Commercial Credit Counseling Servs., Inc. v American Off. Furniture (2008 NY Slip Op 50834(U))

Commercial Credit Counseling Servs., Inc. v American Off. Furniture

2008 NY Slip Op 50834(U) [19 Misc 3d 1123(A)]

Decided on April 24, 2008

Hirsh, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected in part through April 25, 2008; it will not be published in the printed Official Reports.

This commercial small claims action requires the court to determine whether the statutory requirement that the claimant in a commercial small claim be a corporation, partnership or association whose principal office is located in the state of New York can be waived and whether a motion for summary judgment can be made by the claimant in a commercial small claims action.

Claimant, Commercial Credit Counseling Services, Inc., ("Commercial") is a New Jersey corporation whose principal office is located in Paramus, New Jersey. The court has checked the records of the New York State Department of State and found that Commercial is not authorized to do business in New York.

Commercial alleges that on or about July 24, 2004 it sold and delivered Steele Case 900 cubicles to the defendant American Office Furniture d/b/a American Office Interiors ("American") for the agreed upon price of $1,200. American did not make payment for the cubicles.

American's place of business is presently located at 10 Commercial Avenue, Hicksville, New York.^[FN1]

On May 12, 2005, Commercial entered a default judgment against American in the Superior Court, Bergen County, New Jersey in the sum of One Thousand Two Hundred Dollars ($1200) plus costs of Seventy Five Dollars ($75) for a total of One Thousand Two Hundred Seventy Five Dollars ($1275) ("New Jersey judgment"). The judgment remains wholly unsatisfied. This judgment purportedly is for the money due and owing for the sale of the cubicles. [*2]

On January 2, 2008, Commercial commenced a Commercial Small Claims Action in this Court seeking to recover the money due for the cubicles sold and delivered.

Rather than proceeding to trial on the cause of action for goods sold and delivered, Commercial's attorney has now moved for summary judgment on the New Jersey judgment.

On the return date of the motion, attorneys appeared for Commercial and American. American's counsel consented to the motion being submitted without opposition.

Uniform District Court Act §1801-A defines a commercial small claim as "...any cause of action for money only not in excess of the maximum amount permitted for a small claim in the small claims part of the court...provided that subject to the limitations contained in section eighteen hundred nine-A of this article, the claimant is a corporation, partnership or association, which has its principal office in the State of New York."

A foreign corporation may not be the claimant in a commercial small claims action. Siegel, General Practice Commentary on "Commercial" Small Claims Article, McKinney's Cons. Laws of NY Book 29A, Part 3, at 815-816. Even a foreign corporation that maintains a substantial presence in New York cannot be the claimant in a commercial small claim. Id.

Commercial is a foreign corporation. It lists its principal place of business

as being 95 Route 17 South, Suite 310, Paramus, New Jersey

In interpreting a statute the court's primary consideration is to ascertain and give full effect to the intention of the Legislature. McKinney's Statutes §92(a). The legislative intent is to be ascertained from the words and language of the statute. McKinney's Statutes §92(b). Words in a statute are to be given their ordinary and accepted meaning. McKinney's's Statute §94

This Court believes the legislative intent as expressed by the language of Uniform District Court Act §§1801-A and 1809-A is to prohibit foreign corporations from being the claimant in a commercial small claims action.

This restriction goes to the subject matter jurisdiction of the commercial small claims part. If this Court were to find that this restriction is waivable, it would be rendering the language that requires the claimant to be a corporation, partnership or association which has its principal place of business in New York meaningless.

Barring a foreign corporation from bringing a commercial small claims action is consistent with the policy of New York of barring foreign corporations doing business in New York but not authorized to do business in New York from maintaining an action in the New York courts until they become authorized and pay all their unpaid corporate [*3]fees and taxes. See, Matter of United Environmental Techniques, Inc. v. State of New York Department of Health, 88 NY2d 824 (1996); McIntosh Builders, Inc. v. Ball, 247 AD2d 103 (3rd Dept. 1998) and Business Corporation Law §1312.^[FN2]

A defect in subject matter jurisdiction cannot be waived. D'Angelo v. State Insurance Fund, 48 AD3d 400 (2nd Dept. 2008). Thus, the commercial small claims part of this court lacks subject matter jurisdiction over this action brought by a foreign corporation.

Even if the court had subject matter jurisdiction over this action, the motion would have to be denied.

A commercial small claims action is commenced by filing a written application containing information regarding the nature and amount of the claim. Uniform District Court Act §1803-A(a); and 22 NYCRR 212.41-a(a)(3). The statement of the nature and amount of the claim is the equivalent of the complaint in a civil action.

CPLR 3013 requires that a complaint contain statements sufficient "...to give the court and parties notice of the transactions...intended to be proved and the material elements of each cause of action."

The court acknowledges that pleadings in commercial small claims actions are not required to have the degree of specificity or formality that would be required in a regular civil action. See, Friedman v. Seward Park Housing Corp., 167 Misc 2d 57 (App.Term, 1st Dept. 1995). However, the statute and regulations governing commercial small claims actions [Uniform District Court Act §1803-A(a); and 22 NYCRR 212.41-a(a)(3)] require the pleading provide the respondent/defendant with information regarding the nature and amount of the claim.

The claim plead in the Small Claims Complaint is for goods sold and delivered.. See, Eagle Work Clothes, Inc. v. Gent Uniform Rental Corp., 30 AD3d 562 (2nd Dept. 2006: and Becker v. Shore Drugs, Inc., 296 AD2d 515 (2nd Dept. 2002). It does not mention the New Jersey judgment.

Generally a party will not be granted summary judgment on an unplead cause of action. Weinstock v. Handler, 254 AD2d 165 (1st Dept. 1998). Summary judgment may be granted on an unplead cause of action if the proof supports the cause and the opposing party has not been misled to its prejudice. .Id; and Torrioni v. Unisul, Inc., 214 AD2d 314 (1st Dept. 1995).

In this case, the court believes the defendant has been mislead to its prejudice. The complaint does not mention the New Jersey judgment. The New Jersey judgment was entered on default. The pleadings in the New Jersey action have not been provided to the court. Thus, the court cannot determine if the New Jersey judgment is based upon the same transaction as is alleged in this action.

In order to domesticate a foreign judgment entered on default, the party must either bring an action on the judgment or move pursuant to CPLR 3213. Siegel, New York Practice 4th §435. Commercial has done neither. [*4]

Commercial Small Claims procedures preclude the making of a motion for summary judgment. A motion for summary judgment cannot be made until after issue is joined. CPLR 3212(a). Issue is joined by the service of an answer. Siegel, New York Practice 4th §279. A summary judgment motion made prior to joinder of issue must be denied. Matter of National Amusements, Inc., v. County of Nassau, 156 AD2d 566 (2nd Dept. 1989), Garden City Center Associates v. Board of Assessors of the County of Nassau, 153 AD2d 667 (2nd Dept. 1989); and CPLR 3212(a).

Issue is never joined in a commercial small claims action. The defendant in a small claims action is not required to interpose a written answer.^[FN3] The defendant contests the claim by appearing on the date set for trial and testifying and offering evidence in defense of the action. See, Scarcella v. America Online, 4 Misc 3d 1024(A), (Civil Ct. NY Co. 2004); and Archer v. Town of Babylon, 2003 WL 21816399 (District Ct. Suffolk Co. 2003). See also, A Guide to Small Claims in the District County of Nassau County, 9-14.

Furthermore, the making of a motion for summary judgment by a claimant defeats the purpose of the Commercial Small Claims part. The small claims procedures are designed to permit a prompt hearing of the claims without resort to the formalities of a civil action. Siegel, New York Civil Practice 4th §582.

In Small Claims actions, the court is not bound by the statutory rules of practice, procedure, pleadings or evidence. Uniform District Court Act §1804-A. The Court is to "...conduct hearings upon commercial claims in such manner as to do substantial justice between the parties according to the rules os substantive law." Id.

Small Claims proceedings are designed to facilitate the resolution of minor claims without the parties having to retain counsel. Weiner v. Tel Aviv Car and Limousine Service, Ltd., 141 Misc 2d 339 (Civil Ct. NY Co. 1988). Uniform District Court Act §1803-A(b) requires the clerk to provide every claimant with written information explaining the terminology, practice and procedures of small claims actions.

Motion practice is disfavored in small claims actions. Batshever v. Okin, 13 Misc 3d 814 ( Civil Ct. Kings Co. 2006). Motions should be heard only when a party has raised a clear issue of law and the motion serves rather than impedes substantial justice. Clegg v. Bon Temps, Ltd., 114 Misc 2d 805 (Civil Ct. NY Co. 1982).^[FN4]

In this case, the making of a summary judgment motion impedes rather than serves substantial justice. The cause of action for goods sold and delivered plead in the [*5]complaint could and would have been tried and decided on or shortly after February 29, 2008, the return date of this action. Adjourning this matter to permit the making of this motion substantially delayed the resolution of this action.

Commercial has retained counsel who has prepared the motion. Defendant had an attorney present in court on the return date of the motion. Where both parties to a small claims action appear by attorney, the court should transfer the action to a regular court part and direct the claimant to pay the additional filing fee. 22 NYCRR 212.41-a

(f-1).

The purpose of the Commercial Small Claims statute, Uniform District Court Act Article 18-A, is to open the doors of the Small Claims Court to corporations, partnerships and associations that had previously been statutorily excluded from Small Claims Court. Uniform District Court Act §1809(a); and Siegel, New York Practice 4th §585A. If a claimant seeks to avail itself of all of the procedural rights provided by the CPLR and the Uniform District Court Act including the right to make a motion for summary judgment, then the claimant should proceed in the regular civil part of this Court.

The Court is not required to dismiss this action. Uniform District Court Act §1805-A(b) to transfer a commercial small claims action to another part of this Court. This court has jurisdiction to hear an action for money damages where the amount sought to be recovered does not exceed $15,000. Uniform District Court Act §202. Transferring this action to the general civil term of this Court will facilitate the proper resolution of this action. In the general civil term of this Court, Commercial will be able to move to amend its complaint to allege a cause of action on the New Jersey judgment. Commercial will also be able to establish its corporate status and whether it can maintain this action. Therefore, the appropriate procedure is to transfer this action to the general civil term of this Court upon the payment of difference of the filing fees for a commercial small claim the filing fee for a civil action. Id. If claimant does not pay the additional fee within 30 days of the date of this order, the action shall be dismissed without prejudice. 22 NYCRR 212-a(a)(f-1).