Preview
FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023
MEDIATION & CIVIL ARBITRATION, INC.: COMMERCIAL ARBITRATION
THE LCF GROUP, INC., MCA Claim No.: 44444/2023
Claimant,
v.
ANGELA PATTERSON DBA ANGELA FINAL ARBITRATION AWARD
PATTERSON DBA FAIRES CLEANING
CREW, AND ANGELA PATTERSON,
Respondents.
Arbitral Seat: New York, New York
Award Date: August 26, 2023
Ira David, the undersigned, an arbitrator duly appointed under the prevailing Commercial
Arbitration Rules of MEDIATION & CIVIL ARBITRATION, INC. (hereinafter, “MCA”) in the
above-captioned matter, hereby makes the following factual findings, legal conclusions, and
final arbitral award:
A. General Background.
1. By way of written Merchant Agreement and Security Agreement for the Purchase
& Sale of Future Receivables Agreement dated December 22, 2022 (“Agreement”), claimant
THE LCF GROUP, INC. (“Claimant”) agreed to enter into a non-recourse merchant cash
advance transaction to purchase a face value of $11,920.00 of future receivables of respondent
Angela Patterson DBA Angela Patterson DBA Faires Cleaning Crew for a purchase price of
$8,000.00.
2. The Agreement was secured by a personal guaranty and confession of award by
respondent Angela Patterson dated same (“COA”), whereby upon a default under the
Agreement, assent and authorization would be granted for Claimant’s entry thereof for all
liquidated damages, costs, and attorney’s fees. Additionally, Respondents agreed to an
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addendum to this Agreement by which said additional Respondents granted a security interest to
further guarantee performance by Angela Patterson DBA Angela Patterson DBA Faires Cleaning
Crew under the Agreement.
3. Under the Agreement, Respondent covenanted to allow Claimant access to their
online banking accounts and repayment through ACH debits at all times unless and until
satisfaction of the Agreement has been made in full.
4. Under the Agreement, the events constituting a default by Respondent and the
remedies available to Claimant are delineated.
5. Claimant asserts that Respondent Angela Patterson DBA Angela Patterson DBA
Faires Cleaning Crew has failed to meet its obligations since March 2, 2023 on or about which
date Respondent Angela Patterson DBA Angela Patterson DBA Faires Cleaning Crew stopped
its scheduled payment to Claimant, thereby causing said payment to be denied to Claimant with
a Bank Returned Check Code of R08.
6. Since March 2, 2023 Claimant reports, and Respondents do not dispute, such
repayments ceased. Claimant asserts, and Respondents do not dispute, a remaining balance of
$6,516.38 (the “Balance”).
7. Claimant asserts that the Agreement provides that upon an event of breach,
Respondents shall be liable for accelerated repayment of the Balance, liquidated damages,
including attorney’s fees, of 33.33% of the Balance or $2,171.91, and a default fee of $5,280.00
being repayment of the eight fees associated with five debits denied with a code of R01 (NSF)
and three denied with a code of R08 (Payment Stopped) and two default charges of $2,500.00
apiece, one for interfering with Claimant’s ability to collect monies due under the Agreement by
stopping such payments, the other for taking another loan against the same future receivables in
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violation of the Agreement.1 Claimant therefore asserts a total claim of $13,968.29.
Notwithstanding, Claimant has offered, sua sponte, a reduction in their demand to $13,032.76,
an offer which is hereby accepted.
B. Procedural Posture & Legal Analysis.
8. On or around May 24, 2023, Claimant asserted this demand for arbitration
whereupon Respondent timely interposed a responsive statement and opposition brief.
9. Respondents proffer a number of defenses to Claimant’s demands. Such defenses
may be summarized as:
a. The Agreement is not enforceable as Respondent Patterson did not understand the
terms of the Agreement and the financial picture reported to Claimant was
factually inaccurate; and
b. The payment schedule as provided in the Agreement is not manageable, i.e.
Respondents cannot afford to make the payments to which they committed.
10. Respondent Patterson has asserted that she was unaware of the terms to which she
had agreed and therefore cannot be bound thereby. This is not an acceptable defense. Respondent
Patterson attested to the accuracy of the information presented to Claimant and agreed to the
terms of the Agreement. Claimant had no basis to force Respondents into accepting the terms of
the Agreement; Claimant did not prevent Respondents from obtaining legal counsel to explain
the Agreement; Claimant did not take any steps to prevent Respondents from utilizing the
1
Claimant asserted Default fees in the amount of $5,000.00, including a bank return fee of $2,500.00 for a payment
denied with a code of R08 and a Default Fee arising out of that payment denial in the amount of $2,500, each on the
same date. We disagree with this assertion. While we agree that Claimant is correct to include the $2,500 Default
Fee on that date, the $2,500 for the bank return charge is improper. The bank return charge on that date is a
reimbursement and should properly be assessed as a reimbursement for $35.00. However, as Claimant has also
asserted a second default event, and Respondents have failed to deny or disprove same, by Respondents’ taking
additional financing against the same stream of receivables in violation of the anti-stacking provision of the
Agreement. Default Fees and reimbursement of bank charges are computed and awarded accordingly.
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protections provided, such as the reconciliation provisions. Respondents accepted the funds
proffered by Claimant and is thereby committed to the terms and conditions of the Agreement.
11. Even accepting Respondents’ assertions regarding their ability to meet the
payment terms of the Agreement, unilaterally taking action to thwart those terms still constitutes
a breach of the Agreement and triggers the remedies provided. A reduction in revenue could
have been reported in a request for reconciliation. If Respondents ceased business operations,
such needed to be reported to Claimant. Neither action was apparently taken by Respondents and
so Respondents cannot escape the liability which they accepted when they executed the
Agreement in the first place.
12. Thus, as Respondents’ answer and the defenses asserted therein negate neither the
breach of, nor the remedies provided in, the Agreement, we must conclude that Claimant is
entitled to an award which includes the (reduced) claims totaling $13,032.76.
13. Any arguments not expressly addressed under this final arbitral award have
nonetheless been considered and hereby expressly denied.
14. Lastly, under this arbitral forum’s Commercial Arbitration Rules, the prevailing
party is entitled reimbursement of costs and expenses of arbitration from the losing party as
additional damages added to the Final Arbitration Award. See Commercial Arb. R. 41-43.
However, the Agreement provides that the parties will be split evenly. See, the Agreement, ¶ VI.
The terms of the Agreement prevail. In this case these costs amount to $1,850.00 comprised of
the initial filing fee of $275.00, plus four and five-tenths hours of arbitrator billing at the hourly
rate of $350.00. This amount has been paid by Claimant, who is thus entitled to reimbursement
of 50% of such costs in the amount of $925.00, hereinafter referred to as “Additional Damages.”
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FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023
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FINAL ARBITRAL AWARD
WHEREFORE, by virtue of Respondent’s default under the Agreement, Claimant is
entitled to a final arbitral award in the amount of $13,957.76, said amount representing the sum
of the acceleration of the balance owed under the Agreement ($6,516.38), the Default fees
($5,280.00), the liquidated legal fees ($2,171.91), and 50% of the costs of arbitration ($925.00),
reduced by the sua sponte discount provided in ¶ 7 above. Additionally, Claimant is entitled to
an award of the costs of confirming this Final Arbitral Award by a Court of competent
jurisdiction, and post-judgment interest accruing at nine-percent (9%) per annum thereon
commencing upon the date of receipt of this decision. Pre-judgment interest is not awarded.
I, Ira David, an attorney duly licensed to practice law in the State of Nevada, declare
under penalty of perjury under the law of the State of Nevada that the foregoing is true and
correct.
Dated: New York, New York
August 26, 2023
_______________
By: Ira David, Esq.
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FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023
To: The Feldman Law Firm, P.C.
Attn: Adam J. Feldman, Esq.
147 Willis Avenue
Mineola, NY 11501
(212) 244-4422
Attorneys for Claimant
Angela Patterson
257 Washington Drive
Pennsville Township, NJ 08070
Representing All Respondents
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Preview
FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023 MEDIATION & CIVIL ARBITRATION, INC.: COMMERCIAL ARBITRATION THE LCF GROUP, INC., MCA Claim No.: 44444/2023 Claimant, v. ANGELA PATTERSON DBA ANGELA FINAL ARBITRATION AWARD PATTERSON DBA FAIRES CLEANING CREW, AND ANGELA PATTERSON, Respondents. Arbitral Seat: New York, New York Award Date: August 26, 2023 Ira David, the undersigned, an arbitrator duly appointed under the prevailing Commercial Arbitration Rules of MEDIATION & CIVIL ARBITRATION, INC. (hereinafter, “MCA”) in the above-captioned matter, hereby makes the following factual findings, legal conclusions, and final arbitral award: A. General Background. 1. By way of written Merchant Agreement and Security Agreement for the Purchase & Sale of Future Receivables Agreement dated December 22, 2022 (“Agreement”), claimant THE LCF GROUP, INC. (“Claimant”) agreed to enter into a non-recourse merchant cash advance transaction to purchase a face value of $11,920.00 of future receivables of respondent Angela Patterson DBA Angela Patterson DBA Faires Cleaning Crew for a purchase price of $8,000.00. 2. The Agreement was secured by a personal guaranty and confession of award by respondent Angela Patterson dated same (“COA”), whereby upon a default under the Agreement, assent and authorization would be granted for Claimant’s entry thereof for all liquidated damages, costs, and attorney’s fees. Additionally, Respondents agreed to an Page 1 of 6 FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023 addendum to this Agreement by which said additional Respondents granted a security interest to further guarantee performance by Angela Patterson DBA Angela Patterson DBA Faires Cleaning Crew under the Agreement. 3. Under the Agreement, Respondent covenanted to allow Claimant access to their online banking accounts and repayment through ACH debits at all times unless and until satisfaction of the Agreement has been made in full. 4. Under the Agreement, the events constituting a default by Respondent and the remedies available to Claimant are delineated. 5. Claimant asserts that Respondent Angela Patterson DBA Angela Patterson DBA Faires Cleaning Crew has failed to meet its obligations since March 2, 2023 on or about which date Respondent Angela Patterson DBA Angela Patterson DBA Faires Cleaning Crew stopped its scheduled payment to Claimant, thereby causing said payment to be denied to Claimant with a Bank Returned Check Code of R08. 6. Since March 2, 2023 Claimant reports, and Respondents do not dispute, such repayments ceased. Claimant asserts, and Respondents do not dispute, a remaining balance of $6,516.38 (the “Balance”). 7. Claimant asserts that the Agreement provides that upon an event of breach, Respondents shall be liable for accelerated repayment of the Balance, liquidated damages, including attorney’s fees, of 33.33% of the Balance or $2,171.91, and a default fee of $5,280.00 being repayment of the eight fees associated with five debits denied with a code of R01 (NSF) and three denied with a code of R08 (Payment Stopped) and two default charges of $2,500.00 apiece, one for interfering with Claimant’s ability to collect monies due under the Agreement by stopping such payments, the other for taking another loan against the same future receivables in Page 2 of 6 FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023 violation of the Agreement.1 Claimant therefore asserts a total claim of $13,968.29. Notwithstanding, Claimant has offered, sua sponte, a reduction in their demand to $13,032.76, an offer which is hereby accepted. B. Procedural Posture & Legal Analysis. 8. On or around May 24, 2023, Claimant asserted this demand for arbitration whereupon Respondent timely interposed a responsive statement and opposition brief. 9. Respondents proffer a number of defenses to Claimant’s demands. Such defenses may be summarized as: a. The Agreement is not enforceable as Respondent Patterson did not understand the terms of the Agreement and the financial picture reported to Claimant was factually inaccurate; and b. The payment schedule as provided in the Agreement is not manageable, i.e. Respondents cannot afford to make the payments to which they committed. 10. Respondent Patterson has asserted that she was unaware of the terms to which she had agreed and therefore cannot be bound thereby. This is not an acceptable defense. Respondent Patterson attested to the accuracy of the information presented to Claimant and agreed to the terms of the Agreement. Claimant had no basis to force Respondents into accepting the terms of the Agreement; Claimant did not prevent Respondents from obtaining legal counsel to explain the Agreement; Claimant did not take any steps to prevent Respondents from utilizing the 1 Claimant asserted Default fees in the amount of $5,000.00, including a bank return fee of $2,500.00 for a payment denied with a code of R08 and a Default Fee arising out of that payment denial in the amount of $2,500, each on the same date. We disagree with this assertion. While we agree that Claimant is correct to include the $2,500 Default Fee on that date, the $2,500 for the bank return charge is improper. The bank return charge on that date is a reimbursement and should properly be assessed as a reimbursement for $35.00. However, as Claimant has also asserted a second default event, and Respondents have failed to deny or disprove same, by Respondents’ taking additional financing against the same stream of receivables in violation of the anti-stacking provision of the Agreement. Default Fees and reimbursement of bank charges are computed and awarded accordingly. Page 3 of 6 FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023 protections provided, such as the reconciliation provisions. Respondents accepted the funds proffered by Claimant and is thereby committed to the terms and conditions of the Agreement. 11. Even accepting Respondents’ assertions regarding their ability to meet the payment terms of the Agreement, unilaterally taking action to thwart those terms still constitutes a breach of the Agreement and triggers the remedies provided. A reduction in revenue could have been reported in a request for reconciliation. If Respondents ceased business operations, such needed to be reported to Claimant. Neither action was apparently taken by Respondents and so Respondents cannot escape the liability which they accepted when they executed the Agreement in the first place. 12. Thus, as Respondents’ answer and the defenses asserted therein negate neither the breach of, nor the remedies provided in, the Agreement, we must conclude that Claimant is entitled to an award which includes the (reduced) claims totaling $13,032.76. 13. Any arguments not expressly addressed under this final arbitral award have nonetheless been considered and hereby expressly denied. 14. Lastly, under this arbitral forum’s Commercial Arbitration Rules, the prevailing party is entitled reimbursement of costs and expenses of arbitration from the losing party as additional damages added to the Final Arbitration Award. See Commercial Arb. R. 41-43. However, the Agreement provides that the parties will be split evenly. See, the Agreement, ¶ VI. The terms of the Agreement prevail. In this case these costs amount to $1,850.00 comprised of the initial filing fee of $275.00, plus four and five-tenths hours of arbitrator billing at the hourly rate of $350.00. This amount has been paid by Claimant, who is thus entitled to reimbursement of 50% of such costs in the amount of $925.00, hereinafter referred to as “Additional Damages.” Page 4 of 6 FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023 FINAL ARBITRAL AWARD WHEREFORE, by virtue of Respondent’s default under the Agreement, Claimant is entitled to a final arbitral award in the amount of $13,957.76, said amount representing the sum of the acceleration of the balance owed under the Agreement ($6,516.38), the Default fees ($5,280.00), the liquidated legal fees ($2,171.91), and 50% of the costs of arbitration ($925.00), reduced by the sua sponte discount provided in ¶ 7 above. Additionally, Claimant is entitled to an award of the costs of confirming this Final Arbitral Award by a Court of competent jurisdiction, and post-judgment interest accruing at nine-percent (9%) per annum thereon commencing upon the date of receipt of this decision. Pre-judgment interest is not awarded. I, Ira David, an attorney duly licensed to practice law in the State of Nevada, declare under penalty of perjury under the law of the State of Nevada that the foregoing is true and correct. Dated: New York, New York August 26, 2023 _______________ By: Ira David, Esq. Page 5 of 6 FILED: NASSAU COUNTY CLERK 09/05/2023 11:46 AM INDEX NO. 614358/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 09/05/2023 To: The Feldman Law Firm, P.C. Attn: Adam J. Feldman, Esq. 147 Willis Avenue Mineola, NY 11501 (212) 244-4422 Attorneys for Claimant Angela Patterson 257 Washington Drive Pennsville Township, NJ 08070 Representing All Respondents Page 6 of 6