Kodiak Funding, LLC v Golden Hospitality LLC

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Kodiak Funding, LLC v Golden Hospitality LLC 2022 NY Slip Op 32703(U) July 27, 2022 Supreme Court, Monroe County Docket Number: Index No. E2022001777 Judge: Sam L. Valleriani 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. E2022001777 I I NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 At a Term of the Supreme Court, in and for the County of Monroe, Hall \ of Justice, Rochester, New York. PRESENT: HON. SAM L. V ALLERIANI Supreme Court Justice SUPREME COURT STATE OF NEW YORK MONROE COUNTY KODIAK FUNDING, LLC, P laintiff(s), DECISION -vsINDEX No.: E2022001777 GOLDEN HOSPITALITY LLC D/B/A GOLDEN HOSPITALITY; BUDGET INN OF STAUNTON and SHAWNDA MARIE SHARMA, Defendant(s). APPEARANCES: Attorney for Plaintiff : Steven W Wells, Esq. 229 Warner Road Lancaster, NY 14086 Attorney for Defendants: William Y Fowlkes, Esq. 2002 Route 17m Unit 12 Goshen, NY 10924 Sam L. V alleriani, J. Plaintiff, Kodiak Funding, LLC, moves for summary judgment on the claims alleged in the complaint including breach of contract, personal guaranty, unjust enrichment, and dismissal of defendant's affirmative defenses. Plaintiff seeks an award of damages in the amount of $14,666.00. Defendants oppose the motion asserting plaintiff has not met its initial burden, and defendants have raised triable issues of fact. 1 [* 1] INDEX NO. E2022001777 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 On January 7, 2022 the parties entered into a document identified as a receivables purchase agreement whereby plaintiff purchased from defendant merchant 25 percent of the defendants' total future accounts receivables until the plaintiff received $8,880.00 for the cost or payment of $6,000.00 from plaintiff to defendants (plaintiffs Ex. A purchase agreement). Under the agreement, the parties agreed to an initial daily payment of $99.00 until the full amount was paid which could be changed and adjusted based upon merchant's revenue (see id.). Plaintiff alleges that defendants made payments in the amount of $2,574.00 leaving a balance of $6,306.00 with additional costs including eleven non sufficient fund charges totally $385.00, eight missed payment fees in the total amount of$280.00, a UCC fee in the amount of $195.00, blocked account fee in the amount of $2,500.00, land a default fee in the amount of $5,000.00 all due under the terms of the agreement (complaint NYSCEF Dkt 1). Plaintiff alleges that defendants violated the express covenants of the agreement by changing the designated bank account, placing a stop payment order or otherwise interfering with plaintiffs ability to collect I future receivables (see id.). Plaintiff asserts the total amount owed is $14,666.00. (see id.; see also affidavit of Ludwig Papp dated May 2, 2022). Summary Judgment It is well settled law that "the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." (Alvarez v Prospect Hosp., 68 NY2d 320, 324, [1986],[citations omitted]). "Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers" (id.). On a motion for summary judgment, the Court must view the evidence as true, and in a light most favorable to the 2 [* 2] INDEX NO. E2022001777 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 nonmoving party. (Hartfordv General Accident, 177 AD2d 1046, [4th Dept 1991]). The Court's function is "issue finding rather than issue determination." (Patton v Matusik, 16 AD3d 1072, [4th Dept 2005]). Once the movant meets its initial burden~ the non-moving party "must produce evidentiary proof in admissible form sufficient t require a trial of material questions of fact." (Zuckerman v New York, 49 NY2d 557, 565 [19$0]). The opponent must "lay bare his proofs (in admissible form) and make an evidentiary showing that there exist genuine, triable issues of fact." (OatsvMarino, 106AD2d289,291, [1 st ept2008]). The elements of a cause of action for bre~ch of contract are: (1) formation of a contract I between plaintiff and defendant, (2) performance by plaintiff, (3) defendant[ s]' failure to I perform, and (4) resulting damage. (see Furia v uria, 116 AD2d 694 [2d Dept 1986]). Here, plaintiff has met its initial burden qy submitting the executed written agreement, I proof that they performed and proof that defendatnts failed to perform or defaulted thereunder I resulting in plaintiffs damages (see affidavit of Ludwig Papp dated May 2, 2022). Defendants cite several cases urging that the affidavit of Ludwig Papp is insufficient to support summary judgment as it contains inadmissible hearsay (affirmation of W. Fowlkes, Esq. dated July 14, 2022). The cases in support of defendants' position challenging the admissibility of Papp' s affidavit were foreclosure cases where the affiant failed to identify and submit the business I records relied on in making their calculations (see Bank ofNY Mellon v Davis, 193 AD3d 803 [2d Dept 2021]; Bank ofNY Mellon v Gordon, 171 AD3d 197 [2d Dept 2019]; JPMorgan v Grennan, 175 AD3d 1513 [2d Dept 2019]). Here, Mr. Papp, the CEO averred that he reviewed the books and records pertaining to this file whiah records are made in the regular course of 3 [* 3] INDEX NO. E2022001777 Ii NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 I business maintained under his supervision and control (see affidavit of L. Papp; see All Burough Grp. Med. Supply, Inc. v GEICO, 43 Misc3d 27 [2d App. Term 2013]; see also 830 Eighth Ave. v Global, 198 AD3d 404 [!51 Dept 2021]). Mr. Pal p submitted the records he relied on which included the contract, proof of funding, and the temittance history (see id. Ex. A-C). Although Mr. Papp did not identify the specific code he a ers that debits were rejected on correlating dates I in the remittance history coded RO 1 for insufficient funds, and the stop payments on three dates coded R08 (see id.). The specific codes are mo) fully identified in Mr. Papp's reply affirmation (see reply affidavit L. Papp, July 18, 2022). No ayments were made after March 2, 2022 as evidenced in the remittance history (see id.). The court finds that Mr. Papp's affidavit does not rely on inadmissible hearsay as the appropriate r cords have been submitted. Since plaintiff has met its initial burden, it is incumbent upon defertdants to make an "evidentiary showing that there I exist genuine, triable issues of fact (see Oats v Marino). Aside from the issues raised and addressbd above, defendants further argue that plaintiffs I papers are insufficient to dismiss the affirmative defenses since plaintiff has only addressed the one affirmative defense of usury with specificity. Plaintiff asserts the remaining affirmative defenses are without merit and boilerplate whic4 defendants claim is insufficient to warrant summary judgment. Plaintiff was not required t address boilerplate affirmative defenses lacking rd in merit (see LaSalle Bank v Kosarovich, 31 AD3d 904,906 [3 Dept 2006]). Once plaintiff met its burden of producing the agreement, proof of funding and defendants' default under the terms, the burden shifted to defendants to raise a triable issue of fact (see id.). Defendants have failed to raise an issue of fact. Even accepting defendants' claim that the bank froze the account, defendants have failed to raise an issue of fact regarding the default based upon the stop payment. [* 4] INDEX NO. E2022001777 I II NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 Mr. Papp in reply has submitted sufficient admissible evidence showing that defendants, in fact, placed a stop payment on the account (reply affi avit L. Papp dated July 18, 2022, 15; remittance history). Plaintiff has specifically addressed defern!lants ' affirmative defense alleging the agreement to be a loan agreement with usury int rest in its motion for dismissal. The agreement is not a loan agreement, thus the defense of usury is inapplicable under the facts of this case (see Principis Capital v I Do Inc., 201 AD3d 752 [2d/Dept 2022]). In determining whether the agreement is a loan, the courts typically weigh three factors: "(1) whether there is a reconciliation provision in the agreement; (2) whether the agreJment has a finite term; and (3 whether there is tcy" (see id., internal quotations and citations any recourse should the merchant declare ba~ I omitted). Here, the agreement contained none o the requisite loan agreement factors which impose interest rate limitations. The agreement stated in clear boldface language that it was a purchase agreement, and the reconciliation claus provided that if the defendant seller was not in breach of the agreement and went into bankruptc in the regular course business seller would owe nothing to buyer (see id., see also Womack J Capital Stack, 2019 WL 4142740 [US District I Court, SD NY, August 30, 2019, Carter, J.]; purchase agreement). Further contrary to I defendants' assertion, the agreement did not con in a finite term, but rather periodic payments projected upon the accounts receivables (see id. )i Unconscionability of Default Charges Defendants claim that the default charge! are unconscionable since under the particular facts, in that the default fees exceed the original mount owed. "An unconscionable contract has been defined as one which is grossly unreasonable or unconscionable in light of the mores and [* 5] INDEX NO. E2022001777 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 business practices of the time and place to be unenforceable according to its literal terms. As a general preposition, unconscionability I *** requir s some showing of the absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party (Warren Electrical ) Davidson, 284 AD2d 502 [3 rd Dept 2001], [internal quotations and citations omitted]). The parties are sophisticated business owners, and defendants are not "commercially illiterate consumer[ s] beguiled into a grossly unfair bargain by I a deceptive vender" (see id., citation and internal quotation mark omitted). Defendants further claim that the default (liquidated) damages is disr roportionate ta the foreseeable losses (see Truck Rent-A-Ctr. v Puritan Farms, 41 NY2d 4j0, 425,426 [1977]). In Truck Rent-A-Center the I Court of Appeals actually upheld the liquidated 1amages despite the damages for wrongful breach ~eing _almost twice as much as the origini l amount owed [$48,134.17 vs $92,341.79] (see id.). The Court of Appeals did find that default :tl'ees 7 ½ times the stipulated amount owed was unconscionable (see Trustee of Columbia v D'Al ostino Supermarkets, Inc., 36 NY3d 69 [2020]). I A liquidated damages clause providing for two t~mes the existing rent per month for a holdover was found not to be disproportionate to the probl ble loss (see Tenber Assoc. v Bloomberg L.P., 51 AD3d 573 [1 st Dept 2008]). It is unclear whether the parties were represented at the time of I the agreement. However, the parties were sophist cated business entities, and the terms of the agreement were negotiated, thus this court finds that the damages clause spelled out in detail in the agreement which provided damages of apprJ imately two times the amount owed under the facts of this case is not "conspicuously dispropor onate to the [plaintiffs] foreseeable loses" (Res Exhibit v Genesis Vision, Inc., 155 AD3d 1 15, 1520 [4th Dept 2017] [internal citation and quotation omitted]). [* 6] INDEX NO. E2022001777 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 Waiver Additionally, defendants claim that plain iff waived its right to declare defendants in default reciting emails where Mr. Papp agreed tq a three day hold for defendants to straighten out I purported banking issues. The cases cited by defendants in support of their position that plaintiff waived defendants' default support the opposite r onclusion that plaintiff did not waive any rights under the agreement (see Fundamental Portofolib v Tocqueville Asset Mgt., L.P., 7 NY3d 96[2006]; Gilbert Frank Corp. v Federal Ins. C1., 70 NY3d 966 [1988]). Plaintiff clearly stated that he would provide defendants a specified thrr day time period to clear up their purported banking issues. There was no clear intent to relT quish a contractual right (see id). Moreover, the parties agreement contained a no oral modifir tion clause requiring a writing signed by one of plaintiffs executive officers (see agreement 124). Defendants have not raised nor does the I court find that an unsigned written text message ,s sufficient to constitute a signed writing I resulting in the waiver of plaintiffs contractual ·ghts under the facts presented herein. Moreover, plaintiff has provided proof that he di not remit during that three day agreed to period. Lastly, defendants do not deny signing the personal guaranty nor otherwise dispute the I guaranty outside the arguments raised to the undr lying breach of contract cause of action. Upon review, defendants have failed to raise a triable i sue of fact in regard to liability, damages or the validity of the personal guaranty. Accordingly, plaintiff is granted summ judgment on liability, dismissal of defendants' affirmative defenses, the validity of the personal !guaranty and damages. Plaintiff sought I damages in their complaint in the amount of $14 666.00 plus interest, costs, disbursement and [* 7] INDEX NO. E2022001777 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/29/2022 attorney's fees. In their motion for summary ju ment they have requested damages in the amount of $14,666.00 without request for couns 1 fees. The court awards damages in the amount of $14,666.00. If plaintiff seeks counsel fees, th y will have to make a motion with appropriate supporting documentation. This constitutes the ecision of the court. Any relief not specifically granted is denied. Plaintiff shall submit the ord Via NYSCEF for defendants' review within five days. Dated: -;)J.1/;,t,;f).- H~@; su reme Court Justice 1 8 [* 8]

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