Opinion
Index No. 654346/2023
10-04-2024
Emirates Islamic Bank PJSC, Plaintiff, v. NeoPharma LLC, BAVAGUTHU RAGHURAM SHETTY, and BINAY RAGHURAM SHETTY, Defendants.
Kellner Herlihy Getty & Friedman, LLP, New York, NY (Thomas Vandenabeele of counsel), for plaintiff. No appearance for defendant.
Unpublished Opinion
Kellner Herlihy Getty & Friedman, LLP, New York, NY (Thomas Vandenabeele of counsel), for plaintiff.
No appearance for defendant.
Gerald Lebovits, J.
This is a motion-action brought on by a CPLR 3213 motion for summary judgment in lieu of complaint, brought by plaintiff, Emirates Islamic Bank PJSC, to enforce a foreign-country judgment entered against defendants. On motion sequence 002, this court denied plaintiff's CPLR 3213 motion, and dismissed the motion-action for lack of personal jurisdiction, because plaintiff set a return date that was one day earlier than defendants' earliest possible deadline to appear and respond under CPLR 320 (a). (See NYSCEF No. 24 at 1, citing Bhanti v Jha, 140 A.D.3d 685, 686 [2d Dept 2016].)
Plaintiff now moves for leave to reargue, arguing that this court overlooked post- Bhanti precedent of the Appellate Division, Second Department, undermining this court's reliance on that case in dismissing the motion-action. The court agrees that granting leave to reargue is warranted to consider the implications of the more-recent caselaw on which plaintiff relies. On reargument, this court adheres to its original decision.
1. One initial point must be dealt with before this court addresses the post- Bhanti decisions on which plaintiff relies. Plaintiff asserts at the end of its memorandum of law that this court "misapprehended that it does not need to have personal jurisdiction over the defendants" to enforce a foreign-country judgment through a CPLR 3213 motion. (NYSCEF No. 32 at 7.) In relying on this principle, plaintiff erroneously conflates different aspects of personal jurisdiction. That is, as the Court of Appeals explained in Keane v Kamin (94 N.Y.2d 263 [1999]), personal jurisdiction has two constitutionally required components. "One component involves service of process, which implicates due process requirements of notice and opportunity to be heard." (Id. at 265.) The other component "involves the power, or reach, of a court over a party, so as to enforce judicial decrees." (Id.)
These two components are distinct: Service of process on a defendant cannot alone grant the court adjudicatory authority over a defendant where it is lacking, "however flawless that service may be." (Id.) And improper service on a defendant deprives the court of personal jurisdiction, even if the court could otherwise properly exercise its authority over that defendant. (Miller v 21st Century Fox Am., Inc., 180 A.D.3d 608, 608 [1st Dept 2020].)
Crucially, the principle that a court need not have personal jurisdiction over defendants for judgment-enforcement purposes relates to the issue of a court's reach over a party-whether plaintiff must provide a basis "to justify defendant's being subject to the New York court's power." (Emaar Rak F.Z.E. v Rak Tourism Inv. F.Z.C., 177 A.D.3d 538, 539 [1st Dept 2019] [emphasis added].) Plaintiff is correct that absent assertion of "colorable, nonfrivolous ground for denying the judgment recognition"-which has not occurred here-it need not satisfy that element of personal jurisdiction. (Id.) But enjoying this additional leeway does not free plaintiff from the service-based element of personal jurisdiction, to afford defendant adequate notice and opportunity to be heard on the judgment-enforcement issue. For that reason, the Appellate Division has held that even absent the need to inquire further into whether a sufficient basis exists to give recognition to an out-of-state judgment, a plaintiff moving under CPLR 3213 still must properly serve defendants with the summons and motion papers. (See TCA Global Credit Master Fund, L.P. v Puresafe Water Sys., Inc., 151 A.D.3d 1098, 1100 [2d Dept 2017].)
This court thus properly considered on the prior motion whether plaintiff had given defendants sufficient notice of its judgment-enforcement motion. The court now turns to plaintiff's challenge to this court's previous conclusion that notice was insufficient.
2. Plaintiff argues that this court, in applying a bright-line rule that plaintiff's failure to provide defendant sufficient notice of a CPLR 3213 motion deprives the court of personal jurisdiction over defendant, overlooked the Second Department's 2023 decision in Blue Lagoon, LLC v Reisman (214 A.D.3d 938 [2d Dept 2023]), which departed from this bright-line rule. (See NYSCEF No. 32 at 2-3.) This court concludes that Blue Lagoon is inapposite and does not require this court to alter its prior determination.
Plaintiff is correct that the CPLR 3213 motion in Blue Lagoon set an initial return date that was too early, given the timing of personal service on defendants relative to when the motion was filed. (See 214 A.D.3d at 941.) But that return date was then adjourned three times, pushing the return date until well after defendant's CPLR 320 deadline to appear and respond. (See id. at 939, 941.) Additionally, after the third adjournment, plaintiff filed an amended notice of motion expressly setting the last of the three adjourned dates as the motion return date. (See id. at 941-942.) The Second Department held that given the adjournments, and the filing of an amended notice of motion, "plaintiff's failure to provide an adequate return date on its original notice of motion was not a fatal defect" depriving the court of personal jurisdiction. (Id. at 942 [emphasis added].)
In so doing, moreover, the Court distinguished its prior decisions in Bhanti and Segway of NY, Inc. v Udit Group, Inc. (120 A.D.3d 789, 791-792 [2d Dept 2014]) through a cf. citation, rather than repudiating those prior precedents. (See Blue Lagoon, 214 A.D.3d at 942.) The Court also cited the decision of the Appellate Division, Third Department, in Capolino v Goren (155 A.D.3d 1414 [3d Dept 2017]). In Capolino, the Third Department declined to dismiss for lack of personal jurisdiction when plaintiff initially served its CPLR 3213 motion improperly and then did not serve properly until after the adjourned return date of the motion, because defendant had not only received the initial improper service, but then also filed "a cross motion that raised various objections and included substantive opposition[,] before being properly served." (155 A.D.3d at 1416 [emphasis added].)
Here, the original motion return date was not adjourned. Nor did plaintiff amend its original notice of motion to set a later return date, although it could have done so. The facts of Blue Lagoon are thus materially different from those present here.
Plaintiff also cites the decision of a judge of this court in Quartix Finance Inc. v KSH Brands LLC, which declined to dismiss a CPLR 3213 motion for lack of personal jurisdiction, in part based on Blue Lagoon. (See 2023 NY Slip Op 32453[U], at *5 [Sup Ct, NY County 2023] [Chan, J.].) Quartix Finance is distinguishable here on largely the same grounds as Blue Lagoon: In that case, although the initial return date was two days before defendants' deadline to appear and respond, the parties then stipulated, twice, to adjourn that return date, leading the court to conclude that the defendants "have had sufficient time to respond" to the CPLR 3213 motion. (Id.) Not so here. And in SD Stability Sdira, LLC v Maxben Holdings, LLC, the same judge concluded-distinguishing Quartix that Blue Lagoon did not control in a circumstance in which the CPLR 3213 motion return date was one day too early and plaintiff had neither stipulated to adjourn nor amended its notice of motion to extend the return date. (See 2024 NY Slip Op 32556[U], at *2-3 [Sup Ct, NY County 2024] [Chan, J.].)
Plaintiff also relies on rulings of the Appellate Division, Third Department, holding in the context of CPLR article 78 proceedings that failure to afford a respondent the statutorily mandated time to respond to the petition is a mere irregularity, rather than a jurisdictional defect. (See NYSCEF No. 32 at 4, citing Matter of Tennessee Gas Pipeline Co. v Town of Chatham Bd. of Assessors, 213 A.D.2d 103, 106 [3d Dept 1995].) Those decisions, however, not only predate the Second Department's rulings in Segway and Bhanti, but also address a different type of proceeding.
The distinction between CPLR 3213 (at issue in Segway and Bhanti) and CPLR article 78 (at issue in Matter of Tennessee Gas Pipeline) is material. The Third Department explained in the latter case that "the Legislature could not have intended [article 78's] notice requirement to be inflexible because it provided" in CPLR 7804 (c) "for shorter notice by order to show cause." (Matter of Tennessee Gas Pipeline Co., 213 A.D.2d at 106.) CPLR 3213, on the other hand, expressly provides that a motion for summary judgment in lieu of complaint must be brought on by notice of motion. (See Omansky v Chase Manhattan Bank, 2023 NY Slip Op 50774[U], at *1 & n 3 [Sup Ct, NY County 2023] [noting this point and contrasting this requirement with CPLR article 4's more flexible rules for special proceedings].) Moreover, CPLR 3213 underscores the inflexibility of its notice requirement by providing that the "minimum time such motion shall be noticed to be heard shall be as provided by subdivision (a) of rule 320 for making an appearance." The emphasis in Matter of Tennessee Gas Pipeline Co. on the connection between the character of a statute's notice requirement and the consequences for failure to provide proper notice thus cuts against plaintiff, not for it.
In short, this court sees no basis to depart from its prior conclusion that Bhanti supplies the procedural rule governing this case. And under that rule, this court lacks personal jurisdiction as a result of plaintiff's short service.
For that same reason, plaintiff misplaces its emphasis on the lack of prejudice to defendants. (See NYSCEF No. 32 at 6-7.) Prejudice (or its absence) with respect to a service- or notice-related defect is relevant if the defect "only a technical infirmity" for purposes of CPLR 2001. (Ruffin v Lion Corp., 15 N.Y.3d 578, 582 [2010] [internal quotation marks omitted].) A defect is "merely technical"i.e., an irregularity that may be corrected absent prejudice-only if it will not affect the likelihood that the papers commencing the action "will reach defendant[,]... inform him that he is being sued," and afford him an opportunity to respond. (Id. at 582-583.) Bhanti holds that decreasing the amount of time for a defendant to respond to a CPLR 3213 motion below the minimum set by CPLR 320 (a) is a fatal jurisdictional defect, not a technical irregularity that this court may disregard under CPLR 2001.
Plaintiff contends, in essence, that a dismissal due to short service would be unfair because plaintiff acted diligently to serve uncooperative overseas defendants) and could not reasonably have predicted when setting the return date that service would take as long as it did. But, as noted above, it was clear well in advance of the return date that serving defendants would be difficult-as shown by plaintiff's (successful) motion for leave to employ alternate means of service. (See NYSCEF No. 10 [proposed ex parte service order].) Plaintiff could have (whether then or later on) protected itself against potential notice problems by amending its notice of motion to extend the return date. Plaintiff did not do so.
Accordingly, it is
ORDERED that the branch of plaintiff's motion seeking leave to reargue this court's order entered March 14, 2024, is granted; and it is further
ORDERED that upon reargument, this court adheres to its original determination.