259 Milford, LLC v. FV-1, Inc.

• Decision Date: 07 December 2022
• Docket Number: 2020–03308,Index No. 521691/16
• Citation: 259 Milford, LLC v. FV-1, Inc., 211 A.D.3d 658, 179 N.Y.S.3d 707 (N.Y. App. Div. 2022)
• Parties: 259 MILFORD, LLC, appellant, v. FV–1, INC., etc., respondent.
• Court: New York Supreme Court — Appellate Division

211 A.D.3d 658

179 N.Y.S.3d 707

259 MILFORD, LLC, appellant,

v.FV–1, INC., etc., respondent.

2020–03308

Index No. 521691/16

Supreme Court, Appellate Division, Second Department, New York.

Argued—October 27, 2022

December 7, 2022

Menashe & Associates, LLP, Montebello, NY (Chezki Menashe of counsel), for appellant.

Greenspoon Marder, LLP, New York, NY (Raspreet Bhatia of counsel), for respondent.

COLLEEN D. DUFFY, J.P., FRANCESCA E. CONNOLLY, PAUL WOOTEN, JANICE A. TAYLOR, JJ.

DECISION & ORDER

In an action to cancel and discharge of record a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Richard J. Montelione, J.), dated January 14, 2020. The order granted the defendant's motion pursuant to CPLR 5015(a)(1) to vacate an order of the same court dated April 13, 2017, and a judgment of the same court entered March 28, 2018, and for an extension of time to answer the complaint.

ORDERED that the order dated January 14, 2020, is reversed, on the law and in the exercise of discretion, with costs, and the defendant's motion pursuant to CPLR 5015(a)(1) to vacate the order dated April 13, 2017, and the judgment entered March 28, 2018, and for an extension of time to answer the complaint is denied.

The plaintiff commenced this action to cancel and discharge of record a mortgage pursuant to RPAPL 1501(4). The defendant, the alleged holder of the mortgage, neither answered the complaint nor appeared in the action. Thereafter, the plaintiff moved for leave to enter a default judgment. By order dated April 13, 2017, the Supreme Court granted the plaintiff's unopposed motion, and directed the plaintiff to settle the judgment on notice. The plaintiff served a notice of settlement of judgment, to which the defendant did not respond. The default judgment was entered on March 28, 2018.

On or about June 25, 2019, the defendant moved pursuant to CPLR 5015(a)(1) to vacate the order dated April 13, 2017, and the judgment entered March 28, 2018, and for an extension of time to answer the complaint. The Supreme Court granted the motion, and the plaintiff appeals.

"A defendant seeking to vacate a judgment pursuant to CPLR 5015(a)(1) must demonstrate a reasonable excuse for the default and a potentially meritorious defense to the action" ( Emigrant Sav. Bank v. Burke, 199 A.D.3d 652, 652, 153 N.Y.S.3d 885 ; see Wells Fargo Bank, N.A. v. Arratia, 207 A.D.3d 598, 599, 169 N.Y.S.3d 837 ; LaSalle Bank N.A. v. Calle, 153 A.D.3d 801, 802, 61 N.Y.S.3d 104 ). Although "[a] motion to vacate a default is addressed to the sound discretion of the motion court" ( Aurora Loan Servs., LLC v. Ahmed, 122 A.D.3d 557, 557–558, 996 N.Y.S.2d 92 [internal quotation marks omitted]; see U.S. Bank, N.A. v. Dorvelus, 140 A.D.3d 850, 852, 32 N.Y.S.3d 631 ), the defaulting party must submit evidence in admissible form establishing both a reasonable excuse for the default and a potentially meritorious cause of action or defense (see OneWest Bank, FSB v. Singer, 153 A.D.3d 714, 715–716, 59 N.Y.S.3d 480 ; HSBC Bank USA N.A. v. Nuteh 72 Realty Corp., 70 A.D.3d 998, 999, 895 N.Y.S.2d 497 ; Incorporated Vil. of Hempstead v. Jablonsky, 283 A.D.2d 553, 554, 725 N.Y.S.2d 76 ).

Here, the defendant failed to provide a "detailed and credible explanation" for the default ( OneWest Bank, FSB v. Singer, 153 A.D.3d at 716, 59 N.Y.S.3d 480 ; see GMAC Mtge., LLC v. Guccione, 127 A.D.3d 1136, 1138, 9 N.Y.S.3d 83 ). Rather, the defendant submitted only an affidavit of an employee of its loan servicer averring that the defendant's agent for process had emailed the summons and complaint to the servicer, and the complaint had been "routed in error to the incorrect email address within" the servicer, which prevented the servicer from "timely notify[ing] its counsel of the [instant] action." That conclusory and nondetailed allegation does not constitute a reasonable excuse warranting vacatur of the default (see Deutsche Bank Trust Co. Ams. v. Hwa Joong Yoon, 204 A.D.3d 885, 887, 164 N.Y.S.3d 836 ; OneWest Bank, FSB v. Singer, 153 A.D.3d at 716, 59 N.Y.S.3d 480 ; see also GMAC v. Minewiser, 115 A.D.3d 707, 708, 981 N.Y.S.2d 580 ). Therefore, it is not necessary to determine whether the defendant demonstrated a potentially meritorious defense to the action (see Nationstar Mtge., LLC v. Brignol, 181 A.D.3d 881, 882, 119 N.Y.S.3d 882 ; U.S. Bank N.A. v. Grubb, 162 A.D.3d 823, 79 N.Y.S.3d 210 ; US Bank, N.A. v. Samuel, 138 A.D.3d 1105, 1107, 30 N.Y.S.3d 305 ).

Although the defendant expressly moved pursuant to CPLR 5015(a)(1) only, the Supreme Court properly considered whether the defendant set forth grounds to vacate its default pursuant to CPLR 317 (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 142–143, 501 N.Y.S.2d 8, 492 N.E.2d 116 ; Peacock v. Kalikow, 239 A.D.2d 188, 189, 658 N.Y.S.2d 7 ). CPLR 317 provides, in relevant part, that a party served with a summons other than by personal delivery and who does not appear "may be allowed to defend the action within one year after he [or she] obtains knowledge of entry of the judgment ... upon a finding of the court that he [or she] did not personally receive notice of the summons in time to defend and has a meritorious defense." A defendant moving pursuant to CPLR 317 is not required to set forth a reasonable excuse for the delay in answering the complaint (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co, 67 N.Y.2d at 141, 501 N.Y.S.2d 8, 492 N.E.2d 116 ; Beltran v. New York City Hous. Auth., 206 A.D.3d 873, 874, 171 N.Y.S.3d 127 ). However, " ‘to support a determination granting relief under CPLR 317, a party must still demonstrate, and the Court must find, that the party did not receive actual notice of the summons and complaint in time to defend the action’ " ( HSBC Bank USA, N.A. v. Cherestal, 178 A.D.3d 680, 682, 113 N.Y.S.3d 206, quoting Taron Partners, LLC v. McCormick, 173 A.D.3d 927, 929, 103 N.Y.S.3d 485 ; see Beltran v. New York City Hous. Auth., 206 A.D.3d at 874, 171 N.Y.S.3d 127 ).

Here, the defendant failed to establish that it did not receive actual notice of the summons and complaint in time to defend the action. Although the mere denial of receipt of the summons and complaint is insufficient to establish lack of actual notice for the purpose of CPLR 317 (see HSBC Bank USA, N.A. v. Cherestal, 178 A.D.3d at 682, 113 N.Y.S.3d 206 ; Wassertheil v. Elburg, LLC, 94 A.D.3d 753, 754, 941 N.Y.S.2d 679 ; Matter of Rockland Bakery, Inc. v. B.M. Baking Co., Inc., 83 A.D.3d 1080, 1081–1082, 923 N.Y.S.2d 572 ), the defendant did not even deny receipt of the summons and complaint. Rather, the defendant's affiant...