Opinion
Index No. 650164/2022
01-03-2023
DEUTSCHE BANK SECURITIES INC., Plaintiff, v. 683 CAPITAL PARTNERS LP et al., Defendants.
The following e-filed documents, listed by NYSCEF document number (Motion 006) 101, 102, 103, 104 were read on this motion to EXTEND - ORDER.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 134, 135, 136, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149 were read on this motion to EXTEND - ORDER.
Motion sequences 006 and 008 are consolidated herein for disposition.
Plaintiff Deutsche Bank Securities Inc. ("Deutsche Bank") commenced this action for breach of contract by filing a summons and complaint on January 10, 2022 (NYSCEF Doc. No. 1, complaint). Deutsche Bank failed to timely serve the summons and complaint upon defendant Cavello Bay Reinsurance Limited ("Cavello Bay") by May 10, 2022 as required under the CPLR. In motion sequence 006, Deutsche Bank moves, pursuant to CPLR 306-b, for an extension of time to serve Cavello Bay with the summons and complaint. No opposition to the motion was filed.
In motion sequence 008, Deutsche Bank moves, pursuant to CPLR 2221, to renew the part of its prior motion (motion seq. no. 005) seeking an extension of time under CPLR 306-b to serve defendant Neuberger Berman Investment Funds PLC ("Neuberger"). Neuberger opposes the motion.
Discussion
Motion Sequence No. 006
CPLR 306-b provides that if service of the summons and complaint upon a defendant is not made within 120 days after an action is commenced, "the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service." An extension for good cause requires the plaintiff seeking the extension to show reasonable diligence in its attempts to serve the defendant with process (see Henneberry v Borstein , 91 AD3d 493, 496 [1st Dept 2012] ).
Here, Deutsche Bank established good cause for an extension of time to serve Cavello Bay. Deutsche Bank's counsel contacted attorneys representing defendant Sound Point Capital Management, LP, who managed Cavello Bay's investment in the loan at issue in this action. Deutsche Bank inquired as to whether Sound Point's counsel would accept service for Cavello Bay, but they declined to do so (NYSCEF doc. no. 103, Joseph J. Cherico [Cherico] affirmation, ¶ 16).
Deutsche Bank then attempted to serve Cavello Bay pursuant to Insurance Law § 1213, by mailing the summons and complaint by first class mail to the New York State Department of Financial Services (DFS) (NYSCEF doc no. 86, affidavit of mailing). By letter dated June 21, 2022, DFS returned the summons and complaint to plaintiff's counsel because the firm failed to comply with notice requirements of Insurance Law § 1213 (NYSCEF Doc No. 104, Cherico affirmation, Ex A). Specifically, Insurance Law § 1213 required two copies of process with the last known address of the entity's principal place of business on each copy, but DFS's address had been mistakenly listed on each copy (id. ).
Further, Deutsche Bank's counsel affirms that in late May 2022, an attorney with Freeborn & Peters LLP, advised that they represented Cavello Bay. The parties’ respective counsels discussed resolving the dispute, extending Cavello Bay's time to respond to the summons and complaint and discussed whether counsel would accept service for that defendant (NYSCEF Doc No. 103, ¶¶ 18-20). Deutsche Bank's motion to extend time to serve Cavello Bay is granted. Deutsche Bank made a sufficient showing of reasonable diligence to warrant granting the extension for good cause (see Frank v Garcia , 84 AD3d 654, 654 [1st Dept 2011] ).
Motion Sequence No. 008
Deutsche Bank served defendant Neuberger, a public limited company based in Ireland, with process under Business Corporation Law § 307. An amended affidavit of service, sworn to May 11, 2022, reveals that plaintiff delivered the summons and complaint to the Secretary of State on May 6, 2022 and sent an additional copy to Neuberger by registered mail, return receipt requested, the same day (NYSCEF doc no. 83).
Under Business Corporation Law § 307 (c) (2), Deutsche Bank was required to file an affidavit of compliance by May 10, 2022. Deutsche Bank failed to do so, and by notice of motion dated May 12, 2022, Deutsche Bank moved for a 45-day extension of time to allow the process server to complete an affidavit of compliance (NYSCEF doc no. 89). By order dated July 25, 2022, this court denied Deutsche Bank's motion, for failing to provide an affidavit of compliance, and failing to establish good cause for the delay (motion seq. no. 005, NYSCEF doc no. 107). Deutsche Bank now moves for leave to renew motion sequence 005 and extend Deutsche Bank's time to serve Neuberger.
Deutsche Bank's counsel asserts that a certificate of compliance was not provided with its prior application, because the process server had not received the return receipt for mailing by the May 10, 2022 deadline. Counsel has now purportedly obtained proof of service of the summons and complaint upon Neuberger by mail. Counsel allegedly provided said proof to Neuberger's counsel, but counsel would not agree to accept or acknowledge service on Neuberger's behalf (NYSCEF Doc No. 136, Joseph J. Cherico [Cherico] affirmation, ¶¶ 21, 25 and 27-28).
With this motion Deutsche Bank filed an affidavit of compliance, which includes the amended affidavit of service, the registered mailing, return receipt requested, a "USPS Customs Declaration and Dispatch Note," and the printout from the U.S. Post Office website showing that, based on the tracking number issued by the U.S. Post Office, the registered mailing addressed to Neuberger was delivered on May 17, 2022 (NYSCEF Doc No. 109).
Neuberger opposes the motion on the ground that the information presented on the present motion, namely the tracking information for the registered mailing, is not new, in that the information could have presented to the court before the court issued its decision on the prior motion. Neuberger also challenges the tracking information obtained from the U.S. Post Office website as it does not list the address where the delivery was made. Neuberger disputes whether Deutsche Bank demonstrated good cause for the extension and whether an extension should be granted in the interest of justice, as Neuberger contends that it is not a proper party to this action.
In reply, Deutsche Bank asserts that the tracking information for the summons and complaint was a new fact that could not have been produced when it filed its prior motion.
Pursuant to CPLR 2221 (e), a motion for leave to renew shall be based upon new facts not offered on the prior motion that would change the prior determination and shall contain reasonable justification for the failure to present such facts on the prior motion.
Here, this court does not find that Deutsche Bank provided reasonable justification for failing to present the documents and facts now being offered to this court for consideration. Deutsche Bank admits that, at the time of motion filing, it did not possess the requisite information needed to properly file an affidavit of compliance, rendering service jurisdictionally defective. The failure to properly file an affidavit of compliance required by BCL § 307(c) (2) is a jurisdictional defect and is not a "mere irregularity" subject to cure ( Flannery v General Motors Corp. , 86 NY2d 771, 773 [1995] ; Green 333 Corp. v RNL Life Science, Inc. , 191 AD3d 506, 506 [1st Dept 2021] ; Mullane v Ceva Logistics, U.S., Inc. , 2020 NY Slip Op 34552(U), **3 [Sup Ct, NY County 2020]). That portion of Deutsche Bank's motion that seeks renewal is denied.
However, this court may issue an extension of time to serve a party in the interest of justice, notwithstanding a party's inability to show good cause for an extension of time to serve defendant with process (see Henneberry v Borstein , 91 AD3d 493, 496 [1st Dept 2012] ). In Leader v Maroney, Ponzini & Spencer (97 NY2d 95, 105-106 [2001] ), the Court of Appeals explained that,
"[t]he interest of justice standard requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties. Unlike an extension request premised on good cause, a plaintiff need not establish reasonably diligent efforts at service as a threshold matter. However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant."
Here this court finds that, in the interest of justice, Deutsche Bank shall be given additional time to serve and confirm compliance with Business Corporation Law § 307. Deutsche Bank demonstrated reasonable efforts to effectuate service upon Neuberger within the 120-day period after it commenced this action, has demonstrated it obtained, albeit belatedly, the documentation needed to properly serve and file its affidavit of compliance, and the length in delay of service will not prejudice the Neuberger defendant as it is clear its counsel has been consistently apprised of all service efforts and was provided with all relevant documentation (see e.g. Davis v ALC of NY LLC , 2016 NY Slip Op 30839[U], *6 [Sup Ct, NY County 2016]; Kelleher v Sol Melia , 2008 NY Slip Op 30817[U], *4 [Sup Ct, NY County 2008]).
Conclusion
Accordingly, it is hereby
ORDERED that the motion of plaintiff Deutsche Bank Securities Inc. for an extension of time to serve the summons and complaint upon defendant Cavello Bay Reinsurance Limited (motion sequence no. 006) is granted; and it is further
ORDERED that plaintiff shall have an additional 45 days after the date of service of this order with written notice of entry, to serve the summons and complaint upon defendant Cavello Bay Reinsurance Limited; and it is further
ORDERED that the portion of plaintiff Deutsche Bank Securities Inc.’s motion (motion sequence no. 008) seeking renewal of motion sequence number 005, is denied; and it is further
ORDERED that the motion of plaintiff Deutsche Bank Securities Inc., to extend time to serve defendant Neuberger Berman Investment Funds PLC is granted, in the interests of justice; and it is further
ORDERED that Deutsche Bank shall have an additional 45 days after the date of service of this order with written notice of entry, to serve the summons and complaint upon defendant Neuberger.