- Court
- New York Supreme Court, Appellate Division, Second Department
- Case
- US Bank Trust National Association v. Valencia
- Date
- June 3, 2026
- Slip Op. No.
- 2026 NY Slip Op 03471
Background
US Bank Trust National Association, as trustee, commenced this mortgage foreclosure action against, among others, defendant Windward Bora, LLC, relating to property in Nassau County. The plaintiff’s predecessor served the defendant by delivering a copy of the summons and amended complaint to the Secretary of State. The defendant failed to answer the amended complaint and did not appear in the action. After US Bank Trust National Association was substituted as plaintiff, the defendant moved pursuant to CPLR 317 to vacate its default in answering the amended complaint. The plaintiff opposed the motion and simultaneously moved to confirm a referee’s report and for a judgment of foreclosure and sale. The Supreme Court, Nassau County, denied the defendant’s CPLR 317 motion and granted the plaintiff’s motion, entering an order and judgment of foreclosure and sale on June 26, 2024. The defendant appealed.
Holding
The Appellate Division dismissed the appeal from the order and judgment of foreclosure and sale except insofar as it brought up for review the underlying order denying the CPLR 317 motion, and affirmed insofar as reviewed. Under CPLR 317, a defendant served by delivery to the Secretary of State may be allowed to defend the action upon a showing that it did not personally receive notice of the summons in time to defend and has a potentially meritorious defense. The Court found that the defendant failed to satisfy the requirements of CPLR 317 because it did not adequately demonstrate that it lacked actual notice of the proceedings in sufficient time to interpose an answer or that it possessed a defense on the merits. The Court awarded one bill of costs to the plaintiff.
Takeaways
To vacate a default under CPLR 317, a defendant served through the Secretary of State must establish two things: first, that it did not personally receive notice of the summons in time to defend, and second, that it has a potentially meritorious defense to the action. This provision is narrower than CPLR 5015(a)(1), which requires a showing of reasonable excuse for the default. Under CPLR 317, the focus is on whether the defendant had actual notice rather than whether there was a reasonable excuse for failure to appear. However, the defendant still bears the burden of proof on both prongs, and a bare assertion of lack of notice without supporting evidence will not suffice.
Why It Matters
This decision is particularly relevant for LLCs and business entities that are served through the Secretary of State in foreclosure proceedings. Because many business entities may have outdated addresses on file with the Secretary of State, service through that office may not reach the entity’s principals. Despite this reality, the Appellate Division requires concrete proof that the defendant did not receive actual notice in time to respond, not merely an assertion that the Secretary of State service was ineffective. Business entities should ensure that their registered agent and address information with the Secretary of State remains current, as failure to do so may foreclose their ability to later vacate a default under CPLR 317.