Key Takeaway
NY court ruling that settlement negotiations constitute reasonable excuse for delay under CPLR 3012(d) and 5015(a)(1), protecting defendants from default judgments.
Pena-Vazquez v Beharry, 2011 NY Slip Op 02462 (1st Dept. 2011)
“In any event, the settlement discussions between plaintiffs and defendants’ insurer constitute a reasonable excuse for defendants’ delay in answering (see CPLR 3012; see also Finkelstein v East 65th St. Laundromat, 215 AD2d 178 ). Contrary to plaintiffs’ contention, defendants were not required to demonstrate the existence of a meritorious defense (see Verizon N.Y. Inc. v Case Constr. Co., Inc., 63 AD3d 521 ).”
This a really important decision, because there is case law from the Third Department that runs contra.
To share a personal story, I had a series of cases with an unnamed plaintiff firm who put an offer of 85/50 on the table. I was in default. Issues arose because of potential policy exhaustion issues. I made the grave mistake of taking one month to get back to said plaintiff. When I got back to the Plaintiff, I was told in substance that the matter is in judgment, and this plaintiff attorney would not be doing justice for my client by taking anything less than 100/100; after all, would I sacrifice my client in that regard?
Needless to say, this case is in First Department, I have a meritorious defense and now a reasonable excuse. So 85/50 now became a deposition of your doctor and a jury trial. Whose doing justice for their client now? No, I will not disclose the Plaintiff, although I really should.
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Legal Update (February 2026): Since this 2011 decision, there may have been subsequent appellate rulings or amendments to CPLR 3012(d) and 5015(a)(1) that could affect the analysis of settlement negotiations as reasonable excuse for defaults. Practitioners should verify current case law interpretations and any procedural rule modifications that may impact default judgment relief standards in settlement contexts.
