TVT Capital, LLC v Legend Ventures
Annotate this CaseDecided on July 16, 2018
Supreme Court, Ontario County
TVT Capital, LLC, Plaintiff,
against
Legend Ventures D/B/A SOLAR MODERN ENERGY/LEGEND MARKETING/LEGEND MOTOR SPORTS/SHAMROCK EMPIRE LLC/QUANTUM PRODIGY INC,/THE PERK LLC/SMPS CONSULTING, LLC and MATHEW SHANE PERKINS, Defendants.
116856-2017
Ashlee Colonna Cohen Esq., The Rubin Law Firm, PLLC, for Plaintiff TVT Capital LLC
Shane Heskin, Esq., White and Williams LLP for the Defendants
Daniel J. Doyle, J.
In this case the Defendants have moved to vacate a confession of judgment entered against them on the grounds that (1) it was improperly entered pursuant to CPLR 3218; and (2) the attorneys fees in the judgment were not supported.
In October 2017, the Plaintiff and Defendant Legend Ventures entered into an agreement whereby the Plaintiff purchased $149,900.00 worth of Legend Ventures' receivables for a discounted purchase price of $100,000.00. In connection with that agreement, the Defendants executed a confession of judgment. The confession of judgment indicated that the confession of judgment may be filed "in any and all Counties in the State of New York."
The Defendant paid $41,912.20 before defaulting on the agreement. On December 19, 2017, Plaintiff filed the confession of judgment and the Plaintiff's affidavit with the Ontario County Clerk. On December 20, 2017, a judgment was entered in the amount of $107,987.80 (the amount confessed in the confession of judgment less what was paid), plus attorneys fees in the amount of 25% of the unpaid balance, plus interest and costs totaling $135,689.04.
The Defendants move to vacate the judgment and the confession of judgment on the [*2]grounds that it violates CPLR 3218. CPLR 3218 provides in pertinent part:
(a) Affidavit of defendant. ...[A] judgment by confession may be entered, without an action, either for money due or to become due...upon an affidavit executed by the defendant: 1. stating the sum for which judgment may be entered, authorizing the entry of judgment, and stating the county where the defendant resides or if he is a non-resident, the county in which entry is authorized....b) Entry of judgment. At any time within three years after the affidavit is executed, it may be filed with the clerk of the county where the defendant stated in his affidavit that he resided when it was executed or, if the defendant was then a non-resident, with the clerk of the county designated in the affidavit....
The crux of the Defendants' argument is that CPLR 3218 only permits the designation of one county for the filing of a confession of judgment and supports this argument that the language of the statute uses the term county in the singular and not the plural.
As a general matter, a debtor seeking to vacate a judgment entered against him upon the filing of a confession of judgment may not proceed by way of motion, but must instead seek relief by commencing a separate plenary action (City of Poughkeepsie v Albano, 122 AD2d 14 [2d Dept 1986]). The exception to this general rule occurs when the judgment was entered without authority; in those cases, the debtor may proceed by motion" (Ripoll v Rodriguez, 53 AD2d 638, 638 [2d Dept 1976]).
Here, the confession of judgment authorized the filing of the confession of judgment in any county in the State of New York and, therefore, it cannot be said that the confession of judgment was filed in a county not authorized by the Defendants (cf Irons v Roberts, 206 AD2d 683, 685 [3d Dept 1994] (confession of judgment filed in Tioga County was unauthorized because it only authorized filing in Bradford County, Pennsylvania)). Defendants argue that because CPLR 3218 only uses the singular "County," a defendant cannot authorize the filing of a confession of judgment in multiple counties.
As a matter of statutory construction, General Construction Law § 35 provides that "words in the singular number include the plural, and in the plural number include the singular." This precept is readily apparent in CPLR 3218 since it speaks in terms of a singular "defendant" confessing judgment and yet, has been applied to multiple defendants confessing judgment (see e.g. Cash and Carry Filing Serv., LLC v Perveez, 149 AD3d 578, 578 [1st Dept 2017]).
The rule of General Construction Law § 35 applies to the CPLR 3218 "unless its general object, or the context of the language construed, or other provisions of law indicate that a different meaning or application was intended" (People v Buckley, 75 NY2d 843, 846 [1990] quoting General Construction Law § 110). Here, construing CPLR 3218, it does not appear that the Legislature intended that a confession of judgment could designate only one county in which it would be filed. A proponent of the argument that a confession of judgment may only be filed in one county could point to the case of a resident defendant in which case CPLR 3218 provides [*3]that a confession of judgment may be filed where the defendant resides. However, the CPLR acknowledges that a party may have more than one residence and may reside in more than one county (CPLR 503[a]), and if a party may reside in more than one county, then it appears plain that such a party could properly designate every county in which he lived for the purposes of filing a confession of judgment under CPLR 3218.
Defendants rely heavily upon a holding of the Court of Appeals finding the Pennsylvania cognovit procedure as unconstitutional because , among other reasons, permitted the entry of a judgment by confession "anywhere in the world" without notice, holding that allowing such entry violated due process and deprived the rendering court of jurisdiction (Atlas Credit Corp. v Ezrine, 25 NY2d 219, 232 [1969]). The Defendants extrapolate the principle that permitting the entry of judgment anywhere in the world to anywhere in New York and argue that it would violate due process to permit the filing of a confession of judgment that authorized the filing anywhere in New York. First, Atlas Credit Corp dealt with the Pennsylvania cognovit statute and not CPLR 3218. Second it was later recognized as abrogated by the subsequent Court of Appeals case of Fiore v Oakwood Plaza Shopping Ctr., Inc., 78 NY2d 572 [1991]). Finally, in Fiore, in which the Court of Appeals found the Pennsylvania cognovit statute permitted New York to provide full faith and credit to a cognovit judgment, the cognovit in that case contained a "'warrant of attorney,' a provision that empowers any attorney to enter the obligor's appearance in any court of record and to waive—on the obligor's behalf—process and consent to the entry of judgment" (Fiore v Oakwood Plaza Shopping Ctr., Inc., 78 NY2d at 578). By upholding a cognovit judgment that permitted entry in "any court of record," it is clear that the Court of Appeals abrogated entirely its prior holding in Atlas Credit Corp, and any reliance upon that case is misplaced.[FN1]
Finally, the issue of the attorneys fees cannot be addressed by motion, but, instead, the confession of judgment must be challenged by plenary action (GTR Source, LLC v Futurenet Group, Inc., 58 Misc 3d 1229(A) [Sup Ct 2018]; see
Headquarters Rest Corp. v Reliance Vending Co., 133 AD2d 444, 446 [2d Dept 1987]).
Based upon the foregoing, it is hereby
ORDERED that the Defendants' motion to vacate the confession of judgment and the judgment entered against them as invalid under CPLR 3218 is hereby denied; and it is further
ORDERED that the Defendants' motion to vacate the confession of judgment and the judgment entered against them for the other reasons asserted in the motion is hereby denied without prejudice to their seeking relief by way of a plenary action.
DatedJuly 16, 2018
________________________________
The Honorable Daniel J. Doyle
Supreme Court Justice Footnotes
Footnote 1:The balance of the Defendants' arguments regarding CPLR 3218 have been squarely addressed by GTR Source, LLC v Futurenet Group, Inc., 58 Misc 3d 1229(A) [Sup Ct 2018] and the Court adopts the decision's reasoning to reject the remaining arguments herein.
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