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  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
  • Prestige Home Fitness, Llc a/k/a Gymguyz Bay Ridge v. Gymguyz Franchising, LlcCommercial - Contract document preview
						
                                

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FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ------------------------------------------------------------------X PRESTIGE HOME FITNESS, LLC A/K/A GYMGUYZ BAY RIDGE, Index No.: 515251/2021 Plaintiff, AFFIRMATION IN SUPPORT -against- OF MOTION TO VACATE DEFAULT JUDGMENT GYMGUYZ FRANCHISING, LLC, Defendant. ------------------------------------------------------------------X NANCY L. KOURLAND, ESQ., an attorney duly admitted to practice before the courts of the state of New York, affirms as follows, upon penalty of perjury: 1. I am a Senior Counsel at Lasser Law Group, PLLC, attorneys for Defendant GYMGUYZ FRANCHISING, LLC (“GymGuyz” of “Defendant”). As such, I have personal knowledge of the facts, circumstances and pleadings set forth herein. 2. I make this Affirmation in support of Defendant’s motion, pursuant to CPLR § 317, seeking an order vacating the default judgment dated November 16, 2022 and entered on December 5, 2022 and compelling Plaintiff Prestige Home Fitness, LLC a/k/a GymGuyz Bay Ridge (“Prestige”) to accept its September 8, 2021 answer with counterclaims (the “Answer”) [NYSECF Doc. No. 13], and for such other and further relief as this Court deems just and proper. 3. As discussed more fully below, GymGuyz did not receive actual notice of the Complaint until after its time to answer or otherwise respond to the Complaint expired. 4. In addition, GymGuyz has a meritorious defense to this commercial breach of contract action because Prestige unequivocally and positively repudiated the contract by expressing its intent in writing to GymGuyz that it would cease, and indeed did cease, performing under it. 1 of 7 FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 5. Thus, because GymGuyz did not receive notice in time to defend and has a meritorious defense, this Court should vacate the Default Judgment under CPLR § 317. PROCEDURAL HISTORY Commencement of the Action 1. Prestige commenced this commercial breach of contract action against GymGuyz on June 22, 2021 by filing a Summons and the Complaint in which it sets forth five (5) causes of action alleging that Gymguyz breached a certain Self-Direction Agreement, dated December 17, 2019, by and between GymGuyz and Prestige and engaged in fraudulent concealment with respect to its books and records as to amounts allegedly owed to Prestige. Prestige seeks (a) unspecified damages, (b) an accounting, and (c) a declaratory judgment that the Self-Direction Agreement continues in perpetuity. A copy of the Self-Direction Agreement is attached hereto as Exhibit “A.” Service on GymGuyz via the Secretary of State 2. The Affidavits of Service [NYSCEF Document No. 2 and NYSCEF Document No. 3] reflect that Prestige served the Summons and the Complaint on GymGuyz by personally delivering them to the New York Secretary of State on July 6, 2021 in accordance with Section 303 (“Service of Process on Limited Liability Companies”) of the New York Limited Liability Law. 3. Service of process on Gymguyz was complete on July 6, 2021 and, pursuant to CPLR §320[a], Gymguyz had until August 5, 2021, i.e., 30 days, to appear or answer. See CPLR §320[a], §3012[c]; Paez v. 1610 St. Nicholas Ave., L.P., 103 AD3d 553 [1st Dept 2013]. 4. The Secretary of State, however, did not mail the Summons and Complaint to GymGuyz at its corporate address on file until August 16, 2021. The Summons and Complaint 2 2 of 7 FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 were sent by USPS certified mail, return receipt requested. See New York Secretary of State’s cover letter to GymGuyz dated August 16, 2022 attached hereto as Exhibit “B.” 5. USPS delivered the Summons and Complaint to GymGuyz on August 19, 2021. See USPS proof of delivery attached hereto as Exhibit “C.” 6. On August 30, 2021, Prestige filed its motion for a default judgment. See NYSCEF Doc. No. 4; Motion Seq. No. 1. 7. On September 9, 2021, GymGuyz filed its Answer [NYSCEF Doc. No. 13]. 8. On September 9, 2021, Prestige rejected the Answer as untimely under CPLR § 320, pursuant to a Notice of Rejection [NYSCEF Doc. No. 15]. 9. On July 19, 2022, Prestige’s motion for a default judgment was denied based on its failure to submit a CPLR §3215(g) affidavit of additional mailing. [NYSCEF Doc. No. 16]. 10. On July 25, 2022, Prestige filed a motion to reargue [NYSCEF Doc. No. 18; Motion Seq. No. 2]. 11. On November 16, 2022, Prestige’s motion to reargue was granted and, upon reargument, this Court entered a default judgment. [NYSCEF Doc. No. 27]. CPLR §317 12. CPLR §317 provides that “a person served with a summons other than by personal delivery . . . who does not appear may be allowed to defend the action within one year after he obtains knowledge of entry of the judgment . . . upon a finding of the court that he did not personally receive notice of the summons in time to defend and has a meritorious defense.” 13. Under this section, the Court of Appeals has held that a defendant moving to vacate a default judgment need not show a “reasonable excuse” for its delay. Eugene Di Lorenzo, Inc. v. A.C. Dutton Lumber Co., 67 NY2d 138, 141 [1986]. See also Matter of Rockland Bakery, Inc. v. B.M. Baking Co., Inc., 83 AD3d 1080, 1081 [2011]. 3 3 of 7 FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 GymGuyz Did Not Receive Notice in Time to Defend 14. Here, GymGuyz satisfies the first prong of the CPLR §317 test because it can establish that did not receive notice of the action in time to defend. 15. As provided by Section 303 of the LLC Law, Prestige served process on Gymguyz through the Secretary of State on July 6, 2021 and service was complete on that date. Pursuant to CPLR §320[a], Gymguyz had until August 5, 2021, i.e., 30 days, to appear or answer. See CPLR §320[a], §3012[c]; Paez v. 1610 St. Nicholas Ave., L.P., 103 AD3d 553 [1st Dept 2013]. 16. Here, however, the New York Secretary of State’s cover letter to GymGuyz is dated August 16, 2022 and the USPS tracking information reflects that the Summons and Complaint were delivered to GymGuyz at its address on file on August 19, 2021, a date that is after GymGuyz’s time to answer or appear lapsed. See Exhibit “B” and Exhibit “C.” 17. Accordingly, GymGuyz did not receive the Summons and Complaint in time to defend the action. 18. Notwithstanding the above, GymGuyz promptly retained counsel and filed its Answer [NYSCEF Doc. No. 13] on September 9, 2021, thus establishing that GymGuyz did not deliberately attempt to avoid notice of the action. Eugene Di Lorenzo, Inc. v. A.C. Dutton Lumber Co., 67 NY2d 138, 143 [1986]. 19. Prestige rejected the Answer the same day. [NYSCEF Doc. No. 15]. GymGuyz Has a Meritorious Defense 20. As set forth in the accompanying Affidavit of Josh York, GymGuyz has a meritorious defense to this breach of contract action and, thus, satisfies the second prong of CPLR § 317. 21. As admitted by Prestige in its Complaint, Prestige anticipatorily repudiated the Self-Direction Agreement when, “[o]n or about February 5, 2021, Plaintiff’s member Robin 4 4 of 7 FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 Hjalte indicated to [GymGuyz] that she did not intend to continue recruiting new franchisees to the Self-Direction [p]rogram.” Complaint at ¶ 18 [NYCEF Doc. No. 1] . The enrollment of new franchisees was an essential and material provision of the Self-Direction Agreement. 22. Prestige’s communication to GymGuyz was a positive and unequivocal statement by Prestige that it would no longer perform under the Self-Direction Agreement. Prestige’s repudiation of the Self-Direction Agreement was subsequently memorialized on March 10, 2021 in email correspondence between the parties, which emails are attached hereto as Exhibit “D.” 23. The emails recite that (a) Prestige would no longer perform under the Self- Direction Agreement, (b) Prestige had received its “last and final check” from GymGuyz in connection with its performance under the Self-Direction program, (c) GymGuyz intended to run the Self-Direction program itself henceforth, and (d) Prestige would cooperate and participate in the transition. 24. Thus, it is clear that Prestige anticipatorily breached the Self-Direction Agreement, which entitled GymGuyz to terminate it, which it did. 25. Anticipatory repudiation occurs “when, before the time for performance has arisen, a party to a contract declares [its] intention not to fulfill a contractual duty’” Condor Funding, LLC v. 176 Broadway Owners Corp., 147 AD3d 99, 101-102 [1st Dept 2017] (citing Kaplan v. Madison Park Group Owners, LLC, 94 AD3d 616, 618–619 [1st Dept 2012], lv. dismissed 19 NY3d 1012 [2012], lv. denied 20 NY3d 858 [2013]). 26. The Court of Appeals, in Rosenthal Paper Co. v. National Folding Box & Paper Co., 226 NY 313, 324 [1919], held that “the inexcusable breach of a contract . . . confer[s] [on the non-breaching party] the right to terminate it . . . .” 27. It “relieves the nonrepudiating party of its obligation of future performance and entitles that party to recover the present value of its damages from the repudiating party’s breach 5 5 of 7 FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 of the total contract.” Am. List Corp. v. U.S. News & World Rpt., Inc., 75 NY2d 38, 44 [1989]. “A repudiation can be either a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach or a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach.” Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 NY2d 458, 463 [1998] (citations omitted). “The announcement of intention not to perform by the repudiating party must be ‘positive and unequivocal.’” Tenavision, Inv. v. Neuman, 45 NY2d 145, 150 [1978]. 28. Here, Prestige’s indicated its intent to cease enrolling GymGuyz franchisees in the Self-Direction program and providing support to them repudiated the Self-Direction Agreement in February 2021. Thereafter, this repudiation excused any further performance by GymGuyz and provides it with an absolute defense to this action. WHEREFORE, GymGuyz respectfully requests that this Court grant its motion to vacate the default judgment pursuant to CPLR § 317and deem its Answer timely filed. Dated: New York, New York December 14, 2022 ________________________________ Nancy L. Kourland, Esq. 6 6 of 7 FILED: KINGS COUNTY CLERK 12/14/2022 06:19 PM INDEX NO. 515251/2021 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/14/2022 VERIFICATION STATE OF NEW YORK ) ): ss. COUNTY OF NEW YORK ) Nancy L. Kourland, Esq., being duly sworn, deposes and says: I am a Senior Counsel with the law firm of Lasser Law Group, PLLC, attorneys for the Defendant herein, and am admitted to practice law in New York State. I have read the foregoing Affirmation and know the contents thereof to be true to my own knowledge, except as to those matters which are alleged upon information and belief and, as to those, I believe them to be true. The grounds for my information and belief are oral statements, books and records maintained by the Defendant, conversations with managing agents and/or employees and material contained in the office files. This verification is made pursuant to RPAPL 741. Dated: New York, New York December 14, 2022 ___________________________ Nancy L. Kourland, Esq. Lasser Law Group, PLLC Attorneys for Defendant 633 Third Avenue, Suite 1301 New York, NY 10017 (212) 376-3205; nkourland@lasserlg.com 7 7 of 7