FIA Card Servs., N.A. v Morgan

[*1] FIA Card Servs., N.A. v Morgan 2009 NY Slip Op 52336(U) [25 Misc 3d 1229(A)] Decided on November 17, 2009 Nassau Dist Ct, First District Hirsh, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 17, 2009
Nassau Dist Ct, First District

FIA Card Services, N.A. f/k/a MBNA America Bank, N.A., Petitioner(s)

against

Edward C. Morgan, Respondent(s)



43580/08



Mann Bracken for Petitioner

no appearance for the defendant

Fred J. Hirsh, J.

Petitioner moves to renew and reargue from the order of this Court dated August 4, 2009, that stayed all proceedings in this action pending the determination of an action brought by the Minnesota Attorney General against National Arbitration Forum ("NAF") and pending the determination of an action brought by the New York Attorney General, Matter of Pfau v. Forster & Garbus, et. al., Supreme Court, Erie County, Index No. 8236/09 ("Pfau Action").

BACKGROUND

MBNA American Bank, N.A. issued a credit card to Edward C. Morgan ("Morgan"). Morgan used the credit card and defaulted in payment. After issuing a credit card to Morgan, MBNA changed its name to FIA Card Services, N.A. ("FIA").

The credit card agreement provided that any disputes between the parties arising out of the agreement or Morgan's use of the card would be resolved through arbitration before NAF.

The matter proceeded to arbitration before NAF. On December 4, 2007, Daniel P. Lund, Esq. issued an arbitration award in favor of FIA in the sum of $11,291.44.

Morgan did not pay the award.

On December 4, 2008, FIA commenced a special proceeding to confirm the arbitrator's award. On May 1, 2009, this Court issued an order confirming the award and directing the clerk to enter of a judgment in favor of FIA and against Morgan in the sum of $11,291.44 together with costs and disbursements. FIA did not enter a judgment in accordance with the order.

Rather than enter a judgment, FIA moved for an order pursuant to CPLR 306-b extending its time to serve Morgan with an amended notice of petition and petition.

By order dated August 4, 2009, this Court stayed all proceedings in this action other than application made by Morgan to vacate his default pending the resolution of an action brought by the Minnesota Attorney General against NAF and pending the resolution of the Pfau Action.

In the Pfau Action, Ann Pfau, as Chief Administrative Judge of the New York Unified Court System sued numerous attorneys and law firms involved in debt collection including the attorneys for the petitioner in this action seeking, inter alia, to prevent the entry of default judgments in actions where service was made by American Legal Process ("ALP") and to vacate default judgments entered on cases where service had been made by process servers from ALP unless the party seeking to enforce the judgment can establish without reference to the affidavit [*2]of service filed by ALP that service was properly effected pursuant to CPLR Article 3.[FN1]

This Court's May 1, 2009 order confirming the arbitration award and directing the entry of judgment was granted on default. Service of the notice of petition and petition in this action was made upon Morgan pursuant to CPLR 308(4) by an ALP process server.

The action brought by the Minnesota Attorney General against NAF has been resolved. In the resolution of this action, NAF agreed to the entry of a consent judgment that it would no longer conduct consumer credit arbitrations.

FIA now moves to renew and reargue from this Court's August 4, 2009 order that stayed all proceedings in this action pending resolution of the Minnesota Attorney General's action against NAF and the Pfau Action. FIA asserts since the action brought by the Minnesota Attorney General against NAF has been resolved, there are new facts. Based upon these new facts, the court should reconsider its prior decision to stay all proceedings in this action and upon reconsideration lift the stay and grant petitioner an extension of time to serve an amended notice of petition and petition.

DISCUSSION

A. Reargument

A motion to reargue shall be so designated, shall be based upon matters of law or fact the court overlooked or misapprehended and shall be made within thirty days of service of a copy of the order determining the prior motion. CPLR 2221(d).

A motion to reargue is addressed to the discretion of the court and may be granted upon a showing the court overlooked relevant facts or misapplied or misapprehended the applicable law or for some reason improperly decided the prior motion. Singleton v. Lenox Hill Hosp., 61 AD3d 956 (2nd Dept. 2009); and Mazzei v. Liccardi, 47 AD3d 774 (2nd Dept. 2008).

A motion to reargue is based solely upon the papers submitted on the prior motion. The court may not consider and the party seeking reargument may not submit new facts. James v. Nestor, 120 AD2d 442 (1st Dept. 1986); and Philips v. Village of Oriskany, 57 AD2d 110 (4th Dept. 1997).

A motion to reargue is not a means by which the unsuccessful party can obtain a second opportunity to argue issues previously decided or to make new or different arguments relating to the issues decided in the prior motion.Gellert & Rodner v. Gem Community Mgt., Inc., 20 AD3d 388 (2nd Dept. 2005); and McGill v. Goldman, 261 AD2d 593 (2nd Dept. 1993).

The motion before the court is not truly a motion to reargue. This Court never addressed the relief FIA sought in the prior motion which was an extension of time to serve an amended notice of petition and petition.

FIA does not indicate what facts the court overlooked or what law the court misapprehended in ordering a stay of all proceedings pending the resolution of the Minnesota Attorney General's action against NAF and the Pfau Action.

The resolution of the Minnesota Attorney General's action against NAF is a new fact. [*3]New facts may not be the basis for reargument.

The allegation made by the Minnesota Attorney General in the complaint in the action it brought against NAF raised serious questions about the impartiality of NAF as a forum in which to arbitrate consumer credit disputes.[FN2] The partiality of the arbitrator is a grounds for vacating an arbitration award under the Federal Arbitration Act, 9 U.S.C. §10(a)(2), and CPLR 7511(b)(1)(ii).

The Pfau Action raises questions about whether this court should permit FIA to enforce a default judgment which may ultimately be vacated. Pfau Action seeks to vacate all default judgments entered in cases in which service was made by ALP and to enjoin the entry of judgment default judgments on cases where service was made by ALP unless plaintiff or petitioner can establish through means other than the ALP affidavit of service that service was properly made. FIA has not offered any evidence establishing it will be able to prove proper service upon Morgan other than by the ALP affidavit of service.

The affidavit of service filed in this action is from ALP and indicates service was made upon Morgan pursuant to CPLR 308(4). The petition filed in the Pfau Action alleges ALP and the process servers used by ALP regularly and repeatedly filed affidavits of service indicating they had made at least three attempts to serve the defendant or respondent by other means before resorting to service pursuant to CPLR 308(4) when they had not made the requisite number of attempts. The petition further alleges ALP and the process servers it used regularly filed affidavits of service in which they averred they had confirmed the address at which the papers were affixed were the defendants or respondents actual address when they had not actually done so.[FN3]The Pfau Action and the allegations in the criminal charges filed against William Singler raise serious questions about the validity of service made by ALP, especially when service was purportedly made pursuant to CPLR 308(4).

The court may stay an action "...in a proper case, upon such terms as may be just." CPLR 2201. The court may sua sponte grant a stay. 4-2201 New York Civil Practice: CPLR ¶ 2201.01. The issuance of a stay is addressed to the sound discretion of the trial court and may be issues when the rights of a party may be subject to prejudice if a stay is not issued. Salerno v. Salerno, 154 AD2d 430 (2nd Dept. 1989); and 4-2201 New York Civil Practice ¶ 2201.05.

This Court believes it is unfair and inequitable to permit FIA to enter and attempt to [*4]enforce a judgment against Morgan that may be vacated by the Pfau Action.

FIA fails to indicate how the court abused its discretion or misapprehended the law or the facts in deciding to stay the action or denying it an extension of time in which the serve an amended notice of petition and petition. Therefore, the motion to reargue is denied.

B. Renewal

A motion to renew shall be so designated. A motion to renew shall be based upon new facts not presented to the court in connection with the prior motion that would change the court's prior determination or upon a change in the law that would change the prior determination. The party moving for renewal must provide a reasonable justification for its failure to present the new facts on the prior motion. CPLR 2221(e).

The party moving to renew must provide the court with a reasonable excuse for its failure to present the new facts on the prior motion. Kornblum v. Blank Rome Tenzer Greenblatt, 39 AD3d 482 (2nd Dept. 2007); and Kaufman v. Kunis, 14 AD3d 542 (2nd Dept. 2005). A reasonable excuse exists when the facts existed but were not known to the party when the prior motion was made. Carbajal v. Bobo Robo, Inc., 38 AD3d 820 (2nd Dept. 2007); and Johnson v. Marques, 2 AD3d 786 (2nd Dept. 2003).

FIA asserts the settlement of the Minnesota Attorney General's action against NAF are new facts which justify the court granting the defendant the relief requested.

The settlement of the Minnesota Attorney General's action is not a new fact. That fact did not exist at the time the motion for an extension of time to serve was made. Petitioner's initial motion was made on May 15, 2009. The Minnesota Attorney General's Action was not commenced until July 2009. Therefore the Minnesota Attorney General's action was not a fact that existed at the time the prior motion was made that was not known to FIA at the time it made the prior motion.

FIA offers no other new facts that would have resulted in a different determination of its prior motion. Therefore, the motion to renew is denied.

C. CPLR 306-b

A special proceeding is commenced in the District Court by filing the notice of petition and petition with the clerk of the court in the district in which the special proceeding is brought. Uniform District Court Act §400(1). Jurisdiction is acquired over the respondent in a special proceeding by serving a copy of the notice of petition and petition upon the respondent. Uniform District Court Act §400(2). Service is made in the same manner as service is made in an action brought in the Supreme Court. Uniform District Court Act §403.

A notice of petition is served in the same manner as a summons. CPLR 403(c).

A summons is served upon a natural person in the manner prescribed in CPLR 308.

CPLR 306-b requires that summons and complaint, summons with notice or notice of petition and petition to be served within 120 days of filing. If service is not made upon the defendant or respondent within 120 days of filing, the court, on motion, shall dismiss the action without prejudice as to any defendant or respondent who has not been served or may extend the time in which to make service "...upon good cause shown or in the interest of justice." CPLR 306-b.

FIA is not entitled to the extension provided for by CPLR 306-b. The extension can be granted only if service has not been made upon the defendant or respondent within 120 days of [*5]filing. In this case, FIA filed an affidavit of service averring service was made upon Morgan in a statutorily prescribed manner [CPLR 308(4)] within the statutorily prescribed time. Based upon that service, this Court issued an order dated May 1, 2009 confirming the arbitration award.

The only way FIA would be able to obtain an extension of time in which to serve Morgan would be if FIA acknowledged service was not properly made upon Morgan and consents to the vacatur of this Court's May 1, 2009 order. FIA refuses to acknowledge that service was not properly made upon Morgan.

CPLR 306-b was amended by Chapter 476 of the Laws of 1997. This amendment granted the court authority to extend plaintiff or petitioner's time to serve a defendant or respondent if service could not be made within 120 days of the filing of the summons and complaint, summons with notice or notice of petition and petition. The legislative purpose of this provision is to permit the court to extend the time in which to make service if the plaintiff or petitioner has been unable to effectuate service within 120 days of commencement despite reasonably diligent efforts to make service. See, NY Bill Jacket, 1997 S.B. 4553, Ch. 476.

A party will be granted an extension of time in which to serve based upon good cause shown if plaintiff or petitioner establishes it has made a reasonably diligent effort to serve the defendant but has been unable to do so. Leader v. Maroney, Ponzini & Spencer, 97 NY2d 95 (2001); and Bumpus v. New York City Transit Auth., 66 AD3d 26 (2nd Dept. 2009).

The affidavit of service filed with this Court establishes the respondent was purportedly served pursuant to CPLR 308(4) within 10 days of the filing of the notice of petition. The affidavit of service avers the affixing was done on December 11, 2008 after three attempts were made to serve Morgan on different days at different time. The mailing was done on December 12, 2008. The affixing and mailing were done at the same address which is stated to be Morgan's residence.

CPLR 306-b does not permit the court to extend a party's time to make service where the party has filed an affidavit of service indicating service was timely made because the plaintiff or petitioner now has reason to believe service was not

properly made.

In determining whether a party's time to serve may extended in the interest of justice, the court should consider whether the presence or absence of diligence in attempting to make timely service, the expiration of the statute of limitations, the merit of the action, the length of the delay in making service, the promptness of the request for an extension of time and prejudice to the defendant. Id; and Mead v. Singleman, 24 AD3d 1142 (3rd Dept. 2005). FIA has failed to establish the existence of any of the relevant factors.

A party has one year from the issuance of the award to move to confirm the award. 9 U.S.C. §9; and CPLR 7510. The arbitrator's award in this case was issued on December 4, 2007 and was mailed to the parties on December 5, 2007. This special proceeding was commenced on the last day FIA could have commenced a special proceeding to confirm the award. If this action is dismissed for failure to make proper service, the action would be time barred and could not be recommenced. CPLR 205(a). Under these circumstance, it would be an abuse of discretion to extend FIA's time to serve Morgan in the interest of justice.

FIA has moved for the improper relief. This Court issued an order confirming the arbitration award issued against Morgan. FIA could have entered a judgment on that order but [*6]did not. The proper relief would be to move to vacate the stay and enter judgment on this Court's May 1, 2009 order.

Under these circumstances FIA's motion to extend its time to serve an amended notice of petition and petition on respondent is denied. Petitioner's motion to reargue from this Court's order of August 4, 2009 is denied. Petitioner's motion to renew from this Court's order of August 4, 2009 is denied. Enforcement of this Court' order dated

May 1, 2009 is stayed pending the resolution of the Pfau Action.

This constitutes the decision and order of this Court.

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge

Dated: November 17, 2009

cc:

Mann Bracken, LLP

Edward C. Morgan Footnotes

Footnote 1:In April 2009, William Singler, the owner of American Legal Process, was arrested on charges of fraud and other felonies relating to improper service of process primarily in debt collection matters. The indictment alleges process servers used by American Legal Process routinely and knowingly prepared false affidavits of service.

Footnote 2:The Minnesota Attorney General alleged NAF had significant financial ties to the debt collection industry. More specifically, the complaint filed by the Minnesota Attorney General alleged a majority of the consumer credit arbitrations filed with NAF were filed by law firms that were linked to NAF through ties to a New York hedge fund. This action was settled by NAF agreeing that it would no longer conduct consumer credit arbitrations as of July 24, 2009. New York State Bar Assoc. Journal, Oct. 2009. Vol.81 No.8 Arbitration p.36-38.

Footnote 3:The petition in the Pfau Action alleges the process server who served Morgan in this action filed affidavits of service in various courts indicating he was at two or more different locations at the same time 125 times and affidavits of service indicating he was at 3 or more different locations at the same time 9 times.