OPINION ORDER

SANDRA J. FEUERSTEIN, District Judge

I. Introduction

Defendant Virgilio Bonilla ("Defendant" or "Bonilla") brings this motion to dismiss, or in the alternative for judgment on the pleadings and summary judgment, pursuant to Fed.R.Civ.P. 4, 12(b) and 56. Defendant further moves for sanctions under Fed.R.Civ.P. 11. Plaintiff has separately moved for a default judgment. For the reasons set forth below, Defendant's motion for summary judgment is granted, and Defendant's motion for sanctions is denied. Plaintiff's motion for entry of a default judgment is denied.

II. Background

Defendant won the New York State "Rich for Life" lottery in November 2002. (Bonilla Aff. ¶ 9; Def. 56.1 Stmt ¶ 1; Pl. Resp. to 56.1 Stmt. ¶ 1). In lieu of a lump sum payment of $5,000,000, Defendant opted to receive payments of $5,000 per week for life with a guaranteed minimum of $5,000,000, payable in quarterly installments of $65,000. (Id. at 9, 2-3, 2-3). Shortly after claiming his prize in January 2003, Mr. Bonilla was contacted by plaintiff Prosperity Partners, Inc. ("Plaintiff" or "Prosperity"), which offered to purchase his quarterly payments in exchange for a lump sum. (Def. 56.1 Stmt. ¶ 11, Pl. Resp. to 56.1 Stmt. 11). On February 18, 2004, Plaintiff and Defendant signed an agreement (the "Agreement") whereby Plaintiff paid agreed to pay Defendant a lump sum of $2,235,000 in exchange for the rights to 70 quarterly payments. (Def. 56.1 Stmt. ¶ 8, 11, Pl. Resp. to 56.1 Stmt. 8, 11). Defendant claims that, in the thirteen months between claiming his prize and signing the Agreement, he was "hounded" and "pressured" to sign and "get it over with." (Bonilla Aff. ¶ 2, 16). Defendant also claims that Plaintiff's agent, Barbara Guerra, specifically assured him that he would not be required to pay taxes on the lump sum payment he was to receive under the Agreement and that he did not need to consult with an attorney or adviser. (Bonilla Aff. ¶ 14, 15). Plaintiff denies these allegations. (Pl. Resp. to 56.1 Stmt. 12; Guerra Aff. ¶ 8).

On March 1, 2004, Plaintiff filed an ex parte application in New York State Supreme Court, Onondaga County, seeking a judicial order "pursuant to New York Tax Law § 1613(a), authorizing the assignment of New York State Lottery prize payments to [Plaintiff]." (Ex. D to Bonilla Aff.). At approximately the same time, Mr. Bonilla claims he had misgivings (Bonilla Aff. ¶ 18) and, on the advice of his fiancée, consulted with an attorney, Michael A. Montesano. (Id.) According to Defendant, Mr. Montesano informed him that, contrary to Plaintiff's alleged representations, he would be required to pay taxes on the $2,235,000 payment. On March 4, 2004, Mr. Montesano sent a letter to Plaintiff, the New York State Lottery and the Onondaga County Clerk of Court cancelling the Agreement. (Bonilla Aff. ¶ 19). As a result of Mr. Montesano's letter, Plaintiff voluntarily discontinued the state court proceedings without prejudice. (Simoes Aff. ¶ 4).

On March 31, 2004, Plaintiff filed the present action, seeking damages for Defendant's alleged breach of contract. (Cmplt. ¶¶ 7, 9). Plaintiff mailed a copy of the summons and complaint to Mr. Montesano, (Ex. I to Bonilla Aff.), who refused Plaintiff's request that he accept service on Mr. Bonilla's behalf. Mr. Montesano returned the papers to Plaintiff's counsel, explaining that "I am not authorized to accept service for Mr. Bonilla and my representation on this matter has been completed." (Ex. J. to Bonilla Aff.). According to Plaintiff, it effected "nail and mail" service on April 30, 2004. (Ex. K to Bonilla Aff.). Defendant alleges that he never received the summons or complaint. (Bonilla Aff. ¶ 22).

Plaintiff claims to have applied for entry of a default judgment against Defendant in June 2004. (Plaint. Mem. Law at 5). According to Plaintiff, however, the application was "inadvertently misplaced by the Clerk of the Court." (Id.). In September 2004, Mr. Montesano received a courtesy call from the Court, advising him that an application to enter a default judgment against Defendant had been made. (Bonilla Aff. ¶ 21). Mr. Montesano informed Mr. Bonilla, and referred him to new counsel, Mr. Kutner. (Id.). In November 2004, Mr. Kutner moved, by Order to Show Cause, to have the "default judgment" vacated. The application was denied as moot, however, as no default judgment had been entered. Defendant now moves this Court to dismiss the action or, in the alternative, for judgment on the pleadings or summary judgment. Plaintiff moves for default judgment based on its June 30, 2004 papers.

III. Summary Judgment Standard

Summary judgment should not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is material "if it might affect the outcome of the suit under the governing law." Holtz v. Rockefeller Co., 258 F.3d 62, 69 (2d Cir. 2001). An issue of fact is genuine only if a jury could reasonably find in favor of the nonmoving party based on that fact. Id. The moving party bears the initial burden of establishing the absence of any genuine issue of material fact, after which the burden shifts to the nonmoving party to establish the existence of a factual question that must be resolved at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). The trial court is required to construe the evidence in the light most favorable to the nonmoving party, and draw all reasonable inferences in its favor. Id. at 252; Cifarelli v. Vill. of Babylon, 93 F.3d 47, 51 (2d Cir. 1996).

IV. Analysis

A. Jurisdiction

Defendant seeks dismissal on the ground that personal jurisdiction was never obtained over him. In response, Plaintiff has submitted an affidavit purporting to document its attempt at personal service at Defendant's home on four separate occasions, and its "nail and mail" service. Under Fed.R.Civ.P. 4(e)(1), service of a summons and complaint can be made, inter alia, "pursuant to the law of the state in which the district court is located," in this case New York. Fed.R.Civ.P. 4(e)(1). CPLR 308(4) authorizes a plaintiff, after attempting personal service on the defendant or another individual of suitable age and discretion, to effect service by "affixing the summons to the door of . . . [the] 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 known residence . . . in an envelope bearing the legend 'personal and confidential' and not indicating on the outside thereof, by return address or otherwise, that the communication is from an attorney or concerns an action against the person to be served. . . ." See also Beller Keller v. Tyler, 120 F.3d 21, 26 (2d Cir. 1997) (holding that, in a federal action in which New York "nail and mail" service has been used, service is complete upon the mailing, and that the "proof of service" requirement in CPLR 308(4) does not apply).

According to Plaintiff, it was unable to effect service on either the Defendant or a person of suitable age and discretion at his dwelling place or usual place of abode, (Rubinstein Aff.), and therefore affixed a copy of the summons and complaint to the door of Defendant's home, 31 First Street, Glen Cove, New York 11542, and mailed a copy of same to that address. (Id.) Defendant claims that he never received a copy of the summons and complaint.

Defendant's conclusory claim that he never received the summons and complaint are insufficient to overcome Plaintiff's prima facie proof of valid service provided by a detailed affidavit documenting the four separate occasions on which it attempted personal service, and its subsequent "nail and mail" service. (Rubenstein Aff.) See, e.g., Matrix Fin. Serv. Corp. v. McKiernan, 295 A.D.2d 579, 580, N.Y.S.2d 706, 706 (2d Dep't 2002) ("The process server's affidavit constituted prima facie proof of proper service pursuant to CPLR 308(4), and the appellant's conclusory allegations failed to rebut the veracity or content of the affidavit.") I find therefore that service was proper and that jurisdiction was obtained over the Defendant.

B. Timeliness

Plaintiff urges a denial of Defendant's motion, on the ground that it is untimely, and entry of a default judgment against Defendant. It is well-settled that the Second Circuit has a strong preference for resolution of disputes on their merits.Sony Corp. v. Elm State Electronics, Inc., 800 F.2d 317, 320 (2d Cir. 1986); Traguth v. Zuck, 710 F.2d 90, 94 (2d Cir. 1983) (holding that, in ruling on default judgments, "[t]he narrow scope of the district court's discretion stems from strong policies favoring the resolution of genuine disputes on their merits. . . .") (internal citations and quotations omitted); Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981) ("While courts are entitled to enforce compliance with the time limits of the Rules by various means, the extreme sanction of a default judgment must remain a weapon of last, rather than first, resort.") Plaintiff has not demonstrated that it has been prejudiced in any way by the delay, or that the delay resulted from willful or bad faith conduct. Plaintiff's motion for a default judgment is therefore denied, and Defendant's motion is considered on its merits.

C. New York Tax Law § 1613(a)

In order for lottery proceeds to be validly assigned in New York, the parties to the assignment agreement must first obtain "an appropriate judicial order" approving the transaction. New York Tax Law § 1613(a); 21 NYCRR § 2803.11; see also In re Cabrera, 196 Misc. 2d 329, 765 N.Y.S.2d 208 (Sup.Ct. 2003);Matter of Guri, 247 A.D.2d 388, 668 N.Y.S.2d 661 (2d Dep't 1998).

It is undisputed that the parties have not obtained the requisite order. (Def. 56.1 Stmt ¶ 17; Pl. Resp. to 56.1 Stmt. ¶ 17). Plaintiff claims, however, that notwithstanding the absence of a § 1613(a) order, the Court should enforce the contract because this failure "is solely a result of the Defendant's refusal to honor his agreement and perform thereunder." (Def. Mem. at 11). This argument is without merit. The requirement that the parties obtain a court order prior to assigning lottery proceeds exists in order to protect the assigning party and ensure that the transaction is fair. While it is normally true that "a party to a contract cannot rely on the failure of another to perform a condition precedent where he has frustrated or prevented the occurrence of the condition," Kooleraire Service Install. Corp. v. Board of Educ., 28 N.Y.2d 101, 106, 268 N.E.2d 782, 784 (1971) (citing the Restatement (Second) of Contracts § 245), the entire purpose of § 1613(a) would be undermined were this principle applied in this context. As theIn re Cabrera court explained,

[r]ecent years have seen the growth of specialty finance or factoring companies, offering lump sum cash payments to injured parties, lottery winners and other claimants, in exchange for a portion, or all, of future annuity or settlement payments. Such factoring companies often operate in a largely unregulated field and one which has come under much scrutiny. The assignments often involve large discounts imposed by factoring companies, aggressive advertising and other methods employed by some companies to induce unrepresented settlement recipients to make such transfers, the failure to properly disclose assignment terms, the possible adverse tax consequences for recipients and settlement companies, and the resulting loss of long-term financial security to recipients posed by the transfers.

D. Sanctions

The Court has broad discretion in deciding whether or not to impose sanctions. Colida v. Sony Corp. of Am., 2005 U.S. Dist. LEXIS 1545, at *13-14 (S.D.N.Y., Feb. 3, 2005) ("Ultimately, the decision to impose Rule 11 sanctions rests in the sound discretion of the court.") (citing to Perez v. Posse Comitatus, 373 F.3d 321, 325 (2d Cir. 2004)). Plaintiff's claims, while ultimately without merit, do not merit sanctions under Rule 11. Defendant's motion for sanctions is therefore denied.

V. Conclusion

For the reasons described above, Defendant's motion for summary judgment is GRANTED, and Plaintiff's motion for default judgment is DENIED. Defendant's motion for sanctions is DENIED. The Clerk of Court is directed to close this case.

IT IS SO ORDERED.