Opinion
Index No. 152399/2022 Motion Seq. No. 001
10-07-2022
ESHA, INC., Plaintiff, v. HODINKEE, INC., Defendant.
P irrotti & Glatt Law Firm PLLC, Scarsdale, NY (Anthony Pirrotti, Jr. of couns el), for plaintiff. Moore Law, New York, NY (Derrick F. Moore of counsel), for defendant.
Unpublished Opinion
P irrotti & Glatt Law Firm PLLC, Scarsdale, NY (Anthony Pirrotti, Jr. of couns el), for plaintiff.
Moore Law, New York, NY (Derrick F. Moore of counsel), for defendant.
PRESENT: HON. GERALD LEBOVITS, JUSTICE
DECISION + ORDER ON MOTION
GERALD LEBOVITS, JUDGE
The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 were read on this motion for DEFAULT JUDGMENT.
This breach-of-contract action arises from a transaction between the parties involving a $5,000 luxury watch. Plaintiff, Esha, Inc., and defendant, Hodinkee, Inc., agreed in November 2021 that Esha would sell Hodinkee the watch. Esha sent the watch and an invoice to Hodinkee. Hodinkee then emailed back a written contract, asking Esha to sign. Shortly afterwards, Esha sent a second invoice to Hodinkee, reflecting a slightly lower negotiated price for the watch. The parties then disputed whether Esha should be required to sign Hodinkee's contract as a prerequisite for receiving payment on the invoices.
Esha brought this action, asserting claims for breach of contract, account stated, and unjust enrichment. Esha seeks payment for the face value of the watch plus shipping costs (totaling $5,052); and also 18% annual default interest and attorney fees, as provided for on the invoices.
As pleaded in the complaint, therefore, Esha's claim was worth $9,811.91: $5,052 for the value of the watch itself plus shipping costs, $301.92 in asserted contractual interest (see NYSCEF No. 1 at 12-13), and $4,457.99 in attorney fees and costs incurred to that point (see NYSCEF No. 15 [billing records]). That amount was within the $10,000 monetary jurisdiction of the Small Claims Part of the New York City Civil Court. (See New York City Civil Court Act § 1801-A.) But it is doubtful that Esha could have asserted all its claims in Small Claims Court. Esha's third cause of action is for unjust enrichment. The Appellate Division, First Department, has held that Civil Court may not adjudicate an action involving a claim for unjust enrichment, because that court "lacks the jurisdiction to grant the equitable relief plaintiff seeks." (Bank of N.Y.v Irwin Intl. Imports, 197 A.D.2d 462 [1st Dept 1993]; accord 19 W. 45th St. Realty Co. v Darom Elec. Corp., 233 A.D.2d 184, 185 [IstDept 1996] [holding that Civil Court lacks jurisdiction to grant the equitable relief of piercing the corporate veil].) This line of precedent is in tension with the language of New York City Civil Court Act § 202, giving that court "jurisdiction of actions and proceedings for the recovery of money," without regard to whether the ground for that recovery is legal or equitable. But the holding remains binding on this court and Civil Court regardless. Given this jurisdictional problem, this court refrains from transferring the action to Civil Court now under CPLR 325 (d).
Hodinkee did not appear or respond following service of the complaint. Esha now moves for default judgment under CPLR 3215, seeking $5,052 for the face value of the watch plus shipping costs, $464.19 in default interest, and $5,305.65 in attorney fees and costs. Hodinkee opposes the motion and asks this court to require Esha to accept Hodinkee's answer. The default-judgment motion is denied; Hodinkee's request for an order requiring acceptance of the answer is granted.
This court construes that request as an application for relief under CPLR 3012 (d), notwithstanding the absence of a formal cross-motion. (See Malta v 801-803, LLC, 2020 NY Slip Op 51523[U], at *1 [Sup Ct, NY County Dec. 18, 2020], citing Wimbledon Financing Master Fund, Ltd. vLaslop, 169 A.D.3d 550, 551 [IstDept 2019].)
DISCUSSION
Esha's moving papers satisfy the requirements of CPLR 3215. This court concludes, though, that Hodinkee has shown a sufficient basis to require Esha under CPLR 3012 (d) to accept Hodinkee's otherwise-untimely answer so that this action can be decided on its merits.
In considering whether to grant an application under CPLR 3012 (d), the Appellate Division, First Department, has held that a court should consider factors such as "the length of the delay, the excuse offered, the extent to which the delay was willful, the possibility of prejudice to adverse parties, and the potential merits of any defense." (Emigrant Bank v Rosabianca, 156 A.D.3d 468, 472-473 [IstDept 2017]; accord Gordon Law Firm, P.C. v Premier DNA Corp., 205 A.D.3d 416, 417 [IstDept2022] [same].)
In Naber Electric v Triton Structural Concrete, Inc., decided after Rosabianca, the First Department granted a CPLR 3012 (d) motion without considering whether defendants had a potentially meritorious defense, and indeed stated that "an affidavit of merit 'is not essential to the relief sought' by defendants before entry of a default order or judgment." (160 A.D.3d 507, 508 [1st Dept 2018], quoting DeMarco v Wyndham Intl., 299 A.D.2d 209, 209 [1st Dept 2002].) It is unclear whether the Court in Naber Electric was holding simply that reaching the merit of a potential defense was unnecessary because the other factors pointed strongly toward granting the CPLR 3012 (d) application; or instead that the merit of a potential defense is irrelevant for pre-default-judgment CPLR 3012 (d) purposes. Either way, the First Department's most recent authority on the issue, which this court is obliged to follow (see Vaughan v Leon, 94 A.D.3d 646, 649 n 2 [1st Dept 2012]), makes clear that the potential merits of a defendant's defenses are relevant on a CPLR 3012 (d) application. (See Gordon Law Firm, 205 A.D.3d at 417.) This court therefore considers whether Hodinkee has a potentially meritorious defense, in addition to the other factors set out in Rosabianca, Naber Electric, and Gordon Law Firm.
The record reflects that Esha served Hodinkee via the Secretary of State on April 1, 2022. (See NYSCEF No. 2.) Hodinkee was therefore required to appear and respond by May 2, 2022. (See CPLR 320 [a]; General Construction Law § 25-a.) Upon Hodinkee's failure to do so, Esha moved for default judgment on May 23, 2022. (See NYSCEF No. 3.) The delay here was thus only a matter of weeks.
Hodinkee explains its failure to appear through the affidavit of its chief financial officer.The affidavit represents that although Hodinkee's employees in New York City-located at the address on file with the Secretary of State-were notified in early 2022 "to monitor daily mail deliveries closely for any documents that may appear to be a service of process or any other correspondence related to this claim via postal delivery," Hodinkee did not receive service of the summons and complaint. (NYSCEF No. 23 at ¶ 12.) This explanation, which goes beyond a mere conclusory denial of receipt, constitutes a reasonable excuse for Hodinkee's default- particularly since an attorney for Hodinkee undisputedly contacted Esha's counsel the same day that Hodinkee received the current default-judgment motion. (NYSCEF No. 24 at ¶ 15.) For that same reason, Esha has not established that Hodinkee willfully defaulted. And Esha does not attempt to show that it has been prejudiced by the delay in Hodinkee's responding to the complaint.
This court is unpersuaded by Esha's argument that this affidavit should be disregarded as insufficiently detailed and not made on personal knowledge.
One of Hodinkee's attorneys also represents in an affirmation that although he "had been in both email and telephone communication with [Esha's counsel] concerning this dispute, at no point did" that counsel inform Hodinkee's attorney that Esha had filed this action. Neither did he discuss service and whether Hodinkee's attorney would be willing to accept service on Hodinkee's behalf. (NYSCEF No. 24 at ¶ 14.)
Additionally, Hodinkee has a potentially meritorious defense. With respect to Esha's breach-of-contract and account-stated claims, questions exist about when Esha is asserting a contract to have been formed and what that contract would consist of; whether the asserted agreement between the parties on which Esha relies encompasses default-interest and attorney-fee provisions; whether Hodinkee's transmission to Esha of a full written contract along with a request for Esha to sign constitutes an unagreed-to counterproposal that defeats the formation of a contract; and whether Hodinkee's later repeated requests to Esha to sign that written contract as a condition of payment constitute objections to Esha's invoices for account-stated purposes.
With respect to Esha's unjust-enrichment claim, it is undisputed that Hodinkee offered to return the watch at issue, and that Esha refused the offer. Esha points out that Hodinkee's offer occurred days after Esha filed the complaint; but that offer was still made before service realistically could have reached Hodinkee. In any event, Esha does not definitively show that it may obtain judgment on an unjust-enrichment claim for the face value of a watch (plus accrued contractual interest) when Esha refused to accept the return of the watch itself.
This court need not, and does not, definitively decide any of these merits-related issues. The court concludes only that Hodinkee has defenses to Esha's claims that are at least potentially meritorious. That conclusion, combined with the other CPLR 3012 (d) factors, warrants denying Esha's default-judgment motion and granting Hodinkee's application to require Esha to accept its answer.
Accordingly, it is
ORDERED that Esha's CPLR 3215 motion for default judgment is denied; and it is further
ORDERED that Hodinkee's application for an order requiring Esha to accept Hodinkee's untimely order is granted, on condition that Hodinkee file an answer within 20 days of entry of this order; and it is further
ORDERED that if Hodinkee does not answer within 20 days of entry, absent good cause shown the court will grant default judgment against Hodinkee on the written request of Esha (which shall be e-filed and emailed to SFC-Part7-Clerk@nycourts.gov); and it is further
ORDERED that Esha serve a copy of this order with notice of its entry on Hodinkee.