Opinion
852 CA 20-00864
12-23-2021
CITY OF UTICA, Plaintiff-Respondent, v. Michelle MALLETTE, Formerly Known as Michelle Bannatyne, Defendant-Appellant.
LAMB & BARNOSKY, MELVILLE (SCOTT M. KARSON OF COUNSEL), FOR DEFENDANT-APPELLANT. WILLIAM M. BORRILL, CORPORATION COUNSEL, UTICA (ARMOND J. FESTINE OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
LAMB & BARNOSKY, MELVILLE (SCOTT M. KARSON OF COUNSEL), FOR DEFENDANT-APPELLANT.
WILLIAM M. BORRILL, CORPORATION COUNSEL, UTICA (ARMOND J. FESTINE OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
PRESENT: WHALEN, P.J., SMITH, CARNI, CURRAN, AND DEJOSEPH, JJ.
MEMORANDUM AND ORDER
It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: In 2010, defendant's husband owned the Doyle Hardware Building, a landmark four-story building in plaintiff City of Utica (City). The City made loans to defendant's husband totaling $150,000 for the purpose of purchasing and installing an elevator in the building (project), which were secured by a mortgage on the building. Defendant signed a personal loan guarantee, in which she "unconditionally guarantee[d]" repayment of the loans should her husband default.
In August 2013, the City commenced this action alleging, in a single cause of action, that defendant's husband had defaulted on the loans and that defendant failed to remit payment under the personal guarantee, despite the City's "due demand." In May 2014, the City moved for a default judgment, noting that defendant, who then lived in Connecticut, had been properly served with the summons and complaint in October 2013, and that she never responded or answered the complaint. Consequently, Supreme Court entered a default judgment against defendant in July 2014. Thereafter, in October 2014, the City allegedly served defendant in Connecticut with an information subpoena, along with a copy of the default judgment. In 2019, defendant moved to vacate the default judgment, and she now appeals from an order denying that motion. We affirm.
Defendant contends that the court erred in denying her motion insofar as it sought to vacate the default judgment pursuant to CPLR 5015 (a) (4) because the court lacked personal jurisdiction over her (see generally Yellowbook, Inc. v. Hedge , 183 A.D.3d 925, 926, 122 N.Y.S.3d 544 [2d Dept. 2020] ). We reject that contention. It is well settled that a court may "exercise personal jurisdiction over a non-domiciliary [where] two requirements are satisfied: the action is permissible under the long-arm statute ( CPLR 302 ) and the exercise of jurisdiction comports with due process" ( Williams v. Beemiller, Inc. , 33 N.Y.3d 523, 528, 106 N.Y.S.3d 237, 130 N.E.3d 833 [2019] ; see LaMarca v. Pak-Mor Mfg. Co. , 95 N.Y.2d 210, 214, 713 N.Y.S.2d 304, 735 N.E.2d 883 [2000] ). Under CPLR 302 (a), a court may exercise personal jurisdiction over any non-domiciliary who, inter alia, "transacts any business within the state or contracts anywhere to supply goods or services in the state" ( CPLR 302 [a] [1] ). The statute also requires, however, "an ‘articulable nexus’ or ‘substantial relationship’ " between the cause of action, or an element thereof, and defendant's alleged contacts with New York State ( D&R Global Selections, S.L. v. Bodega Olegario Falcon Pineiro , 29 N.Y.3d 292, 298, 56 N.Y.S.3d 488, 78 N.E.3d 1172 [2017] ; see Zeidan v. Scott's Dev. Co. , 173 A.D.3d 1639, 1640, 103 N.Y.S.3d 707 [4th Dept. 2019] ). With respect to due process, a non-domiciliary must have "certain minimum contacts with [New York] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice’ " ( International Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 [1995] ; see Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 [2011] ). That test is satisfied where a defendant "purposefully avails [himself or herself] of the privilege of conducting activities within the forum State" ( LaMarca , 95 N.Y.2d at 216, 713 N.Y.S.2d 304, 735 N.E.2d 883 [internal quotation marks omitted]), thereby "invoking the benefits and protections of [New York's] laws" ( Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 [1958] ).
Here, the court properly concluded that it had personal jurisdiction over defendant because the City's cause of action directly arose from her business transactions related to the project, including, but not limited to, her personal guarantee of the loans (see CPLR 302 [a] [1] ). The evidence in the record establishes that defendant played far more than a minimal role in the project besides indemnifying the loans with a personal guarantee. Specifically, defendant was named, alongside her husband, as part of the project's two-person development team, and her qualifications for that role were extensively detailed in a request for financing brochure. Further, an affidavit from a member of the City's economic development department, who had personally met defendant, established that she was heavily involved in the project, had intimate knowledge of the project and its operations, and made frequent trips to the City for meetings to monitor the project's progress. Consequently, defendant's association with New York with respect to the project far exceeded "the negotiation and execution of the indemnity agreement" while in another state that the Court of Appeals previously concluded was insufficient to support long-arm jurisdiction under CPLR 302 (a) (1) ( Ferrante Equip. Co. v. Lasker-Goldman Corp. , 26 N.Y.2d 280, 284, 309 N.Y.S.2d 913, 258 N.E.2d 202 [1970] ). For similar reasons, we conclude that the exercise of personal jurisdiction under CPLR 302 (a) (1) here also comported with federal due process (see LaMarca , 95 N.Y.2d at 216, 713 N.Y.S.2d 304, 735 N.E.2d 883 ; see generally International Shoe Co. , 326 U.S. at 316, 66 S.Ct. 154 ). Defendant's detailed personal involvement in multiple aspects of the project, as detailed above, amply demonstrated that she purposefully availed herself of the privilege of conducting business activities in New York, thereby invoking the benefits and privileges of the state's laws (see Hanson , 357 U.S. at 253, 78 S.Ct. 1228 ; LaMarca , 95 N.Y.2d at 216, 713 N.Y.S.2d 304, 735 N.E.2d 883 ). This is not one of the "rare" cases where "personal jurisdiction permitted under the long-arm statute may theoretically be prohibited under due process analysis" ( D&R Global Selections, S.L. , 29 N.Y.3d at 299-300, 56 N.Y.S.3d 488, 78 N.E.3d 1172 [internal quotation marks omitted]; see Rushaid v. Pictet & Cie , 28 N.Y.3d 316, 330-331, 45 N.Y.S.3d 276, 68 N.E.3d 1 [2016], rearg denied 28 N.Y.3d 1161, 49 N.Y.S.3d 89, 71 N.E.3d 581 [2017] ).
We further conclude that the court properly denied defendant's motion insofar as it sought to vacate the default judgment pursuant to CPLR 5015 (a) (1). "[A] party seeking to vacate a default judgment pursuant to CPLR 5015 (a) (1) must demonstrate a reasonable excuse for the default and a meritorious defense" ( Peroni v. Peroni , 189 A.D.3d 2058, 2060, 134 N.Y.S.3d 839 [4th Dept. 2020] ; see Wells Fargo Bank, N.A. v. Mazzara , 124 A.D.3d 875, 875, 2 N.Y.S.3d 553 [2d Dept. 2015] ). The "determination of what constitutes a reasonable excuse lies within the sound discretion of the trial court" ( Solorzano v. Cucinelli Family , 1 A.D.3d 887, 887, 767 N.Y.S.2d 731 [4th Dept. 2003] [internal quotation marks omitted]; see Wells Fargo Bank, N.A. v. Dysinger , 149 A.D.3d 1551, 1552, 52 N.Y.S.3d 788 [4th Dept. 2017] ). Here, we conclude that the court did not abuse its discretion in determining that defendant failed to establish a reasonable excuse for her default because defendant's stated lack of familiarity "with the legal system is insufficient" to demonstrate such a reasonable excuse ( US Bank N.A. v. Brown , 147 A.D.3d 428, 429, 46 N.Y.S.3d 107 [1st Dept. 2017] ; see also Wells Fargo Bank, N.A. , 149 A.D.3d at 1552, 52 N.Y.S.3d 788 ; U.S. Bank N.A. v. Ahmed , 137 A.D.3d 1106, 1109, 29 N.Y.S.3d 33 [2d Dept. 2016] ). In light of that conclusion, we need not consider whether defendant established a potentially meritorious defense (see Wells Fargo Bank, N.A. v. Stewart , 146 A.D.3d 921, 922-923, 45 N.Y.S.3d 207 [2d Dept. 2017] ; Abbott v. Crown Mill Restoration Dev., LLC , 109 A.D.3d 1097, 1100, 972 N.Y.S.2d 117 [4th Dept. 2013] ).
Finally, we conclude that the court did not abuse its discretion in denying defendant's motion insofar as it sought to vacate the default judgment pursuant to CPLR 5015 (a) (3) (see generally VanZandt v. VanZandt , 88 A.D.3d 1232, 1233, 931 N.Y.S.2d 774 [3d Dept. 2011] ). Here, defendant did not meet her "burden of establishing fraud, misrepresentation, or other misconduct on the part of [the City] sufficient to entitle [her] to vacatur of the judgment" ( Abbott , 109 A.D.3d at 1100, 972 N.Y.S.2d 117 ), because she "offered nothing more than broad, unsubstantiated allegations of fraud on the part of [the City]" ( Bank of N.Y. v. Stradford , 55 A.D.3d 765, 766, 869 N.Y.S.2d 554 [2d Dept. 2008] [internal quotation marks omitted]; see Matter of Jon Z. [Margaret Z.] , 178 A.D.3d 1417, 1418, 116 N.Y.S.3d 824 [4th Dept. 2019] ; Carlson v. Dorsey , 161 A.D.3d 1317, 1320, 77 N.Y.S.3d 198 [3d Dept. 2018] ).