CFG Merchant Solutions, LLC v Valentis Sec. Servs., Inc.

[*1] CFG Merchant Solutions, LLC v Valentis Sec. Servs., Inc. 2022 NY Slip Op 50875(U) Decided on September 16, 2022 Supreme Court, New York County Lebovits, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 16, 2022
Supreme Court, New York County

CFG Merchant Solutions, LLC, Plaintiff,

against

Valentis Security Services, Inc. and Marnie Sutch, Defendants.



Index No. 654515/2020


Jason A. Gang, Esq., Hewlett, NY, for plaintiff.

No appearance for defendants.
Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27 were read on this motion for SUMMARY JUDGMENT.

In this action on a settlement agreement, plaintiff, CFG Merchant Solutions, LLC, moves without opposition for summary judgment against defendant Valentis Security Services, Inc., and Valentis's guarantor, defendant Marnie Sutch. The motion is granted as to defendant Valentis and denied as to defendant Sutch.

In October 2019, plaintiff entered into a merchant cash-advance agreement with Valentis, for which Sutch served as guarantor. Plaintiff has alleged that Valentis breached its obligations under that agreement, and then breached an ensuing settlement agreement executed in February 2020. Plaintiff brought this action in September 2020. (See NYSCEF No. 1.)

On this motion, brought in June 2022, plaintiff introduces evidence that plaintiff and defendants executed a second settlement agreement in October 2022€"and that the second agreement was breached as well. (See NYSCEF No. 14 at ¶¶ 19-25 [affidavit of plaintiff's representative]; see also NYSCEF No. 25 [payment history under second settlement].) Plaintiff seeks summary judgment against defendants for the amounts outstanding under the second settlement agreement.[FN1]

With respect to Valentis, plaintiff provides an affidavit from its collections manager attesting to the circumstances of the three agreements, their breach, and the balance that is still owed; and provides copies of the agreements and payment histories under the two settlements. This showing establishes plaintiff's prima facie entitlement to judgment for the amounts remaining under the second settlement agreement. And Valentis has not opposed the motion, much less established the existence of a material dispute of fact. Plaintiff is entitled to summary judgment on its breach-of-contract claim against Valentis€"approximately $149,000, plus interest.

Plaintiff's request for summary judgment against Sutch, as Valentis's guarantor, fares less well. Neither the complaint nor the affidavit of plaintiff's representative alleges that Sutch breached her obligations under the initial guarantee, the first settlement, or the second settlement. Instead, plaintiff relies on an April 2022 notice to admit that plaintiff served on defendants under CPLR 3123. (See NYSCEF No. 10 [notice to admit].) That notice demands that Valentis and Sutch admit or deny, for example, that plaintiff "fully performed all of its obligations" under the merchant cash-advance agreement and that defendants "have not performed under the terms" of the initial cash-advance agreement and the first settlement agreement. (Id. at ¶¶ 6, 7, 13.) Plaintiff asserts that defendants' undisputed failure to respond to this notice "is equivalent to their admission of all the essential facts of this action," warranting summary judgment for plaintiff. (NYSCEF No. 16 at 9.) This court disagrees.

A CPLR 3123 notice to admit "is improper where it . . . request[s] admission of material issues or ultimate issues or facts," as opposed to uncontroversial and undisputed factual matters. (Village of Malone v Stone Mtn. Prime, LLC, 204 AD3d 1148, 1150 [3d Dept 2022]; accord Fetahu v New Jersey Transit Corp., 167 AD3d 514, 515 [1st Dept 2018].) A motion court on summary judgment may properly decline to treat as admitted the facts set forth in an improper notice to admit of this sort (see Lewis v DiMaggio, 151 AD3d 1296, 1297-1298 [3d Dept 2017])€"even where the nonmovant failed to respond timely to the notice (see Stone Mtn. Prime, 204 AD3d at 1150). Given that plaintiff is seeking to use its notice to admit in this case precisely for the improper purpose of resolving the ultimate issues in the case, this court declines to deem defendants to have admitted the contents of the notice. Absent evidence of Sutch's breach other than the notice, plaintiff has not established prima facie that it is entitled to summary judgment against her.

Moreover, even if this court were to deem admitted the statements from the notice, those statements would not support summary judgment for the amounts sought on this motion. The notice discusses only the initial cash-advance agreement, the first settlement agreement, and defendants' putative breaches of those agreements. (See NYSCEF No. 10 at ¶¶ 3-10.) Indeed, the notice states that "there are no agreements at issue in this action" other than those two contracts. (Id. at ¶ 5.) As discussed above, though, the current summary-judgment motion is not based on [*2]those contracts. Rather, it seeks to enforce defendants' obligations under the third agreement in the case, namely the second of the two settlements among the parties. (See NYSCEF No. 13 at ¶¶ 11-16, 22 [statement of material facts].) The notice thus does not support plaintiff's request for summary judgment against Sutch.[FN2]

Accordingly, it is

ORDERED that the branch of plaintiff's motion seeking summary judgment under CPLR 3212 as against defendant Valentis is granted, and plaintiff is awarded a judgment for $149,285.46, with interest running from March 5, 2022 (the day after Valentis's last payment under the second settlement), plus costs and disbursements to be taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that the branch of plaintiff's motion seeking summary judgment under CPLR 3212 against defendant Sutch is denied; and it is further

ORDERED that plaintiff's claims against defendant Sutch are severed and continued; and it is further

ORDERED that plaintiff serve a copy of this order with notice of its entry on defendants and on the office of the County Clerk, which shall enter judgment accordingly.

Dated: September 16, 2022
Hon. Gerald Lebovits
J.S.C. Footnotes

Footnote 1:Plaintiff has not moved under CPLR 3025 (c) to amend its pleadings to conform to the proof. Plaintiff is therefore, in effect, seeking summary judgment on an unpleaded claim. This court may grant summary judgment "on an unpleaded cause of action if the proof supports such cause and if the opposing party has not been misled to its prejudice." (Weinstock v Handler, 254 AD2d 165, 166 [1st Dept 1998].) Here, the proof consists largely of an agreement that defendants themselves executed, and plaintiff's records of payments that were (or were not) made under that agreement. Considering this evidence is unlikely to prejudice defendants€"particularly since they could have, but did not, file opposition papers.

Footnote 2:The notice also does not support plaintiff's request for summary judgment against Valentis; but that request, unlike the one against Sutch, is supported by factual representations and documentary evidence beyond the notice.