Commercial Division litigators are keenly aware of CPLR 3215’s proof requirements. We can recite in our sleep the need to submit (1) proof of service, (2) proof of default, (3) the amount due, and (4) facts constituting the claim.  While the elements themselves are pretty straightforward, the nuances can be tricky – particularly relating to the facts necessary to constitute the claim.  The CPLR permits the facts constituting the claim to be submitted by affidavit or the complaint itself, if it is verified.  There is no express language in the CPLR suggesting that the movant is required to show prima facie entitlement to relief.  But as Manhattan Commercial Division reiterated recently in Bellino v. Dormet, Inc., et al., that is exactly what is required. 

Background: 

Bellino stems from a business venture allegedly gone bad.  Plaintiff alleges that between 2019 and 2020 he and his business partner formed Doromet, Inc. (the “Company”) to import precious metals from South America to the United States.  Plaintiff alleges to have made capital contributions to the Company totaling $550,000 between August 2019 and August 2020 that were ultimately used to purchase gold that was going to be imported by supplier – defendant Garcia (“Garcia”) in compliance with the legal requirements of Brazil and the United States.  Plaintiff alleges that the Company paid Garcia $1 million to purchase and import gold from Brazil, which included $500,000 of Plaintiff’s capital contribution.  According to Plaintiff, the gold was seized by Brazilian authorities due to alleged non-compliance with Brazilian export requirements.  Plaintiff thereafter demanded return of his $550,000 from his partner and Garcia, neither of whom complied. 

Plaintiff initiated the Bellino action on October 7, 2021, alleging nine causes of action, including claims sounding in breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, unjust enrichment, dissolution, and fraud.  Plaintiff’s partner and the Company answered in November 2021.  Garcia did not answer or appear, but per Plaintiff’s affidavit of service, was served personally on December 15, 2022, by the Brazilian Central Authority for the Hague Convention in Brazil. 

On July 19, 2023, Plaintiff filed its motion for default judgment against Garcia generally, which the Court read to address all the asserted causes of action.  In support, Plaintiff submitted (1) his affidavit, as the complaint was not verified; (2) an excel spreadsheet that Plaintiff averred accurately reflected bank wire transfers Plaintiff made to the Company and MBLT Consulting Group from April 18, 2019, to August 13, 2020; and (3) an email from Plaintiff to his business partner and Garcia demanding return of $550,000. 

The Court’s Decision: 

First, the Court noted that Plaintiff had submitted no proof that there was a partnership or fiduciary relationship, nor that any agreement existed, between him and Garcia.  Nor did Plaintiff show, or even allege, that Garcia made any fraudulent representations regarding existing fact.  Thus, the Court determined that only Plaintiff’s sixth claim for unjust enrichment involved Garcia at all.

Turning to Plaintiff’s unjust enrichment claim, and analyzing the proof submitted by Plaintiff, the Court determined that Plaintiff failed to “demonstrate the elements of an unjust enrichment claim” and specifically “fail[ed] to show that Garcia was enriched by plaintiff’s expense, as he fail[ed] to show that Garcia injured him individually in the transaction.”  The Court noted that the Company was the party to the contract with Garcia, not the Plaintiff, and that “[w]hen a corporation is injured, ‘a shareholder has no individual cause of action, though he loses the value of his investment’” (Bellino [quoting Abrams v. Donati, 66 NY2d 951, 953 [1985]).  The Court ultimately held that “plaintiff has failed to demonstrate, through adequate proof, the prima facie validity of his unjust enrichment claim as against Garcia.” 

The Takeaway: 

Instead of relying solely on Plaintiff’s lack of standing to deny Plaintiff’s default motion, the Court took the opportunity to reiterate that a CPLR 3215 movant is required to establish prima facie entitlement to judgment via adequate proof – proper service, default and failure of the non-appearing party to oppose the application are simply not enough.  As Commercial Division litigators we must be cognizant that the Court will review the underlying merits of a claim, at least as it relates to submitting some proof showing prima facie entitlement, before granting a default Motion under CPLR 3215.  The Court was crystal clear, quoting Joosten v. Gale, 129 AD2d 531, 535 [1st Dept 1987] and citing Martinez v. Reiner, 104 AD3d 477 [1st Dept 2013], that “CPLR 3215 does not contemplate that default judgments are to be rubber-stamped once jurisdiction and a failure to appear have been shown. Some proof of liability is also required to satisfy the court as to the prima facie validity of the uncontested cause of action.” 

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