JP Morgan Chase Bank, N.A. v H&B Design, Inc.

[*1] JP Morgan Chase Bank, N.A. v H&B Design, Inc. 2005 NY Slip Op 51967(U) [10 Misc 3d 1055(A)] Decided on November 9, 2005 Supreme Court, Nassau County Winslow, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 9, 2005
Supreme Court, Nassau County

JP Morgan Chase Bank, N.A., Plaintiff,

against

H&B Design, Inc. HELEN BENHAMOU, Defendants.



1934/05

F. Dana Winslow, J.

In this action to collect the unpaid balance on a business line of credit, defendants H&B DESIGN, INC. (the "Corporation") and HELEN BENHAMOU ("Benhamou") move pursuant to CPLR §5015(a)(1) to vacate the default judgment entered in the Office of the Clerk of the County of Nassau on April 14, 2005 (the "Default Judgment").

Defendants claim that to have a reasonable excuse for failing to appear in that they were never served with the Summons and Complaint in this action. They also claim to have a meritorious defense. In her Affidavit dated June 20, 2005 ("Benhamou Affidavit"), Benhamou states that the Corporation has paid a portion of the monetary damages set forth in the Complaint. She also states that she never executed a personal guaranty of the corporate debt. The Court shall consider the proffered grounds for relief in sequence, as they apply to each defendant.

The Corporation

Although the Corporation does not specifically seek relief pursuant to CPLR §5015(a)(4), Benhamou's sworn statement that neither she nor the Corporation were properly served raises the question of whether or not the Court had jurisdiction to render the Default Judgment in the first instance. A default judgment rendered without personal jurisdiction over the defendant is a nullity and must be unconditionally vacated. Citibank, N.A. v. Keller, 133 [*2]AD2d 63. In such circumstances, the defendant need not demonstrate a meritorious defense. Steele v. Hempstead Pub Taxi, 305 AD2d 401. The issue of jurisdiction must be determined before the Court may consider the discretionary ground for vacatur pursuant to CPLR §5015(a)(1), namely, excusable default. Citibank, 133 AD2d 63.

Plaintiff attaches an Affidavit of Service, sworn to on February 17, 2005, attesting to service upon the Secretary of State pursuant to Business Corporation Law §306. This constitutes prima facie proof of proper service upon the Corporation. General Motors Acceptance Corp. v. Grade A Auto Body, Inc., 21 AD3d 447; 96 Pierrepont, LLC v. Mauro, 304 AD2d 631; Simmons First Nat'l Bank v. Mandracchia, 248 AD2d 375. Conclusory denials of service are insufficient to raise an issue of fact. Id. The Court concludes that it had jurisdiction over the Corporation when it rendered the Default Judgment.

Notwithstanding the foregoing, the Court has discretion to vacate the judgment pursuant to CPLR §5015(a)(1) if the Corporation demonstrates a reasonable excuse for its delay in appearing and answering the complaint and a meritorious defense to the action. Eugene Di Lorenzo, Inc. v. A.C. Dutton Lumber Co., Inc., 67 NY2d 138. Where a corporate defendant has been served by some means other than personal delivery to the corporation, it may also obtain relief pursuant to CPLR §317. In such circumstances, there need be no showing of a reasonable excuse for its delay in appearing or answering. Id. Under either section, however, a meritorious defense is required. See General Motors Acceptance Corp., 21 AD3d 447.

In this case, the Corporation has failed to show that it has a meritorious defense. It does not deny the existence of a debt to plaintiff. It merely states, "upon information and belief," that it has paid a portion of the outstanding balance, and that it is "in the process" of obtaining copies of cancelled checks substantiating this claim. Benhamou Affidavit ¶¶ 11,12. This is so clearly insufficient that it borders on frivolous, particularly in view of the fact that the Corporation was the movant herein and was required to obtain the necessary proof before filing the motion. Accordingly, the Court finds no basis to vacate the Default Judgment as against the Corporation.

Benhamou

In considering the question of jurisdiction, the Court refers to the Affidavit of Service, sworn to on March 4, 2005 (the "Affidavit"), attesting to service upon Benhamou pursuant to CPLR §308(4). According to the Affidavit, the Summons and Complaint were affixed to the door at the specified address after three attempts at personal service, on three different dates, including the date of affixation. The Affidavit form used by the process server states that the premises was the "recipient's actual place of business - dwelling house - usual place of abode - within the state," but the process server never made the designation called for by the form. Instead, he made a notation below indicating that the premises was defendant's "last known address." The Affidavit form also states that service was made at such premises after "having verified recipient's residence," but the Affidavit does not identify the person to whom the process [*3]server spoke, if anyone.

CPLR §308(4) provides that, where service cannot be made pursuant to CPLR §308(1) or (2) "with due diligence," the summons and complaint may be affixed to the door of either "the actual place of business, dwelling place or usual place of abode" of the defendant, followed by a subsequent mailing. Although an affidavit of service is generally presumptive of proper service, and a conclusory denial of service will not suffice to raise an issue of fact, the Court finds that plaintiff is not entitled to the presumption in the first instance if the affidavit of service is deficient on its face or contains facts which call into question the validity of the service. See CSC Holdings, Inc. v. Fung, 349 F. Supp. 2d 613 (presumption of proper service "in the absence of facts to the contrary"); D'Alesandro v. Many, 137 AD2d 484; Kaszovitz v. Weiszman,110 AD2d 117.

In this case, the Affidavit, on its face, raises two issues regarding proper service: (1) did the prior attempts at personal service constitute "due diligence"; and (2) was the summons affixed at the proper address?

The due diligence requirement must be strictly observed, given the reduced likelihood that "nail and mail" service will actually be received. Gurevitch v. Goodman, 269 AD2d 355. Nonetheless there is no rigid rule to determine whether or not the requirement has been satisfied. See Sartor v. Utica Taxi Center, Inc., 260 F. Supp. 2d 670, quoting Barnes v. City of New York, 51 NY2d 906. Instead, the Courts generally look at the "totality of the circumstances that bear on whether the service of process at issue was reasonably calculated to give the defendant notice, with the CPLR 308(4) due diligence inquiry guided by several pertinent considerations: whether the process server (1) attempted service during various days and times before and after working hours, weekdays and weekends or holidays when defendant may be reasonably expected to be found at home, ... (2) had an opportunity to serve a person of suitable age and discretion pursuant to CPLR 308(2) and failed to do so, ... (3) made adequate inquiry, upon receiving no response to reasonable efforts to gain access to defendant's residence, as to defendant's whereabouts, habits or schedule of times at home, or place of business, ... (4) made an effort to serve at defendant's workplace where the location of employment was readily apparent." Id. at 676 (citations omitted). See also Hanover New England v. MacDougall, 202 AD2d 724. The fourth consideration has been afforded particular weight in the Second Department, some cases holding that three attempts to effect personal service at the defendant's residence were not sufficient where there was no showing that the process server attempted to ascertain the defendant's place of business or to serve the papers there. See, e.g., Gurevitch, 269 AD2d 355; Pizzolo v. Monaco, 186 AD2d 727.

Here, the process server attempted personal service three times, on three different weekdays: Wednesday, 2/16/05 at 7:48 a.m.; Tuesday, 2/22/05 at 7:13 p.m.; and Monday, 2/28/05 at 9:08 a.m., the last being the date and time that the papers were affixed to the door. The Court finds this insufficient to satisfy the diligence requirement of CPLR §308(4). It is not clear that the attempts were made at a time when Benhamou could reasonably be expected to be [*4]home. At least two attempts were made during normal working hours or at a time when Benhamou could reasonably be expected to be in transit to or from work. See Earle v. Valente, 302 AD2d 353; Annis v. Long, 298 AD2d 340. Further, the Affidavit does not show that the process server ever spoke to anyone at the address in question (an apartment building), to ascertain Benhamou's normal working hours or her place of business. In fact, Benhamou's place of business may have been readily apparent to plaintiff, insofar as Benhamou was the owner of the Corporation, and the Corporation's address was known to plaintiff. The Affidavit shows no attempt to serve her there. See Pizzolo, 186 AD2d 727.

The Court does not, however, rest its determination herein solely upon the apparent lack of diligence. Equally troubling to the Court is the process server's notation that the papers were affixed at Benhamou's "last known address." The Affidavit shows no attempt to ascertain whether this address was defendant's actual dwelling place or usual place of abode. The process server apparently did not speak to any resident or manager/employee of the building to find out if Benhamou resided there at the time. It is well settled that purported service by affixation to the door of defendant's last known residence, as opposed to defendant's dwelling place, usual place of abode or actual place of business, is ineffective, whether or not defendant received notice of the suit. Feinstein v. Bergner, 48 NY2d 234.

The Court notes that, although Benhamou denies receipt of process, she never denies that this address was, in fact, her residence at the time of service. Nonetheless, she is not obligated to rebut a presumption of valid service when the presumption does not arise in the first instance. Here, the Affidavit, on its face, reveals more than one significant defect in service that, in this Court's view, undermines the presumption to the point of extinction.

The Court concludes that it never acquired jurisdiction over Benhamou, and, accordingly, that Benhamou is entitled to vacatur of the Default Judgment as against her.

Although the Court is not required to reach the question of a meritorious defense, the Court notes, ironically, that the proffered defense appears frivolous, if not sanctionable. Benhamou's claim that she never guarantied the loan is belied by the loan documents themselves. Nonetheless, the Court's first determination, that it lacks jurisdiction over Benhamou, renders it powerless to make any further determination on the merits.

Conclusion

Based upon the foregoing, it is

ORDERED, that defendants motion to vacate the Default Judgment is denied in part and granted in part as follows:

(1) With respect to the Corporation, the motion is denied. The Default Judgment remains in full force and effect as against the Corporation. [*5]

(2) With respect to Benhamou, the motion is granted. The Default Judgment is vacated as against Benhamou.

This constitutes the Order of the Court. Benhamou shall serve a copy of this Order upon plaintiff, with Notice of Entry, forthwith upon receipt from any source.

ENTER:

Dated: November 9, 2005 ________________________________

J.S.C.