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  • Posted on: Jun 21 2024

By Jonathan H. Freiberger

In today’s BLOG we discuss AMK Capital Corp. v. Plotch., a case decided on June 18, 2024, by the Appellate Division, First Department, that involves, inter alia, an interesting service of process issue.

The Court in AMK Capital recognized that the appeal it was deciding is “an issue of apparent first impression – whether CPLR 308(2)’s restrictions prohibiting the inclusion of information indicating that a communication ‘is from an attorney or concerns an action against the person to be served’ on an envelope in which the process is mailed to a place of business apply when the mailing address serves both as a defendant’s residence and place of business.” In deciding the action, the First Department held that “where a defendant’s address serves a dual purpose, a mailing in conformity with CPLR 308(2)’s residential requirement is proper and that the restrictions concerning litigation-related information do not apply.”

Legal Issues

This Blog has previously addressed issues involving service of process. See, e.g., [here], [here], [here], [here], [here], [here], [here] and [here]. As explained in prior articles, there are two “components and constitutional predicates of personal jurisdiction.” Keane v. Kamin, 94 N.Y.2d 263, 265 (1999). “One component involves service of process, which implicates due process requirements of notice and opportunity to be heard.” Id. (citations omitted). Even though a defendant may be subject to the jurisdiction of the Court, dismissal may be sought “based on the claim that service was not properly effectuated.” Id. (citations omitted). “The other component of personal jurisdiction involves the power, or reach, of a court over a party, so as to enforce judicial decrees.” Id. (citations omitted). This requires a “constitutionally adequate connection between the defendant, the State and the action” and is beyond the scope of today’s article. Id. (citations omitted).

In order for a court to exercise personal jurisdiction over a defendant in a litigation, among other things, defendant must be served with process (typically a summons). The failure to serve process in “strict compliance” with the “statutory methods,” “leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void.”  Nationstar Mortgage, LLC v. Gayle, 191 A.D.3d 1002 (2nd Dep’t 2021) (citations omitted).

The CPLR provides numerous methods for service of process on individuals or different types of entities. See CPLR 307 (State), 308 (natural person), 309 (infant, incompetent or conservatee), 310 (partnership), 310-a (limited partnership), 311 (corporation or governmental subdivision), 311-a (limited liability company) and 312 (court, board or commission). Today’s article focusses on service of process on an individual pursuant to CPLR 308(2), which permits service on a natural person to be made by:

by delivering the summons within the state to a person of suitable age and discretion at the actual place of business, dwelling place or usual place of abode of the person to be served and by either mailing the summons to the person to be served at his or her last known residence or by mailing the summons by first class mail to the person to be served at his or her actual place of business in an envelope bearing the legend “personal and confidential” and not indicating on the outside thereof, by return address or otherwise, that the communication is from an attorney or concerns an action against the person to be served, such delivery and mailing to be effected within twenty days of each other;  proof of such service shall be filed with the clerk of the court designated in the summons within twenty days of either such delivery or mailing, whichever is effected later;  service shall be complete ten days after such filing;  proof of service shall identify such person of suitable age and discretion and state the date, time and place of service…. [Emphasis added.]

When service is made pursuant to CPLR 308(2), jurisdiction “is not acquired…unless both the delivery and mailing requirements have been strictly complied with.” Jordan-covert v. Petroleum Kings, LLC, 199 A.D.3d 666 (2nd Dep’t 2021) (citations and internal quotation marks omitted).

The Facts of AMK Capital as Related to Today’s Article

Defendant borrowed money and pledged its interest in a condominium as security for the repayment of the loan (the “Mortgage”). The Board of Managers of the Condominium Association commenced an action to foreclose its lien on the subject property due to unpaid common charges due to it from the borrower. The resulting judgment of foreclosure and sale provided that the property was being sold subject to the Mortgage. The condominium lien was sold to Plotch, who received a referee’s deed indicating that the deed was subject to the Mortgage. Plotch’s action to quiet title was dismissed due to the clear “subject to” language on, inter alia, the referee’s deed.

Subsequently, upon the borrower’s loan default, AMK Capital commenced a commercial foreclosure action to foreclose its interest in the Mortgage. Plotch was served with process pursuant to CPLR 308(2). The process server’s affidavit indicated that the mailing envelope was not marked “personal and confidential” and did not have any markings on it indicating that the mailing was from an attorney or otherwise related to a legal action. However, in actuality, the envelope was not marked “personal and confidential,” but did have some markings indicating the mailing was litigation related. Plotch defaulted in answering the loan foreclosure complaint. The Property was sold pursuant to a judgment of foreclosure and sale and was subsequently resold.

Plotch moved to vacate the judgment of foreclosure and sale and the related sales of the property. Plotch argued that the address at which he was served was both a residence and a business address. To the extent that the service address was a business address, Plotch argued that, inter alia, “to the extent the address was his business address, the envelope’s extensive litigation-related information markings violated CPLR 308(2)’s prohibition; and that the violation mandates vacatur of the foreclosure judgment and dismissal of the foreclosure complaint for lack of personal jurisdiction as a matter of law.”

The motion court, inter alia, “rejected defendant’s argument that the presence of the litigation-related information on the envelope mandated vacatur and dismissal because the address was his residence….” The First Department affirmed the motion court as to the “mailing” issue, but on different grounds.

The First Department’s Decision

The Court rejected Blotch’s position that “the business purpose overrides the residential purpose [and that] compliance with CPLR 308(2)’s business mailing restrictions is not excused ‘just because the defendant’s place of business happens to be furnished with a bed.’” The Court noted that the “failure to comply with CPLR 308(2)’s mailing requirement is a jurisdictional defect warranting a finding as a matter of law that service thereunder was invalid” (citation omitted) and, therefore, if Plotch’s argument was successful, the action would be dismissed, and the judgment of foreclosure and sale vacated.

However, the Court rejected Plotch’s position as “untenable” and stated:

This position would improperly render meaningless one provision in favor of the other for no apparent reason other than to benefit one side over the other. That said, a close reading of CPLR 308(2)’s mailing requirements reveals an alternative construction that would resolve this interesting dilemma. The placement of the phrase “last known residence” before the phrase “actual place of business” signals the Legislature’s clear intent to deem mailing to a defendant’s residence to be primary over a place of business. Indeed, the legislative history for the 1987 amendment to CPLR 308(2) strongly supports this reasoning. The amendment providing for mailing to a place of business was to ameliorate the inability to locate a defendant’s residence. Thus, mailing to a residential address is primary over a mailing to a place of business, an option that was intended to be secondary in effectuating service of process. Based on the foregoing, where a defendant’s address is both residential and a place of business, the address may be deemed as a residential one in the affidavit of service, permitting a mailing in accordance with CPLR 308(2)’s residential mailing requirements. Under these circumstances, the mailing at issue herein did not violate CPLR 308(2)’s mailing requirements.

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be, and should not be taken as, legal advice. 

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