Preview
FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021
NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
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THE AVANZA GROUP, LLC, Index No. 611469/2021
Plaintiff,
-against- AFFIDAVIT
INVESTMENT MANAGEMENT GROUP, LLC,
DBA INVESTMENT MANAGEMENT GROUP,
LLC BALLARD INVESTMENTS INC. DBA
BALLARD INVESTMENTS INC. and RALPH
LEWIS BALLARD III,
Defendants.
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WEST VIRGINIA
STATE OF ___________________
KANAWHA
COUNTY OF _________________
RALPH LEWIS BALLARD, III, being duly sworn, swears under penalties of perjury:
1. I am the individual defendant in this action and the founder and principal of Defendants
INVESTMENT MANAGEMENT GROUP, LLC, DBA INVESTMENT
MANAGEMENT GROUP, LLC, and BALLARD INVESTMENTS INC. DBA
BALLARD INVESTMENTS INC. (“Business Defendants”).
2. I make this affidavit in support of the instant application for a temporary restraining order
and to vacate the default judgment against Defendants pursuant to CPLR §5015 and
CPLR § 2004.
3. I have personal knowledge of the facts sworn to herein.
4. I am a resident of West Virginia, and the Business Defendants are located in West
Virginia.
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5. On May 14, 2021, I executed the underlying Merchant Cash Advance Agreement
(“Agreement”).
6. Section 1 of the Agreement states,
“Merchant(s) hereby sell, assign, and transfer to AVANZA (making AVANZA the
absolute owner) in consideration of the funds provided (“Purchase Price”) specified
above, all of each Merchant’s future accounts, contract rights, and other obligations
arising from or relating to the payment of monies from each Merchant’s customers
and/or other third party payors (the “Receivables”, defined as all payments made by
cash, check, credit or debit card, electronic transfer, or other form of monetary payment
in the ordinary course of each merchant’s business), for the payment of each
Merchant’s sale of goods or services until the amount specified above (the
“Receivables Purchased Amount”) has been delivered by Merchant(s) to AVANZA.”
7. Section 15 is one of the provisions of the Agreement that is inserted to prevent the
Agreement from being considered a usurious loan:
“Each Merchant [Defendant] and AVANZA agree that the Purchase Price under this
Agreement is in exchange for the Receivables Purchased Amount and that such Purchase
Price is not intended to be, nor shall it be construed as a loan from AVANZA to any
Merchant. AVANZA is entering into this Agreement knowing the risks that each
Merchant’s business may decline or fail, resulting in AVANZA not receiving the
Receivables Purchased Amount. Each Merchant agrees that the Purchase Price in
exchange for the Receivables pursuant to this Agreement equals the fair market value of
such Receivables. AVANZA has purchased and shall own all the Receivables described
in this Agreement up to the full Receivables Purchased Amount as the Receivables are
created. Payments made to AVANZA in respect to the full amount of the Receivables
shall be conditioned upon each Merchant’s sale of products and services and the payment
therefor by each Merchant’s customers in the manner provided in this Agreement.”
8. It is explicitly not an event of default if a business’ ability to generate receivables slows
down or if the business stops generating revenue.
9. The Business Defendants generate their revenue from mining coal in West Virginia.
10. On July 21, 2021, when business began to slow, I notified Plaintiff via email that
Business Defendants were unable to maintain the daily payment of $5,996.
11. I requested Plaintiff reduce the daily payment amount—a contractual right owed to
Defendants under Section 4 entitled “Reconciliation.”
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12. Plaintiff only agreed to reduce payments for 1.5 weeks.
13. Shortly thereafter on or about August 20, 2021, the equipment lease for the majority of our
mining equipment was terminated.
14. Business Defendants had no funds to pay for additional blasting in order to uncover coal
reserves to sell and no equipment.
15. The mine is currently idled with no marketable coal production and has been since
approximately August 21, 2021.
16. The Business Defendants reduced their workforce from 41 mine employees to 5 from August
23, 2021 to September 15, 2021.
17. Defendants have several other MCA loans.
18. On or about August 9, 2021, one of the other lenders filed an action against Defendants.
19. Shortly thereafter, a company named National Credit Partners began calling and emailing me
advising that if I did not engage their services, default judgments and liens would be filed
against me and my companies.
20. National Credit Partners stated they specialize in negotiating, settling, and litigating MCA
debt.
21. National Credit Partners specifically told me they provide legal representation.
22. I engaged National Credit Partners due to their representations made to me and sent them
copies of the pleadings herein.
23. I have paid National Credit Partners approximately $160,000 to assist with the instant alleged
debt, and other outstanding loans.
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24. National Credit Partners has failed to appear or plead in every single action filed against me
and my companies leading to two default judgments held by Plaintiff and several other
defaults.
25. I only became aware of the default judgments held by Avanza after my bank account, that
I share with my wife, was frozen at Truist Bank and the Business Defendants’ accounts
were frozen at Summit Bank.
26. Neither bank has a location or authorized representative for service in New York.
27. Neither I nor the Business Defendants have any contact whatsoever with the state of New
York.
28. As soon as I was made aware of the default judgments, I obtained experienced and
reputable New York counsel to make the instant application.
29. My attorney has advised that under New York law, this constitutes a “reasonable excuse”
within the meaning CPLR § 5015.
30. Defendants also have a meritorious defense to the action required to vacate the default
judgment.
31. The Business Defendants are not generating receivables.
32. The Business Defendants were only able to make ends mee by filling a rock quarry order
through November 2021 while seeking working capital to restart mining operations.
33. The revenue generated from that rock quarry order was delivered to Plaintiff, but the order has
since been fulfilled.
34. The Business Defendants are only performing reclamation activities (the rehabilitation of land
after coal mining operations have stopped) at this time which does not generate revenue.
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35. There are zero receivables at this time and there are zero forecasted receivables while the mine
remains idled.
36. Plaintiff explicitly assumed the risk of the Business Defendants’ slowdown or failure
(“AVANZA is entering into this Agreement knowing the risks that each Merchant’s business
may decline or fail, resulting in AVANZA not receiving the Receivables Purchased Amount”).
37. Avanza was notified in writing of the slowdown and failure as far back as July 2021.
38. Clearly, Avanza did not assume the risks explicitly stated in the Agreement.
39. Instead, Avanza sued the Defendants to satisfy the Agreement using savings from the bank
account I share with my wife and other funds in the business accounts set aside for tax
purposes.
(CONTINUED ON NEXT PAGE)
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Preview
FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021 NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU ------------------------------------------------------------------X THE AVANZA GROUP, LLC, Index No. 611469/2021 Plaintiff, -against- AFFIDAVIT INVESTMENT MANAGEMENT GROUP, LLC, DBA INVESTMENT MANAGEMENT GROUP, LLC BALLARD INVESTMENTS INC. DBA BALLARD INVESTMENTS INC. and RALPH LEWIS BALLARD III, Defendants. ------------------------------------------------------------------X WEST VIRGINIA STATE OF ___________________ KANAWHA COUNTY OF _________________ RALPH LEWIS BALLARD, III, being duly sworn, swears under penalties of perjury: 1. I am the individual defendant in this action and the founder and principal of Defendants INVESTMENT MANAGEMENT GROUP, LLC, DBA INVESTMENT MANAGEMENT GROUP, LLC, and BALLARD INVESTMENTS INC. DBA BALLARD INVESTMENTS INC. (“Business Defendants”). 2. I make this affidavit in support of the instant application for a temporary restraining order and to vacate the default judgment against Defendants pursuant to CPLR §5015 and CPLR § 2004. 3. I have personal knowledge of the facts sworn to herein. 4. I am a resident of West Virginia, and the Business Defendants are located in West Virginia. 1 of 6 FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021 NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022 5. On May 14, 2021, I executed the underlying Merchant Cash Advance Agreement (“Agreement”). 6. Section 1 of the Agreement states, “Merchant(s) hereby sell, assign, and transfer to AVANZA (making AVANZA the absolute owner) in consideration of the funds provided (“Purchase Price”) specified above, all of each Merchant’s future accounts, contract rights, and other obligations arising from or relating to the payment of monies from each Merchant’s customers and/or other third party payors (the “Receivables”, defined as all payments made by cash, check, credit or debit card, electronic transfer, or other form of monetary payment in the ordinary course of each merchant’s business), for the payment of each Merchant’s sale of goods or services until the amount specified above (the “Receivables Purchased Amount”) has been delivered by Merchant(s) to AVANZA.” 7. Section 15 is one of the provisions of the Agreement that is inserted to prevent the Agreement from being considered a usurious loan: “Each Merchant [Defendant] and AVANZA agree that the Purchase Price under this Agreement is in exchange for the Receivables Purchased Amount and that such Purchase Price is not intended to be, nor shall it be construed as a loan from AVANZA to any Merchant. AVANZA is entering into this Agreement knowing the risks that each Merchant’s business may decline or fail, resulting in AVANZA not receiving the Receivables Purchased Amount. Each Merchant agrees that the Purchase Price in exchange for the Receivables pursuant to this Agreement equals the fair market value of such Receivables. AVANZA has purchased and shall own all the Receivables described in this Agreement up to the full Receivables Purchased Amount as the Receivables are created. Payments made to AVANZA in respect to the full amount of the Receivables shall be conditioned upon each Merchant’s sale of products and services and the payment therefor by each Merchant’s customers in the manner provided in this Agreement.” 8. It is explicitly not an event of default if a business’ ability to generate receivables slows down or if the business stops generating revenue. 9. The Business Defendants generate their revenue from mining coal in West Virginia. 10. On July 21, 2021, when business began to slow, I notified Plaintiff via email that Business Defendants were unable to maintain the daily payment of $5,996. 11. I requested Plaintiff reduce the daily payment amount—a contractual right owed to Defendants under Section 4 entitled “Reconciliation.” 2 of 6 FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021 NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022 12. Plaintiff only agreed to reduce payments for 1.5 weeks. 13. Shortly thereafter on or about August 20, 2021, the equipment lease for the majority of our mining equipment was terminated. 14. Business Defendants had no funds to pay for additional blasting in order to uncover coal reserves to sell and no equipment. 15. The mine is currently idled with no marketable coal production and has been since approximately August 21, 2021. 16. The Business Defendants reduced their workforce from 41 mine employees to 5 from August 23, 2021 to September 15, 2021. 17. Defendants have several other MCA loans. 18. On or about August 9, 2021, one of the other lenders filed an action against Defendants. 19. Shortly thereafter, a company named National Credit Partners began calling and emailing me advising that if I did not engage their services, default judgments and liens would be filed against me and my companies. 20. National Credit Partners stated they specialize in negotiating, settling, and litigating MCA debt. 21. National Credit Partners specifically told me they provide legal representation. 22. I engaged National Credit Partners due to their representations made to me and sent them copies of the pleadings herein. 23. I have paid National Credit Partners approximately $160,000 to assist with the instant alleged debt, and other outstanding loans. 3 of 6 FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021 NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022 24. National Credit Partners has failed to appear or plead in every single action filed against me and my companies leading to two default judgments held by Plaintiff and several other defaults. 25. I only became aware of the default judgments held by Avanza after my bank account, that I share with my wife, was frozen at Truist Bank and the Business Defendants’ accounts were frozen at Summit Bank. 26. Neither bank has a location or authorized representative for service in New York. 27. Neither I nor the Business Defendants have any contact whatsoever with the state of New York. 28. As soon as I was made aware of the default judgments, I obtained experienced and reputable New York counsel to make the instant application. 29. My attorney has advised that under New York law, this constitutes a “reasonable excuse” within the meaning CPLR § 5015. 30. Defendants also have a meritorious defense to the action required to vacate the default judgment. 31. The Business Defendants are not generating receivables. 32. The Business Defendants were only able to make ends mee by filling a rock quarry order through November 2021 while seeking working capital to restart mining operations. 33. The revenue generated from that rock quarry order was delivered to Plaintiff, but the order has since been fulfilled. 34. The Business Defendants are only performing reclamation activities (the rehabilitation of land after coal mining operations have stopped) at this time which does not generate revenue. 4 of 6 FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021 NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022 35. There are zero receivables at this time and there are zero forecasted receivables while the mine remains idled. 36. Plaintiff explicitly assumed the risk of the Business Defendants’ slowdown or failure (“AVANZA is entering into this Agreement knowing the risks that each Merchant’s business may decline or fail, resulting in AVANZA not receiving the Receivables Purchased Amount”). 37. Avanza was notified in writing of the slowdown and failure as far back as July 2021. 38. Clearly, Avanza did not assume the risks explicitly stated in the Agreement. 39. Instead, Avanza sued the Defendants to satisfy the Agreement using savings from the bank account I share with my wife and other funds in the business accounts set aside for tax purposes. (CONTINUED ON NEXT PAGE) 5 of 6 FILED: NASSAU COUNTY CLERK 01/04/2022 01:22 PM INDEX NO. 611469/2021 NYSCEF DOC. NO. 16 RECEIVED NYSCEF: 01/04/2022 40 1 2 6 of 6