LCS Capital, LLC v Hatlestad

[*1] LCS Capital, LLC v Hatlestad 2022 NY Slip Op 22317 Decided on October 7, 2022 Supreme Court, Monroe County Doyle, 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 October 7, 2022
Supreme Court, Monroe County

LCS Capital, LLC, Plaintiff,

against

Kelsey Hatlestad, and Mary Adams-Hatlestad, Defendants.



Index No. E2022006368



Shelly L. Baldwin, Esq., Relin, Goldstein & Crane, LLP, attorneys for Plaintiff

Kelsey Hatlestad, pro se Daniel J. Doyle, J.

In this action Plaintiff LCS Capital, LLC (hereinafter "LCS") seeks to recover damages for a breach of contract relating to non-payment of a student loan agreement.

Defendant Kelsey Hatlestad (hereinafter "Hatlestad") now moves to dismiss the complaint pursuant to CPLR Rule 3211 (a)(8) alleging that the Court does not have jurisdiction over her due to lack of proper service under CPLR § 308.[FN1] For the reasons that follow, Hatlestad's motion to dismiss the complaint is GRANTED.

This action was initiated by the filing of the summons and complaint on August 9, 2022.[FN2] Two days later, a process server effectuated service on Hatlestad pursuant to CPLR § 308(2) by delivering a copy of the summons and complaint to a person of suitable age and discretion at 15 Belinda Crescent, Fairport, New York ("Kelsey Hatlestad's usual place of residence") and mailing a copy of same the next day.[FN3]

However, on July 15, 2022 — approximately three and one-half weeks prior to service - Hatlestad entered into a lease agreement for an apartment at 5927 Hazelwood Ct, Farmington, New York. Hatlestad attaches a copy of her lease agreement.[FN4] Hatlestad alleges that she lives at [*2]this address,[FN5] and she was never served with the complaint.[FN6]

In opposition to Hatlestad's motion, LCS submits (in addition to the process server's affidavit) a New York Department of Motor Vehicle record indicating Hatlestad's address is 15 Belinda Crescent, Fairport, New York;[FN7] an Experian Social Search Report indicating the "best address" for Hatlestad is 15 Belinda Crescent, Fairport, New York;[FN8] and a TransUnion "TLO" report which states Hatlestad's address was 15 Belinda Crescent, Fairport, New York from 12/01/2005 to 07/02/2022.[FN9] All reports are dated August 23, 2022- the day Hatlestad filed the instant motion to dismiss.

As the parties have supplied documentary evidence in support of their positions, and the Court determines that this issue can be determined without resorting to a hearing to determine credibility issues, the Court will determine the issues herein on the papers submitted.

"Service of process upon a natural person must be made in strict compliance with the statutory methods of service set forth in CPLR 308 (see Washington Mut. Bank v Murphy, 127 AD3d 1167, 1174 [2015]; Emigrant Mtge. Co., Inc. v Westervelt, 105 AD3d 896, 896-897 [2013]). " '[T]he failure to serve process in an action leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void' " (Krisilas v Mount Sinai Hosp., 63 AD3d 887, 889 [2009], quoting McMullen v Arnone, 79 AD2d 496, 499 [1981])." (Indymac Fed. Bank, FSB v. Jones, 173 AD3d 702, 703 [2nd Dept. 2019].)

LCS has established through the process server's affidavit prima facie evidence that Hatlestad was served pursuant to CPLR § 308(2). The affidavit alleges that the process server delivered a copy of the summons and complaint with a person of suitable age and discretion at "Kelsey Hatlestad's usual place of residence".[FN10] "Ordinarily, a process server's affidavit of service establishes a prima facie case as to the method of service and, therefore, gives rise to a presumption of proper service (see Household Fin. Realty Corp. of NY v Brown, 13 AD3d 340 [2004]; Bankers Trust Co. of Cal. v Tsoukas, 303 AD2d at 344; Frankel v Schilling, 149 AD2d 657, 659 [1989]; see also New Is. Invs. v Wynne, 251 AD2d 560 [1998])." (Wells Fargo Bank, NA v. Chaplin, 65 AD3d 588, 589 [2nd Dept. 2009].)

However, Hatlestad has established that on the date of service she was no longer residing at the 15 Belinda Crescent address, her "last known address". Instead, she was living at 5927 Hazelwood Ct, Farmington, New York having moved there three and ½ weeks prior to the [*3]service of the summons and complaint at the Belinda Crescent address.[FN11] Thus, Hatlestad argues that service was improper as it was not made at her actual dwelling place or usual place of abode. (See gen. Feinsten v. Bergner, 48 NY2d 234 [1979].) The Court agrees. At best, LCS established that Hatlestad was served at her "last known address" and not her dwelling place or usual place of abode. This is not sufficient. ("It is well settled that the terms "dwelling place" and "usual place of abode" may not be equated with the "last known residence" of a defendant for purposes of substituted service pursuant to CPLR 308(2) (see, Feinstein v. Bergner, supra, 48 NY2d at 239, 422 N.Y.S.2d 356, 397 N.E.2d 1161; Chiari v. D'Angelo, supra)." (Cuomo v. Cuomo, 144 AD2d 331, 332, [2nd Dept. 1988].)

LCS argues that Hatlestad should be estopped from arguing that she was not properly served, relying upon the argument that Hatlestad failed to update her address with the New York State Department of Motor Vehicles (hereinafter "DMV") as required by Vehicle and Traffic Law § 505(5).

"Service of process is carefully prescribed by the Legislature, which affords litigants ample methods for serving natural persons. Regularity of process, certainty and reliability for all litigants and for the courts are highly desirable objectives to avoid generating collateral disputes (citation omitted). These objectives are served by adherence to the statute and disserved by judicially engrafted exceptions to CPLR 308 (1) (CPLR 308 [2]; see also, Macchia v Russo, supra, at 594; duPont, Glore Forgan & Co. v Chen, 41 NY2d 794, 797)." (Dorfman v. Leidner, 76 NY2d 956, 958 [1990].)

There are several judicially recognized exceptions to the requirement that the precise language of CPLR § 308(2) be followed. Two interrelated exceptions are relevant herein. The first is the concept of estoppel due to a defendant engaging in affirmative conduct which misleads the plaintiff into serving process at an incorrect address; the second is where the process server relies upon DMV records which are inaccurate because the defendant failed to fulfill the statutory obligation of notifying DMV of a change of address. (See Everbank v. Kelly, 203 AD3d 138, 145 [2nd Dept. 2022].)

Hatlestad was under no obligation to apprise LCS of her whereabouts, and she engaged in no affirmative efforts to mislead LCS as to her address. Thus, the "classic" estoppel doctrine should not be applied here to prevent Hatlestad from asserting defective service. (See Feinstein v. Bergner, supra at 241—42: "Nor may Bergner be estopped from raising the defect in service as a defense, since plaintiffs here have failed to demonstrate that Bergner engaged in conduct which was calculated to prevent them from learning of his new address (see Cohen v. Arista Truck Renting Corp., 70 Misc 2d 729, 335 N.Y.S.2d 30). Since potential defendants ordinarily have no affirmative duty to keep those who might sue them abreast of their whereabouts, (cf. Dobkin v. Chapman, 21 NY2d 490, 504, 289 N.Y.S.2d 161, 172, 236 N.E.2d 451, 458) we can find no basis for invoking the estoppel doctrine here.")

The remaining question is whether Hatlestad's failure to inform DMV of her new address in Farmington, New York as required by Vehicle and Traffic Law § 505(5) would preclude Hatlestad from challenging the service at her previous address. A resolution of this issue requires an examination of the development of this judicial exception to the requirement of strict compliance with the procedures of CPLR § 308(2).

The first case to consider this issue was Cohen v. Arista Truck Renting Corp. (70 Misc 2d 729 [Sup. Ct. 1972]). Cohen involved an automobile accident wherein the defendant provided an incorrect address to the plaintiff, never filed the required Motor Vehicle Accident Report (MV 104), and never filed a change of address as required by the Vehicle and Traffic Law. The supreme court held that the defendant was estopped from asserting plaintiff's non-compliance with CPLR § 308(4) holding: "Defendant . . . may not benefit from his own misrepresentation and fraud." (Cohen v. Arista Truck Renting Corp., 70 Misc 2d 729, 731 [Sup. Ct. 1972].)[FN12]

Later cases interpreted the Cohen holding to apply to instances where, in automobile accident cases, the defendant deliberately provides an incorrect address to the plaintiff, or provides an incorrect address to the plaintiff (or police officer), and then fails to update his address information as required by the Vehicle and Traffic law. (See e.g. Kenworthy v. Van Zandt, 71 Misc 2d 950 [NY City Ct. 1972].)

The Court of Appeals cited Cohen with approval in Feinstein v. Bergner (48 NY2d 234 [1979]), a case where defendant provided a correct address to the police at the time of the accident but moved to another address 30 months afterwards. In holding that service was ineffective, the Court of Appeals held that the defendant therein may not "be estopped from raising the defect in service as a defense, since plaintiffs here have failed to demonstrate that [defendant] engaged in conduct which was calculated to prevent them from learning of his new address (see Cohen v. Arista Truck Renting Corp., 70 Misc 2d 729, 335 N.Y.S.2d 30)." (Id. at 241, emphasis supplied[FN13] , see also Gilbert v. Lehman, 73 AD2d 793 [4th Dept. 1979].)

Later cases applied the doctrine of estoppel to cases in which an automobile accident defendant provided the incorrect address to the plaintiff (either in-person or through the responding police officer) and then failed to update their correct address with DMV as required by Vehicle and Traffic Law § 505(5). These cases relied upon the principle of estoppel as they found the defendants' actions in providing an incorrect address to the defendant, and then failing to remedy that by informing DMV of their new address, supported an inference that the defendants were deliberately attempting to avoid service. (See e.g., Kalamadeen v. Singh, 63 AD3d 1007 [2nd Dept. 2009]: "Here, considering that the defendant supplied the police officer with two different addresses at the time of the officer's investigation, and that there was yet another address on record for the defendant at the DMV, his failure to comply with Vehicle and [*4]Traffic Law § 505 (5) raised an inference that the defendant deliberately attempted to avoid notice of the action (see Cruz v Narisi, 32 AD3d 981 [2006])".[FN14] )

But these cases specifically relied upon the fact that the defendant had provided an improper address to the plaintiff as a necessary element of applying the estoppel doctrine.

Itshaik v. Singh (165 AD3d 902 [2nd Dept. 2018]) is instructive. In that case plaintiff was injured by a motor vehicle that he identified belonging to a "neighbor" and he served process at a "West End Avenue" apartment that he believed was the residence of the defendant. However, defendant (who moved to vacate a default judgment) alleged that he was not living at that apartment at the time of the accident. In response, "the plaintiff's attorney stated that he had obtained the defendant's address by obtaining an "Insurance Activity Expansion" report from the New York State Department of Motor Vehicles (hereinafter the DMV) on November 9, 2015. The report showed that on the date of the report the subject vehicle was owned by the defendant, and the address listed for the defendant was the apartment on West End Avenue in Manhattan". (Id. at 903.). The plaintiff argued that the defendant was estopped from challenging service upon him at the West End Avenue address pursuant to Vehicle and Traffic Law § 505(5), but the Second Department concluded "under the circumstances of this case, where the defendant did not provide the West End Avenue address at the time of the accident, where the record does not contain a DMV driver's abstract for the defendant, and where the plaintiff identified the motor vehicle allegedly involved in this accident as belonging to a neighbor, the plaintiff's contention is without merit (cf. Canelas v. Flores, 112 AD3d at 871—872, 977 N.Y.S.2d 362)." (Id. at 904 [emphasis supplied].)

In non-automobile accident cases, courts also have determined that estoppel is not warranted unless the defendant engages in some affirmative effort to avoid service by misrepresentation and rejected the argument that failure to update an address with DMV alone is sufficient to invoke the estoppel doctrine. For instance, in Nationstar Mortg., LLC v. Esdelle (186 AD3d 1384, 1388 [2nd Dept. 2020]), a mortgage foreclosure case, the Court held:

Under the circumstances of this case, the Supreme Court should not have determined that the defendant is estopped from challenging service because she failed to update her new address with the Department of Motor Vehicles (see Vehicle and Traffic Law § 505[5]; Itshaik v. Singh, 165 AD3d 902, 903—904, 86 N.Y.S.3d 572). Here, there is no evidence that the defendant affirmatively misrepresented her address so that the plaintiff would rely upon the misrepresentation to effectuate service (cf. Mighty v. Deshommes, 178 AD3d 912, 915, 115 N.Y.S.3d 454; Kalamadeen v. Singh, 63 AD3d 1007, 1009, 882 N.Y.S.2d 437), nor is there any evidence that the plaintiff served the defendant at the New York Avenue address in reliance upon the defendant's address as reported to the Department of Motor Vehicles (see Itshaik v. Singh, 165 AD3d at 903—904, 86 N.Y.S.3d [*5]572).[FN15]

Ortiz v. Santiago (303 AD2d 1 [1st Dept. 2003]), cited by LCS in support of their argument that the failure to notify DMV of a change of address is sufficient to estop a defendant from claiming improper service, is not dispositive. In that automobile accident case, both defendants (moving to vacate default judgments on the ground of allegedly improper service) provided the address at which they were served to the responding police officer, and one of the defendants claimed she had moved from that address three months prior to the accident. The Court observed that the defendant failed to notify DMV of a change of address and held that this would estop the defendant from claiming inadequate service. The decision, however, concentrates on the efforts of both defendants "who [were] playing fast and loose with the court" to avoid service. (Id. at 4.)

The Court is cognizant of the line of cases in which it appears that defendants were estopped from arguing improper service due only to the fact that they failed to update their address with DMV. (See Stillman v. City of New York, 39 AD3d 301 [1st Dept. 2007]; Burke v. Zorba Diner, Inc., 213 AD2d 577 [2nd Dept. 1995].)[FN16] However, given the unique facts of this case, these cases are not controlling.

Here, there is no evidence the process server relied upon the DMV address in effectuating service. (Itshaik v. Singh, supra.) Nor is there any evidence that Hatelstad engaged in affirmative misconduct (such as providing LCS an incorrect address) that would allow an inference she was avoiding service. Although Hatlestad moved her residence three and ½ weeks prior to the service of the summons and complaint at the 15 Belinda Crescent address, and failed to notify DMV within ten days, given the short period of time between the move and the service of process it cannot be said that this was a sufficient amount of time to determine that her failure to notify DMV was an attempt to avoid service. (Nationstar Mortg., LLC v. Esdelle, supra.).

As LCS failed to establish that Hatlestad engaged in conduct designed to avoid service, estoppel is not warranted. Hatlestad has rebutted the presumption of proper service provided by the process server's affidavit, and has established that the service at 15 Belinda Crescent address was not at her actual "dwelling place" or "usual place of abode" as required by CPLR § 308(2). [*6]Thus, service was improper, and the Court does not have personal jurisdiction over Hatelstad. Thus, the Court grants Hatlestad's motion to dismiss the complaint.

Accordingly, Defendant Kelsey Hatlestad's motion to dismiss the complaint pursuant to CPLR Rule 3211 (a)(8) is GRANTED, and the complaint as to Defendant Kelsey Hatlestad is dismissed.

Any prayers for relief not specifically addressed herein are DENIED.

This constitutes the Decision and Judgment of the Court.

Dated: October 7, 2022

__________________________
Honorable Daniel J. Doyle, JSC Footnotes

Footnote 1: Defendant's Notice of Motion (NYSCEF Docket # 11), Affidavit in Support of Motion (NYSCEF Docket # 12); Affidavit in Reply (NYSCEF Docket # 25); Affirmation in Opposition to Motion with exhibits (NYSCEF Docket # 18-21).

Footnote 2: NYSCEF Docket # 1

Footnote 3: Affidavit of Service (NYSCEF Docket # 8). The affidavit of service does not state that the process server relied upon Department of Motor Vehicle records to determine Hatlestad's address.

Footnote 4: Exhibit 1 to Reply to Opposition to Motion to Dismiss (NYSCEF Docket # 25). The Court accepts the lease agreement as "documentary evidence" in support of Hatlestad's position. (See gen. 150 Broadway NY Associates, L.P. v Bodner, 14 AD3d 1 [1st Dept. 2004].)

Footnote 5: Although Hatlestad never avers when she moved into the Farmington, New York address, a fair reading of her papers supports the inference that she is alleging that she did not live at the Fairport, New York address at the time process was served there on August 11th.

Footnote 6: Affidavit of Kelsey Hatlestad in Support of Her Motion to Dismiss Pursuant to CPLR 3211 (NYSCEF Docket # 12) at ¶¶ 2-4.

Footnote 7: DMV Abstract, attached as Exhibit A to Affirmation in Opposition to Motion (NYSCEF Docket # 19).

Footnote 8: Experian Social Services Report, attached as Exhibit B to Affirmation in Opposition to Motion (NYSCEF Docket # 20).

Footnote 9: TransUnion TLO Report, attached as Exhibit C to Affirmation in Opposition to Motion (NYSCEF Docket # 21).

Footnote 10: The statutory language states that service must be made at "the actual place of business, dwelling place or usual place of abode of the person" (CPLR § 308[2]).

Footnote 11: Hatlestad also argues that LCS failed to employ due diligence in serving her at the Belinda Crescent address. Process servers are not required to exercise due diligence prior to resorting to service under CPLR § 308(2). (Everbank v. Kelly, 203 AD3d 138 [2nd Dept. 2022].) Service was properly made at that address by leaving the summons and complaint with a person of suitable age and discretion, provided that the address is "the actual place of business, dwelling place or usual place of abode of the [Hatlestad]", and provided the requisite mailing is done.

Footnote 12: A similar holding was made in Greenwood v. White (25 AD2d 73 [3rd Dept. 1966]) where a non-resident of New York provided a false address to a New York resident plaintiff thus depriving the plaintiff the ability to serve process through the Secretary of State (under prior Vehicle and Traffic Law § 52) the Court held: "Under these circumstances, by voluntarily giving an incorrect address and thereby making respondent's compliance with § 52 impossible, White relinquished his rights to assert noncompliance with § 52 (see, 21 N.Y.Jur., Estoppel, Ratification, and Waiver §§ 88, 92, 100; 92 C.J.S. Waiver p. 1061)." (Greenwood v. White, supra at 75.)

Footnote 13: The specific argument related to Vehicle and Traffic Law § 505 does not appear to have been raised or addressed by the Court.

Footnote 14: Cruz v Narisi (32 AD3d 981 [2006]): "Narisi's actions, including, inter alia, her direct involvement in the accident in question coupled with her failure to advise the DMV of her change of address for a prolonged period, should be viewed as a deliberate attempt to avoid notice of the action, under the unique facts of this case (cf. Lawrence v Esplanade Gardens, supra; Paul Conte Cadillac v C.A.R.S. Purch. Serv., 126 AD2d 621 [1987])." (Id.)

Footnote 15: Similarly, there is no evidence in this case that the process server relied upon the address as reported to DMV. Although LCS attached a DMV report in this case showing Hatlestad's address is at 15 Belinda Crescent, Fairport, New York, that report is dated after process was served, and the process server's affidavit is devoid of any averments that the process server obtained Hatelstad's address from DMV.

Footnote 16: The Court also questions the validity of the reasoning in these cases. Recognizing that judicially created exceptions to strict compliance with CPLR § 308(2) should be rare (Dorfman v. Leidner, supra) the expansion of the estoppel doctrine to instances where a defendant does not engage in affirmative efforts to avoid service (such as providing an improper address to a police officer responding to an accident) is inappropriate. These courts have equated failure to notify DMV within ten days, as required by Vehicle and Traffic Law § 505, with affirmative misrepresentation of an address, presumably by reasoning that people who possess driver's licenses must be aware of the requirement to notify DMV of a change of address within ten days and the failure to do so must be out of a desire to avoid service of process. The Court believes that is a "bridge too far" and impermissibly expands the estoppel doctrine, especially in light of the obvious fact that few citizens who possess driver's licenses are aware of the obligation to notify DMV of a change of address within the ten-day period.