Inter Credit Corp. v 888 Enters., Inc.
Annotate this CaseDecided on May 10, 2005
Civil Court of the City of New York, New York County
Inter Credit Corp., Petitioner,
against
888 Enterprises, Inc., d/b/a FUJI RESTAURANT 146 East 55th Street, Entire Building New York, New York 10022, Respondent, NIJIMA CLUBS, INC., AMERICAN SEA FA IMPORTED, INC., CHENG DE WU, CITY NAIL SALON, INC., J&J NAIL SALON, INC., YIMAY CORP., QIGONG CENTER, INC. and "XYZ" CORP., Respondent-Undertenant(s).
79327/2003
Jeffrey K. Oing, J.
In this commercial holdover proceeding, respondent tenant, 888 Enterprises, Inc., moves to dismiss this proceeding for lack of personal jurisdiction. This Court held a hearing on the issue of whether personal jurisdiction was obtained over respondent tenant.
By way of background, on August 20, 1996, petitioner and respondent entered into a commercial lease for the entire building, which consisted of four floors, located at 146 East 55th Street. Pursuant to the lease, respondent is permitted to use and occupy the first floor of the premises for a restaurant and the remainder of the premises for other retail or commercial use (P6). On March 10, 2003, petitioner served respondent with a default notice notifying it that it was in violation of certain provisions of the lease, namely with respect to its subleases with various entities. On April 11, 2003, petitioner served respondent with a 10-day notice to cure. On June 24, 2003, petitioner commenced the instant holdover proceeding.
Procedural History[*2]
The Court held a traverse on the issue of whether the notice to cure was properly served (Inter Credit Corp. v 888 Enterprises, Inc. d/b/a Fuji Restaurant, Civ Ct, NY County, September 5, 2003, Nadelson, J., Index No. 79327/03, slip op, at 1). In that proceeding, the notice to cure was sent by certified mail, return receipt requested, to the building address, in the following format:
888 Enterprise, Inc.d/b/a Fuji RestaurantAttention: Yang Zi Qiang a/k/a John Yang146 East 55th StreetNew York, NY 10022
Respondent argued that it never received the notice and that it was facially defective because it was addressed to the wrongly-named Tenant. Respondent argued that it "is not in any way related to Fuji Restaurant, that it does not operate under the assumed name of Fuji Restaurant, and that Fuji Restaurant is, in fact, a separate business entity incorporated under the name of Fuji Japanese Restaurant, Inc." (Id. at p. 2).
The Court rejected respondent's argument. The Court reasoned that "even when a party is served under a misnomer, a dismissal of the proceeding is not warranted if the intended but misnamed party is fairly notified that it is the party affected and would not be prejudiced" (Id. at p. 2). As such, the Court held that proper notice was effected in accordance with the lease, and set the matter down for trial.
Instant Proceeding
Respondent now argues that the notice of petition and petition were not properly served, and, as such, this holdover proceeding should be dismissed. Contrary to petitioner's contention, certain issues concerning service of the notice of petition and petition were not resolved by the Court in its prior decision. Accordingly, this Court held a traverse hearing to determine the validity of service of the notice of petition and petition.
RPAPL § 735[1] provides, in relevant part, that:
Service of the notice of petition and petition shall be made by personally delivering them to the respondent; or by delivering to and leaving personally with a person of suitable age and discretion who resides or is employed at the property sought to be recovered, a copy of the notice of petition and petition, if upon reasonable application admittance can be obtained and such person found who will receive it ... and in addition, within one day after such delivering to such suitable person ... by mailing to the respondent both by registered or certified mail and regular first class mail ....
The testimony of the process server, Charles Mon, and Xiao Dong [*3]Yang, an officer of Fuji Restaurant, Inc. ("Fuji"), clearly establish that the individual served, a Ken Chan, was an employee of Fuji. Thus, pursuant to section 735[1], Mr. Chan is a person employed at the property sought to be recovered.
Respondent argues that it and Fuji are two separate entities, and that service on Mr. Chan does not constitute service on it because Mr. Mon never inquired as to whether Mr. Chan was an employee of respondent (see, Ilfin Co., Inc. v Benee Indus., Inc., 114 Misc 2d 411 [Civ Ct, NY County 1982 [Saxe, J]). Stated differently, respondent's argument is that employees of another are not individuals who are of suitable discretion to receive on its behalf. While the argument is persuasive, for the reasons that follow respondent's argument is unavailing.
The question is whether Mr. Chan is a "person of suitable age and discretion" within the meaning of section 735[1] so as to constitute service upon respondent. In other words, whether under the circumstances, is it fair to say that the manner of service used is one that objectively viewed is calculated to apprise adequately and fairly respondent of an impending lawsuit (Ilfin Co., Inc. v Benee Indus., Inc., 114 Misc 2d at 413). In Ilfin, supra, the landlord effected service upon the targeted tenant by serving a cotenant. The Court in dismissing the petition held that "as a general rule, in a business setting, it would be unfair and improper to say that an employee of another tenant, not employed by the tenant on whom service is intended, would be one of suitable age and discretion" (Ilfin Co., Inc. v Benee Indus., Inc., 114 Misc 2d at 413 [emphasis in the original]). The Court reasoned that "[t]heir relationship to each other is simply too remote" (Id.).
Unlike the facts in Ilfin, supra, while respondent and Fuji appear to be two separate and distinct entities, Fuji is clearly operating in the 1st floor premises with respondent's knowledge and permission as a subtenant. In that regard, Ms. Yang's response to the question, "[d]o you have a relationship to that corporation [respondent 888 Enterprises, Inc.]", was "I have a lease for this company from 1997 to 2007" (Hearing Tr. at p. 77). These facts are virtually indistinguishable from those of Cooke Properties, Inc. v Masstor Systems Corp., NYLJ, Jan. 4, 1993, at 22, col 2 (Civ Ct, NY County, Tolub, J.). There, Justice Tolub held that service on an employee not employed by respondent was of "no concern". Justice Tolub reasoned that the relationship of the parties as sublessor and sublessee provided the basis to conclude that service on such an employee was the method best calculated to apprise respondent of the pending lawsuit.
Moreover, Ms. Yang testified that not only is she an officer of Fuji, but that she also owns a forty percent share in respondent and that she is the spouse of respondent's principal, Zi Qiang Yang (Hearing Tr. at pp. 76, 93). Mr. Yang himself [*4]testified that while he was not currently an officer of Fuji he was at one point Fuji's chairman and chief executive officer (Hearing Tr. at pp. 119-120). Indeed, Mr. Yang's testimony leaves this Court with the inescapable impression that although respondent and Fuji may be separate in the jural sense his conduct and actions gave others a different impression:
Q Did you ever meet with Mr. Berger [petitioner's principal]?
A Many times.
Q Where did you meet with him?
A At the entrance of his home. He cheated me. He wanted to sell his house to me. He cheated me. He wanted to sell the building to me. I met him twice in a coffee shop, two times. Every time he came to dine in the Fuji Japanese Restaurant. He did not pay the bill. And he kept asking for liquor.
* * *
Q You met with Mr. Berger in the restaurant?
A He came to dine and he wanted to have liquor.
(Hearing Tr. at p. 121).
Based on the totality of the testimony and evidence, this Court finds that Mr. Chan is a person of suitable age and discretion. In that regard, the legal relationship between respondent and Fuji is such that service on Mr. Chan, an employee of Fuji, was "the method best calculated to apprise respondent of the pending lawsuit". Indeed, as Justice Tolub accurately pointed out "common sense would dictate that it behooves a subtenant to notify its sublessor of a pending summary proceeding" and that "[a]fter all, the threat of eviction to the prime tenant is a threat to the undertenants right to remain in occupancy".
As to Ms. Yang's testimony that Mr. Chan did not give her any legal papers, this Court finds Ms. Yang's testimony not credible, particularly in the absence of any testimony concerning Mr. Chan's whereabouts and the failure to compel or otherwise cause Mr. Chan to appear to testify. In any event, Ms. Yang's testimony would be unavailing given that Mr. Mon credibly testified that Mr. Chan willingly accepted service of the notice of petition and petition (Hearing Tr. at p. 11 ["[Mr. Chan] said he worked there and he would give to his boss"]), and that Mr. Chan has been found to be a person of suitable age and discretion (Silverman v BPPT Enter. Corp., 144 Misc 2d 270 [Nassau Dist Ct, 2d Dist 1989]).
RPAPL § 735[1](b) sets forth the mailing requirement, which [*5]provides in relevant part:
(b) if a corporation ... as follows: at the property sought to be recovered, and if the principal office or principal place of business of such corporation ... is not located on the property sought to be recovered, and if the petitioner shall have written information of the principal office or principal place of business within the state, at the last place as to which petitioner has such information, or if the petitioner shall have no such information but shall have written information of any office or place of business within the state, to any such place as to which the petitioner has such information. Allegations as to such information as may affect the mailing address shall be set forth either in the petition, or in a separate affidavit and filed as part of the proof of service.
Mr. Mon testified that the day after he served the notice of petition and petition he performed the necessary mailings (P4A-4E). One such mailing was to respondent "d/b/a Fuji Restaurant" at 146 East 55th Street. The Court has previously held that the mailing of the notice to cure to this address and to respondent with a "d/b/a" designation to be proper. As such, given that that finding is law of the case, this Court finds that the mailing of the notice of petition and petition in the same form to the same address to be proper, and that petitioner has complied with the mailing requirement of section 735[1](b).
Accordingly, the traverse is dismissed. Respondent's motion to dismiss the proceeding for lack of personal jurisdiction is denied. This matter is restored to the Part 52 calendar for trial. All parties are directed to appear ready for trial on June 6, 2005 in Room 1166 at 9:30 a.m. Petitioner shall notify respondent forthwith. The Clerk is respectfully directed to restore this matter to the Part 52 calendar.
This memorandum opinion constitutes the decision and order of the Court. The respective exhibits of the parties have been mailed to the parties along with a copy of this decision and order.
Dated:
____________________________
HON. JEFFREY K. OING, C.C.J.
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