Opinion
No. 380934/2007.
2009-12-29
Santa BAEZ, Plaintiff, v. ENDE REALTY CORP. and Ende Associates LLC, Defendants.
Michael T. Sucher, Esq. Brooklyn, for Plaintiff. Francis M. DeCaro, Esq. Bronx, for Defendants.
Michael T. Sucher, Esq. Brooklyn, for Plaintiff. Francis M. DeCaro, Esq. Bronx, for Defendants.
LUCINDO SUAREZ, J.
Upon defendants' notice of motion dated August 18, 2009 and the affirmation, affidavits (3) and exhibits submitted in support thereof; the affirmation in opposition dated October 2, 2009 and the affidavit and exhibits submitted therewith; the affirmation in reply dated November 6, 2009 and the exhibits submitted therewith; the affirmation in sur-reply dated November 12, 2009 and the exhibit submitted therewith; and due deliberation; the court finds:
Defendants Ende Realty Corp. (“Corporation”) and Ende Associates LLC (“Associates”) move pursuant to CPLR 317 and 5015(a)(1) to vacate the default judgment entered in this action and for leave to file an answer to the complaint. Defendants were served on November 9, 2007 pursuant to Business Corporation Law § 306(b)(1), by delivery of the summons and complaint to the office of the New York State Secretary of State.
The court takes judicial notice of the file maintained by the Bronx County Clerk in the related underlying action of Santa Baez v. Ende Realty Company LLC (Index No. 24173/2005) (the “2005 action”). See See Samuels v. Montefiore Med. Ctr., 49 A.D.3d 268, 852 N.Y.S.2d 121 (1st Dep't 2008); Walker v. City of New York, 46 A.D.3d 278, 847 N.Y.S.2d 173 (1st Dep't 2007); American S & L Ass'n v. First American Title Ins. Co., 78 A.D.2d 624, 432 N.Y.S.2d 706 (1st Dep't 1980); Tischler v. Key One Corp., 67 A.D.2d 886, 413 N.Y.S.2d 710 (1st Dep't 1979). In that action, in an affidavit submitted in support of defendants' motion to vacate a default judgment, Dawn DeAndrade (“DeAndrade”), the principal of both defendants here, attested that the attorney who filed the Corporation's incorporation materials in 1996 and whose address was listed as the corporation's address for service of process retired in 2002, and that DeAndrade “didn't even know or think of the need to change the address in Albany for service of process for Ende Realty Corp., so it was not changed.” DeAndrade also attested that she did not learn of either action until June 20, 2009 when the property's manager showed her a copy of the decision and order of the undersigned dated June 8, 2009 in the 2005 action which appointed a receiver for the property upon entry of a money judgment against those defendants. DeAndrade also attested that while the office of the Corporation has been located at 45 Elliot Place, Suite 5, Bronx, New York, “[f]or some reason unknown to me the post office does not deliver mail to he [ sic ] office address.” Her affidavit submitted on the instant application is not inconsistent, and here she also avers that defendants maintain a post office box which she believes to be the most appropriate mailing address for defendants.
“[S]ervice of process on a corporation is complete when the Secretary of State is served irrespective of whether the process subsequently reaches the corporate defendant.” Associated Imports, Inc. v. Leon Amiel Publisher, Inc., 168 A.D.2d 354, 354, 562 N.Y.S.2d 678, 679 (1st Dep't 1990) (citations omitted), appeal dismissed,77 N.Y.2d 873, 571 N.E.2d 85, 568 N.Y.S.2d 915 (1991). Despite DeAndrade's plea of ignorance, maintenance of a current address on file with the Secretary of State is no entity's obligation other than the corporation itself. SeeBusiness Corporation Law § 408(1); Crespo v. A.D.A. Mgmt., 292 A.D.2d 5, 739 N.Y.S.2d 49 (1st Dep't 2002).
The failure to maintain on file with the Secretary of State a current address of an agent for service of process is not a reasonable excuse for a default in responding to a summons and complaint. See Associated Imports, Inc. v. Leon Amiel Publisher, Inc., 168 A.D.2d 354, 562 N.Y.S.2d 678 (1st Dep't 1990) (citations omitted), appeal dismissed,77 N.Y.2d 873, 571 N.E.2d 85, 568 N.Y.S.2d 915 (1991); see also Lawrence v. Esplanade Gardens, 213 A.D.2d 216, 623 N.Y.S.2d 586 (1st Dep't 1995), rehearing denied, 1995 N.Y.App. Div. LEXIS 8578 (1st Dep't Aug. 3, 1995). Failure to update the corporate address with the Secretary of State, however, is not necessarily fatal to a motion to set aside a default pursuant to CPLR 317. See Arabesque Recs. LLC v. Capacity LLC, 45 A.D.3d 404, 404, 846 N.Y.S.2d 43, 43 (1st Dep't 2007).
Contrary to defendant's assertions, the length of time that a corporation has failed to update its information with the Secretary of State is not an impermissible consideration on a motion pursuant to CPLR 317. Relief under CPLR 317 is not absolute. See Eugene Di Lorenzo, Inc. v. A.C. Dutton Lumber Co., 67 N.Y.2d 138, 143, 492 N.E.2d 116, 119, 501 N.Y.S.2d 8, 11 (1986). A corporation's failure to update its address on file with the Secretary of State need not be disregarded; it is merely not a “ per se ” barrier to relief under CPLR 317. See Arabesque Recs. LLC, supra. If “denial of relief under CPLR 317 might be appropriate where, for example, a defendant's failure to personally receive notice of the summons was a result of a deliberate attempt to avoid such notice,” Eugene Di Lorenzo, Inc., supra (internal citations omitted), then it follows that the length of time a corporation's address on file with the Secretary of State has been erroneous is not an inappropriate consideration. In fact, such failure has been considered, and disfavorably so, in the context of CPLR 317. See Lawrence, supra.
In the present case, if the retirement of defendant's agent is submitted to this court as evidence of the resignation of the agent for service of process purposes, and it is not clear that the two events coincided, then defendant has failed to update its address for at least seven years. While flexibility may be afforded by the court where defendant was served by delivery of the summons and complaint to the Secretary of State, relief is not automatically granted. See On Assignment v. Medasorb Tech., LLC, 50 A.D.3d 342, 855 N.Y.S.2d 98 (1st Dep't 2008) (flexibility not warranted given the passage of fifteen months during which defendant's address on file with the Secretary of State was not updated); J & S Constr. of NY, Inc. v. 321 Bowery LLC, 39 A.D.3d 391, 835 N.Y.S.2d 65 (1st Dep't 2007) (flexibility not warranted where three years passed during which defendant's address on file with the Secretary of State was not updated). The court finds DeAndrade's statement that the United States Postal Service does not deliver mail to its office address not to be credible, particularly in light of the simultaneous assertion that defendant's post office box address is intended only for the use of tenants' submissions of rent payments. “[D]efendant's failure to receive the duplicate copy of the summons and complaint mailed to it by the Secretary of State, in and of itself and without excuse, does not furnish a ground for opening the default.” Cascione v. Acme Equipment Corp., 23 A.D.2d 49, 50, 258 N.Y.S.2d 234, 236 (1st Dep't 1965).
No jurisdictional argument is advanced in the moving papers. The court also notes that as of the date of this decision and order, a search of the Secretary of State's online Corporation and Business Entity database,
of which the court takes judicial notice, reveals that the Corporation's address on file with the Secretary of State remains that of its purportedly “retiredagent.” Given that the Corporation has been aware of the purportedly erroneous address for approximately six months, the court would have grounds to infer that the failure to update the Secretary of State's database in the interim is an evasion of notice. See e.g. Lawrence v. Esplanade Gardens, 213 A.D.2d 216, 623 N.Y.S.2d 586 (1st Dep't 1995), rehearing denied, 1995 N.Y.App. Div. LEXIS 8578 (1st Dep't Aug. 3, 1995).
http://appsext8.dos.sta te.ny.us/corp_public/CORPSEARCH.ENTITY_ INFORMATION? p_nameid=2131909 & p_corpid=2081508 & p_entity_name= >[/] & p_ name _type=% 25 & p_search_type=C § +T”†+S & p_srch_results_page=0
Papers to be served upon a party who has not appeared by counsel may be served to the party's last known address. SeeCPLR 2103(c), citing CPLR 2103(b)(2). DeAndrade avers that “long before [June 20, 2009] and up until the present,” defendant's office has been located at 45 Elliot Place, Suite 5, Bronx, New York. Sent to this address were, inter alia, letters dated March 20, 2005, April 22, 2005 and September 28, 2005 from plaintiff to defendant regarding notice of plaintiff's claims; an additional copy of the summons and complaint served by plaintiff pursuant to CPLR 3215(g)(4) with cover letter dated February 15, 2006; plaintiff's motion seeking a default judgment against defendant, served on September 15, 2006; the order denying plaintiff's motion for a default judgment with notice of entry, served on October 13, 2006; plaintiff's motion seeking leave to renew the denial of a default judgment, served on November 17, 2006; plaintiff's Note of Issue served on January 16, 2007; an additional copy of the summons and complaint in the 2007 action served by plaintiff pursuant to CPLR 3215(g)(4) with cover letter dated November 28, 2007; plaintiff's notice of motion and supporting documentation served January 2, 2008 in the 2007 action; plaintiff's service on March 27, 2008 of the notice of settlement of the default judgment in the 2007; plaintiff's service of a letter to the court (Justice Sallie Manzanet–Daniels, J.S.C.) dated May 14, 2008 and copied to defendant in the 2007 action; the information subpoena served on defendant by plaintiff; plaintiff's letter to defendant dated June 13, 2008 served by Federal Express overnight mail, signed for and received; plaintiff's service of a letter to the court (Justice Sallie Manzanet–Daniels, J.S.C.) dated July 14, 2008 and copied to defendant in the 2007 action; and plaintiff's motion seeking a default judgment in the 2007 action, served on September 19, 2008. There is therefore ample evidence of actual knowledge of the action through numerous papers served pursuant to the CPLR. According to the affirmations of plaintiff's two attorneys, none of these mailings was ever returned, as undeliverable or otherwise.
Regardless of the merit of defendant's proposed defenses, defendant has failed to demonstrate a reasonable excuse for its default in responding to the summons and complaint. See M.R. v. 2526 Valentine LLC, 58 A.D.3d 530, 871 N.Y.S.2d 131 (1st Dep't 2009). Furthermore, defendant's failure to maintain an accurate address for service of process with the Department of State for at least seven years and claim of lack of knowledge of the action, if not an attempt to evade service, appears to have been the result of willful neglect inadequately explained by defendant. See Smith v. City of New York, 250 A.D.2d 393, 672 N.Y.S.2d 694 (1st Dep't 1998); Wynne v. Wagner, 262 A.D.2d 556, 693 N.Y.S.2d 60 (2d Dep't 1999), appeal dismissed,94 N.Y.2d 796, 722 N.E.2d 509, 700 N.Y.S.2d 429 (1999).
With respect to the Associates, the address on file with the Secretary of State's Division of Corporations for service of process, and therefore the address to which process was served by the Department of State, was the post office box address urged by defendant.
Aside from lack of notice, the Associates do not posit any other excuse for the default. There is no evidence of problems receiving mail at the post office box, and the Associates have, in fact, stated that that is their preferable mailing address. Defendant uses it for receiving rent, and it is reasonable to infer that defendant would choose a mail receipt method that would ensure it of a continuing stream of income. Accordingly, neither defendant has presented a reasonable excuse for their default, and the Associates have likewise failed to demonstrate in detail that it did not receive notice of the action in time to defend.
As per the online database of the New York State Secretary of State Division of Corporations, http://appsext8.dos.state.ny .us/corp_ public/CORPSEARCH.ENTITY_INFORMATION? p_nameid=3439273 & p_corpid=3436420 & p_entity_name= >[/] % 20/?? ?vi/· ? & p_name_type=% 25 & p_search_type=C § +T”† +S & p_srch_results_page=0, visited December 21, 2009.
Furthermore, the court does not discern a meritorious defense with respect to the Corporation. Pursuant to Debtor and Creditor Law § 273–a,
Every conveyance made without fair consideration when the person making it is a defendant in an action for money damages or a judgment in such an action has been docketed against him, is fraudulent as to the plaintiff in that action without regard to the actual intent of the defendant if, after final judgment for the plaintiff, the defendant fails to satisfy the judgment.
A plaintiff claiming a fraudulent transfer, therefore, need prove only the lack of consideration, an action or docketed judgment and the failure to satisfy such judgment. Knowledge of the underlying claim is not a component of the cause of action, nor is defendant's actual motive in transferring the property. See Palestine Monetary Auth. v. Strachman, 62 A.D.3d 213, 873 N.Y.S.2d 281 (1st Dep't 2009). In the present action, all three facets of the necessary showing have essentially been conceded by defendant. The claim that the transfer was part of a refinancing structure to avoid foreclosure is of no moment in the calculus of a showing of a fraudulent transfer by a defendant. The Corporation has therefore demonstrated no meritorious defense to the action to set aside the transfer as fraudulent pursuant to Debtor and Creditor Law § 273–a. In the absence of a meritorious defense, the default cannot be vacated under either CPLR 317 or CPLR 5015, both of which require such a showing of a merit.Accordingly, it is
ORDERED, that defendants' application to vacate the default judgment entered against them is denied.
This constitutes the decision and order of the court.