Key Takeaway
Court rules on debt collection case where borrower missed one payment after paying $45,000, examining whether strict enforcement of settlement stipulation was appropriate.
This article is part of our ongoing stipulations coverage, with 8 published articles analyzing stipulations issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
RCS Recovery Servs., LLC v Mensah, 2018 NY Slip Op 07766 (2d Dept. 2018)
The Court really went out on a limb here and did the right thing. Question – was it correct legally? They said so.
(1) In 2007, the defendant borrowed $74,000 from the plaintiff’s predecessor-in-interest, Wells Fargo Bank, N.A., as evidenced by a note, which provided that he would repay the sum due, with interest at the rate of 9.5% per year. The defendant allegedly defaulted on the note on June 17, 2010, and this action ensued. On December 6, 2013, with the defendant’s consent, judgment in the total sum of $95,083.08 was entered in favor of the plaintiff and against the defendant.
(2)On July 2, 2014, the parties entered into a stipulation of settlement whereby the plaintiff agreed to accept the sum of $65,000 in full settlement of the judgment. An initial $5,000 payment was made on or about the date of the stipulation, and the remaining $60,000 was to be paid in monthly installments of $5,000, due on the 25th day of each month. The parties agreed that the judgment would remain as a lien on the defendant’s property until full payment of the amounts owed under the stipulation
(3) After paying a total of $45,000 without incident, the defendant inadvertently missed a payment due on March 25, 2015. By letter dated April 7, 2015, the plaintiff notified the defendant that he was in default and informed him of its election to continue to enforce the judgment pursuant to the terms of the stipulation. The defendant avers that he attempted, in good faith, to cure his default, but the plaintiff refused and insisted upon full payment of the amount owed under the judgment, which was more than double what was still owed under the stipulation.”
(4a) However, under the circumstances of this case, the Supreme Court should have granted the alternate branch of the defendant’s motion, which was, in effect, to preclude the plaintiff from enforcing the default provision of the stipulation without affording the defendant a reasonable opportunity to cure his default. “Under almost any given state of facts, where to enforce a stipulation would be unjust or inequitable or permit the other party to gain an unconscionable advantage, courts will afford relief” (Goldstein v Goldsmith, 243 App Div 268, 272; see Weitz v Murphy, 241 AD2d 547, 548; Bank of N.Y. v Forlini, 220 AD2d 377, 378).
(4b) Here, the defendant’s default was inadvertent and minor in nature when measured against the harsh result that would be obtained upon literal enforcement of the default provision in the stipulation (see Bank of N.Y. v Forlini, 220 AD2d at 378). Insofar as the plaintiff failed to offer the defendant any opportunity to cure his default before seeking to recover the full amount due under the judgment, the plaintiff’s conduct could be interpreted as an attempt to take advantage of a technical default to obtain payment of the far greater sum which the plaintiff had originally sought, but agreed to forgo as part of the settlement (compare Weitz v Murphy, 241 AD2d at 548-549 and Bank of N.Y. v Forlini, 220 AD2d at 378, with McKenzie v Vintage Hallmark, 302 AD2d 503, 504).
Look, it is a great case. It definitely takes some of the sting out of inadvertent stupidity.
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Legal Context
Why This Matters for Your Case
New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.
Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,353 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.
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Frequently Asked Questions
Are stipulations binding in New York litigation?
Yes. Under CPLR 2104, a stipulation made in open court or in writing subscribed by the parties or their attorneys is binding and enforceable. Courts will enforce stipulations unless there is evidence of fraud, collusion, mistake, or overreaching.
Can a stipulation be set aside in New York?
A stipulation may be set aside under CPLR 2104 if there was fraud, mutual mistake, or if enforcement would be unconscionable. Courts also have inherent authority to relieve parties from stipulations in the interest of justice, though this power is exercised sparingly.
What types of stipulations are common in no-fault cases?
Common stipulations include agreements to extend discovery deadlines, adjourn hearings, limit issues for trial or arbitration, and settle claims. In no-fault arbitration, stipulated facts can significantly streamline the hearing process.
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About the Author
Jason Tenenbaum, Esq.
Jason Tenenbaum is the founding attorney of the Law Office of Jason Tenenbaum, P.C., headquartered at 326 Walt Whitman Road, Suite C, Huntington Station, New York 11746. With over 24 years of experience since founding the firm in 2002, Jason has written more than 1,000 appeals, handled over 100,000 no-fault insurance cases, and recovered over $100 million for clients across Long Island, Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, the Bronx, and Staten Island. He is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
Jason is admitted to practice in New York, New Jersey, Florida, Texas, Georgia, and Michigan state courts, as well as multiple federal courts. His 2,353+ published legal articles analyzing New York case law, procedural developments, and litigation strategy make him one of the most prolific legal commentators in the state. He earned his Juris Doctor from Syracuse University College of Law.
Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
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