158 A.D.3d 1193
N.Y. App. Div.2018Background
- Plaintiff Cach, LLC sued Ryan to collect unpaid credit-card debt originally issued by Providian Bank; defendant did not appear or answer and a default judgment was entered in December 2007.
- Plaintiff attempted collections for years; in June 2016 a bank levied defendant’s account under a property execution and paid plaintiff the judgment amount with interest.
- In August 2016 Ryan moved to vacate the 2007 default judgment under CPLR 5015(a)(4), arguing lack of personal jurisdiction due to improper service.
- Supreme Court denied the motion, reasoning Ryan lacked standing because the judgment had been satisfied.
- The Appellate Division reversed, concluding satisfaction by levy did not eliminate Ryan’s ability to challenge the judgment as void for lack of personal jurisdiction, and that her sworn denial of service rebutted the process server’s affidavit.
- The case was remitted for an evidentiary (traverse) hearing to determine whether service under CPLR 308(2) was proper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendant may challenge a default judgment after it was paid by levy | Judgment satisfied; therefore defendant lacks standing to seek vacatur | A judgment void for lack of personal jurisdiction is a nullity and never legally existed; satisfaction by levy does not bar challenge | Defendant may challenge; payment by levy does not deprive her of standing because a void judgment is null and not extinguished by payment |
| Whether satisfaction by levy constitutes voluntary payment waiving jurisdictional defense | Satisfaction extinguishes judgment and precludes vacatur | Levy is not a voluntary payment; defendant did not voluntarily satisfy the judgment and thus did not waive the defense | Satisfaction by levy is not voluntary payment and does not constitute waiver of lack-of-jurisdiction defense |
| Whether the process server’s affidavit established prima facie valid service under CPLR 308(2) | Process server’s affidavit is prima facie proof of service (service on a male "Larry" at defendant’s residence plus mailing) | Defendant’s sworn, detailed denial (doesn’t know anyone named Larry; husband is different name/description) rebuts the presumption | Defendant’s detailed affidavit rebutted the server’s proof, requiring an evidentiary hearing (traverse) |
| Whether a traverse hearing is required | No, because judgment was satisfied and plaintiff alternatively argued other grounds for affirmance | Yes; factual dispute on who was served and where requires an evidentiary hearing | Court must hold an evidentiary hearing to determine propriety of service under CPLR 308(2) |
Key Cases Cited
- Royal Zenith Corp. v. Continental Ins. Co., 63 N.Y.2d 975 (N.Y. 1984) (a judgment void for lack of jurisdiction is a nullity)
- Empire of American Realty Credit Corp. v. Smith, 227 A.D.2d 931 (App. Div. 4th Dep't 1996) (reiterating nullity principle for void judgments)
- H.D.I. Diamonds v. Frederick Modell, Inc., 86 A.D.2d 561 (App. Div. 1st Dep't 1982) (paid and satisfied judgments generally cease to exist)
- Delahanty v. Anderson, 161 A.D.2d 1164 (App. Div. 4th Dep't 1990) (distinguishing voluntary payment from levied satisfaction)
- Wachovia Bank, N.A. v. Greenberg, 138 A.D.3d 984 (App. Div. 2d Dep't 2016) (process server affidavit is prima facie evidence; sworn specific denial may rebut and require hearing)
- Wells Fargo Bank, N.A. v. Christie, 83 A.D.3d 824 (App. Div. 2d Dep't 2011) (similar rule on prima facie proof of service and rebuttal by defendant)