Opinion
Index No. 656042/2020
12-22-2022
CEDAR CAPITAL MANAGEMENT GROUP INC., Cadmus Asset Management, Ltd., CTC Trading Ltd., Citadel Holdings Inc., Plaintiff, v. Brian LILLIE, Enterprise Holdings Group Ltd., Enterprise Holdings Group LLC, EHG Capital Management Limited, EHG Equities Limited, Lilliham Holdings Limited, Tracy Lillie, Andrew George Michael, Seyed Morteza Vanaki, Chris Cioffi, Tim Carr, Gulf Atlantic Traders, LLC, Tom Kent, Custodial Account and Transaction Services LLC, e-Creative Group, Inc., Three Wide Media, LLC, Jane Doe, John Doe, ABC Inc., XYZ Corp., Defendant. Brian Lillie, Plaintiff, v. Wael Chehab, Juri Patrick Brandt aka JP Bradley, Logan Andrews, Rising Sun Consulting, Defendant.
The following e-filed documents, listed by NYSCEF document number (Motion 016) 266, 267, 268, 269, 270, 271, 272, 273, 279, 280, 332, 337, 338, 339 were read on this motion for JUDGMENT - DEFAULT.
In this motion, plaintiffs move for default judgment against defendant Custodial Account and Transaction Services LLC (CAT) on all causes of action. Plaintiffs ask that the inquest be deferred until the time of trial.
On January 27, 2021, defendant Tom Kent answered the complaint pro se. The answer was purportedly filed on behalf of himself and CUSTODIAL ACCOUNT AND TRANSACTION SERVICES LLC ("CAT"), the latter of which is a corporation (see NYSCEF Doc. No. 38). Plaintiffs argue that CAT is in default because a corporation must appear by an attorney, pursuant to CPLR § 321 (a).
Kent opposes the motion by arguing that the issuance of a default order is improper, due to his pending motion to dismiss filed on behalf of CAT. Kent is "hesitant in securing an attorney as it might be construed as accepting New York ‘Jurisdicton’[sic ] and statements made by the plaintiff are untrue and wrong" (NYSCEF Doc. No. 279, 1). He submits that CAT will obtain counsel after resolution of his pending motion if the corporation is still a defendant in this case.
Kent has made several applications in this case. The first, which Kent filed on January 28, 2021, was to dismiss the original complaint (NYSCEF Doc. No. 50 [motion sequence number 007]). The court denied the motion as moot due to the filing of the amended complaint. The second, which Kent filed on June 11, 2021, seeks discovery and an accounting, and it also seeks to sever the claims against him and CAT (NYSCEF Doc. No. 182 [motion sequence number 010]). Kent's third motion, which he brought on by order to show case, moved to dismiss the complaint based on lack of personal jurisdiction and untimeliness (NYSCEF Doc. No. 189 [motion sequence number 011]). The court declined the application as there was no basis for proceeding by order to show cause. Kent's fourth motion, which he filed on June 30, 2021, seeks reconsideration of the arguments he made for dismissal in motion sequence numbers 007 and 010 (NYSCEF Doc. No. 235 [motion sequence number 012]).
Kent's argument lacks merit. An individual cannot appear in New York Supreme Court on behalf of a corporate entity. Under CPLR § 321 (a), a corporation or voluntary association shall appear by attorney. As a corporation cannot proceed pro se, the answer filed by Kent is a nullity as to CAT (see Boente v Peter C. Kurth Off. Of Architecture & Planning, P.C. , 113 AD3d 803, 804 [2d Dept 2014] ). For the same reason, Kent's motion papers cannot be considered except as they apply to him, individually. Kent cannot interpose argument on behalf of the corporation. Finally, Kent's argument that he fears the corporation will be deemed to have waived its jurisdictional argument if it appeared by an attorney is misguided. Given that Kent filed an answer, several motions, and opposition papers to motions, that are purportedly not only on his behalf but on behalf of the corporation, he has arguably waived such jurisdictional challenge.
The amended complaint (NYSCEF Doc. No. 269) details the allegedly fraudulent actions of defendants CAT and Tom Kent along with two other groups of defendants. Very generally, it alleges that the three groups colluded to entice plaintiffs to purchase debentures for significant sums of money, and that they subsequently transferred funds to the individual defendants and otherwise failed to pay plaintiffs most of the proceeds to which they were entitled. More specifically, the complaint alleges that CAT, through Kent, emailed three letters to plaintiffs, each of which stated that CAT was "responsible for the custodial holding, organization, and distribution of the wind-up profits to EHG's investors (subscribers)" (id. , 166). These letters relate to what the plaintiffs call "the First Bucket PPMs" (see, e.g., id. ,146-147). CAT and Kent are specifically named in the ninth and tenth causes of action. The remaining causes of action either relate to the actions of the other two groups of defendants or generally allege that all defendants are liable. In addition, plaintiffs submit the affidavit of Wa'el Chehab, an executive in all the plaintiff corporations (NYSCEF Doc. No. 268). The affidavit incorporates plaintiffs’ papers in opposition to motion sequence number 007 (NYSCEF Doc. No. 119) and their affidavit and affirmation in support of their motion for default judgment against the Cioffi defendants (NYSCEF Doc. Nos. 272, 273).
The court does not have "a mandatory, ministerial duty to grant a motion for default judgment" ( Dyno v Rose , 260 AD2d 694, 698 [3d Dept 1999] ). The court has the discretion to decide whether the movant has satisfied its obligation to show a prima facie case on each cause of action (id. ; see Boente , 113 AD3d at 804 [finding that movant had satisfied this burden as to each claim]; Ayal v Bassett , 57 AD3d 387, 387 [1st Dept 2008] ).
After due consideration, this court finds that CAT is in default, and grants judgment as to the ninth and tenth causes of action. Plaintiffs’ papers are sufficient to establish culpability in this regard. However, the court otherwise denies the motion. Plaintiffs have not met their burden to establish judgment on the remaining causes of action. Neither the complaint nor the supporting papers are specific enough, or supported by sufficient evidence, in their explanations as to why CAT is liable under the remaining claims.
Accordingly, it is hereby
ORDERED that default judgment on the issue of liability is granted against CAT on the ninth and tenth causes of action, with inquest to be held at the time of trial.