Commissioners of the State Ins. Fund v Deviled Foods LLC

[*1] Commissioners of the State Ins. Fund v Deviled Foods LLC 2019 NY Slip Op 29340 Decided on November 7, 2019 Civil Court Of The City Of New York, New York County Baron, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on November 7, 2019
Civil Court of the City of New York, New York County

Commissioners of the State Insurance Fund, Plaintiff,

against

Deviled Foods LLC D/B/A DIABLO ROYALE, Defendant.



023558/18



ATTORNEY FOR PLAINTIFF:

Maidenbaum & Associates P.L.L.C.

By Eric J. Canals

One Broadcast Plaza, Suite 218

Merrick, NY 11566

(516) 223-8553

ATTORNEY FOR DEFENDANT :

Gabriel Fischbarg, Esq.

230 Park Avenue, Suite 900

New York, New York 10169

(917) 514-6261
Elena Baron, J.

Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion

Papers Numbered

Defendant's Notice of Motion with Supporting Affidavit,

and Exhibits A-E 1

Affirmation in Opposition to Defendant's Motion

with Exhibits A-E 2

Reply Affidavit with Exhibit A and Memorandum 3

Upon the foregoing cited papers, the Decision/Order on this motion is as follows:

Defendant moves pursuant to CPLR 317 to vacate a default judgment entered March 7, 2019, to file an answer, and to order plaintiff to return the total funds paid by defendant. Defendant's motion is granted for the reasons stated below.

A. Background

On April 15, 2019, after the default judgment was entered in the amount of $24,598.01, the Marshal issued a levy and demand to defendant's bank pursuant to CPLR 5232 seeking satisfaction of the judgment. That same day defendant filed an order to show cause seeking to [*2]enjoin plaintiff from levying and executing on the judgment or otherwise enforcing the judgment and to vacate its default. The court (Hon. D. Ramseur, J.C.C.) signed the order to show cause, which contained a stay of the levy and execution or other enforcement of the judgment pending the hearing of the motion. On May 9, 2019, after hearing oral argument by both parties in court, this court denied the motion. This court noted that while defendant "blankedly asserts lack of service," plaintiff submitted an affidavit of service in opposition showing service upon the New York Secretary of State (defendant's motion, exhibit C). On May 15, 2019, a copy of the order with notice of entry was served on defendant's attorney. It is undisputed that the judgment was paid. On August 1, 2019, defendant filed the instant motion to vacate the default judgment under CPLR 317.

B. Analysis

Although defendant's initial motion did not specify what section of the CPLR it was moving under, both sides agree that defendant moved under CPLR 5015 and this court treated the motion as such. Given that defendant now moves under CPLR 317 and makes new arguments that pertain to that statute, the court finds that, contrary to plaintiff's contention, defendant's motion is not a motion to reargue the prior motion, which would have been untimely as it was made outside of the 30-day period (see CPLR 2221). Accordingly, contrary to plaintiff's contention, the time requirements for motions to reargue do not apply here (see CPLR 2221[d][3]). Plaintiff cites no authority stating that the court cannot treat this motion as a new motion pursuant to CPLR 317. Plaintiff's law of the case argument is also unavailing. While defendant previously argued lack of service under CPLR 5015, it is now arguing lack of receipt under CPLR 317. The court never previously made a finding regarding lack of receipt and thus the prior order is not law of the case on the issue.

Equally unavailing is plaintiff's argument that this court lacks jurisdiction to vacate the default judgment because the judgment was paid and satisfied (citing H. D. I. Diamonds, Inc. v Frederick Modell, Inc., 86 AD2d 561 [1st Dept 1982][court lacked jurisdiction to vacate a default judgment, where the judgment was paid and satisfied], appeal dismissed 56 NY2d 645 [1982]). Pursuant to CPLR 5020(a), when a person entitled to enforce a judgment receives satisfaction, he "shall execute and file with the proper clerk" a satisfaction-piece (CPLR 5020[a]). Further, the satisfaction-piece shall be "acknowledged in the form required to entitle a deed to be recorded, which shall set forth the book and page where the judgment is docketed" (id.). Additionally, a copy of the satisfaction piece filed with the clerk "shall be mailed to the judgment debtor by the person entitled to enforce the judgment within ten days after the date of filing" (id.). Here, there is no indication that the satisfaction of judgment was filed; rather the satisfaction submitted by plaintiff indicated that it was received by this court on May 29, 2019, but there is no "Filed" stamp and the court's database does not show a filing. Further, the satisfaction of judgment does not set forth the book and page where the judgment is docketed. Nor is there any indication that a filed copy was mailed to defendant. Accordingly, the court finds that it has jurisdiction to vacate the default judgment, for plaintiff's failure to comply with CPLR 5020(a). Moreover, since defendant did not voluntarily pay the judgment, it did not waive its defenses (see Cach, LLC v Ryan, 158 AD3d 1193, 1194 [4th Dept 2018]).

As to the merits, defendant showed that it is entitled to vacatur under CPLR 317. Pursuant to CPLR 317, a person who is served with a summons other than by personal delivery to him, or to his agent for service designated as such under CPLR 318, is permitted to defend the action within one year after he obtains knowledge of the entry of judgment, but in no event more [*3]than five years after such entry, provided the court finds that "he did not personally receive notice of the summons in time to defend and has a meritorious defense" (CPLR 317).

Here, plaintiff submitted an affidavit of service showing that it served the Secretary of State, which is not considered personal delivery to defendant or its agent designated under CPLR 318 (see Seijas v Rawhide Ranch, 99 AD2d 739, 740 [1st Dept 1984]). Further, defendant has shown that it moved to vacate the default within one year of obtaining knowledge of entry of the judgment and that it did not personally receive notice of the summons in time to defend (Olivaria v Lin & Son Realty, Corp., 84 AD3d 423, 424-425 [1st Dept 2011]). Defendant's president avers in his affidavit in support of the motion that defendant never received the summons and complaint and first learned of this lawsuit in April 2019, upon the restraint of defendant's bank account by plaintiff. In support, defendant submits a copy of the Marshal's notice to JP Morgan Chase Bank dated April 15, 2019, ordering the bank to turn over all property of defendant pursuant to the judgment against defendant. As noted above, defendant filed an order to show cause to vacate the default that same day. The court also notes that the affidavit of service upon the Secretary of State indicates that the Secretary of State was not paid the fee required by Limited Liability Company Law § 303(a). This supports defendant's argument of non-receipt.

Lastly, the court finds that defendant has shown a meritorious defense in this action, which alleges that defendant owes plaintiff $22,094.54 in unpaid insurance premiums. Defendant's president avers that his review of defendant's books and records shows that the premiums charged by plaintiff do not match the amounts applicable to the number of employees working for defendant and that plaintiff actually owes defendant money. In support, the president submits a summary he created from defendant's business records showing the alleged overpayment by defendant. The court finds that defendant submitted enough evidence to show a meritorious defense. Although defendant has not shown that it formally disputed the balance alleged by plaintiff prior to commencement of the action, defendant's president has alleged a mistake, which is a meritorious defense to an account stated claim (see Shaw v Silver, 95 AD3d 416, 416 [1st Dept 2012]).

C. Conclusion

In conclusion, the court finds that vacatur of the default judgment is warranted, particularly when considering the State's preference to resolve matters on the merits (Rosenblatt v New York City Tr. Auth., 122 AD3d 410, 411 [1st Dept 2014]). Accordingly, defendant's motion is granted.

Defendant has 14 days from the date of this order to file and serve an answer. Plaintiff shall hold the funds in an interest-bearing account pending determination of the proceeding. The matter is restored to the calendar for the parties to appear on December 5, 2019.

This constitutes the decision and order of the court.

DATED: November 7, 2019

_______________________

HON. Elena Baron

JUDGE, CIVIL COURT