NOAH BANK v. HUDSON PRODUCE INC (2018)

Order, Supreme Court, New York County (Eileen Bransten, J.), entered July 13, 2017, which, to the extent appealed from, granted defendant's motion to vacate a prior default judgment, same court and Justice, entered November 28, 2016, unanimously reversed, on the law, without costs, and the motion denied to the extent of remanding the matter for a traverse hearing to determine whether the court had jurisdiction to render the default judgment.

Since defendant is a corporation, CPLR 311(a)(1) governs the method of service in this action.  It is undisputed that both service of the complaint and of plaintiff's motion papers seeking a default judgment were personally delivered to an employee of defendant, whom the corporate defendant's principal asserts was not authorized to accept service.  Thus an issue of fact is raised as to whether plaintiff validly served defendant pursuant to CPLR 311(a)(1).  Accordingly, a traverse hearing should have been held to determine whether defendant was entitled to relief from the judgment pursuant to CPLR 5015(a)(4), before the court ruled on an excusable default and meritorious defense (see Cipriano v. Hank, 197 A.D.2d 295, 298, 610 N.Y.S.2d 523 [1st Dept. 1994] ).

If, after the traverse hearing, the court finds that service was improper, then it must grant defendant's motion to vacate the default judgment pursuant to CPLR 5015(a)(4) and dismiss the action (cf.  CPLR 317).  If, however, the court determines that service was proper under CPLR 311(a)(1), then the motion to vacate the default judgment must be denied pursuant to CPLR 5015(a)(1), as defendant failed to raise a meritorious defense (see generally Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116 [1986] ).

Defendant's argument that the court erred in denying its motion to stay the action pursuant to CPLR 3211(a)(4) is not properly before this Court because defendant did not appeal from the order (see Hecht v. New York, 60 N.Y.2d 57, 61, 467 N.Y.S.2d 187, 454 N.E.2d 527 [1983] ).  In any event, the argument is unavailing.  The litigation pending in another court involves a different corporate entity and a separate transaction.

We have considered the parties' remaining contentions and find them unavailing or academic in light of our determination.