SUPREME COURT - STATE OF NEW YORK IAS TERM PART 18 NASSAU COUNTY. Justice LEONARD B. AUSTIN ORDER
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1 co- INDEX NO SUPREME COURT - STATE OF NEW YORK IAS TERM PART 18 NASSAU COUNTY PRESENT: HONORABLE FARSI JEWELRY MANUFACTURING CO., INC. Plaintiff, - against - ZEEVAR JEWELRY, INC. d/b/a PRISMA JEWELRY and JACOB LA VI Defendants, Justice LEONARD B. AUSTIN Motion RID: Submission Date: 7- Motion Sequence No. : 001,002/MOT D COUNSEL FOR PLAINTIFF L. Blake Morris, Esq Cortelyou Road Brooklyn, New York COUNSEL FOR DEFENDANT Noel W. Hauser and Associates 415 Madison Avenue - 22 Floor New York, New York ORDER The following papers were read on Defendant Jacob Lavi' s motion to stay or dismiss this action and Plaintiff' s cross-motion for summary judgment: Notice of Motion dated June 1, 2005; Affirmation of Noel W. Hauser, Esq. dated June 1, 2005; Notice of Cross-motion dated June 20, 2005; Affidavit of Masoud Eshaghzadeh sworn to on June 16, 2005; Affirmation of L Blake Morris, Esq. dated June 20, 2005; Affidavit of Masoud Eshaghzadeh sworn to on June 16, 2005; Affirmation of L. Blake Morris, Esq. dated June 17, 2005; Affirmation of Noel W. Hauser, Esq. dated June 28, 2005.
2 FARSI JEWELRY MANUFACTURING CO., INC. v. ZEEVAR JEWELRY, INC. et ana. Defendant, Jacob Lavi ("Lavi"), moves to dismiss or stay this action on the ground that Plaintiff is a foreign corporation not authorized to do business in New York. Plaintiff cross-moves for summary judgment against Jacob Lavi. BACKGROUND Plaintiff, Farsi Jewelry Manufacturing Co., Inc. ("Farsi" ), is a California corporation that maintains its principal and sole place of business in Los Angeles, California. Farsi is in the business of manufacturing and sellng jewelry in the national wholesale market. Farsi markets its products by attending regional trade shows, through independent contractor commissioned sales representatives, and by receiving unsolicited orders. Farsi attends six national wholesale trade shows annually, including a show at the Javits Center in Manhattan. Farsi leases a booth at this trade show which runs three or four days. Farsi has two independent contractor regional sales representatives, one in the Carolinas and one in the mid-atlantic region. A clerk' s judgment was entered against the Defendant Zeevar Jewelry, Inc. d/b/a Prisma Jewelry on June 20, 2005
3 ). FARSI JEWELRY MANUFACTURING CO., INC. v. ZEEVAR JEWELRY, INC., et ana., Farsi does not maintain a sales or business office in New York, has no employees or agents who are permanently in New York, does not maintain a bank account in New York and does not have a New York telephone number or a post office address in New York. Farsi ships its goods from California. Between February and April 2004, Farsi sold and delivered merchandise to the Defendant Zeevar Jewelry Manufacturing Co., Inc. ("Zeevar Payment for the goods shipped by Farsi to Zeevar was personally guaranteed by Lavi. DISCUSSION Defendant's Motion to Dismiss A foreign corporation doing business in New York may not maintain an action in New York unti it has been authorized to do business in New York and has paid all the fees and taxes due pursuant to the provisions of the Business Corporation Law and the Tax Law. Business Corporation Law An action brought by a foreign corporation that is doing business in New York without having been authorized to do business in New York should be stayed to permit the foreign corporation to become authorized to do business in New York. See, Mclntosh Builders. Inc. v. Ball, 247 A. 2d 103 (3 Dept. 1998). If the foreign corporation that is doing business fails to obtain authorization, the action should be dismissed. to do business in New York Matter of United I;ronmenta ques. Inc. v. State of New York Dept. of Health, 88 N. 2d 824 (1996).
4 FARSI JEWELRY MANUFACTURING CO., INC. v. ZEEVAR JEWELRY, INC., et ana. The defense that a foreign corporation may not maintain an action must be asserted as an affirmative defense in the Defendant's answer or raised by pre-answer motion. FBB Asset Managers. Inc. v. Freund, 2 AD.3d 573 (2 Dept. 2003); and RCA Records v. Wiener, 166 AD.2d 221 (1 Dept. 1990); and CPLR 3211(a)(3) and (e)., it is waived. this defense is not raised in the answer or by pre-answer motion Id. Lavi has failed to raise the defense that Farsi was not authorized to do business in New York in his answer or by pre-answer motion. Accordingly, the defense has been waived. In addition, Lavi has failed to move for leave to serve an amended answer asserting this defense. For this reason, Lavi's motion to stay or dismiss the action must be denied. denied. Even were the defense not waived, Defendant's cross-motion must stil be In order tb being considered as doing business in New York, a corporation activities in New York must be so systematic and regular so as to demonstrate continuous presence and activity in New York. Peter Matthews. Ltd. v. Robert Mabey. Inc., 117 AD.2d 943 (3 Dept. 1986); and Construction Specialties. Inc. v. Hartord Ins. Co., 97 A. 2d 808 (2 Dept. 1983). A corporation which ships products into New York but does not maintain an office, a telephone number or sales representatives in New York is not doing business in New York. See, Airline Exchange. Inc. v. Bag, 266 A.D. 2d 414 (2 Dept. 1999); and
5 FARSI JEWELRY MANUFACTURING CO., INC. v. ZEEVAR JEWELRY, INC., et ana. S & T Bank v. Spectrum Cabinet Sales. Inc., 247 AD.2d 373 (2 Dept. 1998). The party asserting that a foreign corporation is barred from bringing an action in New York because it is doing business in New York without having obtained authority has the burden of establishing noncompliance. Scaffold-Russ Dilworth Ltd. v. Shared Management Group Ltd., 289 AD.2d 932 (4 Dept. 2001). In this case, Defendant has failed to meet this burden. Lavi has only established that Farsi is not authorized to do business in New York. In opposition, Farsi has established that it does not maintain a systematic and regular presence in New York. Farsi' s contact with New York is limited to sending goods into New York in response to orders and a three or four day presence at a trade show once a year. Such contact is insufficient to establish that Farsi is doing business in New York. Finally, Lavi asserts that the guarantee contains a provision which requires that action to be brought in Los Angeles. The guarantee provides that the Defendant consents to the jurisdiction of the courts in Los Angeles, California. Contractual venue provisions may be waived. By commencing the action in New York, Farsi has waived that provision. See, Benny v. Benny, 199 AD.2d 384 (2 Dept. 1993). be denied. For the foregoing reasons, Defendant's motion to stay or dismiss this action must
6 FARSI JEWELRY MANUFACTURING CO., INC. v. ZEEVAR JEWELRY, INC. et ana. Plaintiff' s Motion for Summary Judgment The party seeking summary judgment must make a prima facie entitlement to judgment as a matter of law. Alvarez v. Prospect Hasp., 68 N. 2d 320 (1986); and Zuckerman v. City of New York, 49 N. 2d 557 (1980). Plaintiff establishes a prima facie case on a guarantee by establishing the existence of the underlying obligation, the guarantee and failure of the prime obligor to make the required payments. Royal Commercial Corp. v. Kotrulya, 304 AD.2d 742 (2 Dept. 2003); and E.D. S. Security System. Inc. v. Allyn, 262 A. 2d 351 (2 Dept. 1999). Farsi has made a prima facie showing of entitlement to summary judgment. Zeevar received the jewelry and failed to make the required payments. The credit agreement which Lavi signed states " the undersigned (Lavi) personally and unconditionally guarantees payment of all obligations incurred by the above-named applicant (Zeevar). Once the Plaintiff establishes a prima facie entitlement to judgment as a matter of law on the guarantee, the Defendant must establish the existence of triable issues of fact. Shah v. Hamptons Haute. Inc., 300 AD.2d 387 (2 Dept. 2000); and Federal Deposit Insurance Co. v. Jacobs, 185 AD.2d 913 (2 Dept. 1992). Lavi has failed to do this. In fact, Lavi did not even submit an affidavit in opposition to Farsi' s motion for summary judgment. Accordingly, it is
7 FARSI JEWELRY MANUFACTURING CO., INC. v. ZEEVAR JEWELRY, INC. et ana. ORDERED, that Defendant Jacob Lavi' s motion to dismiss or stay this action on the ground that Plaintiff is not authorized to do business in New York is denied; and it is further ORDERED, that Plaintiff's motion for summary judgment is granted. The County Clerk, Nassau County is directed to enter a judgment in favor of Plaintiff and against the Defendant Jacob Lavi in the sum of $110, together with interest from May and costs and disbursements as taxed by the Clerk. This constitutes the decision and Order of the Court. Dated: Mineola, NY September 30, 2005 Hon. LEONARD B. ENTERED OC NASSAU COUNTY ounty CLERK' S OFFICE
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