Preview
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
"D"
EXHIBIT
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8
________------- ____ __-------------------x
ACE FUNDING SOURCE, LLC.,
P.1aintiff, Decision. and order
- against - Index No. 2965/18
MYKA CELLARS, INC., d/b/a MYKA CELLARS,
ROUNDHAY PARTNERS, LLC., d/b/a ROUNDHAY
PARTNERS, SOLVENT, LLC., d/b/a ROUNDHAY
PARTNERS OPPORTUNITIES, L.P., d/b/a
ROUNDRAY PARTNERS OPPORTUNITIES,
GOLDLINE BRANDS,. INC.., d/b/a GOLDLINE
BRANDS, d/b/a GOLDLINE BRANDS, RHONE
WOLF VINE YARD, LLC., d/bfa RHONE WOLF
VINE YARD., ROUND HAY FARMING, LLC.,
d/b/a ROUNDHAY FARMING, LLC., d/b/a
ROUNDHAY FARMING, ROUNDHAY PARTNERS
REGIONAL CENTER, LLC., d/b/a ROUNDHAY
PARTNERS REGIONAL CENTER, SCOREWELL,
INC., d/b/a SCOREWELL, 1850 DEVELOPMENT,
LLC., d/b/a 1850 DEVELOPMENT, LLC.,1850
DEVELOPMENT AND PAUL HALEY,
Defendants, February 21, 2019
_____------____-------________------------x
PRESENT: HON. LEON RUCHELSMAN
The defendants have moved seeking to vacate confessions of
judgement filed. The plaintiff opposes the motion, Papers were
submitted by the parties and arguments held. After reviewing all
the arguments this court no.w makes the following determination.
On June 28, 2018 the plaintiff a merchant cash advance
funding provider entered into a contract with defendants,
wineries located in California. Pursuant to the agreement the
plaintiff purchased S412,225 of defendant's future receivable for
$275,000. The parties further agreed that the plaintiff would be
able to obtain a daily amount of $5,889 until the amount of
$412,225 was fully paid. Further, the parties entered into a
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
second agreement whereby the plaintiff purchased defendant's
future receivable of $374,750 for $250,000. Moreover, the
defendants executed confessions of judgement which the plaintiff
was permitted to file if certain conditions enumerated in the
agreement were met. Indeed., on July 11, 2018 the plaintiff filed
a confession of judgement against the defendants. The defendants
moved to vacate the confession of judgement and October 17, 2018
the parties entered into a settlement agreement wherein the
confessions of judgement were vacated- The defendants executed
new confessions of judgement, the filing of which were governed
by the original agreements, On December 4, 2018 the plaintiff
filed the confession of judgement. The motion seeking to vacate
the confession of judgement h.as now been filed. The defendants
assert the confession of judgement was filed in an improper
manner, without sufficient basis and furthermore seeks excessive
legal fees.
Conclusions of Law
It is well settled that to vacate a judgement based upon a
confession of judgemen.t a plenary action must generally be
commenced (Recencv Club at Wallkill LLC v. Beinish, 95 AD3d 879,
94.2 NYS2d 894 [2d Dept., 2012]l. There are cases that hold a
plenary action need not be commenced where "the entry of
defendants'
judgement is so unfair as to violate the due process
rights" V
(se_e, Funding Metrics, LLC v. D and Hospitality Inc.,
2
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
91 MIsc3d 678, 2019 WL 138614 [Supreme Court Westchester County
2019]}. Although the defendants have not alleged any due process
violations, in the interests of efficiency and resolution of the
important legal issues raised the court will entertain the
motion.
Substantively, it is clear that the Merchant Cash Agreements
survived the Settlement Agreement. Thus, the Settlement
Agreement states that concerning the revised schedule of payments
as well as the resumption of previous payments "if any payment is
not received on the aforementioned dates, Plaintiff may take such
Agreements"
action as expressly provided for in the Merchant
(sgg, Stipulation and Settlement Agreement, § 3). Thus, an
examination of the Merchant Agreement is now necessary.
Section 3.1 of the Agreement lists thirteen 'Events of
Default' which permit various remedies outlined in Section 3.2 of
the Agreement. The first of the events of default includes
Agreement"
"Merchant shall violate any term or covenant of this
(sag, Ace Funding Source Merchant Agreement, 53.1(a)). There can
be little dispute that failing to make payments pursuant to the
agreement is an event default enumerated. Further, the court
does make .any determination whether in fact the defendants failed
to make payments pursuant to the agreement. Rather, the court
will only focus on the propriety of the filing of the confessions
of judgement. Indeed, the remedies noted in Section 3.2 do not
3
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
include filing a confession of judgement. Section 3.2 states
that upon an event of default the plaintiff may "proceed to
protect and enforce: its rights or remedies by suit in equity or
by action at law, or both, whether for the specific performarice
of any covenant, agreement or other provision contained herein,
or to enforce the discharge of Merchant's obligations
remedy"
hereunder...or any other legal or equitable right or
(id). Thus, the remedy outlined in the agreement appears to only
include proceeding by suit in law or equity. The remedy further
provides that "all rights, powers and remedies of AES in
connection with this Agreement may be exercised at any time by
AFS after the occurrence of an Event of Default, are cumulative
and. not exclusive, and shall be in addition to any rights, powers
equity"
or .remedies provided by law or (id). However, that last
provision cannot refer to the filing of any confessions of
judgement. First, the entire nature of a merchant cash agreement
is premised upon the plaintiff s .purchasing receivables and the
right to receive the repayments is contingent upon the defendants
business fortunes (Pearl Caoital Rivis Ventures LLC e. RDN
Construction Inc., 54 Misc3d 470, 41 NYS3d 397 [Supreme Court
Westchester County 2016]). If the plaintiff would be able to
file the confession of judgement based upon mere non-payment then
the plaintiff's right to payment is not contingent or
indeterminate, calling into question the legal nature of th.e
4
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
agreement. As the court observed in Rubenstein v. Small, 273 AD
[1"
102, 75 NYS2d 483 Dept., 1947] "for a true loan it is
essential to provide for repayment absolutely and at all events
or that the principal in some way be secured as distinguished
hazard"
from being put in (id). Thus, the .confession of
judgement cannot be utilized for non-payment since in such
instance the repayment could be classified as a loan.
Moreover, the agreement itself forecloses the use of the
confession of judgement for non-payment. In Section 1.11 of the
Agreement it provides eight protections which may be implemented,
without notice to the defendants, upon the occurrence of five
enumerated defaults. None of the defaults concern non-payment.
The third protection states that "upon breach of any provision in
this paragraph 1.1, AFS may enter that confession of judgment as
thereon"
a judgment with the Cle.rk of the Court and execute
(Merchant Agreement, §1.11). Thus, the agreement itself permits
filing the confession of judgement for the specific defaults
enumerated, which as noted do not include non-payment. The other
defaults enumerated in Section 3.1, of which non-payment is
included does not authorize the filing of a confession of
judgement. Clearly, the agreement cannot be interpreted as
allowing the filing of a confession of judgement for non-payment
where no such authorization expressly permits it.
5
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
Therefore, based on the foregoing the confessions of
judgement are hereby vacated.
So ordered.
ENTER:
DATED: February 21, 2019
Brooklyn N.Y. Hon. Leon Ruchelsman
JSC
6
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019
SÚPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK INDEX: 656346/2018
JAMES DAVIS II and MEDISALE, INC.,
-against-
RICHMOND CAPITAL GROUP, LLC; INFLUX CAPITAL
GROUP, LLC, a/k/a/ INFLUX CAPITAL, LLC; GTR SOURCE,
LLC; ADDY SOURCE, LLC; YES CAPITAL FUNDING
GROUP, LLC, d/b/a/ YES FUNDING SERVICES, LLC;
JONATHAN BRAUN; MICHELLE GREGG; TSVI REICH
a/k/a STEVE REICH; ROBERT GIARDINA; BRYAN BAKER
d/b/a BAKER CAP FUNDING d/b/a BAKER CAPITAL
FUNDING; REBAR CAPITAL, LLC;
AZRIEL INZELBUCH a/k/a DAVID B FRANK;
and TZVI DAVIS a/k/a STEVEN DAVIS,
Defendants.
NOTICE OF CROSS-MOTION
(Mot. Seq. #005)
Yours, etc.
GRIMBLE & LOGUIDICE, LLC
217 Broadway, Suite 304
New York, NY 10007
(212)349-0450
O NOTICE OF ENTRY
Please take notice that the annexed is a true
copy of the Order entered in the above named court on
O NOTICE OF SETTLEMENT
Please take notice that the annexed Order will be presented for settlement at the above named court on at 9:30 am.
CERTIFICATION OF ENCLOSED PAPERS:
R n , E .
Robin_b atffdice, Esq.
Shaina Weissman, Esq.
GRIMBLE & LOGUIDICE, LLC
21 7 BROADWAY, SUITE 304
NEW YORK, NY 10007
(2 1 2) 349 0450
Preview
FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 "D" EXHIBIT FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 ________------- ____ __-------------------x ACE FUNDING SOURCE, LLC., P.1aintiff, Decision. and order - against - Index No. 2965/18 MYKA CELLARS, INC., d/b/a MYKA CELLARS, ROUNDHAY PARTNERS, LLC., d/b/a ROUNDHAY PARTNERS, SOLVENT, LLC., d/b/a ROUNDHAY PARTNERS OPPORTUNITIES, L.P., d/b/a ROUNDRAY PARTNERS OPPORTUNITIES, GOLDLINE BRANDS,. INC.., d/b/a GOLDLINE BRANDS, d/b/a GOLDLINE BRANDS, RHONE WOLF VINE YARD, LLC., d/bfa RHONE WOLF VINE YARD., ROUND HAY FARMING, LLC., d/b/a ROUNDHAY FARMING, LLC., d/b/a ROUNDHAY FARMING, ROUNDHAY PARTNERS REGIONAL CENTER, LLC., d/b/a ROUNDHAY PARTNERS REGIONAL CENTER, SCOREWELL, INC., d/b/a SCOREWELL, 1850 DEVELOPMENT, LLC., d/b/a 1850 DEVELOPMENT, LLC.,1850 DEVELOPMENT AND PAUL HALEY, Defendants, February 21, 2019 _____------____-------________------------x PRESENT: HON. LEON RUCHELSMAN The defendants have moved seeking to vacate confessions of judgement filed. The plaintiff opposes the motion, Papers were submitted by the parties and arguments held. After reviewing all the arguments this court no.w makes the following determination. On June 28, 2018 the plaintiff a merchant cash advance funding provider entered into a contract with defendants, wineries located in California. Pursuant to the agreement the plaintiff purchased S412,225 of defendant's future receivable for $275,000. The parties further agreed that the plaintiff would be able to obtain a daily amount of $5,889 until the amount of $412,225 was fully paid. Further, the parties entered into a FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 second agreement whereby the plaintiff purchased defendant's future receivable of $374,750 for $250,000. Moreover, the defendants executed confessions of judgement which the plaintiff was permitted to file if certain conditions enumerated in the agreement were met. Indeed., on July 11, 2018 the plaintiff filed a confession of judgement against the defendants. The defendants moved to vacate the confession of judgement and October 17, 2018 the parties entered into a settlement agreement wherein the confessions of judgement were vacated- The defendants executed new confessions of judgement, the filing of which were governed by the original agreements, On December 4, 2018 the plaintiff filed the confession of judgement. The motion seeking to vacate the confession of judgement h.as now been filed. The defendants assert the confession of judgement was filed in an improper manner, without sufficient basis and furthermore seeks excessive legal fees. Conclusions of Law It is well settled that to vacate a judgement based upon a confession of judgemen.t a plenary action must generally be commenced (Recencv Club at Wallkill LLC v. Beinish, 95 AD3d 879, 94.2 NYS2d 894 [2d Dept., 2012]l. There are cases that hold a plenary action need not be commenced where "the entry of defendants' judgement is so unfair as to violate the due process rights" V (se_e, Funding Metrics, LLC v. D and Hospitality Inc., 2 FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 91 MIsc3d 678, 2019 WL 138614 [Supreme Court Westchester County 2019]}. Although the defendants have not alleged any due process violations, in the interests of efficiency and resolution of the important legal issues raised the court will entertain the motion. Substantively, it is clear that the Merchant Cash Agreements survived the Settlement Agreement. Thus, the Settlement Agreement states that concerning the revised schedule of payments as well as the resumption of previous payments "if any payment is not received on the aforementioned dates, Plaintiff may take such Agreements" action as expressly provided for in the Merchant (sgg, Stipulation and Settlement Agreement, § 3). Thus, an examination of the Merchant Agreement is now necessary. Section 3.1 of the Agreement lists thirteen 'Events of Default' which permit various remedies outlined in Section 3.2 of the Agreement. The first of the events of default includes Agreement" "Merchant shall violate any term or covenant of this (sag, Ace Funding Source Merchant Agreement, 53.1(a)). There can be little dispute that failing to make payments pursuant to the agreement is an event default enumerated. Further, the court does make .any determination whether in fact the defendants failed to make payments pursuant to the agreement. Rather, the court will only focus on the propriety of the filing of the confessions of judgement. Indeed, the remedies noted in Section 3.2 do not 3 FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 include filing a confession of judgement. Section 3.2 states that upon an event of default the plaintiff may "proceed to protect and enforce: its rights or remedies by suit in equity or by action at law, or both, whether for the specific performarice of any covenant, agreement or other provision contained herein, or to enforce the discharge of Merchant's obligations remedy" hereunder...or any other legal or equitable right or (id). Thus, the remedy outlined in the agreement appears to only include proceeding by suit in law or equity. The remedy further provides that "all rights, powers and remedies of AES in connection with this Agreement may be exercised at any time by AFS after the occurrence of an Event of Default, are cumulative and. not exclusive, and shall be in addition to any rights, powers equity" or .remedies provided by law or (id). However, that last provision cannot refer to the filing of any confessions of judgement. First, the entire nature of a merchant cash agreement is premised upon the plaintiff s .purchasing receivables and the right to receive the repayments is contingent upon the defendants business fortunes (Pearl Caoital Rivis Ventures LLC e. RDN Construction Inc., 54 Misc3d 470, 41 NYS3d 397 [Supreme Court Westchester County 2016]). If the plaintiff would be able to file the confession of judgement based upon mere non-payment then the plaintiff's right to payment is not contingent or indeterminate, calling into question the legal nature of th.e 4 FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 agreement. As the court observed in Rubenstein v. Small, 273 AD [1" 102, 75 NYS2d 483 Dept., 1947] "for a true loan it is essential to provide for repayment absolutely and at all events or that the principal in some way be secured as distinguished hazard" from being put in (id). Thus, the .confession of judgement cannot be utilized for non-payment since in such instance the repayment could be classified as a loan. Moreover, the agreement itself forecloses the use of the confession of judgement for non-payment. In Section 1.11 of the Agreement it provides eight protections which may be implemented, without notice to the defendants, upon the occurrence of five enumerated defaults. None of the defaults concern non-payment. The third protection states that "upon breach of any provision in this paragraph 1.1, AFS may enter that confession of judgment as thereon" a judgment with the Cle.rk of the Court and execute (Merchant Agreement, §1.11). Thus, the agreement itself permits filing the confession of judgement for the specific defaults enumerated, which as noted do not include non-payment. The other defaults enumerated in Section 3.1, of which non-payment is included does not authorize the filing of a confession of judgement. Clearly, the agreement cannot be interpreted as allowing the filing of a confession of judgement for non-payment where no such authorization expressly permits it. 5 FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 Therefore, based on the foregoing the confessions of judgement are hereby vacated. So ordered. ENTER: DATED: February 21, 2019 Brooklyn N.Y. Hon. Leon Ruchelsman JSC 6 FILED: NEW YORK COUNTY CLERK 03/22/2019 05:59 PM INDEX NO. 656346/2018 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 03/22/2019 SÚPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK INDEX: 656346/2018 JAMES DAVIS II and MEDISALE, INC., -against- RICHMOND CAPITAL GROUP, LLC; INFLUX CAPITAL GROUP, LLC, a/k/a/ INFLUX CAPITAL, LLC; GTR SOURCE, LLC; ADDY SOURCE, LLC; YES CAPITAL FUNDING GROUP, LLC, d/b/a/ YES FUNDING SERVICES, LLC; JONATHAN BRAUN; MICHELLE GREGG; TSVI REICH a/k/a STEVE REICH; ROBERT GIARDINA; BRYAN BAKER d/b/a BAKER CAP FUNDING d/b/a BAKER CAPITAL FUNDING; REBAR CAPITAL, LLC; AZRIEL INZELBUCH a/k/a DAVID B FRANK; and TZVI DAVIS a/k/a STEVEN DAVIS, Defendants. NOTICE OF CROSS-MOTION (Mot. Seq. #005) Yours, etc. GRIMBLE & LOGUIDICE, LLC 217 Broadway, Suite 304 New York, NY 10007 (212)349-0450 O NOTICE OF ENTRY Please take notice that the annexed is a true copy of the Order entered in the above named court on O NOTICE OF SETTLEMENT Please take notice that the annexed Order will be presented for settlement at the above named court on at 9:30 am. CERTIFICATION OF ENCLOSED PAPERS: R n , E . Robin_b atffdice, Esq. Shaina Weissman, Esq. GRIMBLE & LOGUIDICE, LLC 21 7 BROADWAY, SUITE 304 NEW YORK, NY 10007 (2 1 2) 349 0450