Opinion
Index No. 159817/2021
01-18-2023
W & W GROCERY STORE, INC, U TWT, INC, ZHONG YI WANG Plaintiffs, v. NMEE REALTY CORP, GRAND PROPERTY ACQUISITIONS LLC, Defendant.
Unpublished Opinion
PRESENT: HON. MARY V. ROSADO Justice.
DECISION + ORDER ON MOTION
HON. MARY V. ROSADO, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 35, 36, 40, 41, 42 were read on this motion to/for JUDGMENT - DEFAULT.
Upon the foregoing documents, Plaintiffs W & W Grocery Store, Inc. ("W & W"), U TWT, Inc. ("U TWT"), and Zhong Yi Wang's ("Wang") (collectively "Plaintiffs") motion for default judgment is denied. Defendants NMEE Realty Corp ("NMEE") and Grand Property Acquisitions LLC's ("Grand") cross-motion asking this Court to compel Plaintiffs to accept Defendant Grand's Answer is granted.
I. Plaintiffs' Motion for Default Judgment
An applicant for default judgment against a defendant must submit: (i) proof of service of the summons and complaint, (ii) proof of the facts constituting the claim, and (iii) proof of the defaulter's failure to appear (PV Holding Corp v AB Quality Health Supply Corp, 189 A.D.3d 645[1st Dept 2020]). Affidavits submitted in support of a motion for default judgment only need to allege enough facts to allow a court to assess where a viable cause of action exists (Woodson v Mendon Leasing Corp., 100 N.Y.2d 62, 71 [2003]). The Court is mindful that "defaulters are deemed to have admitted all factual allegations in the complaint and all reasonable inferences that flow from them (Al Fayed v Barak, 39 A.D.3d 371, 372 [1st Dept 2007]).
Plaintiffs' motion suffers from several procedural infirmities which prevent granting default judgment. In particular, Plaintiffs have failed to comply with CPLR § 3215(f), which requires either a Complaint verified by the party seeking default judgment or an affidavit in support of the motion executed by a party with personal knowledge of the merits of a movant's claims (Beltre v Babu, 32 A.D.3d 722 [1st Dept 2006]). Here, the Complaint is only verified by Plaintiffs' counsel, and there is no affidavit in support of the motion executed by a party with personal knowledge. Although the Complaint is verified by Plaintiff" s counsel, the First Department has held that a complaint verified by counsel is purely hearsay, devoid of evidentiary value, and thus insufficient to support entry of a judgment pursuant to CPLR 3215 (id.). Moreover, the issue of whether service of the summons and complaint was properly effectuated is hotly contested by Defendant via a sworn affidavit, making compliance with CPLR § 3215(g) dubious (see NYSCEF Doc. 16). Indeed, the managing member of Defendant Grand states that only he is authorized to accept service and that he was not in the office on the date personal service was purportedly effectuated on Grand Property Acquisitions LLC (NYSCEF Doc. 11). Based on these procedural infirmities, entry of default judgment is inappropriate. As Defendant NMEE has not yet appeared, and Plaintiffs' motion is denied on procedural grounds, the motion is denied without prejudice as to NMEE, with leave to renew upon proper supporting papers.
IL Cross-Motion Seeking to Compel Plaintiffs to Accept Defendant Grand Property's Answer
In New York, public policy favors resolving cases on their merits (Yea Soon Chung v Mid Queens LP, 139 A.D.3d 490 [1st Dept 2016]. Moreover, CPLR 3012(d) provides that "upon the application of a party, the Court may extend the time to appear or plead, or compel the acceptance of a pleading untimely served, upon such terms as may be just and upon a showing of reasonable excuse for delay or default." Granting an extension of time to answer is within the discretion of the Court (Guzetti v City of New York, 32 A.D.3d 234 [1st Dept 2006]).
Defendant Grand Property allegedly obtained notice of this action through conversations between Plaintiff Wang and members of Defendant Grand in January of 2022 (NYSCEF Doc. 17 at ¶ 20). Although this gave Defendant Grand knowledge of the lawsuit, it is highly contested whether service was effectuated giving this Court jurisdiction over Defendant Grand. Counsel for Defendant Grand, upon learning about the action, claims that he attempted to contact Plaintiff s counsel to learn if service was effectuated on the Secretary of State, since as of January 2022, there were no affidavits of service filed on NYSCEF (id. at ¶¶ 20-21). Purportedly, it was only in July 2022, after receiving a discovery notice from the Court (NYSCEF Doc. 6) that Defendant Grand saw that a motion for default judgment had been filed and affidavits of service had been uploaded (NYSCEF Doc. 17 at ¶¶ 22-24). Defendant Grand also purportedly asked in July of 2022 if it may be permitted to file a late answer but counsel for Plaintiff refused (id. at ¶ 24).
While Plaintiffs counsel attempts to argue that Defendant Grand should be barred from serving a late answer because their attorney is lying about service, Plaintiff s counsel only provides in support the telephone call records and a voicemail transcript which is unintelligible, which the Court assumes is due to a faulty telephone transcription software (see NYSCEF Docs. 32-33). In any event, the telephone call records and date on the voicemail transcript are inadmissible hearsay which may not be considered by the Court. Moreover, the fact that counsel for Defendant Grand reached out to Plaintiffs counsel in January of 2022, when Defendant Grand purportedly learned about this action through interaction with Plaintiff Wang, does not contradict the affidavit of Defendant Grand and its counsel - nor does it show conclusively that service was properly effectuated on Defendant Grand.
Given the public policy in favor of resolving cases on the merits, Plaintiffs delay in uploading to NYSCEF affidavits of service until February of 2022 even though the action was commenced in October of 2021; the hotly contested matter of whether service has been properly effectuated, and Defendant Grand's attempt to work with Plaintiff to file a late answer, the Court finds there are reasonable excuses for Grand's delay in filing an Answer. Moreover, as there has been no discovery to date, there is no prejudice to Plaintiffs in being compelled to accept Defendant Grand's late Answer. Finally, Defendant Grand has presented potentially meritorious defenses and counterclaims for damages which warrant granting Defendant Grand's cross-motion (see NYSCEF Docs. 18-29).
Accordingly, it is hereby, ORDERED that Plaintiffs' motion for default judgment against Defendant Grand is denied; and it is further
ORDERED that Plaintiffs motion for default judgment against Defendant NMEE is denied without prejudice, with leave to renew within 60 days from entry of this Decision and Order upon proper supporting motion papers; and it is further
ORDERED that Defendant Grand's motion to extend the time to answer is granted, and the Answer in the proposed form annexed to the moving papers shall be deemed served upon service of a copy of this order with notice of entry thereof; and it is further
ORDERED that counsel for Grand is to serve a copy of this order with notice of entry on all parties to this action within ten (10) days of this Decision and Order; and it is further
ORDERED that counsel for Grand and Plaintiff shall submit a proposed preliminary conference order to the Court via e-mail at SFC-Part33-Clerk@nvcourts.gov on or before February 1, 2023. In the event the parties are unable to agree to a proposed preliminary conference order, the parties are directed to appear for an in-person preliminary conference on February 8, 2023, at 9:30 a.m., in person at 60 Centre Street, Room 442, New York, New York.
This constitutes the Decision and Order of the Court.