GLD Sponsor Member, LLC v BN Holdings Trust
Annotate this CaseDecided on September 12, 2023
Supreme Court, New York County
GLD Sponsor Member, LLC, Plaintiff,
against
BN Holdings Trust and Kelli D. Austin, Defendants.
Index No. 653490/2023
Akerman LLP, New York, NY (Donald N. David of counsel), for plaintiff.
No appearance for defendants.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 13, 16, 17, 18, 19 were read on this motion for SUMMARY JUDGMENT IN LIEU OF COMPLAINT.
In this action on a promissory note and guarantee, plaintiff, GLD Sponsor Member, LLC, moves without opposition under CPLR 3213 for summary judgment in lieu of complaint against defendant-borrower, BN Holdings Trust, and defendant-guarantor, Kelli D. Austin. The motion is granted without opposition.
DISCUSSION
I. Whether Personal Jurisdiction Exists over Defendants
Guarantor is a natural person. Plaintiff's affidavit of service on guarantor reflects service by personal delivery in Texas under CPLR 308 (1). (See NYSCEF No. 19 at 1.) Borrower is a trust. Plaintiff's affidavit of service reflects that it served borrower by personal delivery on guarantor as borrower's authorized agent under CPLR 308 (1). (NYSCEF No. 18 at 1.) The note and the guarantee each reflect that guarantor is a trustee (or perhaps the sole trustee) of borrower. (See NYSCEF No. 4 at 4 [signature block of note]; NYSCEF No. 5 at 1 ¶ 1 [guarantee].) Given that borrower is a trust, service on a trustee, by a means appropriate under the CPLR for serving [*2]that trustee (here, personal delivery), is valid service on borrower. (See MLG Capital Assets, LLC v Judith Eidelkind Trust, 283 AD2d 619, 621 [2d Dept 2001]; Citibank, N.A. v Kollen, 162 Misc 2d 883, 884-886 [Sup Ct, Suffolk County 1994].)
However, because defendants are not domiciled here, CPLR 313 provides that service on defendants in Texas is proper only if this court has personal jurisdiction over them under CPLR 301 or CPLR 302. Consent is a proper basis for the exercise of personal jurisdiction under CPLR 301. (See Pichardo v Zayas, 122 AD3d 699, 702 [2d Dept 2014].) Both borrower (in the promissory note) and guarantor (in the guarantee) expressly consented to the jurisdiction of the New York courts in an action arising out of or relating to the note, or the guarantee, respectively. (NYSCEF No. 4 at 3; NYSCEF No. 5 at 2 ¶ 8.) Service on defendants was therefore proper.
Defendants' express consents to jurisdiction, in addition to validating service, also means that this court may properly exercise personal jurisdiction over borrower—notwithstanding that borrower was created under the laws of Nevada, that borrower's trustee is a resident of Texas, and that plaintiff does not suggest that borrower's assets are located in New York. (See National City Bank of NY v Beebe, 131 NYS2d 57, 71-72, 74 [Sup Ct, NY County 1954] [holding that personal jurisdiction by consent existed over trustees of trust that was organized under laws of Rhode Island and held assets consisting in part of Rhode Island real property], affd without opn 285 AD 874 [1st Dept 1955]; cf. Braman v Braman, 236 AD 164, 168 [1st Dept 1932] [explaining that a court with personal jurisdiction over a trustee may require the trustee to take action with respect to out-of-state trust property].)
A CPLR 3213 motion may not be made returnable before the defendant's time to appear under CPLR 320 expires. (See Alpine Capital Bank v Estate of Shiah, 2020 NY Slip Op 50587[U], at *3 [Sup Ct, NY County May 20, 2020].) Failure to comply with this requirement is a "fatal jurisdictional defect." (Bhanti v Jha, 140 AD3d 685, 686 [2d Dept 2016].) Plaintiff's affidavits of service represent that defendants were served by personal delivery under CPLR 308 (1) on July 24, 2023. (NYSCEF Nos. 18, 19.) CPLR 320 (a) provides that a defendant served by this method has 20 days from service to appear and respond. Because the 20th day of the period, August 13, was a Sunday, defendants' deadline was extended to August 14. (See General Construction Law § 25-a). Plaintiff's motion return date, set two weeks later, on August 28, 2023, was proper.
II. Whether Plaintiff is Entitled to Summary Judgment in Lieu of Complaint Against Defendants
On the merits, the accelerated procedure provided for by CPLR 3213 is available only for "instruments for the payment of money only" (or for payments on judgments). Promissory notes and unconditional guarantees of the payment of money, like those relied on by plaintiff here, qualify for CPLR 3213 treatment. (See Aranoff v Lipskar, 269 AD2d 124, 124-125 [1st Dept 2000] [promissory note]; Punch Fashion, LLC v Merchant Factors Corp., 180 AD3d 520, 521 [1st Dept 2020] [guarantee].)
Plaintiff has provided copies of the note and guarantee (NYSCEF Nos. 4, 5), and an affidavit of its general manager, attesting on personal knowledge to defendants' failure to make all payments required under those instruments (NYSCEF No. 3 at ¶¶ 11-12). That evidence suffices to meet plaintiff's prima facie burden. (See Lugli v Johnston, 78 AD3d 1133, 1135 [2d Dept 2010].) Defendants have not appeared, let alone provided evidence establishing the existence of a triable issue of fact.
Plaintiff also requests its reasonable attorney fees. The note provides that borrower must [*3]pay "all costs incurred and reasonable attorneys' fees for legal services" involved in an effort by plaintiff to collect on the note. (NYSCEF No. 4 at 1.) The guarantee makes guarantor responsible for "all of [borrower's] obligations under the Note," including the obligation to pay attorney fees. (NYSCEF No. 5 at ¶ 1.)
Accordingly, it is
ORDERED that plaintiff's CPLR 3213 motion for summary judgment in lieu of complaint is granted, and plaintiff is awarded a judgment against defendants, jointly and severally, for $422,500, with interest running at the contractual default rate of 15% from June 29, 2023, plus costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff may enter a supplemental judgment for its reasonable attorney fees, with the amount of those fees to be determined by motion made on notice, supported by appropriate documentation; and it is further
ORDERED that plaintiff shall serve a copy of this order with notice of its entry on defendants by certified mail, return receipt requested, directed to their respective last-known addresses; and on the office of the County Clerk, which shall enter judgment accordingly.
Dated: September 12, 2023
Hon. Gerald Lebovits
J.S.C.
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