United States District Court, S.D. New York
MEMORANDUM & ORDER
L. STANTON U.S.D.J.
Carol Yuan-Leung brought this action alleging fraudulent
filing of a federal tax information return in violation of 26
U.S.C. § 7434 and mail fraud in violation of 18 U.S.C.
§ 1341. Default judgment was entered against the
defendants. They now move to vacate the default judgment. For
the reasons that follow, defendants' motion is denied.
Carol Yuan-Leung, defendant In Bum Chung, and defendant Min
Chong Lee were partners of a title insurance company called
Orsyn Abstracts LLC ("Orsyn Abstracts"). Mr. Chung
and Ms. Lee were also officers of another entity called Orsyn
Land Services, Inc. ("Orsyn Land").
31, 2015, Ms. Leung left Orsyn Abstracts, which owed her
$100, 395.28 at the time. That day, Mr. Chung wrote to Ms.
Leung's company, SSYL Corp., a check in the amount of
$50, 395.28, and Mr. Chung and Ms. Lee executed a promissory
note promising to pay Ms. Leung the remaining $50, 000
December 19, 2016, Ms. Leung commenced a New York state court
action against defendants to recover the promissory
note's unpaid balance. The parties reached a settlement,
which disposed of the issue of the remaining $50, 000
March 19, 2018, Ms. Leung received from Orsyn Land a Form
1099 for the 2015 tax year, which identified the original
$50, 595.28 payment to her as "non-employee
Leung brought this action on July 10, 2018, alleging that the
Form 1099 had been fraudulently filed because that payment
was not "compensation" (i.e., earnings taxable to
her, and a deduction for Orsyn Land) but rather a partial
repayment of contributions she made to Orsyn Abstracts
between 2013 and 2015 to finance its operating expenses.
Defendants were served in July of 2018.
retained Michael-Hyun Lee, Esq. as their counsel. Mr. Lee
informed defendants that he would represent them in this
case, but he did not file a notice of appearance, did not
file an answer, nor take any other action on defendants'
behalf, due to claimed but unspecified "serious health
issues." Michael-Hyun Lee Decl. ¶ 9. He states that
as his health issues worsened, he was not able to assist
defendants or "even to communicate with them regarding
this matter." Id. ¶ 10. No affidavit of
any treating or other physician has been submitted.
October 1, 2018, the Clerk issued a certificate of default as
to all defendants. On October 5, 2018, plaintiff moved for
default judgment, which was served upon each of the three
defendants via U.S. Mail (Dkt. No. 25). Default judgment was
entered on November 2, 2018 against defendants requiring them
to immediately issue a corrected Form 1099, and awarding Ms.
Leung the amount of $33, 276.43, representing primarily her
costs and attorneys' fees incurred in obtaining
correction of the Form 1099, as well as $5, 000 statutory
December 13, 2018, the Clerk issued a writ of execution
against defendants in the amount of $33, 276.43, which was
served upon defendants' banks on December 31, 2018 and
January 2, 2019.
January 10, 2019, defendants' previous counsel, Mr. Lee,
sent an email to plaintiff s counsel stating, "I would
appreciate a call from you and if you can send a notice to
the bank lifting the writ of execution as soon as possible to
limit any irreparable damage to my client." O'Brien
Decl. Ex. 1.
counsel for defendants, Robert James Basil, Esq. of the Basil
Law Group, PC, appeared on February 26, 2019, and filed this