| Matter of Rockland Bakery, Inc. v B.M. Baking Co., Inc. |
| 2011 NY Slip Op 03617 [83 AD3d 1080] |
| April 26, 2011 |
| Appellate Division, Second Department |
| In the Matter of Rockland Bakery, Inc.,Respondent, v B.M. Baking Company, Inc., et al., Respondents, and Calabrese Bakeries,Inc., et al., Appellants. |
—[*1] Higgins, Roberts, Beyerl & Coan, P.C., Niskayuna, N.Y. (Matthew T. Nowak of counsel),for petitioner-respondent.
In a proceeding pursuant to Business Corporation Law § 1104 for the judicialdissolution of B.M. Baking Company, Inc., the appeal is from an order of the Supreme Court,Rockland County (Berliner, J.), dated February 24, 2010, which denied the motion of B.M.Baking Company, Inc., Calabrese Bakeries, Inc., Rose Melino, and Lucinda Melino pursuant toCPLR 317 and 5015 (a) to vacate a judgment of the same court (Smith, J.) dated December 15,2005, adjudging that B.M. Baking Company, Inc., is dissolved nunc pro tunc as of March 19,2004, in effect, upon its default in appearing, and for leave to interpose an answer.
Ordered that the order is affirmed, with costs.
In 2004 Rockland Bakery, Inc., a 50% shareholder of B.M. Baking Company, Inc.(hereinafter B.M. Baking), filed this petition for the judicial dissolution of B.M. Baking, pursuantto Business Corporation Law § 1104. B.M. Baking failed to appear or answer the petition.On December 15, 2005, the Supreme Court granted the petition as unopposed and adjudged B.M.Baking dissolved nunc pro tunc as of March 19, 2004.
On September 25, 2008, the appellants filed a separate petition in the Supreme Courtpursuant to Business Corporation Law § 1008 to suspend or annul the dissolution of B.M.Baking. The appellants are B.M. Baking, Calabrese Bakeries, Inc. (hereinafter Calabrese), whichis the other 50% shareholder of B.M. Baking, and Rose Melino and Lucinda Melino (hereinaftertogether the Melinos), who are shareholders of Calabrese. The Melinos and Calabrese werenamed as petitioners individually and acting on behalf of B.M. Baking. In an order dated August10, 2009, the Supreme Court dismissed the petition in that proceeding, without prejudice to theappellants' right to make an application in the instant dissolution proceeding for the same relief(see Matter of Calabrese Bakeries, Inc. v Rockland Bakery, Inc., 83 AD3d 1060 [2011][decided herewith]).
On September 30, 2009, the appellants filed a motion in this proceeding pursuant to CPLR317 and 5015 to vacate the default judgment dated December 15, 2005. In support of theirmotion, the [*2]appellants submitted the affidavit of JosephMelino, the president of both Calabrese and B.M. Baking, averring that he first learned of thedissolution proceeding sometime in the winter of 2005-2006, when he was released from prisonand retrieved a large amount of mail from the corporate address, including the dissolutionpetition, which he gave to an attorney.
Pursuant to CPLR 317, "[a] person served with a summons other than by personal delivery tohim [or her] or to his [or her] agent for service designated under rule 318, within or without thestate, who does not appear may be allowed to defend the action" by seeking to vacate a defaultjudgment within one year of learning of the judgment upon demonstrating a potentiallymeritorious defense (see Caba v Rai, 63 AD3d 578, 580 [2009]). Here, CPLR 317 is notavailable to the Melinos, who were not served with the dissolution petition because they were notentitled to service pursuant to Business Corporation Law § 1106 (c). B.M. Baking and itsshareholder Calabrese were properly served with the dissolution petition pursuant to BusinessCorporation Law § 306 by delivery to the Secretary of State as their agent for service(see Perkins v 686 Halsey Food Corp., 36 AD3d 881 [2007]; Shimel v 5 S. FultonAve. Corp., 11 AD3d 527 [2004]). Although "service on a corporation through delivery ofprocess to the Secretary of State is not 'personal delivery' to the corporation or to an agentdesignated under CPLR 318," the corporation still must establish that it did not actually receivenotice of the action in time to defend in order to avail itself of the relief afforded by CPLR 317(Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 142 [1986] [corporateaddress on file with the Secretary of State was incorrect]). Here, the mere denial of receipt byCalabrese and B.M. Baking due to late pick up of the mail at the proper corporate address isinsufficient to rebut the presumption of proper service or to establish lack of actual notice for thepurpose of CPLR 317 (see Thas v Dayrich Trading, Inc., 78 AD3d 1163, 1164 [2010];Shimel v 5 S. Fulton Ave. Corp., 11 AD3d at 527; cf. Fleisher v Kaba, 78 AD3d1118 [2010]). Moreover, in light of the more than three-year delay between learning of thejudgment and filing the motion pursuant to CPLR 317, the Supreme Court providently exercisedits discretion in declining to extend the one-year time period (see Caba v Rai, 63 AD3d at581; Levine v Berlin, 46 AD2d 902, 903 [1974]; cf. Girardo v 99-27 Realty,LLC, 62 AD3d 659, 660 [2009]). Although the appellants contend that a portion of the delaywas due to their prior attorney's neglect of the matter and her eventual suspension from thepractice of law (see Uddaraju v City of New York, 1 AD3d 140, 141 [2003]; but seeHuggins v Parkset Supply, Ltd., 24 AD3d 610, 611 [2005]), they still unreasonably delayedin making their motion for 20 months after discharging that attorney (see Matter of PutnamCounty Natl. Bank v JP Morgan Chase Bank N.A., 57 AD3d 677, 678 [2008]; Nahmaniv Town of Ramapo, 262 AD2d 291 [1999]).
A motion to vacate a default judgment pursuant to CPLR 5015 (a) may be brought by anyparty or "interested person," which would include the corporate and individual appellants here(Oppenheimer v Westcott, 47 NY2d 595, 602 [1979]). On their motion, the appellantsraised arguments under CPLR 5015 (a) (1), (3) and (4). To obtain vacatur of a default judgmentunder CPLR 5015 (a) (1), the moving party must demonstrate both a reasonable excuse for thedefault and a potentially meritorious defense (see Liotta v Mattone, 71 AD3d 741, 741[2010]; Strauss v R & K Envtl., 66 AD3d 766, 767 [2009]; Li Gang Ma v HongGuang Hu, 54 AD3d 312, 313 [2008]), and must move "within one year after service of acopy of the judgment" (CPLR 5015 [a] [1]; see Malik v Noe, 54 AD3d 733, 734 [2008];Nahmani v Town of Ramapo, 262 AD2d at 291). Here, the Supreme Court providentlyexercised its discretion in denying the appellants' motion as untimely given the extensive delaybetween the date of the service of the judgment, December 15, 2005, and the filing of the motionto vacate the default in September 2009 (see Matter of Putnam County Natl. Bank v JPMorgan Chase Bank N.A., 57 AD3d at 678; Nahmani v Town of Ramapo, 262AD2d at 291; Long Is. Trust Co. v PTI Intl. Corp. of N.Y., 166 AD2d 504 [1990]).
A motion pursuant to CPLR 5015 (a) (3) based upon alleged fraud or misconduct of anadverse party must be made within a "reasonable time" (Bank of N.Y. v Stradford, 55AD3d 765, 765 [2008]). That branch of the appellants' motion which was pursuant to thissubsection was not made with a "reasonable time" and, in any event, was without merit (seeMatter of Holden, 271 NY 212, 218 [1936]; Bank of N.Y. v Stradford, 55 AD3d at765-766; Aames Capital Corp. v Davidsohn, 24 AD3d 474, 475 [2005]; Abacus RealEstate Fin. Co. v P.A.R. Constr. & Maintenance Corp., 128 AD2d 821 [1987]). Finally, thatbranch of the appellants' motion which was pursuant to CPLR 5015 (a) (4) for alleged lack ofjurisdiction is without merit. As noted, jurisdiction was acquired over B.M. Baking andCalabrese through service pursuant to Business Corporation Law § 306, and the Melinoswere not entitled to service pursuant to [*3]Business CorporationLaw § 1106 (c).
Accordingly, the Supreme Court properly denied the appellants' motion to vacate the defaultjudgment and for leave to interpose an answer. Rivera, J.P., Angiolillo, Eng and Sgroi, JJ.,concur.