cause”—and the court would not reach unpreserved arguments.

The majority emphasized that CPLR 3215(c)’s “abandonment” phrasing is descriptive of the statute’s purpose; the operative standard is whether the plaintiff took timely default-judgment proceedings or, failing that, offered “sufficient cause” (a reasonable excuse for delay and a potentially meritorious claim). Cliffcrest framed its position as a lack-of-abandonment showing but did not tether that showing to the statutory sufficient-cause standard. The court refused to adopt the dissent’s equity-based approach grounded in an argument the appellant did not make.

Factual and Procedural Background

• 2013: Lender sues to foreclose a mortgage financing Cliffcrest’s attempted HDFC conversion; Cliffcrest answers, asserts cross-claims, and brings a third-party action against HPD and others, alleging fraud/mismanagement in HPD’s Third Party Transfer program.
• 2016: Leave granted to serve a second amended third-party complaint; HPD answers earlier iterations.
• June 15, 2017: Cliffcrest files and serves a third amended third-party complaint (the operative pleading). HPD does not answer; default occurs July 6, 2017.
• 2018–2022: Extensive litigation on the merits between Cliffcrest and HPD:
  • Discovery exchanged, including voluminous HPD productions; discovery motions and a 2020 stipulation resolving them.
  • Court conferences and mediation; settlement negotiations through 2022.
• June 29, 2018: The foreclosure action is dismissed; third-party claims continue.
• August 23, 2022: Cliffcrest settles with other third-party defendants; HPD remains.
• Post-2022: Cliffcrest moves for a default judgment; HPD cross-moves to dismiss under CPLR 3215(c) for failure to take proceedings within one year after its 2017 default.
• July 31, 2023: Supreme Court denies both motions.
• September 23, 2025: First Department modifies on the law to grant HPD’s CPLR 3215(c) cross-motion and directs dismissal; Moulton, J.P., and Mendez, J., dissent.

Analysis

Precedents and Authorities Cited

• Wells Fargo Bank, N.A. v Gwebu, 226 AD3d 578 (1st Dept 2024)
  • Cited by the majority for the proposition that CPLR 3215(c) mandates dismissal where the plaintiff fails to “take proceedings for the entry of judgment” within one year of default, unless “sufficient cause” is shown.
  • Supports the majority’s insistence that the “proceedings” must be directed at entry of a default judgment, not generic litigation activity.
• Vanship Holdings Ltd. v Energy Infrastructure Acquisition Corp., 65 AD3d 405, 408 (1st Dept 2009), and Dannasch v Bifulco, 184 AD2d 415, 416 (1st Dept 1992)
  • Relied on by the majority to underscore appellate preservation rules: the court will not decide appeals on arguments not raised, and it will not consider points raised for the first time in reply.
  • Integral to the majority’s refusal to adopt the dissent’s “sufficient cause” rationale where the appellant did not make that argument.
• Dissent’s authorities (illustrating a more equitable and flexible approach to CPLR 3215(c)):
  • NYCTL 2017-A Trust v Heirs-at-Law of John Ghiselli, 215 AD3d 427 (1st Dept 2023); Hummingbird Assoc. v Dix Auto Serv. Inc., 273 AD2d 58 (1st Dept 2000)
    • Amended pleadings supersede prior pleadings; failure to answer the amended pleading constitutes a fresh default notwithstanding earlier answers.
  • 371-381 PAS Assoc., LLC v Moss & Moss LLP, 237 AD3d 588 (1st Dept 2025)
    • Reinforces the one-year timing and untimeliness of default motions made years after default.
  • Bank of Am., N.A. v Rice, 155 AD3d 593 (2d Dept 2017)
    • “Sufficient cause” under CPLR 3215(c) requires a reasonable excuse for the delay and a potentially meritorious claim.
  • First Department cases treating active litigation/settlement as sufficient cause or as grounds to deny 3215(c) dismissal: Board of Mgrs. of Baychester Villas Condominiums I & II v Gerald Caliendo Architects & Planners, 201 AD3d 457 (1st Dept 2022); JP Morgan Chase Bank, N.A. v Salvage, 171 AD3d 438 (1st Dept 2019); Street Snacks, LLC v Bridge Assoc. of Soho, Inc., 156 AD3d 556 (1st Dept 2017); Brooks v Somerset Surgical Assoc., 106 AD3d 624 (1st Dept 2013).
    • These decisions recognize that ongoing settlement negotiations and discovery can demonstrate no intent to abandon and may justify denying dismissal under CPLR 3215(c).
  • Authorities on waiver/appearance mitigating strict 3215(c) outcomes: One West Bank, FSB v Lara, 192 AD3d 695 (2d Dept 2021); Wells Fargo Bank, N.A. v Martinez, 181 AD3d 470 (1st Dept 2020); HSBC Bank USA, N.A. v Slone, 174 AD3d 866 (2d Dept 2019); Private Capital Group, LLC v Hosseinipour, 170 AD3d 909 (2d Dept 2019).
  • Meritorious-claim and public policy cases: Fling v Integrity Bus. Solutions, Inc., 166 AD3d 458 (1st Dept 2018); LaValle v Astoria Const. & Paving Corp., 266 AD2d 28 (1st Dept 1999).

Legal Reasoning

1) The text of CPLR 3215(c) and what counts as “tak[ing] proceedings”

CPLR 3215(c) provides that if “the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned … unless sufficient cause is shown why the complaint should not be dismissed.”

The majority reads this language strictly and functionally:

• “Proceedings for the entry of judgment” means steps directed at obtaining a default judgment (e.g., an application for the clerk’s judgment on a sum certain or a motion for default judgment to the court). Discovery exchanges, motions to compel, court conferences, and settlement discussions—even if extensive—are not “proceedings” aimed at entering a default judgment.
• Timing matters. Not only must the step be the right kind of “proceeding,” it must also be taken within one year of the default on the operative pleading.

On these points, the court found the record “does not support a finding” that Cliffcrest took qualifying proceedings within one year of HPD’s July 2017 default; indeed, it waited over five years to seek a default judgment, and none of the cited activities both fell within that one-year window and sought entry of a default judgment.

2) “Abandonment” is descriptive; the operative exception is “sufficient cause”

The majority draws a sharp distinction between:

• The statute’s characterization that dismissal is “as abandoned” (a description of purpose), and
• The statute’s operative exception—“unless sufficient cause is shown why the complaint should not be dismissed.”

Cliffcrest argued that its sustained litigation activity showed no intent to abandon, but it did not actually invoke or develop a “sufficient cause” argument. That omission was fatal. The majority holds that a generalized showing of non-abandonment untethered to the statutory “sufficient cause” exception does not stave off dismissal.

3) Preservation matters: The court will not supply unargued theories

Relying on Vanship Holdings and Dannasch, the majority declines to decide the case on a theory the party did not argue. Put simply, even if an equity-based sufficient-cause rationale could fit the facts, it was not presented. The court underscores that deciding appeals on unpreserved arguments is “inequitable” and “impractical” and would “obstacle … the orderly administration of justice.”

4) Implicit treatment of waiver and active litigation by the defaulting party

While the dissent would treat HPD’s robust participation as grounds to deny 3215(c) relief (either as sufficient cause or waiver), the majority does not expressly analyze waiver by appearance or litigation conduct. The holding nevertheless signals two practical points:

• Active litigation by a defaulting defendant does not, by itself, transform that activity into “proceedings for entry of judgment” taken by the plaintiff.
• If a plaintiff wishes to rely on a defendant’s conduct (e.g., “lulling” through settlement or discovery) to avoid dismissal, it must explicitly frame that reliance as “sufficient cause” and support it with the recognized elements (reasonable excuse plus a potentially meritorious claim).

The Dissent’s Perspective

Justice Mendez would have affirmed the denial of both motions. He stresses:

• HPD defaulted on the operative third amended third-party complaint in July 2017, but both sides litigated vigorously on the merits—including during COVID-19 slowdowns—with discovery, motions, conferences, and mediated settlement efforts through 2022.
• This sustained activity demonstrates Cliffcrest never intended to abandon its claims and supplies “sufficient cause” under CPLR 3215(c) to deny dismissal, particularly given no prejudice to HPD and strong public policy favoring decisions on the merits.
• Equity should prevent HPD from using its own participation as both a shield (to oppose default judgment) and a sword (to seek abandonment dismissal).
• The majority’s rule is “inequitable, illogical and impractical” and will spur unnecessary default motions whenever an amended pleading goes unanswered, burdening trial courts.

The dissent invokes First Department authority (Baychester Villas, Salvage, Street Snacks, Brooks) that has credited ongoing litigation activity and settlement as reasons to deny CPLR 3215(c) dismissals, and Second Department cases (e.g., Rice, Lara) recognizing waiver/appearance and sufficient-cause frameworks.

Impact and Practical Implications

1) Tightening of CPLR 3215(c) in the First Department

This decision fortifies a disciplined, text-centric application of CPLR 3215(c):

• Only steps aimed at entering a default judgment count as “proceedings,” and they must be taken within one year of the default on the operative pleading.
• Absent such steps, plaintiffs must explicitly invoke “sufficient cause” and satisfy its two components (reasonable excuse for delay and a potentially meritorious claim). A bare claim of non-abandonment is insufficient.
• Appellate preservation rules will be enforced; do not expect the court to construct or entertain unargued sufficient-cause rationales.

The ruling does not repudiate prior First Department cases that have accepted active litigation and settlement as part of a sufficient-cause analysis, but it insists that litigants must frame and prove that analysis; courts will not infer it.

2) Litigation behavior will change

• Expect more “protective” default motions: Where a defendant fails to answer an amended complaint, plaintiffs will file CPLR 3215 default motions within a year—even if the parties are actively litigating—simply to preserve the claim and avoid abandonment.
• Settlement dynamics may shift: Parties may be less inclined to forgo procedural protections while negotiating, or they will incorporate tolling/standstill agreements that expressly address CPLR 3215(c) exposure.
• Case management: Trial courts may see an uptick in default-related applications even in cases proceeding on the merits, echoing the dissent’s concern about administrative burdens.

3) Amended pleadings reset the clock

Even though the majority did not dwell on it, the record and dissent highlight an important practice point: an amended complaint supersedes prior versions. A defendant’s answer to a prior complaint does not avoid default on the amended pleading; the one-year clock runs from the new default date on the operative pleading. Counsel must track these reset points meticulously.

4) Waiver/appearance arguments remain possible—but must be preserved

The decision leaves open, for another day, whether and when a defendant’s post-default litigation conduct or formal appearance may waive or estop a CPLR 3215(c) dismissal. Several authorities (some in the First Department) have credited such arguments. But after this ruling, any party opposing a 3215(c) motion should:

• Explicitly argue “sufficient cause,”
• Detail a reasonable excuse for the delay (e.g., law office failure, documented settlement discussions, agreed standstills, court-imposed pauses),
• Proffer a potentially meritorious claim by affidavit and supporting evidence, and
• Develop any waiver/appearance theory with record citations (e.g., notices of appearance, stipulations, affirmative, on-the-merits motion practice).

Complex Concepts Simplified

• CPLR 3215(c) “one-year rule”
  • If a defendant defaults (fails to answer or appear), the plaintiff has one year to initiate a default-judgment process. If not, the complaint must be dismissed as “abandoned” unless the plaintiff shows “sufficient cause.”
• “Proceedings for the entry of judgment”
  • Examples that qualify: a clerk’s judgment request for a sum certain; a motion to the court for a default judgment; steps in the default-judgment process like an order of reference in foreclosure contexts.
  • Examples that do not qualify: general discovery, motions to compel discovery, status conferences, settlement talks or mediation—unless they are part of or explicitly tied to a default-judgment application.
• “Sufficient cause” under CPLR 3215(c)
  • Two required showings: (a) a reasonable excuse for the delay in seeking a default judgment (e.g., documented settlement talks, law office failure supported by detail, court-imposed delays); and (b) a potentially meritorious claim (usually via an affidavit from a person with knowledge setting out facts supporting liability and damages).
  • “No intent to abandon” may support sufficient cause, but only if expressly framed within and supported as part of the statutory standard.
• Amended pleadings and default
  • An amended complaint supersedes prior versions. A defendant who answered older versions but does not answer the amended pleading is in default on the new, operative complaint, and the one-year clock runs from that default.
• Preservation of arguments on appeal
  • Appellate courts typically will not consider arguments raised for the first time on appeal or in reply briefs. Parties must make their statutory and equitable arguments in the trial court and in their principal appellate briefs.

Practice Pointers

• Calendar the one-year deadline upon any default on the operative pleading (including amended complaints). Do not assume ongoing litigation preserves your rights.
• If you miss the one-year deadline, build a detailed “sufficient cause” record:
  • Reasonable excuse: Document settlement communications, docket slowdowns, agreed standstills, or law-office failures with specificity.
  • Meritorious claim: Submit affidavits from knowledgeable persons, attach key documents, and address elements of your causes of action.
• Do not rely on “lack of intent to abandon” as a standalone argument. Tie it expressly to the statutory “sufficient cause” exception.
• Consider a protective default-judgment motion (or a stipulation preserving CPLR 3215(c) rights) when a defendant does not answer an amended pleading, even during active merits litigation or settlement.
• When opposing a CPLR 3215(c) motion, preserve waiver/appearance arguments with record evidence of the defendant’s conduct; but recognize that such conduct does not itself satisfy the “take proceedings” requirement.

Conclusion

938 St. Nicholas Avenue Lender LLC v. 936-938 Cliffcrest HDFC stakes out a clear First Department position: generic litigation activity and settlement efforts do not, without more, satisfy CPLR 3215(c)’s mandate to take default-judgment proceedings within one year of a default. If that window is missed, plaintiffs must explicitly invoke and satisfy the statute’s “sufficient cause” exception, which requires both a reasonable excuse and a potentially meritorious claim. Equitable themes of non-abandonment will not be imported sua sponte, and appellate preservation rules will be enforced.

The decision will likely prompt more timely default applications following unanswered amended pleadings and encourage express standstill arrangements during settlement talks. While the dissent warns of administrative burdens and inequity, the majority’s approach emphasizes procedural clarity, predictability, and disciplined adherence to statutory text. For practitioners, the message is unmistakable: track the operative pleading, calendar the one-year clock, and, if you blow it, make a fully developed “sufficient cause” record—do not assume the court will do it for you.