HSBC Bank USA, Nat'l Ass'n v. Eliyahu

• Decision Date: 27 March 2019
• Docket Number: Index No. 601158/12,2017–09068
• Citation: 97 N.Y.S.3d 259,170 A.D.3d 1130
• Parties: HSBC BANK USA, NATIONAL ASSOCIATION, respondent, v. Shimon ELIYAHU, et al., appellants.
• Court: New York Supreme Court — Appellate Division

170 A.D.3d 1130

97 N.Y.S.3d 259

HSBC BANK USA, NATIONAL ASSOCIATION, respondent,

v.Shimon ELIYAHU, et al., appellants.

2017–09068

Index No. 601158/12

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

Submitted - December 4, 2018

March 27, 2019

Meir Moza (Sweetbaum & Sweetbaum, Lake Success, N.Y. [Joel M. Sweetbaum ], of counsel), for appellants.

Kirschenbaum & Phillips, P.C., Farmingdale, N.Y. (Love Ahuja of counsel), for respondent.

RUTH C. BALKIN, J.P., LEONARD B. AUSTIN, SHERI S. ROMAN, FRANCESCA E. CONNOLLY, JJ.

DECISION & ORDER

In an action to recover on a business line of credit agreement and a personal guarantee, the defendants appeal from an order of the Supreme Court, Nassau County (Denise L. Sher, J.), entered July 18, 2017. The order, insofar as appealed from, denied that branch of the defendants' motion which was pursuant to CPLR 5015(a)(1) and (4) and/or 317 to vacate a judgment of the same court entered November 13, 2012, in favor of the plaintiff and against the defendants in the sum of $ 107,979.72.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The plaintiff commenced this action alleging that the defendant USA Car & Truck Repair of Hempstead, Inc. (hereinafter USA Car & Truck Repair), defaulted in making payments on a business line of credit which was guaranteed by the defendant Shimon Eliyahu. After the defendants defaulted in answering the complaint, judgment was entered on November 13, 2012, in favor of the plaintiff and against the defendants in the sum of $ 107,979.72. On May 19, 2017, the defendants moved, inter alia, pursuant to CPLR 5015(a)(1) and (4) and/or 317 to vacate the default judgment. The Supreme Court denied that branch of the defendant's motion. The defendants appeal.

Pursuant to CPLR 5015(a)(4), "[t]he court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person ... upon the ground of ... lack of jurisdiction to render the judgment or order." The failure to serve process in an action leaves the court without personal jurisdiction over the defendant, rendering all subsequent proceedings in the action null and void (see HSBC Bank USA, N.A. v. Daniels, 163 A.D.3d 639, 640, 81 N.Y.S.3d 584 ; Krisilas v. Mount Sinai Hosp., 63 A.D.3d 887, 889, 882 N.Y.S.2d 186 ; McMullen v. Arnone, 79 A.D.2d 496, 499, 437 N.Y.S.2d 373 ).

Here, affidavits of service of the plaintiff's process servers constituted prima facie evidence of proper service on the individual defendant Shimon Eliyahu pursuant to CPLR 308(4) (see HSBC Bank USA, N.A. v. Daniels, 163 A.D.3d at 641, 81 N.Y.S.3d 584 ; HSBC Mtge. Corp. (USA) v. Hollender, 159 A.D.3d 883, 884, 74 N.Y.S.3d 93 ; HSBC Bank USA v. Desrouilleres, 128 A.D.3d 1013, 1014, 11 N.Y.S.3d 93 ) and on the corporate defendant USA Car & Truck Repair pursuant to section 306 of the Business Corporation Law (see CPLR 311[a][1] ; Business Corporation Law § 306[b][1] ; Konig v. Hermitage Ins. Co., 93 A.D.3d 643, 646, 940 N.Y.S.2d 116 ; Thas v. Dayrich Trading, Inc., 78 A.D.3d 1163, 1164, 913 N.Y.S.2d 269 ). Eliyahu's conclusory denial of service was insufficient to rebut the presumption of proper service established by the affidavits of service. Eliyahu failed to swear to specific facts rebutting the statements in the process server's affidavit (see HSBC Bank USA, N.A. v. Daniels, 163 A.D.3d at 641, 81 N.Y.S.3d 584 ; Wassertheil v. Elburg, LLC, 94 A.D.3d 753, 753, 941 N.Y.S.2d 679 ; Scarano v. Scarano, 63 A.D.3d at 716, 880 N.Y.S.2d 682 ). Accordingly, we agree with the Supreme Court's denial of that branch of the defendants' motion which was pursuant to CPLR 5015(a)(4) to vacate the judgment.

A defendant seeking to vacate a default under CPLR 5015(a)(1) must demonstrate a reasonable excuse for its delay in appearing and answering the complaint and a potentially meritorious defense to the action (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116 ; Hamilton Pub. Relations v. Scientivity, LLC, 129 A.D.3d 1025, 12 N.Y.S.3d 234 ; New York & Presbyt. Hosp. v. American Home Assur. Co., 28 A.D.3d 442, 813 N.Y.S.2d 186 ).

Here, the defendants failed to establish a reasonable excuse for their default, since the only excuse proffered was that they were not served with process (see PNC Bank, N.A. v. Bannister, 161 A.D.3d at 1116, 77 N.Y.S.3d 452 ; Bank of N.Y. v. Krausz, 144 A.D.3d 718, 718, 41 N.Y.S.3d 84 ; Deutsche Bank Natl. Trust Co. v. Pietranico, 102 A.D.3d 724, 725, 957 N.Y.S.2d 868 ). Inasmuch as the defendants failed to demonstrate a reasonable excuse for their default, it is unnecessary to determine whether they demonstrated the existence of a potentially meritorious defense (see PNC Bank, N.A. v. Bannister, 161 A.D.3d at 1116, 77 N.Y.S.3d 452 ; Bank of N.Y. v. Krausz, 144 A.D.3d at 719, 41 N.Y.S.3d 84 ; Deutsche Bank Natl. Trust Co. v. Pietranico, 102 A.D.3d at 725, 957 N.Y.S.2d 868 ). Accordingly, we agree with the Supreme Court's denial of that branch of the defendants' motion which was pursuant to CPLR 5015(a)(1) to vacate the judgment.

Pursuant to CPLR 317, "[a] person served with a summons other than by personal delivery to him [or her] or to his [or her] agent for service designated under rule 318, within or without the state, who does not...