Summit Apparel, Inc. v Bally Realty Holdings, LLC

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Summit Apparel, Inc. v Bally Realty Holdings, LLC 2015 NY Slip Op 32806(U) September 4, 2015 Supreme Court, Suffolk County Docket Number: 601932/15 Judge: Thomas F. Whelan Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 601932/2015 [*FILED: SUFFOLK COUNTY CLERK 09/09/2015 02:29 PM 1] NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 09/09/2015 SHORT FORM ORDER INDEX No. 601932/15 SUPREME COURT - STATE OF NEW YORK ~~"' O~G I.A.S. PART 33 - SUFFOLK COUNTY PRESENT: Hon. THOMAS F. WHELAN Justice of the Supreme Court MOTION DATE---"'6/"""l"""/1""5_ __ SUBMITDATE 817/15 Mot. Seq.# 001 - MD Mot. Seq.# 002 - XMD CDISP Y _ _ N __x_ ---------------------------------------------------------------X SUMMIT APPAREL, INC., Plaintiff, RUSKIN MOSCOU FALTISCHEK Atty. For Plaintiff 1425 RXR Plaza Uniondale, NY 11556 -againstBALLY REALTY HOLDINGS, LLC, Defendant. MICHAEL M. YOUSSEF, ESQ. Atty. For Defendant 4012 Quentin Rd. Brooklyn, NY 11234 ---------------------------------------------------------------X Upon the following papers numbered 1 to _8_ read on this motion for default judgment and cross motion to vacate the default in answering ; Notice of Motion/Order to Show Cause and supporting papers l.:..i.._; Notice of Cross Motion and supporting papers 5-7 ; Answering papers ; Reply papers _8_;Other ; (and aftc1 hca1ing eouaocl in ouppo1t and oppoocd to the motion) it is, ORDERED that the plaintiffs motion (#001) for a default judgment on its complaint against the defendant is considered under CPLR 3215 and is denied; and it is further ORDERED that the defendant's cross motion (#002) for an order to vacate its default in answering and for leave to serve a late answer is considered under CPLR 5015 and 3012(d) and is denied. The plaintiff commenced this action to recover damages incurred by reason of the plaintiffs purported breach of a commercial lease which obligated it to make structural repairs to the building that was the subject of the plaintiffs leasehold. In addition, the plaintiff seeks a judicial declaration that it properly renewed the lease for the additional two year term provided therein. The summons [* 2] Summit Apparel, Inc. v Bally Realty Holdings, LLC Index No. 601932/15 Page 2 and complaint were served upon the defendant on March 6, 2015 by service upon the office of the Secretary of State pursuant to LLCL §303. The defendant defaulted in timely answering the summons and complaint. The plaintiff interposed its motion (#001) for a default judgment by service thereof on May 1, 2015 to the defendant at three separate locations. The return date of such motion was set as June 1, 2015. On May 13, 2015, the defendant's managing member, responded by directly contacting the plaintiffs counsel by e-mail. Therein, said managing member advised that he had just been apprised of the existence of this lawsuit and that he had appointed counsel who would be contacting the plaintiffs counsel. The original return date of the plaintiffs motion was administratively adjourned by the court to the date of June 5, 2015, and thereafter, by stipulation of counsel dated May 19, 2015, to June 19, 2015. A further adjournment of the plaintiffs motion to August 7, 2015 was granted by the court upon the stipulation of counsel dated June 16, 2015. The defendant opposes the plaintiffs motion in cross moving papers (#002) in which said defendant seeks to vacate its default and for leave to serve a late answer. The cross motion is predicated upon the discretionary vacatur grounds of the type contemplated by CPLR 5015(a)(l) and 3012, namely the movant's possession of a reasonable excuse for the default and a meritorious defense to the claims interposed against it. Specifically, the defendant claims that his counsel's engagement in settlement negotiations with the plaintiffs counsel constitute a reasonable excuse for the default and that it possesses a meritorious defense to the plaintiffs claims for damages and declaratory relief by virtue of the terms of the lease. The plaintiff opposes the cross motion by way of an affirmation of its counsel which further serves as a reply to its motion-in-chief. For the reasons stated, the cross motion by the defendant is denied. A defendant who has defaulted in answering may seek to vacate the default and appear by service of a late answer by demonstrating its possession of a reasonable excuse for the default in answering and possession of a meritorious defense to the plaintiffs claim for such relief by way of affidavit or proposed verified answer by one with knowledge of the facts asserted (see Wells Fargo Bank,N.A. v Krauss, 128 AD3d 813, 10NYS3d 257 [2d Dept 2015]; see also LibertyMutuallns. Co. v Avenue I Med., P.C., 129 AD3d 783, 11 NYS2d 623 [2d Dept 2015]). Contrary to the contentions of defense counsel, this standard governs applications made on grounds of excusable default that are interposed both prior and subsequent to a formal fixation of a default on the part of the defendants by the court pursuant to CPLR 5015(a)(l) or 3012(d) (see Kennedy v City of New York, 114AD3d 831, 980NYS2d 779 [2dDept. 2014];BankofNew YorkvEspejo, 92AD3d 707, 939 NYS2d 105 [2d Dept 2012];/ntegon Natl. Ins. Co. v Norterile, 88 AD3d 654, 930 NYS2d 260 [2d Dept 2011]; Juseinoskiv Board of Educ. of City ofNew York, 15 AD3d 353, 790 NYS2d 162 [ 2d Dept 2005); Ennis v Lema, 305 AD2d 632, 760 NYS2d 197 [2d Dept 2003); cf, Guzetti v City of New York, 32 AD3d 234, 820 NYS2d 29 [!st Dept 2006]). The defendant's claim that its counsel's engagement in settlement negotiations with the plaintiffs counsel constitutes a reasonable excuse for its default is untenable since the defendant was [* 3] Summit Apparel, Inc. v Bally Realty Holdings, LLC Index No. 601932/15 Page 3 already in default when its current counsel and only attorney of record was retained and the plaintiffs motion for a default judgment was already pending prior to that retention 1 (see Karalis v New Dimensions HR, Inc., 105 AD3d 707, 962 NYS2d 647 [2d Dept 2013)). In addition, those allegations are unsubstantiated (see Juseinoski v Board of Educ. of City of New York, 15 AD3d 353, supra). While the court acknowledges that claims ofongoing settlement negotiations between a defendant and a plaintiff to a pending action may, under certain circumstances, constitute a reasonable excuse for a default in answering (see Scarlett v McCarthy, 2 AD3d 623, 768 NYS2d 342 [2d Dept 2003)), the movant must demonstrate a good faith belief in a settlement that is supported by substantial evidence (see Armstrong Trading, Ltd. v MBM Enter., 29 AD3d 835, 815 NYS2d 689 [2d Dept 2006]) and the defendant's justifiable reliance thereon (see American Shoring, Inc. v D.C.A. Constr., Ltd., 15 AD3d 431, 789 NYS2d 722 [2d Dept 2005)). Absent such a showing, vague and unsubstantiated claims of on-going settlement negotiations, such as the ones advanced here, will not be accepted as a justification for a default (see Community Preserv. Corp. v Bridgewater Condominiums, LLC, 89 AD3d 784, 932 NYS2d 378 [2d Dept. 2011]; Mellon v Izmirligil, 88 AD3d 930, 931NYS2d667 [2d Dept 2011]; Maspeth Federal Sav. and LoanAss'n vMcGown, 77 AD3d889, 909NYS2d403[2dDept. 2010];Kouzios vDery, 57 AD3d 949, 950, 871 NYS2d 303 [2d Dept 2008]; Antoine v Bee, 26 AD3d at 306, 812 NYS2d 557 [2d Dept 2008]; Majestic Clothing Inc. v East Coast Stor., LLC, 18 AD3d 516, 518, 795 NYS2d 289 [2d Dept 2006)). The defendant's failure to advance a reasonable excuse for its default renders it unnecessary to determine whether it possesses a meritorious defense to the plaintiffs claims for relief (see TD Bank, N.A. v Spector, 114 AD3d 933, 980 NYS2d 836 [2d Dept 2014]; Diederich v Wetzel, 112 AD3d 883, 979 NYS2d 605 [2d Dept 2013)). The defendant's cross motion (#002) is thus denied. The plaintiffs motion-in-chief(#OO I) is also denied. Entitlement to a default judgment rests upon the plaintiff's submission of proof of service of the summons and complaint, proof of the facts constituting the claim and proof of the defaulting party's default in answering or appearing (see CPLR3215[t]; U.S. BankNatl.Ass'n vAlba,130AD3d 715, 11NYS2d864 [2dDept2015];HSBC Bank USA, N.A. v Alexander, 124 AD3d 838, 4 NYS2d 47 [2d Dept 2015]; Todd v Green, 122 AD3d 831, 997 NYS2d 155 [2d Dept 2014]; U.S. Bank, Natl. Ass'n v Razon, 115 AD3d 739, 981 NYS2d 571 [2d Dept 2014]; Green Tree Serv., LLCv Cary, 106 AD3d 691, 965 NYS2d 511 [2d Dept 2013]; Dupps v Betancourt, 99 AD3d 855, 855, 952 NYS2d 585 [2d Dept 2012; Triangle Prop. #2, LLC v Narang 73 AD3d 1030, 903 NYS2d 424 [2d Dept 20 I OJ). To satisfy the "facts constituting the claim" element of CPLR 32 l 5(f), the plaintiff must advance facts from which the court may discern the plaintiffs possession of one or more viable claims for relief against the defaulting defendant in an affidavit or verified complaint (see DLJ Mtge. Capital, Inc. v United 1 It appears from the record that the defendant retained its attorney of record herein subsequent to May 13, 2015 as indicated in his May 13, 2015 e-mail to plaintiff's counsel and prior to May 19, 2015, the date the first stipulation adjourning the plaintiff's motion on consent to June 16, 2015 was executed by the defendant's current counsel and plaintiff's counsel. [* 4] .. Swnmit Apparel, Inc. v Bally Realty Holdings, LLC Index No. 601932/15 Page4 Gen. Title Ins. Co., 128 AD3d 760, 9 NYS3d 335 [2d Dept 2015]; Williams v North Shore LIJ Health Sys., 119 AD3d 937, 989NYS2d 887 [2d Dept 2014];Atlantic Cas. Ins. Co. vRJNJ Serv., Inc., 89 AD3d 649, 932 NYS2d 109 [2d Dept 2011]; Church of So. India Malayalam Congregation of Greater New York v Bryant Installations, Inc., 85 AD3d 706, 925 NYS2d 131 (2d Dept 2011]; CPS Group, Inc. v Gastro Enter. Corp., 54 AD3d 800, 863 NYS2d 764 (2d Dept 2008];Resnick vLebovitz, 28 AD3d 533, 813 NYS2d 480 (2d Dept. 2006]; Beaton v Transit Fae. Corp., 14 AD3d 637, 789 NYS2d 314 [2d Dept 2005]), together with proofofthe amount due, if sufficiently certain (see CPLR 3215[f]). Where these elements are established, a motion for entry ofa default judgment should be granted (see Woodson v Mendon Leasing Corp., 100 NY2d 62, 760 NYS2d 727 [2003]; Csaszar v County of Dutchess, 95 AD3d 1009, 943 NYS2d 610 [2d Dept 2012]; King v King, 99 AD3d 672, 951NYS2d565 [2d Dept 2012]; Tarrytown Professional Ctr., Inc. v Family Medicine of Tarrytown, 93 AD3d 712, 939 NYS2d 868 (2d Dept 2012]). Where they are not, the motion should be denied (see Interboro Ins. Co. v Johnson, 123 AD3d 667, 1 NYS3d 111 [2d Dept 2014]; Peniston v Epstein, 10 AD3d 450, 780 NYS2d 916 (2d Dept 2004]). Here, the plaintiff failed to satisfy the "facts constituting the claim" element imposed by CPLR 3215(f) as a condition upon the granting of a motion for a default judgment even in the absence of opposition (see DLJ Mtge. Capital, Inc. v United Gen. Title Ins. Co., 128 AD3d 760, supra). The complaint served herein is not verified and the affirmation of plaintiff's counsel wherein he asserts factual allegations in support of the plaintiffs demands for relief without any allegations as to the source of such facts is insufficient (see Triangle Props. # 2, LLC v Narang, 73 AD3d 1030, 903 NYS2d 424 [2d Dept 201 OJ; Henriquez v Purins, 245 AD2d 337, 666 NYS2d 190 [2d Dept 1997]). In addition, counsel's affirmation failed to include allegations of fact from which the court can discern the elements of viable claims for recovery of damages by reason of the defendant's purported breach of the lease and viable claims for the declaratory relief regarding the plaintiff's purportedly valid exercise of its option to renew. The affidavit of the defendant's Vice President, which merely incorporated the insufficient allegations of facts advanced in the affirmation ofits counsel, was itselfinsufficient to demonstrate the plaintiff's possession of viable claims for recovery of damages and for the declaratory relief demanded by it in its complaint (see Beaton v Transit Fae. Corp. 14 AD3d 63 7, supra; see also Atlantic Cas. Ins. Co. v RJNJ Serv., Inc., 89 AD3d 649, supra; CPS Group, Inc. v Gastro Enter. Corp., 54 AD3d 800, supra; Henriquez v. Purins, 245 AD2d 337, supra; cf, Thattil v Mondesir. 253 AD2d 809, 677 NYS2d 513 [2d Dept 1998]). In view of the foregoing, the plaintiffs motion (#001) for a default judgment and the cross motion (#002) by the defendant for a vacatur of its default in answering and leave to serve a late answer are denied. DATED: i} ._,/ts

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