Liberty Funding Solutions, LLC v Desalis Pretzels LLC

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Liberty Funding Solutions, LLC v Desalis Pretzels LLC 2023 NY Slip Op 31672(U) May 15, 2023 Supreme Court, New York County Docket Number: Index No. 531569/2022 Judge: Carl J. Landicino 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. 531569/2022 FILED: KINGS COUNTY CLERK 05/16/2023 03:39 PM NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 05/16/2023 o 0 • At At an IAS lAS Term, Term, Part Part 81 of of the the Supreme Supreme New York, ··,Qourt ',(iiourt of of the State State of of New York, held held in and the County CoUnty of of Kings, Kings, at the the Courthouse, Courthouse, at f~r the 360 Adams New York, Adams Street, Street, Brooklyn, Brooklyn, New York, on the the 15 th day of of May, May, 2023. 2023. I ' PRESENT: PRESENT: HON. HON. CARL CARL J. LANDICINO, LANDICINO, Justite. Justibe. l ______________________________________________________ ------------~-J( ------------------------------------------------------------------v-X LIBERTY LIBERTY FUNDING FUNDING SOLUT!ONS, SOLUT!ONS, LLC, LLC, !l Index Index No. No. 531569/2022 53156912022 Plaintiff, Plaintiff, DECISION DECISION AND AND ORDER ORDER -against-againstDESALIS DESALIS PRETZELS PRETZELS LLC LLC DBA DBA PRILL PHILL Y PRETZEL PRETZEL FACTORY; A&T A&T DESALIS DESALIS PRETZEL PRETZEL LLC; LLC; DESALIS DESALIS FACTORY; PRETZEL PRETZEL LLC LLC and and TIMOTHY TIMOTHY DESALIS, DESALIS, Defendants.. Defendants. ______________________________________________________ Motion Motion Sequence Sequence # 1 \ ---------------J( I ---------------------------------------------------------------------X Recitation, as required required by CPLR CPLR 2219(a), 2219(a), of of the the papers papers considered considered in the the review review of of this this motion: motion: Recitation, Papers Numbered (NYSCEF) Papers Numbered (NYSCEF) Notice of Notice of Motion/Cross Motion/Cross Motion Motion and Affidavits Affidavits (Affirmations) (Affirmations) Annexed Annexed ... ... ·'...................................................... ...................................................... 9-16, 9-16, 18-22, 18-22, Opposing Affidavits Affidavits (Affirmations) (Affirmations) .. :..................................................... . Opposing Reply Affidavits Affidavits (Affirmations) (Affirmations) ............................................................. . Reply 23, 28. Memorandum Memorandum of of Law Law ............................................................ 17, 17,23,28. After a review review of of the the papers papers and oral oral argument, argument, the Court Court finds finds as follows: follows: After In this this action action to recover recover damages damages for the breach breach of of a contract contract for the the assignment assignment of of future future receivables, receivables, the the Plaintiff, Plaintiff, Liberty Liberty Funding Funding Solutions, Solutions, LLC, LLC, moves moves for an order order pursuant pursuant to CPLR CPLR § judgment in its favor. S 3212 3212 granting granting summary summary judgment "The "The proponent proponent of of a summary summary judgment judgment motion motion must must make make a prima prima facie facie showing showing of of entitlement entitlement to judgment, judgment, as a matter matter of of law, tendering tendering sufficient sufficient evidence evidence to demonstrate demonstrate the Prospect Hosp., Hosp., 68 N.Y.2d N.Y.2d 320, 324, 501 absence absence of of any material material issues issues of of fact" fact" (Alvarez (Alvarez vs. Prospect N.E.2d N.E.2d 572, 508 N.Y.S.2d N.Y.S.2d 923, 923, citing citing Winegrad Winegrad vs. NY NY. Univ. Med. Ctr., Or., 64 N.Y.2d N.Y.2d 851,476 851, 476 N.E.2d N.E.2d 642, 487 487 N.Y.S.2d N.Y.S.2d 316; Zuckerman Zuckerman vs. City City of of New New York, 49 N.Y.2d N.Y.2d 557). 1 [* 1] 1 of 4 The INDEX NO. 531569/2022 FILED: KINGS COUNTY CLERK 05/16/2023 03:39 PM NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 05/16/2023 of action to recover recover damages for breach contract are the essential elements of a cause of action to damages for breach of of contract are ((l)l) the essential elements of a cause the plaintiffs plaintiffs performance performance pursuant pursuant to to the contract, (3) the existence of of aa contract, contract, (2) (2) the the contract, (3) the existence defendant's defendant's breach breach of of its contractual l contractua .'gations, 1· ns obll obl 1ga 10 , and (4) damabaes damages resulting resulting from J. the breach breach (see Arnell City Sch. Const. Auth., 41 Arnell Const. Corp. v:. New New York City Auth., 144 AD.3d A.D.3d 714, 715, 41 ! N.Y.S.3d 101, 103; Legum Legum v. v. Russo,!133 Russo, .133 AD.3d A.D.3d 638,639, N.Y.S.3d 124). N.Y.S.3d 638, 639, 20 N.Y.S.3d primafacie judgment by showing The Plaintiff Plaintiff established established its prima facie entitlement entitlement to summary summary judgment showing that: future receivables together with with a (1) parties entered into a contract (l) the parties entered into contract for the assignment assignment of of future receivables together related performed its obligations under the contract contract by tendering tendering the related Guaranty; Guaranty; (2) Plaintiff Plaintiff performed obligations under of $40,000.00, provided for in the agreement, Defendants purchase price price of purchase $40,000.00, subject subject to fees provided agreement, and (3) Defendants breached their under the contract contract on or about about September breached their contractual contractual obligations obligations under September 30, 2022, 2022, by failing to give Plaintiff hours advance notice that that there there were were insufficient insufficient funds funds in the'subject the subject failing Plaintiff 24 hours advance notice Account such that attempted debits debits were Account such that attempted were rejected, rejected, and failing failing to make make any further further remittances; remittances; and Plaintiff was apparently damaged damaged in the sum of of$9,132.76 (comprising the outstanding outstanding balance $9,132.76 (comprising balance ((4) 4) Plaintiff was apparently owing), plus plus fees and and costs. due and owing), costs. ·' Plaintiff, as contended contended by the Defendants, The Plaintiff, Defendants, is not precluded precluded from recovery recovery on the basis basis that the transaction transaction between usurious loan. The Appellate Second that between the parties parties was a usurious Appellate Division, Division, Second Department has been United Senior Senior Properties of v. United Properties of Department been clear clear in its holding holding in LG LG Funding, Funding, LLC LLC v. 181 AD.3d Olathe, LLC, LLC, 181 A.D.3d 664, 122 N.Y.S.3d N.Y.S.3d 309,312: 309,312: The rudimentary rudimentary element element of of usury existence of of a loan or The usury is the existence forbearance of of money, money, and and where where there there is no loan, loan, there there can can be forbearance usury, however however uriconscionable unconscionable the contract contract may may be (see Seidel Seidel no usury, v. 18 E. 17th 17th St. Owners, Owners, 79 N.Y.2d 586N.Y.S.2d 240,598 v. N.Y.2d 735, 586 N.Y.S.2d 240, 598 N.E.2d v. Malky, AD.3d 646, 649, 649, 873 N.Y.S.2d N.E.2d 7; Abir Abir v. Malky, Inc., Inc., 59 A.D.3d N.Y.S.2d 350). To determine determine ~hether whether a transaction transaction constitutes constitutes a usurious usurious 350). loan, it "must "must be 'considered 'considered in its totality totality and and judged judged by its real loan, character, rather rather than than by by the name, name, color, color, or form form which which the the parties parties character, have seen seen fit to give give it"' it'" (Abir (Abir v. v. Malky, Inc., 59 A.D.3d A.D.3d at 649, 649, 873 have N.Y.S.2d 350, quoting quoting Ujueta v. v. Euro--Quest Corp., 29 A.D.3d AD.3d 895, Euro--Quest Corp., N.Y.S.2d 350, 2 [* 2] 2 of 4 INDEX NO. 531569/2022 FILED: KINGS COUNTY CLERK 05/16/2023 03:39 PM NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 05/16/2023 The omitted]). The marks omitted]). quotation marks 895, 814 N.Y.S.2d 551 [internal [internal quotation N.Y.S.2d 551. 895, entitled to absolutely entitled ''is absolutely court must examine whether plaintiff "is the plaintiff whether the must examine court Capital Arch v. (K9 " repayment under all circumstances" Bytes, Inc. v. Arch Capital circumstances repayment under N.Y.S.3d 625 [Sup. Ct. Funding, Misc.3d 807, 816, 57 N.Y.S.3d LLC, 56 Misc.3d Funding, LLC, repayable advanced sum Westchester County]). Unless a principal advanced is repayable principal Unless County]). Westchester Small, v. Rubenstein v. Small, 273 loan (see Rubenstein absolutely, not a loan transaction is not the transaction absolutely, the three factors weigh three App.Div. 483). Usually, courts weigh factors Usually, courts N.Y.S.2d 483). App.Div. 102, 75 N.Y.S.2d (I) contingent: or absolute when determining whether repayment is absolute contingent: (1) repayment when determining whether (2) provision in the agreement; whether there is a reconciliation reconciliation provision agreement; whether there there is any whether there term; and (3) whether whether agreement has a finite finite term; whether the agreement Bytes, Inc. K9 (see bankruptcy recourse should the merchant declare bankruptcy K9 Bytes, declare recourse should the merchant N.Y.S.3d Misc.3d at 816--819, v. Capital Funding, 816--819,5757 N.Y.S.3d LLC, 56 Misc.3d Funding, LLC, Arch Capital v. Arch Inc., 62 Hospitality, Inc., 625; see LLC v D & V Hospitality, Metrics, LLC Funding Metrics, also Funding see also County]). Westchester Ct. Misc.3d 966,91 678, 970 [Sup. Westchester County]). N.Y.S3d 678,970 91 N.Y.S.3d Misc.3d 966, took reconciliation took if a reconciliation possibly change Further, could possibly change if payments could daily payments the daily of the amount of the amount Further, as the provides an estimated Agreement provides the Agreement while the place, of the agreementwas s not finite. Further, estimated Further, while the agreement.wa term of place, the term Agreement provisions in the Agreement were no provisions there were term of Of 8 months, indefinite. Finally, Finally, there nevertheless indefinite. months, it is nevertheless Agreement. the Agreement. under the declaration of of bankruptcy constitute a default default under would constitute bankruptcy would that a declaration requested in the sum of However, Plaintiff is not entitled to recover recover a default default fee as requested of not entitled However, the Plaintiff liquidated recoverable liquidated not recoverable and not penalty and $1,800.00. unenforceable penalty an unenforceable constitutes an default fee constitutes $1,800.00. A default Court 420,425, N.Y.2d 420, Inc., 41 N.Y.2d Farms 2nd, Inc., damages. Truck Rent-A-Center 425, the Court Puritan Farms v. Puritan Rent-A-Cente r Inc. v. damages. In Truck held: of Appeals held: of Appeals fixing provision fixing The contractual provision established. A contractual well established. now well rule is now The rule damages in the event of of breach sustained if if the amount amount breach will be sustained the event damages the loss and the probable loss the probable liquidated proportion to the reasonable proportion bears a reasonable liquidated bears estimation. precise of difficult or amount of actual loss is incapable difficult of precise estimation. amount of actual loss incapable supra; 470,473, N.Y.2d 470, (City o/Rye 473, supra; Serv. Mut. Ins. Co., 34 N.Y.2d Public Servo ofRye v Public (City supra; 223, 214, N.Y. Booking v Wirth, 265 N.Y. 214, 223, supra; Fair Booking Hamid Fair Wirth & Hamid Hudson Riv. Bldg. Co., Curtis v Van Bergh, Ward v Hudson N.Y. 47; Wardv Bergh, 161 N.Y. Curtis 230, supra; Contracts, §~ 339.) 339.) If, however, however, Restatement, Contracts, supra; Restatement, N.Y. 230, 125 N.Y. the ate disproportion the amount fixed is plainly or grossly disproportionate to the grossly plainly the amount fixed penalty and will probable loss, the the provision calls for a penalty will not not be provision calls probable loss, N.Y.2d enforced. (Equitable (Equitable Lbr. Co. v IPA Land Corp., 38 N.Y.2d Land Dev. Corp., enforced. 172-173; 167, N.Y. 230 516,521-522, supra; 8eidlitz vAuerbach, 230 N.Y. 172-173; vAuerbach, Seidlitz supra; 516, 521-522, provision fixing interpreting a provision fixing Damages, .§ 155.) In interpreting NY Jur, Damages,~ 14 NY 3 [* 3] 3 of 4 INDEX NO. 531569/2022 FILED: KINGS COUNTY CLERK 05/16/2023 03:39 PM NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 05/16/2023 t ~; .. damages, damages, it is not not material material whether whether the parties parties themselves themselves have have chosen to call the the provision provision one for "liquidated "liquidated damages", damages", as in this this chosen case, or have have styled styled it·· it as a penalty. penalty. (E.g., Wirth & Hamid Hamid Fair Fair case, Booking N.Y. 214, 214, 225, 225, supra; supra; Ward Ward v Hudson Hudson Riv. Booking v Wirth, 265 N.Y. Bldg. N.Y. 230,234, Bldg. Co., Co., 125 N.Y. 230, 234, supra.) supra.) Perseus Telecom, Indy Research Research Labs, LLC, LLC, 41 N.Y.2d N.Y.2d 420, In Perseus Telecom, Ltd. v Indy 420, 425, 425, the Court Court of of Appeals Appeals held: A contractual provision fixing contractual provision fixing damages damages in the the event event of of breach breach will sustained if if the the amount amount liquidated liquidated bears bears a reasonable reasonable proportion proportion be sustained the probable probable loss loss and. the amount amount of of actual actual loss loss is incapable incapable or to the difficult difficult of of precise precise estimation. estimation. If, however, however, the the amount amount fixed fixed is plainly plainly or grossly grossly disproportionate disproportionate to the probable probable loss, loss, the the . provision provision calls calls for a penalty penalty and will not be enforced. enforced. Plaintiff Plaintiff is entitled entitled to the the total total amount amount owed owed under under the the agreement agreement less the amount amount repaid, repaid, interest from from the the date date of of breach. breach. The The default default fee is denied. denied. with interest For For the above above reasons, reasons, it is hereby hereby judgment is granted ORDERED ORDERED that that Plaintiffs Plaintiffs motion motion for summary summary judgment granted solely solely to the the extent extent that that Plaintiff Plaintiff is entitled entitled to an award award in the the sum sum of of $7,340.00 $7,340.00 with with interest interest from from October October 1, 2023. 2023. The Plaintiff judgment on notice Plaintiff may may settle settle a judgment notice together together with with a copy copy of of this this decision decision and order, order, to Defendants (by certified certified mail) mail) withi~ within 30 days days of of entry entry of of the Decision Decision and and Order. Order. the Defendants r The foregoing foregoing constitutes constitutes the the Decision Decision and Order Order of of the Court. Court. The ' ENTER: ENTER: /I 4 [* 4] 4 of 4

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