Snyder v. Alternate Energy Inc.

• Citation: 19 Misc.3d 954,2008 NY Slip Op 28137,857 N.Y.S.2d 442
• Decision Date: 04 April 2008
• Docket Number: 011086 CVN 2007.
• Parties: JASON ARTHUR SNYDER et al., Plaintiffs, v. ALTERNATE ENERGY INC. et al., Defendants.
• Court: New York Civil Court

19 Misc.3d 954

857 N.Y.S.2d 442

2008 NY Slip Op 28137

JASON ARTHUR SNYDER et al., Plaintiffs, v. ALTERNATE ENERGY INC. et al., Defendants.

011086 CVN 2007.

Civil Court of the City of New York, New York County.

April 4, 2008.

Law Offices of Yitzchak E. Cohen, New York City, for plaintiffs.

OPINION OF THE COURT

MATTHEW F. COOPER, J.

Considering the pervasive role the Internet plays in today's world, it is striking how seldom it is used to notify somebody that he or she is being sued. While legal terms like "e-filing," "e-discovery" and "e-contacts" are becoming increasingly familiar, the concept of "e-service" remains all but unknown. In fact, there appears to be only one reported New York state court decision authorizing service of the summons and complaint by e-mail, and that case, as discussed later in this decision, dealt with a rather unique set of facts.

In this instance, plaintiffs faced a frustrating but not uncommon situation: despite their best efforts they were unable to locate an address where they could make service on two of the defendants. The only address they could find was an e-mail address. As a result, plaintiffs made application to this court to serve process via e-mail. This decision explains why I permitted them to do so. It also discusses the additional conditions imposed to help insure that cyber-notice would be as reliable as the more conventional service of a paper summons and complaint.

Procedural History

In late January 2008, plaintiffs submitted an ex parte application for an order, pursuant to CPLR 308 (5), directing the manner of service. Specifically, plaintiffs sought leave to serve defendants Peter J. Nelson and Corporate Energy Investing, Inc. at the e-mail address EnergyAEI@aol.com. Plaintiffs also requested an extension of time to make service. Plaintiffs had previously applied for the same relief from another judge of this court, who denied the application with leave to renew with a more detailed explanation of the efforts made to locate the defendants' physical whereabouts. The affirmation of plaintiffs' attorney, which accompanied the new application, contained a detailed record of the efforts undertaken to find defendants. I subsequently had plaintiffs submit a memorandum of law in support of the application, and then heard oral argument on the matter.

On February 28, 2008 I signed an order authorizing service of the summons and complaint, along with a copy of the order, on defendants Nelson and Corporate Energy by e-mail. The order required that the e-mail be sent on two consecutive dates, that it bear the subject line "LEGAL PAPERS—OPEN ATTACHMENT IMMEDIATELY," and that additional copies of the summons, the complaint and the order be sent by regular mail to defendants at both their last known New York and Connecticut addresses. The order further required that plaintiffs' attorney call defendant Nelson's mobile telephone number to advise him that service was being made on defendants by e-mail and by regular mail to their last known addresses. Finally, the order extended plaintiffs' time to serve the summons and complaint, nunc pro tunc, to March 28, 2008, and directed defendants to answer the complaint within 30 days of service.

Statement of Facts

Plaintiffs Jason Arthur Snyder and Snyder Energy, LLC are engaged in the business of energy, cogeneration and structuring energy/real property improvement benefits. Defendants Alternate Energy Inc. and Corporate Energy are energy-benefits investment companies. Plaintiffs allege that these companies are related entities in that one is the parent or subsidiary company of the other. Defendant Nelson is the president and owner of both companies.

According to the complaint, on March 23, 2005, Snyder entered into an agreement with Nelson to perform energy, cogeneration, and structuring energy/real property improvement benefits services. Approximately one month later, Snyder Energy entered into an agreement with Alternate Energy for the same type of services. Under the terms of the agreements, Alternate Energy agreed to compensate Snyder Energy the sum of 5% of the profits that would be sourced or negotiated through Snyder Energy. Alternate also agreed to reimburse Snyder Energy for certain expenses. Plaintiffs allege that defendants owe them $23,050 for services performed and expenses incurred pursuant to the agreements, and that although duly demanded no payment has been made.

On March 2, 2007 plaintiffs commenced this action by purchasing an index number and filing the summons and complaint. On March 7, 2007 plaintiffs effected service on Alternate Energy by serving the summons and complaint on the New York Secretary of State. Plaintiffs, however, were unable to make service on the remaining two defendants. Corporate Energy was found not to be registered with the Secretary of State, and plaintiffs were unable to find a place where either Corporate Energy or Nelson could be physically served.

As detailed in their attorney's affirmation, plaintiffs conducted a rigorous search to locate defendants Nelson and Corporate Energy. A few months before the commencement of this action, plaintiffs' counsel spoke with Nelson on his mobile phone and was able to confirm his cellular number. In connection with a different lawsuit against the same defendants, plaintiffs served a subpoena duces tecum on Cingular Wireless in an effort to obtain subscriber information, including the address and home or business numbers for the defendants. The subpoena was returned to plaintiffs without any information that could be used to effect service on the defendants.

Immediately after commencing this case, plaintiffs attempted to serve Nelson and Corporate Energy at their last known New York address, 11 Skyline Drive, Hawthorne, New York 10532. They found that defendants had vacated the premises and that their telephone number at that address was disconnected. Apparently, defendants chose not to leave any forwarding information.

Plaintiffs also attempted to serve Nelson and Corporate Energy at their last known Connecticut address, 203 Westbrook Road, Essex, Connecticut 06426, by utilizing the services of a Connecticut state marshal. The marshal was unable to locate the defendants. In an affidavit dated May 18, 2007 the marshal states that he "made a diligent search throughout [his] precincts to locate the ... defendants and found that their office at 203 Westbrook Road, Westbrook, CT was empty" and that he "checked with the local post office but they did not leave a forwarding address."

In addition to the measures described above, plaintiffs' counsel tried to find the defendants by performing a search of public records, on-line phone books and other people locators. Counsel also performed a search of court dockets and contacted attorneys on other actions brought against these defendants in an effort to obtain current addresses for them. These efforts, too, proved unsuccessful.

While plaintiffs have searched to no avail for defendants' physical whereabouts, they have had no problem reaching Nelson on the Internet. On November 1, 2006, plaintiffs' counsel, utilizing username Zlitigator@aol.com, exchanged messages with Nelson, whose username is EnergyAEI@aol.com, via America Online's (AOL) Instant Messenger service. This address had been obtained from an earlier e-mail sent by Nelson to plaintiffs. The e-mail, sent from the e-mail address EnergyAEI@aol.com, asked that the recipient "please write back or call me at (917) [XXX-XXXX]" (cellular number redacted by the court) and was closed with the name "Pete Nelson."

On November 1, 2006, after communicating with defendant Nelson on-line, counsel sent an e-mail to defendant Nelson at EnergyAEI@aol.com, with a request for return receipt attached. Later that evening, counsel received a receipt from AOL indicating that the e-mail had been read.

As recently as January 8, 2008, a matter of days before plaintiffs made the instant application, counsel sent an e-mail to defendant Nelson asking for his current street address. On January 9, 2008, counsel received a receipt from AOL indicating that the e-mail had been read. Counsel did not receive a response to the e-mail.

Finally, counsel attests to the fact that he regularly sees Nelson online at EnergyAEI@aol.com. He is able to do this because he has added Nelson's e-mail address to something known as his AOL "Buddy List." Courtesy of this minor miracle of modern technology, whenever plaintiffs' counsel is on line he is notified if Nelson is also on line.

Legal Analysis

Fundamental to our system of justice is the right to be heard. "This right to be heard," however, "has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest." (Mullane v Central Hanover Bank & Trust Co., 339 US 306, 314 [1950].) Thus, in order to meet the constitutional requirements of due process, service of process must be by a legally approved method that is reasonably calculated to give the defendant notice of the pending lawsuit. (Dobkin v Chapman, 21 NY2d 490 [1968]; Harkness v Doe, 261 AD2d 846 [4th Dept 1999]; City of New York v Chemical Bank, 122 Misc 2d 104 [Sup Ct, NY County 1983].)

In the interests of insuring that constitutionally sufficient notice is given to parties being sued in civil actions, our legislature has established the methods by which the summons is to be served on individuals and corporations. CPLR 308 sets forth the various means that can be employed to make personal service on a natural person. One of the two preferred methods is "inhand" delivery of the summons to the defendant. (CPLR 308 [1].) The other is leaving the summons with a person of "suitable age and discretion" at the defendant's "actual place of business, dwelling place or usual place of abode," and then mailing to either the last known address or actual place of business. (CPLR 308 [2].) If...