Opinion
Index No. 652617/2020
11-10-2021
COWLEY HOLDINGS SERVICES INC., Jailineli Ltd., Excel Group Corporation, Alapaha View Ltd., and Sharina Mobin Chowdhury, Plaintiffs, v. PRODIGY NETWORK, LLC, Prodigy Shorewood Investment Management LLC, 85 Broadway NewCo, Inc., Prodigy Shorewood New York REP Fund, LP, and Prodigy Shorewood Master REP Fund, LLC, Defendants.
Jenny Johnson-Sardella & Mark David Hunter, HUNTER TAUBMAN FISCHER & LI LLC, 2 Alhambra Plaza, Suite 650, Coral Gables, Florida 33134, Tel: (305) 629-1180 Fax: (305) 629-8099
Jenny Johnson-Sardella & Mark David Hunter, HUNTER TAUBMAN FISCHER & LI LLC, 2 Alhambra Plaza, Suite 650, Coral Gables, Florida 33134, Tel: (305) 629-1180 Fax: (305) 629-8099
The following e-filed documents, listed by NYSCEF document number (Motion 001) 13, 14, 15, 16, 17, 18, 19, 20 were read on this motion to/for JUDGMENT - DEFAULT.
Plaintiffs Cowley Holdings Services Inc., Jailineli Ltd., Excel Group Corporation, Alapaha View Ltd. and Sharina Mobin Chowdhury move, pursuant to CPLR 3215, for leave to enter a default judgment against defendants Prodigy Network, LLC (Prodigy), 85 W Broadway NewCo, Inc. (NewCo), and Prodigy Shorewood Master REP Fund, LLC (Shorewood Master) (collectively, defendants). Defendants have not submitted any opposition.
Background
This action stems from certain real estate investments plaintiffs made in connection with a hotel project (the Project) located at 85 West Broadway, New York, New York and led by Prodigy (NY St Cts Elec Filing [NYSCEF] Doc No. 16, Jenny Johnson-Sardella [Johnson-Sardella] affirmation, exhibit B, ¶ 15). Prodigy allegedly formed NewCo as a vehicle to allow foreign investments on the Project (id. , ¶ 17). The investments were made by way of purchases of Class B Common Stock in NewCo, secured promissory notes from NewCo, or interests in 85 W Broadway Offshore Feeder Series of defendant Prodigy Shorewood New York REP Fund, LP (Shorewood) (id. , ¶ 16). The investments were sold through a private offering memorandum for Shorewood Master, NewCo, Shorewood and nonparty Prodigy Shorewood Domestic Feeder REP Fund, LLC (id. ). In connection with their investments, Prodigy and plaintiffs executed separate "Side Letter Agreements" in which Prodigy agreed to provide plaintiffs with the right to voluntarily redeem their investments (id. , ¶¶ 21-25). Upon learning of certain financial difficulties on the Project and other projects under Prodigy's control (id. , ¶¶ 29-30), plaintiffs served Prodigy with separate written demands to redeem their investments (id. , ¶¶ 33-38). Nonparty Rodrigo Niño, Prodigy's manager and alleged alter ego, advised plaintiffs that nonparty Prodigy Shorewood Domestic Feeder REP Fund, LLC, Shorewood and NewCo lacked funds to repay the redemption requests (id. , ¶¶ 11, 30 and 39).
Plaintiffs initially brought the action solely against Prodigy (NYSCEF Doc No. 16, Johnson-Sardella affirmation, exhibit A) before amending the summons and complaint to add NewCo, Shorewood and defendants Prodigy Shorewood Investment Management LLC and Prodigy Shorewood New York REP Fund, LP as defendants. The amended complaint pleads four causes of action for breach of contract, conversion, fraud and unjust enrichment. Plaintiffs now move for leave to enter a default judgment against Prodigy, NewCo, and Shorewood Master.
Discussion
It is well settled that an application for a default judgment must be supported with "proof of service of the summons and the complaint[,] proof of the facts constituting the claim, [and] the default" ( CPLR 3215 [f] ). " ‘[B]y defaulting, 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 , ––– AD3d ––––, 2021 NY Slip Op 05459, *1 [1st Dept 2021] [citation omitted]; Rokina Opt. Co. v Camera King , 63 NY2d 728, 730 [1984] ).
Prodigy and Shorewood Master are Delaware limited liability companies, NewCo is a Delaware Corporation (NYSCEF Doc No. 17, ¶¶ 6, 8 and 10). The affidavits of service submitted on the motion show that defendants were served in Delaware. Under CPLR 313, "[a] person subject to the jurisdiction of the courts of the state may be served with the summons without the state, in the same manner as service is made within the state." The statute permits a plaintiff " ‘to use the service methodologies of CPLR 308, 309, 310, 311, and 312-a, etc. wherever the defendant (or person authorized to accept service on defendant's behalf) may be found’ " ( Morgenthau v Avion Resources Ltd. , 11 NY3d 383, 389 [2008] [citation omitted]). As is relevant here, CPLR 311 (a) provides that personal service upon a foreign corporation shall be made by personally delivering the summons to "an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service." In addition, CPLR 311-a (a) partially reads:
"Service of process on any domestic or foreign limited liability company shall be made by delivering a copy personally to (i) any member of the limited liability company in this state, if the management of the limited liability company is vested in its members, (ii) any manager of the limited liability company in this state, if the management of the limited liability company is vested in one or more managers, (iii) to any other agent authorized by appointment to receive process, or (iv) to any other person designated by the limited liability company to receive process, in the manner provided by law for service of a summons as if such person was a defendant"
Strict compliance is required to obtain jurisdiction over a corporation or a limited liability company (see Persaud v Teaneck Nursing Ctr. , 290 AD2d 350, 351 [1st Dept 2002] [discussing service upon a corporation pursuant to CPLR 311 ]).
According to an affidavit of service sworn to on July 11, 2020, plaintiffs served Prodigy by personally delivering the summons and complaint to "Sean Ohara," an "intake specialist," on July 7, 2020 at 1209 N. Orange St., Wilmington, Delaware 19801 (NYSCEF Doc No. 18, Johnson-Sardella affirmation, exhibit C at 1). Although the individual served with process is described as an intake specialist, there is no indication that he was a member, manager or an agent authorized to accept service for Prodigy. Thus, plaintiff has failed to carry its burden of showing proper service of process upon Prodigy.
Two affidavits of service sworn to on October 12, 2020 show that plaintiffs effectuated service of process upon NewCo and Shorewood Master on October 9, 2020 at 1209 N. Orange St., Wilmington, Delaware 19801 by delivering the summons and amended complaint to "Kamesha James personally, deponent knew said corporation so served to be the corporation described, and knew said individual to be Authorized thereof" (NYSCEF Doc No. 18 at 2-3). These affidavits are sufficient to demonstrate that NewCo and Shorewood Master were served in accordance with CPLR 311 and CPLR 311-a, respectively. Plaintiffs have established that the time for NewCo and Shorewood Master to answer or otherwise appear in this action has since expired.
As to the merits, however, the motion is deficient. An "application for default must be supported by either an affidavit of a person with knowledge, or a verified complaint" ( Ostroy v Six Sq. LLC , 74 AD3d 693, 693 [1st Dept 2010] ). Although plaintiffs submit a copy of the complaint and the amended complaint, neither is verified by a party with knowledge (see CPLR 3215 [f] ). Nor have plaintiffs presented an affidavit from one with personal knowledge (see Mejia-Ortiz v Inoa , 71 AD3d 517, 517 [1st Dept 2010] ). Furthermore, plaintiffs have furnished the court with the Side Letter Agreement executed by plaintiff Cowley Holdings Services but not any of the Side Letter Agreements executed by the other plaintiffs.
Accordingly, it is
ORDERED that the part of the motion of plaintiffs Cowley Holdings Services Inc., Jailineli Ltd., Excel Group Corporation, Alapaha View Ltd. and Sharina Mobin Chowdhury for leave to enter a default judgment against defendants Prodigy Network, LLC, 85 W Broadway NewCo, Inc. and Prodigy Shorewood Master REP Fund, LLC is denied without prejudice to renewal.