Paragon Coffee Trading Co., L.P. v Araban Coffee Co., Inc.
Annotate this CaseDecided on November 16, 2004
Supreme Court, New York County
PARAGON COFFEE TRADING CO., L.P., Petitioner
against
ARABAN COFFEE CO., INC., Respondent
112800/03
Bruce Allen, J.
Petitioner brought a motion to confirm an arbitration award against respondent. By decision and order dated October 31, 2003, this court granted the motion to confirm on default and issued an order in judgment in petitioner's favor in the total amount of $182,771.44. Petitioner subsequently brought an action in Massachusetts to enforce the judgment against respondent. Respondent has now brought a motion to vacate the default judgment pursuant to CPLR §5015(a)(1) and a motion to dismiss proceeding for lack of personal jurisdiction pursuant to CPLR §3211(a)(8).
Where there is an absence of jurisdiction due to a failure to properly serve respondent, respondent is entitled to vacatur of judgment without having to offer a meritorious defense or a reasonable excuse for delay. Jiminez v. City of New York, 5 AD3d 182 (1st Dept 2004); European American Bank v. Legum, 248 AD2d 206 (1st Dept 1998).
Here, respondent contends that service of the motion to confirm was improper in that Joan Da Silva, the employee served by process server, was a "low-level customer service person" who was not authorized to accept service on behalf of the corporation. A corporation is properly served by delivering the summons to "an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service" pursuant to CPLR §311. The Court of Appeals has held that "reliance may be made on the corporate employees to identify the proper person to accept service. In such circumstances, if service is made in a manner which, objectively viewed, is calculated to give the corporation fair notice, the service should be sustained." Fashion Page, Ltd. v. Zurich Ins. Co., 50 NY2d 265, 428 (1980).
The affidavit of Petitioner's process server, Jason Rudy, sets forth the following: On July 14, 2003, Rudy entered respondent's offices and spoke with a woman in the reception area who identified herself as Joan DaSilva. Rudy informed her that he had papers to serve on respondent. DaSilva stated that the president would have to sign for the papers, but he was not there. Rudy left the offices without serving the papers and returned on July 18, 2003. He encountered DaSilva again. DaSilva stated that she could accept the papers and that he should [*2]leave them with her. Rudy then left the papers with her. When asked by Rudy to identify her position, however, she refused.
DaSilva's affidavit states that she has "no recollection of accepting service of any papers" and that she never told anybody that she was authorized to accept service. Such a statement, based on a lack of recollection rather than a specific denial, is insufficient to raise an issue of fact with respect to the otherwise uncontradicted allegations of the process server. See Electric Ins. Co. v. Grajower, 256 AD2d 833, 835 (3d Dept. 1998). Matter of Shaune TT, 251 AD2d 758 (3rd Dept 1998); Patti v. NYCTA, 296 AD2d 484 (1st Dept 2002); Steinman v. 319 W.48th Street Realty Corp., 276 AD2d 355 (1st Dept 2000).
Even if DaSilva did not explicitly tell the process server that she was authorized to accept service, it was reasonable for the process server to rely on an employee who represented that she could accept the legal papers and instructed the process server to leave them with her. See Arvanitas v. Bankers Trust Co., 286 AD2d 273 (1st Dept. 2001); Psathas v. Catskill Regional Off-Track Betting Corp., 173 AD2d 1070, 1071 (3d Dept. 1991). As noted, when the process server initially went to respondent's office, DaSilva told him that the president would have to sign for the papers, but he was not there. When the process server returned four days later, Da Silva told him that he could give her the papers. Given the change in what she told him on the two occasions, the reasonable inference would have been that in the interim she had been told by her superiors that she could accept the papers. I find that under the circumstances the process server made appropriate efforts to effect service on respondent in a manner that would give respondent fair notice and reasonably relied on DaSilva's apparent authority to accept the papers. Id.; Peck v. Church, 160 AD2d 854 (2d Dept. 1990); Smithtown General Hospital v. American Transit Ins. Co., 94 AD2d 767 (2d Dept. 1983). Thus, respondent was properly served and personal jurisdiction was obtained.
As noted, to vacate a default judgment pursuant to CPLR §5015(a)(1) when jurisdiction has been obtained, the moving party must first demonstrate both a reasonable excuse and a meritorious defense to the underlying action. Bridger v Donaldson, 34 AD2d 628, 629 (1st Dept. 1970). While I find that the service was proper and sufficient to obtain jurisdiction, that Ms. DaSilva may not have been actually authorized to accept service and that respondent's president may not have received the papers could nevertheless constitute a reasonable excuse for default. See Brown Cow Farm, Inc. v. Volvo of America Corp., 102 AD2d 916 (3d Dept. 1984). Respondent has not, however, proffered any excuse for the five-month delay in bringing this motion after learning of the default decision. See Robinson v. 1068 Flatbush Realty, 10 AD2d 716 (2nd Dept 2004); Cipriano vHank, 197 AD2d 295 (1st Dept 1994).
Nor has respondent met the second prong required for vacatur. To prevail, respondent must set forth sufficient facts to make out a prima facie showing of a meritorious defense. Quis v. Bolden, 298 AD2d 375 (2d Dept. 1992); Energy Sav. Products v. MiliciEnergy Sav. Products v. Milici, 168 AD2d 415 (2d Dept. 1990); Tat Sang Kwong v. Budge-Wood Laundry Service, 97 AD2d 691 (1st Dept. 1983).
Respondent claims that the actual award was not attached to the petition, and the judgment was based on a defective document that was not "signed and affirmed by the arbitrator" pursuant to CPLR §7507. However, petitioner has submitted the actual award in its papers. The award is in writing, signed, and affirmed by the three members of the arbitration panel. It sets forth the amounts assessed against respondent and clearly constitutes a final and definite award pursuant to CPLR §7511(b)(1)(iii). Had respondent raised the issue in an answer [*3]at the time, petitioner could have amended its petition as of right to cure the defect by adding the omitted papers.
The arbitration concerned a dispute over payments for sales under a contract between the parties. The contract specified that disputes were to be resolved by arbitration in accordance with the rules of a trade association,. At the time, petitioner's president, Roland W. Veit, was also serving as chairman of The Green Coffee Association. Respondent alleges that it was unaware of Mr. Veit's position with the Association at the time the contract with petitioner was entered. Respondent further alleges that it became aware of Mr. Veit's position by the time of the arbitration, and on that basis chose not to participate in the arbitration. Citing J.P. Stevens & Co. v. Rytex Corp., 34 NY2d 123, respondent contends that the failure of the arbitral body to disclose a conflict of interest requires vacatur of the award, and thus constitutes a meritorious defense.
As set out in Stevens, the failure of a seemingly neutral arbitrator to disclose a substantial relationship with one of the parties can provide grounds for vacatur. Both parties here agreed to the terms of the contract, which provides that disputes arising out of the contract are to be settled by arbitration in accordance with the Association's rules. While, respondent may not have been aware of Mr. Veit's position with the Association, the information was available to respondents had they made any inquiry of the Association. Respondent admits it became aware of Mr. Veit's chairmanship at the outset of the arbitration, but did not make any objection at the time. While respondent did not participate, it allowed the arbitration to proceed. See, 1000 Second Avenue Corp. V. The Pauline Rose Trust, 171 AD2d 429 (1st Dept 1991). Further, vacatur is not required unless the undisclosed relationship appears to be a substantial one. Matter of Weinroth, 32 NY2d 190; Elias Eleni Restaurant Corp. v. 8430 New Utrecht Corp., 282 AD2d 705 (2nd Dept 2001); Artists & Craftsman Ltd. v. Shapiro, 232 AD2d 265 (1st Dept 1996). Respondent has failed to make any showing that Mr. Veit, in his unpaid position of chairman of the Association, would have any involvement in the arbitration process in general and in the selection of arbitrators in particular. From the by-laws of the Association, as shown in petitioner's exhibits, it does not appear that the chairman has any such role. Absent any showing of a substantial apparent conflict of interest, respondent must demonstrate actual prejudice or partiality to be entitled to vacatur of the arbitration award. New York Restaurants Exch. v. Chase Manhattan Bank, N.A., 226 AD2d 312, 315 (1st Dept. 1996); Mannor Corp. v. Zanzibar Int'l , 192 AD2d 306 (1st Dept. 1993). Dasrath v. New York State, 191 AD2d 569 (2nd Dept 1993). Respondent has failed to make a prima facie case with respect to any actual prejudice or partiality.
Accordingly, respondent's motion to vacate the default motion is denied.
On cross motion, petitioner requests the default judgment be modified "to make it plain that the Judgment is entitled to res judicata and full faith and credit". Petitioner has not submitted any authority for such a motion. The decisions speak for themselves.
Accordingly the cross motion is denied.
November 16, 2004 ________________
J.S.C.
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.
