On September 24, 2024, the First Department issued a decision in 4CS Ltd v. Kahiri Diamonds Ltd, 2024 NY Slip Op. 04513, holding that ongoing settlement negotiations were an insufficient excuse for failing to answer, explaining:
Supreme Court providently declined to vacate the default under CPLR 317 where service of process on corporate defendants was properly made by means of service upon the Secretary of State, and defendants failed to demonstrate lack of actual notice of the action. Defendant Kahiri’s admission in his sworn affidavit that he was aware plaintiff had filed a lawsuit against him in New York in 2020, and therefore engaged in settlement negotiations with plaintiff during that period, manifests actual notice of the action.
Supreme Court providently denied defendants’ motion under CPLR 5015(a)(1) for failure to provide a reasonable excuse for their default. Defendants’ denials of receipt of service, without proof, fall short of creating reasonable excuse. Furthermore, defendants’ claim that the parties were involved in settlement negotiations does not constitute a reasonable excuse.
(Internal quotations and citations omitted).