Pacific W. Bank v Waso Health Care LLC
Annotate this CaseDecided on December 14, 2022
Supreme Court, New York County
Pacific Western Bank, Plaintiff,
against
Waso Health Care LLC and WAEL KHALIFA, Defendants.
Index No. 651846/2022
Brown Rudnick LLP, New York, NY (Marcus T. Strong of counsel), for plaintiff.
No appearance for defendants.
Gerald Lebovits, J.
This is an action to collect on a commercial loan made by plaintiff, Pacific Western Bank, to defendant Waso Health Care LLC (Waso) and guaranteed by defendant Wael Khalifa. Pacific Western has alleged that Waso defaulted on the loan, and that following that default Khalifa breached his obligation to guarantee Waso's payment obligations. Pacific Western is seeking the remaining balance on the loan (approximately $330,000), plus accrued default interest and attorney fees.
Pacific Western now moves for default judgment under CPLR 3215 against both Waso and Khalifa. Neither defendant has opposed the motion. With respect to Waso, the motion is denied and the action is dismissed for lack of personal jurisdiction. With respect to Khalifa, the motion is denied without prejudice for failure to establish Khalifa's default.
[*2]DISCUSSION
I. The Branch of Pacific Western's Motion Seeking Default Judgment as to Waso
Pacific Western's affidavit of service on Waso reflects that service was made in Indiana by delivery to the Indiana Secretary of State. (See NYSCEF No. 8.) This method of service necessarily foregrounds the issue of personal jurisdiction over Waso, because CPLR 313 provides that out-of-state service on a nonresident is proper only where the party being served is subject to the personal jurisdiction of the New York courts under CPLR 301 or 302.
Neither the complaint nor the affidavit submitted on this motion by an officer of Pacific Western identify any facts that might give rise to long-arm jurisdiction over under CPLR 302. To the contrary, the complaint alleges that Pacific Western is a California bank with a principal place of business in Maryland; that Waso is an Indiana limited liability company with a principal place of business in Ohio; and that Khalifa lives in Indiana and apparently has a second residence in Florida. (NYSCEF No. 2 at ¶¶ 1-3.) Neither the loan agreement nor the guarantee give any indication that they were executed in New York or that performance of their obligations is connected to New York. (See id. at 9-15 [loan], 59 [guarantee].)
At most, the complaint alleges that personal jurisdiction over Waso exists in New York because the loan agreement "provides that any claims arising under the Loan Agreement are governed by the laws of the State of New York." (Id. at ¶ 4; see also id. at 14, § 13 [f] [choice-of-law provision].) But a "choice of law provision in an agreement, while relevant, is insufficient by itself to confer personal jurisdiction over a defendant in New York under CPLR 302 (a) (1)." (America/Intl. 1994 Venture v Mau, 146 AD3d 40, 59 [2d Dept 2016].) Nor does the presence of a choice-of-law provision, standing alone, manifest "consent to jurisdiction in New York" for purposes of CPLR 301. (Pal Pools, Inc. v Billiot Bros., Inc., 57 AD2d 891, 891 [2d Dept 1977].)
Given this facial jurisdictional defect, Pacific Western's default-judgment motion is denied as against Waso, and its claim against Waso is dismissed for lack of personal jurisdiction.
II. The Branch of Pacific Western's Motion Seeking Default Judgment as to Khalifa
The guarantee executed by Khalifa, unlike the loan agreement executed by Waso, expressly "agrees to the jurisdiction and venue of the state and federal courts in New York County, New York." (NYSCEF No. 2 at 59 [block capitalization omitted].) And Pacific Western has established that it validly served Khalifa in Florida by the leave-and-mail method under CPLR 308 (2) and CPLR 313. (See NYSCEF No. 9.) Pacific Western has not, however, shown that Khalifa was in default when Pacific Western moved for default judgment.
CPLR 320 (a) provides that a defendant served under CPLR 308 (2) must appear or respond "within thirty days after service is complete." CPLR 308 (2), in turn, provides that "service shall be complete ten days after . . . filing" of proof of service. Although Khalifa was served in mid-June 2022, the affidavit attesting to that service was not filed until August 30, [*3]2022—the same day that Pacific Western brought this default-judgment motion. (See NYSCEF No. 9 [affidavit of service]; NYSCEF No. 3 [notice of motion].) As a result, Khalifa's deadline to appear was not, as Pacific Western suggests, July 13, 2022 (see NYSCEF No. 7 at ¶ 6), but instead October 11, 2022.[FN1]
Given that Khalifa's time to appear and respond had not expired when Pacific Western filed the current motion—indeed, had not even begun to run—Pacific Western is not entitled on this motion to default judgment against him.
Accordingly, it is
ORDERED that the branch of Pacific Western's motion seeking default judgment against Waso under CPLR 3215 is denied, and the action is dismissed as against Waso (no costs); and it is further
ORDERED that the branch of Pacific Western's motion seeking default judgment against Khalifa under CPLR 3215 is denied without prejudice; and it is further
ORDERED that if Pacific Western does not bring a renewed default-judgment motion against Khalifa within 30 days of entry of this order, the action will be dismissed; and it is further
ORDERED that Pacific Western shall serve a copy of this order with notice of its entry on Waso and on Khalifa by certified mail, return receipt requested, directed to their respective last-known addresses.
12/14/2022 FootnotesFootnote 1:Because the 30th day after service was completed on Khalifa (October 9, 2022) was a Sunday, and the following day a public holiday (see General Construction Law [GCL] § 24), Khalifa's time to appear extended until the next business day, October 11, 2022. (GCL § 25-a.)
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
