Opinion
Index No. 653468/2022
01-03-2024
RDC-S111, INC., Plaintiff, v. JTRE 28 LLC, Jack Terzi, Defendant.
Plaintiff brought this action against defendants, JTRE 28 LLC and Jack Terzi, in August 2022. Plaintiff has asserted claims for breach of contract, unjust enrichment, and an account stated, arising from services allegedly rendered in connection with a construction/development project. (NYSCEF No. 1.) Defendants did not timely appear.
Plaintiff brought this motion in June 2023, seeking a default judgment against both defendants. (NYSCEF No. 10.) While the motion was pending, defendant Terzi appeared, filed opposition papers, and cross-moved to dismiss plaintiff's claims against him under CPLR 3211 (a) (1) and (a) (8). (NYSCEF No. 20.)
In August 2023, this court issued an interim motion order, holding that the court could not resolve the motion and cross-motion on the record then before it. (See RDC-S111, Inc. v JTRE 28 LLC , 2023 NY Slip Op 50851[U], *1 [Sup Ct, NY County 2023].) In particular, this court concluded that Terzi's opposition papers had raised questions about the legal and factual underpinnings of plaintiff's claim, to which plaintiff had not attempted to provide answers. (See id. at *2-3 [describing questions].) Rather than deny the motion (and indeed potentially dismiss the action altogether) at that point, the court afforded plaintiff the opportunity to provide a supplemental submission in support of its motion. (Id. at *3.)
Plaintiff did so. (See NYSCEF Nos. 27-28.) That supplemental submission, however, does not dispel the doubts expressed in this court's interim order—particularly those concerning whether plaintiff validly served Terzi. Plaintiff's default-judgment motion is denied. Terzi's cross-motion to dismiss is granted.
Under CPLR 3215 (f), a plaintiff moving for default judgment must establish proper service on defendants, defendants’ default, and the facts constituting plaintiff's claims.
In support of its motion for default judgment, plaintiff initially submitted affidavits of service purporting to show it effected service on Terzi under CPLR 308 (2) at a residential Brooklyn address; and service on JTRE 28 LLC under CPLR 311 at the same address. (See NYSCEF No. 17.) In opposition, Terzi submitted an affidavit in which he claimed that he resides in New Jersey and not at the Brooklyn address, and that he is not familiar with JTRE 28. In turn, the court directed plaintiff to explain why it attempted to serve Terzi and JTRE 28 at the Brooklyn address, given that plaintiff, in its complaint, noted that JTRE 28 is located in Manhattan. (See NYSCEF No. 1 at 2.)
Terzi also argues that plaintiff did not provide proper proof that it satisfied the additional mailing requirement imposed by CPLR 3215 (g) (3) (i). Under that provision, plaintiff must submit an affidavit stating that an additional copy of the summons was provided to a natural defendant at least 20 days before the entry of default judgment. Plaintiff did attempt to comply with this requirement. (See NYSCEF No. 8.) But plaintiff sent the additional notice to the Brooklyn address at which Terzi contends he does not live. This argument for denying plaintiff's motion thus rises or falls with Terzi's service-based challenge to plaintiff's claims against him.
In its supplemental papers, plaintiff responds that it previously attempted to serve both Terzi and JTRE 28 at the Manhattan corporate address provided in plaintiff's complaint. (NYSCEF No. 28.) Plaintiff represents that when the process servicer attempted to enter the Manhattan premises to serve Terzi and JTRE 28, a company receptionist refused to accept service, and the doorman of the premises refused to let the process server further onto the premises to effect service. (NYSCEF Nos. 27, 28.)
Plaintiff still has not shown, though, why it then delivered process to both defendants at the Brooklyn address, rather than, for example, serving them at Terzi's New Jersey address (or, with respect to JTRE 28, serving it through the Secretary of State). Plaintiff does not otherwise show that it properly served defendants. This failure of proof alone warrants denying plaintiff's motion.
Plaintiff's supplemental submission does not satisfactorily address this court's questions about the basis for plaintiff's claims, either. As noted in this court's prior order (see RDC-S111 , 2023 NY Slip Op 50581[U], at *2), the affidavit of plaintiff's CEO and the attached letter agreement represent that plaintiff entered into a contract with JTRE 28 and Terzi that was executed by Terzi. (NYSCEF No. 18 at 3, 7-11.) But Terzi's affidavit represents that he is not associated with JTRE 28 and is not familiar with it. (NYSCEF No. 25.) And the invoices attached to plaintiff's affidavit are addressed to JTRE Holdings , not JTRE 28 LLC. Plaintiff's counsel's only explanation for these discrepancies is to speculate that Terzi "has created so many entities to shield himself from personal liability that he has forgotten them all, such as JTRE 28." (NYSCEF No. 27.) But Terzi's representation about JTRE 28 was made in an affidavit filed in an ongoing lawsuit. That is hardly the sort of circumstance in which a party would "forget" about an entity under his control. And the absence of JTRE 28 from the New York Secretary of State's business-entity database—an issue this court raised in its prior order (see RDC-S111 , 2023 NY Slip Op 50581[U], at *2 n 1)—renders plaintiff's speculation thin and unconvincing in any event.
Plaintiff's supplemental submission also does not address, let alone assuage, the doubts raised in this court's prior order about the recipient of its invoices, the address to which those invoices were assertedly sent, or the (lack of) proof that JTRE 28 received and retained those invoices without objection. (See RDC-S111 , 2023 NY Slip Op 50581[U], at *3 & n 4.)
These service- and merits-based shortcomings, although a sufficient basis to deny plaintiff's default-judgment motion, do not constitute affirmative proof either that service was defective or that no contract existed between plaintiff and defendants. The shortcomings do not, therefore, warrant dismissal at this time of plaintiff's claims.
As this court noted in its interim order, however, Terzi's cross-motion does raise such a ground: that he may not be held personally liable on the putative agreement between plaintiff and JTRE 28. (See id. at *2 n 2, citing NYSCEF No. 21 at ¶ 16.) This court noted that Terzi's argument on this point is strong, but expressly reserved decision pending plaintiff's supplemental submission. (Id. ) Plaintiff's supplemental submission does not discuss this issue. This court concludes that the letter agreement conclusively shows that Terzi is not a party to the contract and is not subject to personal liability.
The letter agreement repeatedly states that plaintiff is providing its services to, and being paid by, "Client." (See NYSCEF No. 18 at 7-11 [reproducing agreement].) The signature block of the agreement defines "Client" as "JTRE 28 LLC" (id. at 11)—not , as plaintiff's affidavit suggests (id. at 3 ¶ 5), both JTRE 28 LLC and Terzi individually. Moreover, assuming Terzi's DocuSign signature on the agreement to be authentic, that signature is given by Terzi only as a representative of JTRE 28 LLC; he does not sign again individually. (Id. at 11.) In these circumstances, Terzi may not be held individually liable on the contract between plaintiff and JTRE 28 LLC. (See Salzman Sign Co. v Beck , 10 NY2d 63, 67 [1961].) Although the absence of contractual-party-based personal liability does not, standing alone, rule out the possibility that Terzi could be held liable through JTRE 28 on a veil-piercing theory, plaintiff does not assert (or show) that veil-piercing would be warranted here. Plaintiff's claims against Terzi are therefore subject to dismissal under CPLR 3211 (a) (1).
Indeed, the signature line has a footnote, which recites that "[i]t is understood the individual signing this Agreement is a representative of the Client and has contractual authority to sign on their behalf." (NYSCEF No. 18 at 11.)
With respect to plaintiff's claims against JTRE 28, as discussed above, plaintiff's supplemental submission did not adequately respond to the concerns raised in this court's interim order. The court will give plaintiff a final opportunity to do so. Plaintiff must, therefore, provide the court with an affidavit and supporting documentation establishing, in detail, that (i) JTRE 28 LLC exists (and the form in which it exists); (ii) plaintiff entered into a contract with JTRE 28 LLC; (iii) plaintiff provided services to JTRE 28 LLC; (iv) plaintiff sent invoices for its services to JTRE 28 LLC; and (v) JTRE 28 LLC neither objected to those invoices nor paid them. Plaintiff must provide these materials (by e-filing on NYSCEF and email to [email protected] ) within 30 days of entry of this order. If plaintiff does not do so, its claims against JTRE 28 LLC will be dismissed. If plaintiff timely submits this further supplemental submission, the court will then determine how best to proceed with respect to plaintiff's claims against JTRE 28 LLC and will enter an appropriate order.
Accordingly, it is
ORDERED that the branch of plaintiff's motion seeking default judgment against Terzi is denied; and it is further
ORDERED that Terzi's cross-motion to dismiss the claims against him is granted, and the complaint is dismissed as against Terzi, with costs and disbursements awarded to Terzi as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff's claims against JTRE 28 LLC are severed and shall continue; and it is further
ORDERED that the branch of plaintiff's motion seeking default judgment against JTRE 28 LLC is denied; and it is further
ORDERED that if plaintiff does not, within 30 days of entry of this order, provide the further supplemental submission described above, plaintiff's claims against JTRE 28 LLC will be dismissed; and that if plaintiff does timely provide the required submission, the court will thereafter enter an appropriate order with respect to those claims; and it is further
ORDERED that Terzi shall serve a copy of this order with notice of its entry on all parties; and on the office of the County Clerk (in accordance with the court's e-filing protocol, which may be accessed via the court's e-filing page, https://ww2.nycourts.gov/courts/1jd/ supctmanh/E-Filing.shtml), which shall enter judgment accordingly.