Kamco Supply Corp. v Cyber-Struct, Inc.
Annotate this CaseDecided on June 23, 2005
Supreme Court, Kings County
Kamco Supply Corp., Plaintiff,
against
Cyber-Struct, Inc., Defendant.
24438/02
Sylvia Hinds-Radix, J.
Upon the foregoing papers in this action by plaintiff, Kamco Supply Corp. (plaintiff) to recover payment for goods sold and delivered, defendant, Cyber-Struct, Inc. (defendant) moves, by order to show cause, for an order: (1) issuing a temporary restraint on plaintiff's execution on a default judgment, entered in this action as against it on August 6, 2002, (2) pursuant to CPLR 317, vacating said default judgment, and (3) allowing it to interpose an answer to plaintiff's complaint.
By written contract dated August 2, 2000, defendant agreed to act as general contractor for the construction of a three-story building with a cellar at 119-125 Boerum Place, in Brooklyn, New York. The project owner was Dean Boerum Owners, Inc. (DBO). Plaintiff was a materials subcontractor on the project. Pursuant to a written agreement containing conditions [*2]of sale and terms of payment dated June 20, 1997, plaintiff sold and delivered to defendant merchandise, consisting of lumber and building materials on March 31, 2002 at the agreed price of $25,447.16.
On June 20, 2002, plaintiff filed the summons and complaint against defendant, alleging that defendant failed to pay it the sum of $25,447.16. It sought recovery of this sum plus a 1½ percent per month late charge pursuant to the terms of sale set forth in the June 20, 1997 written agreement. Service of the summons and complaint upon defendant was made, pursuant to Business Corporation Law § 306, by service upon the Secretary of State on July 3, 2002. No answer to plaintiff's complaint was interposed by defendant. On August 6, 2002, a default judgment in the principal sum of $25,447.16, plus 1½ percent per month late charges on that sum from March 30, 2002 until the date of the entry of judgment in the amount of $1,526.80, and $485 as costs and disbursements, totaling the sum of $27,458.96, was entered against defendant in this action. Defendant, by notice of public auction sale, was notified by the Marshal of the City of New York that its property and business would be sold at public auction on April 7, 2005 in order to satisfy the default judgment. Thereafter, defendant brought the instant motion.
Defendant seeks to vacate the default judgment as against it, pursuant to CPLR 317. CPLR 317 permits a defendant to defend an action within one year after it obtains knowledge of the entry of the judgment upon the court's finding that the defendant did not personally receive notice of the summons in time to defend and that the defendant has a meritorious defense (see Nicolsi v Sleuth Sec. Sys., 247 AD2d 521, 521 [1998]).
In support of its motion, defendant alleges that it first became aware of the June 20, 1997 default judgment on February 2, 2005, when its attorney was attending a preliminary conference on a different matter involving it, and plaintiff's attorney inquired as to whether defendant intended to pay the judgment. It argues that prior to that time, it was unaware that plaintiff had commenced this action against it.
Plaintiff, however, has submitted an affidavit of service, showing that service of the summons and complaint was made on defendant, pursuant to Business Corporation Law § 306, by service on the Secretary of State on July 3, 2002, and it has also submitted a receipt for such service. Defendant does not dispute that the address on the Secretary of State's records was its current address nor does it allege that the summons and complaint which the Secretary of State was required to mail to it was returned undelivered by the post office. Rather, defendant merely speculates that "[p]erhaps the Secretary of State's office failed to mail [it] a copy of . . . plaintiff's summons and complaint due to the proximity between the date of the affidavit of service and the annual July 4th holiday."
In view of the competent evidence that service was effected upon the Secretary of State, it is presumed that the Secretary of State properly mailed a copy of the summons and complaint to defendant and defendant's mere denial of receipt, without more, does not rebut this presumption (see Engel v Lichterman, 62 NY2d 943, 944-945 [1984]; Udell v Alcamo Supply Contracting Corp., 275 AD2d 453, 453-454 [2000]; Facey v Heyward, 244 AD2d 452, 453 [1997]). Additionally, plaintiff has submitted an attorney's affirmation dated August 5, 2002, stating that a copy of the summons was mailed to defendant at his last known address on June 15, 2002 (see CPLR 3215 [g] [4]). Where, as here, the filed affidavit attests that plaintiff has complied with this additional mailing requirement, defendant's claimed non-receipt of the mail does not preclude the entry of a default judgment (see Udell, 275 AD2d at 453-454; Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3215:19B, at [*3]512). Thus, plaintiff has failed to make the required showing of a lack of notice of the action in time to defend, as is necessary to vacate the default judgment (see Metropolitan Steel Indus. v Rosenshein Hub Dev. Corp., 257 AD2d 422, 422 [1997]; Nicolsi, 247 AD2d at 421; Fleetwood Park Corp. v Jerrick Waterproofing, 203 AD2d 238, 239 [1994]; Kramer, Levin, Nessen, Kamin & Frankel v International 800 Telecom Corp., 190 AD2d 538, 538 [1993]).
In any event, defendant has failed to set forth a meritorious defense to plaintiff's claim against it (see Gibson, Dunn & Crutcher LLP v Global Nuclear Servs. & Supply Ltd., 280 AD2d 360, 362 [2001]; Peacock v Kalikow, 239 AD2d 188, 189 [1997]; Halali v Gabbay, 223 AD2d 623, 623-624 [1996]). Defendant, in support of its contention that it has a meritorious defense to this action, has submitted the affidavit of its president, Patsy Fierro. Patsy Fierro asserts that in April 2002, Phil Mendlow (Mendlow), the owner of DBO, informed her that DBO was running out of money and that it could not afford to complete the project or to pay defendant the full amount due under DBO's contract with it. She states that Mendlow, therefore, had asked her if defendant would allow a termination of the contract, and that DBO would complete the project itself. Patsy Fierro asserts that defendant agreed to this, and that effective April 25, 2002, defendant agreed to allow DBO to complete the project itself and to withdraw from the project based upon an oral promise by DBO to assume liability for all current and future outstanding claims. Patsy Fierro avers that many, if not all, of the subcontractors were aware of these discussions. Defendant thus contends that since DBO agreed to pay the balance of its schedule of payments in connection with its April 25, 2002 termination of its contract without further recourse to it, it is no longer responsible for any outstanding amounts owed to plaintiff for materials it provided to the project.
Defendant's argument must be rejected. Defendant's agreement with DBO as to who is responsible to make payments under the schedule of payments only affects defendant's rights with respect to DBO. Therefore, while defendant may have a claim as against DBO for failure to make payment to plaintiff pursuant to their oral agreement, plaintiff was not a party to that agreement and such agreement does not affect plaintiff's rights as against defendant. Paragraph 4 of the June 20, 1997 written agreement between plaintiff and defendant expressly provides that "[n]o modification of this agreement will be binding upon [the] parties unless in writing and signed by them." Consequently, since plaintiff did not agree in writing to hold DBO liable for the materials delivered rather than defendant, plaintiff could properly seek judgment as against defendant pursuant to the terms of the June 20, 1997 agreement between them (see Gibson, Dunn & Crutcher LLP, 280 AD2d at 362).
Defendant further contends that plaintiff improperly obtained the default judgment by directly applying for it in the clerk's office rather than by moving for it via a notice of motion. Such contention is without merit. CPLR 3215 (a) permits the application for a default judgment to be made to the clerk if the action is for "a sum certain or for a sum which can by computation be made certain." This "sum certain" category includes "an action to recover the agreed price of items which are shown to have been delivered" (Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3215:2, at 484). Thus, since here, the action by plaintiff was one to recover for goods sold and delivered pursuant to a written contract setting forth the agreed conditions of sale and terms and amount of payment, and it is undisputed that such goods were delivered, plaintiff could properly seek a default judgment by application to the clerk rather than by a motion.
Defendant additionally argues that plaintiff obtained its judgment fraudulently because it was in excess of the amount actually remaining owed to it. Defendant points to a fax sent by [*4]plaintiff to its former attorney dated August 1, 2002, which shows that DBO had made payments to plaintiff in the amounts of $5,000 on June 10, 2002, $5,000 on June 25, 2002, and $8,000 on August 1, 2002, for a total of $18,000. The fax reflects that the balance owed on the subject project was $8,373.63, and that balances on other jobs and late fees were also owed by defendant to plaintiff for a total sum due of $13,166.74. Defendant thus asserts that the default judgment entered on August 6, 2002 was for the amounts owed before the payments totaling $18,000 were made.
This argument by defendant, however, has been rendered moot. Plaintiff has filed a partial satisfaction of judgment, stating that the judgment of $27,447.16 has been partially paid and that only the sum of $9,447.16 remains unpaid with interest thereon from August 5, 2002. Therefore, since plaintiff's attorney alleges that he modified the judgment once he became aware that subsequent to the application for the default judgment, the payments totaling $18,000 had been made by DBO, there is no fraud with respect to the amount of the judgment. However, since, as noted above, the actual principal sum of the judgment was $25,447.16, rather than $27,447.16, with 1½ percent per month late charges from March 30, 2002 until the date of entry of judgment, in the amount of $1,526.80, plus $485 as costs and disbursements, totaling $27,458.96, the partial satisfaction of judgment should be modified to accurately reflect this and the correct balance remaining owed.
Accordingly, defendant's motion for an order, pursuant to CPLR 317, vacating plaintiff's August 6, 2002 default judgment against it, allowing it to interpose an answer to plaintiff's complaint, and restraining plaintiff's execution on its default judgment, is denied.
This constitutes the decision and order of the court.
E N T E R,
J. S. C.
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