Chaos Commerce Inc. v Choxi.com Inc.

[*1] Chaos Commerce Inc. v Choxi.com Inc. 2023 NY Slip Op 50418(U) Decided on May 8, 2023 Supreme Court, Kings County Montelione, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 8, 2023
Supreme Court, Kings County

Chaos Commerce Inc., Plaintiff,

against

Choxi.com Inc. f/k/a Nomorerack.com, Inc., Vipesh Agarwal, and Rohit Lalwani, Defendants.



Index No.: 501323/2016


For Plaintiff
Joseph Obermeister, Esq.
Joseph Obermeister-Attorney at Law
555 Willow Avenue, Cedarhurst, NY 11516
516-730-7401

For Defendant Rohit Lalwani
Aaron Harold Pierce
Pierce & Kwok LLP
299 Broadway Suite 1405, New York, NY 10007
347-678-7262 Richard J. Montelione, J.

After oral argument on the record, the following papers were read on this motion pursuant to CPLR 2219(a):

Papers Numbered

Notice of Motion/Order to Show Cause/Affidavits/Affirmations/Exhibits 27-40
Answering Affirmations/Affidavits/Exhibits 42
Reply Affirmations/Affidavits/Exhits NO REPLIES CONSIDERED BECAUSE NO REQUEST TO SUBMIT ONE WAS MADE OR GRANTED.

This is an action where plaintiff claims, inter alia, a breach of contract by defendants for their failure to pay for merchandise provided to defendants, valued in excess of $447,082.10, [*2]with a balance due of $142,474.42. A clerk's judgment was entered on default on March 15, 2016.

Defendant Rohit Lalwani ("Lalwani") now moves to vacate his default based on lack of jurisdiction because the summons and complaint were not properly served upon him, and this defendant asserts that he was only an employee of Choxi.com Inc. f/k/a Nomoreerack.com Inc. and not a proper party as there is no individual liability for a corporate debt. The court has reviewed the affidavits of service and finds that the court has jurisdiction over the defendants and defendant has not provided "good cause" under CPLR 5015 (a)(4) to vacate his default. Notwithstanding, an initial review of the summons and complaint indicates that the claims regarding the amount sought under contract is not one where computation can be made certain " ' as in actions on money judgments and negotiable instruments,' " (see 21st Mtge. Corp. v Raghu, 197 AD3d 1212, 154 NYS3d 84, 2021 NY Slip Op 05016, 2021 WL 4301662 [2d Dept 2021]). In fact, plaintiff's counsel's affirmation in opposition highlights a dispute raised by defendants regarding the amount due in an email from defendants prior to the commencement of the action (NYSCEF Doc. No.42, ¶30, " it is NOT $150,000 but rather an amount significantly less "). At the very least, the clerk's judgment would have to be vacated and an inquest held. However, upon further review of the complaint, this court has determined that the complaint states no viable cause of action by the plaintiff against the individual defendant Lalwani (or defendant Vipesh Agarwal hereinafter "Agarwal"). The defendant Lalwani was an employee of the corporate defendant. There is no allegation of a personal guarantee or any other allegations which would provide a legal basis for a cause of action against this defendant. There is nothing stated in the opposition papers to the motion that provides a legal basis for the personal liability of this defendant for the corporate debt of his employer. Regarding the requirements for stating a viable cause of action, the Court in Katz v Blau, 173 AD3d 987, 988, 103 NYS3d 131, 2019 NY Slip Op 04922, 1, 2019 WL 2518877 [2d Dept 2019] held that:

'A plaintiff must allege enough facts to enable the court to determine that a viable cause of action exists' (Roy v 81E98th KH Gym, LLC, 142 AD3d 985, 985 [2016]; see Woodson v Mendon Leasing Corp., 100 NY2d 62, 71 [2003]). "Where a valid cause of action is not stated, the party moving for judgment is not entitled to the requested relief, even on default" (Cardo v Board of Mgrs., Jefferson Vil. Condo 3, 29 AD3d 930, 932 [2006], quoting Green v Dolphy Constr. Co., 187 AD2d 635, 636 [1992]; see Abrahams v Commonwealth Land Tit. Ins. Co., 120 AD3d 1165, 1166 [2014]; Venturella-Ferretti v Ferretti, 74 AD3d 792, 793 [2010]).

Moreover, the only causes of action regarding the individual defendants involve claims for unjust enrichment and quantum meruit which cannot be recovered from these defendants when plaintiff seeks a clerk's judgment on a contractual basis with the corporate defendant. See Rayham v Multiplan, Inc., 153 AD3d 865, 868-69, 61 NYS3d 90, 94, 2017 NY Slip Op 06306, 2017 WL 3611693 [2d Dept 2017], " causes of action sounding in unjust enrichment and quantum meruit cannot be maintained if there is a valid, enforceable contract governing the same subject matter underlying the action." Given there was no viable cause of action by the plaintiff against defendant Lalwani (or defendant Agartwal) at the time the clerk entered default judgment, let alone no legal basis to grant the "sum certain" requirements under CPLR 3215(a), the Kings County Clerk did not have the authority to enter a judgment against movant defendant Lalwani or defendant Agarwal. See Freeport Plaza Realty, LLC v Freeport Moon, Inc., 205 AD3d 685, 165 NYS3d 710, 2022 NY Slip Op 02981, 2022 WL 1414591 (2d Dept 2022). [*3]Further, there being no viable cause of action regarding the individual defendants, movant defendant Lalwani and non-moving defendant Agarwal, the court will sua sponte vacate the judgment and dismiss the complaint against these defendants. See Aprea v NY State Bd. of Elections, 103 AD3d 1059, 1061 (3d Dept 2013):

Even where a defendant has defaulted, a plaintiff is only entitled to a default judgment if the complaint states a viable cause of action (see Walley v Leatherstocking Healthcare, LLC, 79 AD3d 1236, 1238, 913 NYS2d 380 [2010]). If, despite accepting the allegations as true, no viable cause of action is stated, 'the court may sua sponte dismiss a plaintiff's complaint upon his or her motion for a default judgment' (id. at 1238; see Martocci v Bowaskie Ice House, LLC, 31 AD3d 1021, 1022, 819 NYS2d 598 [2006], lv dismissed 7 NY3d 916, 860 NE2d 985, 827 NYS2d 683 [2006], cert denied 552 US 918, 128 S Ct 277, 169 L Ed 2d 202 [2007]).

Based on the foregoing, it is

ORDERED that the clerk's default judgment entered on March 15, 2016 is VACATED; and it is further

ORDERED that defendant Rohit Lalwani's Motion to vacate the default judgment as against him individually is moot as the entire clerk's default judgment has been vacated, but GRANTED(MS#1) to the extent that all causes of action against defendant Rohit Lalwani and Vipesh Agarwal are DISMISSED; and it is further

ORDERED, that all other requests for relief are denied.

This constitutes the decision and order of the Court.

Dated: May 8, 2023
Hon. Richard J. Montelione, J.S.C.