Opinion
Index No. 650164/2022
07-25-2022
Deutsche Bank Securities Inc., Plaintiff, v. 683 Capital Partners LP et al, Defendant.
Unpublished Opinion
Robert R. Reed, J.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 16, 17, 49, 52 were read on this motion to/for SEAL.
The following e-filed documents, listed by NYSCEF document number (Motion 003) 46, 47, 48, 50, 53 were read on this motion to/for SEAL.
The following e-filed documents, listed by NYSCEF document number (Motion 005) 89, 90, 91 were read on this motion to/for EXTEND - ORDER.
Motion sequence nos. 002, 003 and 005 are consolidated herein for disposition.
In this commercial action for breach of contract, in motion seq. no. 002, defendants Corbin Capital Partners, L.P., Corbin Equity Fund, L.P., Corbin Opportunity Fund, L.P., and Fifth Street Station LLC (the Corbin defendants), move by order to show cause for an order sealing Exhibits 2 and 3 attached to the affirmation of Andrew K. Glenn in support of defendants' motion to dismiss the complaint and for sanctions (motion sequence no. 001). There is no opposition to the motion.
Corbin Equity Fund, L.P. was formerly known as named defendant Fort George Investments, LLC.
In motion sequence no. 003, defendants Greenlight Capital, L.P., Greenlight Capital Offshore Partners, Ltd., Greenlight Capital Investors, L.P., Greenlight Capital Offshore Master, Ltd., and Solasglas Investments, L.P. (collectively Greenlight Defendants), move by order to show cause for an order sealing the affidavit of Daniel Roitman in support of Greenlight Defendants' motion to dismiss the complaint and exhibits 1 through 12 attached thereto (motion sequence no. 004). In motion sequence no. 003, Greenlight Defendants contend that the documents they wish to have sealed "contain information, the disclosure of which would, in the good faith judgment of Greenlight Defendants, be detrimental if the information were to become public" (Affirmation of Andrew K. Glenn in Support of Greenlight Defendants' Order to Show Cause to Seal, ¶3). There is no opposition to the motion.
Greenlight Capital Qualified, L.P. merged and combined with Greenlight Capital, L.P. Greenlight Capital Offshore Partners contributed all of its assets and liabilities to Greenlight Capital Offshore Partners, Ltd. and has been dissolved. The Greenlight Defendants include Greenlight Capital Offshore Partners, Ltd. Greenlight Capital (Gold), L.P. gullwing a name change is now Greenlight Capital Investors, L.P. Greenlight Capital Offshore Master (Gold), Ltd., following a name change is now Greenlight Capital Offshore Master, Ltd. Greenlight Reinsurance, Ltd. Contributed a portion of its assets into Solasglas Investments, L.P., which, as a result, is included among the Greenlight Defendants.
In motion sequence no. 005, plaintiff, Deutsche Bank Securities Inc., moves pursuant to CPLR 306-b, for an order extending plaintiff time to serve the summons and complaint on defendants BMO Funds, Inc. - BMO Alternative Strategies Fund (BMO) and Neuberger Berman Investment Funds plc (Neuberger) by 45 days to June 24, 2022.
Discussion
Motion Sequence No. 002 & 003
Under New York law, there is a presumption that the public is entitled to access to judicial proceedings and court records (Mancheski v Gabelli Group Capital Partners, 39 A.D.3d 499, 501 [2d Dept 2007]). The public's right to access, however, is not absolute, and a court is empowered to seal or redact court records pursuant to section 216.1 (a) of the Uniform Rules for Trial Courts upon a showing of "good cause" (Danco Labs. v Chemical Works of Gedeon Richte r, 274 A.D.2d 1, 8 [1st Dept 2000]).
Section 216.1(a) of the Uniform Rules for Trial Courts empowers courts to seal documents upon a written finding of good cause. It provides:
"(a) [e]xcept where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and an opportunity to be heard."
Thus, sealing has been found to be appropriate to preserve the confidentiality of materials which involve internal finances of a party which are of minimal public interest (see D'Amour v Ohrenstein & Brown, LLP, 17 Misc.3d 1130 [A], 2007 NY Slip Op 52207[U] [Sup Ct, NY County 2007]). In the business context, courts permit records to be sealed when trade secrets are involved or when disclosure of information contained in documents "could threaten a business's competitive advantage" (Mosallem v Berenson, 76 A.D.3d 345, 350-351 [1st Dept 2010]). Moreover, sealing has been allowed in the absence of "any legitimate public concern, as opposed to mere curiosity, to counterbalance the interest of [a business's] partners and clients in keeping their financial arrangement private" (Dawson v White & Case, 184 A.D.2d 246, 247 [1st Dept 1992] [internal quotation marks and citation omitted]).
According to the affirmation of Andrew K. Glenn, Esq., representing the Corbin defendants, exhibits 2 and 3 (NYSCEF doc nos. 5 and 6) should be sealed as the "documents contain information, the disclosure of which would, in the good faith judgment of the Moving Defendants, be detrimental if the information were to become public" (Affirmation of Andrew K. Glenn, Esq. dated February 23, 2022, ¶ 3, NYSCEF Doc. No. 17). The documents the Corbin defendants seek to have sealed, include the affidavit of John Hartwell Cocke, "Co-Portfolio Manager of Credit Strategies," for Corbin Capital Partners, L.P. ("Corbin"), the investment manager of Corbin Opportunity Fund, L.P. ("COF") and Corbin Equity Fund, L.P., formerly known as Fort George Investments, LLC ("Fort George"), as well as the affidavit of Jennifer Bucher, general counsel of defendant Fifth Street Station LLC. Both affidavits attach copies of various assignments of loans between Corbin entities and other lenders (NYSCEF Doc. 5, 6).
There is no opposition to the motion and no indication that the public or press would have an interest in this matter. However, a party's designation of a document as confidential or restricted, without further explanation or supporting case law, is insufficient to support a finding of good cause to seal court records in whole or in part (Mosallem v Berenson, 76 A.D.3d 345; DT Net Lease I Reit v Coughlan, 2022 NY Slip Op 31326[U], **3 [Sup Ct, NY County 2022]; Resort Cayman Holdings, Ltd. v Partnerships & Investments LLC, 2020 NY Slip Op 31404[U], *1 [Sup Ct, NY County 2020 ] ["Conclusory assertions of harm do not suffice... [and] a generalized preference for confidentiality is not enough"] [internal quotation marks and citation omitted]). Defendants' have failed to provide the court with any explanation, aside from counsel's conclusory statement that publication of said records would be "detrimental" to the moving defendants and a rubber stamp "HIGHLY CONFIDENTIAL" on the bottom of the documents page, as to why such records should be completely sealed (see Matter of Hoffman, 284 A.D.2d 92, 94 [1st Dept 2001] ["conclusory claims of the need for confidentiality of settlement agreements are insufficient to seal a record"]; Angiollio v Christie's Inc., 64 Misc.3d 500, 524 [Sup Ct, NY County 2019] [noting that "the mere designation of information as confidential does not guarantee that such information will be kept sealed [and that] [g]ood cause must still be shown"]).
Therefore, defendants' request to seal NYSCEF doc nos. 5 and 6 is denied.
Likewise, in motion sequence no. 003, Glenn affirms that the Greenlight defendants are seeking an order sealing the affidavit of Daniel Roitman in support of Greenlight defendants' motion to dismiss and exhibits 1 through 12 attached thereto (NYSCEF Doc. Nos. 31-43), claiming the "documents contain information, the disclosure of which would, in the good faith judgment of Greenlight Defendants, be detrimental if the information were to become public (affirmation of Andrew K Glenn in Support of Greenlight Defendant's order to cause to seal, ¶ 3, NYSCEF Doc. 47). For the same reasons as set forth above, the motion by the Greenlight defendants to seal said records is denied.
Motion Sequence No. 005
Plaintiff commenced this action on January 10, 2022, by filing the summons and complaint (NYSCEF Doc. No. 001), naming 86 defendants. Plaintiff seeks an extension of time in which to complete service on two of the 86 defendants, BMO Alternative Strategies Fund (BMO) and Neuberger Berman Investment Funds plc (Neuberger). According to plaintiff, service was effectuated on BMO and Neuberger pursuant to Business Corporation Law (BCL) §307, which is the statute governing service of process on an unauthorized foreign corporation. Plaintiff timely served the Secretary of State and sent an additional copy to BMO and Neuberger by registered mail, return receipt requested (NYSCEF Doc. Nos. 64, 84). While the summons and complaint were delivered and mailed before the service deadline of May 10, 2022, an affidavit of compliance could not be filed with the Court within the 10 days as required under BCL § 307(c)(2). Plaintiff, therefore, seeks an additional 45 days to allow for the affidavits of service to be complete and for the 10-day statutory period to run.
CPLR 306-b provides that "[i]f service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service." "To establish 'good cause' for extending the time to serve under CPLR 306-b, a plaintiff must show that it exercised 'reasonable diligence' in attempting to effect service (Huber v Palm Constr. Inc., 2022 NY Slip Op 30851[U], **4 [Sup Ct, NY County 2022]). Law office failure or failure to investigate or make a reasonably diligent effort at service will not amount to good cause (Zegelstein v Faust, 179 A.D.3d 541, 542 [1st Dept 2020]; Henneberry v Borstein, 91 A.D.3d 493, 496 [1st Dept 2012]).
"The interest of justice standard requires a careful judicial analysis of the factual setting of the case and a balancing of competing interests presented by the parties" (Leader v Maroney. Ponzini & Spencer, 97 N.Y.2d 95, 105 [2001]; de Vries v Metropolitan Tr. Auth., 11 A.D.3d 312, 313 [1st Dept 2004]). In determining whether relief is warranted pursuant to CPLR 306-b, "the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of 'time, and prejudice to defendant" (Leader, 97 N.Y.2d at 105-106; Johnson v Concourse Vil., Inc., 69 A.D.3d 410, 411 [1st Dept 2010]).
Plaintiff argues that there is good cause for granting the extension because both the current and prior counsel used reasonable diligence to pursue a potential resolution of the matter, and the process server has already completed the steps needed to effectuate service. Additionally, plaintiff asserts that the extension of time should be granted in the interest of justice as it has set forth meritorious claims against these two defendants in the summons and complaint.
BCL §307 provides for service of process on an unauthorized foreign corporation. According to the statute in pertinent part, service may be made by personally serving New York's Secretary of State, together with notice of such service and a copy of such process mailed "by registered mail with return receipt requested" to the address on file in the department of state for that corporation, in the jurisdiction of its incorporation, or to the last address of the foreign corporation known to the plaintiff (BCL § 307 [b][2]).
Additionally, where service of a copy of process is effectuated by mailing in accordance with this statute,
"proof of service shall be by affidavit of compliance with this section filed, together with the process, within thirty days after receipt of the return receipt signed by the foreign corporation, or other official proof of delivery or of the original envelope mailed. If a copy of the process is mailed in accordance with this section, there shall be filed with the affidavit of compliance either the return receipt signed by such foreign corporation or other official proof of delivery or, if acceptance was refused by it, the original envelope with a notation by the postal authorities that acceptance was refused... Service of process shall be complete ten days after such papers are filed with the clerk of the court"(BCL §307 [c][2]).
A review of the record shows that BMO was served, as a signed return receipt that the papers were delivered on May 16, 2022 and an affidavit of compliance was filed with the court on May 24, 2022 (NYSCEF Doc. No. 93). The court finds that plaintiff had good cause for the delay, and in the interest of justice the six-day delay did not prejudice defendant so as to permit the extension of time (see Freepoint Energy Solutions LLC v Deep Ellum Power & Gas Co. LLC, 2021 WL 852909, *1 [ Sup Ct, NY County 2021]; Taz Prods. Inc. v Rentacom, Inc., 19 Misc.3d 965 [Civ Ct, NY County 2008]).
The motion by Deutsche Bank to extend time to serve the summons and complaint on defendants BMO Funds, Inc. granted.
However, with respect to Neuberger no such affidavit of compliance has been filed. Rather, plaintiff stipulated with defendants Neuberger Berman Alternative Funds - Neuberger Berman Absolute Return Multi-Manager Fund and New Berman Advisers Management Trust - Absolute Return Multi-Manager Portfolio ("stipulating defendants") as to the completion of service and the stipulating defendants agreed to "waive any defenses that may be asserted based on a claim of improper or lack of service" (stipulation dated May 24, 2022 at ¶ 3, NYSCEF Doc. No. 94), but Neuberger Berman Investment Funds plc did not agree. To date, no such affidavit of compliance has been filed as it pertains to Neuberger, therefore service is deemed "jurisdictionally defective" (see Chan v Onyx Capital, LLC, 156 A.D.3d 1361, 1363 [4th Dept 2017]; David v Fuchs, 204 A.D.2d 253, 353-254 [1st Dept 1994]; Demitro v Garsan Realty, Inc., 24 Misc.3d 1205 [A], *3, 2009 NY Slip Op 51272[U] [Sup Ct, Bronx County 2009]).
The failure to properly serve and file an affidavit of compliance after service on the New York State Secretary of State as required by BCL §307(c)(2) is a jurisdictional defect and does not constitute a "mere irregularity' subject to cure" (Flannery v General Motors Corp., 86 N.Y.2d 771, 773 [1995]; Green 333 Corp. v RNL Life Science, Inc., 191 A.D.3d 506, 506 [1st Dept 2021]; Mullane v Ceva Logistics, U.S., Inc., 2020 NY Slip Op 34552(U), **3 [Sup Ct, NY County 2020]). Moreover, "notice received by means other than those authorized by statute cannot serve to bring a defendant within the jurisdiction of the court" (id., quoting Lansdowne Fin. Servs. Ltd. v Binladen Telecommunications Co., 95 A.D.2d 711, 712 [1st Dept 1983]).
Accordingly, the motion by Deutsche Bank as to Neuberger is denied.
Conclusion
Accordingly, it is
ORDERED that Corbin defendants' motion to seal is denied without prejudice (motion sequence no. 002); and it is further
ORDERED that Greenlight defendants' motion to seal is denied without prejudice (motion sequence no. 003); and it is further
ORDERED that Plaintiff's motion for an order extending time to serve the summons and complaint (motion seq. no. 005) is granted as to BMO and denied as to Neuberger.