Merchants Capital Access, LLC v Supreme Court, Nassau County

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Merchants Capital Access, LLC v Supreme Court, Nassau County 2011 NY Slip Op 32300(U) August 19, 2011 Supreme Court, Nassau County Docket Number: 003755-11 Judge: Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT- STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court ------------------------------------------------------------------- x MERCHANTS CAPITAL ACCESS, LLC Plaintiff, TRIAL/IAS PART: 20 NASSAU COUNTY Index No: 003755Motion Seq. Nos. 2 & 3 Submission Date: 6/27/11 -against- SOUTH SHORE MOTORSPORTS, LLC, FREDERICK IPPOLITO and SOLIVIA POWERSPORTS, LLC, Defendants. --------------------------------------------------------------------x The following papers having been read on these motions: Notice of Motion, Affidavit in Support, Affirmation in Support and Exhibits.... Affidavit in Opposition , Affirmation in Opposition and Exhibit..................... Memo rand urn of Law in Opposition....................................... ................................... Reply Affirmation in Further Support and Exhibit...................................... Notice of Motion , Affirmation in Support and Exhibit.................................. Affidavit in Support and Exhibit.......................................... ... ................................... Solivia Mem orandum of Law......................................... ... Motorsports and Ippolito Memorandum of Law...................................................... Affidavit in Opposition, Affirmation in Opposition and Exhibits....................... ffirma ti 0 n in Res pons e............. .............. ... Memorandum of Law in Opposition.......................................................................... [* 2] This matter is before the Cour for decision on 1) the motion fied by Plaintiff Merchants Capita Access , LLC (" MCA" or "Plaintiff' ) on May 13 , 2011 , and 2) the motion filed by Defendant Soli via Powersports , LLC (" Solivia ) on May 20 , 2011 , both of which were submitted on June 27 2011. For the reasons set forth below , the Cour 1) grants Plaintiffs motion, except that the Cour denies Plaintiff s motion to sever and continue the eleventh cause of action , which the Cour hereby dismisses; and 2) grants Solivia s motion to dismiss the Eleventh Cause of Action seeking injunctive relief, and otherwse denies Solivia s motion. BACKGROUND Relief Sought A. Plaintiff moves for an Order 1) pursuat to CPLR 212( e), granting Plaintiff an award of sumar judgment against Defendant South Shore Motorsports , LLC (" SSM" ) on the First and Second Causes of Action of Plaintiffs 2) pursuant to CPLR Verified Amended Complaint (" Complaint" 3212(e), granting Plaintiff an award of sumar judgment against Defendant Frederick Ippolito (" Ippolito ) on the Third and Fourh Causes of Action of the Complaint; 3) pursuat to CPLR 3211 , dismissing SSM' s and Ippolito s Affirmative Defenses; 3212(e), severing and continuing Plaintiffs Fifth through Eleventh and 4) pursuant to CPLR Causes of action in the Complaint. Solivia moves for an Order , pursuant to CPLR dismissing the Fift B. though Eleventh Causes of The Paries ' 3211(a)(7), 3013 and 3016(b), Action. History This action was the subject of a prior decision of the Cour dated March Decision ) denying Plaintiffs 31 , 2011 ("Prior application for injunctive and other relief. On April 1 , 2011 Plaintiff filed an Amended Verified Complaint ("Amended Complaint") (Ex. G to Bilotti Aff. in Supp. ) which is the subject of the motions sub judice. The Amended Complaint alleges as follows: On or about Janua 10 2010 , Defendant SSM executed a Merchant Agreement Original Merchant Agreement") that was counter-executed by MCA on Januar 12 2010. Pursuant to the terms of the Original Merchant Agreement , and in consideration for MCA' capital advance to SSM in the amount of $250 000. , SSM sold a certain percentage of its futue credit card receivables totaling $312 500. 00 to MCA. MCA filed a UCC- l Financing [* 3] Statement with respect to SSM' s future credit card receivables. In or about October of 20 1 0 , without having paid the advance pursuant to the Original Merchant Agreement, SSM sought a second capita advance from MCA. In an effort to induce MCA to make this second advance , SSM provided MCA with a financial statement reflecting that SSM had a value in excess of $2 milion as of the period ending August 31 , 2010. Based on that representation , MCA agreed to renew the $66 348. 72 due from SSM to MCA pursuant to the Original Merchant Agreement , and advanced SSM an additional $183 651.28 for a total advance of $250 000. , which was later memorialized in the Second Merchant Agreement. On October 15 2010 , without MCA' s knowledge or consent, SSM entered into an agreement with Solivia to sell to Solivia substantially all of SSM' s assets ("Asset Purchase Agreement"). On October 26 2010 , notwithstading the execution of the Asset Purchase Agreement, SSM executed the Second Merchant Agreement which was counter executed by MCA on October 28, 2010. Plaintiff alleges that , at all relevant times , Solivia knew or should have known of the existence of the Merchant Agreements and their significance to Plaintiff. The Amended Complaint contains eleven (11) causes of action , which are as follows: I)SSM breached the Second Merchant Agreement; 2) SSM is liable for MCA' s attorney s fees and other expenses , pursuant to Section 5. 7 of the Second Merchant Agreement , in light of its breach of the Second Merchant Agreement; 3) Ippolito is in default of the guaranty (" Ippolito Guaranty") he executed on or about October 26 , 2010 , to induce MCA to enter into the Second Merchant Agreement; 4) Ippolito is liable for MCA' s attorney s fees and other expenses pursuant to his Guaranty; 5) SSM' s conveyance of its assets to Solivia was fraudulent pursuant to New York Debtor and Creditor Law ("DCL" Solivia was fraudulent pursuat to DCL 274; 7) SSM' s conveyance of its assets to Solivia was 275; 8) SSM' s conveyance of its assets to Solivia was fraudulent fraudulent pursuant to DCL pursuant to DCL 273; 6) SSM' s conveyance of its assets to 276; 9) Solivia aided and abetted the breach of the Second Merchant Agreement and Ippolito Guaranty, and the fraudulent conveyance of SSM' s assets, for which Plaintiff seeks counsel fees pursuant to DCL against Solivia, pursuat to DCL 276-a; 10) Plaintiff has the right to proceed 278 , to set aside SSM' s conveyance ofits assets; and 11) MCA is entitled to a permanent injunction enjoining Solivia and its agents from distributing more than seventy percent (70%) of SSM and/or Solivia s credit card receivables wtihout [* 4] MCA' s wrtten consent, and directing Solivia and its agents to deliver to MCA credit card receivables accepted by Solivia. The UCC- l Financing Statement (Ex. B to Snead Aff. in Supp. ) stated that it covered the following collateral: Certain future credit card , debit card , bancard , ban card , and other charge card receivables sold by (SSM) and purchased by (MCA) as buyer, pursuant to that certain merchant agreement between seller and purchaser regarding the sale of futue receivables 01/14/2010. The sale of the futue receivables pursuant to the agreement is intended by the paries thereto to be an outright sale of such futue receivables and not intended to be nor is to be construed as , a financing or an assignment for securng the obligations of the seller. In addition , the agreement prohibits seller from , transferring futue receivables any person , or granting any security interest in its accounts receivable until buyer has received all amounts due under the agreement. On Januar 10 , 2011 , SSM issued a Bil of Sale in the amount of $207 769. 50 for the assets described in the Asset Purchase Agreement. The assets reflected in the Schedule of the Bil of Sale (Ex. F to Snead Aff. in Supp. ) consist of the following: Retail Motorcycle , A TV and (SSM) Store including the stock in trade , fixtues , used equipment, accounts , pars and accessories , contract rights , lease , good will , licenses , rights under any contract for telephone service or other renta , maintenance or use of equipment, machinery and fixtues at the said premises , more paricularly described in the Schedule herein. The Schedule listed the following: All futue, fixtues and equipment located at 4116 Sunse Highway, Massapequa New York. All used inventory located at 4116 Sunise Highway, Massapequa , New York. All pars and accessories located at 4116 Sunise Highway, Massapequa, New York. Franchises for Yamaha , Suzui , Kawasak and BRP. The Bil of Sale also contained a non-compete clause , pursuant to which SSM agreed: (N)ot to re-establish , re-open , be engaged in , nor in any maner whatsoever become interested , directly or indirectly, either as employee , as owner , as parer , as agent or as stockholder , director or officer of a corporation or otherwse , in any business trade or occupation similar to the one hereby sold , within (a) FIVE (5) mile radius [* 5] of 4116 Sunse Highway, Massapequa , New York. Section 5. 9 of the Merchant Agreements , including the Second Merchant Agreement (Ex. C to Snead Aff. in Supp. ), titled " Entire Agreement " stated as follows: This Agreement, together with any addenda or riders hereto to any credit card processing agreement , contains the entire agreement and understanding between Seller and the Buyer and supersedes all prior agreements and understadings related to the subject matter thereof unless otherwse specifically reaffrmed or restated herein. Thus , the Second Merchant Agreement superseded the First Merchant Agreement. Pursuant to the terms of the Second Merchant Agreement , in consideration for MCA' capita advance to SSM in the amount of $250 000. , SSM sold thrt percent (30%) of its futue credit card receivables totaling $312 500. 00 to MCA. As with the Original Merchant Agreement (Ex. A to Snead Aff. in Supp. ), the Second Merchant Agreement did not set fort specific dates on which payments were required , and was secured only by a security interest in futue credit card receivables. The Second Merchant Agreement also stated , in pertinent par, as follows: REPRESENTATIONS , WARRNTIES AND COVENANTS Seller (SSM) and the Guarantor(s) (Ippolito) hereby represent, warant and covenant that as of this date and during the term of this Agreement: Section 3. Seller s Conduct. Seller shall: (i) exclusively use the credit card processor approved by the Buyer for the processing of all of its credit card transactions; (ii) not tae any action to reduce or discourage the use of credit cards or permit any event to occur which could have an adverse effect on the use , acceptace or authorization of credit cards for the purose of the Seller s services and products; (ii) not amend or terminate , or consent to the termination of, the processing agreement with the credit card processor approved by the Buyer, or any authorization to initiate ACH or electronic check payment or to obtain information granted by Seller to Buyer or its agents under Section 1. 1 above; (iv) not breach or default under the processing agreement with the credit card processor approved by Buyer; (v) not change or permit the change ofthe credit card processor approved by the Buyer or add an additional credit card processor , in each case , without the express prior written [* 6] consent of the Buyer; (vi) not change the account name , password or other access information relating to accounts from which ACH or electronic check payments are to be made without giving Buyer at least ten (10) business days prior wrtten notice of such change; (vii) not sell , dispose , conveyor otherwise transfer its business or all or any substantial portion of its assets , in each case , without the express prior written consent of the Buyer and the purchaser or assignee s assumption of all of the Seller s obligations under ths Agreement pursuant to the documentation reasonably satisfactory to the Buyer; receivable; (viii) not sell , dispose , conveyor otherwise transfer any of its futue credit card (ix) not grant any security interest or lien upon its accounts receivable or other assets; (x) not incur any debt on the business without the express prior written consent of the Buyer; and (xi) not commit fraud. ADDITIONAL TERMS In the event of (a) any breach or inaccuracy of any representation or waranty made by Seller in this Agreement or in any certificate or other document delivered by or on behalf of Seller pursuant hereto , or (b) any breach or default in the performance by Seller of any covenant or agreement contained in this Agreement or in any certificate or other document delivered by or on behalf of Seller pursuant hereto (any of the foregoing, a " Breach" ), the Buyer shall be entitled to all remedies available hereunder , under Aricle 9 ofthe Uniform Commercial Code or other applicable law. the Seller agrees that the the event that the Seller breaches the covenants in Section Buyer wil be entitled to, among other things, damages equal to the amount by which the cash attributable to the Purchased Amount of future credit card receivables exceeds the amount of cash received from the credit card receivables that have previously been The Seller hereby agrees that delivered by the Seller to the Buyer under this Agreement. the Buyer may automatically debit such damages from the Seller s ban account via ACH , electronic check or wire transfer , and/or may notify the credit card processor to remit to the Buyer any and all amounts received by the processor to satisfy the full amount of the then outstanding balance of the Purchased Amount ($312 500. 00). In addition , and to the extent not prohibited by applicable law and any agreements between the Seller s credit card processor and the applicable credit card association, Buyer and Seller s credit card processor shall be authorized to place Seller on any "terminated merchant file " list with any applicable credit card association in the event of a Breach by Section 4.4 Remedies. *** [* 7] Seller of Section 3. 1 hereof. Furher , Buyer shall be entitled to collect all indemnfied Amounts from Seller and/or Guarantors in accordance with Section 5. 7 hereof. (Emphasis added). Section 5. Indemnifed Amounts. In the event of a Breach , Seller and Guarantor shall assume liabilty for and do hereby agree to indemnify, protect, save and keep harless Buyer and its agents and servants , from and against any and all liabilties , claims , losses obligations , damages , penalties , actions and suits of whatsoever kind and nature imposed , incured by or asserted against Buyer or its agents and servants , in any way relating to or growing out of such Breach (collectively, " Indemnfied Amounts ), including, without limitation, the payment of all costs and expenses of every kind for the enforcement of Buyer s right and remedies hereunder , including attorneys ' fees and costs in any tral cour or appellate cour proceeding, any admnistrative proceeding, any arbitration or mediation, or any negotiations or consultations in connection with any Breach. Such Indemnfied Amounts shall bear interest at the highest rate of interest allowed by applicable law until paid. Simultaeous with the execution of the Second Merchant Agreement , on October 26 2010 , SSM executed a direction letter (Ex. D to Snead Aff. in Supp. ) directing its credit card processor , IRN Payment Systems (" IRN"), to pay thrt percent (30%) of its credit card , debit card , Discover and EBT receivables to MCA. Also on October 26 2010, Ippolito executed his Guaanty with respect to the Second Merchant Agreement. The Guaranty (Ex. C to Snead Aff. in Supp. ) states as follows: Unconditional Personal Guarantee IN CONSIDERATION OF THE BUYER ENTERIG INTO THIS AGREEMENT AND TO INDUCE BUYER TO ENTER INTO THIS AGREEMENT , THE UNDERSIGNED PRICIP AL(S) OF SELLER (" GUARTOR(S)") HEREBY PERSONALLY GUARNTEE TO BUYER THAT: (I) ALL INFORMATION PROVIDED BY SELLER TO BUYER IN CONNECTION WITH THE TRASACTION CONTEMPLATED BY THIS AGREEMENT IS TRUE , CORRCT AND COMPLETE , (2) SELLER SHALL NOT REPLACE THE CREDIT CAR PROCESSOR APPROVED BY BUYER OR ENGAGE AN ADDITIONAL CREDIT CARD PROCESSOR , IN EACH CASE , PRIOR TO THE TIME THAT BUYER HAS RECEIVED THE ENTIRE PURCHASED AMOUNT; AND (3) SELLER SHAL NOT BREACH , OR DO ANY OF THE ACTS PROHIBITED BY , SECTION 3.1 OF THIS AGREEMENT. This guarantee shall be the continuing, irrevocable , unconditional and joint and several obligations of the Guarantors and the Guarantors hereby waive demand of payment, notice of presentment, and any and all requirements of notice , defenses offsets and counterclaims and any other act or omission of Buyer which changes the [* 8] scope of the Guarantor s risk , and Guarantors fuher agree that Buyer may proceed directly against the Guarantors without first proceeding against Seller. Guarantor fuher guarantees the payment of and agrees to pay all indemnified amounts (as defined in section 5. 7 of the Agreement). By signing below Guarantors agree to this Guarantee and each representation , waranty and covenant set forth is section 3 and 4. 1 of this Agreement, which representations , waranties and covenants shall surive the tennination of this Agreement as provided in Section 5. 8 hereof. On October 29, 2010 , MCA wired SSM the sum of$183 651.28, as reflected on the wire detail report provided (Ex. E to Snead Aff. in Supp. ). On Januar 10 2011 , SSM issued a Bil Sale to Solivia in the amount of $207 769. 50 for the assets described in the Asset Purchase Agreement. IRN provided MCA with documents reflecting that the last date on which SSM processed any ban card transactions with IRN was Februar 2 2011 , and MCA has not received any payments from SSM' s processing since that date. John Snead , the President of Plaintiff, affinns that SSM owes Plaintiff the sum of $269 237. , plus applicable interest from Febru 3 2011 , consisting of the Purchase Amount of$312 500. 00 under the Second Merchant Agreement , less payments received in the amount of $43 262. 97. C. The Paries ' Positions Plaintiff submits that , as outlined in the Snead Affdavit in Support , Plaintiff has demonstrated its entitlement to sumar judgment on its breach of contract by establishing 1) the fonnation of a contract between MCA , SSM and Ippolito, 2) perfonnance by MCA 3) SSM and Ippolito s failure to perform , and 4) resulting damages. Plaintiff also argues that SSM and Ippolito s affirmative defenses fail to create an issue of fact defeating Plaintiffs right to sumar judgment. Plaintiff submits , fuher , that pursuant to the tenns of the Second Merchant Agreement and Ippolito Guaanty, Plaintiff is entitled to recover expenses and attorney s fees incured in enforcing its rights under those instrents. Counsel for Plaintiff provides details regarding 1) the services he provided to Plaintiff, 2) the number of hours he expended on this matter, and 3) the expenses incured by Plaintiff in support of Plaitiffs request for an award of $5 220. representing attorney s fees , costs and expenses. In opposition , Defendants South Shore and Ippolito submit inter alia that 1) Plaintiff has failed to submit documentar evidence in support of its request for damages in the sum of [* 9] $269 237. 03; 2) Plaintiff has failed to set fort evidence that it performed its obligations under the terms of the Agreements; and 3) Plaintiffhas failed to set fort its claim that SSM defaulted under its obligations pursuant to Section 3. 1 of the Second Merchant . Agreement by, evidence in support of sellng all or any substatial portion of its assets. In reply, Plaintiffs submit inter alia that 1) Plaintiff, though the Affidavit in Support of Snead , has provided competent evidence in support of its motion; 2) SSM and Ippolito have failed to produce documentar evidence disputing Snead' s affirmation regarding payments made by and sums owed to Plaintiff; and 3) the Cour should reject SSM and Ippolito s " disingenous claim (Reply Aff. at p. 6) that the sale to Solivia did not represent a sale of all or any substatial portion of SSM' s assets. Solivia argues inter alia that 1) the allegations in the Fift through Eleventh Causes of Action are pled with insufficient paricularity, and do not give rise to a reasonable inference of fraud; and 2) Plaintiffs fail to allege that the conveyance to Solivia was without fair consideration or would have rendered SSM insolvent. SSM and Ippolito have submitted a Memorandum of Law in support of Solivia s motion in which they argue inter alia that 1) Plaintiff has failed to adequately plead causes of action pursuat to DCL 273 274 and 275 by failing to allege that a conveyance was made without fair consideration , and the affidavit of Ippolito establishes that the sum paid by Solivia for the assets constituted fair consideration; 2) Plaintiff has failed to adequately plead a cause of action pursuant to DCL 276 by failng to allege that a conveyance was made with actul intent to hinder , delay or defraud a creditor , and failing to plead the alleged fraud with adequate paricularity; . and 3) in light of the insuffciency of Plaintiffs allegations with respect to 273 , 274 , 275 and 276 , its causes of action for attorney s fees pursuant to 276-a, and under DCL 278 , must fail as well. violations ofDCL DCL MCA opposes Solivia s motion , submitting that 1) the Complaint alleges cognzable causes of action for a fraudulent conveyance; and 2) Plaintiff has provided adequate regarding the alleged fraud , including a) the identity of the transferor transferee , and c) "badges of fraud " including the allegation that " detals , b) the identity of the Defendants defrauded Plaintiff by the transfer of assets from (SSM) to Solivia for less than a fair consideration when (SSM) and Solivia were aware that MCA provided a capital advance to (SSM) after the [* 10] execution of the asset purchase agreement , but prior to closing on the sale of assets which rendered (SSM) insolvent" (P' s Memorandum of Law in Opp. at p. 4). RULING OF THE COURT Sumar Judgment Standards Pursuant to CPLR g 3212(e), sumar judgment may be granted as to one or more A. causes of action, or par thereof, in favor of anyone or more paries , to the extent waranted , on such tenns as may be just. The cour may also direct 1) that the cause of action as to which sumar judgment is granted shall be severed from any remaining cause of action; or 2) that the entr of the sumar judgment shall be held in abeyance pending the detennination of any remaining cause of action. To grant sumar judgment , the cour must find that there are no material , triable issues of fact , that the movant has established his cause of action or defense suffciently to warant the cour, as a matter oflaw, directing judgment in his favor, and that the proof tendered is in admissible fonn. Menekou v. Crean 222 A.D. 2d 418 419-420 (2d Dept 1995). If the movant tenders sufficient admissible evidence to show that there are no material issues of fact, the burden then shifts to the opponent to produce admissible proof establishing a material issue of fact. Id at 420. Sumar judgment is a drastic remedy that should not be. granted where there Id. is any doubt regarding the existence of a triable issue of fact. B. Standards of Dismissal A motion interposed pursuat to CPLR g 3211 (a)(7), which seeks to dismiss a complaint for failure to state a cause of action , must be denied if the factual allegations contained in the complaint constitute a cause of action cognizable at law. 268 (1977); 511 W 232 Guggenheimer Owners Corp. v. Jennifer Realty Co. v. Ginzburg, 43 N. 98 N. Y.2d 144 (2002). When entertng such an application, the Cour must liberally constre the pleading. In so doing, the Cour must accept the facts alleged as true and accord to the plaintiff every favorable inference which may be drawn therefrom. Leon however, the Cour wil not presume flatly contradicted by the evidence. 2002). v. Martinez 84 N. Y.2d as tre Palazzolo 83 (1994). On such a motion bare legal conclusions and factual claims which are v. Herrick, Feinstein 298 A. D.2d 372 (2d Dept. [* 11] C. Relevant Causes of Action To establish a cause of action for breach of contract, one must demonstrate: 1) the existence of a contract between the plaintiff and defendant , 2) consideration , 3) performance by the plaintiff, 4) breach by the defendant, and 5) damages resulting from the breach. Furia 116 AD. 2d 694 (2d Dept. 1986). 802 (2d Dept. 2010) (complaint Furia v. See also JP Morgan Chase v. J.H Electric 69 AD. suffcient where it adequately alleged existence of contract plaintiffs performance under contract, defendant' s breach of contract and resulting damages), citing, inter alia , Furia, supra. To establish an entitlement to judgment as a matter of law on a guaranty, plaintiff must prove the existence of the underlying obligation, the guaranty, and the failure of the prime obligor to make payment in accordance with the terms of the obligation. S. Security Sys., Inc. v. Allyn 262 AD. 2d 351 (2d Dept. 1999). To be enforceable , a guaranty must be in wrting executed by the person to be charged. General Obligations Law see also 701 (a)(2); Schulman v. Westchester Mechanical Contractors, Inc. 56 A. PNC Capital Recovery intent to guarantee the obligation must be clear and explicit. Mechanical Parking Systems, Inc. (2002). Clear and 283 AD. app. dism. 2d 268 (1st Dept. 2001), 98 N. Y.2d 763 explicit intent to guaranty is established by having the guarantor sign in that capacity and by the language contaned in the guarantee. Harrison Court Assocs. 63 (1961); 2d 625 (2d Dept. 1977). The Salzman Sign Co. v. v. 220 Westchester Ave. Assocs. 203 A. Beck 10 N. Y.2d 2d 244 (2d Dept. 1994). The essential elements of a cause of action sounding in fraud are 1) a misrepresentation or a material omission of fact which was false and known to be false by defendant , 2) made for the purose of inducing the other par to reply upon it , 3) justifiable reliance of the other on the misrepresentation or material omission, and 4) injur. Real Estate 68 A. D.3d 706 (2d Dept. 2009), quoting Colasacco v. par Robert E. Lawrence Orlando v. Kukielka 40 A. D.3d 829 , 831 (2d Dept. , 2007). CPLR 3016(b) provides that an action for fraud must be pled with paricularity. Bare allegations of fraud without any allegation of the details constituting the wrong are clearly insuffcient to sustan such a 1987). The requirements cause of action. ofCPLR Gervasio v. DiNapoli 126 A. 2d 514 (2d Dept. 3016(b), however, may be met when the facts are sufficient [* 12] Pludeman to pennit a reasonable inference of the alleged conduct. v. Northern Leasing Systems Inc. , 10 N. Y.3d 486 492 (2008). D. Fraudulent Conveyances Debtor and Creditor Law (" DCL" 273 provides that every conveyance made and every obligation incured by a person who is or who will be thereby rendered insolvent is fraudulent as to creditors without regard to actual intent if the conveyance is made or the obligation incured 274 provides that every conveyance made without fair without a fair consideration. DCL consideration when the person makng it is engaged or is about to engage in a business or transaction for which the propert remaining in his hands afer the conveyance is an uneasonably small capital , is fraudulent as to creditors and as to other persons who become creditors durng the ,continuance of such business or transaction without regard to his actual 275 renders conveyances without fair con ideration fraudulent if made by a intent. DCL person intending to incur debts beyond his abilty to pay. DCL 276 renders conveyances made with actual intent to deftaud fraudulent as to both present and futue creditors. DCL 276-a authorizes an award of attorneys ' fees in proceedings to set aside a conveyance made with intent to defraud , where such conveyance is found to have been made by the debtor and received by the transferee with actul intent to hinder , delay or defraud either present or futue creditors. DCL 278 provides that where a conveyance or obligation is ftaudulent as to a creditor , such creditor , when his claim has matued , may, as against any person except a purchaser for fair consideration without knowledge of the ftaud at the time of the purchase , or one who has derived title immediately or mediately from such a purchaser , have the conveyance set aside or obligation anulled to the extent necessar to satisfy his claim , or . disregard the conveyance and attch or levy execution upon the propert Direct evidence offtaudulent intent is often elusive. Pen Pak Corp. conveyed. v. LaSalle National Bank of Chicago 240 A. D.2d 384 386 (2d Dept. 1997). Cours, therefore , will consider " badges offtaud " which are circumstances that accompany fraudulent transfers so commonly that their presence gives rise to an inference of intent. v. Id. quoting MFS/Sun Life Trust-High Yield Series Van DusenAirport Servs. Co. 910 F. Supp. 913 , 935 (S. Y. 1995). For example , in Pen Pak the Second Deparment affinned the trial cour' s denial of defendant' s motion to dismiss the causes of action asserted under DCL 276 in light of the " badges offtaud" which included [* 13] 1) the close relationship among the paries to the transaction, 2) the inadequacy of consideration 3) the transferor s knowledge of the creditor s claims , or claims so likely to arise as to be certin and the transferor s inability to pay them , and 4) the retention of control of propert by the transferor after the conveyance. E. Counsel Fees Attorneys ' fees may be awarded pursuat to the tenns of a contract only to an extent that is reasonable and waranted for services actually rendered. Contracting Inc. 261 A. v. Kamco Supply Corp. Annex 2d 363 (2d Dept. 1999). Provisions or stipulations in contracts for payment of attorneys ' fees in the event it is necessar to resort to aid of counsel for enforcement Roe or collection are valid and enforceable. Westchester v. Pisani 58 A.D. 2d v. National Bank of Smith 278 N. Y. 364 (1938); 597 (2d Dept. 1977). The amount of attorneys ' fees awarded pursuant to a contractul provision is withn the cour' s sound discretion, based upon such factors as time and labor required. v. Canarsie Hotel Corp. 33 A.D.3d 986 (2d Dept. 2006); Dept. 1985). Legal fees are awarded on a sumarily. See Simoni v. Matter ofUry, 272 A. D. 108 A.D.2d 816 (2d basis and canot be detennined quantum meruit Time-Line, Ltd SO/Bluestar, LLC 2d 537 (2d Dept. 2000); Borg v. Belair Ridge Development Corp. 270 A. D. 2d 377 (2d Dept. 2000). When the cour is not provided with sufficient infonnation to make an infonned assessment of the value of the legal services , a Bankers Fed Sav. Bank hearng must be held. v. OffW. Broadway Developers 224 A.D. 2d 376 (1st Dept. 1996). F. Application of these Principles to the Instat Action MCA has demonstrated that, as a result of the sale of SSM' s assets to Solivia, Defendants breached Section 3. 1 of the Second Merchant Agreement. The documentar the Bil of Sale , evidence , including confinns that SSM entered into an agreement with Solivia to sell all or any substatial portion of its assets. First , the Asset Purchase Agreement was titled " Bil of Sale Business (emphasis added). Moreover , the assets sold by SMS included the " Retail Motorcycle , A TV and (SSM) Store (emphasis added), including all of its franchise rights. The Cour concludes that the applicable subsection of Section 3. 1 was designed to ensure that SSM would be able to continue in business , thereby allowing MCA to continue to collect on the accounts receivable and to be repaid according to the tenns of the Second Merchant [* 14] Agreement. The Cour fuher determines that the inclusion ofthe non-competition agreement between Solivia and SSM demonstrates that the intent of that agreement was to put SSM out of business , in violation of Section 3. 1(vii) of the Second Merchant Agreement. Moreover , in light of 1) SSM' s sale or transfer of all or any substantial portion of its assets to Solivia, 2) the transfer oftitle to and operational control of the business , and 3) the noncompetition agreement , Plaintiff has demonstrated that SSM not only permitted " any event to occur which could have an adverse effect on the use , acceptace or authorization of credit cards (subdivision ii), but also that there was a constructive termination with IRN (subdivision ii). In light of the foregoing, the Cour concludes that Plaitiff has demonstrated its entitlement to judgment as a matter of law with respect to its first cause of action for breach of contract and SSM has failed to submit sufficient proof to raise a triable issue offact. Accordingly, the Cour grants PlaintiffMCA sumar judgment against SSM on its first cause of action for breach of contract and dismisses the affirmative defenses of SSM and Ippolito. The Cour concludes that those afrmative defenses fail to create an issue of fact defeating Plaintiffs right to sumar judgment given inter alia 1) the absence of any documentar or other admissible evidence to substatiate Defendants ' conclusory claim that Plaintiff failed to remit the sum of $250 000. 00 to SSM as required by the Second Merchant Agreement, the affirmation of Snead that SSM' s payment obligations under the First Merchant Agreement were subsumed in the obligations set fort the Second Merchant Agreement , and the wire detail report which confrmed that MCA advanced an additional $183 651.28 under the Second Merchant Agreement, and 2) the Cour' s conclusion that Defendants ' usur defense lacks merit, given that the Second Merchant Agreement is not a loan agreement involving the charging of interest to SSM , but rather is an agreement pursuant to which MCA purchased a percentage of SSM' futue credit card receivables. The Cour also grants Plaintiffs motion for sumar judgment on its third cause of action in light of Ippolito s execution of his "Unconditional Personal Guarantee " with respect inter alia the Second Merchant Agreement. Ippolito executed the Guaranty, which clearly reflects his intention to guarantee SSM' s payment pursuat to the Second Merchant Agreement and , as discussed infra SSM failed to make payment in accordance with the terms of its obligation under the Second Merchant Agreement. [* 15] In light of the Cour' s detennination that Plaintiff has demonstrated its entitlement to sumar judgment on the first and third causes of action, the Cour also grants Plaintiffs motion for sumar judgment on its second and fourh causes of action , seeking attorney s fees pursuant to the Second Merchant Agreement and Guaranty. Although counsel for Plaintiff has provided an affinnation regarding his labor and fees , the Cour nonetheless concludes that it has an insuffcient basis on which to make an award of counsel fees , and refers that matter to an inquest as well. In light of the Cour' s denial of Solivia s motion to dismiss the fifth though tenth causes of action, as discussed infra the Cour directs that the remainder of ths action , except for the eleventh cause of action which the Cour is dismissing, shall be severed and shall continue. The Cour denies Solivia s motion to dismiss Plaintiffs fift though tenth causes of action , which are based on Plaintiff s allegation that the transfer of assets to Solivia was fraudulent and violated numerous provisions of the Debtor and Creditor Law. The Cour denies Solivia s motion in light of evidence supporting the inference that the transfer of assets was fraudulent and Solivia knew of the fraud , including documentation supporting the conclusion that 1) SSM and Solivia entered into the Asset Purchase Agreement prior to SSM' s execution of the capita advance agreement with MCA; 2) the Asset Purchase Agreement was for the sale of substatially all of SSM' s assets; 3) the sale of the assets was not for fair consideration; 4) the closing on the allegedly fraudulent transfer of assets to Solivia occured afer MCA provided the advance to SSM; 5) Solivia was made aware that MCA was a creditor of SSM; 6) SSM agreed not to compete with Solivia; and 7) SSM is no longer in business. In light of the foregoing, the Cour concludes that Plaintiff has adequately pleaded' causes of actions under the DCL regarding the alleged fraud. g273 , 274 , 275 and 276 , and has provided adequate specificity Given the sufficiency of those allegations , the Cour concludes that Plaintiffs have also suffciently pled causes of action for attorney s fees pursuat to DCL g 276-a, and an application to set aside the transfer of assets pursuant to DCL 278. The Cour grants the motion to dismiss the eleventh cause of action which seeks a pennanent injunction. The Cour incorporates by reference the Prior Decision , in which the Cour denied Plaintiffs application for pennanent injunctive relief, in par based on the Cour' conclusion that Plaintiffs injur, ifany, is compensable by money damages. The motion papers [* 16] now before the Cour confinn the Cour' s prior conclusion that Plaintiffs injur is compensable by money damages and , therefore , the Cour dismisses the eleventh cause of action. In light of the foregoing, it is hereby ORDERED , that Plaintiffs motion for sumar judgment against Defendants South Shore Motorsports , LLC on the first and second causes of action in the Amended Verified Complaint , and against Frederick Ippolito on the third and four causes of action in the Amended Verified Complaint , is hereby granted; and it is furher ORDERED , that Plaintiff have judgment against Defendants South Shore Motorsports LLC and Frederick Ippolito in the sum of $269 237. Februar 3 , plus applicable interest from 2011 , attorney s fees and costs to be detennined at an inquest; and it is fuher ORDERED , that this matter is respectfully referred to Special Referee Fran N. Schellace (Room 060 , Special 2 Courroom , Lower Level) to hear and detennine all issues relating to the computation of interest, attorney s fees and costs on September 27 2011 at 9:30 a. ; and it is fuer ORDERED , that Plaintiff shall serve upon counsel for Defendants , by regular mail , a copy of this Order with Notice of Entry, a Notice ofInquest or a Note ofIssue and shall pay the appropriate filing fees on or before September 16 , 2011; and it is fuher ORDERED , that the County Clerk, Nassau County is directed to enter a judgment in favor of the Plaintiff and against Defendants South Shore Motorsports , LLC and Frederick Ippolito in accordance with the decision of the Special Referee. All matters not decided herein are hereby denied. This constitutes the decision and order of the Cour. Counsel for the parties are reminded of their required appearance before the Court for a Preliminary Conference on August 31, 2011 at 9:30 a. DATED: Mineola, NY August 19 2011 ENTERED AUG 23 2011 NASSAU COUNTY COUNY CLERK' S OFFtCE

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