Opinion
Index No. 156720/2020 Motion Seq. Nos. 006 007 008
01-19-2024
QUEST BUILDERS GROUP, INC., Plaintiff, v. QT SOHO REALTY LLC, SALT LIVE ENERGIZED, LTD., STERLING NATIONAL BANK, TARGET MECHANICAL INC., RYAN SOAMES ENGINEERING D.P.C., DREAMWORK CRAMIC TILE & MARBLE INC., GOODMART LLC, STATE OF NEW YORK DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY PARKING VIOLATIONS BUREAU, JOHN DOE 1 THROUGH JOHN DOE 10, JASON LUNDY, Defendants.
Unpublished Opinion
Motion Date 10/30/2023, 09/09/2022, 03/20/2023
PRESENT: HON. ARTHUR F. ENGORON, Justice
DECISION + ORDER ON MOTION
HON. ARTHUR F. ENGORON, JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 006) 208, 209, 210, 211, 212, 213, 214, 215, 216, 217, 218, 219 were read on this motion for DEFAULT JUDGMENT.
The following e-filed documents, listed by NYSCEF document number (Motion 007) 223, 224, 225, 226 were read on this motion to RESTORE PRIOR MOTION.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 230, 231, 232, 233, 234, 236, 237, 238, 239, 240, 241, 242, 243, 244, 245, 246, 247, 248, 249 were read on this motion to RESTORE PRIOR MOTION.
Upon the forgoing documents, and for the reasons stated hereinbelow, crossclaim plaintiff's motions to restore and for a default judgment are granted, and crossclaim defendant's cross-motion to compel is denied.
Background
On January' 25, 2019, crossclaim defendant Jason Lundy ("Lundy") signed a commercial lease (the "Lease"), as president of crossclaim defendant Salt Live Energized, LTD ("Salt") and as personal guarantor, with crossclaim plaintiff, QT Soho Realty LLC ("QT"), for a space located at 180 Avenue of the Americas, New York, New York (the "Premises"). NYSCEF Doc. No. 211.
Paragraph 3 of the Lease provides, inter aha, that "[i]f any mechanic's lien is filed against the demised premises ... for work claimed to have done for, or materials furnished to, [Salt] ... the same shall be discharged by [Salt] within ten days thereafter, at [Salt's] expense, by filing the bond required by law." NYSCEF Doc. No. 211.
Paragraph 19 of the Lease provides, inter alia, that if Salt defaults on any obligations under the Lease, then it would become liable to QT for airy expenditures incurred as a result, including attorney's fees. NYSCEF Doc. No. 211.
Paragraph 78 of the Lease provides that, as an inducement for QT to let the Premises to Salt, Lundy guaranteed all of Salt's obligations under the Lease. NYSCEF Doc. No. 211.
On August 4, 2020, plaintiff filed a mechanic's lien against the Premises in the amount of $373,348. NYSCEF Doc. No. 2. Salt neither discharged nor bonded the lien.
On August 24, 2020, plaintiff sued QT and defendants seeking foreclosure its mechanic's liens for work performed turning the Premises into a "salt dry therapy" spa. NYSCEF Doc. No. 212.
On August 6, 2021, QT filed a verified answer asserting six affirmative defenses, a counterclaim, and the instant crossclaim against Salt and Lundy. NYSCEF Doc. No. 213.
On September 14, 2021, after two previous attempts at his place of residence, a copy of the summons and verified answer with counterclaims were served upon Lundy, pursuant to CPLR 308(2), via a package room attendant "authorized to accept delivery on behalf of' Lundy at Lundy's home, as well as through the United States Postal Service. NYSCEF Doc. No. 214. On September 23, 2021, an additional copy was mailed to Lundy at the same address. Id.
On September 24, 2021, Salt filed a Suggestion of Bankruptcy with this Court after filing a voluntary petition in the United States Bankruptcy Court, Southern District of New York. NYSCEF Doc. No. 119.
On October 5, 2021, QT obtained a bond in the amount of $410,682.80, discharging plaintiffs mechanic's lien. NYSCEF Doc. No. 216.
In a Decision and Order dated May 6, 2022, after oral argument the day before, this Court granted plaintiffs motion for summary' judgment to foreclose on its mechanic's lien; denied QT's cross-motion for summary judgment; and ordered the Clerk to enter a judgment against QT in the amount of $373,348 plus statutory interest and costs. NYSCEF Doc. No. 217.
On June 3, 2022, a Judgment against QT in the amount of $376,510.64 was filed with the New York County Clerk's Office. NYSCEF Doc. No. 218.
On July 20, 2022, pursuant to CPLR 3215(g)(3), QT mailed a further copy of the verified answer with counterclaims to Lundy at his place of residence. NYSCEF Doc. No. 207.
On September 8, 2022, QT moved, pursuant to CPLR 3215, for a default judgment against Lundy for, inter alia, the money required to satisfy the judgment dated June 3, 2022, and attorney's fees, returnable October 11, 2022. NYSCEF Doc No. 208.
In support of its motion QT argued, inter alia, that it is entitled to a default judgment against Lundy as both he and Salt had failed to interpose an answer or otherwise appear in this action and, pursuant to the Lease, Salt was required to discharge the lien by bond and pay QT s expenses incurred in any lien-related litigation, and Lundy, in turn, had guaranteed Salt's performance. NYSCEF Doc. No. 209.
On October 11, 2022, counsel for Lundy appeared for the "limited purpose of Monitoring Matter and Notification of Auction" on his behalf. NYSCEF Doc. No. 220. In addition, Lundy's counsel filed a copy of a Notice of Bankruptcy Case Filing in the United States Bankruptcy Court, Eastern District of New York, case number 8-23-71223, which had been filed on behalf of Lundy that morning at 7:04 a.m. NYSCEF Doc. No. 222. Consequently, an automatic stay was put on the instant action.
On March 20, 2023, QT filed a motion to restore the instant action and prior motion for default judgment, with a return date of April 11,2023. NYSCEF Doc. No. 223. In support, QT filed a March 9, 2023 Order from the United States Bankruptcy Court, Eastern District of New' York, dismissing Lundy's Chapter 13 case. NYSCEF Doc. No. 225.
On April 10, 2023, Lundy's counsel filed a second Notice of Bankruptcy Case Filing in the United States Bankruptcy Court, Eastern District of New York, case number 8-23-71223, which had been filed on behalf of Lundy that afternoon at 5:31 p.m. NYSCEF Doc. No. 227.
Consequently, the instant action remained stayed.
On October 30, 2023, QT filed a second motion to restore the instant action and prior motion for a default judgment. NYSCEF Doc. No. 230. In support, QT filed an October 26, 2023 Order from the United States Bankruptcy Court, Eastern District of New' York, dismissing Lundy's Chapter 13 case. NYSCEF Doc. No. 232.
On November 28, 2023, Lundy filed an answer with five affirmative defenses and cross-moved, pursuant to CPLR 3012(d), to compel QT to accept his answer. NYSCEF Doc. No. 235, 236.
In support of his cross-motion Lundy argues, inter alia, that: when he was allegedly served at his place of residence via a package room attendant he was, in light of the COVID-19 pandemic, actually living on Fire Island, and, further, that the package room attendant was not authorized to accept service; he did not recall seeing the papers; and that he filed for bankruptcy as soon as he became aware of the instant action. NYSCEF Doc. 237, 238. Lundy also argues that he has a meritorious defense because the verified answer with counterclaims did not provide proper notice in its caption that it included a crossclaim against him, and, further, pursuant to the Lease, his personal guaranty expired on May 7, 2022, when Salt surrendered the Premises, months before QT's counterclaims were filed. Id.
In opposition QT argues, inter alia, that: Lundy's delay in answering was an inexcusable two years; Lundy's proffered reasonable excuse of not being aware he was being sued is not supported by his listing the instant action in two bankruptcy proceedings; QT would in fact be prejudiced by granting Lundy's motion as there is "no dispute in this case that the work upon which this proceeding is grounded was ordered by Lundy for his corporation, and that Lundy should be responsible for those monies"; Lundy's obligations to the underlying liens accrued well before Salt surrendered the Premises; and that, pursuant to CPLR 320(b), Lundy waived any personal jurisdiction claims. NYSCEF Doc. No. 246.
Discussion
CPLR 3012(d) gives the Court the discretion to "extend the time to appear or plead, or compel the acceptance of a pleading untimely served, upon such terms as may be just and upon a showing of reasonable excuse for delay or default." The First Department has further "adopted factors" that must "be considered and balanced in determining whether a CPLR 3012(d) ruling constitutes an abuse of discretion. Those factors include the length of the delay, the excuse offered, the extent to which the delay was willful, the possibility of prejudice to adverse parties, and the potential merits of any defense." Emigrant Bank v Rosabianca, 156 A.D.3d 468, 472-73 (1st Dept 2017) (internal citations and quotations omitted).
As Lundy has neither failed to provide a reasonable excuse for his years-long delay in answering nor has he provided a meritorious defense, his cross-motion to compel QT to accept his late answer must be denied.
Lundy waived any personal jurisdiction claims when his counsel filed a "limited notice for request of service," alleging to "not in any way waive the Defendant's right to assert any defense, including the Defendant's right to a defense based on lack of jurisdiction and improper service of process," but then failed to preserve those defenses. See JP Morgan Chase Bank v Jacobowitz, 176A.D.3d 1191, 1192-93 (2d Dept 2019) ("It is immaterial that the notice of appearance ... stated that' [t]he Defendants do not waive any jurisdictional defenses by reason of the within appearance.' This language is not a talisman to protect the defendants from their failure to take timely and appropriate action to preserve their defense of lack of personal jurisdiction.").
To obtain a default judgement, a plaintiff must submit proof of service of the summons and complaint, the facts constituting the claim, the default, and the amount due. CPLR 3215. "Given that in default proceedings the defendant has failed to appear and the plaintiff does not have the benefit of discovery, the affidavit or verified complaint need only allege enough facts to enable a court to determine that a viable cause of action exists." Woodson v Mendon Leasing Corp., 100N.Y.2d62, 70-71 (2003).
Here, QT has submitted the facts constituting the claim and the amounts due, as well as proof of service, and Lundy has defaulted by failing to answer in a timely fashion and has waived any personal jurisdiction claims. Thus, QT is entitled to a default judgment in its favor.
The Court has considered Lundy's remaining arguments and finds them to be unavailing and/or non-dispositive.
Conclusion
Therefore the motions of crossclaim plaintiff, QT Soho Realty LLC, to restore are granted; the cross-motion of crossclaim defendant Jason Lundy to compel is denied; and the motion of crossclaim plaintiff, QT Soho Realty LLC, for a default judgment against crossclaim defendant Jason Lundy is granted; and the Clerk is hereby directed to enter judgment against crossclaim defendant Jason Lundy in the amount of $376,510.64 (the amount of the June 3, 2022 Judgment in this action against crossclaim plaintiff).
It is further ordered that crossclaim plaintiffs request for the monies required to discharge the instant mechanic's liens as well as for attorneys' fees is hereby severed, and crossclaim plaintiff may obtain an inquest into said fees by presenting the Clerk with a Note of Issue with Notice of Inquest, a copy of this Decision and Order, and any necessary fees. Crossclaim plaintiff must file such Note of Issue within 30 days from the date of this Decision and Order, and crossclaim plaintiffs failure to do so timely shall result in automatic disposal of this action. Crossclaim plaintiff is further directed, within 15 days of filing the Note of Issue, to contact chambers to schedule the inquest date.