CourtListener opinion 10461157

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UNITED STATES BANKRUPTCY COURT 
WESTERN DISTRICT OF NEW YORK 
_________________________________________ 

In re: 

James W. Blakesley, Jr., Bankruptcy Case No. 19-20566-PRW 
 Chapter 7 
 Debtor, 

_________________________________________ 

Douglas J. Lustig, 
 as Chapter 7 Trustee, 

 Plaintiff, 

 vs. Adversary Proceeding No. 21-2001-PRW 

Lisa J. Blakesley, 

 Defendant. 
_________________________________________ 

 DECISION AND ORDER 
 GRANTING MOTION TO VACATE DEFAULT JUDGMENT 
 UNDER RULE 60(b)(1) FRCP 

PAUL R. WARREN, U.S.B.J. 

Lisa J. Blakesley, the Defendant in this adversary proceeding, has moved to vacate a default 
judgment entered in favor of the Trustee, under Rule 60(b)(1) FRCP.1 The Trustee has opposed the 
motion clamorously. Following a flurry of submissions by both parties, the Court heard argument 
on December 9, 2021, after which the matter was taken under submission. For the reasons that 
follow, Ms. Blakesley's motion to vacate the default judgment is GRANTED, under Rule 60(b)(1) 
FRCP. 

1 Rule 60(b) is made applicable in adversary proceedings by Rule 9024 Federal Rule of 
Bankruptcy Procedure ("FRBP"). 
 I. 
 JURISDICTION 
The Court has jurisdiction under 28 U.S.C. §§ 157(a), 157(b)(1) and 1334. This is a core 
proceeding under 28 U.S.C. § 157(b)(2)(A), (E), (F) and (O). 

 II. 
 ISSUE 
The question presented is whether, on the specific facts having evidentiary support in the 
record, Ms. Blakesley has carried her burden, under Rule 60(b)(1) FRCP, to justify vacatur of the 
default judgment entered against her. Applying the standards established by Second Circuit 

precedent, the answer is yes. 

 III. 
 FACTS 
James Blakesley2 filed a petition under Chapter 7 on June 6, 2019. (Case No. 19-20566, 
ECF No. 1).3 In Schedule A/B of his petition, Mr. Blakesley listed his interest in Ms. Blakesley's 
401(k) account in the amount of $90,000 arising out of a "divorce property settlement" (it also arose 
out of a Judgment of Divorce). (ECF BK No. 1, Sch. A/B ¶ 29). On Schedule C of his petition, Mr. 
Blakesley listed his interest in the funds in that 401(k) account as fully exempt, in the total amount 
of $90,000. (Id. at Sch. C). The docket in the bankruptcy case reflects that no objection to the 

2 Mr. Blakesley is the former spouse of the Defendant. 
3 References to the docket for the adversary proceeding (Case No. 21-2001) are identified as 
"ECF AP" and references to the docket in the main bankruptcy case (Case No. 19-20566) are 
identified as "ECF BK." 
 2 
exemptions claimed by Mr. Blakesley was ever filed—and the time to object has long since passed.4 
The docket further reflects that the exemptions claimed by Mr. Blakesley have never been amended, 
modified or waived—and there is no evidence in admissible form that Mr. Blakesley has ever done 
so. Mr. Blakesley was granted a discharge (ECF BK No. 29) but the bankruptcy case has remained 
open due to the Trustee's designation of the case as a "possible asset" case. (ECF BK No. 31).5 
The Complaint sought turnover of the money owed by Ms. Blakesley to Mr. Blakesley, in an 
amount not less than $89,000, under the Separation, Property Settlement and Opting Out 

Agreement. (ECF AP No. 1 ¶¶ 11, 13, 16, 17). A Summons and Complaint was served on Ms. 
Blakesley on August 11, 2021, with copies also provided to Mr. Blakesley and the attorney who 
represents him in the Chapter 7 case. (ECF AP No. 4). Service of the Summons and Complaint 
was made by regular first class mail, as permitted by Rule 7004(b)(1) FRBP. (Id.). 
Ms. Blakesley did not answer the Complaint or otherwise appear in the adversary 
proceeding—her time to do so expired on September 13, 2021 (including 3 extra days for service by 
mail). See Rule 7012(a) FRBP. A few weeks later, the Trustee applied for the entry of a default 
against Ms. Blakesley. (ECF AP No. 5). The Clerk entered a default against Ms. Blakesley the 
next day. (ECF AP No. 6). The Court subsequently entered a default judgment in favor of the 
Trustee and against Ms. Blakesley, under Rule 55(b)(2) FRCP, in the amount of $90,000—the 

amount of money due from Ms. Blakesley under the state court's Judgment of Divorce. (ECF AP 
No. 8). The adversary proceeding was promptly closed. As had been this Court's procedure for 

4 The Court can always take judicial notice of its docket. Mangiafico v. Blumenthal, 471 F.3d 
391, 398 (2d Cir. 2006). 
5 Because the Chapter 7 case was designated as having a "possible asset" it remains open. 
However, the Trustee has not requested that the Clerk of Court issue a "notice of assets" to 
creditors. As a result, no proofs of claim have ever been filed. 
 3 
more than 30 years, the default judgment was granted on a simple application, not by motion on 
notice to Ms. Blakesley.6 
A few weeks later, counsel to Ms. Blakesley filed an "Ex Parte Application to Re-Open 
Adversary Proceeding," citing as authority § 350 of the Code. (ECF AP No. 11). The Clerk issued 
a deficiency notice requiring the request to be made by motion on notice, in keeping with this 
Court's long-standing practice requirements. In re Christensen, No. 09-20299-PRW, 2015 Bankr. 
LEXIS 3506, at *3 n.4 (Bankr. W.D.N.Y. Oct. 16, 2015) (Warren, J.); In re Gill, 529 B.R. 31, 34 

n.2 (Bankr. W.D.N.Y. 2015) (Warren, J.). Counsel to Ms. Blakesley then filed a motion, on notice 
to the Trustee, requesting that the Court reopen this adversary proceeding under § 350(b) of the 
Code, and, additionally, requesting that the Court vacate the default judgment under Rule 60(b) 
FRCP. (ECF AP Nos. 14 and 16—the latter being an amendment to the notice of motion to identify 
the proper time of day for a hearing on the motion). Included with that motion was an affirmation 
from Ms. Blakesley and a memorandum of law in support of the motion. (ECF AP No. 14-2 & 14-
4). Ms. Blakesley admits to having received the Summons and Complaint at her residence in 
September 2021, but can't recall reading it; nor does she recall having received any prior notice or 
communication from the Trustee concerning the 401(k) issue. (ECF AP No. 14-2 ¶¶ 11-13). Ms. 

6 The Court has been deliberate in its use of the word "had" in this sentence. For more than 
30 years (and possibly longer than 40 years) only where the debtor was the defendant in an 
adversary proceeding was a motion (on notice) required to obtain entry of a default judgment. 
Because default judgments have been exceedingly rare (in this Court's experience) that procedure 
was not problematic. This case has, however, demonstrated the need to revisit and revise this 
decades-old practice. Going forward, this Court will grant default judgment in any adversary 
proceeding only after a motion by the plaintiff(s), on notice to and properly served on the 
defendant(s), under this Court's Negative Notice Procedures. Proof of all factual allegations in the 
Complaint must be supported by an affidavit, under Rule 55(b)(2)(C) FRCP, with evidence in 
admissible form establishing the truth of the allegations in the Complaint, in a motion seeking entry 
of a default judgment. 
 4 
Blakesley does recall receiving a copy of the default judgment that was delivered to her by mail in 
October. (ECF AP No. 14-2 ¶ 14). 
In the motion, Ms. Blakesley asserts that the default judgment should be vacated by this 
Court, under Rule 60(b)(1) FRCP, for her excusable neglect in failing to timely answer. First, Ms. 
Blakesley points out that, prior to receiving a copy of the default judgment, the only communication 
she received concerning this action was the Summons and Complaint delivered to her by regular 
first class mail—which she admits to having ignored. (ECF AP No. 14-2 ¶¶ 11-13). Next, Ms. 

Blakesley argues that she has a meritorious defense to the action. Specifically, it is argued that, 
because Mr. Blakesley's interest in the money in the 401(k) was disclosed in his schedules and 
claimed as fully exempt, it ceased to be property of the estate by operation of law due to the failure 
of the Trustee to object to the claimed exemption. (ECF AP No. 14 ¶¶ 5-6). Therefore, the 
argument goes, the Trustee has no authority to pursue property that is not property of the 
bankruptcy estate. 
The Trustee filed opposition to the motion, asserting various grounds why the default 
judgment should not be vacated. (ECF AP Nos. 20, 22).7 First, the Trustee asserts that Ms. 
Blakesley's failure to answer the Complaint was calculated and willful. (ECF AP No. 22 ¶¶ 48-71). 
Next, the Trustee argues that Ms. Blakesley has no defense to the underlying action, because the 

Trustee and Mr. Blakesley "agreed to resolve any interest or exemption that the debtor may have in 
the retirement monies." (Id. at ¶ 36). In simple terms, the Trustee is alleging that, despite the 
passage of two years since the time to challenge the exemption having lapsed, Mr. Blakesley has 
agreed to waive his claim of exemption. (No evidence in admissible form is submitted by the 

7 The Court will refer only to the documents filed at ECF AP No. 22, as that filing corrected a 
technical error with the earlier filing. Substantively, the filings are identical, so no purpose would 
be served in referring to both filings. 
 5 
Trustee to support this assertion.) Finally, the Trustee argues that he would be prejudiced by 
vacatur of the default judgment, because he has taken steps to enforce the judgment and because 
Ms. Blakesley agreed to settle this action—seemingly suggesting that she did so before the motion 
to vacate the default judgment was filed. (Id. at ¶¶ 82-89). (No evidence in admissible form is 
submitted by the Trustee to support this second assertion.) 

 IV. 

 DISCUSSION 
A. Reopening the Adversary Proceeding Is Unnecessary 
Counsel to Ms. Blakesley titled the motion as "Motion to Reopen Adversary and Vacate 
Default Judgment." (ECF AP No. 14). But, nowhere in the motion or the memorandum of law in 
support of the motion does counsel cite to any Code provision, Rule or caselaw to support the 
request. In fact, other than in the title of the motion, counsel to Ms. Blakesley doesn't even mention 
"reopening" the adversary proceeding again (except in the prayer for relief at the end of the 
motion). But no matter. Like a greyhound chasing a mechanical rabbit, counsel to the Trustee was 
off on the chase. Citing § 350(b) of the Code and the Second Circuit's decision in In re Chalasani, 
92 F.3d 1300 (2d Cir. 1996), the Trustee argues that Ms. Blakesley has failed to demonstrate cause 

to reopen the adversary proceeding. (ECF AP No. 22-7 at 9-10). On that basis, the Trustee 
concludes that the motion should be denied in its entirety. 
The Trustee's analysis of the applicability of § 350(b) of the Code to the motion at hand is 
entirely misplaced. Section 350(b) of the Code applies only to reopening bankruptcy cases, not to 
adversary proceedings. The plain language of § 350(b) of the Code makes it readily apparent that it 
applies to the closing and reopening of the bankruptcy case: "(a) After an estate is fully 
 6 
administered and the court has discharged the trustee, the court shall close the case. (b) A case 
may be reopened in the court in which such case was closed to administer assets, to accord relief to 
the debtor, or for other cause." 11 U.S.C. § 350(b) (emphasis added). There is no "estate" in an 
adversary proceeding. There is no "trustee" to be discharged in an adversary proceeding. The 
estate and the trustee are creatures that exist in a bankruptcy case. Would it have been more precise 
if Congress had included the word "bankruptcy" before the word "case" in § 350(a) and (b)? No 
doubt. But the context in which Congress used the word "case" in those subsections leaves no room 

for doubt—except, apparently, here in the Trustee's mind. 
The Second Circuit has also observed that a bankruptcy case, if closed, must first be 
reopened under § 350(b) of the Code, before a defendant can seek to vacate a default judgment in an 
adversary proceeding. See In re Chalasani, 92 F.3d 1300 (2d Cir. 1996). Puzzlingly, the Trustee 
relies on Chalasani, quoting a passage at some length in his memorandum of law, to argue that it is 
necessary for Ms. Blakesley to both demonstrate cause to reopen this adversary proceeding under 
§ 350(b) and, if successful, to then demonstrate a basis to vacate the default judgment. (ECF No. 
22-7 at 9). The Trustee's reliance on Chalasani—for the proposition that this Court must first find 
"cause" to reopen the adversary proceeding under § 350(b), before the Court can consider the 
request to vacate the default judgment under Rule 60(b) FRCP—appears to be the result of a 

careless reading of that case. The Court will give counsel the benefit of the doubt that it was 
carelessness, and not an attempt at mischief, that is the basis for his argument. 
In Chalasani, the debtor filed a Chapter 7 case. In re Chalasani, 92 F.3d at 1305. While the 
bankruptcy case was pending (or "open"), State Bank of India commenced an adversary proceeding 
against Mr. Chalasani. Id. The bankruptcy court entered a non-dischargeable default judgment for 
approximately $1.7 million against Mr. Chalasani and in favor of State Bank, and the adversary 
 7 
proceeding was concluded. Id. The bankruptcy case continued on, presumably as the trustee 
administered the case. Id. at 1306. The bankruptcy case was closed and a final decree issued 
several months after the adversary proceeding had been concluded. Id. Only after the bankruptcy 
case had been closed did Mr. Chalasani, through new counsel, file a motion seeking to reopen the 
bankruptcy case and to also vacate the default judgment in the adversary proceeding. Id. The 
motion to reopen the bankruptcy case was denied by the bankruptcy court, but, as the Second 
Circuit observed, the bankruptcy court's order did not make it clear whether the denial was with 

respect to reopening the bankruptcy case or vacatur of the default judgment in the adversary 
proceeding. Id. at 1307. Regardless, the Second Circuit did not hold (or even hint) that § 350(b) 
applied to reopening an adversary proceeding, as is suggested by counsel to the Trustee here. Quite 
the opposite. 
"A district court does not need an independent basis to reopen a civil proceeding before 
considering a motion for relief from a judgment pursuant to Rule 60(b) of the Federal Rules of Civil 
Procedure. Rather, such a motion is deemed a continuation of the original proceeding." In re Sun 
Healthcare Group, Inc., Case No. 99-03657 (MFW), A.P. Nos. 01-7671 & 01-7480 (MFW), 2004 
Bankr. LEXIS 572, at *16-17 (Bankr. D. Del. Apr. 30, 2004) (citing 12 Moore's Federal Practice 
§ 60.61 (Matthew Bender 3d ed. 1999)). See also In re Ander, Case No. 13-25279-B-7, AP No. 13-

2225, 2015 Bankr. LEXIS 1352, at *9-10 (Bankr. E.D. Ca. Apr. 15, 2015). 
Here, the bankruptcy case is and has remained open continuously since the Chapter 7 
petition was filed. Consequently, Ms. Blakesley's suggestion—in the title of the motion—that the 
adversary proceeding must be "reopened," and the Trustee's argument that the motion to reopen 
should be denied under § 350(b) of the Code (thereby sinking with it the motion to vacate the 
default judgment), are misplaced and lack any legal authority in support of either position. Because 
 8 
it is unnecessary for the Court to "reopen" the adversary proceeding to entertain Ms. Blakesley's 
motion to vacate the default judgment, the Court will disregard both the request and the response as 
being off the mark. 
B. The Default Judgment Should Be Vacated Under Rule 60(b)(1) FRCP 
Rule 55(c) FRCP provides that "[t]he Court may set aside an entry of default for good cause, 
and it may set aside a final default judgment under Rule 60(b)." Here, Ms. Blakesley has moved to 
vacate the default judgment under Rule 60(b)(1) FRCP (and presumably Rule 55(c) FRCP), 

claiming "excusable neglect" in failing to either answer the Complaint or otherwise appear in the 
adversary proceeding. 
The Second Circuit has established very clear overarching principles to be followed by the 
trial court in deciding whether to grant relief to a party seeking vacatur of a default judgment.8 
And, when applying the Second Circuit's three-factor test in deciding whether to vacate a default 
judgment, the trial court is to be mindful that the Second Circuit has expressed a strong "preference 
for resolving disputes on the merits." Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). 
See also American All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996) ("Strong public 
policy favors resolving disputes on the merits."). "Motions to set aside default judgments should be 
granted liberally." Crawford v. Nails on 7th by Jenny Inc., No. 18 Civ. 9849 (ER), 2020 U.S. Dist. 

LEXIS 19230, at *6 (S.D.N.Y. Feb. 5, 2020) (citing Standards Enters., Inc. v. Bag-It, Inc., 115 
F.R.D. 38, 39 (S.D.N.Y. 1991)). "Rule 60(b) is its strongest in the context of setting aside default 

8 It is not lost on the Court, but appears to have been lost on the Trustee, that the Second 
Circuit has engaged in a fact-intensive analysis, in each of its decisions, to determine whether a 
lower court's denial of a motion to vacate a default judgment finds support in the Circuit's three-
factor test. While the Trustee's brief correctly states the applicable test and the outcome of the 
Second Circuit cases he cites, the specific facts that drove the outcome of each case have been 
glossed over or completely ignored. 
 9 
judgments . . . There is much more reason for liberality in reopening a judgment when the merits of 
the case never have been considered . . . ." Standards Enters., Inc., 115 F.R.D. at 39. "[I]n ruling 
on a motion to vacate a default judgment, ‘all doubts must be resolved in favor of the party seeking 
relief from the judgment in order to ensure that to the extent possible, disputes are resolved on their 
merits.'" Gesualdi v. Quadrozzi Equip. Leasing Corp., 629 F. App'x 111, 113 (2d Cir. 2015) 
(quoting New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005)). See also Robinson v. Sanctuary 
Music, 383 F. App'x 54, 58 (2d Cir. 2010); Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167, 172 

(2d Cir. 2001). "Nonetheless, default judgment is an appropriate sanction for ‘defaults that arise 
from egregious or deliberate conduct.'" DIRECTV, LLC v. Wright, No. 15-CV-474-FPG, 2019 U.S. 
Dist. LEXIS 216133, at *16 (W.D.N.Y. Dec. 16, 2019) (Geraci, C.J.) (quoting 1st Bridge LLC v. 
682 Jam. Ave., LLC, No. 08-CV-3401(NGG)(MDG), 2009 U.S. Dist. LEXIS 8859, at *2 (E.D.N.Y. 
Feb. 4, 2009) (quoting American All. Ins. Co., 92 F.3d at 61)). 
Under the umbrella of those overarching principles, the Second Circuit has established a 
three-factor test for trial courts to apply in deciding a motion to vacate a default judgment under 
Rule 60(b): "(1) whether the default was willful, (2) whether the defendant demonstrates the 
existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will 
cause the nondefaulting party prejudice." De Curtis v. Ferrandina, 529 F. App'x 85, 86 (2d Cir. 

2013) (internal quotation marks and citation omitted). See also W.B. David & Co. v. De Beers 
Centenary AG, 507 F. App'x 67, 69 (2d Cir. 2013); Pecarsky, 249 F.3d at 171; American All. Ins. 
Co., 92 F.3d at 59. 
With those overarching principles and the three-factor test in mind, the Court turns to the 
parties' arguments for and against vacatur of the default judgment. 

 10 
1. Willfulness of the Defendant in Defaulting 
Ms. Blakesley, in arguing that her default was not willful, points to the undisputed fact that 
the only communication she received concerning this adversary proceeding was the Summons and 
Complaint delivered to her residence by regular first class mail. (ECF AP No. 14-2 ¶ 13). She does 
not dispute that she lives at the address to which the Summons and Complaint were mailed. (Id. at 
¶ 12). She admits receiving the Summons and Complaint in September, but asserts that she doesn't 
think she read those documents. (Id. at ¶ 13). 

On the other hand, the Trustee argues that Ms. Blakesley's conduct in ignoring the facially 
valid Summons is tantamount to a willful strategy to evade this litigation. (ECF AP No. 22 ¶¶ 47-
81). The Trustee points to the fact that Ms. Blakesley ignored three letters from Mr. Blakesley's 
divorce attorney in March, April and May 2019, concerning rollover of funds in her 401(k) and the 
need for Ms. Blakesley to cooperate in the preparation of a Qualified Domestic Relations Order. 
(ECF AP No. 22-6). 
Here, it is undisputed that the only contact between the Trustee and Ms. Blakesley 
concerning this adversary proceeding was the delivery by regular first class mail of the Summons 
and Complaint. There was no pre-litigation demand letter.9 There were no orders issued by this 
Court, after service of the Summons and before entry of the default judgment. There was no 

motion, on notice to Ms. Blakesley, requesting entry of the default judgment (admittedly as 
permitted by a long-standing practice of this Court—which practice has been abrogated as a result 

9 The Trustee's attempt to reach back to the 2018-2019 state court divorce action to bolster his 
claim that Ms. Blakesley made a strategic decision to default is unavailing. The question is not 
whether Ms. Blakesley was uncooperative in the divorce action in the state court two years ago. 
The question is whether the facts before this Court demonstrate a strategic decision by Ms. 
Blakesley to default. They do not. 
 11 
of the lessons learned by the Court in this case). Here, there was but one single mailing to Ms. 
Blakesley—a mailing that contained a Summons, as permitted by Rule 7004(b)(1) FRBP. Ms. 
Blakesley admits receipt of the Summons and admits that she took no steps to respond. Was Ms. 
Blakesley's conduct negligent? Certainly. Was Ms. Blakesley's conduct grossly negligent? 
Perhaps. 
The Second Circuit has refused to expand the standard for a finding of willfulness to include 
careless or negligent errors. American All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996). 

And the Circuit instructed that "[a] less rigorous construction [of "excusable neglect"] is appropriate 
for a lawsuit yet to be contested on its merits." Id. at 61 n.2. Further, the Circuit established that 
"[g]ross negligence can weigh against the party seeking relief from a default judgment, though it 
does not necessarily preclude relief." Id. at 61 (emphasis added). As with all decisions granting or 
denying relief from a default judgment under Rule 60(b)(1), the specific facts in the record 
necessarily drive the outcome. The vast body of Second Circuit decisions illustrate that point. 
At most, Ms. Blakesley's conduct in ignoring the Summons was grossly negligent. There is 
no evidence that her conduct was deliberately evasive. The Court finds, on the facts in the record, 
this factor moves the needle in favor of Ms. Blakesley. 
2. Meritorious Defense Demonstrated by Defendant 

The next hurdle for Ms. Blakesley, to justify vacatur of the default judgment, is to 
demonstrate that she has a meritorious defense. "Whether a defense is meritorious is measured not 
by whether there is a likelihood that it will carry the day, but whether the evidence submitted, if 
proven at trial, would constitute a complete defense." State St. Bank & Trust Co. v. Inversiones 
Errazuruz Limitada, 374 F.3d 158, 167 (2d Cir. 2004) (internal quotation marks omitted) (quoting 

 12 
Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 98 (2d Cir. 1993)). See also DIRECTV, LLC v. Wright, 
No. 15-CV-474-FPG, 2019 U.S. Dist. LEXIS 216133, at *11-12 (W.D.N.Y. Dec. 16, 2019). 
Here, Ms. Blakesley asserts that the Debtor's interest in her 401(k) was declared as fully 
exempt in Schedule C of the petition. (ECF AP No. 14-4 ¶¶ 2-3). She argues that, because that 
exemption was never challenged and the time to do so has long ago passed, the Debtor's interest in 
Ms. Blakesley's 401(k) ceased to be property of the estate by operation of law. See 11 U.S.C. 
§ 522(c). In support of her claim of having a meritorious defense, Ms. Blakesley points to the fact 

that the Debtor has never amended Schedule C to remove that claim of exemption, and there is no 
evidence that he has waived that exemption.10 (ECF AP No. 14 ¶¶ 5-6). That is a response to the 
substance of the Complaint, constituting the showing of a meritorious defense. 
In opposition, the Trustee asserts that the Debtor has agreed to waive his claim of exemption 
with respect to the monies in Ms. Blakesley's 401(k) account. (ECF AP No. 22 ¶ 36). However, no 
evidence in admissible form is offered by the Trustee in support of that claim. The only evidence in 
the record is Mr. Blakesley's Schedule C (listing his interest in the funds in the 401(k) as exempt). 
Mr. Blakesley has never amended Schedule C to eliminate or waive that exemption and there is no 
other evidence in the record to prove that he did so. The Trustee's unsupported claim to the 
contrary is entitled to no weight. 

10 Counsel to Ms. Blakesley also points to potential counterclaims (erroneously described as 
cross-claims) she may have concerning offsets to the Judgment of Divorce. However, if those 
counterclaims were offered as the sole basis to claim that she has a meritorious defense, that may 
not have satisfied the meritorious defense factor. See State St. Bank & Trust Co., 374 F.3d at 161 
("[W]e have never addressed whether a counterclaim, rather than a response to the substance of a 
complaint, may constitute a meritorious defense."). 
 13 
The Court finds that, on the facts in the record, this factor also moves the needle in favor of 
Ms. Blakesley. If proved at trial, Ms. Blakesley's defense would constitute a complete defense to 
the action. 
3. Prejudice Has Not Been Demonstrated by the Trustee 
When opposing a motion to vacate a default judgment under Rule 60(b) FRCP, the 
nondefaulting party must show that it would be prejudiced by vacatur of the default judgment. 
Proof of prejudice generally requires a showing that there has been a delay (by the defaulting party) 

that "will result in the loss of evidence, create increased difficulties of discovery, or provide greater 
opportunity for fraud and collusion." Robinson v. Sanctuary Music, 383 F. App'x 54, 58 (2d Cir. 
2010). See also Crawford v. Nails on 7th by Jenny Inc., No. 18 Civ. 9849 (ER), 2020 U.S. Dist. 
LEXIS 19230, at *10 (S.D.N.Y. Feb. 5, 2020); DIRECTV, LLC, 2019 U.S. Dist. LEXIS 216133, at 
*14. 
Here, the Trustee asserts that he would be prejudiced if the default judgment is vacated 
because he has taken steps to record the judgment with the District Court and the Ontario County 
Clerk, and has issued executions against Ms. Blakesley's accounts and income. (ECF AP No. 22 
¶ 87; ECF No. 22-7 at 16). The Second Circuit has flatly rejected such arguments as unpersuasive, 
observing that "[a]ttempting to execute the default judgment and to proceed against the individual 

defendants was the sensible next step for the plaintiffs at the time that the default judgment was 
entered, but does not establish that they would be prejudiced now by our decision to vacate the 
default judgment entered by the district court." Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167, 
174 (2d Cir. 2001). See also Crawford v. Nails on 7th by Jenny Inc., 2020 U.S. Dist. LEXIS 19230, 
at *10. 

 14 
In a final effort to show prejudice, the Trustee asserts that Ms. Blakesley made an 
unconditional offer to settle this action, which was accepted by the Trustee. (ECF AP No. 22-7 at 
16). At oral argument, counsel doubled-down on that claim—going so far as to assert that he has 
grounds to sue Ms. Blakesley for breach of a settlement agreement. Not only is there no settlement 
agreement included with the Trustee's submissions, the exhibits attached to the Trustee's papers 
seem to demonstrate that the factual contentions made at paragraphs 84 and 85 by counsel are 
inaccurate and lack evidentiary support, furrowing the brow of Rule 9011(b)(3) FRBP. 

Specifically, counsel unequivocally asserts, as fact, that "[o]n November 8, 2021, after a 
week of negotiations between the undersigned and Mr. Wegman [attorney], this matter was settled 
with Ms. Blakesley's authority. On November 8, 2021, Mr. Wegman made an unconditional offer 
of $53,160 to settle this matter and the offer was accepted by the Trustee." (ECF AP No. 22 ¶ 85). 
To support his factual contention, counsel attached as an exhibit an email exchange between he and 
Mr. Wegman. (ECF AP No. 22-5, Ex. E). But, that exhibit tells a much different and troubling 
story. 
According to the timeline that can be gleaned from that email exchange (ECF AP No. 22-5, 
Ex. E) and from the Court's docket, the actual series of events appears as follows: 
 1. Friday evening (Nov. 5, 2021) counsel to the Trustee left a voicemail with Mr. 
 Wegman conveying the Trustee's offer to settle for $65,000, described as "take-it-or-
 leave-it." 

 2. Monday morning (Nov. 8, 2021) Mr. Wegman spoke with Ms. Blakesley about the 
 Trustee's offer and she asked Mr. Wegman to contact the Trustee's counsel to offer 
 $53,160. 

 3. On November 8, 2021, at 3:35 p.m., Mr. Scribner filed a Motion to Reopen 
 Adversary Proceeding, with the stated intention of subsequently moving to vacate 
 the default judgment. (ECF AP No. 11, time stamped 11/8/2021 at 3:35 PM EST). 
 It appears, and is logical to conclude, that sometime prior to that time Mr. Scribner 
 15 
 also spoke with the Trustee's counsel, asserting the exemption defense and 
 announcing his intention to file a motion seeking to vacate the default judgment. 

 4. Sometime after 4:00 p.m. (Nov. 8, 2021) Mr. Wegman contacted the Trustee's 
 counsel to convey an offer that he believed he had authority to make for $53,160.00. 

 5. According to Mr. Wegman's email, by the time he called the Trustee's counsel, Mr. 
 Scribner had already spoken to the Trustee's counsel and had already filed a motion 
 on Ms. Blakesley's behalf—both of which the Trustee's counsel seems to have 
 acknowledged having knowledge of, but neither of which Mr. Wegman was aware 
 of. 

 6. On November 8, 2021, at 8:12:16 PM, counsel to the Trustee sent an email to Mr. 
 Wegman stating—"The trustee accepts the $53,106." That email was sent five hours 
 after Ms. Blakesley's motion was filed and more than five hours after Mr. Scribner 
 spoke with counsel about his planned motion and defense to the action. 

What the timeline appears to show is that at the time of the post-4:00 p.m. conversation with Mr. 
Wegman on November 8, 2021, counsel to the Trustee had already spoken to Mr. Scribner and was 
already aware of the pending motion announcing an intention to seek relief from the default 
judgment. Prior to that conversation, on November 5, 2021, it appears that the Trustee made an 
offer of $65,000 to settle. So, Mr. Wegman (unaware of Mr. Scribner's earlier conversation with 
the Trustee's counsel and unaware of the motion filed at 3:35 p.m. that afternoon) made a counter-
offer, sometime after 4:00 p.m., on behalf of Ms. Blakesley to settle for $53,160. Nearly five hours 
after the motion had been filed by Mr. Scribner on Ms. Blakesley's behalf, clearly stating "[t]he 
Defendant has retained the undersigned to represent her in this matter" and unequivocally 
demonstrating an intention not to settle this action (ECF AP No. 11 ¶ 3), at 8:12:16 p.m. on 
November 8, 2021, the Trustee's counsel sent an email to Mr. Wegman—without notice to Mr. 
Scribner—purporting to accept the counter-offer. (ECF AP No. 22-5, Ex. E). 
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Counsel has pointed to no legal authority to support the proposition that a settlement 
counter-offer can be accepted by a party, where counsel to that party has actual knowledge (gained 
five hours prior to acceptance) that a different attorney has been retained by the counter-offeror and 
that new attorney has taken steps (after apparently having first communicated the intention to take 
those steps) that unequivocally demonstrate a withdrawal of the counter-offer prior to its 
acceptance.11 On the facts in the record, the Trustee's claim of prejudice concerning the purported 
settlement agreement is found to have no merit. The Trustee has failed to carry his burden of 

demonstrating prejudice, sufficient to deny the vacatur of the default judgment. 

 V. 
 CONCLUSION 
The Second Circuit has repeatedly reminded the trial courts that default judgments are 
disfavored. "[D]efault judgment is an appropriate sanction for defaults that arise from egregious or 
deliberate conduct." DIRECTV, LLC v. Wright, No. 15-CV-474-FPG, 2019 U.S. Dist. LEXIS 
216133, at *16 (W.D.N.Y. Dec. 16, 2019) (Geraci, C.J.) (internal quotations marks omitted) 
(quoting 1st Bridge LLC v. 682 Jam. Ave., LLC, No. 08-CV-3401(NGG)(MDG), 2009 U.S. Dist. 
LEXIS 8859, at *2 (E.D.N.Y. Feb. 4, 2009) (quoting American All. Ins. Co. v. Eagle Ins. Co., 92 

F.3d 57, 61 (2d Cir. 1996)). Here, there is no evidence that Ms. Blakesley's conduct was 
sufficiently egregious or deliberate to warrant the denial of her request that the default judgment be 
vacated under Rule 60(b)(1) FRCP. 

11 Such facts may make for an interesting question on a contracts exam in the first year of law 
school, but they should not be the basis for threats of bringing suit for breach of a settlement 
agreement in oral argument before a federal court. 
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Balancing the three factors established by the Second Circuit, the Court finds that those 
factors all move the needle in favor of Ms. Blakesley. First, there is no evidence that Ms. 
Blakesley's conduct was willful—there is no evidence that her conduct was egregious or deliberate. 
Next, on the facts before the Court, Ms. Blakesley has asserted a meritorious defense that, if proven 
at trial, would constitute a complete defense to this action. Finally, the Trustee has not 
demonstrated that he would be prejudiced by vacatur of the default judgment and by permitting Ms. 
Blakesley to defend the action. The motion to vacate the default judgment is GRANTED. For that 

reason, the Court need not and does not consider Ms. Blakesley's alternative request for relief under 
Rule 60(b)(3) or (b)(6) FRCP. 
The following curative actions are to be promptly taken: 
 (1) The Clerk of Court is to note the vacatur of the default judgment on the docket in the 
 adversary proceeding. 

 (2) Counsel to the Trustee is to immediately take such steps as are necessary to record 
 the vacatur of the default judgment with both the Clerk for the District Court and the 
 Ontario County Clerk. 

 (3) Counsel to the Trustee is further directed to immediately discontinue all collection 
 efforts and to notify the Ontario County Sheriff and any third-party garnishees of that 
 discontinuance. 

 (4) Finally, Ms. Blakesley is directed to serve and file an Answer to the Complaint in 
 this action within 20 days of entry of this Decision and Order. 

IT IS SO ORDERED. 

DATED: December 16, 2021 __________________/s/__________________ 
 Rochester, New York HON. PAUL R. WARREN 
 United States Bankruptcy Judge 

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