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April 14, 1984


The opinion of the court was delivered by: KRAM



 The above-captioned action came before this Court upon defendant's motion for an order vacating the default judgment granted plaintiffs on December 19, 1983, and dismissing the complaint. For the reasons, and on the conditions, stated below, defendant's motion is granted in part and denied in part.


 Plaintiffs commenced this action by filing the complaint on July 13, 1983. The action seeks damages arising out of the alleged breach of a contract for the sale to defendant of a building located at 121 East 78th Street, Manhattan, and owned by plaintiffs. Plaintiffs then attempted to serve defendant at this last known address, 800 Fifth Avenue, Manhattan, an apartment apparently leased by defendant's mother or some other family member in which defendant had been permitted to reside. Plaintiffs were unable to serve him there.

 Plaintiffs then determined, through the use of a service agency, that defendant was an employee of Mark Evan Products, Inc. ("Mark Evan"). In an effort to verify this information, plaintiffs' attorney telephoned Mark Evan and asked to speak to "Mr. Streit." After being told "[w]e have three Mr. Streits," plaintiffs' attorney specified the defendant, Clifford Streit. The person on the other end of the phone responded "I will get him." Plaintiffs' attorney hung up at that point, apparently satisfied that Clifford Streit was employed there (Affidavit of Stephen F. Harmon, dated January 31, 1984, P4).

 Thereafter, on October 13, 1983, the summons and complaint were served by leaving the papers with Blanche Brand, the receptionist at Mark Evan, and by mailing copies of same on October 18, 1983, to defendant, at 800 Fifth Avenue, his last known residence, as well as to defendant in care of Carl Streit (the defendant's father), 300 Castle Drive, Englewood, New Jersey, his parents' residence.

 Defendant admits that he received actual notice of the action. At the very least, his uncle, Martin S. Streit, an attorney, telephoned him and informed him about the action and the attempted service at Mark Evan. Clifford Streit claims he did not know what to do about the complaint; however, he did not, at that time, ask Martin Streit to represent him. Nor did he ask Martin Streit for advice. Instead, Clifford Streit simply chose to ignore the complaint.

 Meanwhile, on October 31, 1983, Martin Streit, claiming to represent Mark Evan, wrote a letter to plaintiffs' attorneys purporting to advise them that service was defective. The letter states, in relevant part, as follows:

 Please be advised that I have consulted by Mark Evan . . . in which you attempted personal service on Clifford Streit who is not employed there.

 Moreover, in violation of Rule 4(d) of Federal Civil Procedure you attempted to serve the receptionist of Mark Evan. . . .

 Furthermore, Mr. Clifford Streit is not a resident of the State of New York and presently, I believe is out of the state. I am not authorized to accept defective service on his behalf.

 I further state that any action taken by your firm based upon defective service will subject you to sanctions

 [sic passim]. Therefore, as early as October 31, 1983, although neither being asked to nor purporting to represent defendant, Martin Streit was taking extra-judicial steps to protect defendant's interests in proper service. Nonetheless, the defendant neither answered nor took judicial steps -- to wit, a timely motion pursuant to Rule 12 of the Federal Rules of Civil Procedure -- to assert his claim of defective service.

 In accordance with this Court's practice in handling applications for a default judgment, plaintiffs moved, by Order to Show Cause dated November 17, 1983, for a default judgment against defendant, pursuant to Rule 55 of the Federal Rules of Civil Procedure. Service of the Order to Show Cause was, at the direction of this Court, effected in the same manner as the summons and complaint had been -- delivery to Mark Evan, copies mailed to defendant's last known residence and to his parents' residence. A hearing was scheduled for December 12, 1983, at 10:00 A.M.

 On December 12, 1983 Martin Streit appeared for Mark Evan in opposition to plaintiffs' motion. At the time of his appearance, Mr. Streit hand-served an affidavit in opposition to plaintiffs' motion. *fn1" In light of the appearance at the eleventh hour of opposition to plaintiffs' motion, albeit by Mark Evan, a non-party without standing, the hearing was adjourned until December 19, 1983. Martin Streit was informed, however, at that time that the unorthodox manner in which he was attempting to protect defendant, while not representing him, was unacceptable. The Court agreed to construe opposition papers from defendant as a Rule 12 motion, but requested, and expected, that the defendant be the opposing party.

 On December 19, 1983, Martin Streit again appeared at the hearing in opposition to the entry of a default judgment against Clifford Streit. Once again, however, Martin Streit purported to represent Mark Evan and not the defendant. Since no one with standing to oppose plaintiffs' application appeared, plaintirffs' motion was granted and the matter referred to Magistrate Tyler, pursuant to Rule 55(a)(2), for the purposes of conducting an inquest and determining plaintiffs' damages.

 On January 17, 1984, defendant, finally represented by Martin Streit, brought on the motion currently before the Court by Order to Show Cause. A hearing was held on the instant application on February 2, 1984, at which defendant presented testimony from the following witnesses: Blanche Brand, the receptionist at Mark Evan who received the service; Jay Buchalter, Mark Evan's comptroller; and Clifford Streit. *fn2" Although testimony was scant on some matters, and recollections sketchy at best, the credible evidence adduced on defendant's application establishes the following scenario.

 Clifford Streit was employed by Mark Evan as a salesperson from mid-1979 through June, 1982. Clifford remained in New York through August, 1982, during which time he negotiated the contract at issue herein. Clifford's down-payment check of $106,000 for the purchase of this property was returned by the bank for insufficient funds, and the transaction fell through. *fn3" Thereafter, Clifford left the Tri-State area and went to work as a "gopher" for a foreign citizen; Clifford spend most of this time shuttling back and forth between Hong Kong and California. He returned "home" in late summer or early fall 1983. *fn4" Although he does not now work at Mark Evan, and apparently has not at any time since June, 1982, he visits Mark Evan occasionally to see his father, Carl, and his brother, Michael, who do work there (Indeed, Carl Streit is the President and sole-owner of Mark Evan).

 On October 13, 1983, a process server went to Mark Evan to effect service on Clifford Streit. The process server indicated to Blanche Brand that he was delivering something for Clifford Streit; he probably specified that he was delivering a summons and complaint. The process server then left the summons and complaint at Mark Evan for Clifford Streit. *fn5" As discussed above, Clifford Streit was made aware of this service shortly thereafter during a telephone conversation with his uncle, Martin Streit, concerning Martin's representation of Clifford in another matter. Nonetheless, service was ignored and the procedural history outlined above ensued.


 Defendant now seeks to have the default judgment entered herein vacated, pursuant to Rule 55(c) and 60(b) of the Federal Rules of Civil Procedure, and plaintiffs' complaint dismissed. Rule 55(c) provides that "[f]or good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)." Rule 60(b) provides, in relevant part, as follows:

 On motion and upon such terms as are just, the court may relieve a party of his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertance, surprise, or excusable neglect; . . . (4) the judgment is void. . . .

 Pursuant to these rules, a motion to vacate is within the trial judge's discretion. Davis v. Musler, 713 F.2d 907, 912 (2d Cir. 1983); United States v. Erdoss, 440 F.2d 1221, 1223 (2d Cir. 1971), cert. denied, 404 U.S. 849, 92 S. Ct. 83, 30 L. Ed. 2d 88 (1972). Motions to vacate default judgments, however, are to be granted liberally, so that a trial on the merits may be had and justice done. See Davis, 713 F.2d at 915 ("all doubts should be resolved in favor of those seeking relief"); Gill v. Stolow, 240 F.2d 669 (2d Cir. 1957).

 The criteria that are applicable in deciding whether to vacate a default judgment have recently been recited by this Court, and by the Second Circuit. Davis, 713 F.2d at 915; Roundball Enterprises, Inc. v. Richardson, 99 F.R.D. 174 (S.D.N.Y. 1983). Those criteria are as follows: "(1) whether the default was willful; (2) whether defendant has meritorious defense; and (3) the level of prejudice that may occur to the non-defaulting party if relief is granted." Davis, 713 F.2d at 915; Roundball, slip op. at 3. See also, Meehan v. Snow, 652 ...

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