EBF Partners, LLC v Yaz & Yash LLC

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EBF Partners, LLC v Yaz & Yash LLC 2017 NY Slip Op 31600(U) July 19, 2017 Supreme Court, Westchester County Docket Number: 65598/16 Judge: Mary H. Smith Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 1] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 DECISION AND ORDER To commence the statutory period of appeals as of right (CPLR 551 :i(a]), you are ad~ised to serve a c;opy of this Order, with notice of entry, upon all parties. SUPREME COURT OF THE STATE OF NEW YORK lAS PART, 'NESTCHESTER COUNTY Present: HON. MARY H. SMITH Supreme Court Justice ---------------_ .._-----------------~---------------------------------------------------)( EBF PARTNERS, LLC, Plaintiff, MOTION DATE:6/23/17 INDEX,NO.: 65598/16 -againstYAZ & YASI-I LLC D/B/A Y&Y and NAVPREET SINGH, , Defendants. --------------------------~------------------------------------------------~--~---------)( The following papers numbered 1 to 8 were read on this motion by defendants for an Order vacating a filed confession of judgment, etc. Papers Numbered Order to Show Cause -,Affidavit (Singh) - Exhs. (A-C) - Affirmation (Weinberg) Memorandum of Law ; Answering Affirmation (Movahed) - Exhs. (A-D) - Memorandum of Law 1-5 6-8 Upon the foregoing papers, it is Ordered that this motion by defendants for an Order vacating the filed October 17, 2016, confession of judgment and, upon vacature, "if the usury issue was not reached compelling plaintiff to arbitrate the parties' claim and dispute," I is denied. Plaint,jff EBF Partners, LLC is a limited liability company existing under the laws of -1:- 1 of 8 [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 2] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 Delaware, with its place of business located in New York City. On September 14, 2016, defendant Yaz & Yash LLC d/b/a Y&Y ("Yaz") had entered into a 9-page agreement ("Agreement") with plaintiff whereby Yaz sold its future receivables and sale proceeds, with an agreed face value of $31 ,740.00, to plaintiff for the purchase price of$23,000, and had granted plaintiff a security interest in and lien upon all accounts. There is no dispute that plaintiff in fact had paid the stated full purchase price to defendant Yaz. Pursuant to the Agreement, defendant Yazhad agreed to conduct is business in good faith and to deposit all of its sale proceeds into a designated business account; plaintiff was authorized to debit from this business account 20 percent ofYaz's sales proceeds until such time as plaintiff had received the full purchased amount. The Agreement expressly provides that defendant vvill be in default under the Agreement if among other things it interferes with plaintiff's rigl,t to collect the payments or in any way violates any term of the Agreement. In addition to the Agreement, defendant Singh, Yaz's owner, had executed a September 15, 2016, personal guaranty of Yaz's performance under the Agreement, with defendants' joint and several liability. This guaranty'had been executed and notarized in Indiana .. Also, on September 15, 2016, defendant Singh had executed, both in his capacity as ownerand principal of defendant Yaz and on his individual behalf! a 3-page Affidavit of Confession of Judgment ("Affidavit" or "Confession of Judgment") .. Same had been notarized in [=Ioridawithout acknowledgment, and without an accompanying Certificate of Conformity. This Affidavit expressly provides for the entry of judgment against defendants jointly and severally for the outstanding purchased receivables, plus legal fees in the sum of 25% of said total sum. This Affidavit expressly further provides that both defendants and -2- 2 of 8 [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 3] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 plaintiff consent to the entry of judgment in: any court, state or federal sitting in the State of New York, including, but not limited to the Supreme Court of the State of New York County of Westchester .... If for any reason, the entry of judgm'ent is . o~tside. the jurisdiction of the aforementioned court(s), [both] Defendant(s] consent to the personal jurisdiction, the entry of judgment, and execution thereon in any court, state or federal ... According to plaintiff, defendant Yaz partially had performed under the Agreement leaving, as of September 23,2106, an outstanding balance owed plaintiff in the sum of $31,018.65. On that date, plaintiff maintains that defendants had breached the Agreement by placing a stop payment on all debits of the specified percentage from Yaz's specified deposit account. . On October 5, 2016, plaintiff had filed the Affidavit of Confession of . . Judgement against defendants, seeking entry of judgment, plus interest from September 14,2016, and attorney's fees in the sum of $7,754.66. Judgment had been entered by the County Clerl<, on October 17,2016, in the total sum of$39,250,71. Defendants have filed the instant June 5,2017, Order t6 Show Cause, under the index number assigned to the entered confessed judgment, seeking to' vacate said judgment, arguing that there are "facial irregularities in the entry of the confession of judgment, and the text of the parties' contract." Defendant Singh enumerates and details in his supporting affidavit the many alleged inadequacies and inconsistencies within the parties' AgrE!ement, as well as between the Agreement and the supporting affidavit that plaintiff had submitted to the Clerk in support of entry of the judgment, which defendants contend require vacature of the Judgment of Confession. , As an initial matter, the Court rejects as being completely unsupported by any legal analysis and cited legal authority defendants' implied argument that defendants necessarily -37 3 of 8 [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 4] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 are entitled to vacature of the entered Judgment of Confession because plaintiff, a limited . '.' liability corporation formed under Delaware law, is not registered in New York, and it . , "appears to be doing business in New York without the requisite registration required by Limited Liability Law, S808." The burden properly had been upon moving defendants to establish their entitlement to prevail on this argument, which they have failed to do. As a second initial matter, defendants' motion is denied in part as being procedurally improper. A confessed judgment is valid only if it conforms to the strict requirements of CPLR.3218. See Hynes v. Skarvelis,6 Misc.3d 1038(A) (Sup. Ct. Kings Co. 2005). CPLR 3218, subdivision (a), paragraph 1, provides that a judgment of confession properly may be entered upon a supporting affidavit executed by a defendant in favor of a plaintiff which states the sum for which defendant agrees judgment may be entered, which authorizes the entry of that judgment and which states the county in which defendant resides or in which entry is authorized. CPLR 3218, subdivision (a), paragraph 2, further states that the . required affidavit shall "stat[e] concisely the facts out of which the debt arose and show[] that the sum confessed is justly due or to ~ecome due." The Affidavit is sufficient undet the statute if it adequately sets out the facts giving rise to the underlying debt. See Giryluk v. Giryluk, 30 A.D.2d 22, 25 (1st Dept. 1968), affd. 23 N.Y.2d 894 (1969). The subject executed Affidavit of Confession of Judgment, on its face, complies with the requirements of CPLR 3218, and thus this Court finds that plaintiff properly had presented same for filing, and that the Clerk properly had accepted and entered judgment thereon. Indeed, defendants concede in their supporting Memorandum of Law that "[t]his motion has nothing to do with CPLR 3218(a)(2)." . . Generally, a defendant seeking an Order setting aside an Affidavit of Confession .' -4"" . 4 of 8 [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 5] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 of Judgment or, as here, vacatin~ a Judgment by Confession, must be challenged by way of commencement AD.3d of a plenary action. See Regency Club at Wallkill, LLC v. Bienish, 95 879 (2nd Dept. 2012); Rubino v.Csikortos,258 Scheckterv. AD.2d 638 (2nd Dept. 1999); Ryan, 161 AD.2d 344 (1st Dept.1990). Only if the Affidavit of Confession of Judgment is> defective on its face, or ithad been entered without authority or in violation of its terms, may same bevacated by the simple expedient of a motion. See CoLintyNat. Bank v. Vogt, 28 AD.2d793 (3rd Dept. 1967); Rae v. Kestenberg, 23 A.D.2d 565 (2nd Dept. . ..1965);, Fabnizio, Radmin. Buksbaum & Co. v. Giordano, 17 Misc.3d 1126(A) (Nass. Co. Dist. Co. 2007); ct. Ripoll v. Rodriguez, 53 AD.2d 638 (2nd Dept. 1976). Contrary to defendants' argument, the entered Judgment of Confession is not being challenged based upon "facial irregularities" but rather, as stated by defendants, based upon alleged inadequacies and inconsistencies within the parties' Agreement, as well as between the; Agreement and the supporting affidavit. . Indeed, pages 3 through 12 of defendant Singh's submitted 12-page affidavit is devoted to addressing the foregoing. Nor does the Court find, contrary to defendants' argument, that their unproven' claim that the interest rate charged for this commercial agreement is criminally usurious permits any basis for finding that the Gonfessionof Judgment 'is facially defective, permitting defendants to obtain relief by simple motion. argument that the underlying Agreement In any event, the Court credits plaintiff'~ had not been a loan but rather a merchant agreeme'nt, and thus outside the ambit of the usury statutes. This Court thus conCiudes"that it had been patently improper for defendants to have filed this motion under the previously assigned index number; defendants had been required to have commenced a plenary action in order to challenge the Confession of -5- 5 of 8 [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 6] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 Judgment, which they fatally have failed to do. This Court also finds no merit to defendants' strained argument that the subject executed Confession of Judgmel'Jt, which expressly states that same could be filed ~ith the clerk in anyone of three named venues, including the Clerk of Westchester County, is fatally defective as violative of CPLR 3218, subdivision (b). CPLR 3218, subdivision (b), states that a Confession of Judgment "may be filed with the Clerk of the county where the defendant resided when it was executed or, if the defendant wasthen a non-resident, with the clerk of tile county designated in the affidavit." Emphasis supplied. While defendants maintain that the use of the word "the" in said statute necessarily prescribes "the singular, or only one," defendants cite no controlling New York authority interpreting said statute in said limited fashion, or holding that the speCification of more than one venue .in a Confession of Judgment is violative of CPLR 3218, subdivision (b). legitimate basis for agreeing with defendants' This Court finds no afore contention,. especially since the intended' legislative. purpose in restricting the county in which the Affidavit of Confession ot Judgmenl could be entered to that which is stated in the Affidavit is met by the subject Affidavit of Confession of Judgment. . FU,rther,the Court rejects defendants' argument that the Westchester County Clerk had been without authority to accept .for filing the Affidavit of Confession of Judgment which had been acknowledgment. notarized in. Florida without a certificate of conformity or any The absence of a certificate of conformity and/or acknowledge is a mere irregularity, not a fatal defect, which can be ignored, as here, in the absence of a showing of actual.prejudice. See Deutsche Bank Nat!. .Trust Co. v. Naughton, 137 A.D.3d 1199, nd 1200 (2n~ Dept. 2016); Gonzalez v. Perkan Concrete Corp., 110 A.D.3d 955 (2 '-6- 6 of 8 Dept. \ [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 7] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 940, 942 (2nd Dept. 2012); Betzv. Daniel 2013); Fredette v, Town ofSmith~6wn,95AD.3d Conti, Inc., 69 ~.D.3d 545 (2nd Dept. 2010). Further, while Articl~ VI of the parties' Agreement does provide for the alternative mechanism of dispute resolution by way of arbitration, defendants had failed to send plaintiff, in accordance with the Agreement's terms, a certified mail, written Notice of Intent to Arbitrate; consequently, defendants have waived theirrightto seek arbitration. Finally, while defendants now take exception to the provision agreed upon in the Affidavit of Confession of Judgment granting plaintiff attorney's fees equal to 25% of the total outstanding purchased receivables, defendants not incorrectly arguing that only the Court can determine the reasonableness of attorney fee awards, this Court finds nOthing unreasonab'le about what amounts to a $7,754.66 attorney fee award herein, on the entered $31,018.65 judgment given that plaintiff's counsel actually had drafted the parties' underlying Purchase and Sale Agreement, as well.-as the Security and Guaranty, the Affidavit of Confession of Judgment, in addition to the proposed judgment: Cf. Headquarters Rest Corp. v. Reliance Vending Co., 133 AD.2d 444, 446 (2nd Dept. 1987); Mead v. First Trust & Deposit Co., 60AD.2d Dated: July J 71 (4th Dept. 1977). q , 2017 --White Plains, New York -7- 7 of 8 [*FILED: WESTCHESTER COUNTY CLERK 07/19/2017 04:14 PM 8] NYSCEF DOC. NO. 23 INDEX NO. 65598/2016 RECEIVED NYSCEF: 07/19/2017 ARY H. SMITH J.S.C. Amos Weinberg, Esq ... Atty. For Defts. 49 Somerset Drive South Great Neck, New York 11020-1821 Vogel Back & Horn, LLP Attys. For Pitt. 1441 Broadway New York, I\lew York 10018 -8- 8 of 8

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