Zomongo.TV USA Inc. v Capital Advance Servs., LLC

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Zomongo.TV USA Inc. v Capital Advance Servs., LLC 2022 NY Slip Op 34130(U) December 7, 2022 Supreme Court, Kings County Docket Number: Index No. 512735/2021 Judge: Leon Ruchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 512735/2021 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 12/07/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 -'-"----- --.: ·------ - .-. --- .---.. -· .. · .· .. - .---·-·--. x ZOMONGO.TV USA INC. D/B/A ZOMONGO.TV USA, JOCELYNE LISA HUGHES-OSTROWSKI and JEREMY GENE OSTROWSKI, Plaint iffs, Decisio n and order Index No. 512735 /2021 ·- agains t - CAPITAL ADVANCE SERVIC ES, LLC, Defend ant, Decemb er 7, 2022 ------ ------ -- -- -- ----- --- ------ -- -x PRESENT: HON. LEON RUCHELSMAN The plaint iffs have moved pursua nt to CPLR§ 2221 seeking to reargue portion s of a de-ci:si on and order dated August 25, 2022. The defend ant has cross-m oved likewis e :seekin g to reargu e portion s of the prior decisio n. respec tively. ,held. The motion s havl8 been oppos:e d Papers were submit ted by the partie s and argume nts After review ing all the argume nts this court now makes the followi ng determ ination . As record ed in the prior decisiq n, the defend ant Zomongo entered into twQ mercha nt cash agreem ents with the defend ant. The first agreem ent was dated Februa ry 12, 2018 whereb y the defend ant purchas €!d $449,70 0 of plaint iff's future receiva :bles for $.100,0 00. The second agreem ent was dated April 11, 2018 whereb y the defend ant purcha sed $861,92 5 of plaint iff's future. receiva bles for $575,00 0. The compla int alleges the defend ant failed to delive r th€! purcha sed amount s pm: sua:rit to the agreem ents and impropt ::rly withdre w daily amount s in excess of the amount s to which the partie s agreed . [* 1] 1 of 7 The court denied a reques t INDEX NO. 512735/2021 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 12/07/2022 to amehd the cofuplai nt to assert various claims anrl permitte d other claims. The parties have moved seeking to reargqe those determi nations. Conclus ions of Law A motion to r~argue mvst be o_ased upoT) the fact the court over looted or mis.ap.pre h:end.ed fact or la:w_ or for sdrne other reason mistaken ly ar.ri ved at in its .e.arlier .dec.is.io_ n (Deutsch e Bank. Nationa l Trust Co.. v. -Rus.so, 1 TQ .AD3d 9.52, 96 NYS2d 617 [2d Dept., 2019]). Inth.e prior decision the court noted that a corporat :iop may not af-firm:a tively- a-s-$ert a usu.::t;'y t::la_iII\ an.c::l. c.ite¢!. to Haymotint_ Urgent Care PC v. GoFund Advance LLC; 202-2 WL 2297768 [S.D.N_ .. Y. ·2022] to .support that conc·lus ion. Qpon r_eqrgµm ent tli.e· pl-a iriti ff' :s argue· the inabi Li t.y to as.$ ert usury claims al 1 ow s- a us:urer tb succeed. and ''-get away" wit.h su:ch illegai conduct ( ~ , ".Memorandum of Law, page 9 [NYSCEF ·-oo-c. No. :B.5]) .• That policy arg-umert t, -to the, ext.-ent t-he· argumen t Ls oompel1i ng_, i~ a -m_at_t.er properly ·placed bef·ore the Legislat ur~, not the Judici.-a ry. .Thus:~ this court is bo.und by clear precede nt that unifortn- ly holds ·np such a·ffirma tive c~use ·of a"cth)n based upon usury exi_sts.. For .examp1e , in Sc-ahtek Medic-al Inc., v. Sabella, ·-582 F.Supp2d 472 [S,D.N.Y . 2008] the c.ourt explaine d that: "New Yo-rk 1 s. criui.ina l usu_ry statute prohibi ts ~ pe.rson from -2 [* 2] 2 of 7 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 INDEX NO. 512735/2021 RECEIVED NYSCEF: 12/07/2022 knowirtg1y charging interest ort a loan at a rate exceeding 25% per annum,. N, Y ·• Pe11.al Law § 190. 4 0. The statute does not provide for Civil liability and from 1860 until 1965, corporatio ns were prohibite d by law from asserting criminal usury as a defense to claims brought in a civil action, Hammelbur ger v. Foursome Inn Corp., 54 N.Y.2d 580, 5H9, 446 N.Y.S.2ci 917, 431 N.E.2d 278 (1981) . In 1965; New York amended its statute to allow corporatio ns to "interpos e[ ] a defense of criminal usury" in civil litigation . N.Y. Gen. Oblig. Law§ 5-521{3). The . legislatur e created this exception because it felt that "it would be most inappropr iate to permit a usurer to recover on a loan for which. he could be pros:ecute d." Hammelbur ger, 54 N.Y. 2d at 590, 446 N.Y.S.2d 917, 431 N.E.2d 278 (citat{on omitted). Although corporatio ns like plaintiff can assert criminal usury as a defense, they cannot bring civil claims under the criminal statute. __.The statutory exception fo.t interest .exceeding 25 percent per annum is strictly an affirmativ e defense to an action seeking repayment of a loan." Intima,-Ei ghteen, Inc, v. A.H. Schreiber Co., 172 A,D.2d 456, 568 N.Y.S.2d 802, 804 (1st Dep 1 t 1991) (citations omitted). In a New York State Supreme court case seeking a declarato ry judgment that securitie s offerings. were void as usurious loans, the court granted defendant s' motion to dismiss stating,. "[I]nsofa r as the complaint seeks affirmativ e monetary relief, plaintiff improperly attempts to use a shield created by the Legislativ e as a sword/' .zoo Holdings, LLC v .. Clinton,. 11 Misc. 3d 1051 (A), 814 N .y. S,2d 893, 893 (Sup. Ct. 2006). In another New York Supreme court Case, the court determine d that the defendant corporatio n 1 s countercla im for usury was barred under New York law and that "the affirmativ e defense rnay only be asserted as an Offset to plaintiff s' claims only to the extent that it is alleged th:at plaintiff s have engaged in ·criminal usury," Donenfeld v, Brilliant Techs. Corp., No. 600664/07 , 20 Misc. 3d 1139 (A) ; 2008 WL 4 0 6588 9, at · *l (N. Y. Sup .Ct. July 14, 2008)" (id). Therefore ; contrary to the arguments of plaintiff s that prohibitin g affirmativ e causes of action of usury is against public policy, there are no recent cases that support that contention ; The plaintiff 's review of vintage and outdated cases Consequen tly, the motion do not demand a cont1=-ary result. seeking reargumeri t to assert a usury cause of action is denied. 3 [* 3] 3 of 7 ........ ·········· ·········· ·········· --------- --------- --------- --- INDEX NO. 512735/2021 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 12/07/2022 Next, the plain•ti f·f's seek to reargue the denial of a claim to. vacate the confessi on of· juc:igeme nt pursuan t to CPLR §5015. It is well Eiettled that CPLR §501"5 does not provide a .separat e cause of action but rather operates io permit a motion seeking to vacate a default (see, NROBos ton LLC v. Capcall LLC, 2020 WL 9810015 [Sµpreme Cou_rt Wes_tch ester Coµhty 2020]). act.ions. tQ va~at.e. co_n f e..!;l s ions pursuan t to CPLR §3218 .. j ud.gemen t must be commenc ed incluping _ the incorre ct statute Thus, within the arn_end~d complai nt fatal. Qf is a mere mistake which is ne.t This is .especia lly true where adequate . notice 9on_9erh ing the n~ture= of the c:laim is provided ·eve-nt. Indeed, t_o the defendan _ts. in any Mon=~over., cons.i:d.e ring tha.t erroneou s-· inclusio n. of CPLR -§5.0.15 it -ci:l-nnot ·be s.aid at thi.s juncture the compl·ain _t hc1~ tie.eri f il~d at an unreason -able time after t_he :enforcem ent o-f the confessi on of judgeme nt. Howev.er , the plainti ff's grounds se--eking to v.~_ cat.e t.he con.fe.s.si o:n o"f. judgeme nt ar.e that ·it -was .b1C1s~d upon =a, _;E-als.e affidav it (see, 'I l 8 4 of the P ropo.s ed second Amended C-or.npl-ai nt, [NYSCEF not:,. No. -24 J.) . sp·eci.fic a=lly, paragrap hs 121,-_1-28 des:c·ribe iaise stateme nts made by a represe ntative of the d.e_fen.dan:t in an af"fidavJ t- suppo,rt. irtg the filing of the confe·ss ion 9f j•uctg,_erii.ent. The a.1legati on-s essenti aliy assert that the affidav it "is not true·tr ( Paragrap h <JI12q") and c·ertairt stateme nts ·'"'are fals.e·,, (Paragra ph 9!128 ") . These allegati ons, "if true., are not fraud in 4 [* 4] 4 of 7 .. ······-- ··--·-- ------- ------- ------- - INDEX NO. 512735/2021 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 12/07/2022 the conve"t1tiorial sense because. those stateme nts did riot friduce any reliance on the part of the plafntif fs. Rather,. the allegati ons merely assert tl.1e defenda nts failed terms of t.he contract .. ttf abide the Thus, these allegati ons are a repeat of the breach of contrac t cause of action. There is nothing specif :Lcally unique about these al.legati ons that covered by the b:r:ea.c)1 o.f c;:ontrac t claim~ a.re not already To the extent the plaintif fs seek to vacate the .confess ions o.f judgernen .t., sureiy if they :prevail upo.n a breach-. of c;ontrac t claii:n then necessa rily the -confes.s ions of j.u.dgeine rit will be vacated. . Consequ ently,. .the motion ~eeking to reargue the inclusi.o n .of the second, cou.nt is denied. t,lext, th€! plain.tif .fs move seeking- to r:eargue the denial of the inc1u$io n of any fraud. claim. The q.ourt based its conclusi on bn thef fact the fra:ud claim a.l.leged perjµry and theTe is no civi.l cause of 'action .hase.o. upon perjury. The pl:ainti fr' s nave. not rai,9 ed any argumen t demandin g a revi:ew of that deterrrd;, b.atioti .. Therefore ··,. the moti.on seeking to reargue the denial oE this .caus¢ of act.ion, Ts denied. Next, the plainti ff's re.a.rgue tl'le denial iJ.f the sixth ca\1se of· action seeking unjust enricchrn eht an:d quantum. me·rui t. ·The plainti ff's do not pre·sent any argumen t why the court erred in its 'earlier determin a.tion, rather, jU~lt a.s·sert that it is unfa.ir defenda nt's counsel re·cEdved suth a large fee. That fe.e w·as 5 [* 5] . ····-·· 5 of 7 ----- ----- ----- ----- ----···-·- -···-· ----- ----- INDEX NO. 512735/2021 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 12/07/2022 contra ctually negoti ated betwee n t:he parties and the plaint iff's have not presen ted any eviden ce why the court should revisi t its prior determ ination . . . . Theref ore, a.11 the motion s seeking reargur nent ar.e denied . The defencta :ht has moved seeking to reargue tl:i.at the individ ua1 .defend ants action , do not mainta in any standin g to pursue this There can be no doubt the plaint iffs execut ed confes sions of judgem ent andrnay have person a1 claims . Tne court need not reach that issue since in any event the plaint iff's clg.irns have been assigne d by functio n .of their bankru ptcy declar ation in Canada. and they now have no right to pursue any claims in this regard . The plaint iffs assert the bankru ptcy trustee will not be taking a positio n regard ing law.sui ts in the United States No. 100]). (see, Email dated Novemb er 16, 2001 [NYSCEF Doc. First, the email further explain s that any other credito rs may pursue such intere sts in this lawsui t. More import antly, whethe r or not the Canadi, m Bankru ptcy trustee seeks r the to take. any po5:itio n in this action ha.a no bec1.rin g .pn whethe individ ual plaint iffs mainta in any standin g. bankru ptcy they have no furthe r standin g. By virtue of the Theref ore, the motion seeki11g reargum ent in this regard is grante d and up.o.n reargum ent the motion seeking to dismis s the individ ual claims Of the plaint iffi s is grante d. Any furthe< r motion seeking to ·dismis s any other portion 6 [* 6] 6 of 7 INDEX NO. 512735/2021 FILED: KINGS COUNTY CLERK 12/07/2022 10:17 AM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 12/07/2022 of the secorid amended complaint is denied. The motion seeking to dismiss the third amended complaint is granted. Should the plaintiff seek to, file any further complaints, court approval is first required. So ordered. ENTER: DATED: December 7, 2022 Brooklyn N.Y. d Hon. Leon Ruchelsman JSC 7 [* 7] 7 of 7

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