ROSENTHAL ROSENTHAL INC v. BRODY (2021)

The following e-filed documents, listed by NYSCEF document number (Motion 001) 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54 were read on this motion to/for JUDGMENT - DEFAULT.

In this action to enforce a personal guarantee, plaintiff Rosenthal & Rosenthal, Inc. (plaintiff or Rosenthal) moves, pursuant to CPLR 3215, for leave to enter a default judgment against defendant Gary Brody. Defendant has submitted no opposition.

Background

On May 15, 2017, nonparty Marcraft Clothing, Inc. (Marcraft or Obligor), a clothing wholesaler, entered into a “Factoring Agreement” (the Factoring Agreement) dated May 15, 2017 whereby plaintiff agreed to advance funds to Marcraft in exchange for certain accounts receivable (NY St Cts Elec Filing [NYSCEF] Doc No. 42, David J. Stone [Stone] affirmation, exhibit A, ¶¶ 6-7). Marcraft agreed that it would be liable for the sums advanced without regard to the amounts plaintiff actually collected on the accounts receivable (id., ¶ 7). To induce plaintiff to enter into the Factoring Agreement, defendant executed a guarantee (the Guarantee) dated May 15, 2017 (id., ¶ 8). The first paragraph of the Guarantee reads, in pertinent part:

“the undersigned irrevocably, absolutely and unconditionally guarantees to Rosenthal payment when due, whether by acceleration or otherwise, of any and all Obligations of the Obligor to Rosenthal. The term “Obligations’ shall mean all obligations, liabilities and indebtedness of the Obligor to Rosenthal arising under [the] Factoring Agreement including (without limitation) all of Rosenthal's charges, commissions, fees, interest, expenses, costs and attorneys’ fees chargeable to Obligor in connection therewith. In addition, the undersigned agrees to indemnify Rosenthal against any loss, damage or liability because of any wrongful acts or fraud of the Obligor. Such indemnification shall not apply to matters arising out of wrongful act or omissions by Rosenthal or its Affiliates”

(NYSCEF Doc No. 52, Steven Spagnuolo [Spagnuolo] aff, exhibit A at 1). In addition, the Guarantee provides:

“Exclusive of the indemnity set forth in the penultimate sentence of the first paragraph of this Guarantee, the maximum liability of the undersigned hereunder shall in no event exceed the sum of $1,000,000 plus all costs, expenses and fees (including, without limitation, reasonable attorneys fees for both in-house and outside attorneys) of collection incurred by Rosenthal in enforcing collection hereof or protecting any of Rosenthal's rights hereunder”

(id. at 4).

In or about 2020, Marcraft defaulted in performing its obligations under the Factoring Agreement (NYSCEF Doc No. 42, ¶ 12). Plaintiff commenced this action on February 12, 2021 seeking to enforce the Guarantee up to its $1 million maximum limit. Plaintiff now moves for a default judgment against defendant.

Discussion

It is well settled that an application for a default judgment must be supported with “proof of service of the summons and the complaint[,] proof of the facts constituting the claim, [and] the default” (CPLR 3215 [f]). “ ‘[B]y defaulting, a defendant admits all traversable allegations contained in the complaint, and thus concedes liability, although not damages’ ” (HF Mgt. Servs. LLC v Dependable Care, LLC, ––– AD3d ––––, 2021 NY Slip Op 05459, *1 [1st Dept 2021] [citation omitted]; Rokina Opt. Co. v Camera King, 63 NY2d 728, 730 [1984]). Plaintiff has met its burden.

According to a corrected affidavit of service sworn to May 21, 2021, plaintiff served defendant pursuant to CPLR 308 (4) by affixing the summons and complaint to the door of his actual place of residence at 405 East 54th Street, Apt. PH-A, New York, New York 10022 on February 27, 2021 at 3:31 p.m. and by mailing two copies of the papers to defendant at that address on March 1, 2021 (NYSCEF Doc No. 43, Stone affirmation, exhibit B at 2). A second affidavit of service sworn to on February 27, 2021 reveals that plaintiff served defendant by delivering the summons and complaint to “Jane Doe” at 5853 Hamilton Way, Boca Raton, Florida 33496 on February 18, 2021 at 12:50 p.m. (NYSCEF Doc No. 44, Stone affirmation, exhibit C at 1). A third sworn affidavit of service shows that plaintiff mailed the summons and complaint by ordinary mail and by certified mail, return receipt requested to defendant at the Boca Raton address on March 1, 2021 (NYSCEF Doc No. 45, Stone affirmation, exhibit D at 1). Plaintiff has demonstrated that it served defendant with the summons and complaint and that defendant's time to answer or appear in the action has expired. In addition, it appears that defendant is aware of the pending action (NYSCEF Doc No. 48, Stone affirmation, exhibit G at 1).

Plaintiff has also satisfied the additional notice requirement set forth in CPLR 3215 (g) (3) (i). An affidavit of additional service sworn to on June 3, 2021 shows that copies of the summons and complaint were mailed to defendant at the addresses in New York and Boca Raton on May 21, 2021 (NYSCEF Doc No. 49, Stone affirmation, exhibit H at 1).

Plaintiff has demonstrated that at the time of his default, defendant was not active in the military. A search of the Department of Defense Manpower Data Center performed June 21, 2021 for defendant's social security number yielded negative results (NYSCEF Doc No. 50, Stone affirmation, exhibit I at 1).

As to the merits, a party seeking to enforce a written guaranty need only prove “an absolute and unconditional guaranty, the underlying debt, and the guarantor's failure to perform under the guaranty” (Gansevoort 69 Realty LLC v Laba, 130 AD3d 521, 521 [1st Dept 2015] [internal quotation marks and citation omitted]). “[W]here a guaranty is clear and unambiguous on its face and, by its language, absolute and unconditional, the signer is conclusively bound by its terms absent a showing of fraud, duress or other wrongful act in its inducement” (Citibank, N.A. v Uri Schwartz & Sons Diamonds Ltd., 97 AD3d 444, 446-447 [1st Dept 2012] [internal quotation marks and citation omitted]). Plaintiff has demonstrated the merits to the claim through the submission of the Guarantee and an affidavit from Spagnuolo, plaintiff's Vice President and Account Representative (NYSCEF Doc No. 51, Spagnuolo aff, ¶ 1). Spagnuolo avers that once Marcraft defaulted on its obligations under the Factoring Agreement, plaintiff provided Marcraft, defendant and other interested parties with timely notice of the default by letter dated January 26, 2021 (id., ¶ 6; NYSCEF Doc No. 53, Spagnuolo aff, exhibit B at 1). Plaintiff demanded that defendant pay the full amount of $1 million under the Guarantee, but no payment has been made (NYSCEF Doc No. 51, ¶¶ 8-9). Spagnuolo also avers that plaintiff has collected and liquidated and will continue to collect and liquidate certain collateral provided by Marcraft, but more than $5 million will remain unpaid even after the remaining collateral has been liquidated (id., ¶ 7).

Rosenthal submits that it has waived its entitlement to its attorneys’ fees (NYSCEF Doc No. 41, Stone affirmation, ¶ 28).

Accordingly, it is hereby

ORDERED that the motion brought by plaintiff Rosenthal & Rosenthal, Inc. for entry of a default judgment against defendant Gary Brody is granted, without opposition; and it is further

ORDERED that the Clerk of the Court is directed to enter judgment in favor of plaintiff Rosenthal & Rosenthal, Inc. against defendant Gary Brody in the amount of $1,000,000.00, with interest at the statutory rate from the date of entry of judgment, together with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs.

Robert R. Reed, J.