Expansion Capital Grp., LLC v. Mentat, LLC
| Decision Date | 02 July 2019 |
| Docket Number | Index No. 652782/2018 |
| Citation | 2019 NY Slip Op 32030 (U) |
| Parties | EXPANSION CAPITAL GROUP, LLC, Plaintiff, v. MENTAT, LLC, Defendant. |
| Court | New York Supreme Court |
DECISION AND ORDER
Plaintiff Expansion Capital Group, LLC moves, pursuant to CPLR 3213, for summary judgment in lieu of a complaint to domesticate an unsatisfied money judgment, entered in default in South Dakota, against defendant Mentat, LLC.
Plaintiff is a South Dakota limited liability company with its principal place of business in Sioux Falls, South Dakota (NY St Cts Elec Filing [NYSCEF] Doc No. 23, aff of Jonathan Doughty [Doughty], exhibit 6 [the South Dakota complaint], ¶ 1). Defendant is a limited liability company organized and existing in New York (id., ¶ 2).
On January 20, 2017, defendant executed a master purchase and sale agreement with plaintiff whereby defendant agreed to sell $45,300 of its future receivables in exchange for an advance of $30,000, with a daily remittance of $377 to be debited automatically from defendant's bank account or from credit card payments made to defendant until the purchased receivables were paid in full (NYSCEF Doc No. 28, affirmation of plaintiff's counsel, exhibit 1 [the Agreement] at 1-2). After defendant defaulted on its payment obligations, plaintiff commenced an action for breach of contract and unjust enrichment in Circuit Court in the Second Judicial District, Minnehaha County, South Dakota (NYSCEF Doc No. 4, aff of Herk Christie [Christie], exhibit A at 2-3). The court granted plaintiff's motion for a default judgment on November 14, 2017, and entered a judgment in the amount of $37,193.40, together with costs, attorneys' fees and post-judgment interest at 10% per annum (the South Dakota Judgment) (id.).
Plaintiff commenced this action on June 5, 2018 by filing a summons with a notice of motion for summary judgment in lieu of a complaint to enforce the South Dakota Judgment.
Plaintiff argues that the court should enter judgment against defendant based upon the South Dakota Judgment. Christie, plaintiff's vice president, avers that defendant consented to jurisdiction in South Dakota pursuant to the forum selection clause in the Agreement, and that defendant has not appealed the South Dakota Judgment (NYSCEF Doc No. 3, Christie aff, ¶¶ 6-7), a copy of which is submitted with his affidavit (NYSCEF Doc No. 4 at 1).
In opposition, defendant tenders an affidavit from Doughty, its owner and chief executive, who attests that the Agreement constitutes an unenforceable loan agreement because plaintiff is not licensed to make loans in New York (NYSCEF Doc No. 17, ¶¶ 4 and 16). Doughty avers that defendant never received notice of the South Dakota action or this action, as plaintiff attempted to serve process at two of defendant's former addresses at 115 East 23rd Street, New York, New York, and 3264 Middleton Road, Bronx, New York, and that plaintiff should have received notices of non-delivery for those attempts (id., ¶ 13). While Doughty admits that defendant receives its mail at 228 Park Avenue South (id., ¶ 14), an address plaintiff's process server has described as an "Earth Class Mail" outlet (NYSCEF Doc No. 31, affirmation of plaintiff's counsel, exhibit 4 at 3), he maintains that building management "receives the mail for all its tenants and keeps an official record of what it receives, including a list and a photocopy of the envelope" (NYSCEF Doc No. 17, ¶ 14). Doughty claims that thebuilding's records from May 22, 2018 to July 8, 2018 do not show the receipt of any mail related to the New York lawsuit addressed to defendant (id.). Doughty further claims that "[a] review of prior records maintained by management shows nothing at all relating to the South Dakota lawsuit" (id.). He refutes Christie's averment that the Agreement contained a forum selection clause, or that defendant consented to jurisdiction in South Dakota (id., ¶¶ 18-19). Lastly, Doughty asserts that illegal contracts, such as the Agreement, are unenforceable in this State (id., ¶ 16).
Plaintiff counters that defendant cannot contest the merits of the underlying South Dakota action as any opposition to enforcement is limited to a challenge to jurisdiction. Plaintiff submits that South Dakota properly exercised personal jurisdiction over defendant, who had deliberately entered into the Agreement with a South Dakota resident. Next, plaintiff alleges that defendant was properly served with notice of this action through the Secretary of State. Plaintiff also urges the court to strike defendant's response pursuant to the Rules of the Chief Administrator of the Courts (22 NYCRR) § 130-1.1a because the opposition consisted solely of an affidavit, which is not a paper signed by an attorney, and exhibits.
At the outset, defendant's contention that it never received notice of this action is unfounded. It is well settled that service upon a limited liability company is "complete upon service to the Secretary of State" (Darbeau v 136 W. 3rd St., LLC, 144 AD3d 420, 420 [1st Dept 2016]). A properly executed "affidavit of a process server constitutes prima facie evidence of proper service" (Matter of de Sanchez, 57 AD3d 452, 454 [1st Dept 2008]). In addition, the statutes governing service of a summons apply equally to service of a CPLR 3213 motion (see Capolino v Goren, 155 AD3d 1414, 1415 [3d Dept 2017] [citation omitted]). Plaintiff hasoffered proof that the summons and the notice of motion were served in accordance with Limited Liability Company Law § 303 (a) and CPLR 311-a, as indicated in an affidavit of service sworn to June 12, 2018 (NYSCEF Doc No. 30, affirmation of plaintiff's counsel, exhibit 3 at 1). Defendant failed to address whether service upon the Secretary of State was proper in its opposing affidavit. Therefore, plaintiff has established that the court has personal jurisdiction over defendant for this action.
Next, plaintiff's argument to strike defendant's opposition, predicated upon a purported violation of the Rules of the Chief Administrator of the Courts (22 NYCRR) § 130-1.1a, is unpersuasive. The rule states, in pertinent part, that "[e]very pleading, written motion and other paper, served on another party or filed or submitted to the court shall be signed by an attorney, or by a party if the party is not represented by an attorney," and allows the court to strike any papers that do not conform to the rule (Rules of Chief Admin of Cts [22 NYCRR] § 130-1.1a [a]). Admittedly, Doughty is not an attorney, and a limited liability company must be represented by a licensed attorney (see DeMartino v Golden, 150 AD3d 1200, 1201 [2d Dept 2017], citing CPLR 321 [a]; Michael Reilly Design, Inc. v Houraney, 40 AD3d 592, 593-594 [2d Dept 2007]). However, plaintiff does not dispute that defendant is represented by counsel, who filed a notice of appearance in this action (NYSCEF Doc No. 26, plaintiff's memorandum of law at 7), and plaintiff can point to no prejudice from the omission (see e.g. Matter of Green v Tierney, 59 AD3d 900, 901 [3d Dept 2009]). Moreover, what is required to oppose a motion for summary judgment is "evidentiary proof in admissible form sufficient to require a trial of material questions of fact" (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Here, although the inclusion of legal arguments in an affidavit is improper (see Taylor v African M. E. Church, 265 App Div 858, 858 [2d Dept 1942] []), Doughty's sworn, notarized statement constitutes an affidavit by a person with knowledge of the relevant facts. Thus, the court will consider the affidavit.
CPLR 5406 provides that a judgment creditor may pursue summary judgment in lieu of a complaint instead of commencing an Article 54 enforcement proceeding. CPLR 3213 allows for the enforcement of a foreign judgment obtained on default (see Morin Boats v Acierno, 150 AD3d 844, 845 [2d Dept 2017 [citations omitted]). The statute partially reads that "[w]hen an action is based . . . upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint" (CPLR 3213).
The certification for the South Dakota Judgment submitted on the motion substantially conforms to the requirements set forth in CPLR 4540 (c) (see Sparaco v Sparaco, 309 AD2d 1029, 1030 [3d Dept 2003], lv denied 2 NY3d 702 [2004]), even though the certification lacks the requisite language that the attesting officer's signature is believed to be genuine. The clerk of the Circuit Court of the Second Judicial Circuit, Angela M. Gries (Gries), certified that she keeps and maintains court records, that she has compared a copy of the South Dakota Judgment with the original on file with the court, and that the copy is a true and correct copy of the original (NYSCEF Doc No. 4 at 1). Judge Lawrence E. Long of the same court certified that Gries is the Minnehaha County Clerk in the Second Judicial Circuit, that she is the keeper of records, that full faith and credit should be given to her official acts, and that her attestation is in due form of law (id.). Gries' deputy certified that Judge Long was a justice in the Second Judicial Circuit (id.). Incidentally, Judge Long had awarded plaintiff the default judgment in the South Dakota action. Consequently, the South Dakota Judgment annexed to Christie's affidavit is both valid and admissible.
Judgments rendered in sister states are entitled to recognition under the Full Faith and Credit Clause in the U.S. Constitution, article IV, § 1 (...
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