State Bank of Tex. v. Kaanam, LLC

• Decision Date: 08 August 2014
• Citation: 991 N.Y.S.2d 818,2014 N.Y. Slip Op. 05707,120 A.D.3d 900
• Parties: STATE BANK OF TEXAS, Plaintiff–Respondent, v. KAANAM, LLC, Defendant, Milind K. Oza and Nayna M. Oza, Defendants–Appellants. (Appeal No. 1.).
• Court: New York Supreme Court — Appellate Division

120 A.D.3d 900

991 N.Y.S.2d 818

2014 N.Y. Slip Op. 05707

STATE BANK OF TEXAS, Plaintiff–Respondent,

v. KAANAM, LLC, Defendant,Milind K. Oza and Nayna M. Oza, Defendants–Appellants. (Appeal No. 1.).

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

Aug. 8, 2014.

Law Office of Carl E. Person, New York City (Carl E. Person of Counsel), for Defendants–Appellants.

Morrisroe Hebert LLP, Buffalo (Richard J. Morrisroe of Counsel), for Plaintiff–Respondent.

PRESENT: SCUDDER, P.J., FAHEY, LINDLEY, VALENTINO AND WHALEN, JJ.

MEMORANDUM:

In appeal No. 1, the individual defendants (defendants), the personal guarantors of the note at issue, appeal from an order denying their motion to vacate the order and judgment entered on their default, which granted plaintiff's motion for summary judgment on the complaint and counterclaims, and awarded plaintiff $501,633.50. In appeal No. 2, defendants appeal from an order that, inter alia, denied their motion for leave to reargue or renew the motion to vacate. We conclude in appeal No. 1 that the court erred in denying the motion to vacate without conducting a traverse hearing to determine whether defendants were properly served with plaintiff's motion for summary judgment. We therefore reverse the order in appeal No. 1 and remit the matter to Supreme Court to decide the motion to vacate following a traverse hearing. In light of our determination in appeal No. 1, we dismiss as moot the appeal from the order in appeal No. 2.

We conclude that defendants established in support of the motion to vacate that there is an issue of fact whether their counsel received adequate notice of the return date for plaintiff's motion for summary judgment, thus raising the possibility that the court did not have “jurisdiction to entertain the motion” ( Financial Servs. Veh. Trust v. Law Offs. of Dustin J. Dente, 86 A.D.3d 532, 532, 926 N.Y.S.2d 326; see Nowak v. Oklahoma League for Blind, 289 A.D.2d 995, 995, 735 N.Y.S.2d 313; Hibbard v. Shaad, 99 A.D.2d 670, 670, 472 N.Y.S.2d 44; see generallyCPLR 5015[a][4] ). It is undisputed that plaintiff's counsel failed to enter the return date of June 28, 2012 on the notice of motion mailed with the other motion papers to defendants' counsel on May 30, 2012 (May 30 package) ( cf. Bush v. Hayward, 156 A.D.2d 899, 900, 549 N.Y.S.2d 873, lv. denied75 N.Y.2d 709, 555 N.Y.S.2d 691, 554 N.E.2d 1279). It is also undisputed that a subsequent notice of motion mailed as part of a “proof of service packet” was not delivered to defendants' counsel until two days before the return date ( see Bigaj v. Gehl, 154 A.D.2d 893, 893, 545 N.Y.S.2d 860). In opposition to defendants' motion to vacate, plaintiff contended that the May 30 package mailed to defendants' counsel contained a cover letter stating the time, place, and date that the motion for summary judgment would be heard. In an affirmation, defendants' counsel denied that a cover letter was included in the May 30 package and averred that he therefore did not submit papers in opposition or appear in court on the return date. Although plaintiff submitted the affidavits of its counsel's secretary and a mailroom employee to whom the secretary delivered the May 30 package in support of its position that the cover letter was included in the May 30 package, we note that the affidavits were inconsistent with respect to whether the cover letter was included in the contents of the May 30 package and whether the May 30 package was sealed before the secretary delivered it to the mailroom employee ( see generally Daulat v. Helms Bros., Inc., 32 A.D.3d 410, 411, 819 N.Y.S.2d 557). In our view,...