Prokos v. Lions Equities, LLC et al

Filing 53

MEMORANDUM DECISION AND ORDER dated 11/26/24 re: that Defendants' motion to vacate the default judgment is denied. ( Ordered by Judge Brian M. Cogan on 11/26/2024 ) (RG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------------------------ANDREW PROKOS,
Plaintiff,
- against ADAM GROSSMAN and GROSSMAN
INTERACTIVE, INC.
Defendants.
-----------------------------------------------------------

X
:
:
:
:
:
:
:
:
:
:
X

MEMORANDUM DECISION
AND ORDER
19-cv-4028 (BMC)

COGAN, District Judge.
This case is before the Court on defendants’ motion to vacate the default judgment
entered against them. Although vacatur of the default would not prejudice plaintiff, the evidence
of willfulness and lack of a meritorious defense is so overwhelming that the motion is denied.
BACKGROUND
Plaintiff, a professional photographer, brought this copyright infringement action against
defendants Adam Grossman (“Grossman”) and Grossman Interactive, Inc. (“Interactive”) for the
unauthorized use of a photograph plaintiff had created and copyrighted. Defendants developed a
website for Lions Equities, a residential home purchasing company, and used plaintiff’s
copyrighted photograph on the website. Lions Equities, originally named as a defendant in this
lawsuit, stated that Grossman and Interactive had designed the website and chosen to use
plaintiff’s copyrighted photograph.
Once plaintiff commenced suit against Lions Equities, Lions Equities complained to
Grossman and Interactive that they had apparently used copyrighted materials for Lions Equities’
website without authorization, and that plaintiff was demanding $4,000 from Lions Equities for

the infringement. Grossman responded to Lions Equities as follows: “Please do not pay this –
this does happen on occasion to me, and some ways is scammey [sic] – to try to get people to
pay outrageous fees like this.” Lions Equities nonetheless settled with plaintiff, and plaintiff
filed an amended complaint naming Grossman and Interactive as defendants.
Plaintiff’s process server attempted personal service of the summons and amended
complaint four times at Grossman’s last known address, which was also the address listed for
Interactive with the New York Secretary of State. Plaintiff eventually served defendants by
affixing to the door and mailing a copy of the summons and amended complaint to the same
address. This method of service is commonly referred to as “nail and mail” service.
In addition to affixing and mailing the summons, plaintiff’s counsel emailed Grossman.
The email stated as follows:
I represent Andrew Prokos. We have filed a lawsuit in the Eastern District of New
York regarding your unauthorized placement of Mr. Prokos’s photograph on the
Lions Equities website. Such use infringed Mr. Prokos’ copyright in the
photograph.
We have resolved this case as to Lions Equities and Jonathan Lemze, and they
have provided evidence that you and your company were responsible for the
infringement. We have amended the complaint to add you and your company as
defendants and are proceeding to effect service of process.
If you would like to resolve this case without proceeding through litigation, feel
free to reach out to me.
When plaintiff’s counsel received no response to this email, he emailed again:
I have not heard back from you. We have served both you and your company
with the complaint and your responses are now due. If we do not receive
responses by the end of the week we will ask the court to enter your default.
If you would like to resolve the case, feel free to call me.
There was no response to this email either.

2

Grossman and Interactive failed to respond to plaintiff’s summons and amended
complaint, leading the Clerk of Court to note their default under Federal Rule of Civil Procedure
55(a). Defendants then failed to respond to plaintiff’s motion for a default judgment pursuant to
Rule 55(b), and the Court granted plaintiff’s motion, awarding $32,500 in statutory damages, 1
$5,529 in attorneys’ fees, and $545 in costs, for a total of $38,574.00, plus interest.
Unbeknownst to plaintiff, at the time of service of the summons and complaint,
Grossman no longer lived at the address plaintiff used for service. Grossman had moved to
Florida eight years prior. Although Grossman had updated his personal address with the U.S.
Postal Service, he never updated Interactive’s address listed with the New York Secretary of
State. Grossman maintains that he never received service of the summons and amended
complaint, and he did not realize he was being sued until plaintiff restrained his bank accounts.
When plaintiff did restrain Grossman’s bank accounts, more than four and a half years
after the entry of default judgment, defendants filed appearances and a motion to vacate the
default judgment. After hearing argument on the motion, the Court temporarily reduced the
amount of the restraining notice to the principal amount of the judgment, that is, excluding
accrued interest, pending decision of the motion.
DISCUSSION
I.

Service Under New York Civil Practice Law and Rules § 308(d)
The threshold question raised by the motion is whether plaintiff properly served

defendant Grossman. If he did not, then the ruling on the motion is not discretionary; the

The Court awarded $2500 under the Digital Millennium Copyright Act, 17 U.S.C. § 1202(b), in addition to
$30,000 under the Copyright Act of 1976, 17 U.S.C. §§ 106, 501.

1

3

judgment must be vacated as to Grossman. 2 See RCC Ventures, LLC v. Brandtone Holdings
Ltd., 322 F.R.D. 442, 446 (S.D.N.Y. 2017).
Grossman contends that service was defective because he did not live at the address
plaintiff used for service, having relocated to Florida eight years prior. However, he admits that
plaintiff used the address for service that Grossman had listed with the New York Secretary of
State for Grossman’s company, and co-defendant, Interactive.
Under Federal Rule of Civil Procedure 4, service on an individual is proper if made in a
manner authorized by state law. Fed. R. Civ. P. 4(e)(1). Under New York Civil Practice Law
and Rules § 308, service may be made on a natural person by a few different methods. Service
may be made “by delivering the summons within the state to the person to be served,” N.Y.
C.P.L.R. § 308(1), or “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 mailing the summons as well, N.Y. C.P.L.R. § 308(2). If service by these two
methods “cannot be made with due diligence,” New York law provides that a natural person may
be served “by affixing the summons to the door of either the actual place of business, dwelling
place or usual place of abode within the state of the person to be served and by either mailing the
summons to such person at his or her last known residence or . . . actual place of business” (affix
and mail service). N.Y. C.P.L.R. § 308(4).
There is “no rigid rule” to determine whether service by the first two methods has been
attempted with due diligence such that affix and mail service is appropriate. Kopec v. GMG
Const. Corp., No. 09-cv-2187, 2011 WL 2650597, at *2 (E.D.N.Y. July 6, 2011). Generally,
three to four attempts at service, made on non-consecutive days, outside of business hours when

2

Defendants do not challenge the validity of service on Interactive.

4

an individual would likely not be home, and an inquiry with a neighbor about whether the
individual lives at the address suffices. See id.
Before plaintiff served Grossman via affix and mail service, the process server made four
attempts to serve Grossman at the address Grossman had listed for Interactive with the Secretary
of State. The process server made these attempts at varying times of day, including three outside
of work hours (8:31pm, 1:26pm, 7:17pm, 8:22am). Compare Kopec, 2011 WL 2650597 (affix
and mail service ineffective where process server made three attempts at service at different
times of day on consecutive days and verified with neighbor that the address was defendant’s),
with Sartor v. Utica Taxi Ctr., Inc., 260 F. Supp. 2d 670, 674 (S.D.N.Y. 2003) (“three attempts to
serve defendant at home at various times when defendant would reasonably be expected to be
found were sufficient to establish ‘due diligence’ so as to permit the use of affix and mail service
pursuant to CPLR § 308” (citation omitted)).
Without deciding whether “a service attempt at the defendant’s place of employment,
after failed attempts at the defendant’s residence, is required,” Kopec, 2011 WL 2650597 at *2,
this Court finds that the process server did make such an attempt, because the address listed with
the New York Secretary of State for Interactive, Grossman’s place of employment, was the same
address at which the process server attempted to serve Grossman four different times. Given
these four attempts at service at the address Grossman listed with the New York Secretary of
State for Interactive, made at varying times when an individual would likely be there, the process
server exercised sufficient due diligence such that affix and mail service was appropriate.
Plaintiff’s use of the same address for affix and mail service was equally proper. “New
York state courts have found listing with the state to be evidence that Defendant ‘held out’ an
address as his place of business.” Unite Nat. Ret. Fund v. Ariela, Inc., 643 F. Supp. 2d 326, 328

5

(S.D.N.Y. 2008) (citing Vid v. Kaufman, 282 A.D.2d 739, 724 N.Y.S.2d 756, 757 (2d Dep’t
2001)). When a defendant makes representations to the Secretary of State about his business
address, and “induce[s] reliance on those representations, he is estopped from denying the
propriety of that address for the purpose of service of process” on him as an individual. Id.
(quoting Sartor, 260 F. Supp. 2d at 678). Thus, affix and mail service on Grossman at the
address listed with the Secretary of State for Interactive was proper.
II.

Discretion to Vacate Under Federal Rule of Civil Procedure 60(b)
Having determined that service was proper, the Court has discretion as to whether to

vacate the default judgment. See Fed. R. Civ. P. 60(b). That discretion is guided by a threefactor test: “(1) whether the default was willful; (2) whether setting aside the default would
prejudice the adversary; and (3) whether a meritorious defense is presented.” Enron Oil Corp. v.
Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993); see also State St. Bank & Tr. Co. v. Inversiones
Errazuriz Limitada, 374 F.3d 158, 166-67 (2d Cir. 2004) (“When a district court decides a
motion to vacate a default judgment pursuant to the provisions of Rule 60(b), the court’s
determination must be guided by [the] three principal factors [mentioned above].”).
Defendants first contend that their default was not willful because they never received the
summons and amended complaint. “A finding of willfulness is appropriate where ‘there is
evidence of bad faith’ or the default arose from ‘egregious or deliberate conduct,’” and any doubt
about willfulness should be resolved in defendants’ favor. Addison v. Reitman Blacktop, 272
F.R.D. 72, 77 (E.D.N.Y. 2010) (quotation omitted).
It is readily apparent that Grossman had notice of the lawsuit through Lions Equities, a
former defendant in this action, and his communications with that company. Defendants’
willfulness is confirmed by Grossman’s choice to ignore the email messages sent to him by

6

plaintiff’s attorney. 3 Finally, Grossman’s statement to Lions Equities that he had been in this
situation before with regard to other copyright holders and the best course of action was to ignore
it – as I noted in the decision granting the motion for default judgment – is strong evidence of
willfulness. It seems clear that Grossman formed the view that the best way to deal with this
litigation was not to deal with it at all in the hope that plaintiff would simply determine that the
burden of pursuing it was not worth the benefits he would receive. That was a miscalculation on
Grossman’s part, and there can be no doubt it was a willful miscalculation.
As to prejudice, plaintiff puts forth no argument that he would suffer prejudice sufficient
to defeat defendants’ motion. “[D]elay alone is not a sufficient basis for establishing prejudice.”
Davis v. Musler, 713 F.2d 907, 916 (2d Cir. 1983) (citations omitted). Instead, plaintiff must
show “that delay will result in the loss of evidence, create increased difficulties of discovery, or
provide greater opportunity for fraud and collusion.” Id. (internal quotation marks and quotation
omitted). Especially since he is only seeking statutory damages, plaintiff alleges no risk of this
nature, and I have no reason to believe that any of these issues would come to pass.
As to the third factor, defendants have failed to meet their burden of showing a
meritorious defense as to liability. They admit to their use of copyrighted materials, and their
state of mind in doing so is irrelevant. See D.C. Comics Inc. v. Mini Gift Shop, 912 F.2d 29, 35
(2d Cir. 1990) (“[A] finding of innocent infringement does not absolve the defendant of liability
under the Copyright Act. Rather, it triggers an equitable remedy . . . that affords the district
court discretion to award damages commensurate with the defendant’s culpability.” (citations
omitted)). Defendants claim that plaintiff has not demonstrated actual injury, but actual injury is

At oral argument, Grossman suggested that he regarded the email messages as spam. The Court finds that
explanation not credible. These email messages were much too specific and detailed to constitute spam, and Lions
Equities’ earlier communication with Grossman confirmed the reality of the lawsuit.

3

7

not a requirement for a claim of copyright infringement. See generally Arista Recs., LLC v. Doe
3, 604 F.3d 110, 117 (2d Cir. 2010). Plaintiff need not request, nor present evidence of, actual
damages for a finding of liability against defendants. In fact, the Supreme Court has long
recognized that “recovery may be awarded without any proof of injury.” F. W. Woolworth Co.
v. Contemp. Arts, 344 U.S. 228, 231 (1952); see also Castillo v. G&M Realty L.P., 950 F.3d
155, 172 (2d Cir. 2020), as amended (Feb. 21, 2020) (“Unlike actual damages, statutory damages
do not require the precise monetary quantification of injury.”). The amount of actual damages
plaintiff has suffered is a factor the Court considers in calculating statutory damages, but
plaintiff’s failure to seek actual damages does not preclude a finding of liability and the
imposition of statutory damages.
Indeed, nothing in defendants’ proffered meritorious defenses addresses liability. Their
motion would be better characterized as a motion to reduce the amount of damages rather than
vacate the judgment. The most they argue is that statutory damages of $32,500 are too high
because they had an innocent intent. 4 They are innocent, they contend, because it was Lions
Equities who provided them with the photograph, and so Lions Equities bore primary
responsibility for determining that the photograph was not subject to copyright restrictions. I
reject this argument for two reasons.
First, Lions Equities’ communications with Grossman show that the story is not credible.
When plaintiff contacted Lions Equities and accused it of using a copyrighted photograph, it
turned to Grossman for direction on how to handle it. And Grossman gave it – ignore this and it
will go away. Grossman did not protest to Lions Equities that Lions Equities was the source of

Defendants also imply, but do not actually argue, that the statutory damages awarded by the Court are too high
because they are not reflective of plaintiff’s licensing fees. But plaintiff submitted invoices in support of his motion
for a default judgment showing that he has charged licensing fees of $10,000 to $20,000 for using his photographs
on websites.

4

8

the photograph. And even if Lions Equities was the source of the photograph, it is clear that its
agreement with defendants required defendants to ensure the useability of photographs before
giving Lions Equities a website that included unlicensed copyrighted material.
Second, the procedural posture of this case does not permit defendants to slough off
liability onto Lions Equities by claiming that it was Lions Equities, not defendants, who was
responsible for vetting the website’s photographs. That would have been a fine defense to raise
if defendants had not willfully defaulted when served with the summons and amended complaint.
But having chosen to forgo the opportunity to mitigate damages with which the law provided
them, they cannot simply step back in and assert that which they chose not to assert when they
should have.
Although the lack of prejudice weighs in favor of defendants, the strong evidence of
willfulness and the lack of a meritorious defense compel the conclusion that the default judgment
should stand.
CONCLUSION
Defendants’ motion to vacate the default judgment is denied.

SO ORDERED.
____________________________________
U.S.D.J.
Dated: Brooklyn, New York
November 26, 2024

9