On April 29, 2025, the Justice Robert R. Reed of the Commercial Division of the Supreme Court of New York County issued a significant ruling in ACM MCC VI LLC v. Able Liquidation Three, Thomas Rossi, et al., granting a default judgment on liability against defendant Thomas Rossi in a commercial dispute after two unsuccessful requests. This case underscores key principles in default practice under CPLR 3215 and offers important procedural lessons for litigators pursuing judgments in complex commercial matters.
Background
The dispute arose from the collapse of Merchant Cash and Capital, LLC (“MCC”), a company engaged in merchant cash advance financing. Following MCC’s financial troubles, its secured lender ACM MCC VI LLC (“ACM”) acquired MCC’s rights and interests through a 2018 foreclosure sale. Defendant, Able Liquidation Three (“Able”), and its principal, Thomas Rossi (“Rossi”), were hired by MCC to collect delinquent payments from merchants. ACM alleged that Rossi and Able entered into nine settlement agreements with merchants totaling $992,000 and collected approximately $841,665—but remitted only $34,000 to MCC. The remainder was allegedly diverted, with Rossi and his company taking unauthorized “fees.” In December 2019, ACM sued Rossi and others, asserting claims for (1) breach of fiduciary duty and aiding and abetting breach of fiduciary duty, (2) breach of contract, (3) unjust enrichment, (4) conversion, and (5) an accounting.
Procedural History
ACM’s road to a default judgment against Rossi was long and complicated. Plaintiff initially filed its complaint on December 6, 2019. Before the motion that is the subject of this decision, ADM had filed two prior, successful motions for default judgment. The first motion was denied due to insufficient evidence, including the absence of a copy of the collection agreement and proof of additional notice required by CPLR 3215(g)(4)(i). The second motion was a partial success: default judgment was granted against co-defendant Able on liability for three causes of action (breach of contract, unjust enrichment, and conversion), but denied as to Rossi due to improper service. After correcting the service and evidentiary issues, ACM moved a third time for the same relief.
The Holding
On the third try, Justice Reed finally granted a default judgment against Thomas Rossi on liability, holding that: (1) ACM had properly served Rossi under CPLR 3215(g)(3)(i), (2) Rossi failed to appear or respond, and (3) ACM sufficiently established the factual basis for its claims through verified pleadings and prior court findings. Notably, the court invoked the “law of the case” doctrine, relying on its earlier determination that ACM had proven the merits of its breach of contract, unjust enrichment, and conversion claims against Able. Since Rossi defaulted, those factual allegations were deemed admitted. The court ordered that an inquest be scheduled to assess damages.
Implications
1. Strict Compliance with Default Practice Is Critical
Obtaining a default judgment in New York is not an easy process. Courts demand precision of process, including proof of proper service, proof of the defendant’s failure to appear, and proof of the facts constituting the claim. Even meritorious claims can falter if procedural rules, especially notice requirements under CPLR 3215(g), are not strictly followed.
2. Law of the Case Is a Powerful Tool
Once a court has ruled on the sufficiency of claims or evidence, that ruling can shape future motions. Here, ACM leveraged the prior partial default ruling to support its renewed motion against Rossi. Courts will not re-litigate settled issues without a compelling cause, emphasizing how consistency and efficiency in judicial decision-making can help your case.
3. Default Admits Liability, Not Damages
Litigators must be ready for the next phase. A liability finding on default is only half the battle; damages must still be proven at an inquest, and plaintiffs will now face the challenge of demonstrating actual financial harm.
4. Procedural Persistence Pays Off
ACM’s willingness to correct earlier deficiencies and pursue judgment a third time demonstrates how persistence, coupled with procedural compliance and knowledge, can ultimately lead to success after multiple setbacks.
Conclusion
This case is more than a routine default judgment – it serves as a procedural roadmap for successfully obtaining default relief after earlier missteps or failed attempts. For attorneys navigating breach of contract and commercial collection actions, this case is a reminder that exceptional knowledge of procedural practice and rules can lead to major wins. For defendants, it’s a warning that ignoring a lawsuit may lead to liability when the plaintiff is persistent.
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