Equable Ascent Fin. LLC v Tirado
Annotate this CaseDecided on August 10, 2015
Civil Court of the City of New York, Richmond County
Equable Ascent Financial LLC, Plaintiff,
against
Damian Tirado, Defendant.
6126/11
Philip S. Straniere, J.
Plaintiff, Equable Ascent Financial, LLC (Equable), commenced this action against the defendant, Damian Tirado, alleging that the defendant failed to pay a consumer credit debt. The defendant neither appeared nor answered and a default judgment was entered by the clerk on March 8, 2012.
Currently before the court is an application by plaintiff to file an "assignment of judgment." The document is dated February 12, 2015 and is signed by Stephanie Cappelli as the "Authorized Representative, Cavalry SPV I, LLC (Cavalry), as attorney-in-fact for Equable Ascent Financial, LLC." Cavalry is an active entity registered with New York Department of State.
On its face, the documentation appears to be in order. However, there is an issue which might negate the filing. The problem is that Equable is listed as an "inactive" entity with the New York Department of State, Division of Corporations having filed a "surrender of authority" on December 10, 2013. It had originally registered in New York on January 27, 2010 as a foreign limited liability company formed in Delaware in September 2009.
In its New York filing Equable listed its address for service of process in Chicago, Illinois and its address on the summons and complaint in Buffalo Grove, Illinois. A check with the Illinois Secretary of State indicates Equable's status in that state is "withdrawn" as of November 19, 2013. Unfortunately, a search of the Delaware Department of State records does not provide a current status of Equable.
A foreign limited liability company such as Equable is required to obtain a certificate of authority pursuant to New York's Limited Liability Company Law (LLCL) Article VIII in order to conduct business in New York [LLCL §805]. It is also required to obtain a "certificate of surrender of authority" when it no longer intends to do business in New York and "(t)he authority of the foreign limited liability company to do business in this state shall terminate on such filing of the certificate of surrender of authority" [LLCL §806].
The problem for the plaintiff is that if Equable ceased to be a legal entity in New York after December 10, 2013, how did it execute a valid power of attorney to Cavalry on February 12, 2015? There must be some documentation that Equable was still a "live" entity as of the date of the execution of the assignment and not another "zombie" company attempting to transact business from beyond its self-made legal grave. A search of New York statutory and case law does not reveal any requirement that such business entities have a bell to ring so as to alert judges that they may be dealing with a situation of a "premature burial" where the business can somehow continue to operate after its death and interment in the defunct corporation/company mausoleum.
This is another example of a presumed Grateful Dead entity Who has joined the Band of business Zombies, some of whom Ten Years After ceasing to exist are still executing documents and expecting the court to accept them with Blind Faith. The Association of these entities with accounts which are not the Cream of consumer credit transactions, has, after a lot of Blood, Sweat and Tears on the part of the court personnel examining the Grassroots of each file, disclosed many Kinks in getting to the Heart of the current process. Even a Strawberry Alarm Clock would not be enough to alert the clerks, who Love their work, to the Grand Funk being created by these Rascals and give Creedance to some of these filings. The Doors to potential abuse opened by these filings require the court to examine each application like Big Brother rather than accept them like some benevolent Queen. It's A Beautiful Day when these filings may be accepted without question. Perhaps that is what happens in places like Buffalo Springfield or Chicago.
Because of the discrepancy between the date of surrender and the date of the assignment, plaintiff has to provide proof that Equable was legally able to assign the judgment on the date the document was executed. And if the power of attorney predates its New York demise, that the law allows its use from beyond the grave.
There is another issue raised by this submission. Assuming for the sake of argument that Equable is still alive and kicking, there must be some evidence as to the contents of the power of attorney and exactly what acts Cavalry was given the authority to perform. The question exists as to whether a limited liability company may execute a power of attorney, or may such a document only be issued by and to an individual.
Counsel needs to provide some law establishing whether both Equable as the principal and Cavalry as the agent, have to produce a resolution from Equable and Cavalry authorizing a member of the LLC to execute the document. Especially if the power of attorney was being used to dispose of assets of the LLC.
In New York, the General Obligations Law (GOL) Article 15 defines and governs the use of powers of attorney. In the above fact situation, Equable would be the "principal" and Cavalry the "agent." What causes concern for the court is the language of the statue defining a "principal" as "an individual who is eighteen years of age or older, acting for himself or herself and not as a fiduciary or as an official of any legal, governmental or commercial entity, who executes a power of attorney" [GOL §5-1501(2)(k)].
An "agent" is defined as "a person granted authority to act as attorney-in-fact for the principal under a power of attorney,...[GOL §5-1501(2)(a)] while a "person means an individual whether acting for himself or herself or as a fiduciary or as an official of any...commercial entity (including but not limited to, any such entity identified in this subdivision),...limited liability company....[GOL §5-1501(2)(i)].
The applicability of these definitions to the within situation appears to have been negated by GOL §5-1501(1) which states: "This title shall apply to all powers of attorney except powers of attorney excluded from this title by section 5-1501C of this title."
GOL §5-1501(C) "Powers of attorney excluded from this title" provides:The provisions of this title shall not apply to the following powers of attorney:1. a power of attorney given primarily for a business or commercial purpose,including without limitation:(a) a power to the extent it is coupled with an interest in the subject of the power;Equable and Cavalry have to provide proof that the assignment of the judgment by use of a power of attorney is permitted under the law of New York or the law of Delaware, the state of their formation, and that the assignment is permitted under their respective certificates of authority issued when they formed as LLC's. Plaintiff has to establish that the transaction is not subject to GOL §5-1501 and is covered by the GOL §5-1501(C).
Counsel for the plaintiff is to brief the issue as to whether an LLC may be either a principal or an agent pursuant to a power of attorney.
Based on the foregoing, plaintiff must provide:
1. Documentation that Equable is still a viable entity under the laws of Delaware and was legally able to execute the power of attorney on the date indicated;
2. A copy of the power of attorney indicating the date it was issued and the authority granted to Cavalry;
3. A copy of the resolution from Equable authorizing one of its members to execute the power-of-attorney;
4. A copy of the resolution from Cavalry authorizing one of its members to act as attorney-in-fact for Equable;
Counsel will provide such documentation in Part 56, at 9:30 AM on Tuesday September 29, 2015, at the courthouse, 927 Castleton Avenue, Staten Island, New York.
The foregoing constitutes the decision and order of the court.
Dated: August 10, 2015
Staten Island, NY
____________________________________
HON. PHILIP S. STRANIERE
Judge, Civil Court
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