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Appellate Division Affirms Order Vacating 2017 Default: Real Estate Development Corp Gets a Second Chance

by | Jun 7, 2023 | Firm News

Plaintiff commenced the action in 2015 seeking to set aside two deed transfers to the same property, which vested title in our client 81 Real Estate Corp (81)  Our client paid $980,000 for the property in 2014, and since then invested nearly double that, to build a multifamily dwelling.  The Plaintiff sought to take the property back alleging that her brother and sister conveyed their late father’s property to themselves by a fraudulent deed after his death.  The client learned of the lawsuit in 2019 and successfully vacated its default so it could be heard on the merits of its defense. The Court agreed that pursuant to CPLR 317, a defaulting defendant that was “served with a summons other than by personal delivery” may be permitted to defend the action upon a finding that the defendant did not personally receive notice of the summons in time to defend the action, and has a meritorious defense. The Court reasoned that 81 did not receive notice of the lawsuit where the Plaintiff served 81 by Secretary of State (which is not ‘personal delivery’ upon a corporation), and all subsequent legal papers served upon 81 were at other various locations, which 81 stated had no connection.  81 stood to lose the property on default and our technical procedural arguments won the day.
Litigants should never count themselves out, and practitioners should not merely rely upon service by the Secretary of State to effectuate service. Personal service and Secretary of State service may be necessary in many instances to ensure the corporation receives the summons.