A New York appellate court recently ruled on a case involving a tenant's claims against a property management company. The case, Murray v. NETZ 642 E. 96th St., LLC, centers on allegations of breach of the warranty of habitability. The decision affects both the tenant, Nigel Murray, and the property management company, NETZ 642 E. 96th St., LLC, as it addresses the validity of service of process and the circumstances surrounding a previous default judgment.

The court's ruling, issued on August 12, 2026, by the Appellate Division of the Supreme Court of the State of New York, specifically dealt with the procedural aspects of the case. This ruling is significant as it may influence how similar cases are handled in the future, particularly regarding tenant rights and the responsibilities of property managers.

Background

The parties involved in this case are Nigel Murray, the tenant, and NETZ 642 E. 96th St., LLC, the property management company that owns the residential building where Murray resides. Additionally, David Lipsh serves as a managing agent for NETZ. The dispute began when Murray filed a lawsuit on October 10, 2019, seeking damages for breach of the warranty of habitability, which refers to the landlord's obligation to maintain rental properties in a livable condition.

Murray claimed that the defendants failed to address significant habitability issues in his apartment. When the defendants did not respond to the complaint in a timely manner, the Supreme Court granted Murray a default judgment on December 9, 2020. This judgment awarded him $350,225 after an inquest, which is a legal process to determine damages when a defendant does not appear in court.

However, in January 2023, the defendants sought to vacate the default judgment and dismiss the complaint. They argued that the service of process was invalid, claiming that the process server did not properly serve the necessary documents to NETZ. This led to the appeal and subsequent ruling by the appellate court.

The Ruling

The Appellate Division ruled on several key points in its decision. First, the court vacated the previous default judgment and the order granting it. The court stated, "It is axiomatic that the failure to serve process in an action leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void." This ruling emphasizes the importance of proper service of legal documents in court proceedings.

Furthermore, the court found that the defendants had provided sufficient evidence to challenge the validity of the service of process. The affidavit submitted by Lipsh, which claimed that the Shiponi Law Firm was not authorized to accept service on behalf of NETZ, raised questions about whether proper service had been completed. The court noted that "Lipsh's affidavit did not conclusively establish that service on NETZ was improper," indicating that further examination was necessary.

As a result, the court remitted the case back to the Supreme Court in Kings County for a hearing to determine the validity of the service of process on NETZ. The appellate judges involved in this decision included Cheryl E. Chambers, Deborah A. Dowling, Lillian Wan, and James P. McCormack.

Impact

This ruling has significant implications for both tenants and property management companies in New York. It highlights the necessity for landlords to ensure they are properly served with legal documents to maintain jurisdiction in court. If a landlord can successfully argue that they were not properly served, it can lead to the dismissal of claims against them, as seen in this case.

Additionally, the ruling could influence how future cases regarding habitability are handled. Tenants may feel empowered to pursue claims against landlords for failing to maintain livable conditions, knowing that the court is willing to examine the validity of service of process. This case may set a precedent for similar disputes, reinforcing the importance of following legal procedures in landlord-tenant relationships.

What's Next

The case will return to the Supreme Court for a hearing to determine the validity of service on NETZ. Depending on the outcome of that hearing, further appeals may be possible. Details about any related cases were not available in the court filing.