Flash Funding Servs., Inc. v Fan Food Corp.

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Flash Funding Servs., Inc. v Fan Food Corp. 2020 NY Slip Op 34022(U) December 2, 2020 Supreme Court, Nassau County Docket Number: 603802/2020 Judge: James P. McCormack 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 INDEX NO. NO. 603802/2070 603802/2020 [*FILED: 1] NASSAU COUNTY CLERK 12/09/2020 11:58 AM RECEIVED RECEIVED NYSCEF: NYSCEF: 12/07/2020 12/07/2020 NYSCEF DOC. DOC. NO. NO. 36 36 NYSCEF SUPREME COURT - STATE OF NEW YORK PRESENT: HonorableJamesP. McCormack Justice of the Supreme Court l'RIAL/IAS, PART 18 NASSAU COUNTY FLASHFUNDING SERVICES; INC.; Plaintiff(s), Index No.: 6()3802/2020 -againstFAN FOOD CORP., and TENLONG LO, Motion Seq. No.: 002 & 003 Motion Submitted: 9/30/2020 Defendant(sJ. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _x . The following papets read on this motion: Order to Show Cause/Supporting Exhibits ........_.. ,.............................X Notice of Cross Motion/Supporting Exhibits ....•.... ,..........................X Affirmation in Opposition to Cross Motion/Further Support! Supporting Exhibits ........... ,.............................................................. X Plaintiff,, Flash Funding Services,: Inc. (Flash), moves this court (Motion Seq.··002} for leave to amend its summons and complaintto add anew party, and for a preliminary injunction seeking to restrain funds belonging to DefendantFan Food, Corp, (Fan} Tenlong Lo (Lo) or current non-party Fan Chinese Cuisine; Inc. (Fan Chinese). Fan and Lo do not oppose the motion to amend,· but oppose the motion for a preliminary. injunction, and cross move (Motion Seq. 003}to vacate their default in opposing a prior motion. Flash opposes the cross motion. 1 of 9 [*FILED: 2] NASSAU COUNTY CLERK 12/09/2020 11:58 AM INDEX NO. 603802/2070 INDEX NO. 603802/2020 RECEIVED 12/07/2020 RECEIVED NYSCEF: NYSCEF: 12/07/2020 NYSCEF DOC. DOC. NO. NO. 36 NYSCEF 36 Flash and Fan entered into an agreement whereby Flash purchased certain receivables.from Fan fot$53,000.00. In return, Fan agreed to allow Flash to receive 25%. of its receivables until Flash was paid $7 5, 790.00. Lo guaranteed the payment ammmt. At some point Defendants stopped paying25% of its receivables. Flash commenced the within action and Defendants failed fo appear. By short form order dated July 7, 2020, this court granted Flash's unopposed motion to restrain certain bank accounts. Flash then moved by order to show cause seeking to add Fan Chinese Cuisine Inc. {Fan Chinese) to this action, arguing that once Fan's bankaccounts wererestrained, Fan opened up Fan Chinese, with a new bank account, and simply continued operating its business under a new name, without having to pay Flash. FLASH'S MOTION TO AMEND THE COMPLAINT (MOTION SEQ. 002) " 'Leave to amend pleadings shoul4 be freely given provided that the amendment is not palpably insufficient, does notprejudice or surprise the opposing party, and is not patently devoid of merif ,; (Bloom v. Lugli, 102AD3d 715 [2d Dept 2013]; quoting Greco v. Christoffersen, 70 AD3d 769, 770 [2d Dept 20 I 0], quoting Gitlin v: Chirinkin, 60 AD3d 901, 901-902 [2d Dept2009]; see CPLR3025 [b]; ). "A determination whether to grant such leave is within the Supreme Court's broad discretion, artd the exercise of that discretion will not be lightly disturbed" (Gitlin,60 AD3d at 902; see Greco~ 70 2 2 of 9 [*FILED: 3] NASSAU COUNTY CLERK 12/09/2020 11:58 AM NYSCEF DOC. DOC. NO. NO. 36 INDEX INDEX NO. NO. 603802/2020 603802/20Zll RECEIVED NYSCEF: NYSCEF: 12/07/2020 A.D.3d at 770). "The granting of such leave is committed to the sound discretion of the trial court and must be determined on a ·case-by-case basis" (Biaggi & l3iaggi v. 175 Medical Vision Properties, LlC, 105 ADJd 790, 791 [2d Dept. 2013 ]; quoting Skinner v. Scobbo, 221 A.D.2d 334, 335 [2d Dept 1995]). The same standards that apply to amend pleadings apply to amendments of bills of particulars. {Daly-Caffrey v. Licausi, 70 AD3d 884 [2d Dept2010]). Herein, the motion to amend the complaint is unopposed. As such, it will be granted. As for the preliminary injunction, Flash claims that Fan never stopped operating its business, but simply changed its name, and in May and June, 2020 grossed over $120,000.00 for the month. Upon presentation of the order to show cause seeking to amend and restrain bank accounts, this court granted Flash a temporary _restraining order (TRO) on the bank accounts and financial services Fan artd Fan Chinese were using to operate. That TRO remains in effect. It is well established that to prevail on a motion for preliminary injunctive relief, the movant must clearly demonstrate a likelihood of success on the merits; the prospect of irreparable harm orinjury if the relief is withheld and thata balance of the equities favors the movant's position (see .Wheaton/TMW Fourth Ave., LP v. New York City Dept. of Bldgs., 65 AD3d 1051 [2d Dept 2009]; Pear/green Corp. v. Yau Chi Chu; 8 AD3d 460 3 3 of 9 [*FILED: 4] NASSAU COUNTY CLERK 12/09/2020 11:58 AM NYSCEF DOC. DOC. NO. NO. 36 INDEX INDEX NO. NO. 603802/2020 603802/202b RECEIVED NYSCEF: NYSCEF: 12/07/2020 [2d Dept. 2004]), The decision to grant a _preliminary injunction is committed to the sound discretion of the court (see Tatum v~ NeweltFitnding, LLC.; 63 AD3d 911 [2d Dept. 2009]; Bergen-Pine v. OilHeatlnst., Inc., 280 AD2d 504 [2d Dept.2001] ), as the remedy is considered to be a drastic one (see Doe v. AX,elrod, 73 NY2d 748 [1988]). Consequently,· a clear legal right to relief which is plain from undisputed facts must be established(see Wheaton/TMW Fourth Ave., LPv. New York City Dept. ofBldgs., 65 AD3d 1051, supra; Gagnon Bus Co., Inc. v. Vallo Transp. 1 Ltd., 13 AD3d 334 [2d Dept 2004]; Blueberries Gourmetv. Aris Realty, 255 AD2d348 [2d Dept 1998]). Article 63 ofthe CPLR governs the issuance of preliminary injunctions and temporary restraining orders. Pursuantto CPLR § 6301, a preliininaryinjunctiohtnay be granted in an action for permanentinjunctivereliefto restrain the defendant, during the pendencyofsaid action~ from doing thatwhich the plaintiffseeks to enjoin permanently, by the firi:al judgment. In addition, a preliminary injunction may be granted in any action . . . . . . where it appears that a defendant threatens, or is about to do, or is doing, or procuring to be done, an act in violation of the plaintiffs rights, respecting the subject of the action, which is likely to render the judgment ineffective. To. constitute. the "subject :of the action" within the contemplation ofCPLR § 6301, the property or assets for which restraint is soughtmust be unique or sufficiently specific and the very obJect of the claim giving rise to the demand for preliminary injunctive relief(see CreditAgricole1ndosuez 4 4 of 9 [*FILED: 5] NASSAU COUNTY CLERK 12/09/2020 11:58 AM NYSCEF DOC. DOC. NO. NO. 36 INDEX INDEX NO. NO. 603802/2020 603802/2020 RECEIVED NYSCEF: NYSCEF: 12/07/2020 v. RossiyskiyKredit Bank, 94 NY2d541 [2000]; CobyGroup, LLCJ v. Hasenfeld, 46 AD3d 593 [2d Dept2007]). The court finds Flash has established entitlement to a preli~inary injunction. Flash has e;itablished itwould be successful on the rnerits· by proving Fan stopped making payments. Whilein general, irreparable harm cannot be proven where rnoney damages can make a party whole, herein Flash has established, atthis point, that Fan has simply changed the business entity it was operating under, likely leaving Fan itselfinsolvent and rendering any judgment Flash may get to be worthless, Finally, the equities favor Flash in that they held up their end of the bargain by paying Fan $53,000.00, yet Fan did not . . . . hold up their end of' the bargain whenthey stopped payments soon thereafter. In opposition to the preliminary injunction, Lo, who owns Fan, submits an affidavit that does not deny· not paying Flash. He also does not deny that Fan Chinese simply· took over for Fail~ He claims that Flash's action "forced'' Fan to make that move. Lo's business was a Chinese food restaurant, and he claims that in the beginning of 2020, when news.ofCovid-19 began·circulating around the world, the impactwas felt by. Asian businesses such as his long before the virus caused the various lock downs and pause orders in the United States; Lo claims that in mid-February, it became clear thathe would be unable to make the payments he had agreed to, and he claims he contacted Flashto.·arrange·to lower the payments to $1,000.00 per week. Within a month, however, 5 of 9 INDEX INDEX NO. NO. 603802/2020 603802/2~0 [*FILED: 6] NASSAU COUNTY CLERK 12/09/2020 11:58 AM NYSCEF DOC. DOC. NO. NO. 36 RECEIVED NYSCEF: NYSCEF: 12/07/2020 his business was so impacted by the pandemic that he could not make that payment.either. Lo then attacks Flash's taetics by moving for the injunction ofTRO~ He Claims he did not answer the· complaint because.he thoughtthe courts were closed down due to the pandemic. Lo also points to paragraph "4 11 of the contract and argues that Flash took the. risk that Fan could fail, and under their contractthey did nothave the right to try to recover what was not paid: Nonrecourse Sale of Future Receipts (THIS ISNOTA LOAN): Seller is selling a portion of a future revenue stream to Buyer at a discount, not borrowing money from Buyer. There is no interest rate or paymentschedule and no time period during which the P1ll'chased An1ouQt must be collected by Buyer. If Future Receipts are remitted more slowly than Buyer mayhave anticipated or projected because Seller's business has slowed down, orifthe. fullPurchased Amount is .never remitted because Seller's business went bankrupt or· othe:rwise ceased operations in the ordinary course· of business, and Seller has not breached this Agreement, Seller wmtld not owe anythingto Buyer and would not be in breach of or default under tl1is Agreement Bl.lyer is buying the Purchased Amount ofFuture Receipts knowing the risks that Seller's business may slow down or fail, and Buyer assumes these risks based on8eller1s representations, warranties and covenants in this Agreement.that are designed to give Buyer a . . teasortable and fait opportunity to receive the benefit of its ·bargain. By this Agreement, Seller transfers to Buyer full and complete owner$hip ofthePurchasi;:d Amount ofFuture Receipts and Seller retains no legal or equitable interest therein. Seller agrees that it will treat Purcha$e Price and Purchased Amount in a manner consistent with a sale in its accounting records and tax returns, Seller agrees that Buyer is entitledto audit Seller1s accounting records upon reasonable Notice in order to verify compliance. Seller waives any rights . : .. · . . . 6 6 of 9 0 .. [*FILED: 7] NASSAU COUNTY CLERK 12/09/2020 11:58 AM INDEX NO. 603802/2070 INDEX NO. 603802/2020 RECEIVED 12/07/2020 RECEIVED NYSCEF: NYSCEF: 12/07/2020 NYSCEF DOC. DOC. NO. NO. 36 NYSCEF 36 of privacy, confidentiality or taxpayer privilege in any such litigation or arbitration in which Seller asserts that this transaction is anything other than a sale offuture receipts. In reply, Flashpoints out that Fan stopped making any payments one month prior to the statewide shutdown. At that time Fan did ask to reduce its payments, but refused to provide bank statements or any other proof that its receivables had declined. Regardless, Flash agreed to reduce the payments to $1,.000.00 per week, as long as Fan provided a credit card to which Flash could charge the payment. Fa!l gave a credit card that was declined when Flash tried to take a payment. Fan would not provide another ci'editcard, and then stopped comhlunicating with Flash completely~ Flash's owner, Kunal Bhasin, states he physically went to Fan's restaurant at this time and saw it was open and operating. Mr. Bhasin further points out that, other than Lo's affidavit, neither Fan nor Lo provide any proof of the decline in business or sales. Flash, however, had. access· to Fan's Chase Bankaccount information because Fan wentto a broker for funding, and the broker sentthe request to Flash. In the application, Flash saw that in May,2020, Fan grossed in excess of $12 8, 000. 00 and in June 2020, it grossed over $13 1,. 000. 00. July, . . 2020 also showed substantial income comingin. Flash points out that had Fan honored its agreement during these months, the entire debt contract Would have been satisfied. Based upon the foregoing, the court finds Fan has not presented evidence to challenge Flash's entitlement to a preliminary injunction. 7 --------------~o~~---------------·----·----··-·· 7 of 9 -···--·-······-·-·-··- [*FILED: 8] NASSAU COUNTY CLERK 12/09/2020 11:58 AM INDEX NO. 603802/20ZO INDEX NO. 603802/2020 RECEIVED 12/07/2020 RECEIVED NYSCEF: NYSCEF: 12/07/2020 NYSCEF DOC. DOC. NO. NO. 36 NYSCEF 36 FAN'S CROSS MOTION TO VACATE ITS DEFAlJLT IN OPPOSING THE MOTION TO RESTRAIN BANK ACCOUNTS AND TO VACATE THE RESTRAINTS (MOTION SEQ. 003) FaIJ first argues.that theTRO should not have been granted because Fan was not served with it and this court lacked jurisdiction. The court disagrees. First, the court had jurisdiction over Fan becaus.e Fan was properly served with the complaint. Second, Fan acknowledges doing that which caused Flash concern- simply moving the money out of the bank account that Flash had access to, and opening. l}nother one and moving forward yvith its business. Lo claims he was "forced" to do this by Flash's action but provide no evidence to· support that assertion. However, the court finds that, under the. circumstances; Fan should be allowed to interpose l}U answer to the amended c01nplaint. Therefore, Flash will serve the amended summons and complaint within 10 days ofbeingserved with notice of entry ofthis order. Fan and Lo ·may then answer pursuant to the CPLR. Accordingly, it is hereby ORDERED, that Flash's motion (Motion Seq. 002}to amend the caption and complaint js GRANTED, Flash shall serve the amended complaint consistent with the tenns of this order; and it is further ORDERED, that Flash's motion for a preliminary injunction is GRANTED under 8 8 of 9 0 [*FILED: 9] NASSAU COUNTY CLERK 12/09/2020 11:58 AM NYSCEF DOC. DOC. NO. NO. 36 INDEX INDEX NO. NO. 603802/2020 603802/2020 RECEIVED NYSCEF: NYSCEF: 12/07/2020 the sametenns as theTRO; and it is further ORDERED, that Fan;s motion{MotionSeq. 003) to vacate the court's prior TRO is DENIED to the extent that the court will not vacate the priorTRO, However, Fan and Lo may interpose an answer to the amended complaint The court has considered the remaining arguments• of the parties and finds. them to be without merit. This foregoing constitutes the Decisionand Order of the Court. Dated: December 2, 2020 Mineola, N.Y. ENTERED Dec 09 2020 NASSAU COUNTY COUNTY CLERK"S OFFICE 9 9 of 9 0

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