Opinion
Index No. 652138/2022
09-03-2024
Philadelphia Professional Collections, LLC, Plaintiff, v. Star Magic, Inc., and SHLOMO AYAL, Defendants.
White and Williams, LLP, Philadelphia, PA (Robert A. Drummond of counsel), for plaintiff. Shlomo Ayal, defendant pro se. No appearance for defendant Star Magic, Inc.
Unpublished Opinion
White and Williams, LLP, Philadelphia, PA (Robert A. Drummond of counsel), for plaintiff.
Shlomo Ayal, defendant pro se.
No appearance for defendant Star Magic, Inc.
Gerald Lebovits, J.
In this action, plaintiff, Philadelphia Professional Collections, LLC, seeks to collect unpaid attorney fees that it alleges to be owed to it by defendants, Star Magic, Inc., and Shlomo Ayal. This court previously denied a motion by plaintiff for default judgment against defendants. (See Philadelphia Professional Collections, LLC v Star Magic, Inc., 2024 NY Slip Op 50232[U] [Sup Ct, NY County 2024].) Plaintiff now moves again for default judgment. The motion is granted as against defendant Star Magic and denied as against defendant Ayal.
As on the prior motion, Ayal's opposition to the motion, although styled an answer, is in substance an untimely memorandum of law. (See NYSCEF No. 67.) Given Ayal's pro se status, the court will treat this filing as a memorandum of law and consider it on the current motion.
1. With respect to Star Magic, this court previously held that although plaintiff had shown that it properly served Star Magic (and that Star Magic has not appeared), plaintiff had not shown that this court had the right to exercise authority over Star Magic for personal-jurisdiction purposes. (See id. at *2.) The record reflects that Star Magic was dissolved prior to this action. This court concluded on the prior motion that plaintiff did not show that Star Magic had held itself out, post-dissolution, as a de facto corporation acting in New York, so as to make itself amenable to this court's exercise of personal jurisdiction. (See id., citing Bruce Supply Corp. v New Wave Mechanical, Inc., 4 A.D.3d 444, 445 [2d Dept 2004].) Plaintiff has now made the requisite showing.
In particular, plaintiff has introduced the complaint from the action in which Star Magic incurred the fees that plaintiff now seeks to collect-a suit brought in this court in December 2020. (See NYSCEF No. 61, reproducing the summons and complaint from Star Magic, Inc. v Tangle, Inc., Index No. 657274/2020 [Sup Ct, NY County].) Star Magic's complaint in that action alleges that it "is a foreign corporation residing in New York," (id. at 5 ¶ 5); that the defendant breached contractual and fiduciary duties to Star Magic, "causing injury to Star Magic in New York" (id. at 4-5, ¶¶ 1, 3); and that this alleged wrongful conduct "deprived Star Magic of substantial sales and resulting profits, thereby damaging Star Magic's successful business and legally protected goodwill and customer relationships" (id. at 4 ¶ 2.) This court agrees with plaintiff that this filing, and the underlying conduct it evidences, establish for pleading purposes that Star Magic acted and held itself out, post-dissolution, as a de facto corporation. (See Ludlum Corp. Pension Plan Trust v Matty's Superservice, Inc., 156 A.D.2d 339, 340 [2d Dept 1989] [discussing criteria for when a dissolved company is acting as a de facto corporation].)
Plaintiff also provides proof of the facts constituting its claim: Documentation showing that Star Magic had a contract with White & Williams, LLP; that Star Magic did not pay the legal fees owed under that contract; and that White & Williams has assigned its right to collect those fees to plaintiff. (See NYSCEF Nos. 60, 62, 63, 64 [engagement letter; invoices; letter regarding invoice; assignment agreement].)
Plaintiff is entitled to default judgment against Star Magic.
2. With respect to Ayal, this court denied the prior default-judgment motion because plaintiff had not established that (i) the court has personal jurisdiction over Ayal; and (ii) plaintiff (as distinct from White & Williams) has the right to sue Ayal for unpaid attorney fees. (See Philadelphia Professional Collections, 2024 NY Slip Op 50232[U], at *3.) On this motion, plaintiff provides a copy of an agreement in which White & Williams assigns any right or claim it might have against Ayal for unpaid attorney fees to plaintiff. (See NYSCEF No. 65.) But plaintiff still has not shown sufficiently that personal jurisdiction exists.
Plaintiff must show either that (i) Ayal is domiciled in New York; or (ii) he is subject to longarm personal jurisdiction under CPLR 302. On this record, plaintiff has not done so. On the former prong, the most that plaintiff says is that "it is clear that Mr. Ayal spends part of the year living in New York." (NYSCEF No. 66 at 11.) Set aside the issue of the probative value of the documents on which plaintiff relies (which Ayal hotly disputes, see NYSCEF No. 67 at 2-3). That Ayal lives at least part time in New York is not enough to show that he is domiciled here for personal-jurisdiction purposes.
Plaintiff argues that Ayal is subject to longarm jurisdiction under CPLR 302 (a) (4) because the record shows that he owns or has an interest in "real property situated within the state." (NYSCEF No. 66 at 11.) This argument is unavailing. The contemporary documentation that plaintiff supplies consists of (i) a recorded sale of a cooperative-apartment unit; and (ii) two recorded sales of single-family homes. (See NYSCEF Nos. 49, 51, 52.) As Ayal points out (NYSCEF No. 67 at 3), although the two home sales involve a person named Shlomo Ayal (see NYSCEF Nos. 51 and 52), plaintiff has not shown that defendant here is the same Shlomo Ayal. As for the co-op sale, to which Ayal concedes he was a party, shares appurtenant to a co-op apartment are personal property, not real property. (See Lombard v Station Sq. Inn Apts. Corp., 94 A.D.3d 717, 718-719 [2d Dept 2012].) Moreover, even if plaintiff were to show that Ayal owns real property in New York, longarm jurisdiction would exist only to the extent that plaintiff's claims against him arise from that ownership. (See CPLR 302 [a] [conferring longarm jurisdiction "[a]s to a cause of action arising from any of the acts enumerated in this section"].)
Plaintiff also contends that "it is clear that Mr. Ayal conducts business in the State of New York" within the meaning of CPLR 302 (a) (1). (NYSCEF No. 66 at 11.) But plaintiff's evidence to support this contention is limited to (i) an affidavit executed by Ayal reflecting that Star Magic's principal place of business is in New York (NYSCEF No. 46); and (ii) an undated screenshot of Ayal's LinkedIn profile listing his location as "New York City Metropolitan Area" (NYSCEF No. 47). These documents are insufficient to show for purposes of CPLR 302 (a) (1) that plaintiff's claims against Ayal arise from business that he personally transacted in New York.
To the extent that plaintiff is relying on Ayal's having retained White & Williams attorneys to represent Star Magic in a suit in New York (see NYSCEF No. 66 at 11), this court remains unpersuaded that this conduct qualifies as transacting business in New York for CPLR 302 (a) (1) purposes under the standard set out in Fischbarg v Doucet (9 N.Y.3d 375, 380-384 [2007]).
Accordingly, it is
ORDERED that the branch of plaintiff's motion seeking default judgment against defendant Star Magic, Inc. is granted, and plaintiff is awarded judgment against Star Magic, Inc., for $93,000, with interest at the statutory rate running from March 18, 2021, plus costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff's claims against defendant Shlomo Ayal are severed and shall continue; and it is further
ORDERED that the branch of plaintiff's motion seeking default judgment against defendant Ayal is denied; and it is further
ORDERED that if plaintiff does not bring a renewed default-judgment motion against Ayal within 30 days of entry of this order, supported by satisfactory evidence that this court may exercise personal jurisdiction over Ayal, the action will be dismissed as against him; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on Ayal by e-filing; on Star Magic by certified mail, return receipt requested, directed to its last-known address; and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.