U.S. EQUITIES CORP, Plaintiff, v. Suzanni CAVADIAS, Defendant.
Following the Court's March 25, 2022 decision and order published as 74 Misc 3d 1226(A) (the “March Decision”), the parties appeared for a traverse hearing on April 22, 2022, and were granted leave to submit written post-hearing summations within 60 days after the hearing. As described in the Court's March Decision, the instant traverse hearing was granted because defendant raised sufficient doubt at that stage to warrant a hearing, including a verified complaint from the Attorney General of New York alleging past ‘sewer service’ by the process server in this action, and a TransUnion report indicating that defendant may not have lived at the alleged place of service when the process server allegedly served the summons and complaint in this action. For reasons described herein, the instant traverse, and therefore defendant's motion to vacate and to dismiss for lack of jurisdiction pursuant to CPLR 5015(a)(4), is denied.
In light of the Court's decision denying the instant traverse and therefore not dismissing the action for lack of jurisdiction, the Court also addresses the alternative relief sought in the underlying motion — to vacate the default judgment in this action based upon CPLR 5015(a)(1), to restore this action to the calendar, and to grant defendant leave to interpose an answer and counterclaims — that had been held in abeyance pending the instant traverse. For the reasons described herein, the Court denies defendant's motion to vacate the judgment, restore this action to the calendar and to grant leave.
At the hearing itself, and in their post-hearing briefs, the parties contest the admissibility of a number of items of evidence, and defendant moved at the conclusion of plaintiff's case in the hearing for, in effect, a trial order of dismissal. The parties also differ on which party bears the burden of proof at the traverse hearing on the issue of service. For the reasons stated on the record during the traverse hearing and, as set forth below, defendant's objection to introducing the affidavit of service at issue, and plaintiff's objection to introducing the verified complaint by the Attorney General of New York alleging ‘sewer service’ by Mr. Safran in the past and the electronic report by TransUnion are each overruled, as each would be given their appropriate weight. As further set forth below, neither the Attorney General's allegations nor the TransUnion report, in the end, were considered as having any probative value and had no bearing on the decision.
The Burden of Proof
The parties dispute the parties’ burden of proof concerning service. The burden of proof concerning service of process ordinarily rests upon plaintiff by a preponderance of the evidence. See, e.g., Woods v. M.B.D. Community Hous. Corp., 90 A.D.3d 430, 430, 933 N.Y.S.2d 669 (1st Dept. 2011) (noting that plaintiff has burden of establishing proper service by preponderance at a traverse hearing). Plaintiff alleges that the burden of proof should shift to defendant in light of Mr. Safran's lack of independent recollection or corroborating logbooks. The Court disagrees.
Contrary to plaintiff's argument, the facts of this hearing are inapposite to those in First Am. Inv. Co., LLC. v. Fabian, 75 Misc 3d 1205(A) (Civ. Ct., Bronx Co. Apr. 26, 2022). Pursuant to CPLR 4531, upon which Fabian was premised. “[a]n affidavit by a person who served, posted or affixed a notice, showing such service, posting or affixing is prima facie evidence of the service, posting or affixing if the affiant is dead, mentally ill or cannot be compelled with due diligence to attend at the trial.” In contrast, Mr. Safran is alive, appeared at the instant traverse hearing and testified, and neither party has suggested that Mr. Safran is mentally ill. Mr. Safran's lack of recollection or corroborating records may make him a less effective witness, but that is a far cry from being dead, incompetent, or unavailable.
Plaintiff's position would accept the burden of proof only when the process server is available to testify, with the full benefit of corroborating records, and has a recollection of the events — when plaintiff would presumably be in its strongest position to prevail at a traverse hearing — but disclaim the burden of proof if and when the process server has no memory and their testimony is not so bolstered with corroborating logbooks or other materials. The Court finds that burden-shifting merely because plaintiff's witness might not be a very strong witness is not what the Legislature intended in enacting CPLR 4531, nor is it within the limited burden-shifting permissible under Chaudry Const. Corp. v. James G. Kalpakis & Assoc., 60 A.D.3d 544, 875 N.Y.S.2d 78 (1st Dept. 2009) that this Court noted in Fabian. Accordingly, the Court finds that plaintiff bears the burden of establishing jurisdiction over defendant by a preponderance of the evidence.
Admissibility of the Process Server's Affidavit of Service
At the traverse hearing, plaintiff sought to introduce Mr. Safran's affidavit of service as a prior recollection recorded, identified at the hearing as Plaintiff's Exhibit 1. Defendant opposed. The affidavit is admissible.
“A memorandum or record made or adopted by a witness concerning a matter about which that witness had knowledge, but about which the witness lacks sufficient present recollection to enable the witness to testify fully and accurately, even after reading the memorandum or record, is admissible, provided: (a) the memorandum or record was made or adopted by the witness when the matter was fresh in the witness's memory and (b) the witness testifies that the memorandum or record correctly represented the witness's knowledge and recollection when made.” Guide to New York Evidence § 8.25 (2022) (standard for past recollection recorded exception to hearsay) (citations omitted). Mr. Safran's affidavit of service, coupled with Mr. Safran's testimony, satisfies the criteria to admit the affidavit as a past recollection recorded. At their essence, defendant's challenges to Mr. Safran's affidavit attack Mr. Safran's credibility. Credibility challenges go the weight to be afforded to Mr. Safran's affidavit, not its admissibility. Fabian, at *2,, citing People v. La Brake, 51 A.D.2d 609, 610, 378 N.Y.S.2d 111 (3d Dept. 1976) (questions of accuracy of affidavit of service affect credibility rather than admissibility). Moreover, as Mr. Safran appeared and testified, any potential concerns with the veracity of the affidavit could be attacked in cross-examination of Mr. Safran, eliminating the potential for prejudice.
Admissibility of the Attorney General's Verified Complaint
Plaintiff renewed its objection to the Court's consideration of the verified complaint filed by the Attorney General of New York in Cuomo on behalf of the People of the State of New York v. Serves You Right, Inc., et al., New York Co. Index No. 401867/2010, identified at the hearing as Court Exhibit 1. As the Court noted in ordering the instant traverse hearing, Cuomo v. Serves You Right was “a civil fraud action alleging pervasive ‘sewer service’ fraud by a process serving company that employed Mr. Safran following an investigation by the New York State Office of the Attorney General and the New York State Unified Court System's Office of Internal Affairs.” March Decision, at *2. Further, there is a specific allegation in the complaint in which the Attorney General (verified under oath by an assistant attorney general) alleged over two dozen instances where Mr. Safran executed affidavits of service that indicate he was in two places at once. Court Ex. 1, ¶ 29.
Plaintiff's objections on the record vary little from those offered in first opposing defendant's motion, which the Court addressed in considering the verified complaint and ordering the instant traverse hearing. March Decision, at *2. Plaintiff has not offered a basis to revisit that decision, and the Court declines to do so. See, Fabian, at *2 n. 1, (declining to revisit prior ruling in traverse hearing). Further, the refuted testimony given during the hearing indicates that there was ultimately no legal or regulatory action taken against Mr. Safran in connection with the allegations raised in the Attorney General's complaint goes to the weight of the document, not its admissibility. In any event, the Court can, and does, take judicial notice of the allegations having been made in that action, and affords the verified complaint the weight it is due in deciding this matter as detailed below. See, Horn v. Fisher, 54 Misc 2d 671, 671, 283 N.Y.S.2d 269 (Fam. Ct., Allegany Co. 1967) (collecting cases and taking notice of other proceedings).
Admissibility of Defendant's TransUnion Credit Report
Plaintiff objected to the admission of a TransUnion credit report — identified at the hearing as Defendant's Exhibit 1—on the basis that it was not a certified business record pursuant to CPLR 3122-a or 4518 and was hearsay. The Court notes that much of this dispute would have been avoided had defendant simply obtained and produced a certified copy of the TransUnion report. That said, the substantive issues raised again go to weight more than admissibility.
CPLR 3122-a is inapplicable as defendant obtained the credit report through TransUnion's website without the benefit of a subpoena. Pursuant to CPLR 4518(a) though, “[a]ny writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter.” As the Supreme Court recently noted, “TransUnion is one of the ‘Big Three’ credit reporting agencies, along with Equifax and Experian,” and “[a]s a credit reporting agency, TransUnion compiles personal and business information about individual customers to create consumer reports,” which TransUnion then sells “for use by entities such as banks, landlords, and car dealerships that request information about the creditworthiness of individual consumers.” TransUnion LLC v. Ramirez, ––– U.S. ––––, 141 S. Ct. 2190, 2201, 210 L.Ed.2d 568 (2021). The compilation and disclosure of credit reports is heavily regulated, including an affirmative obligation that TransUnion and others accurately report information provided to them. 15 U.S.C. § 1681e(b) (requiring reasonable efforts by reporting agencies to ensure accuracy of consumer credit reports). Given the extensive regulation associated with TransUnion credit reports, and defendant's testimony attesting to both obtaining the report from TransUnion's website and the accuracy of information listed in the report, sufficient information exists to admit the report pursuant to CPLR 4518(a). See, e.g., City of New York v. NYC Midtown, Index No 450151/2015, NYSCEF Doc. No. 447, at *22 (Sup. Ct., New York Co. Feb. 3, 2017) (admitting uncertified copy of record over objection). The accuracy of that information, and the import of it, are again questions of weight rather than admissibility, which the Court addresses later in this decision. But, as to the threshold question of whether the report is admissible, the answer is yes.
Defendant's Traverse Challenge
Turning to the merits, the traverse hearing itself illustrated what was missing from the parties’ submissions more than what they provided. The process server had no independent recollection of serving the complaint in this action, and no corroborative logbook entries concerning the alleged service. Defendant produced no other witnesses beyond herself, and did not provide any additional evidence establishing where she resided (or did not reside) at the time of alleged service beyond that which defendant offered in making the underlying motion (i.e., the TransUnion report). The Court notes that neither party sought an adjournment prior to the hearing to locate additional witnesses or evidence, and there is no indication that either party availed itself of the subpoena power available to them to obtain witnesses or evidence. On balance, however, the evidence the parties elected to present to the Court tips in favor of plaintiff.
Mr. Safran's Testimony
The Court is mindful that the hearing concerns an alleged act that occurred over seventeen years ago, on January 9, 2005. It is not subject to reasonable dispute that “memories fade over time.” People v. Toms, 191 Misc 2d 585, 596, 743 N.Y.S.2d 690 (St. Lawrence Co. Ct. 2002). Given that Mr. Safran was serving various papers in various places for decades, one particular act of service would very likely be utterly unremarkable such that Mr. Safran's memory of it would be particularly vulnerable to time. See, e.g, People v. Martin, 53 Misc 3d 1207(A), *2 (Sup. Ct., 2015) (noting that “unlike a civilian for whom witnessing a crime may be a particularly memorable event, a police officer's memory of a routine day on the job may not be as robust”). Given the passage of time, there is very little to draw from Mr. Safran's lack of recollection. Indeed, courts treat the unaided memory of process servers as suspect given the sheer volume of papers they are often called upon to serve. See, Masaryk Towers Corp. v. Vance, 12 Misc 3d 1172(A), *9-10, 820 N.Y.S.2d 843 (Civ. Ct., New York Co. 2006) (collecting cases and dismissing action after traverse hearing).1 While this issue would normally be addressed through the extensive recordkeeping requirements imposed by state and local regulation of process servers, the passage of time and Mr. Safran's subsequent retirement have apparently left the parties with nothing more than Mr. Safran's 2005 affidavit of service. By law, Mr. Safran was only required to maintain records for three years, not in perpetuity. Compare, General Business Law § 89-gg, and 6 R.C.NY § 2-33(c)(2), with N.Y.C. Police Dept. Patrol Guide Procs. 202-01(16) and 212-08 (requiring police officers to maintain activity logs after retiring).2 Absent any indication that Mr. Safran should have retained his records longer, the Court will not draw a negative inference from the fact that Mr. Safran did not produce records he no longer had any obligation to maintain. Cf., Pegasus Aviation I, Inc. v. Varig Logisitica S.A., 26 N.Y.3d 543, 547, 46 N.E.3d 601 (2015) (discussing standard for spoliation sanctions).
The Court ordered the traverse hearing to address whether there may be an issue with the service of process due, in part, to the Attorney General's allegations and the then-unclear circumstances surrounding the end of Mr. Safran's licensure as a process server. Mr. Safran's uncontroverted testimony, which the Court finds credible, that he retired of his own free will rather than because he was facing discipline by state or local authorities for allegations of sewer service, and that he was never even questioned by state or local authorities concerning these allegations, severely blunts the evidentiary impact of the Attorney General's complaint. Moreover, although the Attorney General's allegations are subject to notice, the Attorney General's apparent lack of follow-through on them through civil litigation against Mr. Safran personally, or any settlement or an assurance of discontinuance related to Mr. Safran personally, or any regulatory action with the Department of Consumer Affairs, render the Attorney General's allegations without any evidentiary weight whatsoever. See, 2437 Valentine Assoc., LLC v. Valverde, 70 Misc 3d 1216(A), *6 (Civ. Ct., Bronx Co. 2021) (discussing standard in assessing credibility at traverse hearing). In effect, Mr. Safran's testimony rehabilitated his credibility, thus satisfying plaintiff's burden of proof at the conclusion of plaintiff's evidence during the traverse hearing. On that basis, plaintiff established prima facie evidence that service had been accomplished.
Defendant's testimony at the traverse hearing was also largely uncorroborated. In contrast to the defendant in Fabian, defendant did not offer any corroborative testimony from other parties. Cf., Fabian, at *5, (discussing testimony by defendant's mother in dismissing action). Although defendant offered the TransUnion credit report as corroboration, that report stands merely for the proposition that someone somewhere told TransUnion that defendant may have lived at various addresses at various times. Even assuming the accuracy of what is stated in the report, the report states only that on or about some date, defendant lived at a location other than the service location, but does not indicate the period when such residence began and ended. Thus, there is nothing in the report that conclusively establishes that defendant lived somewhere else when service was made as described in the affidavit of service. Indeed, defendant failed to provide any evidence affirmatively establishing residence elsewhere. For instance, defendant did not produce a lease or utility bill for the time of alleged service or supporting her allegation she resided alone and elsewhere from the place of alleged service. Defendant did not obtain or offer any of the material upon which TransUnion relied in preparing defendant's credit report. If anything, defendant herself contradicted TransUnion at times. See, e.g., March Decision, at *2 n. 4 (noting that defendant alleges she moved in November 2002 to an address TransUnion did not associate with her until November 2004). Although defendant raised sufficient question to necessitate the traverse hearing, there is a difference between raising material issues of fact necessitating a trial and prevailing on the merits after trial. See, 2437 Valentine Assoc., at *7 (collecting cases and noting that “personal jurisdiction will be upheld without a traverse hearing if the only evidence submitted in opposition is a bare or conclusory denial of service”).
Accordingly, the record before the Court having supported that defendant was served with the summons and complaint in this action thereby establishing personal jurisdiction, the traverse is denied as is the motion to vacate the default judgment and dismiss the action pursuant to CPLR 5015(a)(4).
Defendant's Trial Motion to Dismiss
At the conclusion of plaintiff's case, defendant moved to dismiss the action, which the Court held in abeyance. As the Court noted previously, the Court ordered the instant traverse hearing because triable issues of fact existed concerning service and therefore jurisdiction. March Decision, at *3 (denying branch of defendant's motion to dispense with traverse hearing and dismiss this action upon the underlying motion papers). As noted, the Court finds that plaintiff presented sufficient evidence of service to defeat defendant's motion under CPLR 5015(a)(4) and therefore also denies defendant's motion during the traverse hearing for what was in essence an application for a directed verdict on the issue of lack of jurisdiction during trial.
Defendant's Alternative Relief
Because the Court ordered the traverse hearing to evaluate service, the Court did not rule upon defendant's proposed alternative relief. See, March Decision, at *1 n. 1. Having now denied the traverse, the Court turns to defendant's alternative relief.
Pursuant to CPLR 5015(a)(1), “the court may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of excusable default, if such motion is made within one year after service of a copy of the judgment or order with written notice of its entry upon the moving party, or, if the moving party has entered the judgment or order, within one year after such entry.” There is also no indication that plaintiff ever served notice of entry, so defendant's motion is timely. Absent a reasonable excuse for her default however, the merits of any defense or counterclaim defendant may seek to interpose do not control. Martinez v. Nguyen, 102 A.D.3d 555, 556, 959 N.Y.S.2d 29 (1st Dept. 2013). Having found that defendant had notice of this litigation years ago, the Court finds that defendant's time to raise her defenses has passed.
Even putting defendant's notice of the action aside, defendant has not established meritorious defenses either. Defendant's proposed answer and counterclaims (which are not verified) offer a general denial of the complaint based upon lack of knowledge or information sufficient to form a belief. Proposed Answer, ¶ 1. Plaintiff then proposes two affirmative defenses (that plaintiff cannot establish chain of title to the debt at issue and that plaintiff's claim is time-barred) and three counterclaims (a federal claim of violations of the Fair Debt Collection Practices Act, and state law claims for deceptive trade practices in violation of General Business Law § 349 and abuse of process), which the Court addresses in turn.
“To establish the existence of a potentially meritorious defense, defendant [need] only to make a prima facie showing of legal merit as the quantum of proof needed to prevail on a CPLR 5015(a)(1) motion is less than that required when opposing a summary judgment motion.” Luderowski v. Sexton, 152 A.D.3d 918, 920 (3d Dept. 2017) (quotations and citations omitted). See also, Ocwen Loan Servicing LLC v. Morgan, 2016 N.Y. Slip Op. 32547(U), *4 (Sup. Ct., Suffolk Co. 2016) (collecting cases and finding that “[a]n affidavit of merit by the moving defendant or a proposed answer, verified by defendant containing assertion of facts which potentially constitute at least one bona fide defense, must thus be attached to the motion papers” in denying motion to vacate default judgment).Although defendant's February 22, 2022 initial affidavit in support of the instant motion purports to support her asserted defenses, her statements are indefinite and hedge that she did not recall having the credit card account at issue in this action, but do not unequivocally deny it either. Defendant's Aff. in Support, ¶¶ 10, 15, and 16. Defendant's subsequent March 14, 2022 reply affidavit did not provide specifically except as to the service issue addressed at the traverse hearing. Defendant's Aff. in Reply, ¶¶ 4-8. Although the standard as noted by the Third Department — based upon First Department precedent and others — is not high, equivocal statements do not suffice. Luderowski, at 921,, citing Cherokee Owners Corp. v. DNA Contr., LLC, 116 A.D.3d 517, 518, 983 N.Y.S.2d 402 (1st Dept. 2014). Defendant's asserted defense that plaintiff cannot establish chain of title is conclusory and unsupported by the record. Bankruptcy Servs. v. Ernst & Young (In re CBI Holding Co.), Dkt. No. 01-cv-131, 2002 WL 33777436, 2010 U.S. Dist. LEXIS 55312, *7 (noting that a “skeletal argument, really nothing more than an assertion, does not preserve a claim,” especially when their papers “present a passel[ ] of other arguments”) (quotation and citation omitted).
As to defendant's statute-of-limitations defense — arguing that Delaware law controls this claim and is thus time-barred, while plaintiff alleges that California law with a longer statute of limitations controls — the Court notes that neither party cites the controlling contract agreement (which the Court notes from its experience in consumer debt actions often include choice-of-law provisions) and defendant does not cite to the relevant statutes of limitations in Delaware upon which she relies.3 “Courts are entitled to assistance from counsel,” however in considering the parties’ argument to conserve judicial resources. Credit Corp. Solutions v. White, Index No. CV-14355-19/BX, slip op, at *2 (Civ. Ct., Bronx Co. Mar. 17, 2022) (quotations and citations omitted). Defendant seemingly relies upon 10 Del. Code. § 8106, which provided for a three-year statute of limitations during the relevant period, and plaintiff seemingly relies upon Cal. Code. Civ. P. § 337, which provided for a four-year statute of limitations. Plaintiff asserts, and defendant does not dispute, that the original debtholder's principal place of business was located, at the relevant time, in California. On that basis, the debt at issue appears to have accrued in California, subject to Cal. Code. Civ. P. § 337 rather than Delaware law. Sands Bros. Venture Capital II, LLC v. Metropolitan Paper Recycling, Inc., 67 Misc 3d 1216(A), *8 (Sup. Ct., New York Co. 2020), citing Proforma Partners v. Skadden Arps Slate Meagher & Flom, 280 A.D.2d 303, 303, 720 N.Y.S.2d 139 (1st Dept. 2001).
For purposes of defendant's motion, the Court has considered defendant's proposed counterclaims as well, none of which alter the Court's analysis. Defendant's counterclaims relied in large measure upon defendant's argument that the instant claim is time-barred, which was not supported here. Proposed Answer, ¶¶ 26, 34, and 38 (asserting statute of limitations in all three counterclaims). Where defendant relied upon improper service allegations, the Court's ruling on the traverse dispenses with those allegations. Proposed Answer, ¶ 40 (asserting systemic practice of improper service in abuse of process counterclaim). Although defendant also asserts that plaintiff improperly sought attorney's fees and pre-judgment interest, defendant premised those allegations upon unspecified “similar practices in other cases brought in New York,” which are insufficient. See, Luderowski; and Bankruptcy Servs., supra. At bottom, and with the benefit of papers, argument, and a hearing, while CPLR 5015(a) vests a court with discretionary power to relieve a party from its judgment or order, “where the moving party's claim is of dubious merit, as here, that discretionary power should be subordinated to the policy favoring the finality of judgments.” Greenwich Sav. Bank v. JAJ Carpet Mart, Inc., 126 A.D.2d 451, 452-453, 510 N.Y.S.2d 594 (1st Dept. 1987).
As defendant has not established a reasonable excuse for her default, and has not established a potentially meritorious defense, defendant's the motion to vacate pursuant to CPLR 5015(a)(1) is denied as is the remaining relief sought by defendant.
Accordingly, it is:
ORDERED that defendant's traverse is denied after hearing; and it further
ORDERED that defendant's motion to vacate the judgment is denied; and it is further
ORDERED that defendant's motion to dismiss the action is denied; and it is further
ORDERED that defendant's motion for leave to file an answer and counterclaims in this action out of time is denied; and it is further
ORDERED that all stays of enforcement of the judgment in this action are dissolved; and it is further
ORDERED that defendant comply with plaintiff's information subpoena within 30 days of the date of this Order;
This constitutes the Decision and Order of the Court.
1. If anything Mr. Safran's testimony may have been more suspect had his independent recollection of one particular alleged act of service after so many years been more precise. Cf., Martin, supra.
2. Available at https://www1.nyc.gov/site/nypd/about/about-nypd/manual.page (last accessed Jul. 13, 2022).
3. The parties do not dispute that an earlier statute of limitations than New York's then-standard six-year period controls pursuant to CPLR 202, but the parties do dispute which earlier period controls.
Jeffrey S. Zellan, J.
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