Funding N.Y. v. 1237 Dean St. Corp.

212 N.Y.S.3d 413

227 A.D.3d 1050

FUNDING NY, LLC, respondent,

v.1237 DEAN STREET CORP., appellant, et al., defendants.

Supreme Court, Appellate Division, Second Department, New York.

Argued—January 5, 2024

May 29, 2024

Law Office of Paul R. Kenney, LLC, New York, NY (Emily Finsterwald of counsel), for appellant.

Law Office of Henry Graham P.C., Greenvale, NY, for respondent.

HECTOR D. LASALLE, P.J., JOSEPH J. MALTESE, HELEN VOUTSINAS, LAURENCE L. LOVE, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant 1237 Dean Street Corp. appeals from an order of the Supreme Court, Kings County (Lawrence Knipel, J.), dated September 13, 2021. The order, insofar as appealed from, granted those branches of the plaintiff’s motion which were for leave to enter a default judgment against the defendant 1237 Dean Street Corp. and for an order of reference, and denied those branches of that defendant’s cross-motion which were, in effect, pursuant to CPLR 317 to vacate its default in appearing or answering the complaint, pursuant to CPLR 3012(d) for leave to serve a late answer, or, alternatively, inter alia, to dismiss the complaint insofar as asserted against it on the ground that the loan was criminally usurious and, thus, void ab initio.

ORDERED that the order is affirmed insofar as appealed from, with costs.

On October 16, 2015, 1237 Dean Street Corp. (hereinafter the defendant), by its president, Everton Pierre, executed a note in the sum of $675,000 in favor of the plaintiff, Funding NY, LLC. The note was secured by a mortgage on certain commercial property located in Brooklyn. The defendant allegedly defaulted on its obligations under the note and mortgage by failing to pay the entire amount due and owing on October 15, 2016, the maturity date of the loan.

In March 2019, the plaintiff commenced this action against the defendant, among others, to foreclose the mortgage. According to an affidavit of service, the defendant was served with process by delivery of the summons and complaint to the Secretary of State pursuant to Business Corporation Law § 806 on April 12, 2019. The defendant failed to appear or answer the complaint.

Thereafter, the plaintiff moved, inter alia, for leave to enter a default judgment against the defendant and for an order of reference. The defendant cross-moved, in effect, among other things, pursuant to CPLR 317 to vacate its default in appearing or answering the complaint, pursuant to CPLR 3012(d) for leave to serve a late answer, or, alternatively, inter alia, to dismiss the complaint insofar as asserted against it on the ground that the loan was criminally usurious and, thus, void ab initio. In an order dated September 18, 2021, the Supreme Court, among other things, granted those branches of the plaintiff’s motion and denied those branches of the defendant's cross-motion. The defendant appeals.

[1, 2] "Pursuant to CPLR 817, a defaulting defendant who was served with a summons other than by personal delivery may be permitted to defend the action upon a finding by the court that the defendant did not personally receive notice of the summons in time to defend and has a potentially meritorious defense" (Bookman v. 816 Belmont Realty, LLC, 180 A.D.3d 986, 987, 121 N.Y.S.3d 134; see New York City Economic Dev. Corp. v. GCC, LLC, 209 A.D.3d 661, 662, 174 N.Y.S.3d 864; Deutsche Bank Natl. Trust Co. v. Benitez, 179 A.D.3d 891, 892-893, 118 N.Y.S.3d 173). In contrast to a motion pursuant to CPLR 317, a motion pursuant to CPLR 3012(d) to extend the time to answer the complaint requires the movant to establish a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action (see Cumanet, LLC v. Murad, 188 A.D.3d 1149, 1152-1153, 137 N.Y.S.3d 412; Deutsche Bank Natl. Trust Co. v. Benitez, 179 A.D.3d at 893, 118 N.Y.S.3d 173).

[3, 4] Here, the record reflects that the defendant personally received notice of the summons in time to defend the action (see New York City Economic Dev. Corp. v. GCC, LLC, 209 A.D.3d at 662, 174 N.Y.S.3d 864; Country-Wide Ins. Co. v. Power Supply, Inc., 179 A.D.3d 405, 406, 116 N.Y.S.3d 231). Moreover, the defendant failed to establish a reasonable excuse for failing to timely answer the complaint. The defendant contends that it has a reasonable excuse based on law office failure because its attorney failed to advise it that the address on file with the Secretary of State for service of process was no longer valid. The court has discretion to accept law...