N.Y. Civ. Prac. L. & R. 311 (McKinney 1990). The scope of the section--i.e., the group of people who properly may accept service--has expanded since its inception. See Fashion Page, Ltd. v. Zurich Ins. Co., 50 N.Y.2d 265, 406 N.E.2d 747, 428 N.Y.S.2d 890 (1980).
The New York Court of Appeals analyzed the history of Rule 311 in great detail in Fashion Page, and declined to read the Rule in the "narrow and technical manner" advanced by the defendant. Id. at 271, 406 N.E.2d at 750, 428 N.Y.S.2d at 893. In certain circumstances, New York courts have permitted what might otherwise constitute ineffective service of process based on the "redelivery theory."
The New York Court of Appeals first addressed this theory in McDonald v. Ames Supply Co., 22 N.Y.2d 111, 238 N.E.2d 726, 291 N.Y.S.2d 328 (1968). Although service was found to be improper in that case, the court stated that as a general rule, once delivery was made to the wrong person, redelivery would not cure the error. However, "distinguishable are those cases in which the process server has acted reasonably in placing the summons within reach of the defendant, and, therefore, with 'due diligence' in fulfilling the statutory requirement of personal delivery." 22 N.Y.2d at 115, 238 N.E.2d at 728, 291 N.Y.S.2d at 331. In McDonald, the court did not uphold service of process because, among other things, the person who signed for the papers was not even employed by the defendant, and the process server had never asked if he was in fact an employee of the defendant. The McDonald court limited the situations in which redelivery would cure erroneous delivery to those "where the defendant resists service." Id.
The concept of redelivery has been expanded, however, to include cases where defendant has not made any affirmative effort to resist service. In Shedlin v. State Tax Comm'n, 62 A.D.2d 806, 406 N.Y.S.2d 596 (3d Dep't 1978), the court relied on three factors to find effective service where there was a redelivery: The server had made a previous "good faith attempt" to serve the defendant; once the server found a receptionist to whom he could give the papers, she agreed to deliver them to the proper person the next day (although she disavowed any authority to accept them); and finally, the defendant ultimately received process. Id. at 808; see also Leo v. General Elec. Co., 111 F.R.D. 407 (E.D.N.Y. 1986) (allowing delivery of process to an unauthorized secretary who redelivered the papers the same day).
Examining this case in light of the factors noted above, process was effective because of the redelivery by Carter. Bringe made a good faith effort when he attempted to deliver on January 17. Bringe Aff. at 2, P 3. Although Carter may not have been authorized by the company to accept service, she nonetheless did accept and sign for the summons and complaint; admittedly she is an employee of the defendant; and she states that upon Bringe's departure, she passed the envelope on to her supervisor. Carter Dec. at 2, P 4. Finally, the summons and complaint were actually received by the defendant. The defendant does not claim that any harm was caused by the delay before the papers reached the authorized recipients.
Because the process server used due diligence, and the summons and complaint were redelivered upon the process server's departure (according to the secretary), service of process was effective.
II. Summary Judgment
The standard for a summary judgment motion is well established: the nonmoving party must demonstrate that there exists a genuine issue of material fact in order to defeat a summary judgment motion. Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
A defendant may not defeat a summary judgment motion merely by making far-reaching allegations that are not grounded in fact. See Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987); Liberty Lobby, 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505. Those issues that are genuine are those which "have a real basis in the record before the court, and most significantly, must be 'material to the outcome of the litigation.'" Litton Indus., Inc. v. Lehman Bros. Kuhn Loeb, Inc., 709 F. Supp. 438, 442 (S.D.N.Y. 1989) (quoting Knight, 804 F.2d at 11, citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)). To be material, "the disputed issues must implicate cognizable legal principles upon which recovery may be had." Id.
B. The Promissory Notes
There is no doubt that Smith Wilson executed the Promissory Notes and Agreement committing to a debt of $ 172,908.63 plus interest. Smith Wilson has indisputably failed to make payment under the notes. The defense that Smith Wilson raises, now that litigation has commenced, is that the notes were not intended to be enforceable, but were to serve only as "collateral." The company defended with sweeping allegations of fraud, which are contradicted by the letters sent to Seward & Kissel by Smith Wilson. See letter from Flagstad to Hancock dated December 4, 1990; letter from Flagstad to Hancock dated November 6, 1991. Yet, Smith Wilson, upon request of the company's in-house counsel, Joel Ferrin, amended the notes to make them enforceable only after September 1, 1991. Complaint, Exh. A. Such an amendment certainly indicates that Smith Wilson realized the very strong possibility that the plaintiff would attempt to enforce the notes after that date.
Smith Wilson does not state whether Ferrin served as counsel at the time. Ferrin was sent a copy of at least one letter from plaintiff to defendant. See Letter from Hancock to Crombie dated June 19, 1991. Hancock avers that he spoke with Ferrin about the amendment to the agreement. While Smith Wilson initially alleged that it had no independent representation, see Answer at 3, P 16, the defendant's Rule 3(g) statement is devoid of any such assertion. The plaintiff had alleged that "Smith Wilson was represented by independent counsel in connection with the negotiation and execution of the Agreement and the First and Second Promissory Notes." Plaintiff's Rule 3(g) Statement, P 27.
Any such assertion in a movant's Rule 3(g) statement not denied in the non-movant's Rule 3(g) statement is deemed admitted for purposes of a summary judgment motion. See Amsler v. Corwin Petroleum Corp., 715 F. Supp. 103, 105 (S.D.N.Y. 1989). In light of the defendant's failure to contradict or deny this allegation, Smith Wilson is deemed to have admitted that the company had in-house counsel--and made use of its in-house counsel--at the time of negotiations with Seward & Kissel.
Moreover, the alleged conversations concerning the nature of the notes, see supra note 2, took place prior to the signing of the notes, and are barred by the parol evidence rule. See Bloor v. Shapiro, 32 Bankr. 993, 999 (S.D.N.Y. 1983) (barring introduction of evidence that written guarantees were intended to be conditional when the guarantees themselves expressly stated that they were unconditional); Benderson Dev. Co. v. Hallaway Properties, Inc., 115 A.D.2d 339, 339, 495 N.Y.S.2d 820, 821 (4th Dep't 1985) (holding that alleged collateral agreement in which holder of note agreed not to seek payment was "inconsistent with the terms of the note and barred by the parol evidence rule"), aff'd, 67 N.Y.2d 963, 494 N.E.2d 106, 502 N.Y.S.2d 1001 (1986); Weyerhaeuser Co. v. Gershman, 324 F.2d 163, 165 (2d Cir. 1963) (granting plaintiff's summary judgment motion and deeming inadmissible the defendant's allegations concerning a contemporaneous agreement not to present notes for payment on maturity).
Here defendant has attempted to do exactly what the summary judgment rules are designed to protect against: "show that there is some metaphysical doubt as to the material facts," Matsushita, 475 U.S. at 586, "relying on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Knight, 804 F.2d at 12. There is no evidence to support the claim that there was an agreement not to enforce the notes; such an assertion is contradicted by Smith Wilson's request to prevent enforcement before September 1, 1991.
Smith Wilson argues that summary judgment is inappropriate because "defendant registered objection to portions of plaintiff's statements and on one occasion plaintiff submitted a revised statement eliminating and acknowledging $ 8,400 in excessive charges." Defendant's Rule 3(g) Statement at 2, P 6. Defendant has produced no evidence of such objections, and Flagstad sent at least two letters to plaintiff acknowledging the debt and professing Smith Wilson's intent to pay off the debt. Letter from Flagstad to Hancock dated December 4, 1990; letter from Flagstad to Hancock dated November 6, 1991. Presumably the mention of $ 8,400 in paragraph 6 of the 3(g) statement refers to a letter sent to Smith Wilson by Hancock in which Hancock urged Flagstad to contact him to set up a payment schedule. Letter from Hancock to Flagstad dated November 27, 1990. Defendant has failed to produce any evidence that the write-off was at defendant's request; the context is best understood by examining the letter in its entirety.
In sum, Smith Wilson's responses to the summary judgment motion are of little use. The statement submitted in accordance with Rule 3(g) consists of seven paragraphs that contain allegations unsupported by the record or the law. Rule 3(g) explicitly requires that
all material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement required to be served by the opposing party.
See Carlton v. Interfaith Medical Center, 612 F. Supp. 118, 123 n.4 (S.D.N.Y. 1985) (where plaintiff's Rule 3(g) statement "merely consists of five conclusions of law," statistics cited in defendant's Rule 3(g) statement are deemed admitted); United States v. Pilot Petroleum Assocs., Inc., 122 F.R.D. 422, 423 (E.D.N.Y. 1988) ("True, a Rule 3(g) statement must be short and concise; but it cannot be anemic. Within its four corners, the non-movant's Rule 3(g) statement must contain a summary of the facts that are in dispute."). Moreover, any statements not denied in the nonmovant's Rule 3(g) statement are deemed admitted for purposes of summary judgment. Amsler v. Corwin Petroleum Corp., 715 F. Supp. 103, 105 (S.D.N.Y. 1989).
Defendant has opposed the summary judgment motion by submitting a single two page affirmation by the defendant's attorney--no affidavits are included. Smith Wilson has failed to show that any genuine issues of material fact exist to justify allowing defendant to proceed to trial.
C. Account Stated
Seward & Kissel has established an account stated as to a final statement of October 2, 1991; the account was for a total of $ 11,988.03. Summary judgment is properly granted upon an attorney's application for fees on the basis of an account stated, and is enforceable absent a showing of "fraud, mistake or other equitable considerations." Rosenman Colin Freund Lewis & Cohen v. Neuman, 93 A.D.2d 745, 746, 461 N.Y.S.2d 297, 299 (1st Dep't 1983); see also Bresler v. Hostage, 696 F. Supp. 46 (S.D.N.Y. 1988) (granting summary judgment on account stated). Defendant has failed specifically to address this account, and summary judgment for plaintiff as to the account is granted.
D. Attorneys' Fees
The promissory notes contained a provision stating that the attorneys' fees and costs incurred in collecting payment on the notes were to be paid by Smith Wilson. This provision is enforceable under New York law. See Torres & Leonard, P.C. v. Select Professional Realties, Ltd., 118 A.D.2d 467, 469, 499 N.Y.S.2d 707, 709 (1st Dep't 1986); Manufacturers & Traders Trust Co. v. Franz, 46 A.D.2d 161, 163, 361 N.Y.S.2d 782, 784 (4th Dep't 1974). Therefore, defendant is also liable for all costs and fees associated with this action, with the exception of attorneys' fees incurred in recovering the $ 11,988.03 as to the account stated.
E. Defendant's Rule 56(f) Motion
Defendant has moved for limited discovery pursuant to Fed. R. Civ. P. 56(f), claiming that the invoices submitted by the plaintiff do not state billing with sufficient detail. While the court has an obligation to rule on a summary judgment motion based on a complete record, requiring production of more detailed invoices from Seward & Kissel is both impracticable and unnecessary. Defendant does not dispute that the notes were signed, and that they have not been paid; any detail relating to the invoices is unnecessary, because no dispute as to the material facts exists. See Sundsvallsbanken v. Fondmetal, Inc., 624 F. Supp. 811, 818 (S.D.N.Y. 1985).
Smith Wilson waived any defense it may have had under Rule 12(b)(5), and even absent that waiver, any such defense would have failed. Summary judgment is granted based on the promissory notes that Smith Wilson signed: $ 137,493.62 as to the first note, and $ 35,493.62 as to the second. Plaintiff is entitled to attorneys' fees incurred in enforcing those notes. Furthermore, the invoice for $ 11,988.03 constitutes an account stated, and is enforceable. Thus defendant is liable for a total of $ 184,896.66. Plaintiff is also entitled to interest on the debts from the date the action was brought.
Because summary judgment is granted on all counts, it is not necessary to consider the defendant's motion to vacate the default judgment. Defendant's cross-motion for further discovery pursuant to Rule 56(f) is denied.
This opinion shall not constitute a final judgment, but is issued subject to filing of a supplemental order by this court. Plaintiff is to submit a proposed order on notice, with an accompanying affidavit detailing the fees and interest allowable pursuant to the notes and account stated.
Dated: New York, New York
March 2, 1993
CHARLES H. TENNEY
United States District Judge