Nyctl 2013-A Trust v. Heights Houses Corp.

• Decision Date: 15 May 2019
• Docket Number: Index No. 506486/14,2017–09991
• Citation: 172 A.D.3d 1078,98 N.Y.S.3d 460 (Mem)
• Parties: NYCTL 2013–A TRUST, et al., Plaintiffs-Respondents, v. HEIGHTS HOUSES CORP., Appellant, et al., Defendants; Yussef Saleh, Nonparty-Respondent.
• Court: New York Supreme Court — Appellate Division

172 A.D.3d 1078

98 N.Y.S.3d 460 (Mem)

NYCTL 2013–A TRUST, et al., Plaintiffs-Respondents,

v. HEIGHTS HOUSES CORP., Appellant, et al., Defendants;Yussef Saleh, Nonparty-Respondent.

2017–09991

Index No. 506486/14

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

Argued—February 14, 2019

May 15, 2019

Berg & David, PLLC, Brooklyn, N.Y. (Abraham David of counsel), for appellant.

Seyfarth Shaw, LLP, New York, N.Y. (Jerry A. Montag of counsel), for plaintiffs—respondents.

Hagan, Coury & Associates, Brooklyn, N.Y. (Paul Golden of counsel), for nonparty—respondent.

CHERYL E. CHAMBERS, J.P., SHERI S. ROMAN, BETSY BARROS, LINDA CHRISTOPHER, JJ.

DECISION & ORDER

ORDERED that the order is affirmed insofar as appealed from, with one bill of costs payable to the plaintiffs-respondents and the nonparty-respondent, appearing separately and filing separate briefs.

The plaintiffs commenced this action to foreclose a tax lien by summons and complaint dated July 15, 2014. The defendant Heights Houses Corp. (hereinafter the defendant) failed to appear or answer the complaint. Thereafter, on the plaintiffs' unopposed motion, the Supreme Court entered a judgment of foreclosure and sale dated August 11, 2016, which, among other things, directed the auction and sale of the subject property. The nonparty-respondent, Yussef Saleh, purchased the subject property at auction on October 27, 2016.

On December 22, 2016, the defendant moved, inter alia, pursuant to CPLR 5015(a)(1) and (4) to vacate the judgment of foreclosure and sale, and to set aside the subsequent foreclosure sale. The Supreme Court denied the motion, and the defendant appeals from the denial of those branches of the motion.

Where, as here, a defendant seeking to vacate a default judgment raises both a jurisdictional objection pursuant to CPLR 5015(a)(4), as well as a discretionary vacatur pursuant to CPLR 5015(a)(1), a court is required to resolve the jurisdictional question before determining whether it is appropriate to grant a discretionary vacatur of the default under CPLR 5015(a)(1) (see HSBC Bank USA, N.A. v. Daniels , 163 A.D.3d 639, 640, 81 N.Y.S.3d 584 ; Wachovia Bank, N.A. v. Greenberg , 138 A.D.3d 984, 985, 31 N.Y.S.3d 110 ).

Contrary to the defendant's contention, the plaintiffs established that they effected service upon the defendant by delivering copies of the summons and complaint to the Secretary of State (see CPLR 311[a][1] ; Business Corporation Law § 306 ; Thas v. Dayrich Trading, Inc. , 78 A.D.3d 1163, 1164, 913 N.Y.S.2d 269 ), and the defendant's mere denial of receipt, in opposition, was insufficient to rebut the presumption of proper service created by service upon the Secretary of State (see Thas v. Dayrich Trading, Inc. , 78 A.D.3d at 1164, 913 N.Y.S.2d 269 ; Coyle v. Mayer Realty Corp. , 54 A.D.3d 713, 713, 864 N.Y.S.2d 75 ). Therefore, we agree with the Supreme Court's denial of that branch of the defendant's motion which was pursuant to CPLR 5015(a)(4) to vacate the judgment of foreclosure and sale.

Turning to the defendant's alternate request for relief pursuant to CPLR 5015(a)(1), under the circumstances presented, the defendant's unexplained failure to update its address for service that is kept on file with the Secretary of State did not constitute a reasonable excuse (see CPLR 5015[a][1] ; compare Vengrenyuk v. Exxonmobil Oil Corp. , 144 A.D.3d 670, 671, 40 N.Y.S.3d 506, and Gershman v Midtown Moving & Stor., Inc. , 123 A.D.3d 974, 975, 999 N.Y.S.2d 485, with Li Fen Li v. Cannon Co., Inc. , 155 A.D.3d 858, 859, 63 N.Y.S.3d 702 ). Therefore, we also agree with the Supreme Court's denial of that branch of the defendant's motion which was pursuant to CPLR 5015(a)(1).

To the extent the defendant's contention that it did not receive actual notice of the foreclosure action in time to defend could be...