LW Holdco V LLC v. Puls
| Docket Number | Index No. 654747/2021 |
| Decision Date | 31 July 2023 |
| Citation | 2023 NY Slip Op 50799 (U) |
| Parties | LW Holdco V LLC, Plaintiff, v. Kelly Puls, Mark Haney, Chris Lyster, Defendant. |
| Court | New York Supreme Court |
Unpublished Opinion
The following e-filed documents, listed by NYSCEF document number (Motion 002) 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43 44, 45, 46, 47, 48, 49, 50, 51 were read on this motion for JUDGMENT - DEFAULT.
The following e-filed documents, listed by NYSCEF document number (Motion 005) 84, 85, 86, 87, 88, 89, 90, 92, 107, 108, 109 were read on this motion for SANCTIONS.
The following e-filed documents, listed by NYSCEF document number (Motion 006) 97, 98, 99, 100, 101, 102, 103, 104, 105, 106 119, 122, 123, 124, 127, 129, 130 were read on this motion to AMEND CAPTION/PLEADINGS.
The following e-filed documents, listed by NYSCEF document number (Motion 007) 110, 111, 112, 113, 114, 115, 116, 117, 118 120, 126, 128, 131 were read on this motion to AMEND CAPTION/PLEADINGS.
In this action, plaintiff LW Holdco V LLC alleges that it invested $3.2 million with Puls Haney PLLC, a law firm formerly owned by defendants Kelly Puls, Mark Haney, and Chris Lyster. In exchange for its investment, defendants agreed to provide plaintiff with an interest in potential future fees earned as a result of the successful prosecution of various oil and gas claims. The parties entered into a funding agreement and also executed a separate Guaranty agreement. Plaintiff alleges that defendants failed to prosecute the claims in a timely fashion, and thereafter, dissolved the firm. Plaintiff commenced this action against defendants as guarantors of the funding agreement for recovery of its investment.
In motion sequence 002, plaintiff moves for an order granting default judgment against defendant Haney. In motion sequence 005, plaintiff moves for sanctions against defendant Kelly Puls for noncompliance with discovery orders. In motion sequence 006, defendant Chris Lyster seeks to amend his answer to assert additional defenses and counterclaims. In motion sequence 007, defendant Kelly Puls seeks to amend his answer to assert additional defenses and counterclaims.
Motion sequences 002, 005, 006 and 007 are consolidated herein for disposition.
On an application for a default judgment, pursuant to CPLR 3215 the plaintiff must submit "proof of service of the summons and the complaint[,]... proof of the facts constituting the claim, [and] the default" (CPLR 3215[f]).
Upon default, "a defendant admits all traversable allegations contained in the complaint, and thus concedes liability although not damages" (HF Mgt. Servs. LLC v Dependable Care, LLC, 198 A.D.3d 457, 458 [1st Dept 2021]; Petty v Law Off. of Robert P. Santoriella, P.C., 200 A.D.3d 621, 621 [1st Dept 2021] []).
Plaintiff provides proof of service of the summons and complaint through certificate of certified mail. An affidavit of service, sworn to on August 11, 2021, shows that Haney was served via certified mail at a residential address located in Fort Worth, Texas (NYSCEF doc. no. 35).
The fully executed guarantee, which is the subject of the instant suit, provides that: "[t]he guarantors irrevocably consent to the service of process out of any of the aforementioned courts by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at the address set forth below its signature to this guarantee" Haney purportedly signed the guarantee on August 6, 2018, and provided an address of 500 ThrockMorton, No.1408, Ft. Worth, TX 76102.
(McSorley v Spear, 50 A.D.3d 652, 653 [2nd Dept 2008]).
The affidavit of service, which provides proof of service of the summons and complaint through certified mail at the address consented to by Haney, satisfies the requirements of CPLR 308 (4).
As to the merits, plaintiff submits the complaint and documentary evidence consisting of an affidavit of service, the investment agreement, Christopher Hagale's affidavit, Scott Danner's affidavit, the Puls Haney firm budget, and various correspondence between the parties (NYSCEF doc. nos. 41-49). The documentary evidence, in combination with Mr. Hagale's affidavit, provides sufficient basis for proof of the claims. "Where a verified complaint has been served, it may be used as the affidavit of the facts constituting the claim and the amount due; in such case, an affidavit as to the default shall be made by the party or the party's attorney" (CPLR 3215 [f]).
Finally, the federal and state Soldiers' and Sailors' Civil Relief Act requires that, before a default judgment can be entered against a natural person who has otherwise not answered or appeared in an action or proceeding, the party seeking to enter the default judgment must submit an affidavit to the court showing that the defaulting party is neither in active military service nor dependent on anyone else who is (50 USC App § 520[1]; Dep't of Hous. Pres. & Dev. of City of New York v W. 129th St. Realty Corp., 9 Misc.3d 61, 62 (App. Term 2005); citing, Citibank, N.A. v McGarvey, 196 Misc.2d 292 (Civ. Ct. 2003).
Here, plaintiff submits the affidavit of Scott Danner, Esq., who affirms that a search was conducted as to the military status of defendant Haney, and Haney was not located as an active servicemember (NSYCEF doc. no. 51, para. 3).
Where, as here, Haney was served with the summons and complaint and has failed to appear for more than thirty days as required by statute, proof that Haney is not an active member of the military was provided as required by the United States Soldiers and Sailors Relief Act of 1940, and proof of a meritorious claim as against Haney was submitted, a finding of default against Haney is proper. Plaintiff's motion for default judgment against defendant Haney is granted.
CPLR 3101 requires full disclosure of all matter material and necessary in the prosecution or defense of an action. The phrase "material and necessary" is (Allen v. Crowell-Collier Publishing Co., 21 N.Y.2d 403).
CPLR 3126 authorizes the court to sanction a party who "refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed." The failure to comply with discovery, particularly after a court order has been issued may constitute "dilatory and obstructive, and thus contumacious, conduct warranting the striking of [a party's pleading]" (Kutner v Feiden, Dweck & Sladkus, 223 A.D.2d 488, 489 [1st Dept 1998]).
Defendant Puls was served with discovery demands in December of 2021. On May 19, 2022, this court held a preliminary conference. The preliminary conference order set the deadline for document production and answers to interrogatories as June 27, 2022 (NYSCEF doc. no. 24). Thereafter, the deadline for document production and interrogatories was extended to July 28, 2022 (NYSCEF doc. no. 72). On August 1, 2022, Puls provided responses and objections to plaintiff's demands, but failed to produce any responsive documents (Pltf. Memo. of Law, NYSCEF doc. no. 85, pg. 4).
A compliance conference was held on August 16, 2022, and this court directed all parties to complete document production by August 31, 2022 (NYSCEF doc. no. 83). Defendant Puls failed to abide by that order and produce any responsive documents (Pltf. Memo. of Law, NYSCEF doc. no. 85, pg. 4-5).
A status conference was held on September 27, 2023. At the conference, defendant Puls' failure to provide discovery responses was discussed. Puls requested an extension of time to respond both to plaintiff's outstanding discovery and motion to strike, and Puls' request was granted. Puls was directed by order to respond to plaintiff's motion to strike by October 13, 2022, and the return date of plaintiff's motion was adjourned to October 27, 2022 (NYSCEF doc. no. 93).
Notwithstanding the court's allowances for additional time to provide discovery and respond to the sanctions motion, Puls did not comply with this court's order. Despite being aware of plaintiff's intention to seek the drastic remedy of striking his answer, Puls did not interpose any opposition to this motion. Rather, plaintiff separately moved this court, in motion sequence number 007, to amend his answer to the complaint with additional defenses of anticipatory breach and counterclaims based on information produced by other parties in discovery (Notice of Motion, NYSCEF doc. no. 110).
In motion sequence no. 005, plaintiff requests that the answer of defendant Puls be stricken for his repeated failure to abide by court-ordered deadlines. Plaintiff seeks the 'ultimate penalty' against Puls (Pezhman v Dep't of Educ. of City of New York, 95 A.D.3d 625,...
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