Charnin v. Cogan

• Decision Date: 26 May 1998
• Citation: 250 A.D.2d 513,673 N.Y.S.2d 134
• Parties: , 1998 N.Y. Slip Op. 4979 Martin CHARNIN, et al., Plaintiffs-Appellants, v. David J. COGAN, et al., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 134

673 N.Y.S.2d 134

250 A.D.2d 513, 1998 N.Y. Slip Op. 4979

Martin CHARNIN, et al., Plaintiffs-Appellants, v. David J. COGAN, et al., Defendants-Respondents.

Supreme Court, Appellate Division First Department.

May 26, 1998.

Robert I. Harwood, for Plaintiffs-Appellants.

Richard S. Oelsner, for Defendants-Respondents.

Before SULLIVAN, J.P., and MILONAS, ROSENBERGER and WILLIAMS, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Herman Cahn, J.), entered February 20, 1997, which, to the extent appealed from, disaffirmed the findings of a Special Referee as to defendant David Cogan and otherwise affirmed the findings of the Special Referee, and dismissed the action against defendants David Cogan, David Bell and Evan Bell, unanimously reversed, on the law, with costs, and the complaint reinstated as to those defendants.

Plaintiff Martin Charnin is the sole shareholder and president of plaintiff company Beam One Limited. The individually named defendants include Charnin's former agents, representatives, accountants and business and investment managers, who in turn are the principals of the partnership and corporate defendants as to which the complaint was dismissed pursuant to the order on appeal. The essence of plaintiffs' claim is that defendants fraudulently and negligently mishandled plaintiffs' investments, resulting in substantial financial losses. The sole issue before us, however, involves the threshold question of whether service of process was properly effected on the individual defendants.

Plaintiffs commenced this action in November 1989, and defendants submitted an answer in January 1990. Following service of an amended complaint in March 1993, defendants moved to dismiss the action for lack of personal jurisdiction, on the ground that the parties had not been properly served in the first instance, with the exception of corporate defendant Sharcar, Inc., as to which jurisdiction was conceded.

A traverse hearing was conducted before a Special Referee on the issue of personal jurisdiction, and the evidence relevant to service on the individual defendants was as follows. On October 27, 1989, Matthew Steinberg, the mail room supervisor at the law firm representing plaintiffs, went to David Cogan's apartment house and "attempted to deliver [the summons] to him personally." Steinberg attempted to go upstairs to Cogan's apartment, but the uniformed doorman of the building informed him that Cogan was not at home; therefore, Steinberg was not able to go upstairs. Instead, he left the summons with the doorman as the law firm had instructed him to do in the event that he could not serve Cogan himself. Steinberg ascertained the doorman's name and wrote down his physical description. A copy of the summons and complaint was thereafter mailed to Cogan at his residence, marked "personal and confidential," by the law firm's senior paralegal, who testified to this effect at the hearing.

On December 8, 1989, Taras Sawchuk, the managing law clerk of the firm representing plaintiffs, went to the office of Bell & Company with an envelope containing summonses and complaints for David and Evan Bell (as well as the various business entities). He told the office receptionist, Carmen Ascue, that he had papers for David Bell, but Ascue said something to the effect that Bell was unavailable or could not come out; Sawchuk recalled that her words were "he's not in" or "I can take it for him." In response to his inquiry, she told him her name and acknowledged that she worked for Bell & Company. Sawchuk gave her the envelope, which he told her contained summonses and complaints for the Bells. Sawchuk wrote down Ascue's physical description, returned to work and prepared a mailing of the summons and complaint the same day. The envelopes were marked "personal and confidential," with no identifying return address other than a street address. In his capacity as docketing clerk at the firm, Sawchuk monitored incoming mail; he testified that the envelopes mailed to Cogan and the Bells were not returned.

David Cogan, Carmen Ascue, David Bell and Evan Bell testified on behalf of defendants. Sometime late in November 1989, Cogan found the envelope with the summons and complaint in the hallway by the entrance to his apartment. According to Cogan, it was the custom and practice for doormen at his building to accept packages from uniformed individuals, but they were not supposed to accept packages for tenants who were not at home. Cogan knew the doorman with whom Steinberg had left the papers, but Cogan never inquired about the envelope's appearance. Cogan denied receiving a copy of the summons and complaint by mail.

David and Evan Bell also denied receiving a copy of the summons and complaint by mail. Each testified, however, that he had found the summons and complaint on his desk at work but did not know how it got there and made no inquiry about it. No one was authorized to accept service on their behalf.

Carmen Ascue, a receptionist for Bell & Company from 1988 to 1990, testified that she was not authorized to accept service of process for her employers and that she would have refused service if anyone had attempted it. When Sawchuk came to the office, he did not say he had legal papers to be served on the Bells. Ascue did not accept Sawchuk's envelope because he did not identify the company for which he worked, and she did not tell Sawchuk that she would accept the summons and complaint from him. Sawchuk did not leave the papers on her desk, but he may have left them on a table near the door. However, Ascue did not pick up the papers he left, and she had no idea what happened to them after that.

In his report of March 22, 1994, the Referee found that service was properly made only as to David Cogan. He concluded that Steinberg's delivery of the papers to the doorman at Cogan's residence and the follow-up mailing complied with the relevant statutory requirements of CPLR 308(2) to obtain personal jurisdiction. As to David and Evan Bell, however, the Referee cited an insufficient showing that Ascue was "a person of suitable age and discretion" under CPLR 308(2), such that leaving the summonses and complaints with her at their place of business could not be said to constitute personal service upon them. (The Referee further concluded that service had not been effected on the various business entities, but this is not an issue on appeal.) Plaintiffs moved to confirm the report with respect to the Referee's finding as to Cogan and otherwise disaffirm the report; defendants moved to disaffirm only as to the finding of service on Cogan and confirm it in all other respects.

The IAS court disaffirmed the finding as to Cogan and otherwise confirmed the Referee's report, resulting in the dismissal of the complaint as to all individuals and business entities except for Sharcar, Inc. Citing F.I. duPont, Glore Forgan & Co. v. Chen, 41 N.Y.2d 794, 396 N.Y.S.2d 343, 364 N.E.2d 1115, and Costine v. St. Vincent's Hospital & Medical Center, 173 A.D.2d 422, 570 N.Y.S.2d 50, the court found that, as to...