MJ Duke Solutions LTD. v Freyja Films, LLC

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MJ Duke Solutions LTD. v Freyja Films, LLC 2014 NY Slip Op 33456(U) February 6, 2014 Supreme Court, New York County Docket Number: 652972/2013 Judge: Eileen A. Rakower Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 15 -------------------------------~--------------------------~-------)( MJ DUKE SOLUTIONS LTD., t/a MICHAEL DUKE PRODUCTIONS Index No. 652972/2013 Plaintiff, DECISION and ORDER -v- Mot. Seq. 001 FREYJA FILMS, LL.C and BETH L. BAUM, a/k/a BETH LAUREN Defendants. ------------------------------------------------------------------)( HON. EILEEN A. RAKOWER, J.S.C. This is an action for breach of contract and unjust enrichment based on an independent film producer's alleged failure to repay certain loans allegedly advanced to it in connectipn with the production and financing of a film. Plaintiff MJ. Duke Solutions, Ltd. ("MJ Duke" or "Plaintiff') clai_µis to h.ave advanced seven loans to defendants .~reyja Film_s, LLC ("Freyja Films")-and Beth L. Baum a/k/a Beth Lauren ("Baum") (collectively, "Defendants") during the period between April 14, 2010 and November, 2011, in the total principal amount of $261,306. 72. Plaintiff claims to have demanded repayment of the subject loans, that Defendants faile~ to repay Plaintiff, and that the full amount of $261,306. 72, with interest from November 30, 2011, rema~ns due and owing to Plaintiff. Plaintiff commenced the instant action on August 23, 20.13, by summons and complaint. Plaintiff now moves.for an order, pursuant to CPLR § 32 l 5(b), directing the entry of~udgment in favor of Plaintiff and against Defendaµts in the amount of $261,306.72 with interest from November 30, 2011. In support, Plaintiff,submits the attorney affirmation of Arthur J. Techburg; a copy of a statement of account.totaling $261,306.72; a copy of Plaintiffs summons and verified complaint; the affidavit of service upon Freyja Films via the Secretary r, 1 [* 2] of State, dated August 28, 2013; and, the affidavit of service upon individual defendant Baum, dated September 9, 2013; and the affidavit of additional service upon Defendants via first-class mail pursuant to CPLR § 3215(g). Defendants oppose. Defendants cross-move for an Order, pursuant to CPLR §§ 321 l(a)(l) and (a)(7), dismissing Plaintiffs complaint; or, alternatively, pursuant to CPLR § 3012(d), compelling Plaintiffs acceptance of a late answer. In support, Defendants submit the attorney affirmation of Robert R. Viduch. Annexed thereto is a copy of Defendants' verified answer in the proposed form. Defendants further submit the affidavit of Baum; a copy of a promissory note (the "Promissory Note"), and accompanying transmittal letter, in the principal amount of $100,000.00, dated May 18, 2010. Plaintiff opposes Defendants' cross-motion. CPLR § 3215 provides, in relevant part: "On any application for judgment by default, the applicant shall file proof ... of the facts constituting the claim, the default and the amount due by affidavit made by the party." CPLR § 3215(f) permits a party to use a verified complaint as the "affidavit of facts constituting the claim." (CPLR § 3215[t]). The standard of proof on an application for judgment by default is not stringent, "amounting only to some firsthand confirmation of the facts". (Peffer v. Ma/peso, 210 A.D.2d 60, 61 [1st Dep't 1994]). Thus, a complaint that is verified by an attorney may be sufficient to support the entry of a default judgment, so long as the attorney has first-hand knowledge of the facts constituting the claim. (see Joosten v. Gale, 129 A.D.2d 531, 534 [1st Dep't 1987] ["A complaint verified by an attorney, although permissible under CPLR 3020 (d) (3) where, as here, the client is not in the county where the attorney maintains his office, is insufficient for purposes of CPLR 3215 (e) when the attorney lacks personal knowledge of the facts constituting the claim."] [emphasis added]). Here, Plaintiff submits a complaint verified by counsel as proof of the facts constituting the claim. Insofar as the verification states that counsel has personal knowledge of the facts alleged, Plaintiffs verified complaint provides sufficient "first-hand confirmation" of the facts constituting the claim to support the entry of a default judgment pursuant to CPLR § 3215. Turning now to Defendants' cross-motion, "the court may extend the time to appear or plead, or compel the acceptance of a pleading untimely served, upon such 2 [* 3] terms as may be just and upon-a showing of reasonable excuse for delay or.default." (CPLR § 3012[d]). Addit~o~ally, in order to be permitted to. serve an untimely answer as timely, a defendant must provide both a reasqnable excuse for the delay and demonstrate potentially m~ritorious -defenses to the action. (Pagan v. Four Thirty Realty LLC, 50 A.D. 3d 265, 266 [1st Dep't 2008]). In the affidavit of Baum, Baum avers that she is the managing member of Freyja Films. Baum avers: In or around October of 2011, I sought permanent financing fro~ a third-party who, after receiving a $14,069 fee (~om Freyja Films, apparently left the country in 2012 with that fee but without providipg any of the promised fin_ancing. As a result of the stres_s endured in connection -with that and other stress f~ctors, I ~uffered mental and emotional distress requiring me to seek and receive medical care (brief hospitalization) for a near nervous breakdown . . ,._. ,,_ Baum further avers: On or about September 24, 2013, I appeared in this lawsuit, and following a motion via or.9er to show cause, was granted additional time to respond to Plaintiffs complaint (as it was served at a former address and I had ' only receiv~~ it the day before appea~ing in court). However, Defendants ultimately did not respond to the . . complaint as I wa~ unable to locate and hire couns~l who would accept,an upfront retainer which.I and Freyj'! Films could actuallx afford. Furthermore, - I b~came unsure whether I shoµJd re&pond as I was seriously cont_emplating filing for protection under the bankruptcy l~~s apd then, after not having heard at all from Plaintiff regard5ng this lawsuit (or otherwise) for several months, came to believe that Plaintiff w~uld no longer prosecute this lawsuit. ~ ~. Baum avers that, "[o]n June 9, 2014,J learned that Plaintiff had filed a motion for a default judgment and ~it~in seven days I was finally able to locate and retain 3 [* 4] counsel (Robert R. Viducich) who did not demand an upfront retainer which I and Freyja Films could not afford." In addition, Baum's affidavit states: In May 2010, Plaintiff provided a bridge loan in the amount of$ 100,QOO and received in return a promissory note, dated May 18,2010, that Mr. Duke had required from me (herein, the "Promissory Note"). M¥ understanding, based on the Pro~issory Note's language and my prior (and subsequent) communications with Mr. Duke, was that the document's terms called for me to pay Mr. Duke $110,000 within three months of receivi!J.g the loan - that is, a return of the $100,000 loaned plus $10,000 ( 10%) interest no la,ter than August 1, 2010 (if not sooner). Attached heretp ~s Exhibit 1 is a copy of the Promissory Note (and acc,pmpanying tran~mittal letter). The Promissory Note is the on~y docum~_nt I .signed on an individual ba~is~ regarding any amo,unts provided by Plaintiff. ·. Baum also avers: I believe that the--total amount of fungs provided r~ceived from Plaintiff (for Freyja Film's benefit)Js approximately $190,000, not the_.$261,306. 72 amount' o.f alleged "loans" referenced in the .Gomplaint, or its_.~Exhibit A" - which exhibit is nota.d9cument (or listing of alleged de~ts) that Plaintiff (or -~>·_Duke) ever sent to- me, or that I had otherwise eve,r'. seen prior to being seryed with a copy of the Complaint. Here, Defendants f.ail to present a reasonable. exouse_ for entity defendant Freyj'! Films' default. Frejya ~ilms did not appear on Baum's Order to Show Cause, and failed to otherwise appear ir;i this action prior to Plaintiffs motion for default. Although an LLC is required to appear by counse~, the LLC 's inability to afford counsel does not, without. m9re, provide a reasonable· excuse for default (see generally, Abbott v. Crow;; Mill Restoration Dev., LLG, 109 A.D.3d 1097, 1099 [4th Dep't 2013] [finding that, .. "a party's failure to_ret~in counsel when provided sufficient time in whic~ to· do so does not constitute .a, reasonable excuse for a 4 [* 5] default"]). In light of Defendants' failure to present a r~~sonable excuse for Freya Films' default, the issue of a meritorious defense ne.ed not be addressed as to this defendant. Accordingly, Plaintiff is entitled to the entry of a default judgment as against Freyja Films. · · However, as far as individual defendant Baum is concerned, Baum.,. adequately ' .... ..., . . sets forth a sufficient showing of a meritorious de(ense to Plaintiffs complaint as against Baum individually. Accordingly, in light_ of Baum's initial appearance, Plaintiffs failure to demonstrate that it suffered any~ prejudice resulting from the delay, and in view of New York's gem~ral policy qf fayoring the disposition of controversies on the merits, (1farbett v. Polakoff, 250 N.Y.S.29 633, 634 [1st Dep't 1964]; Pagan v. Four Thirty Realty LLC, 50 A.D.~d 265 [1st Dep't 2008], permission to file a late answer is warranted with respect to Baum. ,,. ,.J.·. Wherefore, it is hereby ORDERED that Plaintiffs motion for def~ult judgment is granted only as against entity defendant Freyja Films; and it is further ORDERED that the clerk is directed to enter judgment in favor of Plaintiff ' ~ ·and against defendant Freyja Fi]ms in the sum of $261,306. 72, with interest at the statutory rate (from 11130/2011), as calculated by the Clerk, together with costs and disbursements, as taxed by th~_ Clerk; and it is further ORDERED that Plaintiffs motion_ for defendant Baum is denied; and it is further defaul~h1dg~ent.as against individual ORDERED that the verifl.ed answer in the proposep form will be deemed filed and served upon service of a copy of this Order with notice of entry. This constitutes the decision and order of the court. All other relief requested is denied. DATED: February 0>-; 2014 "h.a O- ~ 201s EILEEN· A. JµKOWER, J.S.C. ,HON. EILEEN A. RAKOWER , 5

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