LVNV Funding, LLC v Delgado
Annotate this CaseDecided on August 3, 2009
District Court of Nassau County, Second District
LVNV Funding, LLC a/o SEARS, Plaintiff(s)
against
William Delgado, Defendant(s)
29263/08
Mann Bracken, LLP 300 Canal View Blvd. Suite 330 Rochester, NY 14623, Attorney for Plaintiff
William Delgado, Pro se
Michael A. Ciaffa, J.
This motion, brought by a law firm that was recently named as a respondent in an action alleging widespread sewer-service in assigned-debt collection cases, raises an important issue respecting the Court's discretionary power to grant extensions of time for making proper service of process in such matters. While accusations of sewer-service may provide "good cause" for granting an extension of time to make proper service of process, see CPLR 306-b and UDCA 411, the interest of justice would be served by granting such a request only in cases where the applicant can make a prima facie showing that it possesses a meritorious cause of action. The Court, accordingly, denies the instant motion without prejudice to renewal upon proper proof of merit, including proof of assignment of the underlying claim that plaintiff is asserting.
In July 2009, the Chief Administrative Judge of the New York State Unified Court System, Hon. Ann Pfau, commenced a lawsuit against 35 law firms involved in debt collection lawsuits in this state. Each of these "high volume" debt collectors had hired a process serving company, American Legal Process, which had been accused by Attorney General Cuomo of falsely claiming service of process upon thousands of alleged debtors.
Justice Pfau's lawsuit specifically challenges the legitimacy of approximately 100,000 default judgments that been obtained through submission of affidavits of service that were believed to be suspect. Additionally, her lawsuit seeks an injunction preventing the entry of a default judgment in thousands of other cases where the same [*2]process serving company claims to have made service upon an alleged debtor-defendant.
By order to show cause granted July 21, 2009, the respondent law firms were
ordered to answer Judge Pfau's request for an order, inter alia, vacating and
setting aside such default judgments, and "[e]njoining the respondents from seeking to obtain a
default judgment against any individual defendant as to whom the respondent used
American Legal Process to serve the summons and complaint, or the notice of petition or order
to show cause and petition, until such time as the respondents can show evidence of service other
than an affidavit of service provided by American Legal Process." Matter of Hon. Ann Pfau
v. Forster & Garbus, et al, index no. I 2009-8236 (Sup Ct Erie Co.). The motion is scheduled
to be heard later this month.
Counsel for the plaintiff in this action, Mann Bracken LLP, is one of the law firms which have been sued by Judge Pfau. By this motion, and by similar motions filed in other cases, plaintiff's law firm seeks an order pursuant to CPLR 306-b extending plaintiff's time to properly serve the summons and complaint upon the defendant. In each case, the Court file reflects the filing of a bare-bones complaint by the alleged assignee of a credit card debt. Service of process in each case was made by a person hired by American Legal Process. Counsel for plaintiff readily admits that the process serving company it hired "is under investigation" and that it "has not confirmed defendant's receipt of the pleading." In each case, the defendant has neither answered nor appeared nor made a motion within the time allotted by law. The law firm, to its credit, acknowledged in open court that it has no intention of seeking a default judgment upon the suspect process server's affidavit of service. However, in each case, more than 120 days had elapsed from the date of the initial filing of the action. Absent new, proper service, plaintiff fears it would effectively lose its right to proceed with its action.
Without doubt, CPLR 306-b and UDCA 411 empower the Court to grant the relief requested. The cited sections provides, in pertinent part, that if service of process is not made upon a defendant within 120 days of the date of commencement, the Court may extend the time for service "upon good cause shown or in the interest of justice."
Under this flexible, liberal standard, lower courts have the discretion to grant an extension of time to make proper service even in circumstances where plaintiff's counsel have been guilty of a law office failure characterized by a mistake, confusion, or oversight. See Leader v. Maroney, Ponzini & Spencer, 97 NY2d 95, 105 (2001). In Scarabaggio v. Olympia & York Estates Co., 278 AD2d 476 (2d Dept. 2000), affd sub nom Leader v. Maroney, Ponzini & Spencer, supra, for example, our appellate courts affirmed the grant of relief under CPLR 306-b in a case where the process server "did not notify counsel that the attempts to effectuate service [within 120 days] failed" (97 NY2d at 107). Because plaintiff's counsel "promptly moved for an extension ... after discovering that [defendant] had not been served within the 120-day period" (278 AD2d at 476), and the defendant "failed to show any prejudice, particularly in light of some [*3]evidence in the record that it had actual notice of the action" (97 NY2d at 107), an extension of time was deemed justified "in the interest of justice."
However, as the Court of Appeals observed in its decision in Leader, the "interest of justice" standard requires "a careful judicial analysis of the factual setting of the case and a balancing of ... competing interests ..." Leader v. Maroney, Ponzini & Spencer, supra, 97 NY2d at 105. Relevant factors include plaintiff's diligence (or lack thereof) in making service, the merits of plaintiff's cause of action, the promptness of plaintiff's request for an extension of time, and prejudice to the defendant. Id. at 105-6. While no one factor is determinative, see Leader, supra, the Court's ultimate goal is to "bring about the type of justice which results when law is correctly applied and administered" after consideration of the interests of both the litigants and society. See Hafkin v. North Shore Univ. Hosp., 279 AD2d 86, 90 (2d Dept. 2000), affd sub nom Leader v. Maroney, Ponzini & Spencer, supra, 97 NY2d at 107-108.
In the instant case, the Court assumes, without deciding, that plaintiff and its counsel were reasonably diligent in attempting to make service upon defendant within the applicable limitations period, and that plaintiff's counsel acted promptly in bringing on this motion upon learning that its process server's affidavits of service were being questioned and challenged. In the face of that challenge, plaintiff's motion argues that defendant will not be prejudiced by an order granting plaintiff an extension of time to make proper service of process. Further, it contends that the relief requested will "assure Defendant's proper notice of the proceedings."
The second point is certainly valid. But the contention that defendant will suffer no prejudice from being served hinges on the assumption that plaintiff actually possesses a valid claim as the assignee of a pre-existing credit card debt. Based upon the papers submitted, and the Court's experience hearing such matters, it is unwilling to assume that plaintiff actually possesses a valid claim. The bare-bones complaint filed in this action is extremely sparse, and in the absence of a detailed affidavit of merit, made upon first hand knowledge, plaintiff would not be able to properly obtain judgment on its claim even on an unopposed default judgment application. See CPLR 3215(f); Henriquez v. Purins, 245 AD2d 337, 338 (2d Dept. 1997); Zelnick v. Biderman Industries USA, 242 AD2d 227, 228 (1st Dept. 1997); US Bank National Assn. v. Merino, 16 Misc 3d 209, 210-212 (Sup Ct Suffolk Co. 2007); PRS Assets v. Rodriguez, 12 Misc 3d 1172(A), 2006 NY Slip Op 51148(U) (Dist Ct Nassau Co.); 73 NY Jur. 2d, Judgments, §138. Nor could plaintiff obtain judgment, without proof of assignment and proof of the underlying debt, on an unopposed summary judgment motion. See Citibank, N.A. v. Martin, 11 Misc 3d 219, 223-226 (Civ Ct NY Co. 2005).
Accordingly, the Court concludes that an extension of time to make proper service of
process in assigned debt cases, such as this one, should be granted, in the interest of justice, only
upon proof that the plaintiff actually possesses a meritorious cause of action. As noted above, the
merits of plaintiff's claim may properly be considered in determining whether to grant relief to
the plaintiff "in the interest of [*4]justice." See Leader,
supra, 97 NY2d at 105; Slate v. Sciavone Constr. Co., 10 AD3d 1, 9 (1st Dept. 2004,
dissenting opn of Friedman, J.), revd 3 NY3d 816 (2005); see also Alexander, Practice
Commentaries to McKinney's CPLR 306-b, at C306-b:3 (the "potential merit of plaintiff's cause
of action" is a factor to be considered in granting an extension of time to serve
process in the interest of justice). Indeed, in weighing all the relevant factors, it
probably is the most important one in determining whether an extension of time to make proper
service would "bring about the type of justice which results when law is correctly applied and
administered ..." Hafkin v. North Shore Univ. Hosp., supra, 279 AD2d at 90.
Plaintiff's motion, however, makes no showing that its action has probable merit. Given the sparse evidence presented, and the assigned-debt industry's frequent pursuit of claims that lack proper documentation, see, e.g. Citibank, N.A. v. Martin, supra; Cach LLC v. Smith, index no. 29236, order dated April 29, 2009 (Dist Ct Nassau Co.); Rushmore Recoveries X, LLC v. Skolnick, 15 Misc 3d 1139(A), 2007 NY Slip Op 51041(U) (Dist Ct Nassau Co); Palisades Collection, LLC v. Gonzalez, 10 Misc 3d 1058(A) 2005 NY Slip Op 52015 (Civ Ct NY Co.), the Court seriously doubts whether plaintiff can prove its right to pursue the claim without producing a properly documented assignment and proof of the validity of the underlying claim. Unless plaintiff can produce such proof, it should not be granted a discretionary extension of time, "in the interest of justice," to make proper service of process.
Plaintiff's motion to extend its time to properly serve the defendant in this action is therefore DENIED, without prejudice to renewal upon proof, in evidentiary form, establishing the merits of plaintiff's cause of action as an alleged assignee of a claim arising from a credit card debt. Such proof, at a minimum, should include an evidentiary showing sufficient to make out a prima facie case for judgment upon the claim asserted, pursuant to the standards and criteria set forth in Citibank, N.A. v. Martin, 11 Misc 3d at 223-226.
Finally, if plaintiff chooses to renew its request for an extension of time to make proper service, it must do so by Order to Show Cause, presented to the undersigned within 30 days of the date of this Order, supported by documentary proof and affidavits establishing a meritorious cause of action. As a matter of discretion, and pursuant to the Court's inherent authority over its docket, the Court concludes that such a time limit is appropriate and warranted to insure that defendants receive timely (as well as proper) notice if plaintiff concludes that it intends to pursue judgment on the merits.
SO ORDERED:
DISTRICT COURT JUDGE
Dated: August 3, 2009
CC:Patricia A. Blair, Esq.
William Delgado, Pro se
MAC:ju
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