MERCHANTS BANK OF NEW YORK v. ITZKOFF (2003)

Order, Supreme Court, New York County (Herman Cahn, J.), entered May 22, 2003, which, inter alia, granted plaintiff bank's motion for an order of seizure insofar as necessary to recover the sum of $149,000, plus interest, and confirmed a referee's finding that defendants had been properly served pursuant to CPLR 308(4), and order, same court and Justice, entered July 15, 2003, which, inter alia, amended the prior order to permit the seizure of additional collateral of up to $60,000 to secure plaintiff's claim for legal fees and directed a reference to determine the amount due, unanimously affirmed, with one bill of costs.

 Efforts to serve defendants at their place of business and three attempts to serve them at their residence during and after business hours constitutes due diligence (CPLR 304[8] ), particularly in view of defendants' failure to inform plaintiff of the relocation of their fur business and the collateral securing the loan.   We perceive no basis to disturb the referee's findings as to the process server's credibility.   Defendants' default under the note and the provision of the loan agreement for a security interest in their inventory and a right to possession upon default establish plaintiff's prima facie entitlement to the provisional remedy of seizure (CPLR 7102[c];  see Red Apple Supermarkets v. Malone & Hyde, 228 A.D.2d 176, 644 N.Y.S.2d 4, lv. dismissed 89 N.Y.2d 916, 653 N.Y.S.2d 919, 676 N.E.2d 501;  Seaman-Andwall Corp., v. Wright Mach. Corp. 31 A.D.2d 136, 137, 295 N.Y.S.2d 752, affd. 29 N.Y.2d 617, 324 N.Y.S.2d 410, 273 N.E.2d 138;  General Elec. Credit Corp. v. Marcella's Appliances Sales & Servs., 66 A.D.2d 927, 410 N.Y.S.2d 930), obliging defendants to come forward with evidentiary facts demonstrating “the existence of a material issue of fact with respect to a bona fide defense” (Sacco v. Sutera, 266 A.D.2d 446, 447, 698 N.Y.S.2d 532;  see E.D.S. Sec. Sys. v. Allyn, 262 A.D.2d 351, 691 N.Y.S.2d 567).   Plaintiff's exercise of its rights under the notes and security agreement does not afford a basis for a claim of bad faith.   Finally, the loan agreement expressly secures plaintiff against costs associated with the taking and sale of the collateral, and the court therefore properly modified the order of seizure to secure payment of attorneys' fees and to direct a reference as to the amount thereof (see Arent Fox Kintner Plotkin & Kahn, PLLC v. Lurzer GmbH, 297 A.D.2d 590, 747 N.Y.S.2d 179).

We have considered defendants' remaining contentions and find them unavailing.