Preview
FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023
NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
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PEARL DELTA FUNDING, LLC,
Plaintiff, Index No.: 600378/2023
-against-
AFFIDAVIT OF
PEAK TITLE AGENCY CO. AKA PEAK TITLE CO and ELIE FRIEDMAN
TOBBY JABLONSKI and JUAN RUIZ JR.,
Defendants.
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STATE OF NEW JERSEY )
) ss:
COUNTY OF HUDSON )
Elie Friedman, being duly sworn, deposes and states:
1. I, Elie Friedman, am the Chief Underwriting Officer for Plaintiff, PEARL DELTA
FUNDING, LLC, in the above captioned action. I have personal knowledge of the facts set forth
in this affidavit as I have been the Chief Underwriting Officer at all times relevant to this action.
2. Plaintiff is a limited liability company duly organized and existing under the laws
of the State of Delaware and duly registered to do business in New York, with its principal place
of business in Jericho, New York.
3. PEAK TITLE AGENCY CO. AKA PEAK TITLE CO (“Business Defendant”) is
a Michigan corporation with its principal place of business in Michigan.
4. Defendants, TOBBY JABLONSKI and JUAN RUIZ JR., are individuals residing
in Michigan and Florida, respectively.
5. On or about August 10, 2022, Plaintiff entered into a sales agreement with Business
Defendant wherein Business Defendant sold $178,100.00 (the Purchased Amount) of its
receivables/revenue to Plaintiff, to be paid to Plaintiff from 1% of Business Defendant’s daily sale
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proceeds, for an upfront sum of $130,000.00 (the Purchase Price) from Plaintiff. The Agreement
is attached hereto as Exhibit 1.
6. The Agreement was made in the regular course of Plaintiff’s business of purchasing
receivables from other companies. Plaintiff’s regular course of business is to enter into agreements
such as the one attached in furtherance of its business of purchasing receivables from companies.
The Agreement was made contemporaneously with the execution by the parties. The Agreement
was entered as a routine business practice by an employee of Plaintiff who had a duty or obligation
to record the information. All information recorded in the Agreement came from either employees
of Plaintiff or from Defendants to this action.
7. The Agreement mandated that “Payments made to Purchaser in respect to the full
amount of the Receipts shall be conditioned upon Merchant’s sale of products and services, and
the payment therefore by Merchant’s customers.” Exhibit 1, p.2, Section 1.10.
8. The Agreement mandated that Plaintiff accept the risks of loss associated with
business slowdowns, failures, and bankruptcy. “Merchant going bankrupt or going out of business,
or experiencing a slowdown in business, or a delay in collecting its receivables, in and of itself,
will not constitute a breach of this Agreement. Purchaser is entering this Agreement knowing the
risks that Merchant’s business may slow down or fail, and Purchaser assumes these risks based on
Merchant’s representations, warranties and covenants in this Agreement, which are designed to
give Purchaser a reasonable and fair opportunity to Purchaser to receive the benefit of its bargain.
Merchant and Guarantor are only guaranteeing their performance of the terms of this Revenue
Purchase Agreement, and are not guaranteeing the payment of the Purchased Amount.” Exhibit
1, p.1, ¶2
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9. The Agreement contained a mandatory adjustment and reconciliation clause to
ensure payments would accurately reflect the Business Defendants’ receivables. “If an Event of
Default has not occurred, every two (2) calendar weeks after the funding of the Purchase Price to
Merchant, Merchant may give notice to Purchaser to request a decrease in the Remittance. The
amount shall be decreased if the amount received by Purchaser was more than the Purchased
Percentage of all revenue of Merchant since the date of this Revenue Purchase Agreement. The
Remittance shall be modified to more closely reflect the Merchant’s actual receipts by multiplying
the Merchant’s actual receipts by the Purchased Percentage divided by the number of business
days in the previous (2) calendar weeks. Seller shall provide Purchaser with viewing access to their
bank account as well as all information reasonably requested by Purchaser to properly calculate
the Merchant’s Remittance.” Exhibit 1, p.2, Section 1.4.
10. “Merchant is selling a portion of a future revenue stream to Purchaser at a discount,
not borrowing money from Purchaser; therefore there is no interest rate or payment schedule and
no time period during which the Purchased Amount must be collected.” Exhibit 1, p.1, ¶2
11. Nevertheless, the Agreement does not provide Business Defendants with the right
to usurp Plaintiff’s 1% of the receivables. See Exhibit 1.
12. This Agreement was not a loan and was not intended to be a loan. Plaintiff’s
Agreement has been reviewed by the Courts of the State of New York and the Agreement has been
upheld as a matter of law. Champion Auto Sales, LLC v. Pearl Beta Funding, LLC, 69 N.Y.S.3d
798 (1st Dept. 2018). Plaintiff relies upon this authority in making the choice to do business in
New York and enter into the form of contract it uses.
13. The individual defendants guaranteed the Business Defendant’s performance of the
representations contained within the Agreement by signing and acceptance of the joint and several
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nature of the Agreement. Pursuant to the Guarantee provision of the Agreement, it explicitly
contains a “Limited Personal Guaranty” of performance which provides that the individual
defendants are jointly and severally liable to Plaintiff in the event of a breach of the Agreement by
Business Defendant. This limited guaranty is no broader than the underlying obligation. Thus, if
there is no receivable generated and collected, Pearl is entitled to nothing and can recover nothing.
14. After execution of the Agreement, Plaintiff promptly performed under each
agreement by depositing the purchase price, less any agreed upon fees, into the account designated
by Business Defendant on page 8 of the Agreement. Plaintiff’s performance under the Agreement
has never been the subject of any dispute. A true, correct, and complete copy of the wire transfer
receipt showing the $124,800 (the purchase price less the upfront fees agreed on page 7 of the
Agreement) wired to Business Defendant on August 11, 2022 is attached hereto as Exhibit 2.
15. The Business Defendant partially performed before usurping the purchased
receivables on December 29, 2022, after having remitted only $98,940 of the purchased
receivables. The Business Defendant continued to generate and collect receivables but
affirmatively blocked any debits, which yielded an ACH R29 rejection code from the designated
account (which means the corporate account holder has blocked the debits) and is distinguishable
from ACH R01 rejections (which are insufficient funds). While ACH R01 rejections do not
necessarily indicate any default, ACH R29 rejections require an affirmative act by the account
holder to block the account.
16. Pursuant to the § 1.4 of the Agreement (“Adjustments to the Remittance”), the
Defendants had the right to seek a modification to the amount of their Remittance to ensure that
amount remitted thereby accurately reflected the purchased Specified Percentage of Defendants'
future accounts-receivable.
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17. The Business Defendant never requested a reconciliation or adjustment, never sent
any notice of a decline in receivables, and never claimed the business had failed or was failing. I
searched Pearl's records in January 2023 and again in July 2023 found no e-mails, letters, or
telephone calls from the Defendants that would ever suggest an excuse against performance. If
Defendants had done so by any method, and if pursuant to § 1.4 of the Agreement an adjustment
was warranted, and thus mandatory, Plaintiff would have readily effected such adjustment. Indeed,
Plaintiff routinely processes adjustment requests made by email or telephone. Attached hereto as
Exhibit 3 is a record documenting numerous instances of reconciliations provided by Pearl
through the end of 2022.
18. Between December 29, 2022, and January 6, 2023, my accounting servicing
colleagues called the Defendants but the Defendants would hang up when we called and would
ignore our calls.
19. On January 4, 5, and 9, 2023, Pearl's collections specialist expressly reminded the
Defendants in writing that if the Business Defendant was experiencing some kind of financial
difficulty, they should reach out to Pearl or the collections specialist to assist. The Defendants
ignored e-mail correspondence.
20. There was no question that the Business Defendant was continuing to operate and
in business because it was publicly operating on its website www.peaktitleco.com in January 2023,
and even now.
21. Starting on January 5, 2023, Pearl's counsel began to communicate via e-mail to
the Defendants but the Defendants ignored those communications as well.
22. The Defendants have refused to provide their bank statements or other business
financials evincing their receivables to perform a reconciliation or to determine if there has been a
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downturn or business failure. The Defendants blocked all debits of the purchased receivables and
then purposefully refused to cooperate or communicate further. The Business Defendant is still in
business and operating.
23. If the Defendants' business had failed, stopped, or experienced a downturn, Pearl
would have immediately reconciled the accounts. Pearl's ordinary business practice is to err on
the side of reconciling accounts, to offer reconciliations even when merchants have not requested
them, and to offer reconciliation even if there has been a technical default.
______________________________
Elie Friedman
Chief Underwriting Officer of
Pearl Delta Funding, LLC
NOTARY ACKNOWLEDGMENT. STATE OF NEW JERSEY, COUNTY OF HUDSON. The foregoing instrument was, on
July 19, 2023, acknowledged before me by means of [X] online notarization, by Elie Friedman, Chief Underwriting Officer, on
behalf of the company, Pearl Delta Funding, LLC, who is personally known to me who and satisfactorily identified himself as the
signer or witnesses to the above-referenced document.
NASTACIA REDHEAD
Notary Public, State of New Jersey
Comm. No. 50106834
Qualified in Hudson County
My Commission Expires June 12, 2024
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Preview
FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU -----------------------------------------------------------------X PEARL DELTA FUNDING, LLC, Plaintiff, Index No.: 600378/2023 -against- AFFIDAVIT OF PEAK TITLE AGENCY CO. AKA PEAK TITLE CO and ELIE FRIEDMAN TOBBY JABLONSKI and JUAN RUIZ JR., Defendants. -----------------------------------------------------------------X STATE OF NEW JERSEY ) ) ss: COUNTY OF HUDSON ) Elie Friedman, being duly sworn, deposes and states: 1. I, Elie Friedman, am the Chief Underwriting Officer for Plaintiff, PEARL DELTA FUNDING, LLC, in the above captioned action. I have personal knowledge of the facts set forth in this affidavit as I have been the Chief Underwriting Officer at all times relevant to this action. 2. Plaintiff is a limited liability company duly organized and existing under the laws of the State of Delaware and duly registered to do business in New York, with its principal place of business in Jericho, New York. 3. PEAK TITLE AGENCY CO. AKA PEAK TITLE CO (“Business Defendant”) is a Michigan corporation with its principal place of business in Michigan. 4. Defendants, TOBBY JABLONSKI and JUAN RUIZ JR., are individuals residing in Michigan and Florida, respectively. 5. On or about August 10, 2022, Plaintiff entered into a sales agreement with Business Defendant wherein Business Defendant sold $178,100.00 (the Purchased Amount) of its receivables/revenue to Plaintiff, to be paid to Plaintiff from 1% of Business Defendant’s daily sale 1 of 6 FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023 proceeds, for an upfront sum of $130,000.00 (the Purchase Price) from Plaintiff. The Agreement is attached hereto as Exhibit 1. 6. The Agreement was made in the regular course of Plaintiff’s business of purchasing receivables from other companies. Plaintiff’s regular course of business is to enter into agreements such as the one attached in furtherance of its business of purchasing receivables from companies. The Agreement was made contemporaneously with the execution by the parties. The Agreement was entered as a routine business practice by an employee of Plaintiff who had a duty or obligation to record the information. All information recorded in the Agreement came from either employees of Plaintiff or from Defendants to this action. 7. The Agreement mandated that “Payments made to Purchaser in respect to the full amount of the Receipts shall be conditioned upon Merchant’s sale of products and services, and the payment therefore by Merchant’s customers.” Exhibit 1, p.2, Section 1.10. 8. The Agreement mandated that Plaintiff accept the risks of loss associated with business slowdowns, failures, and bankruptcy. “Merchant going bankrupt or going out of business, or experiencing a slowdown in business, or a delay in collecting its receivables, in and of itself, will not constitute a breach of this Agreement. Purchaser is entering this Agreement knowing the risks that Merchant’s business may slow down or fail, and Purchaser assumes these risks based on Merchant’s representations, warranties and covenants in this Agreement, which are designed to give Purchaser a reasonable and fair opportunity to Purchaser to receive the benefit of its bargain. Merchant and Guarantor are only guaranteeing their performance of the terms of this Revenue Purchase Agreement, and are not guaranteeing the payment of the Purchased Amount.” Exhibit 1, p.1, ¶2 2 of 6 FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023 9. The Agreement contained a mandatory adjustment and reconciliation clause to ensure payments would accurately reflect the Business Defendants’ receivables. “If an Event of Default has not occurred, every two (2) calendar weeks after the funding of the Purchase Price to Merchant, Merchant may give notice to Purchaser to request a decrease in the Remittance. The amount shall be decreased if the amount received by Purchaser was more than the Purchased Percentage of all revenue of Merchant since the date of this Revenue Purchase Agreement. The Remittance shall be modified to more closely reflect the Merchant’s actual receipts by multiplying the Merchant’s actual receipts by the Purchased Percentage divided by the number of business days in the previous (2) calendar weeks. Seller shall provide Purchaser with viewing access to their bank account as well as all information reasonably requested by Purchaser to properly calculate the Merchant’s Remittance.” Exhibit 1, p.2, Section 1.4. 10. “Merchant is selling a portion of a future revenue stream to Purchaser at a discount, not borrowing money from Purchaser; therefore there is no interest rate or payment schedule and no time period during which the Purchased Amount must be collected.” Exhibit 1, p.1, ¶2 11. Nevertheless, the Agreement does not provide Business Defendants with the right to usurp Plaintiff’s 1% of the receivables. See Exhibit 1. 12. This Agreement was not a loan and was not intended to be a loan. Plaintiff’s Agreement has been reviewed by the Courts of the State of New York and the Agreement has been upheld as a matter of law. Champion Auto Sales, LLC v. Pearl Beta Funding, LLC, 69 N.Y.S.3d 798 (1st Dept. 2018). Plaintiff relies upon this authority in making the choice to do business in New York and enter into the form of contract it uses. 13. The individual defendants guaranteed the Business Defendant’s performance of the representations contained within the Agreement by signing and acceptance of the joint and several 3 of 6 FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023 nature of the Agreement. Pursuant to the Guarantee provision of the Agreement, it explicitly contains a “Limited Personal Guaranty” of performance which provides that the individual defendants are jointly and severally liable to Plaintiff in the event of a breach of the Agreement by Business Defendant. This limited guaranty is no broader than the underlying obligation. Thus, if there is no receivable generated and collected, Pearl is entitled to nothing and can recover nothing. 14. After execution of the Agreement, Plaintiff promptly performed under each agreement by depositing the purchase price, less any agreed upon fees, into the account designated by Business Defendant on page 8 of the Agreement. Plaintiff’s performance under the Agreement has never been the subject of any dispute. A true, correct, and complete copy of the wire transfer receipt showing the $124,800 (the purchase price less the upfront fees agreed on page 7 of the Agreement) wired to Business Defendant on August 11, 2022 is attached hereto as Exhibit 2. 15. The Business Defendant partially performed before usurping the purchased receivables on December 29, 2022, after having remitted only $98,940 of the purchased receivables. The Business Defendant continued to generate and collect receivables but affirmatively blocked any debits, which yielded an ACH R29 rejection code from the designated account (which means the corporate account holder has blocked the debits) and is distinguishable from ACH R01 rejections (which are insufficient funds). While ACH R01 rejections do not necessarily indicate any default, ACH R29 rejections require an affirmative act by the account holder to block the account. 16. Pursuant to the § 1.4 of the Agreement (“Adjustments to the Remittance”), the Defendants had the right to seek a modification to the amount of their Remittance to ensure that amount remitted thereby accurately reflected the purchased Specified Percentage of Defendants' future accounts-receivable. 4 of 6 FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023 17. The Business Defendant never requested a reconciliation or adjustment, never sent any notice of a decline in receivables, and never claimed the business had failed or was failing. I searched Pearl's records in January 2023 and again in July 2023 found no e-mails, letters, or telephone calls from the Defendants that would ever suggest an excuse against performance. If Defendants had done so by any method, and if pursuant to § 1.4 of the Agreement an adjustment was warranted, and thus mandatory, Plaintiff would have readily effected such adjustment. Indeed, Plaintiff routinely processes adjustment requests made by email or telephone. Attached hereto as Exhibit 3 is a record documenting numerous instances of reconciliations provided by Pearl through the end of 2022. 18. Between December 29, 2022, and January 6, 2023, my accounting servicing colleagues called the Defendants but the Defendants would hang up when we called and would ignore our calls. 19. On January 4, 5, and 9, 2023, Pearl's collections specialist expressly reminded the Defendants in writing that if the Business Defendant was experiencing some kind of financial difficulty, they should reach out to Pearl or the collections specialist to assist. The Defendants ignored e-mail correspondence. 20. There was no question that the Business Defendant was continuing to operate and in business because it was publicly operating on its website www.peaktitleco.com in January 2023, and even now. 21. Starting on January 5, 2023, Pearl's counsel began to communicate via e-mail to the Defendants but the Defendants ignored those communications as well. 22. The Defendants have refused to provide their bank statements or other business financials evincing their receivables to perform a reconciliation or to determine if there has been a 5 of 6 FILED: NASSAU COUNTY CLERK 07/19/2023 04:01 PM INDEX NO. 600378/2023 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 07/19/2023 downturn or business failure. The Defendants blocked all debits of the purchased receivables and then purposefully refused to cooperate or communicate further. The Business Defendant is still in business and operating. 23. If the Defendants' business had failed, stopped, or experienced a downturn, Pearl would have immediately reconciled the accounts. Pearl's ordinary business practice is to err on the side of reconciling accounts, to offer reconciliations even when merchants have not requested them, and to offer reconciliation even if there has been a technical default. ______________________________ Elie Friedman Chief Underwriting Officer of Pearl Delta Funding, LLC NOTARY ACKNOWLEDGMENT. STATE OF NEW JERSEY, COUNTY OF HUDSON. The foregoing instrument was, on July 19, 2023, acknowledged before me by means of [X] online notarization, by Elie Friedman, Chief Underwriting Officer, on behalf of the company, Pearl Delta Funding, LLC, who is personally known to me who and satisfactorily identified himself as the signer or witnesses to the above-referenced document. NASTACIA REDHEAD Notary Public, State of New Jersey Comm. No. 50106834 Qualified in Hudson County My Commission Expires June 12, 2024 6 of 6