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Metropolitan Transportation Authority v. Penstraw's Inc. d/b/a Dollar Bills

(Civ. Ct. N.Y. Cty. 5/13/96)

Plaintiff represented by Itkowitz PLLC

Martin Shulman, J.C.C.

Respondent Penstraw's, Inc. d/b/a Dollar Bills ("Dollar Bills" or "respondent"), moves to dismiss this commercial holdover proceeding on the ground that this Court lacks personal jurisdiction over Dollar Bills. Petitioner Metropolitan Transit Authority ("MTA" or "petitioner") opposes the motion and cross-moves for an order as follows:

  1. Dismissing the first, second, third, fourth, fifth, sixth, seventh and eighth affirmative defenses interposed in Dollar Bills' answer; and
  2. Granting MTA leave to amend the caption and body of the notice of petition and petition to substitute "Penstraw, Inc." in lieu of "Penstraw's Inc.'

Both the motion and cross-motion are consolidated herein for disposition.

Dollar Bills essentially sets forth the following three (3) arguments to dismiss this proceeding for lack of personal jurisdiction:

  1. The MTA failed to comply with the additional mailing requirement set forth in RPAPL § 735(b)(1); namely, the MTA was required to serve Dollar Bills with an additional mailing to an alternate corporate address located at 1000 Huyler Street, Teterboro, New Jersey. In support of this assertion, Dollar Bills' counsel states that the MTA had written information of this New Jersey address because Dollar Bills sent a rental check and Certificate of Insurance that contained this address on the face of these documents;
  2. the relevant lease between the parties requires the MTA to serve notice upon Dollar Bills at the Teterboro, New Jersey address; and
  3. the MTA cannot obtain a money judgment in this proceeding because it failed to serve Dollar Bills pursuant to CPLR § 311.

Substitute Service

RPAPL § 735 governs service of the pleadings in a summary proceeding. RPAPL § 735(l) states, in pertinent part, that:

Service of the notice of petition and petition shall be made . . . by delivering to and leaving personally with a person of suitable age and discretion who . . . is employed at the property sought to be recovered, a copy of the notice of petition and petition, if upon reasonable application admittance can be obtained, and such person who will receive it...

After carefully examining the papers in support and in opposition to the motion to dismiss as well as the process server's affidavit of service, this Court finds that the notice of petition and petition were properly served by substitute service pursuant to RPAPL § 735(l). According to the affidavit of service, on March 18, 1996, the process server delivered the notice of petition and petition to Lou Nachimdas, an employee who was employed at the subject premises and authorized to accept service of same. On March 19, 1996, the process server completed an additional mailing to the subject premises and to an alternate address located in Ridgefield, New Jersey. Initially, it is noted that in a summary proceeding, service on a corporate tenant pursuant to CPLR § 311(1) is not the sole means of service to enable the Court to obtain jurisdiction. Strict compliance with this CPLR provision is simply not required in a summary proceeding. A petitioner may clearly resort to delivering papers to a respondent-corporation employee who is of suitable age and discretion, and who is physically at the premises sought to be recovered.

Further, this Court follows the ratio decidendi of the Hon. Marcy Friedman, J.C.C., in Manhattan Embassy Co. v. Embassy Parking Corp., 627 N.Y.S.2d 245, March 15, 1995, N.Y.L.J., p. 25 col. 1 (Civ. Ct. N.Y. Co. 1995):

Contrary to respondent's contention, the terms "will receive" [in the substituted service clause of RPAPL § 735] and "willing to receive" [which is not contained anywhere in RPAPL § 735] are not equivalents, and only the latter clearly expresses consent. While the legislature's choice of the somewhat peculiar term "will receive" is not explained by the legislative history, it is clear that RPAPL 735 was intended to relax service requirements for summary eviction proceedings. Thus, it permits "reasonable application" to make substitute service before resorting to conspicuous place service, as opposed to imposing the higher standard of "due diligence" applicable to actions under CPLR 308. (Eight Assocs. v. Hynes [102 A.D.2d 746, 748, 476 N.Y.S.2d 881, aff'd 65 N.Y.2d 739, 492 N.Y.S. 2d 15, 481 N.E.2d 555 1985]; Hospitality Enterprises, Inc. v. Fuego Rest. Corp. [6/5/80 N.Y.L.J. 11 (col. 4)].) Significantly, even under CPLR 308, substitute service may be made on a party who "resists" or refuses to submit to service. (Bossuk v. Steinberg [58 N.Y.2d 916, 918, 460 N.Y.S.2d 509, 447 N.E.2d 56 (1983)1; McDonald v. Ames Supply Co., 22 N.Y.2d 111, 291 N.Y.S.2d 328, 238 N.E.2d 726 [1968].) It follows that refusal to accept service cannot vitiate a substitute service under the less rigorous RPAPL 735 reasonable application standard.

Accordingly, this Court obtained jurisdiction over Dollar Bills via RPAPL § 735 service to proceed to trial.

Generally, if service of a petition was affected by conspicuous place service, and a tenant fails to appear and defend on the merits, the petitioner would only be awarded a judgment for possession. Since this Court finds that service on Dollar Bills' employee at the premises sought to be recovered is sufficient to confer jurisdiction for a summary proceeding pursuant to RPAPL § 735 (Walber 419 Co. v. Office Design Associates, N.Y.L.J., May 5, 1992, p. 24, col. 1 [Civ. Ct. NY Co., Solomon, J.]), this proceeding shall proceed to trial. However, it will be up to the trial court to decide whether Dollar Bills' continued appearances and anticipated trial defenses raised in its answer constitute a waiver to confer jurisdiction to award the MTA both a possessory and money judgment. (Walber, supra.)

Notice

Dollar Bills claims that dismissal is warranted based upon the MTA's non-compliance with 27 of the lease, i.e., a standard "Bills and Notices" provision. Said provision, inter alia, states that when an owner is required to give a notice to a tenant, said notice is deemed sufficiently given if it is in writing and either delivered personally, served by registered mail or physically left at the premises sought to be recovered. Paragraph 27 of the underlying lease is strikingly similar to the lease provision construed by the Appellate Term, First Department in Four Star Holding Co. v. Alex Furs, Inc., 153 Misc.2d 447, 590 N.Y.S.2d 667 (1st Dept., 1992). In Four Star, the Appellate Term clearly rejected the construction of this standard provision suggested by Dollar Bills:

... [W]e construe that provision as applicable principally to notices or statements given pursuant to or under the lease itself, as opposed to statutory notices we decline to hold that this printed provision in the standard form lease manifests the parties' agreement that they have adopted a notice requirement different from the otherwise controlling statutory procedure.(599 N.Y.S.2d at 688.)

In addition, the mere mailing of a rental check and Certificate of Insurance (which is only affirmed by respondent's counsel) listing an alternate address of Dollar Bills does not constitute a formal written notice of such address to require the MTA to serve an additional mailing to that address pursuant to RPAPL § 735(l)(b). For that matter, it also does not constitute notice under the express terms of T27 to require an additional mailing to the Teterboro, New Jersey address.

Additional Mailing Requirements

RPAPL § 735(l)(b) states, in relevant part:

... [I]n addition, within one day after such delivery to such suitable person . . . by mailing to the respondent by registered or certified mail, if a corporation . . . at the property sought to be recovered, and if the principal office or principal place of business of such corporation . . . is not located at the property sought to be recovered, and if the petitioner shall have written information at his principal office or principal place of business within the state, at the last place as to which petitioner has such information, or if the petitioner shall have no such information but shall have written information of any office or place of business within the state to any such place as to which the petitioner has such information.

Since the MTA served the notice of petition and petition at the premises sought to be recovered, and it solely had written information of Dollar Bills' principal office located "at the last place as to which petitioner has such information" (i.e., at the premises sought to be recovered), MTA's additional mailings to the subject premises fully complied with RPAPL § 735(l)(b).

Accordingly, this Court denies Dollar Bills' motion to dismiss, in its entirety, and grants the branch of the MTA's cross-motion to strike Dollar Bills' second affirmative defense of lack of personal jurisdiction.

Leave to Amend

The MTA cross-moves solely to amend the notice of petition and petition to reflect the correct spelling of respondent's name as "Penstraw, Inc." rather than \"Penstraw's Inc." Dollar Bills raises this typographical error in its first affirmative defense.

It is well settled that leave to amend pleadings should be freely given in the absence of prejudice to the opposing party. (CPLR § 3025(b); Mathiesen v. Mead, 168 A.D.2d 736 [3d Dept., 1990].) "In cases where the defects and irregularities of a pleading are inconsequential and do not prejudice the rights of the parties, courts can and should disregard or amend the irregularities and dispose of the action on the merits if possible." [Citations omitted.] (Brusco v. Miller, N.Y.L.J., November 9, 1994 [Civ. Ct., N.Y. Co., Payne, J.], citing Birchwood Towers #2 Associates v. Schwartz, 98 A.D.2d 699, 469 N.Y.S.2d 94 [2d Dept., 1983].)

This Court agrees and finds that the above error is inconsequential and does not prejudice the rights of the parties.

Accordingly, this Court grants the branch of the MTA's cross-motion to amend the notice of petition and petition to reflect the correct spelling of respondent's name as "Penstraw, Inc. d/b/a Dollar Bills" and strikes Dollar Bills' first affirmative defense and a portion of the fourth affirmative defense concerning the spelling of respondent's name. The notice of petition and petition shall be deemed amended, served and filed as of the date hereof.

Inadequate Notice of Petition

RPAPL § 731(2) requires that the notice of petition inform the respondent "that if respondent shall fail at such time [the time of the hearing on the petition] to interpose and establish any defense that he may have, he may be precluded from asserting such defense or the claim on which it is based in any other proceeding or action." Dollar Bills argues that by omitting the words "at such time" from this paragraph of the notice of petition, the notice of petition is fatally defective.

This argument is without merit. Courts have held that even where the notice of petition fails completely to include the appropriate warning about the consequences of failing to interpose and establish defenses, such failure does not mandate dismissing the proceeding where, as here, the respondent has not defaulted. (See, Commissioner of N.Y. State Office of Mental Hygiene v. Kings Park Yacht Club, Inc., N.Y.L.J., July 12, 1995, p. 29, col. 4 [A.T., 2d Dept.].)

Dollar Bills also argues that in the notice of petition, petitioner informed Dollar Bills that if the notice of petition was served upon respondent on or before March 23, 1996, that Dollar Bills would have to answer three days before the date of the hearing on the petition; that said date should have been March 18, 1996, rather than March 23, 1996; and that this proceeding should therefore be dismissed. However, such a typographical error does not require dismissal of this proceeding because it was a mere irregularity which caused no prejudice to Dollar Bills and is correctable pursuant to CPLR § 2001. (See, Parkway Assocs. v. Berkoff, N.Y.L.J., March 7, 1995, p. 29, col. 2 [A.T., 2d Dept.].)

Accordingly, this Court grants the branch of the MTA's cross-motion which seeks to strike the remaining portion of Dollar Bills' first affirmative defense which challenges the adequacy of the notice of petition.

Improper Verification

Dollar Bills alleges in its third affirmative defense that the petition is improperly verified.

CPLR § 3022 governs the remedy for a defective verification. It states, in relevant part, that:

... Where a pleading is served without a sufficient verification in a case where the adverse party is entitled to a verified pleading, he may treat this as a nullity, provided he gives notice with due diligence to the attorney of the adverse party that he elects to do so.

It is well settled that if the objecting party fails to give notice that such party is treating the defective verification as a nullity within 24 hours of receipt of the pleading, any defect in the verification is deemed waived. (Lentile v. Egan, 94 A.D.2d 839, 463 N.Y.S.2d 542 [3d Dept., 1983] aff'd., 61 N.Y.2d 874, 474 N.Y.S.2d 467 [1984]; Westchester Life, Inc. v. Westchester Magazine Co., 85 N.Y.S.2d 34 [Sup. Ct., N.Y. Co. 1984]; Fort Holding v. Otero, 157 Misc.2d 834, 598 N.Y.S.2d 908 [Civ. Ct., N.Y. Co., 1993]; Vann v. Vann, N.Y.L.J., February 4, 1991, p. 28, col. [Civ. Ct., N.Y. Co., Braun, J.] and 400 Madison Ave. L.P. v. Etno, Inc., N.Y.L.J. April 27, 1994, p. 24, col. 5 [Civ. Ct., N.Y. Co., Payne, J.].)

In this proceeding, Dollar Bills failed to notify the MTA within 24 hours that it would treat the petition as a nullity pursuant to CPLR § 3022. Therefore, the alleged defect in the verification is deemed waived.

Furthermore, assuming arguendo that a waiver had not occurred, a defective verification is not a jurisdictional defect and is capable of being amended. (See, 400 Madison Ave. L.P. v. Etno, Inc., supra, citing Hablin Realty Corp. v. McCain, 123 Misc.2d 777, 478 N.Y.S.2d 224 [A.T. 1st Dept., 1984]; Nassau Lease Corp. v. The Nissan Bros., N.Y.L.J., January 13, 1984, p. 6, col. 1 [A.T., 1st Dept., 1984]; 150 West 26th St. Corp. v. Hall, N.Y.L.J., January 12, 1982, p. 11, col. 1 [A.T., 1st Dept.].)

Accordingly, this Court grants the branch of the MTA's cross-motion to strike Dollar Bills' third affirmative defense

.

Interest of Petitioner and Respondent in the Subject Premises

Dollar Bills' challenge to the MTA as landlord fails because Dollar Bills has attorned to the MTA and is therefore estopped to deny the title of its landlord. (See, Parkway Assocs. v. Berkoff, supra.) In addition, the petition clearly specifies that Dollar Bills is the tenant of the subject premises. Accordingly, this Court strikes a portion of the fourth affirmative defense and the entire seventh affirmative defense that challenge the interest of the parties in the subject premises.

Failure to State a Cause of Action

In its fifth affirmative defense, Dollar Bills alleges that the petition must be dismissed because the petitioner has failed to state a cause of action upon which relief may be granted. The Appellate Division of this Department in Riland v. Todman, 56 A.D.2d 350, 393 N.Y.S.2d 4 (1977) stated:

We agree with the rationale in Prompt Electrical, supra [citation omitted], that the defense of failure to state a cause of action may be inserted in an answer as an affirmative defense (CPLR 3211[a][7]). The pleading of that defense is, however, surplusage, as it may be asserted at any time even if not pleaded (CPLR 3211(e)). Nevertheless, inclusion of such defense in an answer is not prejudicial. It serves to give notice to the other side that the pleader may at some time move to assert it. The choice whether or when to so move should remain with the pleader; the affirmative pleading of such defense is not a motion. "Since a defendant might not want to move under CPLR rule 3211, preferring a later motion for summary judgment (CPLR 3212[a]), there is no reason why he should not be permitted to allege in his answer that a particular cause of action is substantively deficient, especially when it is recalled that this defect is unwaivable." (23 Syracuse L. Rev. 290; see CPLR 3211[3]). The assertion of that defense in an answer should not be subject to a motion to strike or provide a basis to test the sufficiency of the complaint. (393 N.Y.S.2d at 5.)

Accordingly, the branch of petitioner's cross-motion to strike the fifth affirmative defense is denied.

Inadequate Description of the Subject Premises

Dollar Bills contends that this proceeding should be dismissed because the petitioner's description of the subject premises slightly differs from the lease, as amended. The lease, as amended, includes as part of the subject premises "the ramp connecting spaces 1650 and 399", whereas petitioner maintains that due to a "typographical" error, the pleadings erroneously describe said portion of the subject premises as "the ramp connecting spaces 1650 and 366." Since it is manifestly clear from even a cursory review of the description of the subject premises the discrepancy is due to a mere typographical error, and there is no prejudice to Dollar Bills, this Court finds it to be a non-jurisdictional amendable defect. (See, Brusco v. Miller, supra.) Therefore, this Court strikes the remaining portions of Dollar Bills' first and fourth affirmative defenses challenging the sufficiency of the description of the subject premises.

In respondent's sixth affirmative defense, Dollar Bills alleges that an order of the Hon. Beatrice Shainswit, J.S.C., dated June 9, 1993, in a prior Supreme Court action entitled Penstraw, Inc. v. Metropolitan Transit Authority (Index No.25082/92) prohibits petitioner from maintaining the instant proceeding. Petitioner asserts that the prior order is not applicable because it only prohibits petitioner from interfering with Dollar Bills' option to lease additional space which petitioner is not seeking to recover in this proceeding.

Unfortunately, this Court cannot readily discern from the documents attached to the motion papers whether the subject premises sought to be recovered includes a portion of the "additional space" which is governed by the above Supreme Court order. Based upon the above, the sixth and eighth affirmative defenses must remain for trial.

This matter shall be restored to the Part 52 trial calendar on May 20, 1996, at 9:30 A.M.

This constitutes the decision and order of the Court. Courtesy copies of this decision and order have been mailed to counsel.