Introduction

Sabo v. Eisenberg addresses when a New York court will vacate a default judgment under CPLR 5015(a). The case arose from a fraud action in which the defendants failed to appear or answer, resulting in a default judgment. After the trial court partially vacated the default as to two individual defendants (Sol and Moshe Eisenberg) but not as to three corporate defendants (Middletown North Dev., LLC, 48 North Realty 2019, LLC, and Valley View Equities Corp.), both sides appealed.

The Second Department reversed the vacatur in favor of the individual Eisenberg defendants and affirmed the denial of vacatur for the corporate defendants. The court clarified three critical points:

• A mistaken belief that the summons and complaint relate to a prior action is not a reasonable excuse for default.
• Unsubstantiated claims of having moved out of the country or not participating in day-to-day business operations do not excuse default where service was properly made.
• Nondisclosure of a prior, related action is intrinsic fraud; a party seeking vacatur on that ground under CPLR 5015(a)(3) must still show a reasonable excuse and a potentially meritorious defense.

The ruling consolidates and reaffirms the Second Department’s strict threshold requirement of a “reasonable excuse” before a default may be vacated—whether under CPLR 5015(a)(1) or (a)(3) for alleged intrinsic fraud—and provides practical guidance for litigants attempting to set aside defaults.

Summary of the Opinion

The plaintiffs commenced a fraud action in August 2022. The defendants, though properly served, failed to appear or answer. The Supreme Court, Rockland County, granted the plaintiffs’ motion for a default judgment by order dated June 13, 2023, and a judgment was entered on July 7, 2023.

In December 2023, the defendants moved under CPLR 5015(a) to vacate the default judgment order and the judgment. By order dated January 9, 2024, the Supreme Court:

• Granted vacatur as to Sol and Moshe Eisenberg (the individual defendants).
• Denied vacatur as to Middletown North Dev., LLC, 48 North Realty 2019, LLC, and Valley View Equities Corp. (the corporate defendants).

On appeal and cross-appeal, the Second Department:

• Reversed the grant of vacatur for the Eisenbergs, holding they failed to show a reasonable excuse for their default; the default judgment against them remains in place.
• Affirmed the denial of vacatur for the corporate defendants for the same reason.
• Rejected the defendants’ reliance on CPLR 5015(a)(3), holding the alleged nondisclosure of a prior action was intrinsic fraud and, absent a reasonable excuse, could not support vacatur.
• Awarded one bill of costs to the plaintiffs.

Analysis

Precedents Cited and Their Influence

The opinion rests on a well-established two-prong standard for vacating a default: the movant must show (1) a reasonable excuse for the default, and (2) a potentially meritorious defense. Several precedents are cited to reinforce both the standard and its threshold nature.

• Bank of N.Y. Mellon v Genova, 159 AD3d 1009 and McCarey v Offshore Trophy Room, Inc., 223 AD3d 893: Reiterate that a defendant seeking vacatur must provide a reasonable excuse and a potentially meritorious defense. These cases anchor the two-prong test that frames the entire analysis.
• Davis v Durand, 227 AD3d 774 and Delucia v Mar Lbr. Co., Inc., 210 AD3d 636: Emphasize that what constitutes a “reasonable excuse” lies within the trial court’s discretion. Although deference is typical, the appellate court will intervene when that discretion is improperly exercised against controlling principles.
• Windward Bora, LLC v Lodico, 206 AD3d 1038 and Cartessa Aesthetics, LLC v Demko, 217 AD3d 821: Confirm that if the movant fails to establish a reasonable excuse, the court need not reach the merits prong. This “threshold” guidance is decisive here, as the Second Department declined to consider defenses once it found no reasonable excuse.
• Wells Fargo Bank, N.A. v Lewis, 232 AD3d 649 and Insiders Success Ventures, LLC v Onewest Bank, FSB, 187 AD3d 866: Hold that a mistaken belief that the papers relate to another case does not constitute a reasonable excuse. These authorities squarely reject the Eisenbergs’ argument that they misapprehended the summons and complaint as connected to prior litigation.
• Williamson v Marlou Cab Corp., 129 AD3d 711 and Tribeca Lending Corp. v Crawford, 79 AD3d 1018: Unsubstantiated assertions—such as being out of the country or not involved in a business’s day-to-day affairs where service was made—do not qualify as a reasonable excuse. These cases directly foreclose Sol Eisenberg’s unsupported claims.
• Heitner v Capital One, N.A., 226 AD3d 979 and Christiana Trust v McCobb, 187 AD3d 981: Describe CPLR 5015(a)(3) as permitting vacatur for fraud, misrepresentation, or misconduct by an adverse party, setting the stage for the intrinsic versus extrinsic fraud analysis.
• Bank of N.Y., N.A. v Scarso, 233 AD3d 739: Key holding: where vacatur is sought under CPLR 5015(a)(3) for intrinsic fraud, the movant must still show a reasonable excuse and a potentially meritorious defense. It also defines intrinsic fraud to include presentation of false statements or material omissions to the court.
• HSBC Bank USA, N.A. v Kantor, 215 AD3d 643: Confirms that omitting material information in litigation materials constitutes intrinsic fraud.
• US Bank N.A. v Nunez, 208 AD3d 711: Defines extrinsic fraud as conduct preventing a party from fully and fairly litigating—for example, a trick or deceit that led the party to believe no defense was needed. This is contrasted with intrinsic fraud and is far narrower.
• Wells Fargo Bank, N.A. v Plaut, 206 AD3d 953: Holds that nondisclosure of a related, prior action is intrinsic fraud. This undercuts the defendants’ attempt to recast the plaintiffs’ supposed nondisclosure as grounds for vacatur absent a reasonable excuse.

Legal Reasoning

The Second Department applied the two-prong vacatur test with a strict threshold requirement. It first examined whether the defendants presented a reasonable excuse for their failure to appear or answer. It rejected both proffered excuses:

• Mistaken case identity: The Eisenbergs’ claim that they believed the summons and complaint related to an earlier action did not amount to a reasonable excuse under the cited authorities. The court relied on cases like Wells Fargo v Lewis and Insiders Success Ventures to hold that misapprehension about related litigation does not excuse ignoring new service.
• Unsubstantiated relocation and non-involvement: Sol Eisenberg’s assertions that he had moved abroad and was not involved in day-to-day operations at the business where service was effected were unsubstantiated and insufficient as a matter of law, per Williamson and Tribeca Lending. Proper service triggers obligations; unsupported claims of absence do not nullify them.

Having found no reasonable excuse, the court did not reach the second prong (potentially meritorious defense), consistent with Windward Bora and Cartessa Aesthetics.

The court separately addressed CPLR 5015(a)(3). It classified the defendants’ allegation—that plaintiffs failed to disclose a prior action between the same parties on the same subject matter—as intrinsic fraud. Under Scarso and Plaut, intrinsic fraud (including material omissions to the court) still requires the movant to satisfy the reasonable-excuse and meritorious-defense prongs. Because the defendants failed the threshold prong, their 5015(a)(3) argument also failed.

Finally, the appellate panel corrected the trial court’s asymmetric result by reinstating the default against the individual Eisenbergs and affirming the default against the corporate defendants, thereby applying a uniform standard to all defendants on the same record.

Impact and Practical Consequences

Sabo v. Eisenberg reinforces and sharpens Second Department doctrine in several important ways:

• Reasonable excuse is a non-negotiable gateway: Litigants cannot rely on the strength of their underlying defenses—or on allegations of their adversary’s litigation misconduct—to obtain vacatur without first establishing a concrete, evidentiary reasonable excuse for the default. Courts will not reach the merits if this threshold fails.
• Mistaken belief about related litigation is not enough: Parties engaged in multiple disputes must maintain rigorous docketing and response protocols. A belief that papers relate to another case does not excuse failing to appear or answer.
• Assertions of absence or limited involvement must be substantiated: Claims of living abroad or not managing day-to-day operations of a business where service was made are insufficient without admissible proof. Proper service at a business address remains effective; principals and agents must implement reliable processes for receiving and acting on legal process.
• Intrinsic fraud under CPLR 5015(a)(3) still requires a reasonable excuse: Even if a party can show adversarial misconduct such as failure to disclose related litigation, that is intrinsic fraud. Vacatur still requires both a reasonable excuse and a potentially meritorious defense. Only extrinsic fraud—conduct preventing a fair opportunity to litigate—potentially relaxes this, and no such showing was made here.
• Uniform standards across individual and corporate defendants: The Second Department’s reinstatement of the default against the individual defendants, alongside affirmance as to the corporate defendants, underscores that the same threshold applies regardless of entity type.

Going forward, motions to vacate defaults in the Second Department must be grounded in:

• Specific, sworn, and corroborated facts establishing a recognized reasonable excuse (e.g., detailed law office failure with dates and corrective steps; verified medical emergencies) rather than generalized or conclusory assertions.
• Prompt action upon learning of the default, with a timeline demonstrating diligence.
• Clear articulation of a potentially meritorious defense—but only after crossing the reasonable-excuse threshold.

Complex Concepts Simplified

• Default judgment: When a party fails to answer or appear after proper service, the opposing party may obtain a judgment without a trial. Vacating that judgment requires meeting statutory criteria.
• CPLR 5015(a): New York’s rule for relieving a party from a judgment or order. Relevant subsections here include:
  • 5015(a)(1): Excusable default (requires a reasonable excuse and a potentially meritorious defense).
  • 5015(a)(3): Fraud, misrepresentation, or misconduct by an adverse party.
• Reasonable excuse: A legitimate, fact-supported reason for missing a litigation deadline. Examples may include documented law office failure, serious illness, or other compelling, corroborated circumstances. Conclusory or unsubstantiated claims do not qualify.
• Potentially meritorious defense: A showing (not full proof) that the defaulting party has a viable defense if the case proceeds. Courts do not reach this question if no reasonable excuse is shown.
• Intrinsic vs. extrinsic fraud:
  • Intrinsic fraud: Misconduct occurring within the litigation, such as false statements or material omissions in court filings. Vacatur on this ground still requires a reasonable excuse and a potentially meritorious defense.
  • Extrinsic fraud: Conduct that prevents a party from defending at all (e.g., tricks that cause a party to believe they need not respond). This is rare and was not shown here.
• Service of process at a business: Proper service at a person’s actual place of business is effective. A defendant cannot typically defeat service by claiming limited involvement in the business without robust, admissible evidence that service was improper or that extraordinary circumstances excused the default.

Conclusion

Sabo v. Eisenberg is a crisp reaffirmation of the Second Department’s insistence that a “reasonable excuse” is the indispensable gateway to vacating a default judgment—whether the motion is brought under CPLR 5015(a)(1) or under 5015(a)(3) for intrinsic fraud. The court held that neither an asserted misunderstanding that new pleadings relate to a prior case, nor unsubstantiated claims of living abroad and lack of day-to-day involvement at a business address, constitutes a reasonable excuse. It further held that the alleged nondisclosure of a prior, related action is intrinsic fraud and cannot support vacatur absent satisfaction of the threshold excuse requirement.

The decision harmonizes the treatment of individual and corporate defendants and offers clear compliance signals to practitioners: respond to process scrupulously; implement reliable intake systems for service; document any excuse with rigor; and do not expect allegations of adversary misconduct within the litigation to bypass the threshold requirement of a reasonable excuse. In the Second Department, the message is unambiguous—no vacatur without a proven, fact-driven reasonable excuse.

Key takeaways:

• Mistaking the lawsuit for a prior action is not a reasonable excuse.
• Unsubstantiated claims of relocation or non-involvement at a business do not excuse default.
• Nondisclosure of related litigation is intrinsic fraud; vacatur still requires a reasonable excuse and a potentially meritorious defense.
• Absent a reasonable excuse, courts will not reach the merits of the defense.
• The ruling applies uniformly to individual and corporate defendants, and costs may be awarded to the prevailing party on appeal.