JPMorgan Mortgage Acquisition Corp. v Shopland Corp.
Categories
Attorneys and Parties
Brief Summary
Mortgage foreclosure; whether a corporate defendant that was served through the Secretary of State could vacate its default and obtain leave to file a late answer.
The Supreme Court, Queens County, granted Shopland Corp.'s motion to vacate so much of the January 13, 2023 order as granted a default judgment and an order of reference against it, and also granted leave to serve a late answer.
The Appellate Division reversed the September 27, 2023 order and denied Shopland Corp.'s motion in its entirety.
The plaintiff proved proper service through the Secretary of State under CPLR 311(a)(1) [service on a corporation] and Business Corporation Law § 306 [service through the Secretary of State on a corporation]. Shopland Corp.'s claim that it did not receive the papers because it failed to update its address with the Secretary of State did not rebut the presumption of proper service, did not establish lack of jurisdiction under CPLR 5015(a)(4) [vacatur for lack of jurisdiction], and did not amount to a reasonable excuse under CPLR 5015(a)(1) [vacatur for excusable default]. The defendant also failed to show sufficient grounds for discretionary vacatur in the interest of substantial justice or lack of actual notice under CPLR 317 [vacatur where service was not by personal delivery and the defendant lacked actual notice in time to defend].
Background
In July 2019, JPMorgan Mortgage Acquisition Corp. commenced a mortgage foreclosure action against Shopland Corp. and others. Shopland Corp. did not timely answer the complaint. In September 2020, the plaintiff moved for leave to enter a default judgment against Shopland Corp. and for an order of reference. On January 13, 2023, the Supreme Court granted those branches of the plaintiff's motion. In March 2023, Shopland Corp. moved to vacate that relief and sought permission to serve a late answer.
Lower Court Decision
The Supreme Court, Queens County, granted Shopland Corp.'s motion, vacated the portions of the January 13, 2023 order that had granted a default judgment and order of reference against it, and allowed the corporation to file a late answer.
Appellate Division Reversal
The Appellate Division held that service on Shopland Corp. through the Secretary of State was proper and that the defendant's own failure to maintain a current address with the Secretary of State was not a basis to undo the default. The court found that the defendant failed to satisfy CPLR 5015(a)(4), CPLR 5015(a)(1), the court's limited inherent power to vacate in the interest of substantial justice, and CPLR 317. It therefore reversed the order dated September 27, 2023, and denied the defendant's motion.
Legal Significance
The decision reinforces that a corporation served through the Secretary of State bears the responsibility to keep its address current. A claimed lack of receipt caused by the corporation's own failure to update that address will generally not defeat service, establish a reasonable excuse for default, or justify vacatur. It also underscores that conclusory affidavits are insufficient to prove lack of actual notice under CPLR 317.
A corporate defendant cannot avoid a foreclosure default merely by saying it never received the summons when the plaintiff properly served the Secretary of State and the corporation failed to update its address; to vacate a default, the defendant must present a valid statutory basis supported by detailed evidence.