Opinion
Index No. 157890/2023 Motion Seq. No. 002
01-25-2024
TREASURES &GEMS, LTD., DAVID M. REPETTO AS ADMINISTRATOR CTA, STUART REISER AS ADMINISTRATOR CTA Plaintiffs, v. MICHAEL CRANE, Defendant.
Unpublished Opinion
MOTION DATE 12/06/2023
DECISION + ORDER ON MOTION
DAKOTA D. RAMSEUR, JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 002) 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 74, 75, 76 were read on this motion to/for MODIFY ORDER/JUDGMENT.
Plaintiffs, Treasures &Gems, LTD. (Gems), Crane Enterprises, LLC., David M. Repetto, as Administrator C.T.A of the Estate of Rhoda Crane, Deceased, as the Substitute Trustee of the Trusts created by Rhoda Crane under the Trust Agreement dated June 4, 1999, and Stuart Reiser as the Administrator C.T.A. of the Estate of Joyce Crane, Deceased, and as the Substitute Trustee of the Trusts created by Joyce Crane under the Trust Agreement dated June 4, 1999 (collectively, plaintiffs), commenced this action for, among others, an accounting, a constructive trust, and for unjust enrichment, against defendant, Michael Crane (defendant), stemming from, among other things, defendant's alleged unlawful collection of rent from the tenants at the property located at 250 East 90th Street, New York, New York (premises). Defendant now moves to vacate this court's August 22, 2023 decision and order, pursuant to CPLR 3012(d) for leave to file a late answer, and for an order permitting him to manage and maintain the premises, or in the alternative, to appoint a neutral third party to maintain the premises. Plaintiff cross-moves pursuant to CPLR 3215 for a default judgment against defendant as to liability. The motion and cross-motion are opposed. For the following reasons, the motion is denied, and the cross-motion is granted.
Gems is the owner of the premises, a multiple dwelling containing 8 Class A units. Plaintiffs allege that defendant falsely claimed to be the sole shareholder of Gems and an officer of Gems with respect to the management of real property owned by Gems despite no inter vivos conveyances or grants of stock ownership were ever made to him. Plaintiffs further allege that defendant asserted control over the assets, property, income, rents, and profits of Gems.
In a related action entitled In the Matter of the Estate of Rhoda Crane, Superior Court of New Jersey, Chancery Division, Bergen County, Probate Part, docket no. BER-P-029-21, plaintiff Jacqueline Crane sought, and obtained, a temporary restraining order, which in sum and substance, prohibited defendant from handling checks with respect to the premises, transferring stock and/or assets of the premise, or Gems, communicating with the tenants or vendors related to the property, required defendant to disclose financial accounts in which rent from the premises was deposited since July 2020 and the location of the approximately $2.3 million mortgage proceed, and that said funds, including any remaining mortgage proceeds, were to be turned over to counsel for plaintiffs by August 12, 2021.
Plaintiffs allege that defendant failed to comply with the temporary restraining order. Plaintiff further claim that defendant filed a bankruptcy petition on behalf of Gems on August 18, 2021, demanded and received rents from tenants at the premises, failed to provide any information or documentation regarding accounts, and refused to turn over the mortgage proceeds. Plaintiff David M. Repetto moved the Bankruptcy court to dismiss the petition, which was granted.
On September 15, 2021, the court in the New Jersey matter entered a final order on plaintiff Jacqueline Crane's order to show cause, stating in relevant part, that all temporary restraints against defendant as set forth in the August 11, 2021 temporary restraining order are converted into a preliminary injunction. Plaintiff claims that defendant has failed to comply with the final order and failed to provide plaintiffs with access to the premise and receiving rents from the tenants.
On February 4, 2022, judgment was entered in the New Jersey matter (the Judgment). The New Jersey the Superior Court ordered and adjudged that, as relevant herein, at the time of her death, "Rhoda Crane owned 64.775% [of the stock of Gems] and Joyce Crane owned 35.225% of the stock of [Gems], and there were no other ownership interests outstanding" (NYSCEF doc. no. 43 at ¶ 24). The Judgment further stated that defendant is:
"permanently restrained and enjoined from making any representation or claim that he has any authority to act on behalf of Treasures &Gems, Ltd., and is permanently restrained and enjoined from taking any action on behalf of Treasures &Gems, Ltd., including without limitation making any sale, transfer, distribution, mortgage or distribution of assets of or withdrawal of funds from Treasures &Gems, Ltd. accounts, demanding or accepting rental payments, or taking any action whatsoever regarding Treasures &Gems, Ltd"(id. at¶21).
Defendant appeared in and participated with counsel and pro se in the above probate proceedings.
Plaintiff alleges that defendant continues to exercise dominion and control over the assets, property, income, rents, and profits of Gems, while purporting to act as an officer, member, or other authorized person and, in contempt of the prior orders and Judgment.
Plaintiff commenced this action on August 8, 2023, by filing the summons and complaint. Plaintiff served the commencement papers on defendant on August 11, 2023. On August 10, 2023, plaintiff filed an order to show cause preliminarily enjoining and restraining defendant from collecting rents and profits from rental tenants of the premise and from entering into renewals or new leases for any portions of the premises, or from exercising any dominion and control over the property or assets of Gems and to turn over any rents collected form the premises. The Court signed the order to show cause on August 11, 2023. Plaintiffs served the order to show cause upon defendant at the identical address plaintiff served the summons and complaint. Pursuant to the August 23, 2023 decision and order, the Court granted the order to show cause as unopposed. Plaintiff served the August 23, 2023 decision and order upon defendant on August 28, 2023.
The Court thereafter scheduled a conference on September 26, 2023. At said conference, counsel for both plaintiff and defendant appeared. The Court filed an order stating that counsel for defendant agreed to file and serve an answer within twenty days and scheduled this matter for a preliminary conference for November 23, 2023. Defendant did not file its answer. The parties appeared at the November 28 preliminary conference, wherein the Court directed defendant move to serve a late answer within twenty days, and that plaintiffs move for appropriate relief, including a default judgement.
CPLR 3215(f) requires a movant seeking default judgment to submit the following proofs: (1) proof of service of the summons and complaint or summons with notice; (2) an affidavit of the facts constituting the claim; and (3) an affidavit showing the default in answering or appearing. "In opposing a motion for default judgment, defendants are to 'demonstrate a reasonable excuse for the default and a meritorious defense,' and to support their assertions through the submission of an affidavit" (Xiaoyong Zhang v Jong, 195 A.D.3d 435, 435 [1st Dept 2021], quoting Morrison Cohen LLP v Fink, 81 A.D.3d 467, 468 [1st Dept. 2011]; see Ng v Asquared Grp., Inc., 219 A.D.3d 1341, 1342 [2d Dept 2023] ["To defeat a facially sufficient motion for leave to enter a default judgment, a defendant must show either that there was no default or that the defendant had a reasonable excuse for the delay and a potentially meritorious defense"]).
Pursuant to CPLR 3012(d), "[u]pon the application of a party, the court may 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." In order to be permitted to serve a late answer, a defendant must demonstrate both a reasonable excuse for the delay and potentially meritorious defenses to the action (Pagan v Four Thirty Realty LLC, 50 A.D.3d 265, 266 [1st Dept 2008]).
Here, plaintiffs establish their entitlement to a default judgment against defendant. Plaintiffs timely served the summons and complaint upon defendant. Defendant does not deny receiving the summons and complaint or that service was improper, but only that he was out of the country at the time of service. However, defendant does not submit any objective proof of his claim. Instead, defendant submits his airline itinerary only demonstrating his return to New York from abroad, but not that he was traveling at the time the summons and complaint was served. In any event, defendant clearly aware of his obligations, as he was given the opportunity to answer when the parties appeared at the September 2023 conference, but inexplicably failed to do so. Plaintiffs also establish the facts underpinning their claims. Namely, the Judgment clearly states that defendant has no ownership in Gems, and thereby no ownership in the premises or legal right to collect rent from the tenants, yet defendant continues to collect rent from tenants at the premises and otherwise failed to adhere to the directives imposed by the Judgment and the prior orders. Other than his conclusory assertions, defendant fails to cite to any facts or basis to law demonstrating a reasonable excuse for failing to timely answer the complaint or a meritorious defense. Accordingly, plaintiffs' cross-motion for a default judgment against defendant is granted as to liability and defendant's motion to serve an untimely answer is denied.
Accordingly, it is hereby, ORDERED that defendants' motion to file an untimely answer is denied; and it is further
ORDERED that plaintiffs motion pursuant to CPLR 3215 for a default judgment against defendant is granted, and an inquest shall take place as to damages; and it is further
ORDERED that plaintiff shall file the note of issue for an inquest within twenty (20) days; and it is further
ORDERED that plaintiffs shall serve a copy of this decision and order upon defendant, with notice of entry, within ten (10) days of entry.
This constitutes the decision and order of the Court.