The motion by defendants Christine Collazo and Dennis Iderman, by Order to Show Cause, for an order vacating a default judgment entered against them on or about October 9, 2007 and for a further order, pursuant to CPLR 5240, staying a partition action commenced by plaintiffs against said defendants and others in this court under Index No. 1366/08 and the motion by plaintiffs Dr. Ted Rothstein (Dr. Rothstein) and Frances Zeman, also by Order of Show Cause, for an order, among other things, vacating the temporary restraining order contained within defendants' Order of Show Cause and sanctioning defendants for their allegedly frivolous conduct are consolidated for disposition herein and, upon consolidation:

the motion by defendants is granted and [*2]

the motion by plaintiffs is, in all respects, denied.

In this action, it is alleged that, while Christine Collazo was in the employ of Dr. Rothstein, she used his credit and debit cards and stole cash and property from him, without his knowledge or consent. In their answer dated November 22, 2005, defendants asserted that most of the disputed credit card charges were made on behalf of Dr. Rothstein or his wife, Frances Zeman, and that those involving Christine Collazo's personal use were known to and approved by her employer. In January and February 2006, plaintiffs served various discovery demands, including a Notice for Discovery and Inspection in which plaintiffs sought information about defendants' bank accounts and tax filings. After plaintiffs had not allegedly received satisfactory responses to their discovery demands, they moved to compel disclosure. By order dated August 11, 2006, defendants were directed "to the extent they have not already . . . to comply with the provisions of the preliminary conference order within 30 days . . ."^[FN1] On or about August 24, 2006, plaintiffs served an amended complaint. An answer to the amended complaint was served by defendants' former counsel on September 22, 2006. Because the answer was verified by the attorney, rather than by defendants, by letter dated October 15, 2006, the answer was rejected by plaintiffs' attorney as "improperly verified."^[FN2] On or about January 16, 2007, plaintiffs moved for a default judgment against defendants based upon defendants' alleged failure to properly serve an answer to the verified amended complaint and to comply with court-ordered discovery. On or about February 27, 2007 (before the return date of plaintiffs' motion), defendants' prior attorneys moved to be relieved as counsel. On March 29, 2007, the court granted the latter motion and all proceedings were stayed for 60 days. Plaintiffs' motion for a default judgment was adjourned until June 21, 2007. On July 19, 2007, plaintiffs' motion for a default judgment was granted on default. On September 18, 2007, an inquest on damages was held and, after inquest, plaintiffs were awarded $413,000, with interest from January 1, 2003. On October 9, 2007, judgment was entered in favor of plaintiffs and against defendants in the sum of $591,287.64. On or about January 11, 2008, plaintiffs commenced a partition action regarding real property at 246-248 Smith Street in Brooklyn, which property is owned by Christine Collazo, her mother and her two sisters. Plaintiffs seek the sale of the property and the application of Christine Collazo's portion of the sale proceeds to their judgment.

In their motion, defendants requested that the default judgment herein be vacated and that the enforcement of the judgment, including the partition action, be stayed "pending the hearing of this application." In an affidavit in support of the motion, Christine Collazo avers that the sale of the subject real property would create immediate and irreparable harm to her, her husband and her ailing mother. Ms. Collazo relates that she and her husband have a meritorious defense to plaintiffs' claims, given that the credit charges at issue were made with Dr. Rothstein's knowledge and consent and that neither she nor her husband (defendant Dennis Iderman) [*3]destroyed any patient records or converted any computer equipment belonging to her employer.^[FN3] With respect to the reasons for the failure to oppose plaintiffs' motion for a default judgment, Christine Collazo explains that, following her former attorneys' withdrawal, she was allegedly told by counsel that she should not be concerned about ownership of the real property being in danger because "no jury in Brooklyn" would allow the house to be taken away from her family. She adds that she was unaware that her answer to the amended complaint had been rejected, that there were any outstanding issues regarding discovery or, ultimately, that a default judgment had been granted until October 2007, following the inquest.

In their motion, plaintiffs accuse defendants of having "defrauded this Court by making materially false statements" and, therefore, the temporary stay herein should be summarily vacated and defendants' motion denied. In particular, plaintiffs dismiss defendants' professed ignorance of the default motion and the underlying basis for it as "perjury," given plaintiffs' service upon defendants of the March 29, 2007 order which relieved defendants' prior attorneys as counsel and indicated that "[p]laintiffs' motion for default is adjourned to June 21, 2007." Plaintiffs also fault defendants for violating the terms of the preliminary conference order by failing to respond to the Notice for Discovery and Inspection and to serve a properly verified answer to the amended complaint.

In opposition to plaintiffs' motion, defendants assert that they did not receive a copy of their files from prior counsel once the firm withdrew and, after they retained their present attorneys in December 2007, the files that were provided were incomplete and did not include the default motion.^[FN4] Defendants do not dispute the fact that they were served with a copy of the March 29, 2007 order; rather, they essentially argue that they did not understand the import of its reference to a default motion or an adjourned date.

In reply, plaintiffs deride defendants' explanation for failing to oppose the default motion and note that "defendants have no other excuse for their default."

A defendant attempting to vacate a default must establish both a reasonable excuse for the default and a meritorious defense (see Mita v Bianchi, 286 AD2d 376 [2001]). The determination of what constitutes a reasonable excuse for a default lies within the sound discretion of the trial court (see Roussodimou v Zafiriadis, 238 AD2d 568 [1997]). Defendants herein have allegedly committed three defaults - - - the failure to appear at the calendar call to oppose plaintiffs' motion for a default judgment, to serve a properly verified answer to the amended complaint and to respond to plaintiffs' Notice for Discovery and Inspection (the latter two defaults being the bases for the default motion). In this case, prior to those defaults, defendants had served a timely answer to the complaint, appeared for a preliminary conference and responded to some of plaintiffs' discovery demands, actions which indicate an intent to defend against plaintiffs' claims. Considering their expenditure of more than $800 for copies of [*4]the court file, it would appear that their knowledge of the conduct of their defense was less than complete and that, in light of the departure of their original attorneys, they had a sufficient excuse for their failure to oppose the default motion. Since defendants have established the requisite excusable default and meritorious defense and given the strong public policy of resolving cases of this merits (see, e.g., 2M Realty Corp. v Boehm, 13 AD3d 361 [2004]), defendants' failure to appear in opposition to the motion is excused and the order and judgment entered thereon is vacated.

With respect to defendants' underlying lapses, plaintiffs' failure to reject the unverified answer until three weeks of its receipt constituted a waiver of the defect, especially where, as here, there is no evidence that a substantial right has been prejudiced (see Theodoridis v American Transit Ins. Co., 210 AD2d 397 [1994]). Moreover, the preliminary conference order did not direct defendants to serve a response to a Notice for Discovery and Inspection and, therefore, defendants were, at most, guilty of ignoring a discovery demand, rather than a court order. Their failure to do so does not appear to have been wilful or contumacious or part of a pattern of dilatory conduct (cf. Howe v Jeremiah, 51 AD3d 975 [2008]). Consequently, sanctions are not appropriate. Accordingly, the motion by defendants is granted. In light of such relief, the motion by plaintiffs is denied.

In order to resolve any outstanding discovery issues, including the outstanding Notice for Discovery and Inspection, the parties are directed to appear at 9:30 a.m. on August 27, 2008 for a Compliance Conference.

The foregoing constitutes the decision and order of this court.

E N T E R,

J. S. C.