Lex Machina, Inc., A LexisNexis Company, Plaintiff, v. LLC (2023)

In this contract action, plaintiff, Lex Machina Inc., moves without opposition for default judgment under CPLR 3215 against defendant, Fullbrook Capital Management, LLC. The motion is denied and the action is dismissed.

Plaintiff has alleged that defendant owes it a total of $45,000 (payable in three equal installments) under a contract between them. Plaintiff has shown that it properly served defendant (see NYSCEF no. 2); and that defendant did not then appear. But plaintiff failed to take timely proceedings for the entry of judgment following defendant's default.

Plaintiff served defendant under Limited Liability Company Law (LLC Law) § 303 by delivery to the secretary of state on April 14, 2020. (Id.) Defendant thus had 30 days from service to appear or respond. (See LLC Law § 303 [a]; CPLR 320 [a].) Because service occurred during the COVID-19-related tolling period imposed by executive order, the 30-day period did not begin to run until November 4, 2020, the first day after expiration of the toll. (See Murphy v Harris, 210 AD3d 410, 411-412 [1st Dept 2022]; Brash v Richards, 195 AD3d 582, 585 [2d Dept 2021].) As a result, defendant's deadline to appear was December 3, 2020. Upon defendant's failure to appear, plaintiff had one year from December 4, 2020, "to take proceedings for the entry of judgment." (CPLR 3215 [c].) But plaintiff did not seek entry of judgment in its favor until August 5, 2022 (see NYSCEF Nos. 4, 5)—eight months after CPLR 3215 [c]'s one-year deadline.

This court is therefore required to dismiss plaintiff's action "unless sufficient cause is shown why the complaint should not be dismissed." (CPLR 3215 [c].) To make that showing, a plaintiff must demonstrate "both a reasonable excuse for the delay in timely moving for a default judgment, plus . . . that the cause of action is potentially meritorious. The determination of whether an excuse is reasonable in any given instance is committed to the sound discretion of the motion court." (Giglio v NTIMP, Inc., 86 AD3d 301, 308 [2d Dept 2011].)

Plaintiff has not established that it has a reasonable excuse for its delay in seeking default judgment. The affirmation of plaintiff's counsel states in conclusory fashion that there "are reasonable excuses for the delay which arise out of the Covid-19 pandemic." (NYSCEF No. 10 at ¶ 12.) But the only excuses counsel then identifies are that executive orders in place during 2020 tolled applicable statutory deadlines and "placed a hold on the entering of default judgment applications." (Id. at ¶¶ 12-13.) But as discussed above, plaintiff's one-year period for requesting entry of judgment did not begin to run until after expiration of the executive orders on which plaintiff relies. Those orders thus cannot justify plaintiff's failure to move for judgment within that one-year period. And plaintiff supplies no other explanation or excuse.

This court is also somewhat skeptical that plaintiff's papers would suffice to warrant entry of a default judgment even if the motion were timely. Plaintiff relies on an affidavit of its "Collections Manager, North America," who has "competent knowledge of the facts stated herein." (NYSCEF No. 13 at ¶ 3.) That affidavit states that "the Complaint with the account annexed against the Defendant is correctly copied from the books of the original entry of Plaintiff and that the charges were made in said book at or about the time of their respective dates"; that "the goods or services for which said charges were made, were sold and delivered and/or performed as charged," and that "the charges are correct and just and true as stated." (Id.) The complaint merely states in boilerplate terms that "Plaintiff sues Defendant for the price of goods sold and delivered and/or services rendered by the Plaintiff to the Defendant on a bill of particulars and/or contract"; that "Defendant agreed to pay for the goods sold and delivered and/or services rendered by the Plaintiff to the Defendant"; and that "Defendant is currently indebted to Plaintiff for [an] unpaid balance in the amount of $48,993.75." (NYSCEF No. 1 at ¶¶ 9-11.)

In other words, the affidavit and complaint, taken together, attest to the accuracy of the bottom-line number sought by plaintiff on this motion—nothing more. And the affidavit does not provide the referenced "books of the original entry" of plaintiff, whether in the form of a ledger or otherwise, to substantiate this bottom-line number. Instead, the affidavit attaches only a copy of the contract and invoices reflecting two of the three promised payments. (See NYSCEF No. 13 at 5-10.) The third invoice, any proof that the invoices were ever sent to defendant (much less received and retained without objection),¹ and any proof of nonpayment, are absent. (Cf. (Bank of NY Mellon v Gordon, 171 AD3d 197, 205-206 [2d Dept 2019] ["Evidence of the contents of business records is admissible only where the records themselves are introduced."] [internal quotation marks omitted].)

On this thin record, the merits case for entering default judgment in plaintiff's favor is close at best. Given plaintiff's unexplained and unexcused eight-month delay in moving for default judgment, this borderline showing of merit does not provide "sufficient cause" to avoid dismissal under CPLR 3215 (c).

Accordingly, it is

ORDERED that plaintiff's motion for default judgment is denied, and the action is dismissed under CPLR 3215; and it is further

ORDERED that plaintiff serve a copy of this order with notice of its entry on defendant by certified mail, return receipt requested, directed to defendant's last-known address; and on the office of the County Clerk, which shall enter judgment accordingly.

DATE 1/20/2023

FOOTNOTES

1.   Thus, although plaintiff's complaint asserts both breach-of-contract and account-stated claims (see NYSCEF No. 1 at ¶¶ 3-7 [account stated], 8-13 [breach-of-contract]), the evidence submitted by plaintiff on this motion is not sufficient to state an account-stated cause of action. And plaintiff's third and fourth causes of action, sounding in unjust enrichment and quantum meruit (id. at ¶¶ 14-19), are subject to dismissal given the presence of a valid contract covering the parties' transaction.

Gerald Lebovits, J.