Motion-Secondary: James Davis Ii, Medisale, Inc v. 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, Tzvi 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, Tsvi Davis a/k/a STEVEN DAVIS, Spg Advance, Llc

On December 20, 2018 a Motion-Secondary was filed involving a dispute between James Davis Ii, Medisale, Inc, and Addy Source, Llc, Azriel Inzelbuch A K A David B. Frank, Bryan Baker D B A Baker Cap Funding, D B A Baker Capital Funding, Gtr Source, Llc, Influx Capital Group, Llc A K A Influx Capital, Llc, Jonathan Braun, Michelle Gregg, Rebar Capital, Llc, Richmond Capital Group, Llc, Robert Giardina, Spg Advance, Llc, Tsvi Davis A K A Steven Davis, Tzvi Reich A K A Steve Reich, Yes Capital Funding Group, Llc D B A Yes Funding Services, Llc, for Commercial - Other (Vacate Judgment) in the District Court of New York County.

Preview
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
----------------------------------------------------------------------x
JAMES DAVIS II and MEDISALE, INC., Index No. 656346/2018

Plaintiffs,

- 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.
----------------------------------------------------------------------x

______________________________________________________________________________
MEMORANDUM OF LAW IN SUPPORT OF MOTION TO REARGUE, OR IN
THE ALTERNATIVE RENEW, MOTION TO DISMISS PLAINTIFFS’ ORIGINAL
COMPLAINT, AND TO DISMISS PLAINTIFFS’ AMENDED COMPLAINT
_____________________________________________________________________________

JACOBOWITZ NEWMAN TVERSKY LLP
Evan M. Newman
Abraham S. Beinhorn
Nathan Cohen
Attorneys for Defendants INFLUX CAPITAL LLC,
GTR SOURCE, LLC, ADDY SOURCE LLC,
TZVI REICH AND TSVI DAVIS
377 Pearsall Avenue, Suite C
Cedarhurst, New York 11516
Tel: (516) 545-0343
Fax: (212) 671-1883
Email: abeinhorn@jntllp.com

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TABLE OF CONTENTS

PRELIMINARY STATEMENT ................................................................................................. 1
RELEVANT FACTUAL BACKGROUND ................................................................................ 3
A. The Influx Agreement .......................................................................................................... 3
B. The Addy Agreements ......................................................................................................... 4
C. The GTR Agreement............................................................................................................ 6
PROCEDURAL HISTORY ......................................................................................................... 6
ARGUMENT ................................................................................................................................. 8
POINT I THE MOVING DEFENDANTS SHOULD BE GRANTED LEAVE TO
REARGUE THEIR MOTION TO DISMISS THE ORIGINAL COMPLAINT ................... 8
A. Legal Standard ..................................................................................................................... 8
B. The Decision Relied on a Dissimilar Federal Court Decision ............................................. 9
C. The Decision Overlooks Requisite Elements for the Constructive Trust and Accounting
Claims, Including an Applicable Fiduciary Relationship ......................................................... 11
D. The Decision Overlooked the Fact that Plaintiffs Did Not Allege General Consumer
Behavior Falling Under the Ambit of GBL § 349 .................................................................... 12
E. The Court Failed to Consider the Documentary Evidence Disproving Plaintiffs’
Allegations of Fictitious Business Names ................................................................................. 13
F. In Inferring a Breach of Contract Claim, the Court Ignored the Dispositive Arguments
Preemptively Set forth in the Moving Defendants’ Papers ....................................................... 14
POINT II ALTERNATIVELY, THE MOVING DEFENDANTS SHOULD BE GRANTED
LEAVE TO RENEW THEIR MOTION TO DISMISS PLAINTIFFS’ ORIGINAL
COMPLAINT .............................................................................................................................. 15
POINT III PLAINTIFFS’ AMENDED COMPLAINT SHOULD BE DISMISSED AS TO
THE MOVING DEFENDANTS ................................................................................................ 16
A. As a Matter of Law for Plaintiffs’ Claim for a Declaratory Judgment .............................. 16
i. As a Matter of Binding Law Plaintiffs’ Merchant Cash Advance Agreements with the
Moving Defendants Are Not Loans....................................................................................... 17
ii. Plaintiffs Cannot Allege Usury as a Basis for Affirmative Relief ................................. 18
B. Plaintiffs’ Constructive Trust Claim Fails as a Matter of Law .......................................... 18
C. Plaintiffs’ RICO Claim Is Inadequately Pled..................................................................... 19
i. Plaintiffs’ RICO Claims Are Impermissibly Vague ...................................................... 21
ii. Plaintiffs’ Allegations Cannot Sustain a Claim of Alleged Racketeering Activity Under
18 U.S.C. § 894 ..................................................................................................................... 22

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iii. The Amended Complaint Fails to Allege How the Affairs of a RICO Enterprise Were
Conducted Through the Alleged Racketeering Activity ....................................................... 22
iv. Plaintiffs Do Not Allege a “Pattern of Racketeering Activity” ..................................... 23
D. Plaintiffs Fail to Allege a Claim for an Accounting .......................................................... 25
E. Plaintiffs’ Fifth Cause of Action Concerning Allegedly Fictious Entities Has Already
Been Disproved as to the Moving Defendants .......................................................................... 26
F. Plaintiffs’ Claim of “Deceptive Business Practices” Fails to State a Basis for Relief
Against the Moving Defendants ................................................................................................ 26
G. Plaintiffs’ Claim for Breach of Contract Should Be Dismissed as to the Moving
Defendants ................................................................................................................................. 28
H. The Individual Defendants Cannot Be Held Liable for the Defendant Entities’ Contractual
Obligations ................................................................................................................................ 30
CONCLUSION ........................................................................................................................... 30

iii

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TABLE OF AUTHORITIES
Cases
Champion Auto Sales, LLC v Pearl Beta Funding, LLC,
159 AD3d 507, 69 N.Y.S. 3d 507, 2018 N.Y. Slip Op. 01645 [1st Dept 2018], lv to appeal
denied, 31 NY3d 910 [2018] ............................................................................................... 10, 17
Cirfico Holdings Corp. v GTE Products Corp.,
99 AD2d 939, 940 [1st Dept 1984] ........................................................................................... 15
Colonial Funding Network, Inc. for TVT Capital, LLC v. Epazz Inc.,
252 F. Supp. 3d 274 (S.D.N.Y 2017) ........................................................................................ 17
Counihan v. Allstate Ins. Co.,
194 F.3d 357, 362 [2d Cir.1999] ............................................................................................... 19
Craig Outdoor Adver., Inc. v. Viacom Outdoor, Inc.,
528 F.3d 1001, 1027-28 [8th Cir. 2008] ................................................................................... 23
DLJ Mortg. Cpital Inc. v. Kontogiannis,
726 F. Supp. 2d 225, 236 [E.D.N.Y. 2010] ............................................................................... 20
Elghanian v Elghanian,
277 AD2d 162, 717 N.Y.S. 2d 54 [1st Dept 2000] ............................................................. 11, 26
Elsevier Inc. v. W.H.P.R., Inc.,
692 F. Supp. 2d 297, 308 [S.D.N.Y. 2010] ................................................................... 20, 22, 23
ESPN, Inc. v. Office of the Comm’r of Baseball,
76 F. Supp.2d 383, 389 [S.D.N.Y. 1999] .................................................................................. 14
First Asset Capital Management v. Satinwood, Inc.
385 F.3d 159 (2d Cir. 2004) ...................................................................................................... 24
Fleetwood Serv., LLC v Complete Bus. Sols. Grp. Inc.,
2019 WL 1558087 (E.D. P.A. Apr. 10, 2019) .................................................................. 1, 9, 10
Frame v Maynard,
39 A.D. 3d 328, 833 N.Y.S. 2d 487 [1st Dept 2007] ................................................................ 14
Freeley v. Whitman Corp.,
65 F. Supp. 2d 164, 173-74 (S.D.N.Y. 1999) ..................................................................... 20, 20
Freitas v. Geddes S&L Ass’n,
63 N.Y.2d 254, 262 [1984] ....................................................................................................... 17
GICC Capital Corp. v. Technology Fin. Group, Inc.,
67 F.3d 463, 466 [2d Cir. 1995], cert. denied, 518 U.S. 1017, 116 S. Ct. 2547 [1996] ..... 23, 25
Gross v. Waywell,
628 F. Supp. 2d 475, 485 [S.D.N.Y. 2009] ............................................................................... 20
H.J. Inc. v. Northwestern Bell telephone Co.,
492 U.S. 229, 109 S. Ct. 2893 (1989) ....................................................................................... 24
Harris v Seward Park Hous. Corp.,
79 AD3d 425, 426 [1st Dept 2010] ........................................................................................... 28
Hartford Acc. & Indem Co. v. Weolowski,
33 N.Y.S.2d 169, 171 [1973] .............................................................................................. 17, 18

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IBIS Capital Group, LLC v. Four Paws Orlando LLC,
2017 N.Y. Slip Op. 30477(U), 2017 WL 1065071 (Nassau Sup. Ct. 2017) (same) ................. 17
K9 Byte, Inc. v. Arch Capital Funding, LLC,
56 Misc. 3d 807, 819 [Westchester Co 2017] ..................................................................... 17, 25
Katzman v. Victoria’s Secret Catalogue,
167 F.R.D. 649, 655 [S.D.N.Y. 1996] ...................................................................................... 21
Massaro v. United States,
2004 U.S. Dist. LEXIS 20084, *13 (S.D.N.Y. 2004) ............................................................... 23
McDonald v. Schencker,
18 F.3d 491, 499 [7th Cir. 1994] ............................................................................................... 20
McLaughlin v. Anderson,
962 F.2d 187, 191 [2d Cir. 1992] .............................................................................................. 21
Michael v Communications Workers of Am. AFL-CIO,
130 Misc 2d 424, 427 [Sup Ct 1985] .......................................................................................... 9
Midwest Grinding Co. v. Spitz,
976 F.2d 1016, 1025 [7th Cir. 1992] ......................................................................................... 20
New York v. Feldman,
210 F Supp 2d 294, 301 [S.D.N.Y. 2002] ........................................................................... 12, 13
Oak Beverages, Inc. v. Tomra of Massachusetts, L.L.C.,
96 F. Supp. 2d 336, 346 [SDNY 2000] ..................................................................................... 23
Schneider v Solowey,
141 AD2d 813 [2d Dept 1988] .................................................................................................... 9
Schneider v. Phelps,
41 N.Y.2d 238, 242 [1977] ....................................................................................................... 18
Sharp v Kosmalski,
40 NY2d 119 [1976] ........................................................................................................... 11, 19
Sherman v Mulerman,
45 Misc 3d 1220(A), 2014 WL 6673912 [NY Sup 2014] ........................................................ 28
Storper v WL Ross & Co., LLC,
2018 N.Y. Slip Op. 32235[U], 2018 WL 4334218, *4 [Sup Ct, NY County 2018] ................. 25
Teller v Bill Hayes, Ltd.,
213 AD2d 141, 149, 630 N.Y.S. 2d 769 [2d Dept 1995].......................................................... 27
United States v. Persico,
832 F.2d 705, 714 [2d Cir. 1987] .............................................................................................. 23
Unitel Telecard Distrib. Corp. v Nunez,
90 AD3d 568, 569, 936 N.Y.S. 2d 117 [1st Dept 2011] ..................................................... 11, 26
Vicom, Inc. v. Harbridge Merch Servs., Inc.,
20 F.3d 771, 782 [7th Cir. 1994] ............................................................................................... 24
Wilkinson Floor Covering, Inc. v Cap Call, LLC,
59 Misc 3d 1226(A) [Sup Ct New York Co. 2018] .................................................................. 17
William P. Pahl Equip. Corp. v Kassis,
182 AD2d 22, 27 [1st Dept 1992] ............................................................................................. 15

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Wilson Impex PTE Ltd. V. American Polymer Group, Inc.,
97 Civ. 4157, 1999 U.S. Dist. LEXIS 17013, *8-9 [S.D.N.Y. 1999] ....................................... 23

Zoo Holdings, LLC v. Clinton,
11 Misc.3d 1051(A) [Sup. Ct. N.Y. Co. 2006] ......................................................................... 18

Statutes
18 U.S.C. § 1962 ..................................................................................................................... 19, 20
18 USC § 894 .......................................................................................................................... 20, 22
General Business Law § 349......................................................................................... 2, 12, 27, 28

Rules
CPLR § 2221(d ............................................................................................................................... 8
CPLR § 2221(e) ............................................................................................................................ 15
CPLR § 3211................................................................................................................................... 1

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PRELIMINARY STATEMENT

Defendants Influx Capital Group, LLC a/k/a Influx Capital LLC (“Influx Capital”), GTR

Source, LLC (“GTR”), Addy Source, LLC (“Addy”), Tzvi Reich (“Reich”) and Tsvi Davis

(“Davis”) (collectively, the “Moving Defendants”), by and through their attorneys, Jacobowitz

Newman Tversky LLP, respectfully submit this memorandum of law in support of their motion

for an Order: (a) Pursuant to CPLR § 2221, granting the Moving Defendants leave to reargue or,

in the alternative, to renew their motion to dismiss Plaintiffs’ Complaint (the “Motion to Dismiss”),

which the Court previously denied in its May 28, 2019 Decision and Order (the “Decision”); (b)

Pursuant to CPLR § 3211(a)(1) and (7), dismissing plaintiffs James Davis, II and Medisale, Inc.’s

(collectively, “Plaintiffs”) Amended Complaint as to the Moving Defendants; and (c) Granting

such further relief as to the Moving Defendants as the Court deems just and equitable.

The Moving Defendants respectfully submit that, in itsDecision, the Court mistakenly

relied on inapplicable law that was misconstrued by Plaintiffs’ Counsel, and overlooked

undisputed and outcome-determinative facts and law. Consideration of such factors establishes

unequivocally that Plaintiffs have not – nor could they in any further amended pleading– sustain a

cognizable cause of action against the Moving Defendants.

First, the Court’s Decision mistakenly relied upon a recent decision of the United States

District Court for the Eastern District of Pennsylvania in Fleetwood Services, LLC v Complete

Bus. Sols. Grp. Inc., 2019 WL 1558087 (E.D. P.A. Apr. 10, 2019), because Plaintiffs’ Counsel

misrepresented its relevance to the present case. As demonstrated below, the district court’s

decision in Fleetwood was expressly premised on the unchallenged assumption that the agreement

at issue constituted a usurious loan. Fleetwood thus has no bearing on the present case, where the

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agreements at issue satisfy each of the established criteria for cash advance agreements and thus,

as a matter of settled New York law, are not loans that could possibly be subject to the usury laws.

Moreover, Plaintiffs’ Counsel failed to disclose that the court in Fleetwood had

backtracked and asked the parties to brief the issue of whether the relevant agreement was, in fact,

a loan – noting that was the key question to determine whether there was usurious interest. Thus,

not only is the proposition that Plaintiffs’ Counsel tried to glean from Fleetwood contrary to New

York law, but Fleetwood does not stand for that proposition – neither the original decision, let

alone that court’s second guessing of its own decision.

Second, the Decision ignored that, as the Court itself had noted at the May 28, 2019 hearing

on the various Motions to Dismiss (the “Hearing”), Plaintiffs’ fail to allege necessary elements for

each of their causes of action.

Third, the Court ignored the documentary evidence – including Plaintiffs’ own proffer of

the agreements at issue, which conclusively refute Plaintiffs’ claims.

Fourth, in allowing Plaintiffs’ claims that the Moving Defendants allegedly engaged in

deceptive business practices in violation of GBL § 349 to survive their motion to dismiss, the Court

overlooked the fact that Plaintiffs fail to allege any conduct effecting consumers at large.

Finally, in inferring a breach of contract allegation from Plaintiffs’ claim to “void or reform

agreements” the Court’s Decision ignored the Moving Defendants’ dispositive legal arguments

and the documentary evidence conclusively refuting Plaintiffs’ “implied” allegations of any

contractual breach of the underlying agreements.

For similar reasons, the Amended Complaint, filed by Plaintiffs after the Court’s Decision

on the Motions to Dismiss the original Complaint, should be dismissed. Although, Plaintiffs have

penned dozens of pages casting general aspersions on the merchant cash advance industry at large

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and asserting vague and conclusive allegations against “Defendants” collectively, Plaintiffs’

claims against the Moving Defendants are inadequately pled, lacking in substance, and are merely

a transparent attempt by Plaintiffs to avoid their own obligations under their separate agreements

with the separate Moving Defendants, despite having long-ago accepted the benefits of their

bargain. While Plaintiffs allege that the Moving Defendants underfunded their respective

agreements by withholding a portion of the “Funded Amount” the agreements themselves

conclusively demonstrate to the contrary, as sums withheld from the “Funded Amounts” were

expressly authorized under the agreements.

Accordingly, the Court should grant the Moving Defendants’ motion and dismiss them

from this action.

RELEVANT FACTUAL BACKGROUND

As set forth in Plaintiffs’ Amended Complaint, this action concerns numerous merchant

cash advance (“MCA”) agreements that Plaintiffs solicited and willingly executed, whereby

Plaintiffs sold the rights to a specified percentage of their future accounts receivable in exchange

for upfront working capital. See Exhibit A to the Affirmation of Abraham S. Beinhorn filed

herewith (“Atty Aff”) (hereinafter cited to as the “Am. Compl.”). Each such agreement was

between Plaintiffs and a single named defendant entity, with Influx Capital, GTR and Addy,

respectively, pursuant to terms more fully described below.

A. The Influx Agreement

Plaintiffs first entered into a Secured Merchant Agreement with Influx Capital on or about

October 4, 2018, whereby Influx Capital purchased $374,750.00 of Plaintiffs’ future accounts

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receivable (the “Influx Agreement”). See Atty Aff, Exhibit 2 to Exhibit B1 for a copy of the Influx

Agreement (previously filed as NYSECF Doc No. 65).

While Plaintiffs allege that the Influx Agreement was “underfunded” because they did not

receive the full $250,000.00 purchase price, Plaintiffs’ own Amended Complaint and the exhibits

(referenced) therein plainly refute any notion of “underfunding”, as the Influx Agreement

explicitly provides for the fees allegedly withheld from the funded amount. See Am. Compl., ¶¶

137-46 and Exhibit 2 to Exhibit B of the Atty Aff.

For instance, the Influx Agreement includes a $94,421.00 deduction for a previous balance

owed to non-party “Capital Merchant Services.” See the Payment Authorization Form in Exhibit

2 to Exhibit B. Although, Plaintiffs now contend that amount was incorrect (Am. Compl., ¶¶ 145-

48), the documentary evidence shows that, as part of the Influx Agreement, Plaintiffs executed a

“Balance Transfer Form” expressly authorizing the $94,421.00 deduction. See Atty Aff, Exhibit

2 to Exhibit B. Moreover, as Plaintiffs concede, Influx Capital often deducted less than the agreed

upon daily remittance and the total amount of all remittances to Influx Capital under the Influx

Agreement was significantly less than the purchased amount. See Am. Compl. ¶ 151.

B. The Addy Agreements

On or about October 16, 2018, Plaintiffs entered into an MCA Agreement with Addy

whereby they sold $299,800.00 of their future accounts receivable for a purchase price of

$200,000.00, as further set forth therein (the “First Addy Agreement”). See Exhibit 3 to Exhibit

B (previously filed as NYSECF Doc No. 66). Plaintiffs allege that there was a “10% reduction of

the funded amount” of the First Addy Agreement, but “Defendants still sought to collect the full

purchased amount.” See Am. Compl. ¶ 161.

1
As noted below, Exhibit B is the Moving Defendants’ motion to dismiss Plaintiffs’ original complaint
(previously filed as NYSCEF Doc Nos. 59-73).

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Yet, here, as well, Plaintiffs disingenuously ignore the explicit terms of their agreement,

which specifically authorizes various fees, including a $19,999.00 professional service fee

expressly set forth in an executed “ACH Authorization Form.” See Exhibit 3 to Exhibit B of Atty

Aff. Such fees easily account for the $20,000.00 allegedly “underfunded” and thus conclusively

refute Plaintiffs’ claims.

On or about November 1, 2018, Plaintiffs entered into a second agreement with Addy,

pursuant to which Addy paid Plaintiffs $320,000.00 in exchange for $479,680.00 of Plaintiffs’

future accounts receivable, as further set forth therein (“Second Addy Agreement”). See Atty Aff,

Exhibit 4 to Exhibit for a fully executed copy of the Second Addy Agreement (previously filed as

NYSECF Doc No. 67).

Like the Influx Agreement and the First Addy Agreement, the Second Addy Agreement

also has contractually agreed upon deductions and fees in executed forms which are conspicuously

missing from the versions of the agreements Plaintiffs attached to their Complaint (and

incorporated into Amended Complaint). The full version of the Second Addy Agreement includes

an executed Balance Transfer Form authorizing a $281,803.00 deduction in satisfaction of the

balance owed on the First Addy Agreement, as well as an executed Authorization Form authorizing

a $10,000.00 professional service fee. Id.

Although Plaintiffs allege that, on a few occasions, Addy received daily remittances in

excess of the authorized amount (Am. Compl. ¶ 93), Plaintiffs do not, and could not, dispute that

the cumulative amount of all daily remittances received by Addy pursuant to the Second Addy

Agreement was hundreds of thousands of dollars less than Addy is entitled to receive under the

agreement. Id. at ¶¶ 172-78.

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C. The GTR Agreement

Plaintiffs entered into a separate agreement with GTR, dated November 7, 2018, whereby

Plaintiffs sold to GTR $562,125.00 of their future accounts receivable for $375,000.00 (the “GTR

Agreement”). See Atty Aff, Exhibit 5 to Exhibit B for a fully executed copy of the GTR Agreement

(previously filed as NYSECF Doc No. 68).

Plaintiffs likewise allege here that they were underfunded, even though the GTR

Agreement itself refutes Plaintiffs’ allegation. To wit, Plaintiffs feign confusion about a

$289,990.00 deduction from the Funded Amount authorized under the GTR Agreement. See Am.

Compl., ¶ 222. However, Plaintiffs executed a Payment Authorization Form explicitly authorizing

the $289,990.00 deduction in order to pay off a balance previously owed to Influx Capital under

its separate agreement with Plaintiffs. See Atty Aff, Exhibit 5 to Exhibit B.

Similarly, the GTR Agreement expressly authorizes numerous other deductions and fees

and belies Plaintiffs’ claims that such were unauthorized. Id. Notably, by their own admission,

Plaintiffs have paid GTR significantly less than the $562,125.00 purchase price they agreed to

remit to GTR pursuant to the GTR Agreement. See Am. Compl., ¶¶ 218-24.

PROCEDURAL HISTORY

Plaintiffs filed a Summons and Complaint on or about December 20, 2018. See Atty Aff,

Exhibit 1 to Exhibit B for a copy of Plaintiffs’ Summons and Complaint (previously filed as

NYSCEF Doc Nos. 64 and 1-10. As set forth therein, Plaintiffs asserted seven distinct causes of

action against various merchant cash advance funders and several individuals, including the

Moving Defendants: (1) Void or Reform Agreements/Declaratory judgment; (2) Constructive

Trust; (3) RICO; (4) Accounting; (5) Disclosure of Confidential Information; (6) “Fictious Names

Violate the General Business Law”; and (7) Deceptive Business Practices. Id.

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Simultaneous with the commencement of this action, Plaintiffs brought an application for

an order to show cause with temporary restraints, by which it sought to restrain all the defendants

from enforcing their respective cash advance agreements and collecting the monies owed to them

thereunder. See NYSCEF Doc. Nos. 11-17.

After the Order to Show Cause was signed by an ex parte judge, the Moving Defendants

opposed Plaintiffs’ application, and the Court issued an interim order granting some, but not all,

of the restraints sought by Plaintiffs – notably allowing the Moving Defendants to enter Plaintiffs’

duly executed confessions of judgment (“COJs”) in New York County. See NYSCEF Doc. Nos.

21 and 50.

Yet, when GTR did just that, the Plaintiffs brought a separate application for yet another

Order to Show Cause with temporary restraints, essentially attempting to override the interim order

insofar as it permitted the filing of Plaintiffs’ COJs in New York County. See GTR Source, LLC

v Medisale Inc. d/b/a Medisale et al. (Index No. 150294/2019). The Court nonetheless granted

Plaintiffs’ application and encouraged the parties to pursue settlement. Id.

Plaintiffs subsequently brought a third application for an order to show cause, essentially

renewing their original request to enjoin and restrain defendants from effectively seeking to

enforce their various agreements with Plaintiffs, which the Court signed on January 30, 2019. See

NYSECF Doc Nos. 78 and 90. Thereafter, the Court issued an Order granting Plaintiffs’ third

request for a preliminary injunction by extending the temporary restraints put in place on January

30, 2019. See NYSECF Doc No. 120.

The Moving Defendants also moved to dismiss Plaintiffs’ Complaint pursuant to CPLR

§3211(a)(1)(7) and (8). See Exhibit B to the Atty Aff for a copy of the Moving Defendants’ Motion

to Dismiss with supporting papers (previously filed as NYSCEF Doc Nos. 59-73).

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Plaintiffs belatedly opposed the Moving Defendants’ Motion Dismiss by filing an untimely

opposition that failed to even address many of the Moving Defendants’ substantive legal

arguments. See Atty Aff, Exhibit C for a copy of Plaintiffs’ Opposition, and Exhibit D for a copy

of Moving Defendants’ Reply (previously filed as NYSCEF Doc Nos 121 and 122, respectively).

On May 28, 2019, the Court heard oral arguments on the Moving Defendants’ Motion to

Dismiss, as well as on defendant Jonathan’s Braun’s (“Braun”) Motion to Dismiss and Plaintiffs’

Cross-Motion to amend the complaint and expedite discovery,2 and subsequently issued its

Decision and Order denying the motions to dismiss except as to Plaintiffs’ Fifth Cause of Action

for disclosure of confidential information, which the Court dismissed. See Atty Aff, Exhibit F for

copy of the Court’s Decision, and Exhibit G for a copy of the Court Reporter’s Transcript from

the May 28, 2019 hearing (the “Transcript”).

On June 25, 2019, Plaintiffs filed their Amended Complaint. See Exhibit A to the Atty

Aff; See also NYSECF Doc Nos. 176-78.

ARGUMENT

POINT I

THE MOVING DEFENDANTS SHOULD BE GRANTED LEAVE TO REARGUE
THEIR MOTION TO DISMISS THE ORIGINAL COMPLAINT

A. Legal Standard

Pursuant to CPLR § 2221(d), a motion for leave to reargue:

1. shall be identified specifically as such;

2
Although the Moving Defendants’ Motion to Dismiss had long been fully submitted, Plaintiffs’ Cross-
Motion to Braun’s separate dismissal motion inappropriately sought relief as to the Moving Defendants and
was, in effect, an unauthorized sur-reply to the Moving Defendants’ Motion to Dismiss. Accordingly, the
Moving Defendants’ also submitted opposition thereto. See a copy of the Moving Defendants’ Opposition
to Plaintiffs’ Cross-Motion attached to the Atty Aff as Exhibit E (previously filed as NYSECF Doc No
161); see also NYSECF Doc Nos. 153-158.

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2. shall be based upon matters of fact or law allegedly overlooked or
misapprehended by the court in determining the prior motion, but shall not
include any matters of fact not offered on the prior motion; and
3. shall be made within thirty days after service of a copy of the order
determining the prior motion and written notice of its entry. This rule shall
not apply to motions to reargue a decision made by the appellate division or
the court of appeals.

“A motion to reargue is designed to give a party a chance to convince the court that relevant

facts were overlooked or misapprehended or any controlling principle of law was misapplied.”

Michael v Communications Workers of Am. AFL-CIO, 130 Misc 2d 424, 427 [Sup Ct 1985]. This

determination is within the sound discretion of the court and a motion to reargue should be granted

where the movant party shows that the court overlooked or misapprehended the facts or the law,

or for some reason mistakenly arrived at its earlier decision. See Schneider v Solowey, 141 AD2d

813 [2d Dept 1988].

B. The Decision Relied on a Dissimilar Federal Court Decision

The Court’s Decision relied heavily on a decision recently rendered by the United States

District Court for the Eastern District of Pennsylvania in Fleetwood Serv., LLC v Complete Bus.

Sols. Grp. Inc., 2019 WL 1558087 (E.D. P.A. Apr. 10, 2019). Plaintiffs’ Counsel presented the

Fleetwood decision for the first time during the Court’s Hearing on the motions to dismiss, and

represented to the Court that the decision was “based on many of the things we have alleged in

this case” and serves as an instance where a court sustained a RICO claim against merchant cash

advance funders based on claims that the defendant’s conduct rendered the cash advance

agreement a usurious loan. See Fleetwood, 2019 WL 1558087; See also Exhibit G.

However, notwithstanding Plaintiffs’ Counsel’s inaccurate representations to the contrary,

the Fleetwood decision is entirely inapposite because it was expressly premised on the

unchallenged assumption that the “Factoring Agreement was a loan.” See Fleetwood, 2019 WL

15 of 36
FILED: NEW YORK COUNTY CLERK 07/15/2019 10:22 PM INDEX NO. 656346/2018
NYSCEF DOC. NO. 197 RECEIVED NYSCEF: 07/15/2019

1558087. Thus, in sustaining the cause of action, the court expressly acknowledged that

“Defendants do not challenge Plaintiffs’ allegation the payments Fleetwood Services made

amounted to ‘collection of unlawful debt’ and the Amended Complaint sufficiently alleged a RICO

violation based on this theory.” Id.

As such, the Fleetwood decision could not be more different than this action, where the

agreements at issue are not loans, as the Moving Defendants have asserted throughout the

pendency of this action, which is entirely consistent with settled New York law. Moreover, as set

forth below, the Fleetwood court soo

Case Info

Judge

Arthur F. Engoron Track Judge’s New Case

Case No.

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Document Filed Date

July 15, 2019

Case Filing Date

December 20, 2018

County

Parties

ADDY SOURCE, LLC Defendant
Azriel Inzelbuch a/k/a DAVID B. FRANK Defendant
BEINHORN, ABRAHAM S. Attorney for the Defendant
BEINHORN, ABRAHAM S. Attorney for the Defendants
BOUSKILA, ARIEL Attorney for the Defendant
BOUSKILA, ARIEL Attorney for the Defendants
Bryan Baker d/b/a BAKER CAP FUNDING, d/b/a BAKER CAPITAL FUNDING Defendant
COHEN, NATHAN Attorney for the Defendant
COHEN, NATHAN Attorney for the Defendants
COLONNA COHEN, ASHLEE VICTORIA Attorney for the Plaintiff
CUMMINGS, RYAN K Attorney for the Defendants
ERSHOWSKY, MICHAEL BRIAN Attorney
FLEISCHMANN, JEFFREY Attorney for the Defendant
GRIMBLE, ROBERT Attorney for the Plaintiff
GTR SOURCE, LLC Defendant
IANDOLO, JEREMY M. Attorney for the Defendant
INFLUX CAPITAL GROUP, LLC a/k/a INFLUX CAPITAL, LLC Defendant
James Davis II Plaintiff
Jonathan Braun Defendant
MEDISALE, INC Plaintiff
Michelle Gregg Defendant
NEWMAN, EVAN M Attorney for the Defendant
NEWMAN, EVAN M Attorney for the Defendants
REBAR CAPITAL, LLC Defendant
RICHMOND CAPITAL GROUP, LLC Defendant
Robert Giardina Defendant
SPG Advance LLC Non Party
SPG Advance, LLC Defendant
Tsvi Davis a/k/a STEVEN DAVIS Defendant
Tzvi Reich a/k/a STEVE REICH Defendant
USHKOW, MICHAEL JASON Attorney for the Defendants
WELLS, STEVEN WILLIAM Attorney for the Defendant
WELLS, STEVEN WILLIAM Attorney for the Defendants
YES CAPITAL FUNDING GROUP, LLC d/b/a YES FUNDING SERVICES, LLC Defendant
ZAWODZINSKI, JAMES JUDE Attorney for the Defendant
ZAWODZINSKI, JAMES JUDE Attorney for the Defendants
SHAINA WEISSMAN Attorney
ISAAC GREENFIELD Attorney
ROBIN LOGUIDICE Attorney
RICHARD GUIDICE Attorneys for Plaintiffs
David Fein Attorneys for Defendants
STEPHEN LEMMON Attorney
ANTHONY VARBERO Attorneys for Defendants
MATTHEW PARKER Attorneys for Defendants
ALLEN SCHWARTZ Attorneys for Defendants
ROBERT LEE Attorney
JEFFREY LEHMAN Attorneys for Defendants
GARY HELLER Attorneys for Defendants
ROBERT BOGLE Attorney
JEROME GOLDMAN Attorneys for Plaintiffs

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