Commercial Division Blog

Posted: September 19, 2022 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Category Commercial Division Justices

Default Judgment Proper Where Defendant Failed to Respond and Plaintiff Submitted Proof of Service and Evidence of Merits

On September 6, 2022, Justice Reed of the New York County Commercial Division issued a decision in Excelsia Leatherware Co. v. Horowitz, 2022 NY Slip Op 50847(U) holding that a party was entitled to a default judgment where the defendant failed to respond to the complaint and the plaintiff submitted proof of service and evidence proving the claim, stating:

On an application for a default judgment, pursuant to CPLR 3215, the plaintiff must submit "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, 198 AD3d 457, 152 N.Y.S.3d 574 [1st Dept 2021]; Petty v Law Off. Of Robert P. Santoriella, P.C., 200 AD3d 621, 621, 160 N.Y.S.3d 228 [1st Dept 2021] [while plaintiff must submit proof of prima facie viability of its claims, "the standard of proof is minimal"] [internal quotation marks and citation omitted]). Plaintiff has met this burden.

Defendants, by counsel, waived service of the summons and complaint by stipulation dated June 22, 2019 (NYSCEF doc. no. 2). Defendants dispensed with personal service, accepted service of the complaint, and waived jurisdictional defendants and all objections to service of process (id.). Thereafter, defendants' counsel moved to withdraw its representation. Both parties were served on January 10, 2020, with notice of entry and a copy of the decision and order on the motion to withdraw (NYSCEF doc. no. 32). Due to the notice of withdrawal, plaintiff served defendants directly with a copy of the summons and complaint. An affidavit by Cagla [*5] Yetis, sworn January 17, 2021 (NYSCEF doc. no. 46), states that Yetis served copies of the summons and complaint upon Horowitz and Bag Studio at their respective last known addresses. The affidavit avers that service occurred on January 14, 2020 (NYSCEF doc. no. 47). Defendants were also served with notice of the court's decision and order denying, in part their motion to dismiss (see, NYSCEF doc. nos. 39- 40, 42, and 45 ex. 2).

Affidavits of service were filed showing Bag Studio was served with both the order granting its counsel's withdrawal, and this court's order denying dismissal of plaintiff's claim as [**3] asserted against it. Bag Studio was served with process by service on the secretary of state and at its last known address (NYSCEF doc. nos. 33, 40, 42). Such service is in conformity with CPLR 311(a)(1) and Business Corporation Law § 306(b).

Affidavits of service were filed showing Horowitz was served with the order granting his counsel's withdrawal, and this court's order denying dismissal of plaintiff's claim as asserted against him, via email and his last known address (NYSCEF doc nos. 33, 39, 45, ex. 2). Service at Horowitz' last known address was in conformity with CPLR § 308(2).

As to the merits, in an action for goods sold and [*6] delivered, a plaintiff must submit proof of invoices and other documentary evidence that defendant placed orders for the goods on the dates at issue, the goods were delivered to defendant, defendant accepted delivery, and did not object to the product or invoices (A & W Egg Co., Inc. v Tufo's Wholesale Dairy, Inc., 169 AD3d 616, 617, 95 N.Y.S.3d 72 [1st Dept 2019]). The plaintiff must also provide a "sufficient foundation to consider the invoices and most of the other documents submitted as business records" (id.; CPLR 4518[a]). "A proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker's business practices and procedures" (Autovest, LLC v Cassamajor, 195 AD3d 672, 673, 145 N.Y.S.3d 363 [2d Dept 2021] [internal quotation marks and citation omitted]).

Here, Excelsia demonstrated the merits of its claims by affidavit from its owner, Ying Kit Mak (NYSCEF doc. no. 44). Mak attests that Excelsia is a leather goods producer based in Hong Kong, China (id. at para 8). Mak affirms that, on or about December 20, 2016, Excelsia exported goods to Bag Studio valued at $42,479 (id. at para 10). Bag Studio paid for this shipment of goods in full, and Excelsia continued to manufacture for, and ship goods to Bag Studio, and received prompt payment. Mak states that, around February 2018, Bag Studio failed to timely pay for [*7] goods shipped by Excelsia. Bag Studio continued to promise payments through communications and emails from Horowitz. Excelsia rendered multiple invoices for goods delivered and received by Bag Studio, and, according to Mak, to date, Bag Studio owes Excelsia $2,761,216.55 for good shipped to and received by Bag Studio (id. at pg. 3).

At that same time, Mak attests that Horowitz fraudulently induced Excelsia to pay fees and commissions to him personally. Mak claims that Horowitz insisted on this payment as an administrative fee required to continue the business relationship (id. at pg. 4). Mak's statement is in compliance with CPLR § 2106(b) and is sufficient proof of the goods sold and delivered and of an account stated.

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