Mario L. GUADINO, Plaintiff, v. Michael A. RUDD, Defendant.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of motion to vacate a default judgment and cross-motion for summary judgment, as indicated below:
Order to Show Cause and Exhibits Annexed 1
Cross-Motion for Summary Judgment 2
Defendant moved by order to show cause seeking to vacate a default judgment. Plaintiff cross-moved for an order striking defendant's jury demand, striking defendant's response to plaintiff's notice to admit, treating the notice to admit as an admission, and, based on those admissions, granting summary judgment pursuant to CPLR § 3212. Defendant's order to show cause is granted. Plaintiff's cross-motion is granted in part and denied in part.
Plaintiff commenced this action as a self-represented litigant seeking $25,000 for “Failure to return security. Loss of time from work.” Defendant failed to appear and a judgment for $7,072.34 was issued on June 27, 2016. The parties, represented by counsel, entered into a stipulation to resolve their pending motions, by which they agreed to vacate the judgment, for plaintiff to serve an amended complaint, and for defendant to interpose an answer. The amended complaint, dated June 1, 2017, sought damages in the amount of $25,000 for failure to return the security deposit and for reasonable attorney's fees. Defendant failed to answer, resulting in a default judgment.
The parties entered into a second stipulation by which they agreed to vacate the judgment, permit defendant to file an answer, waive discovery, and for plaintiff to file a notice of trial. In his answer dated October 24, 2017, defendant raised defenses and counterclaims totaling $37,468.76 for repairs and loss of rental income. Plaintiff filed the notice of trial on December 7, 2017, requesting a trial without a jury. Defendant filed a demand for a jury trial on February 8, 2018.
In support of this order to show cause seeking to vacate the default judgment, defendant submitted, among other things, a letter from defendant's counsel showing that on March 13, 2018, he asked plaintiff's counsel to agree to adjourn the case on April 6, 2018, because he would be on vacation; an email from plaintiff's counsel dated March 15, 2018 giving his consent to the adjournment; and the letter from plaintiff's counsel notifying defendant of the April 6 default and that the case was put on for an inquest on April 25.
In support of this cross-motion, plaintiff submitted his own affidavit; a copy of the lease; the notice to admit; and the response to the notice to admit.
CPLR 5015(a)(1) provides that a party may be relieved from a judgment or order based on an excusable default. The party seeking relief from an order or judgment must provide a reasonable excuse for the failure to appear and demonstrate the merit of the cause of action or defense. Eugene Di Lorenzo, Inc. v. A. C. Dutton Lumber Co., 67 NY2d 138, 492 N.E.2d 116, 501 N.Y.S.2d 8 (1986); Rugieri v. Bannister, 7 NY3d 742, 853 N.E.2d 231, 819 N.Y.S.2d 861 (2006) (“plaintiffs proffered a reasonable excuse for their default and facts indicating a meritorious cause of action.”); Goldman v. Cotter, 10 AD3d 289, 291, 781 N.Y.S.2d 28 (1st Dept. 2004). Here, plaintiff did not oppose defendant's motion to vacate the default. This Court finds that defendant established a reasonable excuse as he submitted evidence in writing that plaintiff agreed to the adjournment on April 6, 2018. Additionally, this Court will exercise its discretion in treating defendant's submissions of repair costs as “facts indicating a meritorious defense.”
Plaintiff seeks summary judgment on the grounds that defendant's attorney's response to the notice to admit was improper and must be stricken, thereby causing the notice to admit to become an admission by defendant, leaving no issue for trial. “The proponent of a motion for summary judgment must demonstrate that there are no material issues of fact in dispute, and that it is entitled to judgment as a matter of law.” Dallas-Stephenson v. Waisman, 39 AD3d 303, 306, 833 N.Y.S.2d 89 (1st Dept. 2007), citing Winegrad v. New York Univ. Med. Center, 64 NY2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 (1985.). “Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers.” Alvarez v. Prospect Hosp., 68 NY2d 320, 324, 501 N.E.2d 572, 508 N.Y.S.2d 923 (1986). The burden then shifts to the opposing party, who must proffer evidence in admissible form establishing that an issue of fact exists warranting a trial. CPLR § 3212(b); Zuckerman v. City of New York, 49 NY2d 557 (1980); Gonzalez v. 98 Mag Leasing Corp., 95 NY2d 124, 733 N.E.2d 203, 711 N.Y.S.2d 131 (2000).
“It is well established that summary judgment may not be granted whenever the pleadings raise clear, well-defined and genuine issues.” Falk v. Goodman, 7 NY2d 87, 89, 163 N.E.2d 871, 195 N.Y.S.2d 645 (1959). Upon a motion for summary judgment, the role of the court is issue finding, not issue determination. Vega v. Restani Constr. Corp., 18 NY3d 499, 965 N.E.2d 240, 942 N.Y.S.2d 13 (2012); Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395, 404, 144 N.E.2d 387, 165 N.Y.S.2d 498 (1957); Esteve v. Abad, 271 A.D. 725, 727, 68 N.Y.S.2d 322 (1st Dept. 1947); The motion should be denied where different conclusions can reasonably be drawn from the evidence. Sommer v. Federal Signal Corp., 79 NY2d 540, 593 N.E.2d 1365, 583 N.Y.S.2d 957 (1992). All of the evidence must be viewed in the light most favorable to the party opposing the motion, and all reasonable inferences must be resolved in that party's favor. Udoh v. Inwood Gardens, Inc., 70 AD3d 563, 897 N.Y.S.2d 12 (1st Dept. 2010). Issues of credibility are to be resolved at trial, not by summary judgment. Castillo v. New York City Tr. Auth., 69 AD3d 487, 891 N.Y.S.2d 645 (1st Dept. 2010).
The notice to admit demanded that defendant admit that (1) he received a $6,300 security deposit; (2) that he did not provide the name or location of the bank where the security deposit was deposited; and (3) that the security deposit was comingled with defendant's own personal funds.
Defendant's counsel, not defendant, responded to the notice to admit as follows: (1) “admits”; (2) “defendant neither denies nor admits. Defendant did not send to plaintiff a separate item of correspondence, but the name of the depository bank was on the back of plaintiff's check, which, presumably, was returned to the plaintiff after payment;” (3) “Denies, in that the security was deposited into a separate account, and maintained therein, until such time as the lease was over and the plaintiff, tenant thereunder, owed money damages to the defendant for breach of lease.”
General Obligations Law §§ 7-103(1) and (2) provides that security deposits shall not be comingled with the landlord's personal property and the landlord shall notify the tenant in writing of the name and address of the bank where the security deposit is lodged. An inference of comingling funds is permitted where the lease has expired and during the course of the lease the landlord failed to give notice of the bank holding the security deposit. Dan Klores Assocs. v. Abramoff, 288 AD2d 121, 733 N.Y.S.2d 388 (1st Dept. 2001). The burden is on the landlord to rebut the inference. Id.; Harlem Capital Ctr., LLC v. Rosen & Gordon, LLC, 145 AD3d 579, 44 N.Y.S.3d 36 (1st Dept. 2016).1 The stamp on the back of the security deposit check which bears the name of the bank when the check is deposited does not satisfy the “notify in writing” requirement of General Obligation Law § 7-103. Leroy v. Sayers, 217 AD2d 63, 635 N.Y.S.2d 217 (1st Dept. 1995). Failure to rebut the inference of comingling will result in the immediate return of the funds without any offset against the cost of repairs or breach of the lease. Jimenez v. Henderson, 144 AD3d 469, 470, 41 N.Y.S.3d 26 (1st Dept. 2016); Dan Klores Assocs., 288 AD2d at 122.
CPLR § 3123(a) provides in relevant part, that
[A] party may serve upon any other party a written request for admission by the latter of the genuineness of any papers or documents, or the correctness or fairness of representation of any photographs, described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry. Copies of the papers, documents or photographs shall be served with the request unless copies have already been furnished. Each of the matters of which an admission is requested shall be deemed admitted unless within twenty days after service thereof or within such further time as the court may allow, the party to whom the request is directed serves upon the party requesting the admission a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters. (emphasis added).
“A notice to admit is to be used only for disposing of uncontroverted questions of fact or those that are easily provable, and not for the purpose of compelling admission of fundamental and material issues or ultimate facts that can only be resolved after a full trial.” Hawthorne Group, LLC v. RRE Ventures, 7 AD3d 320, 324, 776 N.Y.S.2d 273 (1st Dept. 2004); Meadowbrook-Richman, Inc. v. Cicchiello, 273 AD2d 6, 709 N.Y.S.2d 521 (1st Dept. 2000). “[I]t may not be employed as a substitute for other disclosure devices, such as examinations before trial, depositions upon written questions or interrogatories.” Taylor v. Blair, 116 AD2d 204, 206, 500 N.Y.S.2d 133 (1st. Dept. 1986); Fetahu v. New Jersey Tr. Corp., 167 AD3d 514, 91 N.Y.S.3d 11 (1st Dept. 2018). A notice to admit cannot be deemed admitted when it goes to the ultimate facts in the case. See, Echevarria v. 158th St. Riverside Dr. Hous. Co., Inc., 113 AD3d 500, 502, 979 N.Y.S.2d 294 1st Dept. 2014). A party does not have to respond to a notice to admit that goes beyond the permissible scope. Fadina v. Beard, 36 Misc 3d 136(A), 957 N.Y.S.2d 264 (App. Term, 1st Dept. 2012). An attorney's response to a notice to admit is improper. See Rosenfeld v. Vorsanger, 5 AD3d 462, 772 N.Y.S.2d 597 (2nd Dept. 2004). Here, the attorney's response is improper and will not be considered by the Court.
Question 1 is deemed an admission as it is within the scope of a notice to admit. Defendant did not deny in his answer the allegation in the amended complaint that plaintiff “gave two months' security. Amended Complaint ¶ 3.
Questions 2 and 3 are beyond the scope of the notice to admit and will not be deemed admissions. This is an action for the return of a security deposit. The questions as to whether notice of the name and address of the bank where the security deposit was lodged and whether plaintiff comingled the security deposit with his personal account in violation of General Obligations Law §§ 7-103 are material issues and ultimate facts. Defendant did not have to respond to these questions as a notice to admit may not be used to compel admission of material issues or ultimate facts, thus they cannot be deemed admissions. Hawthorne Group, LLC, 7 AD3d at 324.
Defendant's jury demand is valid. In support of the branch of the cross-motion seeking to strike defendant's jury demand, plaintiff relies on the section of the lease which states that by signing a lease the parties waived their right to a jury trial. New York Real Property Law (“RPL”) § 259-c provides that “[a]ny provision in a lease, executed after the effective date of this act, that a trial by jury is waived in any action, proceeding or counterclaim brought by either of the parties thereto against the other in any action for personal injury or property damage, is null and void.” See, Phoenix Garden Rest. v. Chu, 234 AD2d 233, 651 N.Y.S.2d 510, (1st Dept. 1997). Here, defendant's affirmative defenses and counterclaims allege that plaintiff caused property damage. Thus, the jury waiver provision contained in the lease is invalid as to property damages.
Accordingly, defendant's order to show cause seeking to vacate the default judgment is granted and the matter is restored to the trial calendar. The branch of the cross-motion seeking to strike defendant's response to the notice to admit is granted. The branch of the motion seeking to treat the notice to admit as an admission is denied as to questions 2 and 3 as they are beyond the scope of a notice to admit. The cross-motion for summary judgment is denied, except on the issue that plaintiff gave defendant the security deposit as stated in the amended complaint.
The parties are directed to appear in Part MP1, Room 949, 111 Centre Street, New York, NY 10013 on February 20, 2020, at 9:30 a.m. for a pre-trial conference.
1. A landlord “ ‘openly repudiate[d]” its obligation under General Obligation Law § 7-103 [when] it ignored the security deposit notice.” Harlem Capital Ctr., LLC, 145 AD3d at 581. In his affidavit dated May 4, 2018, plaintiff stated that he attached an email from August 2015 at the termination of the lease. Guadino Aff. ¶ 9. The email was not attached to the motion before this Court.
Carol Sharpe, J.
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