DECOSTA v. NAMDAR EAST VILLAGE HOLDINGS LLC 158 FIRST AVE NYC LLC (2023)

Recitation as required by CPLR 2219 (a) of the papers considered in the review of this Motion:

Papers Numbered

Notice of Motions & Affts. 1

Order to Show Cause

Opposition & Affidavits

Reply & Affidavits

Exhibits

Supplemental Affidavits

I. Papers

Upon reading Plaintiffs' Notice of Motion and Affirmation in Support seeking a default judgment pursuant to CPLR 3215 against defendants N&S SASSOUNI and 158 FIRST AVE NYC LLC, filed on May 8, 2023, together with all supporting documents, Plaintiffs' motion ("Motion"), submitted without opposition, is denied.

II. Procedural History

Plaintiffs commenced this action involving a dispute over a security deposit by filing a Summons and Complaint on January 18, 2023. Plaintiffs alleged two causes of action sounding in unjust enrichment and violations of General Obligations Law § 7-108. Plaintiffs sought monetary damages including actual damages, punitive damages, attorney fees, and interest. On May 8, 2023, Plaintiffs filed the instant Motion made returnable on June 8, 2023, in Part 34, Room 428 at the Civil Court of the State of New York, County of New York. The Motion was adjourned to Part 30, Room 949 on July 5, 2023, and was submitted without opposition on that date.

III. Discussion

Plaintiffs' Motion was made returnable in the incorrect court part. "A notice of motion shall specify the time and place of the hearing on the motion, the supporting papers upon which the motion is based, the relief demanded and the grounds therefor" (CPLR 2214 [a]). Plaintiffs' Motion was made returnable in Part 34, Room 428. However, that court part is reserved for matters involving self-represented litigants. Plaintiffs here are represented by counsel. All three defendants in this matter are entities that must be represented by an attorney in a court proceeding (CPLR 321 [a]; see Tennants Comm. of 36 Gramercy Park v New York State Div. of Housing and Cmty. Renewal, 108 AD3d 413, 413 [1st Dept 2013]; see also Michael Reilly Design, Inc. v Houraney, 40 AD3d 592 [2d Dept 2007]).

Although it is within this Court's discretion to deny Plaintiffs' Motion because it was made returnable in a part that will not hear their Motion (see Abizadeh v Abizadeh, 159 AD3d 856, 857 [2d Dept 2018]), a clerk recognized the error and the Motion was adjourned to the correct court part, which is Part 30, Room 949. A clerk of this Court sent mailers advising all parties of this adjournment. Thus, all parties were afforded an opportunity to be heard on this Motion. Given that the Defendants were not prejudiced by this procedural defect, this Court excuses the error.

As the proponent of a motion seeking a default judgment, Plaintiffs have the burden of establishing that the defendants against whom judgment is sought, were properly served with the Summons and Complaint (CPLR 3215 [a]). Here, the affidavits of service annexed to the Plaintiffs' motion established that copies of the Summons and Complaint were properly served on both Defendants (see Porges aff, exhibit B). However, in some cases, corporate defendants are entitled to additional notice when a plaintiff moves for a default judgment. Specifically, CPLR 3215 (g) (4) provides that:

"(i) When a default judgment based upon non-appearance is sought against a domestic or authorized foreign corporation which has been served pursuant to paragraph (b) of section three hundred six of the business corporation law, an affidavit shall be submitted that an additional service of the summons by first class mail has been made upon the defendant corporation at its last known address at least twenty days before the entry of judgment.

"(ii) The additional service of the summons by mail may be made simultaneously with or after the service of the summons on the defendant corporation pursuant to paragraph (b) of section three hundred six of the business corporation law, and shall be accompanied by a notice to the corporation that service is being made or has been made pursuant to that provision. An affidavit of mailing pursuant to this paragraph shall be executed by the person mailing the summons and shall be filed with the judgment. Where there has been compliance with the requirements of this paragraph, failure of the defendant corporation to receive the additional service of summons and notice provided for by this paragraph shall not preclude the entry of default judgment."

(CPLR 3125 [g] [4] [i], [ii]). This additional notice provision only applies to corporations served pursuant to Business Corporation Law § 306 (b), which authorizes service of a Summons and Complaint upon the Secretary of State. Defendant N&S SASSOUNI is a domestic corporation (see Porges aff, exhibit A). Plaintiffs contended that they properly served such Defendant with the additional notice required by CPLR 3125 (g) (4) (i) (see Porges aff, ¶ 6). Plaintiff annexed a copy of the additional notice of that was purportedly mailed to Defendant N&S SASSOUNI and a photocopy of the envelope. However, Plaintiffs' proof of service falls short of what is required by CPLR 3125 (g) (4) (ii). To comply with the statute, Plaintiff would have been required to submit a personal affidavit from the individual who mailed the additional notice. However, Plaintiff personally served N&S SASSOUNI with a copy of the Summons and Complaint pursuant to Business Corporation Law § 306 (a) (see Porges aff, exhibit B). Since N&S SASSOUNI was not served pursuant to Business Corporation Law § 306 (b), additional notice was not required.

Plaintiffs also contended that CPLR 3125 (g) (4) (i) required them to serve additional notice upon 158 FIRST AVE NYC LLC. However, 158 FIRST AVE NYC LLC is a limited liability company ("LLC"). Service of process upon an LLC is governed by CPLR 311-a, which also authorizes service of process by delivery of the Summons and Complaint to the Secretary of State. CPLR 3125 (g) (4) (i) does not apply in cases involving a limited liability company served pursuant to CPLR 311-a (Mitchell v Kingsbrook Jewish Medical Center, 210 AD3d 887 [2d Dept 2022]). Accordingly, Plaintiffs were not required to serve additional notice on Defendant 158 FIRST AVE NYC LLC.

In summary, the service of additional notice upon N&S SASSOUNI and 158 FIRST AVE NYC LLC is not an issue here. However, this case highlights the disparate treatment that corporations and LLCs receive under the CPLR in the realm of default judgments. The CPLR requires service of additional notice when a plaintiff moves for a default judgment against a corporation that was served by delivery of the Summons and Complaint to the Secretary of State. But an LLC that has been served via delivery of the Summons and Complaint to the Secretary of State is not entitled to the same additional notice. Given the similarities between corporations and LLCs it is perplexing why corporations are entitled to this additional protection, but LLCs are not. Indeed, it may be wise for the Legislature to amend the CPLR to remedy this discrepancy.

As to the merits of the instant Motion, Plaintiffs here failed to establish that they have a meritorious claim. A plaintiff may move for a default judgment against a defendant who has failed to answer their complaint (CPLR 3215). The party seeking a default judgment must submit proof of service of the summons and the complaint and proof of the facts constituting the claim, the default, and the amount due (Bigio v Gooding, 213 AD3d 480, 481 [1st Dept 2023] [internal quotation marks omitted]). To establish the facts constituting the claim, the movant need only provide sufficient proof to enable a court to determine whether there is a viable cause of action (Woodson v Mendon Leasing Corp., 100 NY2d 62, 71 [2003]; see also Bigio, 213 AD3d at 481). "The movant may do so either by submission of an affidavit of merit or by verified complaint, if one has been properly served" (Bigio, 213 AD3d at 481).

The Complaint alleged as follows: "Plaintiffs and [their daughter] dealt with Defendant N&S SASSOUNI regarding most or all of the monetary aspects of [their daughter's] tenancy, after the lease was signed" (Porges aff, exhibit A, ¶ 3). Defendant NAMDAR EAST VILLAGE HOLDINGS LLC was assigned the lease in January 2022 (Porges aff, exhibit A, ¶ 4). 158 FIRST AVE NYC LLC was the title owner of the leased premises (Porges aff, exhibit A, ¶ 5). The Plaintiffs, as guarantor for their daughter E. Decosta, paid a security deposit for an apartment to a middleman named "Apt 212", and that Apt 212 in turn transmitted the security deposit "to one or more of the Defendants" (Porges aff, exhibit A, ¶ 7).

To support their Motion seeking a default judgment, Plaintiffs provided an affidavit of merit from Plaintiff L. Decosta (see L. Decosta aff). But Ms. Decosta's affidavit of merit did not identify the entity or entities to whom the Plaintiffs allegedly paid a security deposit or the lessor of the apartment (see L. Decosta aff). Ms. Acosta did not state that the security deposit was transmitted to either Defendant N&S SASSOUNI or Defendant 158 FIRST AVE NYC LLC by a middleman. Nor did Plaintiffs' affidavit of merit address the purported assignment of the lease to Defendant NAMDAR EAST VILLAGE HOLDINGS LLC. Plaintiffs did not append the lease or proof of payment of the alleged security deposit as exhibits. Had the Plaintiffs done so, the documents may have provided sufficient evidence as to the relationships between the parties. Here, Plaintiffs failed to proffer prima facie evidence that either Defendant N&S SASSOUNI or Defendant 158 FIRST AVE NYC LLC was the landlord that wrongfully retained their security deposit. Plaintiffs' counsel stated in his affidavit that N&S SASSOUNI provided the Plaintiffs with "what appear[ed] to be a personal check" for $3,200, the amount of the alleged security deposit. Plaintiffs' affidavit of merit confirmed that they received said payment, but not the identity of the payor. Plaintiffs failed to make a prima facie showing that defendants N&S SASSOUNI and 158 FIRST AVE NYC LLC wrongfully retained their security deposit, as alleged.

Plaintiffs' failure to establish that they possess a viable cause of action against either Defendant N&S SASSOUNI or Defendant 158 FIRST AVE NYC LLC warrants denial of this Motion (Martinez v Reiner, 104 AD3d 477, 478 [1st Dept 2013]). Given the forgoing, this Court need not address the Plaintiffs' claims for attorney fees or punitive damages.

IV. Order

Accordingly, it is

Ordered that Plaintiffs' Motion seeking a default judgment against defendants N&S SASSOUNI and 158 FIRST AVE LLC is DENIED.

This constitutes the DECISION and ORDER of the Court.

Dated: November 17, 2023

County of New York

Honorable Wendy Changyong Li, J.C.C.

Wendy Changyong Li, J.