Preview
FILED: NEW YORK COUNTY CLERK 02/07/2019 03:10 PM INDEX NO. 652580/2018
NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 02/07/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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Index No.: 652580/2018
STRATEGIC FUNDING SOURCE, INC.
Plaintiff, PLAINTIFF'S AFFIDAVIT
IN SUPPORT OF MOTION
- against- FOR AN ORDER OF
ATTACHMENT OR, IN
THE ALTERNATIVE,
THEODORE FARNSWORTH,
ENTRY OF A
Defendant.
PRELIMINARY
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INJUNCTION
Holly S. Falkowitz, being duly sworn, deposes and says:
1. I am an attorney duly admitted to practice in the State of New York and counsel to Plaintiff
("Strategic"
Strategic Funding Source, Inc. d/b/a Kapitus, Inc. or "Plaintiff") in this action. I have
knowledge of the matters set forth below based upon my review of the file. I submit this Affidavit in
Support of Plaintiff's Motion for an Order of Attachment or, in the Alternative, Entry of a Preliminary
Injunction, pursuant to New York's Civil Practice Law and Rules ("CPLR") § 6212 against the personal
("Farnsworth"
property of Defendant Theodore Farnsworth, or "Defendant"), owner of Live the Source,
Source"
Inc. ("Live the or the "Company").
B. REQUIREMENTS UNDER CPLR § 6212
2. Under CPLR § 6212(a), on a motion for attachment, the plaintiff "shall show by affidavit
and such other written evidence as may be submitted thatthere isa cause of action, that itis probable that
the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201
plaintiff."
exist, and that the amotmt demanded from the defendant exceeds allcounterclaims known to
3. As explained in detail below, Plaintiff has met the requirements of § 6212(a), and an order
of attachment isappropriate.
A. There are Causes of Action and Plaintiff isLikely to Sücceed on the Merits
4. CPLR § 6212(a) requires a plaintiff to demonstrate that there is a cause of action. Here,
Plaintiff asserts four cases of action against Defendant: (1) breach of contract; (2) account stated;(3) breach
of guaranty; and (4) attorney's fees. As described below, Plaintiff has demonstrated that there is a sound
basis for each cause of action and has therefore satisfied this element of CPLR § 6212(a).
5. CPLR § 6212(a) also requires a plaintiff to demonstrate a likelihood of success on the
merits. As described below, the evidence demonstrates thatnot only has Plaintiff alleged causes of actions,
but that Plaintiff is likelyto succeed on the merits of each of itsclaims.
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i. Breach of Contract
6. To statea claim for breach of contract, the plaintiff must allege that: "(1)the parties entered
into a contract; (2) the plaintiff performed itsobligation; (3) the defendant breached; and (4) the plaintiff
breach."
suffered damages caused by that Judd v. Madison Advisory Serv., Inc., No. 152895/2017, 2018
N.Y. Mise. LEXIS 4097, at *9 (N.Y. S. Ct. Sep. 6, 2018) (citing Harris v. Seward Park Hous. Corp., 79
A.D.3d 425, 426 (1st Dep't. 2010).
7. Here, Plaintiffhas satisfied these four elements and there isa cause of action for breach of
contract. The parties entered into the Agreement on July 17, 2012. See Affidavit in Support of Plaintiff's
Order to Show Cause for an Order of Attachment, or Alternatively, Entry of a Preliminary Injunction
("Wolfson Affidavit") at Exhibit A; Compl. ¶ 4. The Agreement provided that Plaintiff would purchase
$277,800.00 of Defendant's Company's future receivables for $200,000.00 and that Defendant's Company
would remit to Plaintiff 20% of the batch amounts of receivables collected by Defendant's cmdit card
processor until all$277,800.00 of the purchased receivables were repaid to Plaintiff.See Wolfson Affidavit
Exhibit A; Compl. ¶¶ 4-6. The Plaintiff performed itsobligations under the Agreement by purchasing
$277,800.00 of Defendant's Company's receivables for $200,000.00 by July 20, 2012. Compl. ¶ 5. The
Defendant bmached the Agreement by diverting his Company's receivables to a non-designated and
unauthorized credit card processor and on his payments under the Agreement. Compl. 10-
by defaulting ¶¶
Defendants'
12. Plaintiffhas been damaged as a result of failure to pay the full amount due under the
Agreement. Compl. ¶ 17. Accordingly, there is a cause of action for breach of contract.
8. Moreover, the record in this action and the evidence submitted in connection with this
Affidavit demonstrate that Plaintiff is likelyto succeed on the merits of itsclaim. There can be no dispute
that the parties entered into an Agreement on July 17, 2012 that required Defendant to remit to Plaintiff
$277,800.00 in creditcard receivables. See Wolfson Affidavit Exhibit A. Nor can Defendant dispute that
as of August 23, 2013, he stopped remitting payment to Plaintiff even though he had not yet fulfilled his
Statement"
obligations under the Agreement. A record of Defendant's payments, referred to as a "Merchant
is attached to the Wolfson Affidavit as Exhibit B. As reflected in Merchant Statement, the lastpayment
from Defendant was received on August 23, 2013. As ofthe date of this filing,Defendant stillowes Plaintiff
$149,830.41 under the Agreement, see Wolfson Affidavit Exhibit B, as well as an additional $7,500 in
default charges for a totalpayment due to Plaintiff in the amount of $157,330.41. Accordingly, because it
is indisputable that Defendant stopped remitting payments to Plaintiff prior to fully satisfying his
obligations under the Agreement, he has breached the contract, thereby damaghig Plaintiff, and it is
therefore likely Plaintiff will succeed on the merits of itsclaim for breach of contract.
ii. Accounts Stated
9. "An account stated is an agreement between [the]parties to an account based upon prior
balance."
transactions between them with respect to the correctness of the account items and Demonstrated
Tech, LLC v. Greene, No. 601637/2006, 2012 N.Y. Misc. LEXIS 2352, (N.Y. S. Ct. May 14, 2012)
(brackets in original). "Where a defendant retains billswithout objecting to them in a reasonable period of
implied."
time or makes some payment on the account, an agreement may be Id.
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10. Here, Plaintiffhas demonstrated that a cause of action exists for an account stated. Plaintiff
periodically mailed notices to Defendant reflecting the current balance due and demanding payment.
Compl. ¶¶ 26, 28. Defendant received and accepted the mailings and did not object, protest, or dispute the
outstanding balance due to Plaintiff, but instead remitted payment up until the date of his default. Compl.
¶ 27. Accordingly, an account has been stated between Plaintiff and Defendant. See id.(holding plaintiff's
allegations were sufficient to statea claim for an account stated because plaintiff mailed defendant invoices
on a monthly basis, defendant did not object to the invoices, and invoices had not been paid).
11. Plaintiff is also likely to succeed on thisclaim. As reflected in Exhibit B tothe Wolfson
Affidavit, Defendant regularly remitted payment to Plaintiff and did not dispute amounts due under the
Agreement. Further, on September 19, 2012, Plaintiff sent Defendant a demand letterfor payments due
under the Agreemeñt and Defendant did not object to the account stated in the letter.
iii. Breach of Guaranty
12. "To statea claim for breach of guaranty under New York law, a plaintiffmust 'establish[]
prima facie the existence of the guaranty executed by defendant, the underlying debt, and defendant's
guaranty."
failure to perform under the BMO Harris Bank N.A. Mobius Bus. Sols., LLC, No. , 2018 U.S.
Dist. LEXIS 136970 (N.D.N.Y. Aug. 14, 2018) (quoting Sarfati v. Palazzolo, 142 A.D.3d 877, 877, (1st
Dept. 2016).
13. Here, Plaintiff has demonstrated a cause of action exists for a breach of guaranty. In
connection with the Agreement, Defendant executed a personal guaranty of Live the Source's performance
of all representations, warranties, and covenants in the Agreement. See Wolfson Affidavit Exhibit A;
Compl. ¶ 31. Plaintiff has further demonstrated that Defendant still
owes Plaintiff $157,330.41 under the
Agreement, Compl. ¶ 33-34, and that Defendant has failed to render payment under the guaranty. Compl.
¶¶ 15-16; 33. Accordingly, Plaintiff has stated a claim for breach of guaranty.
14. Plaintiff isalso likelyto succeed on the merits of this claim. Defendant cannot dispute that
he executed a guaranty, see Exhibit A to the Wolfson Affidavit, or that, as reflected in the Merchant
Statement, $149,830.41 is stilldue under the Agreement that he guaranteed, see Exhibit B to the Wolfson
Affidavit, or thatto date, he has failed to remit any payments as the guarantor.
Attorneys'
iv. Fees
attorneys' contractual."
15. In New York, the right to recover fees "must be statutory or Hing
v.Abreu, No. 14083/2009, 2016 N.Y. Misc. LEXIS 4889, at *3 (N.Y. S. Ct. Dec. 22, 2016).
16. Here, Section 3.3 of the Agreement provides that in addition to allpayments owed under
the Agicement, Defendant agrees to pay allcosts associated with a default and the enforcement of remedies
attorneys'
thereof, including but not limited to, fees. Exhibit A tothe Wolfson Affidavit; Compl. ¶ 36. As
a result of this litigation,Plaintiff has incurred expenses, including attorney's fees and Defendant is liable
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attorneys'
for payment of the fees under the Agreement. Accordingly, Plaintiff has stated a claim for
attorneys'
fees.
17. Plaintiff is also likelyto succeed on the merits of this elaim. Section 3.3 of the Agreement
attorneys'
between the parties expressly provides for Defendant's payment of fees arising out of any default
and the enforcement of remedies. See Exhibit A to the Wolfson Affidavit. Defendant executed the
Agreement, indicating his assent and agreement to all terms included therein. Accordingly, Plaintiff is
attorneys'
likely to succeed on itsclaim for fees because Defendant defaulted on the Agreement and
Plaintiff has incurred fees in connection with pursuing remedies arising from Defendant's default.
B. Plaintiff has Met the Statutory Requirements Set Forth in CPLR § 6201(1)
18. The third requirement for an order of attachment isthat Plaintiff must show that "one or
exist."
more grounds for attachment provided in section 6201 CPLR § 6212(a).
19. CPLR § 6201(1) provides that an order of attachment may be granted when "the
state."
defendant is a nondomiciliary residing without the
20. Here, Defendant is not domiciled in New York and, upon information and belief,he is
domiciled at 1220 Thatch Palm Drive, Boca Raton, Florida 332432.
21. Upon information and belief,Defendant does not reside in New York, but instead resides
at 1220 Thatch Palm Drive, Boca Raton, Florida 332432.
22. Accordingly, Plaintiffhas demonstrated that Defendant isa nondomiciliary residing
without the state and isentitled to an order of attachment under CPLR § 6201(1).
C. The Amount Demanded Exceeds All Known Coasterclaims
23. The fourth and f-malrequirement for an order of attachment isa showing that "the amount
plaintiff."
demanded from defendant exceeds allcounterclaims known to the CPLR §6212(a).
24. Defendant owes Plaintiff $157,330.41.
25. Plaintiffdemands $157,330.41 from Defendant.
26. The stock that Plaintiff seeks to attach isworth approximately $59,579.90
27. Defendant has asserted no counterclaims against Plaintiff and Plaintiff isnot aware of
any counterclaims that can be asserted against it.
28. Accordingly, Plaintiff's demand exceeds allcotmterclaims known to Plaintiff.
[Signature Page to Follow)
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Sworn to before me
This Pday of February, 2019
Shantel Boyd Holly S.Óalkowitz
Notary Public, State of New York Vice President and Deputy General Counsel
Reg. No. 01B03634530 Strategic Funding Source Inc. d/b/a Kapitus, Inc.
Qualified in New York County
Commission expires 9-18-2021
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