On September 1, 2023, Justice Reed of the New York County Commercial Division issued a decision in Lakeland Bank v. Beach, 2023 NY Slip Op. 50931(U), rejecting a challenge to a stipulation of settlement, explaining:
CPLR 3215 (i) (1) governs when a default judgment for failure to comply with a stipulation of settlement is entered. It states:
Where, after commencement of an action, a stipulation of settlement is made, providing, in the event of failure to comply with the stipulation, for entry without further notice of a judgment in a specified amount with interest, if any, from a date certain, the clerk shall enter judgment on the stipulation and an affidavit as to the failure to comply with the terms thereof, together with a complaint or a concise statement of the facts on which the claim was based, and, if applicable, a statement that the interest rate for consumer debt pursuant to section five thousand four of this chapter applies.
In this matter, a stipulation of settlement was signed on October 8, 2011. Paragraph 4 of the stipulation set forth the consequences for defendant’s failure to abide by the settlement terms. The stipulation expressly stated that if defendant failed to make any of the said payments on the due dates, and failed to cure its default within ten days after notice, plaintiff may enter judgment against defendant, for the full amount demanded in the complaint. When defendant failed to timely make his payments, a default notice was served upon him and his attorney. The money judgment was properly entered and filed against defendant on January 30, 2023.
Therefore, in order vacate a properly issued default judgment for failure to comply with a stipulation of settlement, defendant must establish cause sufficient to invalidate a contract, such as fraud, collusion, mistake, or accident.
Here, defendant has not set forth any evidence to suggest that the stipulation was entered as a result of any of the aforementioned factors. Defendant’s conclusory allegation that the boat was not sold at a commercially reasonable price is insufficient to invalidate his agreement. Nothing in his affidavit suggests that his attorneys lacked authority to enter the agreement on his behalf, or that the sale price of the boat was somehow listed improperly or due to fraud or mistake.
Neither does the defendant’s claim of family illness suffice. In order to set aside a stipulation of settlement for ‘lack of capacity’ due to illness, a litigant must set forth evidence of incapacity of such a nature that the litigant was incapable of comprehending the nature of the transaction or making a rational judgment concerning the transaction, or provide evidence that by reason of illness the litigant was unable to control his conduct. Defendant’s affidavit merely stated that his brother in Chicago had a kidney transplant that placed undue stress on his family. Self-serving statements are insufficient to meet the evidentiary burden of establishing diminished capacity.
In this matter, defendant has not met his burden of entitlement to vacatur of the default judgment issued against him. A stipulation of settlement is a contract and is enforceable according to its terms. Stipulations of settlements are favored by courts and are not to be lightly set aside particularly where the party seeking to vacate the stipulation was represented by counsel.
Literal enforcement of the terms of the stipulation of settlement is not unjust, especially where the agreement was negotiated by sophisticated parties, all of whom were represented by counsel, and the default was neither inadvertent nor trivial.
(Internal quotations and citations omitted).