US Flour Corporation v. Certified Bakery Corporation

Filing 21

MEMORANDUM AND ORDER denying 12 Motion for Default Judgment; adopting 15 Report and Recommendation. For the foregoing reasons, Plaintiff's objections to Judge Wall's R&R are OVERRULED, Judge Wall's R&R is ADOPTED IN ITS ENTIRET Y, and Plaintiff's motion for default judgment is DENIED without prejudice with leave to refile. Plaintiff shall file its renewed motion for default judgment within thirty (30) days of the date of this Memorandum and Order. Plaintiff is warned t hat if it does not move for default judgment within the time prescribed, Plaintiff's Second Amended Complaint will be dismissed without prejudice for failure to serve process. So Ordered by Judge Joanna Seybert on 3/5/12. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
US FLOUR CORPORATION,
Plaintiff,

MEMORANDUM & ORDER
10-CV-2522(JS)(WDW)

-againstCERTIFIED BAKERY, INC. a/k/a CERTIFIED
BAKERY CORPORATION,
Defendant.
---------------------------------------X
APPEARANCES
For Plaintiff:
Scott Adam Grauman, Esq.
Law Offices of Scott A. Grauman, Esq.
125-16 Queens Boulevard
Kew Gardens, NY 11415
Scott Cargill, Esq.
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, NJ 07068
Samuel J. Teele, Esq.
Lowenstein Sandler PC
1251 Avenue of the Americas, 18th Floor
New York, NY 10020
For Defendant:

No appearances.

SEYBERT, District Judge:
Pending before the Court are U.S. Flour Corporation’s
(“Plaintiff”) objections to Magistrate Judge William D. Wall’s
Report and Recommendation (“R&R”) recommending that Plaintiff’s
motion for default judgment be denied.

For the reasons stated

below, Plaintiff’s objections to Judge Wall’s R&R are OVERRULED,
and Judge Wall’s R&R is ADOPTED IN ITS ENTIRETY.

BACKGROUND
Plaintiff commenced this diversity action on June 3,
2010 (Docket Entry 1), filed an Amended Complaint on October 8,
2010 (Docket Entry 3), and filed a Second Amended Complaint 1 on
December 6, 2010 asserting claims against Defendant Certified
Bakery, Inc. a/k/a Certified Bakery Corporation (“Defendant”)
for breach of contract, account stated, and unjust enrichment
(Docket Entry 6).
On February 4, 2011, Plaintiff filed a Certification
of

Due

Diligence

service

of

documenting

process

upon

its

process

[D]efendant.”

servers’

“attempted

(Docket

Entry

8.)

Attached as exhibits to the Certification were two Affidavits of
Service.

One stated that a process server attempted to serve

Defendant

at

20

Universal

Place,

Carlstadt,

New

December 23, 2010 “but the building is for sale.
real estate sign Chaus Realty.
effectuate service.”
a

process

process

on

server
Sam

Grunfeld,

on

There is a

So therefore I was unable to

(Docket Entry 8-2.)

attempted,

Jersey

again

unsuccessfully,

Defendant’s

1

The other stated that

registered

to

serve

agent,

on

The Court notes that the Second Amended Complaint was filed
without leave of court. See FED. R. CIV. P. 15(a)(1) (stating
that a party may amend its pleading only once as a matter of
course). However, leave to amend should be freely granted “when
justice so requires.” FED. R. CIV. P. 15(a)(2). Therefore,
despite Plaintiff’s failure to move to amend, the Court accepts
the Second Amended Complaint as the operative complaint.
2

December 22, 29, and 30, 2010 at his residence 9 Clark Place,
Tenafly, New Jersey.

(Docket Entry 8-4.) 2

The Certification

also asserted that on January 4, 2011, Plaintiff served the
“summons

and

complaint”

3

via

certified

mail,

return

requested, and via first class mail on Sam Grunfeld

4

receipt
at his

residence located at 9 Clark Place, Tenafly, New Jersey.
Defendant never answered or otherwise appeared in this
action.

Thus, on February 7, 2011, Plaintiff moved for the

entry of default (Docket Entry 9), and on February 8, Plaintiff
filed an amended motion for the entry of default (Docket Entry
10).

2

The

Clerk

of

the

Court

noted

Defendant’s

default

on

The Affidavit states:
There was a vehicle in the driveway.
[I]
confirmed with next door neighbor that
entity does reside at this address.
Also
there was a name plate on the front door,
with the name Grunfelds. The lights were on
and there was a vehicle in the driveway.
Entity would not answer the door. Entity is
evading service.
So therefore I was unable
to effectuate service.

(Docket Entry 8-4.) It is unclear from the process server’s
affidavit how he obtained this address, as the New Jersey
Business Entity Status Report indicating that Mr. Grunfeld is
Defendant’s registered agent states that his address is 20
Universal Place, Carlstadt, New Jersey. (Docket Entry 8-3.)
3

The Certification is misleading and should have stated that
Plaintiff served the Amended Summons and Second Amended
Complaint. (See Docket Entry 8-5, at 4-24.)
4

This is also incorrect: The certified mail and first class mail
were addressed to Sam Frunfeld. (Docket Entry 8-5, at 2-3.)
3

February 8, 2011, and Plaintiff moved for a default judgment on
March 3, 2011 (Docket Entry 12).
On March 8, 2011, the Clerk of the Court received a
letter dated February 24, 2011 from Richard J. Schwartz, Esq.
Mr. Schwartz indicated that he was counsel for Defendant and
that

Defendant

objected

to

the

entry

of

default

because

it

“never received any notice of papers indicating that suit was
instituted.”

(Docket Entry 13.)

On March 21, 2011, the Court

referred the motion to Judge Wall for an R&R.
On March 22, 2011, Judge Wall issued an electronic
order scheduling a traverse hearing “at which the plaintiff must
establish proper service.
must be introduced.”

Appropriate witnesses and exhibits

A copy of this electronic order was mailed

to Mr. Schwartz.
The hearing took place on April 27, 2011.
Entry 16.)

(Docket

Plaintiff was represented by Thomas Livolsi, Esq.

(not one of its attorneys of record in this case), and no one
appeared

on

behalf

of

Defendant.

(Docket

Entry

16.)

Mr.

Livolsi did not produce any witnesses or exhibits to establish
proper service at the hearing but rather rested on the papers
filed in support of the motion for default judgment.

Judge Wall

issued his R&R that day recommending that default judgment be
denied for failing to establish proper service.
15.)

The R&R stated:

(Docket Entry

“To the Traverse Hearing, the plaintiff
4

sent

an

attorney

who

is

not

an

attorney

of

record,

and

introduced not a single witness or exhibit to establish proper
service, thus wasting the court’s time and completely failing to
meet its burden of proving service.”

(Docket Entry 15.)

On May 11, 2011, Plaintiff filed timely objections to
the R&R.

(Docket Entry 18.)

Specifically, Plaintiff argues

that Judge Wall erred in (1) finding that Defendant was not
properly served and (2) recommending that default judgment be
denied.
DISCUSSION
I.

Standard of Review
“When evaluating the report and recommendation of a

magistrate judge, the district court may adopt those portions of
the report to which no objections have been made and which are
not facially erroneous.”

Walker v. Vaughan, 216 F. Supp. 2d

290, 291 (S.D.N.Y. 2002) (citation omitted).

A party may serve

and file specific, written objections to a magistrate’s report
and recommendation within fourteen days of being served with the
recommended disposition.
receiving

any

recommendation,

timely
the

See FED. R. CIV. P. 72(b)(2).

objections

district

to

“court

the
may

magistrate
accept,

Upon
judge’s

reject,

or

modify, in whole or in part, the findings or recommendations
made by the magistrate judge.”
FED. R. CIV. P. 72(b)(3).

28 U.S.C. § 636(b)(1); see also

A party that objects to a report and
5

recommendation

must

point

out

the

specific

portions

report and recommendation to which they object.

of

the

See Barratt v.

Joie, No. 96-CV-0324, 2002 WL 335014, at *1 (S.D.N.Y. Mar. 4,
2002) (citation omitted).
When

a

party

raises

an

objection

to

a

magistrate

judge’s report, the Court must conduct a de novo review of any
contested sections of the report.

See 28 U.S.C. § 636(b)(1);

Pizarro v. Bartlett, 776 F. Supp. 815, 817 (S.D.N.Y. 1991).

But

if a party “makes only conclusory or general objections, or
simply reiterates his original arguments, the Court reviews the
Report and Recommendation only for clear error.”
Entegris,

Inc.,

249

F.R.D.

48,

51

(E.D.N.Y.

Pall Corp. v.
2008)

(internal

quotation marks and citation omitted).

Furthermore, even in a

de

objections,

novo

review

ordinarily

will

evidentiary
presented

of

a

not

material
to

the

party’s

specific

consider
which

“arguments,

could

magistrate

have

judge

in

been
the

case
but
first

the
law

court
and/or

[were]

not,

instance.”

Kennedy v. Adamo, No. 02-CV-1776, 2006 WL 3704784, at *1 (E.D.N.Y.
Sept. 1, 2006) (internal quotation marks and citation omitted).
Here, Plaintiff raises two objections:

(1) that Judge

Wall erred in finding that it failed to establish proper service
and (2) that because proper service was established, default
judgment should have been granted.

Accordingly, the Court will

review those portions of the R&R de novo.
6

Plaintiff has not

objected to Judge Wall’s decision to hold a traverse hearing, so
the Court will review Judge Wall’s decision to do so for clear
error.
II.

Plaintiff’s Objections
The Court will briefly address Judge Wall’s decision

to hold a traverse hearing for clear error before discussing the
issues raised in Plaintiff’s objections de novo.
A.

Judge Wall’s Decision to Conduct a Traverse Hearing
“Under New York law 5 a traverse hearing is required

when there exists a genuine issue of fact of whether service was
properly made.”

Escobar v. New York, No. 05-CV-3030, 2010 WL

629828, at *4 (E.D.N.Y. Feb. 22, 2010) (citing CSC Holdings,
Inc. v. Fung, 349 F. Supp. 2d 613, 617 (E.D.N.Y. 2004); LePatner
& Assocs., L.L.P. v. Horowitz, 24 Misc. 3d 187, 882 N.Y.S.2d
829, 832 (Sup. Ct. N.Y. Cnty. 2009); Dime Sav. Bank of N.Y. v.
Steinman,

206

1994)).

Typically,

establishes

a

A.D.2d

prima

404,
a

613

process

facie

N.Y.S.2d
server’s

case

of

945,

946

affidavit

proper

service.

(2d
of

Dep’t

service
See

Old

Republic Ins. Co. v. Pac. Fin. Servs. of Am., Inc., 301 F.3d 54,
57 (2d. Cir. 2002) (citing Nyctl 1997-1 Trust v. Nillas, 288
A.D.2d 279, 732 N.Y.S.2d 872, 873 (2d Dep’t 2001)).

5

However, a

“[P]ersonal jurisdiction over a defendant in a diversity action
is determined by reference to the law of the jurisdiction in
which the court sits.” Hoffritz for Cutlery, Inc. v. Amajac,
Ltd., 763 F.2d 55, 57 (2d Cir. 1985) (citations omitted).
7

defendant’s

sworn

presumption

of

server’s

denial

proper

affidavit

of

receipt

service

and

of

service

established

necessitates

an

“rebuts

by

the

evidentiary

the

process
hearing.”

Id. at 57-58 (citing Skyline Agency, Inc. v. Ambrose Coppotelli,
Inc., 117 A.D.2d 135, 502 N.Y.S.2d 479, 483-84 (2d Dep’t 1986)).
Such a hearing is not necessary “where the defendant fails to
swear to ‘specific facts to rebut the statements in the process
server’s affidavits.’”

Id. at 58 (quoting Simonds v. Grobman,

277 A.D.2d 369, 716 N.Y.S.2d 692, 693 (2d Dep’t 2000)).

Thus,

since Defendants denied receipt of service via a letter from
their attorney and not via a sworn statement, a traverse hearing
was not required.
Nonetheless,
leeway”

in

deciding

courts
how

to

have

“considerable

address

allegations

procedural
of

improper

service and may conduct an evidentiary hearing even without a
sworn denial.

See Marine Midland Bank, N.A. v. Miller, 664 F.2d

899, 904 (2d Cir. 1981); see also, e.g., SEC v. Napolitano, No.
99-CV-4807, 2006 U.S. Dist. LEXIS 82016, at *6 (E.D.N.Y. Nov. 3,
2006)

(traverse

hearing

held

notwithstanding

the

defendant’s

failure to submit a sworn rebuttal); Harris v. Wu-Tang Prods.,
Inc., No. 05-CV-3157, 2006 WL 1677127, at *6 (S.D.N.Y. June 16,
2006)

(holding

that

a

traverse

hearing

was

“particularly

appropriate” to resolve defendant’s allegation that plaintiff
served

the

wrong

address

despite
8

the

absence

of

a

sworn

rebuttal).

Therefore, Judge Wall’s exercising his discretion to

conduct a traverse hearing despite no sworn denial of service
from Defendant was not clear error.
B.

Plaintiff’s Burden of Establishing Proper Service at
the Hearing
At the hearing, Plaintiff had the burden of proving

proper

service

by

a

preponderance

of

the

evidence.

Hoffritz, 763 F.2d at 57; Marine Midland, 664 F.2d at 904.

See
Yet

Plaintiff did not call any witnesses or admit any exhibits.
Instead, Plaintiff asked Judge Wall to take judicial notice of
the

process

Diligence.

servers’

affidavits

and

Certification

of

Due

Judge Wall refused to do so and found that Plaintiff

failed to establish proper service by a preponderance of the
evidence.

The Court agrees with Judge Wall.
The Federal Rules of Evidence provide that a “court

may judicially notice a fact that is not subject to reasonable
dispute because it: (1) is generally known within the trial
court’s territorial jurisdiction; or (2) can be accurately and
readily determined from sources whose accuracy cannot reasonably
be questioned.”

FED. R. EVID. 201(b).

The date, time, and manner

in which Plaintiff’s process servers claim to have made service
are not such matters of general knowledge; therefore, Judge Wall
correctly refused to take judicial notice of these statements.
Cf. Cobble Hillbillies, L.L.C. v. Interior Design, 4 Misc. 3d

9

987, 990, 782 N.Y.S.2d 600, 602 (N.Y.C. Civ. Ct. 2004).

The

case cited by Plaintiff, Person v. White, No. 09-CV-3920, 2010
WL 2723210, at *3 (E.D.N.Y. July 2, 2010), stating that “the
Court may take notice of . . . items in the record of the case,”
is

inapposite,

as

it

describes

notice on a motion to dismiss.

what

a

court

may

judicially

The traverse hearing, although

one-sided, was nonetheless a hearing:

The Federal Rules of

Evidence applied and Plaintiff had the burden of introducing
evidence

sufficient

to

establish

preponderance of the evidence.

proper

service

by

a

See Hoffritz, 763 F.2d at 57;

Marine Midland, 664 F.2d at 904; Cobble Hillbillies, 4 Misc. 3d
at 990, 782 N.Y.S.2d at 602.6
Therefore,

the

Court

finds

that

Plaintiff,

having

failed to introduce any evidence at the traverse hearing, did
not satisfy its burden of establishing proper service.
C.

Denial of Default Judgment
“A court may not properly enter a default judgment

unless it has jurisdiction over the person of the party against
whom the judgment is sought, which also means that he must have
been effectively served with process.”

Copelco Capital Inc. v.

Gen. Counsel of Bolivia, 940 F. Supp. 93, 94 (S.D.N.Y. 1996)
6

Even if Plaintiff’s counsel attempted to admit the affidavits
and Certification of Due Diligence at the hearing, which he did
not, such documents would have been excluded as inadmissible
hearsay. FED. R. EVID. 801-02; cf. Cobble Hillbillies, 4 Misc. 3d
at 989-90, 782 N.Y.S.2d at 601-02.
10

(internal

quotation

marks

and

citation

omitted).

Since

Plaintiff failed to establish proper service, the motion for
default judgment must be denied.

See id.; United States v.

Kadoch, No 96-CV-4720, 2011 WL 2680510, at *2 (E.D.N.Y. June 10,
2011) (“In the absence of proper service, it appears that this
Court

may

lack

personal

jurisdiction

over

defendant

and

the

default therefore must be voided.”), adopted by 2011 WL 2680362
(E.D.N.Y. July 8, 2011).
CONCLUSION
For the foregoing reasons, Plaintiff’s objections to
Judge Wall’s R&R are OVERRULED, Judge Wall’s R&R is ADOPTED IN
ITS ENTIRETY, and Plaintiff’s motion for default judgment is
DENIED without prejudice with leave to refile.

Plaintiff shall

file its renewed motion for default judgment within thirty (30)
days of the date of this Memorandum and Order.

Plaintiff is

warned that if it does not move for default judgment within the
time prescribed, Plaintiff’s Second Amended Complaint will be
dismissed without prejudice for failure to serve process.

See

FED. R. CIV. P. 4(m); Gleason v. McBride, 869 F.2d 688, 692 (2d
Cir. 1989).
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

March
5 , 2012
Central Islip, NY

11