LIBERT AS FUNDING, LLC vs. KDC GLOBAL, INC

Additionally, Plaintiff failed to provide a proof of a signed acknowledgement of receipt as required. As Defendants were not properly served, the New York judgment is void and unenforceable; therefore, the California entry of sister-state judgment must be vacated. Plaintiff asserts that CPLR § 312-a does not apply as Defendants consented to service of process by USPS Priority Mail as part of an agreement with Plaintiff. Plaintiff contends the New York action arose out of a breach of contract. Plaintiff and Defendants entered into an Agreement of Sale of Future Receipts (“Agreement”), which Defendants defaulted. (Epstein Dec.; Ex, 1).

To resolve their default, Defendants entered into a Stipulation of Settlement (“Stipulation”) wherein Defendants agreed to make payments to Plaintiffs, which they further defaulted. (Epstein Dec.; Ex. 2). As the Parties consented to another form of method of service in the Agreement, Plaintiff indicates their agreed-upon manner of service prevails over the statutory requirements. See Gilbert v Burnstine, 255 NY 348, 355 [1931]; Gallant Funding, L.P. v Tocci, 34 Misc 3d 1220[A], 1220A, 2011 NY Slip Op 52486[U], *3 [Sup Ct, Kings County 2011]; Wynwood Capital Group LLC v Confluence Corp., 82 Misc 3d 1247[A], 2024 NY Slip Op 50557[U], *4 [Sup Ct, Kings County 2024].

Paragraph 27 of the Agreement provides: Service of Process. Merchant and Guarantor(s) consent to service of process and legal notices made by Certified or Priority Mail delivered by the United States Postal Service and addressed to the respective party’s address set forth on the first page of this Agreement or any other address(es) provided in writing to Purchaser by Merchant or Guarantor(s), and unless applicable law or rules provide otherwise, any such service or legal notice will be deemed complete upon dispatch.

Merchant and Guarantor(s) agree that it will be precluded from asserting that it did not receive service of process or any other legal notice mailed to the address located in the Merchant Information and Owner Information sections set forth on the first page of this Agreement if it does not furnish a certified mail return receipt signed by Purchaser demonstrating that Purchaser was provided with a notice of a change of address. (emphasis added) Paragraph 10 of the Stipulation provides:

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Parties agree that the sending of any Summons and Complaint, in any proceeding commenced by Libertas, sent via the following methods: a) FEDEX or Certified Mail to the mailing addresses listed in this Settlement Agreement or otherwise provided to Libertas; or b) any other process required by any such court of proper jurisdiction, shall constitute valid and lawful service of process, without the necessity for service by any other means provided by statute, CPLR, or rule of court, but without invalidating service performed in accordance with any such other provisions. (emphasis added) Plaintiff claims the service provision of the Agreement was not superseded by the Stipulation, as the Stipulation only modified the provision of the Agreement allowing for an additional acceptable method of service via FedEx.

Plaintiff asserts that paragraph 10 of the Stipulation allows for methods of service “otherwise provided to Libertas,” which includes Priority Mail per the Agreement. Plaintiff misinterprets this provision. Paragraph 10 of the Stipulation provides that service may be effectuated by “FedEx or Certified mail to the mailing addresses listed in this Settlement Agreement or otherwise provided to Libertas.” This reference does not extend service to Priority Mail per the Agreement but rather indicates the mailing addresses service may be made upon via FedEx or Certified Mail.

Plaintiff further argues paragraph 10 allows for service by any other process required by any such court of proper jurisdiction and thus, the court would allow for service by Priority Mail based on the Agreement. However, per the Stipulation, the Parties’ prior Agreement is no longer binding as indicated in paragraph 16 of the Stipulation: 16. This Agreement constitutes the entire agreement between the Parties, superseding all prior oral or written representations, negotiations, understandings and agreements, with regard to the subject matter hereof.

Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to the terms included therein may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement. Code of Civil Procedure § 1856(a). New York, like California, applies the parol evidence rule to exclude evidence of any prior oral or written agreements and any contemporaneous oral agreements that contradict, vary, add to, or subtract from the terms of an agreement when, as here, the agreement has been reduced to an integrated writing (see, Marine Midland Bank v.

Thurlow, 53 N.Y.2d 381, 387; Prince, Richardson on Evidence § 11–101 [Farrell 11th ed]). An integrated agreement is one that represents the entire understanding of the parties to the transaction (Morgan Stanley High Yield Securities, Inc. v. Seven Circle Gaming Corp., 269 F Supp 2d 206, 214 [SDNY]). When an agreement contains a merger clause, it requires full application of the

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parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing (Primex Intl. Corp. v. Wal–Mart Stores, 89 N.Y.2d 594, 599). A merger clause accomplishes this objective by establishing the parties' intent that the agreement be considered a completely integrated writing (Id. at 599–600). Theatrical Services and Supplies, Inc. v. GAM Products, Inc. (N.Y. Sup. 2012) 34 Misc.3d 1224(A) [946 N.Y.S.2d 69] Accordingly, the terms of the Stipulation apply, rendering the service of the Summons and Complaint must be effectuated by FedEx, certified mail or any other process required by any such court of proper jurisdiction.

Service of the Summons and Complaint was effectuated by Priority Mail service, not in compliance with paragraph 10(a) of the Stipulation; therefore, service must have been effectuated by any other process required by any such court of proper jurisdiction. CPLR 312-a provides: (a) Service. As an alternative to the methods of personal service authorized by section 307, 308, 310, 311 or 312 of this article, a summons and complaint, or summons and notice, or notice of petition and petition may be served by the plaintiff or any other person by mailing to the person or entity to be served, by first class mail, postage prepaid, a copy of the summons and complaint, or summons and notice or notice of petition and petition, together with two copies of a statement of service by mail and acknowledgement of receipt in the form set forth in subdivision (d) of this section, with a return envelope, postage prepaid, addressed to the sender.

The Court in Uzamere v. Uzamere (N.Y. Sup. Ct. 2010) 28 Misc.3d 1207(A) [957 N.Y.S.2d 639], aff'd (N.Y. App. Div. 2011) 89 A.D.3d 1013 [933 N.Y.S.2d 336] instructed CPLR § 312–a service is voluntary and contingent upon plaintiff's compliance with the statute. It requires plaintiff to mail two copies of the statutory statement of service and an acknowledgment of receipt pursuant to the statutory form (CPLR § 312–a [d]), with “a return envelope, postage prepaid, addressed to the sender” (CPLR § 312–a [a]), with defendants executing and returning the form.

If the acknowledgment of receipt is not mailed or returned to the sender, the sender is required to effect personal service in another manner. (emphasis added). Plaintiff does not dispute that Defendants did not return an acknowledgment of receipt. Plaintiff indicates that Defendants’ counsel, Stephan M. Brown, confirmed receipt of the Summons and Complaint in a letter to Plaintiff’s counsel (Epstein Dec.; Ex. 4); however, by failing

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to provide an executed acknowledgment of receipt, Plaintiff was required to effect personal service in another manner which they failed to do. Plaintiff further argues that Defendants waived objections to jurisdiction pursuant to the Agreement and Stipulation. Paragraph 46 of the Agreement provides: This Agreement shall be governed by and construed exclusively in accordance with the laws of the State of New York, without regard to any applicable principles of conflicts of law. Any lawsuit, action or proceeding arising out of or in connection with this Agreement shall be instituted exclusively in any court sitting in New York State (the "Acceptable Forums").

Each party signing this Agreement agrees that the Acceptable Forums are convenient, and irrevocably submits to the jurisdiction of the Acceptable Forums and waives any and all objections to inconvenience of the jurisdiction or venue. Should a proceeding be initiated in any other forum, the parties waive any right to oppose any motion or application made by either party to transfer such proceeding to an Acceptable Forum. (emphasis added). Paragraph 9 of the Stipulation provides: This Agreement shall be governed and construed in accordance with the laws of the State of New York, without regards to any applicable principals of conflicts of law.

Any suit, action or proceeding arising hereunder, or the interpretation, performance, or breach hereof, shall be instituted in any court sitting in the State of New York, (the “Acceptable Forums”). Parties agree that the Acceptable Forums are convenient to it, submit to the jurisdiction of the Acceptable Forums, and waive any and all objections to jurisdiction, venue, or choice-of-law. Should such proceeding be initiated in any other forum than the Acceptable Forums, Merchant waives any right to oppose any motion or application made by Libertas to transfer such proceeding to an Acceptable Forum.

Plaintiff’s argument is unavailing. Despite agreeing to jurisdiction in New York, proper service must nevertheless be effectuated. As Plaintiff failed to properly serve Defendants pursuant to the terms of the Stipulation or CPLR § 312-a, New York never acquired personal jurisdiction over Defendants. In the absence of proper service, no personal jurisdiction was acquired over the defendants. Klein v. Educational Loan Servicing, LLC (N.Y. App. Div. 2010) 71 A.D.3d 957, 958 [897 N.Y.S.2d 220, 222].

If service of process in a sister-state action was not made or was defective, the sisterstate judgment is void for lack of fundamental jurisdiction and therefore unenforceable in California. Conseco Marketing, LLC v. IFA & Ins. Services, Inc. (2013) 221 Cal.App.4th 831, 841.

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Where the original court lacked jurisdiction over the judgment debtor, the judgment is unenforceable ab initio and cannot be enforced in California. WV 23 Jumpstart, LLC v. Mynarcik (2022) 85 Cal.App.5th 596, 608. Defendants’ Motion to Vacate Sister-State Judgment is granted. TENTATIVE RULING #4: DEFENDANTS’ MOTION TO VACATE SISTER-STATE JUDGMENT IS GRANTED. NO HEARING ON THIS MATTER WILL BE HELD UNLESS A REQUEST FOR ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 621-6551 BY 4:00 P.M.

ON THE DAY THE TENTATIVE RULING IS ISSUED. CAL. RULE CT. 3.1308; LOCAL RULE 8.05.07; SEE ALSO LEWIS V. SUPERIOR COURT, 19 CAL.4TH 1232, 1247 (1999). NOTICE TO ALL PARTIES OF A REQUEST FOR ORAL ARGUMENT AND THE GROUNDS UPON WHICH ARGUMENT IS BEING REQUESTED MUST BE MADE BY TELEPHONE OR IN PERSON BY 4:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. CAL. RULE CT. 3.1308; EL DORADO COUNTY LOCAL RULE 8.05.07. PROOF OF SERVICE OF SAID NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING. LONG CAUSE HEARINGS MUST BE REQUESTED BY 4:00 P.M.

ON THE DAY THE TENTATIVE RULING IS ISSUED AND THE PARTIES ARE TO PROVIDE THE COURT WITH THREE MUTUALLY AGREEABLE DATES ON FRIDAY AFTERNOONS AT 2:30 P.M. LONG CAUSE ORAL ARGUMENT REQUESTS WILL BE SET FOR HEARING ON ONE OF THE THREE MUTUALLY AGREEABLE DATES ON FRIDAY AFTERNOONS AT 2:30 P.M. THE COURT WILL ADVISE THE PARTIES OF THE LONG CAUSE HEARING DATE AND TIME BY 5:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. PARTIES MAY PERSONALLY APPEAR AT THE HEARING.

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