Westchase Residential Assets Ii, LLC v. Shashi B. Gupta, Mortg. Elec. Registration Sys., Inc., 14-cv-1435 (ADS)(GRB)

• Decision Date: 07 July 2016
• Docket Number: 14-cv-1435 (ADS)(GRB)
• Parties: WESTCHASE RESIDENTIAL ASSETS II, LLC Plaintiff, v. SHASHI B. GUPTA, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as Nominee for American Brokers Conduit, and MRS. FERGUSON, Defendants.
• Court: U.S. District Court — Eastern District of New York

WESTCHASE RESIDENTIAL ASSETS II, LLC Plaintiff, v. SHASHI B. GUPTA, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,as Nominee for American Brokers Conduit, and MRS. FERGUSON, Defendants.

14-cv-1435 (ADS)(GRB)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

July 7, 2016

MEMORANDUM OF DECISION & ORDER

APPEARANCES:

Pulvers, Pulvers, Thompson & Friedman, LLP

Attorneys for the Plaintiff

950 Third Ave, 11th Floor

New York, NY 10022

By: Adam J. Friedman, Esq., Of Counsel

Erica T. Yitzhak Esq. P.C.

Attorney for the Defendant Gupta

17 Barstow Road, Suite 406

Great Neck, NY 11021

By: Erica Tobi Yitzhak, Esq., Of Counsel

SPATT, District Judge.

On March 4, 2014, the Plaintiff Westchase Residential Assets II, LLC (the "Plaintiff"), filed a Complaint against the Defendants Shashi B. Gupta; Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit; John Does "1" through "12," said persons or parties having or claimed to have a right, title or interest in the Mortgaged premises, herein their respective names are presently unknown to the Plaintiff; and Mrs. Ferguson (collectively, the "Defendants") pursuant to New York Property Actions and Proceedings Law, Section 1301 et seq., to foreclose on a mortgage encumbering the property commonly known as 55 East Beverly Parkway, Valley Stream, NY 11580.

On May 21, 2014, the Clerk of the Court issued a certificate of default noting the default by the Defendants.

On October 6, 2014, the Plaintiff moved for a default judgment granting a judgment of foreclosure and sale and to amend the caption.

On October 7, 2014, the Court referred this matter to United States Magistrate Judge Gary R. Brown for a recommendation as to whether the motion for a default judgment should be granted, and if so, whether damages should be awarded.

On May 19, 2015, Judge Brown issued a Report (the "R&R") recommending that (1) the caption of the case be amended to dismiss John Does 2-12, and replace John Doe 1 with a tenant known only as "Mrs. Ferguson"; (2) the motion for a default judgment be granted; (3) judgment of foreclosure and sale be awarded; (4) principal, advances and interests be awarded in the amount of $752,461.83, along with interest accrued past June 10, 2014 at a rate of 7.5% per year; (5) attorneys' fees in the amount of $5,500.00; (6) costs in the amount of $2,381.60; and (7) the Defendants be directed that the judgment forecloses any interest that the Defendants had in the mortgaged premises.

On June 10, 2015, the Court adopted the R&R in its entirety and directed the Clerk of the Court to enter judgment in favor of the Plaintiff and to close this case.

On June 25, 2015, the Clerk of the Court entered a default judgment against the Defendants.

On September 3, 2015, Erica Tobi Yitzhak, Esq. ("Yitzhak"), for the first time filed a notice of appearance on behalf of the Defendant Shashi B. Gupta ("Gupta"), who executed thenote and mortgage encumbering the property at issue in this case. On the same day, Yitzhak filed a request for a court conference and indicated her intent to file a motion on behalf of Gupta to vacate the default judgment.

On September 21, 2015, the Court held a conference during which it granted Gupta leave to file a motion to vacate the default judgment.

Presently before the Court is a motion by Gupta to vacate the default judgment because she alleges that service of process was improper.

For the reasons set forth below, the motion by Gupta is denied.

I. DISCUSSION

A. The Legal Standard

Gupta styles her motion as one made pursuant to Federal Rules of Civil Procedure ("Rules") 55(c) and 60. Rule 55(c) states that a court "a may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b)." Rule 60(b), in turn, authorizes a court to relieve a party from a final judgment for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b).

Gupta does not specify which of these subdivisions she is moving under, and the only argument she offers for vacating the default judgment against her is the Plaintiffs' alleged failure to properly serve her with a summons and the complaint.

Where, as here, a defendant moves to vacate a default judgment for insufficient service of process, courts generally construe the motion as one made under Rule 60(b)(4). See Trustees of Local 531 Pension Fund v. Am. Indus. Gases, Inc., 708 F. Supp. 2d 272, 275 (E.D.N.Y. 2010) ("Giving defendant the benefit of the intendment of its argument, the Court interprets its brief to allege that the default judgment is 'void' pursuant to Rule 60(b)(4) because Local 531 failed to adequately serve process, and thus the Court lacked personal jurisdiction."); United States v. Roman, No. 98-CV-4953 (JS) (ETB), 2008 WL 4415291, at *1 (E.D.N.Y. Sept. 22, 2008) ("[T]he substance of Defendant's letter motion is that his rights were violated because the United States did not comply with Rules 12(b)(4) and (5), which deal with insufficient process and insufficient service of process, respectively, and therefore, this Court lacked jurisdiction to issue the default judgment against him. Accordingly, the Court analyzes Defendant's motion pursuant to Rule 60(b)(4)."); Arista Records, Inc. v. Musemeci, No. 03CV4465(DGT)(RML), 2007 WL 3124545, at *2 (E.D.N.Y. Sept. 18, 2007) ("Although he does not specifically cite Rule 60(b)(4), defendant alleges that he was never served with a summons or complaint . . . . The court construes this as a motion to vacate the default judgment on the ground that the default judgment was void for want of personal jurisdiction.") (alteration added), report and recommendation adopted, No. CIV.A. CV-03-4465 (DG), 2007 WL 3145861 (E.D.N.Y. Oct. 25, 2007).

Accordingly, the Court analyzes Gupta's motion to vacate the default judgment against her for lack of proper service of process under the provisions of Rule 60(c)(4).

"A default judgment is 'void' if it is rendered by a court that lacks jurisdiction over the parties." City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 138 (2d Cir. 2011). For a federal court to exercise personal jurisdiction over a defendant, "the plaintiff's service of process upon the defendant must have been procedurally proper." Licci ex rel. Licci v. LebaneseCanadian Bank, SAL, 673 F.3d 50, 59 (2d Cir. 2012). Rule 4(e) governs the procedural requirements for the service of individuals. It provides:

[A]n individual — other than a minor, an incompetent person, or a person whose waiver has been filed — may be served in a judicial district of the United States by:

(1) following the state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or

(2) doing any of the following:

(A) delivering a copy of the summons and of the complaint to the individual personally;

(B) leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there; or

(C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

Fed. R. Civ. P. 4(e).

As this Court is located in New York, Section 308 of the New York Civil Practice Law and Rules ("CPLR") provides the relevant framework for service under Rule 4(e)(1). Section 308, in turn, provides that individuals may be served by: (i) delivering the summons to the person to be served, also known as personal service; or (ii) by delivering the summons to a person of suitable age and discretion at the actual place of business, dwelling place, or usual place of abode of the person to be served, along with mailing the summons to the person's last known address of residence, also known as substituted service. See N.Y. C.P.L.R. § 308(l)-(2).

However, and as relevant here, if personal service or substituted service "cannot be made with due diligence," Section 308(4) provides that a plaintiff can serve an individual:

by affixing the summons to the door of either the actual place of business, dwelling place or usual place of abode within the state of the person to be served and by either mailing the summons to such person at his or her last knownresidence or by mailing the summons by first class mail to the person to be served at his or her actual place of business[.]

N.Y. C.P.L.R. § 308(4). This type of service is sometimes referred to as nail and mail service.

"The requirement of due diligence must be strictly observed because 'there is a reduced likelihood that a defendant will actually receive the summons when it is served pursuant to CPLR 308(4).'" Serraro v. Staropoli, 94 A.D.3d 1083, 1084, 943 N.Y.S.2d 201 (2d Dep't 2012) (quoting Kaszovitz v. Weiszman, 110 A.D.2d 117, 493 N.Y.S.2d 335 (2d Dep't 1985)).

"New York courts have not adopted a per se rule as to what constitutes 'due diligence' under Section 308. Rather, whether attempts to effectuate service constitute due diligence is determined on a case-by-case basis." Allstate Ins. Co. v. Rozenberg, 771 F. Supp. 2d 254, 261 (E.D.N.Y. 2011) (Spatt, J); accord Barnes v. City of New York, 51 N.Y.2d 906, 907, 415 N.E.2d 979, 980 (N.Y. 1980) ("[I]n determining the question of whether due diligence has been exercised, no rigid rule could properly be prescribed."); McSorley v. Spear, 50 A.D.3d 652, 653, 854 N.Y.S.2d 759, 761 (2d Dep't 2008) ("What constitutes due diligence is determined on a case...