CAMPBELL v. AMEL PARK HOLDINGS LLC (2018)

Plaintiffs Doreen Campbell and Adrian Radcliffe (hereinafter collectively referred to as Plaintiffs) commenced this action against Defendants Amel Park Holdings LLC (hereinafter referred to as Amel) and Carol J. Madsgard, P.C. and Carol J. Madsgard, Esq. The Complaint, dated November 10, 2017, states that Plaintiff entered into a contract with Amel to purchase the real property located at 85 Hill Avenue, Elmont, New York.

The Complaint alleges that at the closing held on February 6, 2017, the Plaintiffs and their attorney Erica Yitzhak, Esq., entered into a Delayed Possession Agreement with Amel, and Carol J. Madsgard, P.C. The Delayed Possession Agreement provided as follows:

“1. The existing tenants will vacate the premises by March 15th, 2017

2. Once the tenants vacate, on or before March 15, 2017, and the buyers will be given possession adjustments will be made to compensate for the buyers for their mortgage, taxes and insurance;

3. In the event the second floor tenant does not vacate prior by March 15th, 2017 the seller shall forfeit $5,000. In the event the first floor tenant does not vacate by March 15th, 2017 the seller shall forfeit $15,000. In the event neither tenant leaves the seller forfeits the full amount of $20,000.

4. Carol J. Madsgard, P.C. is currently holding $20,000 in escrow.

5. Carol J. Madsgard, P.C. will undertake to provide Erica Yitzhak, Esq. with copies of the existing leases for both tenants.”

The Complaint states that Plaintiffs received $5,000 from Defendants out of the escrow on April 3, 2017. The first cause of action alleges that the tenants did not vacate prior to March 15, 2017 but the Defendants refused to release the remaining balance of $15,000. Therefore, Plaintiffs demand judgment for $15,000.

Plaintiffs move for an order to enter a default judgment in favor of Plaintiffs against Amel by the motion dated June 28, 2018. The motion states that Amel was served via service on the Secretary of State on January 22, 2018. The motion further alleges that Amel failed to answer and has not provided a reasonable excuse and a meritorious defense to vacate its default.

Amel cross moves by the motion dated September 18, 2018, for an order dismissing the Summons and Complaint or in the alternative to allow Amel to submit an answer and “argue the case on the merits.”

Amel avers that it was not properly served as required by law and the CPLR. Amel contends that CPLR 311-A does not permit service upon the Secretary of State because Amel did not designate the Secretary of State as agent. Thus, it is argued that since service upon the Secretary of State is a nullity, the court is without authority to enter a default judgment against Amel.

The cross motion also claims that there was no breach of the agreement because there was a modification which extended the time to move until April 1, 2017. Amel claims that the tenants vacated the premises by March 31, 2017.

In opposition to the cross motion, Plaintiffs argue that Amel did not submit a reasonable excuse and meritorious defense for its default. Furthermore, Plaintiffs allege that service was proper upon the Secretary of State because:

“Defendant allege in its cross-motion that it was not properly served with a copy of the Summons and Complaint because Defendant never appointed Secretary of State as an agent for any purpose. However, this is simply not true. Attached to Plaintiff's motion for a default judgment, as Exhibit “B” is a copy of the affidavit of service, which clearly shows that the person designated to receive service of process is Jean Alfred, the exact same person who signed the affidavit in support of Defendant's cross-motion.”

Plaintiffs contend that the matter was settled with Carol J. Madsgard P.C. and Carol J. Madsgard Esq. on May 14, 2018 for $3,000 leaving $12,000 owed by Amel.

Decision

Service upon the Amel by service upon the Secretary of State is proper and authorized by law. See Drillman v. Marsam Realty 13th Ave., LLC, 129 A.D.3d 903, 13 N.Y.S.3d 126 (2d Dept. 2015), wherein the following is stated concerning the service upon a limited liability company via service upon the Secretary of State:

“The process server's affidavit of service established that service of process upon the New York Secretary of State as agent for the defendant Marsam 13th Realty Avenue, LLC (hereinafter Marsam), constituted valid service pursuant to Limited Liability Company Law § 303(a) (see CPLR 311—[a]; Bennett v. Patel Catskills, LLC, 120 A.D.3d 458, 990 N.Y.S.2d 594; Trini Realty Corp. v. Fulton Ctr. LLC, 53 A.D.3d 479, 861 N.Y.S.2d 743; Union Indem. Ins. Co. of N.Y. v. 10-01 50th Ave. Realty Corp., 102 A.D.2d 727, 728, 476 N.Y.S.2d 563). Marsam's mere denial of receipt of the summons and complaint was insufficient to rebut the presumption of proper service created by service upon the Secretary of State (see Thas v. Dayrich Trading, Inc., 78 A.D.3d 1163, 1164, 913 N.Y.S.2d 269; Gartner v. Unified Windows, Doors & Siding, Inc., 71 A.D.3d 631, 632, 896 N.Y.S.2d 415; Coyle v. Mayer Realty Corp., 54 A.D.3d 713, 864 N.Y.S.2d 75). Therefore, Marsam was not entitled to relief pursuant to CPLR 5015(a)(4).”

Thus, the cross motion to dismiss because Amel was served via service of the Secretary of State is denied.

A review of the court file and the court records indicate that Plaintiffs never filed the proof of service with the court concerning service upon Amel by service upon the Secretary of State. Uniform District Court Act Section 402(b) states:

“If the summons is served otherwise than as designated in subdivision (a), it shall provide that the defendant must appear and answer within thirty days after proof of service is filed with the clerk.”

Since Plaintiffs never filed proof of service concerning Amel, the time to appear and answer did not commence. Thus, the Plaintiffs' motion to enter a default judgment against Amel is denied.

Amel shall serve and file its answer by November 15, 2018.

So Ordered:

Scott Fairgrieve, J.