Opinion
Index No. 656081/2019
05-20-2020
ALPINE CAPITAL BANK, Plaintiff, v. The ESTATE OF Eugenia S. SHIAH, Deceased, Thomas Shiah, as Co-Guardian of and Successor to Eugenia S. Shiah and Executor of the Estate of Eugenia S. Shiah, Vivien Shiah, as Co-Guardian of and Successor to Eugenia S. Shiah and Executrix of the Estate of Eugenia S. Shiah, Elizabeth Shiah, as Successor to Eugenia S. Shiah and Executrix of the Estate of Eugenia S. Shiah, and John Does 1-20, Defendants.
Pavia & Harcourt LLP, New York, NY (Brandon C. Sherman of counsel), for plaintiff. McCarney Law, P.C., New York, NY (James G. McCarney of counsel), for defendants Thomas Shiah, Vivien Shiah, and Elizabeth Shiah.
Pavia & Harcourt LLP, New York, NY (Brandon C. Sherman of counsel), for plaintiff.
McCarney Law, P.C., New York, NY (James G. McCarney of counsel), for defendants Thomas Shiah, Vivien Shiah, and Elizabeth Shiah.
Gerald Lebovits, J.
Eugenia Shiah borrowed millions of dollars from Alpine Capital Bank over a number of years in the form of a promissory note. Shiah initially executed this note directly; later amendments to the note were made by defendants Thomas, Vivien, and Elizabeth Shiah, as Eugenia Shiah's co-guardians. The promissory note at issue here (the fifth amended and restated version of the original note) was executed in May 2019 in the principal amount of $9,547,847.22 (plus interest).
Eugenia Shiah died at the end of June 2019. Alpine alleges that no payments on the note have been made since July 1, 2019, notwithstanding a demand for payment made to Shiah's estate. Alpine therefore accelerated the note's outstanding balance—$7,547,847.22 in unpaid principal, plus interest and collection costs.
In motion sequence 001, Alpine seeks the note's unpaid principal and interest by CPLR 3213 motion for summary judgment on an instrument for the payment of money only. The motion is brought against (i) the estate of Eugenia Shiah and (ii) against Thomas, Vivian, and Elizabeth Shiah, both as "Co-guardians and successors" of Eugenia Shiah and as the executors of the estate. Defendants have filed a brief opposition to Alpine's CPLR 3213 motion. The opposition states that defendants are separately moving to dismiss and requests that the motion be dismissed for lack of personal jurisdiction. (See NYSCEF No. 14.) In motion sequence 002, defendants move to dismiss for lack of personal jurisdiction due to untimely service under CPLR 3213. (See NYSCEF Nos. 15, 16.) Alpine cross-moves to have its affidavits of service deemed filed nunc pro tunc. (See NYSCEF Nos. 23-25.)
Motion Sequence 001 was made returnable on December 2, 2019, and later calendared to be orally argued on March 25, 2020. Motion sequence 002 was originally made returnable on January 9, 2020. The parties adjourned that return date several times on consent until March 18, 2020. On March 17, 2020, the parties sought a further adjournment on consent. That same day, however, this court began working remotely due to COVID-19-related disruptions to normal court operations. The court therefore did not become aware of the adjournment request until after the return date on motion sequence 002 had passed.
The March 25 oral argument on motion sequence 001 was canceled due to COVID-19. The motion was instead submitted on the papers.
After consulting with the parties regarding this unusual scenario, this court granted permission to defendants to file reply papers, and Alpine to file cross-reply papers if it so chose, on motion sequence 002. On the deadline set by the court for defendants' reply papers, defendants filed not only a reply, but also a purported "amended notice of motion." This "amended notice" set a new return date and added a second, independent argument in support of dismissal. (See NYSCEF Nos. 37, 38 at 2.) Alpine did not file a cross-reply by the deadline set by the court.
Motion sequences 001 and 002 are consolidated here for disposition. Alpine's CPLR 3213 summary-judgment motion is denied. Defendants' motion to dismiss for lack of personal jurisdiction due to untimely service is granted; Alpine's cross-motion to file affidavits of service is denied as academic.
For clarity, this court deems defendants' post-submission filing to include a request for leave to amend defendants' notice of motion on motion sequence 002, adjourn the (already passed) return date, and add an entirely new ground for dismissal. That request is denied: This court granted defendants permission only to file post-submission reply papers, not more. This decision and order thus does not address defendants' new ground for dismissal raised in those reply papers. (See NYSCEF No. 38 at 2.) This court also does not address defendants' additional challenge to the validity of service as to defendant Elizabeth Shiah, in particular. (See id. at 3.) That challenge rests on an affidavit submitted for the first time on reply. (See NYSCEF No. 39.)
DISCUSSION
Alpine Capital Bank moves for summary judgment in lieu of complaint under CPLR 3213. Defendants move to dismiss on the ground that Alpine failed to serve the motion far enough in advance of the return date to satisfy CPLR 3213 —thereby depriving this court of personal jurisdiction. This court agrees that Alpine's motion must be dismissed on this ground. Alpine's cross-motion is denied as academic: the period between service and the motion's return date would be too short under CPLR 3213 even if the affidavits of service were deemed filed on the date they were executed.
This court notes that Alpine Capital Bank brought its CPLR 3213 motion not only against Eugenia Shiah's co-guardians, but also against her estate itself. The bank does not identify the basis on which it may bring claims directly against the estate. Nor do the bank's motion papers indicate whether Shiah's co-guardians have received testamentary letters from Surrogate's Court, such that claims against the estate may properly be brought against them in a representative capacity as estate fiduciaries. A serious question thus exists whether the CPLR 3213 motion would be subject to dismissal for lack of a proper party defendant even if personal jurisdiction existed. This court need not, however, reach that question here.
CPLR 3213 is a "hybrid procedure incorporating certain elements of an action and certain elements of motion practice." ( Goldstein v. Saltzman , 13 Misc 3d 1023, 1025 [Sup Ct, Nassau County 2006].) Thus, as "with a plenary action, jurisdiction is obtained over the Defendant by serving the Defendant with the summons, notice of motion and supporting papers in a method prescribed in CPLR Article 3." (Id. )
Once the movant serves these initiating papers, a defendant must "submit answering papers on the motion within the time provided in the notice of motion." ( CPLR 3213.) The rule also provides, though, that the "minimum time such motion shall be noticed to be heard"—and thus the minimum period in which defendants may prepare, serve, and file answering papers—"shall be as provided by subdivision (a) of rule 320 for making an appearance." (Id. )
The minimum time set by CPLR 320 (a) for purposes of CPLR 3213 varies, "depending upon the method of service." ( CPLR 3213.) CPLR 320 (a) provides that where service of the summons is made by hand delivery under CPLR 308 (1), the defendant must appear "within twenty days after service of the summons." Where, on the other hand, the summons "was served pursuant to ... subdivision two, three, four or five of section 308," the defendant must appear "within thirty days after service is complete." And CPLR 308, subdivisions two and four, provide in turn that service is complete 10 days after proof of service is filed with the court.
In short, if the summons and notice of motion on a CPLR 3213 motion is served by leave-and-mail under CPLR 308 (2) or nail-and-mail under CPLR 308 (4), CPLR 320 (a) gives the defendant 40 days from filing of proof of service in which to appear. Thus, under CPLR 3213, where service is made by either of these two methods the motion's return date must be set at least 40 days out from filing of the proof of service. (See David D. Siegel, Practice Commentaries to CPLR 3213, at C3213:5, C3213:9 [noting this aspect of CPLR 3213 practice].) If, however, a CPLR 3213 movant in these circumstances sets a return date prior to 40 days out, the court lacks personal jurisdiction because the movant failed to provide the defendant timely notice of the motion (and thus of the defendant's obligation to file answering papers). (See Segway of NY, Inc. v. Udit Grp., Inc. , 120 AD3d 789, 791-792 [2d Dept 2014].) Additionally, because failing to provide sufficient advance notice of a motion's return date "create[s] a greater possibility of frustrating the core principles of notice to the defendant[ ]," this defect may not be corrected or disregarded under CPLR 2001. ( Id. at 792 [internal quotation marks omitted].)
Here, Alpine Capital Bank's notice of motion set a return date of December 2, 2019. (See NYSCEF No. 13.) Alpine's affidavits of service state that service was made on Thomas Shiah on October 30, 2019, by leave-and-mail; on Vivien Shiah on October 31, 2019, by nail-and-mail; and on Elizabeth Shiah on November 7, 2019, by leave-and-mail. (See NYSCEF Nos. 17-19.) Thus, under CPLR 3213, the period in which these defendants could appear—and the minimum elapsed period before the return date—would not begin to run until Alpine filed the affidavits of service.
As noted above, Elizabeth Shiah contests the validity of service as to her. (See NYSCEF No. 39.) That issue is not properly before this court on the present motion, however.
The docket reflects, though, that Alpine did not file those affidavits at all until December 5, 2019—after the motion's return date. (See NYSCEF Docket Nos. 17-19.) As a result, Alpine failed to provide defendants with sufficient advance notice of the motion and their obligation to file return papers to satisfy the requirements of CPLR 320 and 3213. This court lacks personal jurisdiction over the CPLR 3213 proceeding.
In fact, Alpine did not file the affidavits of service until after defendants had not only opposed the motion but also moved to dismiss for lack of personal jurisdiction due to untimely service. (See NYSCEF Nos. 14-16.)
Alpine argues that under longstanding First Department precedent, the failure merely to file affidavits of service is a technical defect that does not affect the validity of service and does not deprive the court of personal jurisdiction. (See NYSCEF No. 24 at 1-2.) This argument, though correct, is immaterial. That Alpine did not file the affidavits of service is not itself the defect that deprives this court of personal jurisdiction. The defect is instead that because Alpine did not file the affidavits, defendants' time to appear did not even begin to run until after the return date of Alpine's CPLR 3213 motion.
Nor is this court's conclusion affected by Alpine's cross-motion to deem the affidavits of service filed nunc pro tunc. The cross-motion is purely academic. Assume that this court were somehow to deem the three affidavits filed as early as the day Alpine carried out the second step of service for each of the three defendants (October 30, October 31, and November 7, 2019, respectively). Even then, the December 2, 2019, return date on the motion would still have been too early for any of the defendants: 40 days from October 30 is December 9.
Accordingly, it is hereby
ORDERED that Alpine's motion for summary judgment in lieu of complaint under CPLR 3213 (motion sequence 001) is denied; and it is further
ORDERED that defendants' motion to dismiss (motion sequence 002) is granted, and the proceeding is dismissed, with costs and disbursements to be taxed by the Clerk of the Court upon the submission of an appropriate bill of costs; and it is further
ORDERED that Alpine's cross-motion to deem its affidavits of service filed (motion sequence 002) is denied as academic; and it is further ordered
ORDERED that defendants shall serve a copy of this order with notice of its entry on all parties and on the office of the General Clerk (60 Centre Street, Room 119), which is directed to amend its records accordingly; and it is further
ORDERED that notice of entry may be served by mail or overnight delivery service, with defendants to e-file a copy of notice of entry (and accompanying affidavit(s) of service) on NYSCEF once filing of notices of entry in pending nonessential matters is again permitted by order of Chief Administrative Judge Lawrence Marks.