KAPITUS SERVICING INC v. DILONE (2022)

Plaintiff, a Virginia corporation that operates in New York, brought this action against defendant, a Rhode Island resident, to collect on sums allegedly owed under a merchant cash advance agreement between plaintiff and a Rhode Island company operated by defendant. Defendant has not appeared. Plaintiff now moves for default judgment under CPLR 3215. The motion is denied.

To obtain a default judgment, the movant must establish valid service, the nonmoving party's default, and the facts constituting the movant's claim. (See CPLR 3215 [f]; Miller Greenberg Mgt. Grp., LLC v Couture, 193 AD3d 1273, 1273 [3d Dept 2021].) Plaintiff has not established that it validly served defendant.

Plaintiff served defendant by personal delivery in Florida under CPLR 313. For service under CPLR 313 to be valid, a defendant must be subject to general personal jurisdiction under CPLR 301 (not the case here), or subject to longarm specific personal jurisdiction under CPLR 302. Neither plaintiff's complaint (NYSCEF No. 1) nor the affidavit of a representative of plaintiff submitted on this motion (NYSCEF No. 6) identify any facts that might establish the presence of jurisdiction under CPLR 302. Plaintiff has therefore failed to establish valid service.

To be sure, the underlying contract on which plaintiff relies provides that the merchant “submits to the jurisdiction of [New York courts] and waives any and all objections to jurisdiction.” (NYSCEF No. 2 at § 4.5.) But that is not sufficient for present purposes. The statute does not require only that an out-of-state individual be subject to the jurisdiction of the New York courts for out-of-state service to be valid, but that the individual be “subject to the jurisdiction of the courts of the state under section 301 or 302.” (CPLR 313 [emphasis added].) Plaintiff has not shown that such jurisdiction exists. Defendant did not consent in the contract to service by means other than those set forth in the CPLR. And plaintiff has not sought leave of court to resort to expedient service under CPLR 308 (5).

Absent a showing that plaintiff validly served defendant, plaintiff is not entitled to a default judgment under CPLR 3215.

Accordingly, it is

ORDERED that the motion for default judgment is denied; and it is further

ORDERED that if plaintiff does not file a renewed motion for default judgment, or move for other appropriate relief, within 60 days from entry of this order, the action will be administratively dismissed.

Gerald Lebovits, J.