American Express Natl. Bank v Skyline Luxury, Inc.

[*1] American Express Natl. Bank v Skyline Luxury, Inc. 2023 NY Slip Op 50519(U) Decided on May 30, 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 This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 30, 2023
Supreme Court, New York County

American Express National Bank, Plaintiff,

against

Skyline Luxury, Inc. and KONRAD ZIELINSKI, Defendants.



Index No. 655190/2020



Zwicker & Associates, P.C., Somerset, NJ (Carl E. Zapffe of counsel), for plaintiff.

Konopka Law Group, New York, NY (Michael Konopka of counsel), for defendants.
Gerald Lebovits, J.

This is an action on allegedly unpaid loans made by plaintiff, American Express National Bank, to defendants, Skyline Luxury, Inc., and Konrad Zielinski. Plaintiff is a "national bank located in Utah." (NYSCEF No. 1 at 2 ¶ 1.) Skyline is a "business entity" (id. at 2 ¶ 2), apparently located in Illinois (see id. at 1 [address given on summons]). Zielinski is an Illinois resident. (Id. at 2 ¶ 3.)

Plaintiff moves under CPLR 3215 for default judgment against defendants in the amount of $109,272.28. Defendants cross-move to dismiss under CPLR 306-b and CPLR 3215 (c). The default-judgment motion is denied. The cross-motion to dismiss is granted.

DISCUSSION

I. Plaintiff's Default-Judgment Motion

A plaintiff moving for default judgment must establish proper service, defendant's [*2]default, and the facts constituting plaintiff's claim. Plaintiff does not meet those requirements here.

1. Plaintiff has not shown that it properly served defendant Skyline. Plaintiff did not serve Skyline directly. Rather, it did so by affix-and-mail service on Zielinski, whom the Skyline affidavit of service describes as Skyline's "registered agent." (NYSCEF No. 2.) But plaintiff's motion papers do not identify any basis to believe that Zielinski is Skyline's registered agent for service papers. Plaintiff does not even state under which state's law Zielinski has (assertedly) registered as Skyline's agent.

With respect to defendant Zielinski, plaintiff concedes that it did not serve him within the 120 days required by CPLR 306-b. (Compare NYSCEF No. 1 [complaint], with NYSCEF No. 6 [affidavit of service].) Failure to serve a defendant within that 120-day period, if not excused, is a ground to deny default judgment as against that defendant. (See Commissiong v Mark Greenberg Real Estate Co. LLC, 203 AD3d 657 [1st Dept 2022].) Plaintiff argues that it attempted unsuccessfully on several occasions over a lengthy period in late 2020 and early 2021 to serve Zielinski, and that given those service efforts, this court should now extend nunc pro tunc plaintiff's time to serve. (See NYSCEF No. 10 at ¶¶ 22-31.) Given this lengthy delay in seeking an extension, this court is skeptical of plaintiff's argument.[FN1] But even if this court were to assume for the sake of argument that plaintiff should be treated as having timely served Zielinski, that would not mean plaintiff is entitled to relief.

2. Plaintiff (headquartered in Utah) has not shown that it may properly maintain this action against defendants (located in Illinois) consistent with Business Corporation Law (BCL) § 1314. That statute restricts actions brought in New York by a foreign corporation against another foreign corporation or nonresident. (See BCL § 1314 [b].) Plaintiff does not show that it can satisfy the requirements of § 1314 (b). And although § 1314 (c) carves out an exemption from these requirements for any "corporation which was formed under the laws of the United States and which maintains an office in this state," plaintiff does not attempt to show that it comes within the scope of this exemption, either.[FN2] Plaintiff has thus failed to show prima facie that it may even bring this action.

3. Plaintiff also fails to show prima facie its entitlement to a judgment for the $109,272.28 that it claims in this action. To prove that defendants owe the amount claimed, plaintiff relies on an affidavit of its records custodian. (See NYSCEF No. 17.) As in other debt-collection actions brought by this plaintiff, the affidavit is conclusory and boilerplate. (See American Express Natl. Bank v Pino Napoli Tile & Granite, LLC, 2023 NY Slip Op 23128, at *4 [*3][Sup Ct, NY County 2023].) Indeed, in each of the three places the affidavit here identifies defendants or their account number, specifically, the affidavit's type is noticeably larger in size—suggesting that it was prepared using a (literally) fill-in-the-blank macro. (See id. at ¶¶ 4, 7.) And the only documentation accompanying the affidavit is a loan statement that (i) appears on its face to reflect a transaction involving a different entity in a different state (a California company called Rising Star Motorcoach International Inc.), and (ii) is from August 2019. (NYSCEF No. 19.) This court remains of the view that evidence that defendants might have "owed plaintiff money in [August] 2019 does not, without more, establish that defendants still owed plaintiff money in [December] 2022," when plaintiff brought this motion. (Pino Napoli Tile & Granite, 2023 NY Slip Op 23128, at *4.)

Plaintiff has thus failed on multiple independent grounds to show that it is entitled to default judgment against defendants.

II. Defendants' Dismissal Cross-Motion

In some cases in which a plaintiff's default-judgment showing is insufficient, the proper course is to afford the plaintiff another opportunity (or even multiple opportunities) to muster the necessary facts and documentation. (See id.) In this case, however, doing so would be futile: Plaintiff's action is subject to dismissal regardless as abandoned.

CPLR 3215 (c) provides that if a plaintiff does not take proceedings for the entry of default judgment within one year of the defendant's default, the court shall dismiss the action unless plaintiff provides good cause why the action should be permitted to continue. Defendants argue in their cross-motion that this action must be dismissed for that reason. This court agrees.[FN3]

Plaintiff's default-judgment motion was concededly brought more than five months after the expiration of the one-year deadline set by CPLR 3215 (c). (See NYSCEF Nos. 6 [affidavit of service on Zielinski], 7 [notice of motion]; CPLR 308 [4]; CPLR 320 [a].) Plaintiff claims that the motion was nonetheless timely because plaintiff had already shown the necessary intent to seek default judgment. In particular, plaintiff says, it did so by mailing to Zielinski on August 31, 2021, the additional copy of the summons and complaint required for default-judgment purposes by CPLR 3215 (g) (3). (See NYSCEF No. 10 at 2 n 2.) But sending "a defendant an additional copy of the pleadings"—which "initiates nothing and . . . asks nothing of the court"—does not qualify as taking proceedings for the entry of judgment within the meaning of CPLR 3215 (c). (American Express Natl. Bank v Deltaware Data Solutions, Inc., 2023 NY Slip Op 50142[U], at *2 [Sup Ct, NY County Feb. 28, 2023].)

Plaintiff also contends, as it has in several other cases, that its action should nonetheless [*4]be permitted to continue because it "made continual good-faith efforts to settle this matter (including over 30 phone calls made to Defendants since the complaint was filed)." (NYSCEF No. 10 at 2 n 2.) As this court has held before, debt-collection calls made to defendants, standing alone, do not constitute sufficient cause to ward off a CPLR 3215 (c) dismissal. (See American Express Natl. Bank v Hybrid, Inc., 76 Misc 3d 637, 639 [Sup Ct, NY County 2022]; Deltaware Data Solutions, 2023 NY Slip Op 50142[U], at *2.)

In this action, plaintiff's counsel does also state that counsel "had several conversations with Defendants' representatives and even secured a settlement offer at one point, but unfortunately, no formal agreement was ever reached," leaving plaintiff "with no choice but to file the instant motion." (NYSCEF No. 10 at 2 n 2.) But counsel does not provide any additional details about those conversations—such as, for example, when they occurred (or when the settlement offer was made or rejected). Absent even that basic information, plaintiff has not shown that these settlement-related conversations explain or justify plaintiff's waiting 17 months after the expiration of defendants' time to appear and respond before moving for default judgment. Plaintiff has therefore failed to show "sufficient cause . . . why the complaint should not be dismissed." (CPLR 3215 [c].)

Accordingly, it is

ORDERED that plaintiff's motion for default judgment against defendants is denied; and it is further

ORDERED that defendants' cross-motion to dismiss the action is granted, and the action is dismissed, with costs and disbursements to defendants as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

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

DATE 5/30/2023 Footnotes

Footnote 1:Plaintiff's counsel says that as a matter of office practice, counsel typically waits to seek extensions for untimely service until "after service [is] ultimately obtained," rather than "file multiple such motions on the same docket" before the 120-day period expires. (NYSCEF No. 10 at 5 n 4.) Plaintiff suggests that proceeding in this manner is less burdensome for the court. (See id.) That explanation, whatever it is worth, does not account for plaintiff's having waited 18 months after it served Zielinski to seek a nunc pro tunc extension here.

Footnote 2:This is not the first time that this plaintiff has run afoul of BCL § 1314's limits on the use of the New York courts by out-of-state plaintiffs for suits having nothing to do with New York. (See American Express Natl. Bank v Pino Napoli Tile & Granite, LLC, 2023 NY Slip Op 23128, at *2-3 [Sup Ct, NY County 2023].)

Footnote 3:This court is unpersuaded by plaintiff's suggestion on reply that defendants cannot raise this ground for dismissal without first establishing both a reasonable excuse for their default and a meritorious defense. (See NYSCEF No. 30 at ¶ 3.) That supposed rule would render nugatory the language of CPLR 3215 (c), which requires courts to dismiss actions as abandoned for failure to timely seek entry of default judgment (at least absent a contrary showing of good cause). And it is unsupported by the cases on which plaintiff relies, each of which involved a conventional dismissal motion made by the defendant under CPLR 3211 (a)—not a request to dismiss the action as abandoned under CPLR 3215 (c).