Legal Document: Rjc Capital Management, Llc D/B/A CREATIVE LENDING SOLUTIONS GROUP v. Alfred Mitaj, First Structure Llc

On January 11, 2023 a MEMORANDUM IN OPPOSITION TO MOTION AND IN SUPPORT OF CROSS-MOTION (Motion #1) - Memo of Law in Opposition to Defs' Motion to Dismiss and in Support of Cross-Motion for Sanctions was filed involving a dispute between Rjc Capital Management, Llc D B A Creative Lending Solutions Group, and Alfred Mitaj, First Structure Llc, for Commercial - Contract in the District Court of Bronx County.

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FILED: BRONX COUNTY CLERK 04/28/2023 11:35 AM INDEX NO. 800498/2023E
NYSCEF DOC. NO. 20 RECEIVED NYSCEF: 04/28/2023

Motion Sequence # 001

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF BRONX
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RJC CAPITAL MANAGEMENT, LLC D/B/A CREATIVE
LENDING SOLUTIONS GROUP, Index No.: 800498/2023E

Plaintiff, Hon. Marissa Soto

- against -

ALFRED MITAJ and FIRST STRUCTURE LLC,

Defendants.
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PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION
TO DEFENDANTS’ MOTION TO DISMISS THE ACTION
AND IN SUPPORT OF ITS CROSS-MOTION FOR SANCTIONS

DAVIDOFF HUTCHER & CITRON LLP
Attorneys for Plaintiff

605 Third Avenue, 34th Floor
New York, New York 10158
(212) 557-7200

April 28, 2023

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Motion Sequence # 001

TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT…………………………………………………………………1

SUMMARY OF KEY ALLEGATIONS OF THE COMPLAINT………………………………2

ARGUMENT…………………………………………………………………………………….4

I. THE MOTION SHOULD BE DENIED………………………………………………4

1. Defendants’ Motion is Untimely………………………………………………4

2. Defendants’ Motion is Meritless………………………………………………5

II. THE CROSS-MOTION SHOULD BE GRANTED………………………………….6

CONCLUSION…………………………………………………………………………………..8

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TABLE OF AUTHORITIES

Page No.

Cases

Crum & Forster Specialty Ins. Co. v. The BCC Group, Inc.,
No. 150826/2014, 2014 WL 4743465 (N.Y. Sup. Ct. Sep. 19, 2014) ........................................ 5, 6

Inc. Vill. of Laurel Hollow v. Laverne, Inc.
43 Misc. 2d 248 (Sup. Ct. Nassau Cnty. 1964)............................................................................... 4

Landmark Cap. Invs., Inc. v. Li-Shan Wang
94 A.D.3d 418 (1st Dept. 2012)....................................................................................................... 5

Spectrum Origination LLC v. Hess
No. 653171/13, 2014 WL 1511159 (N.Y. Sup. Ct. Apr. 16, 2014) ................................................ 5

Success, LLC v. Stonehenge Capital Co., LLC
No. 117138/06, 2010 WL 887345 (N.Y. Sup. Ct. Feb. 18, 2010) .................................................. 5

Wahrhaftig v. Space Design Grp., Inc.
29 A.D.2d 699 (3d Dept. 1968) ...................................................................................................... 4

Statutes

CPLR 302........................................................................................................................................ 5

CPLR 3211............................................................................................................................. passim

LLC Law § 808(a) ...................................................................................................................... 5, 6

22 NYCRR 130-1.1 .................................................................................................................... 7, 9

22 NYCRR 130-1.3 .................................................................................................................... 7, 9

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Motion Sequence # 001

Plaintiff RJC CAPITAL MANAGEMENT, LLC D/B/A CREATIVE LENDING

SOLUTIONS GROUP (“Plaintiff”), respectfully submits this memorandum of law in opposition

to the motion to dismiss the Complaint, dated January 11, 2023 (the “Complaint” or “Cpl.”)1, by

Defendants ALFRED MITAJ and FIRST STRUCTURE LLC (“Defendants”) pursuant to CPLR

3211(a)(3) (the “Motion”) and in support of Plaintiff’s cross-motion for sanctions pursuant to 22

NYCRR 130-1.1 and 22 NYCRR 130-1.3 and for such other and further relief as this Court deems

just and proper (the “Cross-Motion”).2

PRELIMINARY STATEMENT

Defendants’ ten paragraph frivolous “motion” is devoid of any supporting caselaw or

factual allegations to properly dismiss the Complaint. As an initial matter, Defendants waived their

right to file a motion to dismiss pursuant to CPLR 3211(a)(3) when they filed their Amended

Answer. As such, the Motion is untimely and should be denied for this reason alone. Moreover,

even if the Court were to consider the merits of the Motion, Defendants fail to provide any factual

affidavits or accompanying memorandum of law to support its contention that the Complaint

should be dismissed. Indeed, the only thing the Motion successfully accomplished was forcing

Plaintiff to expend time and money to oppose it and for this Court to waste its judicial resources

to review—and ultimately deny—their Motion.

As set forth herein, it is well-settled that for a complaint to be dismissed under LLC Law

§808(a), the movant has a heavy burden to show that the foreign LLC’s activities are permanent,

1
A copy of the Complaint is annexed to the affidavit of Robert Coppinger, sworn to on April 26,
2023 (the “Coppinger Aff.”).
2
Capitalized terms not defined herein shall have the meaning set forth in the Coppinger Aff.

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continuous and regular. In their Motion, Defendants failed to even allege that Plaintiff transacted

any business in New York, let alone that that business was “permanent, continuous and regular.”

Moreover, Defendants allege in their Motion that “[p]ursuant to the agreement between the parties

Plaintiff is responsible for Defendants attorneys fees.” However, not only do Defendants fail to

attach the Agreement anywhere in their Motion, there is no provision in the Agreement which

provides for any attorneys’ fees.

The Court should not permit Defendants’ frivolous actions to go unsanctioned. As set forth

herein, Defendants waived their right to file a motion to dismiss pursuant to CPLR 3211(a)(3)

when they filed their Amended Answer. Moreover, Defendants’ legal theory is without merit, their

Motion contains material misstatements of fact, and the only thing accomplished by filing this

Motion was forcing Plaintiff to incur additional legal fees and delay the resolution of this matter.

As such, the Court should award Plaintiff its reasonable attorneys’ fees and order that Defendants

pay $10,000 to the Commissioner of Taxation and Finance.

Accordingly, as more fully set forth below, the Motion should be denied and the Cross-

Motion granted in their entireties.

SUMMARY OF KEY ALLEGATIONS OF THE COMPLAINT

The Agreement

Plaintiff is a consultant who negotiates terms for commercial loans with commercial

lenders on behalf of borrowers. Cpl. ¶ 10. In June, 2022, Defendants engaged Plaintiff to negotiate

a construction loan for a development project in the Bronx on their behalf. Cpl. ¶ 11. On June 14,

2022, Plaintiff and Defendants executed a Consulting Fee Agreement (the “Agreement”) whereby

Plaintiff would “be engaged in the activity of negotiating loans for referral to Commercial Lenders

for a fee outlined below.” Cpl. ¶ 11-12. The Agreement provided that “Once an LOI (Letter of

Intent) from a Commercial Lender is obtained through [Plaintiff’s] efforts and Lender has notified

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[Defendants] that the Loan is ready to Close by issuing a Commitment Letter, the Commission

listed below is deemed earned and do in full at the loan closing paid from loan proceeds: .75% of

the committed loan.” Cpl. ¶ 13. Moreover, the Agreement states “Once the [Defendants] has been

notified of the Lenders readiness to Close the Loan, if the [Defendants] do[] not Close [Plaintiff]

is due a fee in the in the amount of: 75% of the committed loan” (the “Breakup Fee”). Cpl. ¶ 15.

Plaintiff Secures Loan on Defendants’ Behalf

On June 15, 2022, Defendants executed a Letter of Intent with Ponce Bank and paid Ponce

Bank a good faith deposit of $15,000 for a construction loan negotiated by Plaintiff. Cpl. ¶ 16.3

Thereafter, on November 15, 2022, Plaintiff emailed Defendants, copying Defendants’ attorney,

informing them that Plaintiff successfully secured a loan commitment from Ponce Bank of a

Construction-to-Permanent-Mortgage Loan in an amount of $11,000,000.00 for Defendants’

development project at 1616 Crosby Avenue, Bronx, NY 10461. Defendants’ attorney

immediately responded saying that he “will review and get back to [Plaintiff] if I have any

questions.” However, Plaintiff did not hear back from Defendants. Cpl. ¶ 17. Finally, after multiple

follow ups, on December 6, 2022, Defendants informed Plaintiff that they would go with another

bank. Cpl ¶ 19. However, Defendants have refused to remit payment of Breakup Fee.

Further, as set forth in the Complaint and the Coppinger Aff., Plaintiff is a Nevada limited

liability company authorized to do business in the state of New Jersey. Coppinger Aff., ¶ 4.

Plaintiff negotiated the terms of a construction loan on behalf of Defendants from its offices in New Jersey.

Id. ¶ 7. Plaintiff does not regularly engage in business in New York. Plaintiff is a consultant operating out

of New Jersey. Id. ¶ 8. Nothing in the Agreement requires Plaintiff to transact any business in New York.

3
Contrary to Defendants’ false allegation in its Amended Answer, Defendants paid the good faith
deposit to Ponce Bank, not Plaintiff. See NYSCEF Dkt. No. 4 (“Amended Answer”), ¶ 32.

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Id. ¶ 9. Moreover, nowhere in the Agreement is there any provision entitling any party to attorneys’

fees. Id. ¶ 10.

ARGUMENT

I. THE MOTION SHOULD BE DENIED

1. Defendants’ Motion is Untimely

It is black-letter law that motions to dismiss under CPLR 3211(a)(3) may not be made after

a party interposes an answer. See Wahrhaftig v. Space Design Grp., Inc., 29 A.D.2d 699 (3d Dept.

1968) (“The motion, not being made ‘before service of the responsive pleading’ (CPLR 3211,

subd. [e]), was not timely and should have been denied on that ground.”); Inc. Vill. of Laurel

Hollow v. Laverne, Inc., 43 Misc. 2d 248, 249 (Sup. Ct. Nassau Cnty. 1964) (“None of the

objections advanced for dismissal of the amended pleading except the alleged legal insufficiency

of the complaint may be considered because of the defendants' service of an answer.”). CPLR

3211(e) explicitly states that the only provisions which a motion to dismiss can be made at any

subsequent time are CPLR3211(a)(2), (7), and (10). See CPLR 3211(e) (“At any time before

service of the responsive pleading is required, a party may move on one or more of the grounds

set forth in subdivision (a) of this rule, and no more than one such motion shall be permitted. . . .

A motion based upon a ground specified in paragraph two, seven or ten of subdivision (a) of this

rule may be made at any subsequent time or in a later pleading, if one is permitted.”).

Here, Defendants filed their answer to the Complaint on January 24, 2023. NYSCEF Dkt.

No. 3. They then amended their answer as of right on February 8, 2023. NYSCEF Dkt. No. 4.

They then, after the filing of an answer and amended answer, filed this Motion pursuant to

CPLR3211(a)(3). As such, the Motion is untimely and should be dismissed on this ground alone.

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2. Defendants’ Motion is Meritless

As referenced in Defendants’ Motion, Section 808(a) of the Limited Liability Company

Law provides that:

A foreign limited liability company doing business in this state without
having received a certificate of authority to do business in this state may not
maintain any action, suit or special proceeding in any court of this state
unless and until such limited liability company shall have received a
certificate of authority in this state.

It is well-settled that “Section 808(a) employs a heightened ‘doing business’ standard in order to

avoid unconstitutional interference with interstate commerce under the Commerce Clause.” Crum

& Forster Specialty Ins. Co. v. The BCC Group, Inc., No. 150826/2014, 2014 WL 4743465, at *1

(N.Y. Sup. Ct. Sep. 19, 2014). “Under this heightened ‘doing business” standard, the test is

whether the foreign LLC’s business activity is so systematic and regular as to manifest a continuity

of activity in this state. The party asserting this barrier to suit bears the burden of rebutting the

presumption that the unauthorized foreign LLC is ‘doing business’ in the state of incorporation,

and demonstrating that the unauthorized foreign LLC’s local business activity is ‘systematic and

regular.’” Id. See also Spectrum Origination LLC v. Hess, No. 653171/13, 2014 WL 1511159, at

*3 (N.Y. Sup. Ct. Apr. 16, 2014) (“The burden is on the party seeking to impose the barrier to

show that the foreign LLC's activities are permanent, continuous, and regular.”) (internal citations

omitted); Success, LLC v. Stonehenge Capital Co., LLC, No. 117138/06, 2010 WL 887345 (N.Y.

Sup. Ct. Feb. 18, 2010) (“a defendant relying upon this statutory barrier bears the burden of proving

that the plaintiff's business activities in New York were not just causal or occasional, but so

systematic and regular as to manifest continuity of activity in the jurisdiction.”) (internal citations

omitted).

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In fact, “LLC § 808(a) presents a ‘higher hurdle’ than the standard jurisdictional ‘doing

business’ test used to determine long-arm jurisdiction under CPLR § 302. Thus, ‘incidents of

business’ may be sufficient to subject an unauthorized foreign company to service of New York

process, ‘and yet insufficient to require it to take out a certificate authorizing it to do business in

New York.’” Crum, 2014 WL 4743465, at *1. (internal citations omitted).

Here, Defendants failed to establish anywhere in their Motion that Plaintiff conducted

“systemic and regular” business activities in New York. In fact, the Motion fails to allege any

business activities taken by Plaintiff in New York at all. Defendants’ only reference to Plaintiff’s

purported business activities in New York is contained in one paragraph (paragraph 17) in their

Amended Answer. There, Defendants conclusory allege that since Defendants’ property is located

in New York, Plaintiff conducted business in New York, and therefore required to obtain a

Certificate of Authority to be authorized to do business in New York. See Amended Answer, ¶ 17.

However, even if procuring a loan for a property in New York constituted as business in New

York—and Defendants provided no support for this assertion—this “activity” alone is insufficient

to constitute “doing business” under Section 808(a). See e.g. Crum, 2014 WL 4743465, at *2 (“It

is undisputed that Plaintiff is an Arizona LLC, that Plaintiff’s principal place of business is located

in New Jersey, and that the policies at issue herein were mailed from New Jersey. In light of the

foregoing, evidence of a handful of New York telephone numbers is insufficient, without more, to

sustain Movant’s burden of showing that Plaintiff's business activity in this state is ‘systematic and

regular’ within the meaning of LLC § 808(a)’s heightened “doing business” test.”); Landmark

Cap. Invs., Inc. v. Li-Shan Wang, 94 A.D.3d 418, 419 (1st Dept. 2012) (“Although plaintiff often

purchased debt held by New York debtors, this, as an activity carried on by an Ohio company with

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no offices or employees in New York, is not sufficient to constitute doing business under section

1312.”).

As such, Defendants failed to satisfy the heightened burden to dismiss the Complaint

pursuant to CPLR 3211(a)(3) under LLC Law § 808(a) and the Motion should be denied in its

entirety for this separate independent reason as well.4

II. THE CROSS-MOTION SHOULD BE GRANTED

Pursuant to 22 NYCRR 130-1.1, the Court may award Plaintiff “costs in the form of

reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting

from frivolous conduct as defined in this Part.” Conduct is “frivolous” when: (1) it is completely

without merit in law and cannot be supported by a reasonable argument for an extension,

modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the

resolution of the litigation, to harass or maliciously injure another; or (3) it asserts material factual

statements that are false. 22 NYCRR 130-1.1(c). Defendants’ filing of this Motion qualifies as

“frivolous” under all three categories.

Initially, pursuant to CPLR 3211(e), Defendants’ Motion is untimely as it was filed after

Defendants’ filing of a responsive pleading—the Amended Answer. As set forth supra, it is black

letter law that a motion to dismiss under CPLR 3211(a)(3) must be filed prior to a responsive

pleading.

4
To the extent the Court finds that Plaintiff must be authorized to do business in New York to bring this suit—which
it should not, the Motion should still be denied and Plaintiff afforded the opportunity to cure its purported
noncompliance. See Access Point Medical, LLC v. Mandell, No. 102082/2010, 2011 WL 3439155 (N.Y. Sup. Ct. July
29, 2011) (“Although the aforementioned statute precludes Access from bringing suit for its failure to obtain a
certificate of authority, such action is not a fatal jurisdictional defect. Access would be entitled to a reasonable
opportunity to cure its noncompliance with the statute prior to an award of dismissal.”) (internal citations omitted).

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Moreover, as set forth herein, the substance of Defendants’ Motion is “completely without

merit in law.” Defendants did not—because they could not—assert any legal or factual support to

dismiss the Complaint under LLC Law § 808(a). Defendants merely quoted the statute (NYSCEF

Dkt. No. 6, ¶ 6 (the “Weiss Aff.”)), allege that Plaintiff does not have a Certificate of Authority to

do business in New York (Id. ¶ 7), and confirm what’s alleged in the complaint: i.e. that Plaintiff

is a Nevada LLC (despite denying sufficient knowledge or information to form a belief as to the

same information in their Amended Answer. See Amended Answer, ¶ 5.) (Weiss Aff., ¶ 8). Then,

Defendants, without any caselaw in support, argue that “[i]t is respectfully submitted that it is

indisputable that Plaintiff lacks legal capacity to bring this lawsuit and it must be dismissed.” (Id.

¶ 9.) However, as clearly demonstrated herein, LLC Law § 808(a) is not a basis to dismiss the

Complaint and Defendants failed to provide any evidence showing that Plaintiff conducted any

business in New York, let alone sufficient “business activities” within the meaning of Section

808(a)

Further, the Motion asserts “material factual statements that are false.” For example,

paragraph 10 of the Weiss Aff. asserts that “[p]ursuant to the agreement between the parties

Plaintiff is responsible for Defendants attorneys fees.” However, Defendants fail to attach or even

cite to a provision of Agreement which they claim provides for Defendants’ attorneys’ fees. As

demonstrated herein and in the Coppinger Aff., the one page Agreement does not contain any

provision providing for attorneys’ fees. This statement, made by Defendants’ counsel, is

unequivocally and knowingly false.

Since the Motion is untimely, completely without merit and asserts material statements that

are false, it is evident that the sole purpose of filing this Motion was to “delay or prolong the

resolution of the litigation.” This is straightforward matter whereby Plaintiff performed under the

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terms of the Agreement and obtained a commercial loan for Defendants, and Defendants refused

to pay Plaintiff its bargained-for Breakup Fee despite due demand. Recognizing its meritless

position, Defendants filed the Motion to force Plaintiff to incur attorneys’ fees and delay needing

to pay Plaintiff its Breakup Fee.

Given the foregoing, the Court should award Plaintiff its reasonable attorneys’ fees

incurred in opposing this Motion and bringing this Cross-Motion pursuant to 22 NYCRR 130-1.1,

and order that Defendants pay $10,000 to the Commissioner of Taxation and Finance pursuant to

22 NYCRR 130-1.3.

CONCLUSION

For all of the foregoing reasons, Plaintiff respectfully requests that the Motion be denied

in its entirety and the Cross-Motion be granted in its entirety.

Dated: New York, New York
April 28, 2023 DAVIDOFF HUTCHER & CITRON LLP

By: ___/s/ Steven Appelbaum ________
Steven Appelbaum
605 Third Avenue, 34th Floor
New York, New York 10158
(212) 577-7200
Attorneys for Plaintiff

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Motion Sequence # 001

CERTIFICATION OF COMPLIANCE WITH WORD COUNT LIMIT

I hereby certify pursuant to Rule 202.8-b of the Uniform Civil Rules For The Supreme

Court And The County Court that the total number of words in the foregoing document, exclusive

of the caption, table of contents, table of authorities, and signature block, is 2,649 according to the

“Word Count” function of Microsoft Word, the word-processing system used to prepare the

document, and thus that the document complies with the word count limit set forth in Rule 202.8-

Dated: New York, New York
April 28, 2023

DAVIDOFF HUTCHER & CITRON LLP

By: /s/ Steven Appelbaum ________
Steven Appelbaum

605 Third Avenue, 34th Fl.
New York, New York 10158
(212) 557-7200
sa@dhclegal.com

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