| Northeast Steel Prods., Inc. v John Little Designs, Inc. |
| 2011 NY Slip Op 00200 [80 AD3d 585] |
| January 11, 2011 |
| Appellate Division, Second Department |
| Northeast Steel Products, Inc., Respondent, v John LittleDesigns, Inc., et al., Appellants. |
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In an action, inter alia, to recover damages for breach of contract, the defendants appeal, as limitedby their brief, from so much of an order of the Supreme Court, Orange County (Lubell, J.), datedOctober 20, 2009, as granted those branches of the plaintiff's motion which were for leave to enter adefault judgment against them on the fourth cause of action to recover damages for fraudulentinducement and the fifth cause of action to recover damages for fraud and misrepresentation, anddenied those branches of their cross motion which were to excuse their default and for leave to serve alate answer with respect to those causes of action.
Ordered that the order is reversed insofar as appealed from, on the law, with costs, those branchesof the plaintiff's motion which were for leave to enter a default judgment against the defendants on thefourth and fifth causes of action are denied, those branches of the defendants' cross motion which wereto excuse their default and for leave to serve a late answer with respect to those causes of action aregranted, and the answer is deemed served with respect to those causes of action.
To prevail on a motion to vacate a default, a party must demonstrate both a reasonable excuse forits default and a potentially meritorious cause of action or defense (see Hageman v Home Depot U.S.A., Inc., 25 AD3d 760 [2006]; Matter of Zrake v New York City Dept. ofEduc., 17 AD3d 603 [2005]). Contrary to the plaintiff's contention on appeal (seeParochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 544-545 [1983]), thedefendants established a reasonable excuse for their default in appearing or answer the complaint.Moreover, in light of the short lapse of time between the default and the defendants' submission of theircross motion, inter alia, for leave to serve a late answer, there would be no prejudice to the plaintiff ifthe cross motion were granted.
In an action to recover damages for fraud, a plaintiff must prove (1) a misrepresentation or amaterial omission of fact which was false and known to be false by defendant, (2) made for the purposeof inducing the other party to rely upon it, (3) justifiable reliance of the other party on themisrepresentation or material omission, and (4) injury (see Lama Holding Co. v Smith Barney,88 NY2d [*2]413 [1996]; Bank of N.Y. v Realty GroupConsultants, 186 AD2d 618 [1992]; Pappas v Harrow Stores, 140 AD2d 501 [1988]).Here, the affidavit of the defendant John Little III, together with the documentary evidence submitted bythe defendants, established the existence of a potentially meritorious defense concerning, inter alia, thetruthfulness of the defendants' representations, as well as whether the plaintiff justifiably relied upon anypurported misrepresentations. Thus, the Supreme Court should have excused the defendants' defaultwith respect to the fourth and fifth causes of action, and the defendants should have been allowed tosubmit an answer with respect to those causes of action. Skelos, J.P., Angiolillo, Hall and Roman, JJ.,concur. [Prior Case History: 2009 NY Slip Op 32420(U).]