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LLC v. Woo's Trading, Inc.

Supreme Court, New York

April 18, 2013

128-138 MOTT STREET, LLC, Plaintiff,
WOO'S TRADING, INC. and TAI PING TRADING, INC.,Defendants 109806/11

Unpublished Opinion



Plaintiff moves, pursuant to CPLR 3215, for default judgment against Defendants. Defendants oppose the motion and cross-move for an order: pursuant to CPLR 2104, declaring that Plaintiff waived any objections to the late answer and that the answer was properly served on the plaintiff; pursuant to CPLR 2004, extending the time to answer the complaint; and pursuant to CPLR 3012(d), compelling Plaintiffs acceptance of the answer. Plaintiff opposes the cross-motion.

The underlying action seeks payment for unpaid rents and unpaid sewer and water charges owed by Woo's Trading, Inc. (Woo) to Plaintiff pursuant to a written lease agreement. Plaintiff claims that Woo failed to pay the agreed upon rent of $5,790.45 per month from February 1, 2010, to November 10, 2010, and failed to pay water and sewer charges.

Plaintiff contends that Tai Ping Trading (Tai Ping) is the alter ego of Woo and was formed for the express purpose and intention of defrauding Plaintiff of the monies it is owed by Woo. As stated in the affidavit of De He Zhu, he is the owner of both Woo and Tai Ping. Plaintiff alleges that the creation of Tai Ping constituted constructive fraud. Accordingly, Plaintiff contends that Tai Ping holds i the assets of Woo as constructive trustee for the benefit of the Plaintiff. Plaintiff further alleges that the conveyance of Woo's assets to Tai Ping was made to intentionally hinder, delay, and defraud Plaintiff.

Plaintiff seeks punitive damages for the fraudulent conduct of Defendants. Plaintiff seeks attorney's fees pursuant to section 276-a of the Debtor and Creditor Law.


On September 21, 2010, Plaintiff was awarded a judgment of $17,371.35 against Woo, for the occupancy period of February 1, 2010, to April 30, 2010, by the New York County Civil Court. The unpaid award in the 2010 action is being sought as a portion of the damages in the present action.

The index number for the underlying action was purchased on August 24, 2011. Service of the Summons and Complaint was made on October 20, 2011. Plaintiff sent letters to the Defendants on December 28, 2011, and March 14, 4 2012,informing the Defendants that they were in default. The motion for default judgment was served upon the Defendants within one year of the service of the i Summons and Complaint.

Despite having been served with the Summons and Complaint and several letters notifying them of their default, Defendants failed to serve their answer until September 10,2012.


Defendants argue that Plaintiff waived its right to reject the answer as late. It is the Defendants' contention that Plaintiff had two days from the date they received the answer in which to return the answer with objections to it or the right to object to the late service is waived. In support of their contention, Defendants point to CPLR § 2104(f), a statute which does not exist. The language that Defendants cite mirrors CPLR § 2101(f), with the exception of the time period, which, according to statute, allows fifteen days in which the answer may be objected to. It is undisputed that the plaintiff objected to the answer within fifteen days of service. Furthermore, CPLR § 2101(f) deals with objecting to defects in the form, not to an untimely answer. Therefore, Defendants argument that Plaintiff failed to timely object to late service of the answer is unavailing.

In order to vacate their default, defendants must show both excusable default and a meritorious defense.

Plaintiff exhibits the sworn affidavit of merit of Kyaw Tun. Mr. Tun states that he is the managing agent of plaintiff 128-138 Mott Street, LLC. He states that plaintiff was awarded a judgment in the Civil Court only against defendant Woo in i the amount of $17,371.35. Tun asserts further that plaintiff is entitled to post-eviction use and occupancy for the period from May 1,2010 through November 10, 2010, in the amount of $36,479.83, plus an additional $865.00 for water and sewer.

Defendants exhibit the sworn affidavit of De He Zhu, the principal of the defendant corporations. He asserts that the answer was delayed as a result of "internal law office confusion arising out of reassigning attorneys" to the case. Such a contention is sufficient to establish a reasonable excuse for the default. The principal's affidavit is insufficient, however, to make out a meritorious defense as to defendant Woo. Defendants' principal merely makes conclusory statements with regards to available defenses of Woo.' The answer is similarly conclusory as to any defenses to payment of rent and Additional rent.

After careful consideration, the Court finds that plaintiff has established that it is entitled to a default judgment only against defendant Woo in the amount of $37,344.83 for post-judgment use and occupancy and; water and sewer.

Regarding defendant Tai Ping, plaintiff asserts in the affidavit of merit that defendant Tai Ping was formed "for the express purpose and intention of defrauding and cheating the plaintiff out of the monies that were lawfully and rightly owed to plaintiff." Further, he contends that Tai Ping was created as a fraudulent conveyance.

In short, the Court finds that the uncorroborated contentions asserted by plaintiff against Tai Ping in the affidavit of merit - namely, that Tai Ping is nothing but the "alter ego" of Woo and that it was created for the sole purpose carrying out "a fraudulent conveyance scheme" to "cheat and defraud" the plaintiff - are conclusory and self-serving. Accordingly, the affidavit of merit is insufficient to make out a prima facie case against Tai Ping. Therefore, the default judgment is denied against Tai Ping.

Taking into consideration the affidavits of De He Zhu and Kyaw Tun and all other papers submitted in connection with Plaintiffs motion for default judgment and Defendants' opposition and cross-motion, it is hereby

ORDERED that Plaintiffs motion for default judgment is granted in part, and the Clerk is directed to enter judgment in favor of Plaintiff and against Defendant Woo's Trading, Inc., in the sum of $37,344.83, with interest from the date of November 10, 2010, at the statutory rate, as calculated by the Clerk, together with costs and disbursements as taxed by the: Clerk; and it is further

ORDERED the Defendants' cross-motion is granted in part, and only defendant Tai Ping Trading, Inc., is granted leave to answer plaintiffs complaint within twenty days of service of this order, with notice of entry; and it is further

ORDERED that the action is severed and continued against the remaining defendant, Tai Ping Trading, Inc.

The foregoing constitutes the decision and order of the court.

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