510 Ninth Ave Funding v. Eureka Realty Corp.

• Decision Date: 21 September 2022
• Docket Number: Index No. 850219/2021,Motion Seq. No. 002
• Parties: 510 NINTH AVE FUNDING LLC, Plaintiff, v. EUREKA REALTY CORP., SILVIA MIGHTY, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, CITY OF NEW YORK DEPARTMENT OF FINANCE, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK, JOHN DOE 1 THROUGH JOHN DOE 100 Defendant.
• Court: New York Supreme Court

2022 NY Slip Op 33228(U)

510 NINTH AVE FUNDING LLC, Plaintiff, v. EUREKA REALTY CORP., SILVIA MIGHTY, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, CITY OF NEW YORK DEPARTMENT OF FINANCE, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK, JOHN DOE 1 THROUGH JOHN DOE 100 Defendant.

Index No. 850219/2021

Motion Seq. No. 002

Supreme Court, New York County

September 21, 2022

Unpublished Opinion

PRESENT: HON. FRANCIS A. KAHN, III, Justice.

DECISION + ORDER ON MOTION

FRANCIS A. KAHN, III, A.J.S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 002) 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113 were read on this motion to/for APPOINT - REFEREE .

Upon the foregoing documents, the motion and cross-motion are determined as follows:

This is an action to foreclose on a commercial mortgage given by Defendant Eureka Realty Corp. ("Eureka") which encumbers real property located at 510 9th Avenue, New York, New York. The mortgage secures a note which evidences a loan with an original principal amount of $2,100,000.00. The note and mortgage were executed by Defendant Silvia Mighty ("Mighty") as Authorized Signatory of Eureka. Mighty admits she is the "sole shareholder, corporate officer and principal of Eureka". Concomitantly with these documents, Mighty executed an unconditional guaranty of the indebtedness. Plaintiff commenced this action wherein it is alleged Defendants defaulted in repayment of the subject note. Defendants defaulted in appearing or answering.

Now, Plaintiff moves for a default judgment against all defendants, an order of reference and to amend the caption. Defendants Eureka and Mighty oppose the motion and cross-move to vacate their default pursuant to CPLR §§317, 5015[a][l] and 5015[a][4], to compel Plaintiff to accept a late answer pursuant to CPLR §3012[d], vacating the appointment of a Receiver, denying the Receiver's motion for leave to retain a managing agent (Mot. Seq. 3), dismissing Plaintiffs complaint pursuant to CPLR §321 l[a][8] and [10], dismissing Plaintiffs complaint pursuant to CPLR §321 l[a][2] and the COVID-19 Emergency Protect Our Small Business Act of 2021, to cancel the notice of pendency and for an award of attorney's fees. Plaintiff opposes the cross-motion.

"An applicant for a default judgment against a defendant must submit proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defaulting defendant's failure to answer or appear" (Deutsche Bank Natl. Trust Co. v Silverman, 178 A.D.3d 898, 899 [2d Dept 2019]). A plaintiff needs "only [to] allege enough facts to enable a court to determine that a viable cause of action exists" (Woodson v Mendon Leasing Corp., 100 N.Y.2d 62, 71 [2003]).

Plaintiff established prima facie its entitlement to a default judgment against Eureka, Mighty and the other Defendants by submitting proof of the mortgage, the unpaid note, notice of default, proof of service on each Defendant as well as proof of their failure to appear or answer (see CPLR §3215[f); SRMOFII2012-1 Trust v Telia, 139 A.D.3d 599, 600 [1^st Dept 2016]; U.S. Bank Natl. Assn. v Wolnerman, 135 A.D.3d 850 [2d Dept 2016]; see also Deutsche Bank Natl. Trust Co. v Silverman, 178 A.D.3d 898 [2d Dept 2019]).

'"To defeat a facially adequate CPLR 3215 motion, a defendant must show either that there was no default, or that it has a reasonable excuse for its delay and a potentially meritorious defense"' (Deutsche Bank Natl. Trust Co. v Silverman, 178 A.D.3d 898, 901 [2d Dept 2020], citing USBankN.A. v Dorestant, 131 A.D.3d 467, 470 [2d Dept 2015]). Similarly, to vacate a default in appearing or answering, a party is required to demonstrate both a reasonable excuse for the default and a potentially meritorious defense to the motion (see CPLR §5015[a][l]; Karimian v Karlin, 173 A.D.3d 614 [1^st Dept 2019]; Needleman v Chaim Tornhein, 106 A.D.3d 707 [2d Dept 2013]). However, a defendant is not required to meet these requisites if there is a lack of jurisdiction (see CPLR §5015[a][4]; Avis Rent A Car Sys., LLC v Scaramellino, 161 A.D.3d 572 [l^sl Dept 2018]). Thus, a court is required to resolve the jurisdictional issue before considering whether to grant a discretionary vacatur of the default (see eg Kondaur Capital Corp. v McAuliffe, 156 A.D.3d 778, 779 [2d Dept 2017]; Caba v Rai, 63 A.D.3d 578, 581, n.l [1^st Dept 2009]).

Defendants' assertion that Eureka was not properly served is without merit. "A process server's affidavit of service constitutes prima facie evidence of proper service and, therefore, gives rise to a presumption of proper service" (Bethpage Fed. Credit Union v Grant, 178 A.D.3d 997, 997 [2d Dept 2019]). Plaintiff filed two affidavits of service attesting to service of the summons and complaint on Eureka. In the affidavit dated September 16, 2021, the process server avers that on that date he served, among other things, a summons and verified complaint, by delivering it to an authorized agent of the New York State Secretary of State. This affidavit is sufficient on its face to establish a presumption of proper service on Eureka pursuant to BCL §306 (see eg Residential Bd. of Managers v Rockrose Dev. Corp., 17 A.D.3d 194 [1^st Dept 2005]). Plaintiff also filed an affidavit of service from Joseph Donovan, dated September 23, 2021, wherein he avers that he personally delivered, among other things, a summons and verified complaint to Mighty at the mortgaged premises. Donovan also attests that the same documents were delivered by certified mail to the same address. This affidavit is sufficient on its face to establish a presumption of proper service on Eureka pursuant to CPLR §311 (see Hayden v Southern Wine & Spirits of Upstate NY., Inc., 126 A.D.3d 673 [2d Dept 2015]).

To rebut this presumption and be entitled to a hearing, an affidavit of the person served containing a nonconclusory denial of service which specifically contradicts the process server's version of events must be proffered (see Bank of Am., N.A. v Diaz, 160 A.D.3d 457, 458 [1st Dept 2018]; NYCTL 1998-1 Trust & Bank of N.Y. v Rabinowitz, 7 A.D.3d 459, 460 [1st Dept 2004]). As to the service under BCL §306, "Defendant does not dispute that it breached its obligation to update its address with its registered agent, which led to its failure to receive service of process" (Salish Lodge LLC v Gift Mgt. Inc., 192 A.D.3d 410, 411 [1^st Dept 2021]). This is not a viable excuse which defeats service (see Fisher v Lewis Constr. NYC Inc., 179 A.D.3d 407 [1^st Dept 2020]). Concerning the service on September 22, 2021, Mighty submitted an affidavit wherein she claimed "[n]one of this occurred on the date, nor at the time claimed in Mr. Donovan's affidavit, nor at any other time". Mighty also claimed the process server's description of the recipient was distinct from her appearance and she denied receipt of the j| certified mailing. Mighty's denial of in hand receipt of the pleadings is entirely conclusory and insufficient to defeat the process server's affidavit (see Wells Fargo Bank, N.A. v Tricarico, 139 A.D.3d 722, 723 [2d Dept 2016]). The claimed discrepancies in the appearance of the recipient and Mighty are both too minor and entirely unsubstantiated (see PNC Bank, N.A. v Bannister, 161 A.D.3d 1114, 1116 [2d Dept 2018]; cf. Emigrant Mlge. Co., Inc. v Westervelt, 105 A.D.3d 896, 897 [2d Dept 2013]). Moreover, the naked denial of receipt of the mailing is insufficient to rebut the presumption of regularity of the mails (see City of New York v Melamed (In Rem Tax Foreclosure Action No. 47), 19 A.D.3d 547, 548 [2d Dept 2005]).

As to service on Mighty, Plaintiff filed an affidavit, dated October 1, 2021, in which a process server, Calvin Chen, who attested that service of the summons and complaint and other documents was made on Mighty by personal delivery at 120-32 167^th Street, Jamaica, New York at 1:29 pm on September 25, 2021. The affidavit also contained an alleged physical description of Mighty as female with Black skin and hair, between the ages of 50-59 who is five feet to five foot three inches in height and weighing 125 to 149 lbs. This constitutes prima facie proof of service on Mighty pursuant to CPLR §308[1] (see HSBC Bank USA v Archer, 173 A.D.3d 984, 985 [2d Dept 2019]).

Mighty submitted an affidavit wherein she again denied personal delivery of the pleadings. She claimed the service, this time by Chen, "did not happen" and claimed she did not match the description in the process server's affidavit. Unlike the claims made on behalf of Eureka, Mighty asserted "I was not served with the summons and complaint in the above-captioned action". She went on to expressly deny being at the premises on the day and time of the alleged service and claimed that she was at the mortgaged premises instead. The claimed discrepancies in appearance are, like before, both too minor and entirely unsubstantiated (see PNC Bank, N.A. v Bannister, supra). However, Mighty's express denial of receipt of the pleading coupled with the claim she was not at the premises sufficiently rebuts the process server's affidavit and requires a hearing on the sufficiency of the September 25, 2021 service (see American Home Mtge. Servicing, Inc. v Gbede, 127 A.D.3d 1004, 1005 [2d Dept 2015]).

Based on the foregoing, the branch of Plaintiff s motion for a default judgment against Mighty, as well as the branches of Defendants cross-motion to vacate Mighty's default, to compel acceptance of her answer, to dismiss pursuant to CPLR §3211 [a][8] and for an award of attorney's fees are held in abeyance...