Most summons and complaints filed in New York debt collection cases are worded specifically with the necessary buzzwords and demand a certain sum. If the debtor defaults in the case, fails to appear or answer, the creditor’s debt collection attorney can then submit a judgment to the clerk for signature.
In New York, there are certain limitations on entering default judgments. A judgment is a legal document that orders a debtor to pay a certain sum of money or provide some other form of relief to a creditor.
The New York judiciary system empowers the clerk of the court to enter judgments on default (without an order from a judge). The New York Unified Court System relies on New York State Civil Practice Rules and Law (CPLR), under which CPLR 3215a authorizes clerks statewide to enter judgment if there has been a default in appearance within one year.
If the New York clerk can enter a default judgment in a New York debt collection case, why then are there situations when they refuse to do so?
8 Reasons Why a Clerk Won’t Enter a Default Judgment
Below are the eight most common reasons that a clerk may not enter a default judgment.
1. A Lack of Supporting Documentation
The party seeking a default judgment from the clerk must submit documentation proving the debt owed. Documentation should include a written contract between the parties and a copy of a bill or invoice. If the documentation is lacking, the clerk will not enter a default judgment and will request a court order to do so.
In addition to a lack of underlying documentation supporting the claim, the documentation may only evidence the liability of one of the parties named in the lawsuit. This would be the case if multiple debtors operate at the same address and all are named in the lawsuit. However, the creditor invoices only one debtor rather than all those named as liable parties.
2. The Complaint Did Not Demand a Sum Certain or Other Liquidated Amount
NY CPLR 3215a authorizes the clerk to enter a default judgment only when “on default involving a sum that is certain or can be made so by calculation.” If the underlying summons and complaint or other pleadings do not contain the necessary buzzwords and demand a sum certain, you will need a court order to enter a judgment.
3. More Than a Year Has Passed Since the Debtor’s Default
The clerk can enter a judgment on default for up to one year from the time of the default. If more than a year has passed, the creditor will need to make a motion to the court for an order directing the clerk to enter judgment.
4. Attorney’s Fees
Even though your underlying agreement with the debtor included a clause for you to recover the attorney’s fee in the event the debtor failed to pay, the clerk is not authorized to enter a default judgment for the attorney’s fee. Attorney’s fees can only be awarded by a judge.
5. Additional Fees and Costs
If a landlord is seeking rent and additional charges and fees, let’s say for damage or deterioration to a property in addition to the back rent, taxes, etc., the clerk will not be able to enter a default judgment as the additional fees and costs are not a sum certain anticipated in the initial agreements between the parties.
6. Using a Name That Is Not Officially Registered
The client’s contract, invoices, statement of account, and any other documents supporting their claim must reference the client’s name or debtor’s name as the official name registered with the state.
For example, let’s say the name on our letterhead references the firm name as FFG&N rather than Frank, Frank Goldstein & Nager, P.C. For the purposes of this example, say we then do business as FFG&N rather than using our corporate name and never register the trade name FFG&N with the state or county clerk.
If we were to sue and request a default judgment from the clerk, the clerk would refuse the entry of a default judgment, requiring a court order, since the name we use is not officially registered.
We see that when clients use an unregistered trade name for themselves and/or debtors on contracts, invoices, and other documents, the clerk almost always rejects their default judgments and requires a court order directing the entry of judgment.
7. Repeat Judgment Requested Against a Party
It is common for a default judgment to be entered against a party and then be settled later. Part of that settlement may be for a payout or to vacate the default judgment. Let’s say that the settlement provided for a payment arrangement that the debtor failed to comply with and a subsequent default judgment was sought.
If the debtor and/or their counsel failed to take the necessary steps to vacate the first default judgment, it could still have been in effect. Therefore, when your collection attorney requests a second default judgment, the clerk may be unable to proceed to enter judgment and require a court order.
8. Stipulation of Settlement
Another reason could be that the case was settled pursuant to a written stipulation of settlement. The terms therein required the debtor to make payments and, in the event they failed to do so, may have required the creditor to provide written notice of default.
In addition to the executed stipulation of settlement, the clerk will request additional affidavits, affirmations and other exhibits to support the attorney’s claim that notice, as required under the stipulation, was provided. Most often an additional affirmation and a copy of the notice will be required as part of the judgment application or judgment roll to prove that you are entitled to a default judgment.
An experienced collection attorney can anticipate what the court requires to get the job done and maximize the chances of obtaining a judgment on default, whenever possible to avoid the need to make a motion to the court for a court order. Read more about our debt collection best practices on our blog.
