Opinion
Index No. 655076/2023 Motion Seq. Nos. 005 007
07-10-2024
MONEX CANADA, INC., Plaintiff, v. BANK OF AMERICA, N.A., CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., M&T BANK, N.A., PNC BANK, N.A., WELLS FARGO BANK, N.A., IAA HOLDINGS, LLC DOING BUSINESS AS IAA BUYER WIRES, SIMON CARS, INC., V & S BROTHERS, INC., GREEN ELECTRIC MOTORS, INC., AUTO CARGO INTERNATIONAL, LLC, MC LOGISTIC LLC, ROCKETDROP, LLC, LOGISTIX 101, INC., COPART, INC. Defendant.
Unpublished Opinion
MOTION DATE 05/15/2024
DECISION + ORDER ON MOTION
JOEL M. COHEN, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 005) 117, 118, 119, 120, 121,122,123, 124, 125, 153, 154, 155 were read on this motion to WITHDRAW AS COUNSEL
The following e-filed documents, listed by NYSCEF document number (Motion 007) 136, 137, 139, 140, 143, 144, 145, 151 were read on this motion for DEFAULT JUDGMENT
Mestechkin Law Group P.C.'s ("Mestechkin") motion (Mot. Seq. No. 5) to withdraw as counsel for Defendant MC Logistic, LLC ("MC Logistic") and for a sixty day stay of proceedings against MC Logistic is granted to the extent that Mestechkin is permitted to withdraw. However, the Court finds that a limited stay of thirty (30) days is appropriate.
Plaintiff Monex Canada's, Inc.'s ("Plaintiff' or "Monex") motion for a default judgment (Mot. Seq. No. 7) against Defendants Logistix 101, Inc. ("Logistix"), Green Electric Motors, Inc. ("Green Electric"), and MC Logistic is denied as to Logistix and Green Electric and granted as to MC Logistic.
A. Background
This is a fraudulent transfer action in which Plaintiff claims that a non-party distributed the proceeds of the fraud to, among others, Logistix, Green Electric and MC Logistic. Several defendants, including Logistix, Green Electric and MC Logistic, moved to dismiss. Those motions were denied in an order dated April 19, 2024 (Monex Can., Inc. v Bank of Am., N.A., 2024 N.Y. Slip Op. 31452[U], 1 [N.Y. Sup Ct, New York County 2024]).
The Court required that Logistix, Green Electric and MC Logistic "respond to the Complaint within twenty-one days of this decision and order" (id). Logistix and Green Electric filed Answers on May 14, 2024 (NYSCEF 141 and 142).
MC Logistic did not file an answer. Instead, on May 3, 2024, Mestechkin moved by proposed order to show cause to withdraw as counsel (NYSCEF 119 [Mot. Seq. No. 5]). The Order to Show Cause required opposition papers to be filed on or by June 25, 2024, and provides that "[if] no opposition is fried, the motion will be decided on the papers."
On May 13, 2024, Plaintiff moved for a default judgment against Logistix, Green Electric and MC Logistic (NYSCEF 136 [Mot. Seq. No. 7]). No opposition was filed by MC Logistic in response to either the motion to withdraw or the motion for a default.
Plaintiff opposes Mestechkin's motion to withdraw on the grounds that it is untimely and requests that its motion for a default be granted because MC Logistic was represented at the time MC Logistic defaulted. Logistix and Green Electric oppose the motion for a default judgment and argue that their Answers were timely.
B. Mestechkin's Motion to Withdraw is Granted
Mestechkin seeks to withdraw as counsel to MC Logistic due to a breakdown in the attorney client relationship and because MC Logistic has failed to respond to or pay Mestechkin's legal fees (NYSCEF 118 ["Mestechkin Affirmation"]). Mestechkin also seeks a sixty (60) day stay of proceedings against MC Logistic.
An attorney may withdraw as counsel upon a showing of good and sufficient cause and reasonable notice (CPLR 321 [2]). For instance, an attorney may withdraw from representation where the client "deliberately disregards an agreement or obligation to the lawyer as to expenses or fees" (NY ST RPC Rule 1.16[c][5]); see also Weiss v Spitzer, 26 A.D.3d 675 [1st Dept 2007] [permitting attorney to withdraw where client was almost $4,000 in arears]; Winters v Winters, 25 A.D.3d 601, 601 [2d Dept 2006] [holding that an attorney may withdraw where the client "refuses to pay reasonable legal fees"]). Mestechkin has demonstrated a break down in the attorney-client relationship, including MC Logistic's failures to pay fees incurred, and is permitted to withdraw.
Further, as a general rule, CPLR 321(c) requires that there be a 30-day stay of all proceedings after counsel is permitted to withdraw over the client's objection. Where, however, the attorney's withdrawal is caused by a voluntary act of the client, the court has the discretion to permit the matter to proceed without such a stay" (Sarlo-Pinzur v Pinzur, 59 A.D.3d 607, 608 [2d Dept 2009] [citations omitted]). Thus, the Court may grant a default judgment notwithstanding the fact that counsel has sought to withdraw where the withdrawal was based on a failure to cooperate and pay attorney's fees (Art Capital Bermuda Ltd. v Bank of N.T. Butterfield &Sons Ltd., 213 A.D.3d 596, 597 [1st Dept 2023]).
In this instance, the Court finds that a stay of thirty (30) days is warranted. Thus, while the Court will grant the motion for a default as against MC Logistic, Plaintiff shall not submit a proposed judgment until thirty (30) days have passed from the service of this order with notice of entry on MC Logistic.
C. The Motion for a Default Judgment is Conditionally Granted as Against MC Logistic and Denied as Against Logistix and Green Electric
To establish an entitlement to a default judgment pursuant to CPLR 3215(f), Plaintiff must establish service of the Complaint, the facts constituting the claim, the Defendant's default, and the damages owed (Woodson v Mendon Leasing Corp., 100 N.Y.2d 62, 70 [2003]). Where the period of default is "relatively short" and the defendant has "an arguably meritorious defense," a default judgment is not appropriate (Muney Design, Inc. v Roscoe Mgt. Co., 97 A.D.2d 712, 712 [1st Dept 1983] citing CPLR 2005 [the Court may "exercise discretion in order to vacate a default judgment entered against a defendant for failure to file an answer due to law office failure"]).
The Court's order denying the motions to dismiss is dated April 19, 2024, and notice of entry was served on April 22, 2024 (NYSCEF 114, 115, 116). However, the NYSCEF system indicates that the order was "filed" on April 23, 2024, and Logistix and Green Electric submit an automated email from NYSCEF notifying them of the entry of the order on April 23, 2024 (NYSCEF 144). Logistix and Green Electric also submit that they have potentially viable defenses as set forth in their Answers filed one day after Plaintiff moved for a default judgment.
Plaintiff contends that answers were due on May 10, 2024, which is twenty-one days from April 19, 2024. Logistix and Green Electric argue that their Answers were properly filed on May 14, 2024, or twenty-one days from April 23, 2024, the date that NYSCEF indicated the order was filed.
On these facts, the Court does not conclude that Logistix and Green Electric were in default at the time they filed their answers. Even if the Court were to find that a default occurred, it would be excusable given the minimal delay, the lack of prejudice, the absence of willfulness, and the preference to adjudicate cases on the merits (Chevalier v 368 E. 148th St. Assoc., LLC, 80 A.D.3d 411, 414 [1st Dept 2011] [citations omitted]). Accordingly, the Court deems Logistix's and Green Electric's Answers timely (Blake v United States, 109 A.D.3d 504, 505 [2d Dept 2013] [collecting cases]).
However, MC Logistic is clearly in default, and has not filed any opposition papers. Plaintiff has adequately demonstrated that it is entitled to judgment in the amount of $50,012.00 against MC Logisitic. Therefore, the motion for a default judgment is granted as against MC Logistic subject to the stay set forth above.
Defendants MC Logistic may seek a vacatur of the instant default judgment if it can satisfy the requirements of CPLR § 5015, CPLR § 317, or any other relevant law.
* * * *
Accordingly, it is
ORDERED that Mestechkin Law Group P.C.'s motion (Mot. Seq. No. 5) to withdraw as counsel for Defendant MC Logistic, LLC and for a sixty day stay of proceedings against MC Logistic is GRANTED to the extent that Mestechkin Law Group is relieved as counsel; it is further
ORDERED that, other than as specifically set forth herein, no further proceedings may be taken against Defendant MC Logistic without leave of this court until thirty (30) days from the date of service of this order with notice of its entry; it is further
ORDERED that Mestechkin Law Group P.C. is to comply with its obligations under Rule 1.16(d) of the Rules of Professional Conduct, as applicable to the facts presented, to "take steps, to the extent reasonably practicable, to avoid foreseeable prejudice to the rights of the clients, including giving reasonable notice to the clients, allowing time for employment of other counsel, delivering to the clients all papers and property to which the clients are entitled, promptly refunding any part of a fee paid in advance that has not been earned and complying with applicable laws and rules;" it is further
ORDERED that both Monex shall promptly serve a copy of this order upon Defendants by email, and in hard copy at their last known business addresses, by certified mail, return receipt requested and provide proof of service thereof, and Mestechkin Law Group P.C. shall separately serve a copy of this order upon MC Logistic; it is further
ORDERED that Defendant MC Logistic appoint substitute counsel within thirty (30) days from the date of service of this order with notice of its entry; it is further
ORDERED that Plaintiffs' motion for a default judgment is DENIED as against Defendants Logistix 101, Inc. and Green Electric Motors, Inc., and GRANTED against Defendant MC Logistic, LLC; it is further
ORDERED that if MC Logistic does not appoint substitute counsel within the period provided above that Monex may submit a proposed judgment against MC Logistic in the amount of $50,012.00, plus costs and pre-judgment interest from July 26, 2023, in an amount to be calculated by the clerk.
This constitutes the Decision and Order of the Court.