Medtech Med. Supply, Inc. v Country-Wide Ins. Co. (2022 NY Slip Op 50304(U))

Glinkenhouse Queen, Esqs. (Alan Queen of counsel), for appellant. Thomas Torto, for respondent.

Appeal from an order of the Civil Court of the City of New York, Queens County (John C.V. Katsanos, J.), entered March 26, 2020. The order granted defendant’s motion to, in effect, vacate a judgment of that court entered March 23, 2017 and, upon such vacatur, to dismiss the complaint.

ORDERED that the order is reversed, with $30 costs, and defendant’s motion to vacate the judgment and dismiss the complaint is denied.

Plaintiff commenced this action in 2000 to recover first-party no-fault benefits for supplies it furnished to its assignor as a result of a motor vehicle accident that occurred on June 11, 1998. Defendant appeared and answered. On June 27, 2001, the State of New York dissolved plaintiff by proclamation. On or about July 15, 2003, the parties entered into a settlement agreement. It is uncontroverted that defendant did not pay the amount set forth in the settlement. On March 23, 2017, plaintiff had a judgment entered, ex parte, in the total sum of $4,781.27, including $2,972.06 in interest. In December of 2018, plaintiff moved to recalculate the interest as compound instead of simple. Defendant submitted opposition to the motion and the motion was marked fully submitted on October 21, 2019. It remains pending.

In November of 2019, defendant moved to, in effect, vacate the March 23, 2017 judgment and, upon such vacatur, to “dismiss[ ] the complaint on the ground that plaintiff lacks standing to [*2]maintain this action and collect on the judgment . . . since the Secretary of State dissolved plaintiff and annulled its authority on June 27, 2001, and plaintiff has failed to wind up its affairs within a reasonable time as a matter of law.” In the alternative, defendant’s motion sought to “vacat[e] the judgment . . . upon the ground that plaintiff failed to comply with CPLR 5003-a.” Plaintiff opposed the motion, to which defendant replied.

By order entered March 26, 2020, the Civil Court granted defendant’s motion and vacated the judgment on the ground of (1) fraud (see CPLR 5015 [a] [3]) based on plaintiff’s failure to inform the court clerk that it had been dissolved in 2001 and (2) lack of jurisdiction (see CPLR 5015 [a] [4]) based on plaintiff’s failure to comply with CPLR 5003-a. Upon such vacatur, the court dismissed the complaint pursuant to CPLR 1017 and 1021 due to the failure to have a proper party substituted for plaintiff within a reasonable time after plaintiff was dissolved.

On appeal, plaintiff contends, among other things, that the Civil Court improperly vacated the judgment.

Under the circumstances presented, we find that plaintiff had the capacity to seek entry of judgment and maintain this action as part of the winding up of its business affairs pursuant to Business Corporation Law §§ 1005 and 1006. While CPLR 1017 provides that a court shall order substitution of the proper party where a corporate party is dissolved, to the extent that Business Corporation Law §§ 1005 and 1006 can be deemed to be inconsistent with CPLR 1017 and 1021, the Business Corporation Law provisions govern (see CPLR 101). Business Corporation Law § 1006 provides, in pertinent part, that “(a) A dissolved corporation, its directors, officers and shareholders may continue to function for the purpose of winding up the affairs of the corporation in the same manner as if the dissolution had not taken place, except as otherwise provided in this chapter or by court order.” Business Corporation Law § 1005 (a) (2) defines “winding up” as the performance of acts directed toward the liquidation of the corporation, including the collection and sale of corporate assets (see Matter of 172 E. 122 St. Tenants Assn. v Schwarz, 73 NY2d 340 [1989]). Since Business Corporation Law § 1006 does not include any time limit for winding up the dissolved corporation’s affairs, courts will imply a reasonable period of time (see e.g. Spiegelberg v Gomez, 44 NY2d 920, 921 [1978]).

As the party moving to vacate the judgment and dismiss the complaint on the ground that plaintiff lacked the capacity to enter judgment and to maintain this action, defendant had the burden of proving that plaintiff is no longer winding up its affairs (see e.g. Greater Bright Light Home Care Servs., Inc. v Jeffries-El, 151 AD3d 818 [2017]; Singer v Riskin, 137 AD3d 999, 1000 [2016]; Brooklyn Elec. Supply Co., Inc. v Jasne & Florio, LLP, 84 AD3d 997 [2011]; Brach v Levine, 36 Misc 3d 1213[A], 2012 NY Slip Op 51312[U] [Sup Ct, Kings County 2012]). Defendant’s initial moving papers, which include the conclusory statement that plaintiff failed to show that it was “in the process of winding up its affairs,” were insufficient to establish, prima facie, that plaintiff’s actions did not relate to the winding up of its affairs or that the nearly 14-year time period between the July 2003 settlement and when plaintiff sought to enter judgment in March of 2017 was an unreasonable period of time to wind up its affairs. Thus, the branch of defendant’s motion seeking to vacate the judgment and, upon such vacatur, to dismiss the [*3]complaint on the ground that plaintiff was a dissolved corporation which was not winding up its affairs should have been denied (see Lamarche Food Prods. Corp. v 438 Union, LLC, 178 AD3d 910 [2019]; Greater Bright Light Home Care Servs., Inc. v Jeffries-El, 151 AD3d at 821; Lance Intl., Inc. v First Nat’l City Bank, 86 AD3d 479 [2011]; Moran Enters., Inc. v Hurst, 66 AD3d 972 [2009]).

While defendant contends that the judgment against it was improperly entered because plaintiff had not provided defendant with a duly executed release and stipulation of discontinuance (see CPLR 5003-a [a]), defendant failed to submit an affidavit from someone with knowledge establishing that failure. We note that the Civil Court’s basis for vacating the judgment pursuant to CPLR 5015 (a) (4) was improper. The court had jurisdiction to enter the judgment herein (see Manhattan Telecom. Corp. v H & A Locksmith, Inc., 21 NY3d 200 [2013]).

Accordingly, the order is reversed, defendant’s motion is denied and the matter is remitted to the Civil Court to determine plaintiff’s pending motion.

ALIOTTA, P.J., WESTON and GOLIA, JJ., concur.