ASCENTIUM CAPITAL LLC v. FULL SPEED AUTO GROUP INC IGOR DATIEV MIRAIDA DATIEVA (2023)

ORDER TO SHOW CAUSE

The Court issues the following order to show cause to Plaintiff Ascentium Capital LLC (“Ascentium”) in connection with its pending motion for default judgment. Ascentium's motion has a series of failings: (a) to establish that service on any of the defendants was proper; and (b) to provide a memorandum of law, as required by Local Rule 55.2, which would assist the Court in resolving the choice-of-law issue that Ascentium's papers ignore.

First, Ascentium has not established service is proper. Service is a predicate to exercising personal jurisdiction over a defendant. And when considering a motion for default judgment, a court is “entitled to raise the matter [of service] sua sponte” “because the defaulting defendant did not appear[ ] or consent[ ] ․ to the jurisdiction of the court.” Hood v. Ascent Med. Corp., 691 F. App'x 8, 10 (2d Cir. 2017) (second and third alterations in original) (quotations omitted).

With respect to the corporate defendant, a corporation like Defendant Full Speed Auto Group Inc. (“Full Speed Auto”), must be served with process either (1) “in the manner prescribed by Rule 4(e)(1) for serving an individual”; or (2) “by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and—if the agent is one authorized by statute and the statute so requires—by also mailing a copy of each to the defendant.” Fed. R. Civ. P. 4(h)(1). Rule 4(e)(1) prescribes that service may be made by “following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” Full Speed Auto was allegedly served by delivering a summons and Complaint to “Lena Doe,” who was “authorized to accept on behalf [of Full Speed Auto].” (Summons Returned Executed, Dkt. No. 8).

The Complaint, in its allegations, does not list anyone with the name “Lena Doe” as an owner or someone associated with Full Speed Auto. (See Compl. dated Dec. 13, 2022, Dkt. No. 1). Indeed, the Complaint alleges that the Individual Defendants, Igor Datiev and Miraida Datieva, are President and an officer, respectively, of Full Speed Auto. The Secretary of State's website entry for Full Speed Auto makes no mention of anyone with the name Lena as someone who is either an owner, officer, or agent authorized to accept service. See N.Y. State Dep't of State, Div. of Corps., Entity Database, https://apps.dos.ny.gov/publicInquiry/ (last visited June 16, 2023) (search by “EntityName”; then enter “Full Speed Auto Group”; then check “Corporation”; then click “Search the Database”). While service on Lena Doe—as a person alleged to be of suitable age and discretion—may be sufficient to serve the two individual defendants, unless Lena Doe was an owner of the corporation, service through her is insufficient with respect to Full Speed Auto. Mil-Spec Indus. Corp. v. Precision Ammunition, LLC, No. 14-CV-7099, 2016 WL 4179945, at *3 (E.D.N.Y. Aug. 5, 2016) (“Under prevailing case law in New York, however, the alternative methods of personal service discussed within CPLR 308 are not available for effecting service on a limited liability company.”).

There is no evidence of Lena Doe's ownership. As noted, neither the Complaint nor the Secretary of State's website establish such ownership. The process server's affidavit of service does not state how the server knew Lena “Doe” was an actual “Owner.” And its “conclusory statements” that she was “authorized to accept process” on behalf of Full Speed Auto provides no supporting detail, and therefore cannot be credited. (Summons Returned Executed, Dkt. No. 8). Valle v. GDT Enters., Inc., No. 19-CV-797, 2020 WL 435295, at *4 (E.D.N.Y. Jan. 28, 2020); Augustin v. Apex Fin. Mgmt., No. 14-CV-182, 2015 WL 5657368, at *3 (E.D.N.Y. July 27, 2015) (“[I]t is not clear ․ that Ms. Velasco was authorized to accept service ․ [the process server's] affidavit does not describe the basis of his knowledge that Ms. Velasco was ‘designated by law to accept service of process on behalf of’ [the corporation].”), report and recommendation adopted, 2015 WL 7430008, at *3 (Nov. 23, 2015). “This facial infirmity suggests service was not made to a person authorized to accept service.” Feng Lin v. Quality Woods, Inc., 17-CV-3043, 2019 WL 1450746, at *5 (E.D.N.Y. Jan. 28, 2019), report and recommendation adopted, Order (Mar. 31, 2019).

Separately, service on the Individual Defendants is also problematic. Service on Lena “Doe” was used to serve both Individual Defendants. The checked box form provided by the process server indicates she was the “Co-Occupant” of the “dwelling house (usual place of abode) within the state.” (See, e.g., Summons Returned Executed, Dkt. No. 6). But the Complaint's Exhibits belie these assertions. Exhibit C to the Complaint indicates that Plaintiff served notices upon these individuals at addresses in Miami, Florida. (Notice of Default & Acceleration dated Nov. 11, 2022, attached as Ex. C to Compl., at 1). That suggests that the Individual Defendants live in Miami, not New York, and service upon them could not have been effectuated in this District.

By June 30, 2023, Plaintiff is directed to show cause as to why service was proper on Full Speed Auto, that is, why Lena “Doe” is authorized to accept service of process on behalf of the corporation under either New York law or Federal Rule 4(h)(1)(B). See, e.g., Feng Lin, 2019 WL 1450746, at *4–*5 (finding that the plaintiff failed to establish that the person named in the executed summonses was authorized to accept service on behalf of the corporate defendants and thus recommending denial of the default judgment). As for the individuals, Plaintiff is also directed to show cause why service on the Individual Defendants in New York, and not Florida, was proper. In responding to the order to show cause, Plaintiff may also advance any other argument under Federal Rule 4 why service is proper and provide any alternative additional factual information to demonstrate service was proper.

In the alternative, Plaintiff may by that date indicate its intention to withdraw the motion, file an Amended Complaint by July 14, 2023, re-serve Defendants with the Amended Complaint that corrects the identified flaws, and seek a new certificate of default if Defendants again fail to respond.

If Plaintiff chooses to persist with its motion for default judgment, in addition to addressing the service issues, it must provide a revised memorandum of law by July 14, 2023. Plaintiff's memorandum of law cites not a single case and appears not to address the standards for a default judgment articulated by the Second Circuit. Local Civil Rule 7.1 provides that, except for letter motions, “all motions shall include ․ [a] memorandum of law, setting forth the cases and other authorities relied upon in support of the motion[.]” Loc. Civ. R. 7.1(a)(2). “The absence of a memorandum of law that comports with the requirements of Rule 7.1 could alone form a basis for denying Plaintiff's motion.” Liberty Mut. Fire Ins. Co. v. CitiMortgage, Inc., No. 20-CV-5839, 2022 WL 5424790, at *3 (E.D.N.Y. July 21, 2022) (quotations omitted), report and recommendation adopted, 2022 WL 4483396, at *1 (Sept. 27, 2022); see also Pompey v. 23 Morgan II, LLC, No. 16-CV-2065, 2017 WL 1102772, at *3 (E.D.N.Y. Feb. 13, 2017) (recommending denial of a motion for default judgment in part for submitting a “cursory” memorandum of law that cited only two cases), report and recommendation adopted, Order (Mar. 21, 2017).

This failure to cite any cases is particularly problematic in light of the fact that the agreement at issue is governed by California, not New York, law. (Equipment Finance Agreement, attached as Ex. A to Compl. (“This EFA shall be governed an construed under the laws of the State of California without reference to its principles of conflicts of law.”); see, e.g., Frank Brunckhorst Co., LLC v. Castellini, No. 17-CV-2324, 2018 WL 1788149, at *3 (E.D.N.Y. Feb. 28, 2018) (“Even worse, Plaintiff has not clarified whether this Court—sitting in diversity—must apply New York or Ohio law, thereby leaving it to this Court to determine the law of two states and to apply the choice of law analysis.”), report and recommendation adopted, 2018 WL 1377302, at *1 (Mar. 19, 2018).

If Plaintiff is unable to cure the process deficiencies or show cause, it may dismiss this action without prejudice.

SO ORDERED.

SANKET J. BULSARA United States Magistrate Judge