Port Auth. of N.Y. & N.J. v Logistics Kone

[*1] Port Auth. of N.Y. & N.J. v Logistics Kone 2023 NY Slip Op 23004 Decided on January 5, 2023 Supreme Court, New York County Lebovits, 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 January 5, 2023
Supreme Court, New York County

Port Authority of New York & New Jersey, Plaintiff,

against

Logistics Kone, AKA KONE LOGISTICS LLC, Defendant.



Index No. 450474/2021



Law Offices of Peter C. Merani, P.C., New York, NY (Derek Soltis of counsel), for plaintiff.

No appearance for defendant.
Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 were read on this motion for DEFAULT JUDGMENT.

Gerald Lebovits, J.

In this action to collect unpaid tolls, plaintiff, Port Authority of New York & New Jersey, moves without opposition for default judgment under CPLR 3215 against defendant, Logistics Kone. The motion is denied and the action is dismissed for lack of personal jurisdiction.

Plaintiff's affidavit of service on defendant reflects that service was made under Limited Liability Company Law (LLC Law) § 304, governing service on unauthorized foreign LLCs. (See NYSCEF No. 4.) That statute imposes a three-step process for service: (i) delivering the summons and complaint to the Secretary of State; (ii) providing notice to the defendant of that delivery, either by personal delivery of notice or by registered mail, return receipt requested; (iii) filing an affidavit of compliance with the statute's delivery and notice requirements. (LLC Law § 304 [e]; see also Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC, 153 AD3d 606, 606-607 [2d Dept 2017] [describing this process].) If the plaintiff provides notice-of-delivery to defendant via registered mail, the affidavit of compliance must attach either a copy of the return receipt or a copy of the envelope "with a notation by the postal authorities that acceptance" of the mailing "was refused" by its recipient. (LLC Law § 304 [e].)

A plaintiff must strictly comply with LLC Law § 304, "including as to the filing of an 'affidavit of compliance.'" (Surgery Ctr. of Oradell, 153 AD3d at 607; accord Chan v Onyx Capital, LLC, 156 AD3d 1361, 1362 [4th Dept 2017].) Plaintiff's affidavit in this action does not satisfy the statutory requirements. The affidavit reflects that plaintiff's process server gave notice-of-delivery by registered mail. (See NYSCEF No. 4.) But the affidavit does not attach either a return receipt or an officially marked envelope reflecting refusal of the mailing. (Id.)

The next question is what consequence flows from plaintiff's noncompliant affidavit—i.e., whether the result should be denial of plaintiff's default-judgment motion without prejudice to its refiling upon satisfactory proof of service, or dismissal of the action for lack of personal jurisdiction due to invalid service. This court is not aware of any appellate authority that squarely considers this question in the context of LLC Law § 304.

Three Appellate Division decisions address a scenario in which plaintiff has not fully complied with § 304 (e). In two of those cases, the motion court denied default judgment; and defendant did not appear on plaintiff's appeal from that denial. (See Surgery Ctr. of Oradell, 153 AD3d at 606; Interboro Ins. Co. v Tahir, 129 AD3d 1687, 1687 [4th Dept 2015].) In those cases, therefore, the appellate court did not have occasion to address whether the consequence for noncompliant service should be more stringent than denial of default judgment. In the third case, Chan v Onyx Capital, the record reflected that plaintiff's notice-of-delivery mailing had been returned as undeliverable (not merely refused at delivery), such that defendant did not receive notice at all. (156 AD3d at 1363.) The Appellate Division's conclusion in that case that no personal jurisdiction existed does not directly control here, where the record is silent on the fate of the registered mailing.

Considering the question for itself, this court concludes that it must dismiss for lack of personal jurisdiction. The requirements of LLC Law § 304 are substantively identical to those of Business Corporation Law (BCL) § 307, governing service on unauthorized foreign [*2]corporations. Courts interpreting LLC Law § 304 have thus relied on the larger body of precedents applying BCL § 307. (See Chan, 156 AD3d at 1362-1363; Elzofri v American Express Co., 29 Misc 3d 898, 900-901 [Sup Ct, Albany County 2010] [holding that the court lacked personal jurisdiction due to plaintiff's failure to file an affidavit of compliance]; accord Mullane v Ceva Logistics U.S., Inc., 2020 NY Slip Op 34552[U], at *2 [Sup Ct, Suffolk County Feb. 11, 2020] [same].)

The Appellate Division, First Department, has held that failure to file the affidavit of compliance required by BCL § 307 deprives the court of personal jurisdiction. (Flannery v General Motors Corp., 214 AD2d 497, 498 [1st Dept 1995].) This court sees no material distinction between that holding and the facts of this case, in which plaintiff's affidavit omitted documents required by LLC Law § 304 (e)—particularly because the caselaw emphasizes that plaintiffs must strictly comply with the statute. Given the Appellate Division decisions with respect to § 304, and the First Department's ruling in Flannery, this court concludes that it lacks personal jurisdiction over defendant.

Accordingly, it is

ORDERED that the motion for default judgment is denied and the action is dismissed for lack of personal jurisdiction; and it is further

ORDERED that plaintiff serve a copy of this order with notice of its entry on defendant and on the office of the County Clerk, which shall enter judgment accordingly.

1/5/2023