Served by Zahav? 5 Deadlines That Decide the Case

The plaintiff served a complaint and a summons naming your business as defendant, with a return date - the day when you must either file an answer or suffer entry of judgment against you. When the plaintiff is Zahav, the future of the claim hinges on whether certain required legal steps have been completed within very specific time periods.

Five potential deadlines follow the filing of a breach of contract lawsuit by Zahav: time to appear, 30 days to remove to federal court, limits on a confession of judgment, one year to vacate a default or 30 days to appeal, and the amount of time the bank garnishment is valid.

1. Appear on time

The first deadline is for you to appear in the lawsuit, a step that some courts call an “appearance” and others refer to as “file an answer.” Making an appearance within the return period, usually 20 or 30 days depending on how you were served with the lawsuit, is crucial to avoid a default judgment against you or your business. In New York, if a lawsuit was left with someone else and then mailed, you are allowed 30 days for appearance. The same applies when your business was served through service of process on a state’s Secretary of State.

Avoid missing the return date at all costs. When served with a summons and complaint you are up against a date certain (a day when something has to be done) that should be treated as an external deadline by which you must act.

2. Decide on removal

If Zahav properly served you with a complaint and summons, then you or your attorney must complete some evaluations before making a decision on whether to change the location of a business litigation by filing a notice of removal to federal court. A case that could have been originally filed in federal court can be removed. The federal removal period generally ends 30 days after the defendant received the initial court paper from Zahav.

3. Check the confession

In a confessed judgment, often known as a judgment by confession, the borrower commits contractually to letting the creditor obtain a judgment against the debtor’s business or individual borrower. New York changed its laws on confessions of judgments in 2019 to end the filing of certain of these judgments against out-of-state business entities. Zahav’s request for a judgment in its favor based on your prior admissions must be filed in the county in which your company has a place of business. If Zahav’s confession was filed in a county where your business has no location, it was probably entered in an improper court. And if more than three years passed before Zahav filed the confession of judgment, that can be another exit from the judgment for you or your business. If the timing or location are questionable, contact an attorney and evaluate the validity of the confession.

4. Undo the default

If Zahav has obtained a default judgment for failure to appear, you or your attorney have the option of moving to vacate that judgment for excusable default as long as the motion is filed within one year after service of the judgment and notice of its entry upon you or your representative. In New York, your motion must show that the default should be excused, and that there are potentially meritorious defenses to Zahav’s claim. You have to file your notice of appeal within 30 days after service of the judgment and notice of its entry.

If you or your business never received proper service, you can have the entry of a default judgment vacated without a fixed deadline. The court will usually conduct a traverse hearing, at which the defendant may present evidence regarding proper service. If the plaintiff used service on a Secretary of State, the defendant should receive a copy mailed by Zahav at least 20 days before a default judgment is entered.

5. Watch the bank clock

Watch this one, because in New York after judgment, a restraining notice on your business bank account can freeze the account up to one year, or until the judgment is paid or vacated. A restraining notice in your or your business’s bank account prevents funds held there from going anywhere else. Any transfer from the account during a restraining notice can be punished as contempt of court. If you or your business use accounts in different banks, Zahav could serve all of them and freeze those funds.

Time Is Frequently of the Essence

Without an appearance or other action by the deadline, the complaint moves into Zahav’s default motion stage, and you may face a default judgment, a bank account restraint, or both. Making yourself known as a participant in the litigation makes it easier to negotiate if you choose to do so. Get the settlement in writing, with a signed release to the bank, before you pay. Make sure the restraint notices are lifted. Avoiding missing a deadline is a valid reason to hire a lawyer. The list of facts and deadlines in this article is not exhaustive. Other deadlines may apply.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.