John Distilleries Pvt. Ltd. v Domaine Select Wine & Spirits, LLC
Annotate this CaseDecided on June 30, 2020
Supreme Court, New York County
John Distilleries Pvt. Ltd., Plaintiff,
against
Domaine Select Wine & Spirits, LLC, Daniel M. Holtz, and Vino Holdings, Defendants.
656090/2019
Emmet, Marvin & Martin, LLP, New York, NY (Paul T. Weinstein of counsel), for plaintiff.
Graff Silverstein LLP, New York, NY (David Graff of counsel), for defendant Domaine Select Wine & Spirits, LLC.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27 were read on this motion to DISMISS.
This action arises out of a distribution agreement between plaintiff, John Distilleries PVT. Ltd., and Domaine Select Wine & Spirits, LLC (Domaine). Plaintiff, concluding that the agreement had gone awry, sued Domaine (for breach of contract and breach of the implied covenant of good faith and fair dealing), Daniel Holtz (for unjust enrichment), and Vino Holdings (for unjust enrichment). Domaine now moves to dismiss the claims against it; plaintiff cross-moves for a default judgment against Domaine.
Domaine's motion is denied; plaintiff's cross-motion is granted.
BACKGROUND
According to the allegations of the complaint, plaintiff is incorporated in India. Plaintiff is not registered to do business in New York. Plaintiff lacks any employees, offices, phone numbers, mailing addresses, bank accounts, or assets in New York.
In February 2016, Plaintiff and Domaine entered into an agreement under which Domaine would distribute plaintiff's whiskey in the United States, Puerto Rico, and the U.S. Virgin Islands. Between April 2016 and December 2017, plaintiff shipped its whiskey from India to New Jersey for Domaine to distribute further within the contractual distribution territory. Domaine failed to pay for the whiskey shipped by plaintiff. Instead, it transferred plaintiff's whiskey in its possession to defendant Vino Holdings, controlled by defendant [*2]Holtz—thereby rendering Domaine insolvent.
In October 2019, plaintiff sued Domaine, Vino Holdings, and Holtz, seeking damages and attorney fees. Plaintiff served Domaine, both personally to an agent authorized to accept service and through the Secretary of State, on October 22, 2019. (See NYSCEF Nos. 5, 6; CPLR 311-a; Limited Liability Company Law § 303.)
Plaintiff neither answered nor moved to dismiss within 30 days of service. On December 17, 2019, counsel for defendant emailed counsel for plaintiff, stating that (i) his firm had just been retained by Domaine to represent it in the action; and (ii) Domaine had informed him that it had not yet been served. Counsel for plaintiff immediately replied, emphasizing that Domaine had been served through the Secretary of State and was in default. (See NYSCEF No. 23 at 3.)
The next day, December 18, 2019, Domaine moved to dismiss under CPLR 3211 (a) (3). Domaine argued that plaintiff lacked capacity to sue under Business Corporation Law (BCL) § 1312 because plaintiff was a foreign corporation that was conducting business in New York without authorization to do so. Plaintiff cross-moved for a default judgment on the ground that Domaine was in default, had not sought to vacate its default, and could not avoid the consequences of that default by filing an untimely CPLR 3211 motion.
DISCUSSION
As an initial matter, plaintiff is correct that a defendant may move to dismiss under CPLR 3211 (a) (3) only "before service of the responsive pleading is required." (CPLR 3211 [e].) Here, Domaine was required to serve a responsive pleading by November 21, 2019, at the latest. Domaine's motion to dismiss—filed on December 18, 2019—was untimely.[FN1] The motion is denied.[FN2] (See Majique Fashions, Ltd. v Warwick & Co., 67 AD2d 321, 323 [1st Dept 1979]; accord Ultimate One Distrib. Corp. v 2900 Stillwell Ave. LLC, 140 AD3d 1054, 1055 [2d Dept 2016].)
With respect to plaintiff's cross-motion for a default judgment, Domaine does not dispute that plaintiff's papers submitted in support of the cross-motion satisfy the requirements of CPLR 3215 (f). Rather, Domaine argues that this court should refrain from entering a default judgment because Domaine meets the requirements of CPLR 317 and CPLR 5015 (a) (1) for vacating its default. This court disagrees.
CPLR 317 provides that where a defendant in default was "served with a summons other than by personal delivery," and has established to the court's satisfaction that the defendant "did [*3]not personally receive notice of the summons in time to defend and has a meritorious defense," the defendant "may be allowed to defend the action." Domaine fails to show that it meets these requirements.
Plaintiff served its summons on Domaine by two means—hand-delivery to a person "authorized to accept" service on Domaine's behalf, and delivery to the Secretary of State for mailing to Domaine. (See NYSCEF Nos. 5, 6; see also CPLR 311-a [a].) Given plaintiff's use of a personal method of service (hand-delivery to an authorized person), Domaine cannot avail itself of CPLR 317. Domaine argues, in effect, that this service should not "count" for CPLR 317 purposes—leaving only service through the Secretary of State (which would qualify as service "other than by personal delivery"). The court is not persuaded by this argument. Domaine relies on the conclusory assertion that the hand-delivery affidavit of service is defective as a matter of law because the affidavit does not demonstrate that the recipient of the summons was authorized or designated to receive process. (See NYSCEF No. 20 at 9.) But the affidavit expressly states that the recipient was a "clerk authorized to accept" service. (NYSCEF No. 6 at 1.) Domaine does not explain why that statement is insufficient or defective. In any event, this challenge to the affidavit of service would go to the validity of plaintiff's effort to serve Domaine by personal delivery—not to whether the summons was delivered to Domaine personally rather than by substituted service.
Domaine's reliance on CPLR 317 is also unavailing for the independent reason that Domaine has not established that it lacked actual notice of the summons in time to defend the action. Domaine relies on an affidavit submitted by its chief financial officer. Read carefully, though, this affidavit does not deny that Domaine received actual notice that plaintiff had filed its summons and complaint.
The affidavit states at most that (i) Domaine "has no record of receipt of the Complaint by personal service, or from its registered agent"; (ii) that "[n]o one named Laura" was "authorized to accept service of process" for Domaine; and (iii) that an email from Domaine's counsel shows that Domaine "had no notice of service of the complaint." (NYSCEF No. 21 at 318-20.) A conclusory denial of "receipt of the pleadings, without further explanation," does not satisfy CPLR 317's lack-of-actual-notice requirement. (Gonzalez v City of NY, 106 AD3d 436, 437 [1st Dept 2013]; accord Ultimate One, 140 AD3d at 1055.) Asserting that Domaine does not employ a woman named Laura who is authorized to accept service is different from saying that Domaine does not employ a woman named Laura who could have received papers from a process server, or that Domaine does not employ any women named Laura at all. And the email from defendant's counsel necessarily reflects that Domaine had received actual notice of the complaint from somewhere, or else Domaine would not have retained counsel to represent it in the action to begin with. (See NYSCEF No. 23 at 3). Yet Domaine's papers do not indicate when—or how—it first gained actual notice of the action, or whether it received that notice in time to defend.
Finally, to invoke CPLR 5015 (a) (1), a defendant must provide both a reasonable excuse for the default and facts indicating a meritorious defense. Domaine has not demonstrated a reasonable excuse here. Domaine's proffered excuse is that plaintiff did not serve Domaine with the summons and complaint. (See NYSCEF No. 20 at 9-10.) But the only basis for this claim is, again, Domaine's conclusory denial of having a record of receipt. That denial is "insufficient to rebut the presumption of service" created by plaintiff's "affidavit of service reflecting service through the Secretary of State." (Gourvitch v 92nd & 3rd Rest Corp., 146 AD3d 431, 431 [1st [*4]Dept 2017] [emphasis added].)
Plaintiff's cross-motion for default judgment is granted.[FN3]
Accordingly, it is hereby
ORDERED that Domaine's motion to dismiss is denied; and it is further
ORDERED that plaintiff's cross-motion for a default judgment against Domaine is granted; and it is further
ORDERED, ADJUDGED, AND DECREED that plaintiff shall have judgment against Domaine in the sum of $415,744.00, together with costs, disbursements, reasonable attorney fees, and interest running from January 1, 2018, until the entry of judgment; and it is further
ORDERED that the issue of the amount of plaintiff's reasonable attorney fees is hereby referred to a Special Referee to hear and report; and it is further
ORDERED that plaintiff shall serve a copy of this order with notice of its entry on all parties and on the Special Referee Clerk in the General Clerk's Office (60 Centre Street, Room 119), who is directed to place this matter on the calendar of the Special Referee's Part for the earliest convenient date.
Dated: June 30, 2020
Hon. Gerald Lebovits Footnotes
Footnote 1: Domaine could have moved instead under CPLR 2004 and 3012 (d) to extend plaintiff's time to answer or to compel plaintiff to accept Domaine's untimely answer. Domaine did not do so.
Footnote 2: Even if it were timely, the motion to dismiss would be without merit. To prevail, Domaine would have to show that plaintiff engaged in systematic and regular New York business activities. (See Uribe v Merchants Bank of NY, 266 AD2d 21, 22 [1st Dept 1999]; Construction Specialties v Hartford Ins. Co., 97 AD2d 808, 808 [2d Dept 1983].) But plaintiff "maintains no office or telephone listing in New York," owns no real property" in New York, has no New York employees, and shipped its product to New Jersey for U.S. distribution. (Uribe, 266 AD2d at 22.) True, Domaine is located in New York. (See NYSCEF No. 20 at 7-8.) But Domaine supplies no authority for its assertion that a foreign company is "doing business" in New York for purposes of BCL § 1312 merely because that company sells products across the United States through a New York distributor.
Footnote 3: Domaine's demand that plaintiff post $500 security under CPLR 8501 is denied as academic.
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