Global Merchant Cash Inc. v. Trapp Constr. & Remodeling, LLC

Global Merchant Cash Inc. v Trapp Constr. & Remodeling, LLC 2025 NY Slip Op 30160(U) January 7, 2025 Supreme Court, Kings County Docket Number: Index No. 535427/2023 Judge: Lisa S. Ottley 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.

FILED: KINGS COUNTY CLERK 01/15/2025 01:38 PM INDEX NO. 535427/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/15/2025

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS - PART 24 ---------------- ---------------------------------------------------------x GLOBAL MERCHANT CASH INC., d/b/a WALL STREET FUNDING, Motion Seq. #¹

Plaintiff, Index No. 53542 7 /2023 -again st- DECISION and ORDER TRAPP CONTRUCTION & REMODELING, LLC D/B/A ...., :x TRAPP CONTRUCTION & REMODELING and DAVID ...., c:::> ...,, ::z C> BRYAN TRAPP, e,_ ::i:,-- (f)

::z 716 -= c Defen dants. U1 n~ ~7 -< -------------------------------------------------------------------------x HON. LISA S. OTTLEY, J.S.C. :t> n r .P, rr, :;;o w ::,,:; Recitation, as requir ed by CPLR 2219(a), of the paper s consid ered in the review of this<r-fotice of Motion to Dismiss submi tted June 3, 2024.

Paper s Numb ered Notice of Motion, Affirm ation and Affidavit.. ........................................ ...... 1, 2, 3 Memo rand um of Law in Suppo rt of Motion ........................................ ....... 4 Memo randu m of Law in Oppos ition to Motion ................. ..................... .... 5 Plaintiff comm enced this action to recov er damag es for breac h of contra ct and guara nty agains t the defen dants for a sum certai n totaling, $195, 285.0 0. Defen dants move to dismis s plaint iffs compl aint pursu ant to CPLR § 3211( a)(7) for failure to state a cause of action; lack of jurisd iction pursu ant to CPLR 3211( a)(8) and Gener al Obligations Law 5- 1402; and excess ive fees charg ed by the plainti ff. Plaint iff oppos es defen dants' motio n. The under lying action seeks damag es based on an allege d breac h of a merch ant cash advan ce agree ment for future receiv ables, contra ct rights and other obliga tions relatin g to the paym ent of monie s entere d betwe en the partie s on or about March 22, 2023, where by plaint iff purch ased future receiv ables from the defen dants, Trapp Const ructio n & Remodeling, LLC d/b/a Trapp Const ructio n & Remo deling and David Bryan Trapp . The compl aint alleges four cause s of action: (1) breac h of contra ct agains t the compa ny defend ant; (2) breac h of perso nal guara nty by the guara ntors; (3) in the altern ative, unjust enrich ment and (4) fees, costs, and expen ses.

In suppo rt of defen dants' motio n seekin g dismis sal for failure to state a cause of action pursu ant to CPLR 32ll(a )(7), the defen dants argue that plaint iffs compl aint consis ts of bare legal conclu sions and factual claims; and as a matte r of law if there is a valid contra ct

FILED: KINGS COUNTY CLERK 01/15/2025 01:38 PM INDEX NO. 535427/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/15/2025

FILED: KINGS COUNTY CLERK 01/15/2025 01:38 PM INDEX NO. 535427/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/15/2025

FILED: KINGS COUNTY CLERK 01/15/2025 01:38 PM INDEX NO. 535427/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/15/2025

FILED: KINGS COUNTY CLERK 01/15/2025 01:38 PM INDEX NO. 535427/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/15/2025

FILED: KINGS COUNTY CLERK 01/15/2025 01:38 PM INDEX NO. 535427/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/15/2025

Footnotes

[1] of 6 [* 1] claim, then the claims. for unjust enri chni ent are· d ti plicative. The defendan ts alsp argue that the court lacks personal jurisdiction pursuan t to CPLR 3211(a) (8)and General Obligations Law 5-1402 since the choice oflaw clause has no relations hip to this transacti on and the amount sought l:iy plaintiff does not comply with General Obligations Law 5-1402. The defendan ts argue that the fees set forth in the contract consistin g of "default fee" or "liquidated d<1mages fee" of$5,000 .00, a "bounce fee'' of $35.00; and a ''UCC filing fee" of $250.00, are unlawful and serve as a penalty and not an amount reasonab ly calculated to reimburs e the plaintiff for actual losses. In oppositio n to defendan ts' motion to dismiss, the plaintiff argues that New York law uniforml yallows parties to plead alternati ve causes ofaction and there is no basis fora court to dismiss an action in its entirety on the basis that some daimS within the action are allegedly duplicative of each other. The plaintiff further argues that the defendan ts consente d to this Court's jurisdicti on ahd Waived arty objections thereto, agreeing that the contract would be governed by the law of the State of New York. The pla:intiffargues that General Obligations Law 5-1402 is riot the only means of establish ing jurisdicti on and therefore, its inapplicability is irrelevan t in this case. As to the alleged excessive fees, the plaintiff argues that the defendan ts have not satisfied theirbur den ofprovir tgthat the subject Jees area penalty since defendan tsfaHed to compare the agreeme nt's fees with any financial calculationiri which the Jees might be dispropo rtionate . . The court notes that a copy ofthe contract between the parties is part of the Summons and Complai nt (See; NYSCEF Docume nts #8 and 18). CPLR 3211(a)( 7) Pursuan t to CPLR 3211 (aJ(7), the courttnu staccept the facts alleged in the complain t as true, afford the plaintiff the benefit of every possible favorable inference, and determin e only whether the facts alleged fit within any cognizable legal theory. Where evidentia ry material is submitte d and consider ed on a motion pursuan t to CPLR 3211(a)( 7), and the motion is riot converte d into one for summa1 yjudgme nt, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one and unless it has been shown that a material fact claimed by the plaintiff to be one is not a fact at all, and unless it can be said that no significant dispute exists regardin g it, dismissal should notevent uate.See , Guggenheimerv, Ginzburg. 43 N.Y.2d 268, 401N.Y.S;2d 182 (1977). 'I'he testofth e sufficiency of a pleading is whether the pleading gives suffi.Cient notice of the occurren ces or series of occurrer tcesinter ided to be proveda ndwheth erthe requisite elements of any cause of action known to our law can be discerne d from its averments. See, Ha mash ire Provs. V. BTA Bldg. & Developing. Inc., 122·AD. 3dS73 (2 nd Dept., 2014}. . . The defendan ts' argumen t for dismissal pursuan t to CPLR 32ll(a)f 7) based on the ca uses of action being bare legal con cl usipns and factual claims is unavailing. The summon s and complain t annexed a copy of the agreeme nt between the parties, which has not been refuted by the defendan ts. Defendants simply argue that plaintiff' s causes of actions are "predicateci by nothing more than monies owed pursuan t to contract." In construin g the 2

[2] of 6 [* 2] complaint herein liberally, accepting the facts alleged as true and giving the plaintiff the benefit of every possible favorable inference, as required ; this Court finds that the plaintiff has stated causes of action for breacho fcontrac t,breach of personal guaranty,·and fees, costs, and expenses. See; Fora Financial Warehouse. LLC v. PMGL, LLC, 83 Misc.3d 1208(A), 210 NS.S.3d 924 (Sup. Ct.,Nassau Co., 2024). Defendants argue that the plaintiff has failed to state a viable cause of action for unjust enrichm ent because the compfairit also alleges the existence of a contract between the parties, Plaintiff alleges that the defendan ts have been unjustly enriched by receiving the purchase price for the future receivables but failing to pay the outstand ing ba!.mce of $195,285.00. The theory of unjust enrichm ent lies as a quasi-co ntract claim. See, Goldman v. Metropol itan Life Ins; Co;, 5 N.Y.3d 561, 572, 807 N.Y.S.2d 583 (2005). It is an obligation imposed by equity to prevent injustice, in the absence of an actual agreeme nt between the parties. Where the parties executed a valid and enforceable written contract governin g a particula r subject matter, recovery on a theory of Un jUst enrichm ent for even ts arising out of that subject matteris ordinaril y preclude d. See, Clark-Fitz12attick.1nc. v; Long /s; R.R. Co., 70 N.Y.2d 382, 388, 521 N.Y.S.2d 653 (1987). Where there is a bona fide dispute as to the existence of a contra ct or the a pplka: tio n of a contract to the dispute. in issue, a plaintiff may proceed upon a theory of quasi contract as well as breach of contract. See, Patkash v Utilisave !&ID., 295 AD2d 330, 743 N.Y.S.2d 889 (2 nd Dept., 2 002). The complain t alleged the exist~nce ofan agreeme nt that controls the subject matter of the action,a nd the existence ofthe agreeme nt is not a matter in dispute. See; Cortazar v Tomasino, SO A.D.3d 668, 54 N,Y.S.3d 89 (2 nd Dept., 2017). Therefor e; the uhjUst enrichm ent ca.use of action should be dismissed, See, Pierce Coach Line; Inc, v.Port Washing ton Union Free School District, 213 A.D.3d959, 185 N.Y.S.3d 187 (2 nd Dept,, 2023). . CPLR 3211(a)( 8J and General Obligations Law 5-1402. Defenda nts nextargu e that the court lacks personal jurisdict fon over the defendan ts pursuan tto GPLR 3211(a)( 8J and General.Obligations Law S-14O2. When a defendan t objects to the court's exercise of personal jurisdiction, the ultimate burden of proofres ts upon the plaintiff. See, Suttonv. Houllou, 191 A.D.3d 1031, 141 N.Y.S.3d .501 (2 nd Dept., 2021). In opposing a.motion to•dismi ss pursuan t to CPLR 32ll(a)( 8)for lack of jurisdiction, a plaintiff need only make a showing that such jurisdict ion exists, Sutton v. Houllou. supra. In the case at bar, the defendan ts argue that the since the defendan ts .ire organize d under the laws of the South Carolina, do business in South Carolina, and that the non-corp orate defendan t resides in South Carolina, the case should be dismisse d and moved to a more convenie nt forum, Le.; the State of.South Carolina. Defendants also argue that the choice of forum provision in the contract which is the subject matter ofthis litigation is not grounded in law or fact, and has no:relati onshipto the transacti on which occurred between the two business es, one which is a New York LLC, and the other being a South Carolina Corporation, which has no ties to New York; and the facts and circumst ances alleged by . . . . . . 3

[3] of 6 [* 3] plaintiff occurred in the State· of South Carolina an.ct therefore; does not confer juri,sdictfon before.·..th~s Court. In the case at bar, the agreemen t provides ori page S, paragraph 4.6 .as follows.: Governing iaw;- Venue -and Jurisdiction This Agreemen t shall be ·governed by and construed in accord_ance with the laws of the State of New York. Any suit, action .a'r proceeding· arising heremider , or the interpretat ion, performan ce, or breach hereof, shall, if BMC so elects, be instituted hi. an:y court siting· in N~w York (the '.½cceptab.le Forµms"). · Merchant and Guarantor (s) agree that the Acceptable Forums are ·convenient tp itan_d_.subinit to thejurisdic tiori ofthe Acceptabl e Forums,an d waives·-.any and all abjectfons to j1irisdiction or venue. Should such proceedin g be initiated in any other forum, Merchant and Guarantor (s)waive anyrightt o oppose any motion or application ntade by GMC to dismiss such proceeding , to remove and/or.:trar;isfer such _pro.ceeclingto--an Acceptabl e Forum; and for an anti-sµit injunction against such proceeding (which ·G M:C- may i.n~ke in Acceptable Forums} Additionally, Merchant and Guarantor (s) waive personal service ·of ap:ysurrmiohs and/or complaint or other process to commerrc:e any litigation and agree that service of such doclinients. shall be. effective- :and complete -·if mailed by certified .mail, return receipt requested to the address(es ) .listed on page 1 of this agreement ; Service shaii be deemed compl.ete. upon mailing in -accordance with this paragraph..:Merchant and G·uarantor(s) will th~n have 3 O calendar .days after the date :of mailing_ in which to respond. "The parti~s to__an agreemen t may freely-select a forum whi~h will resohte-.a_ny disputes over the interpreta tion or perf9tmari ce ofthe contract. Sllch a forum selection da. use :is prirha. facie valid c!,nd e_nforc;eable unless it is shown by the challenging:·party to be UI:1.reasonable, uri.just, in contraven tion of public policy, invalid due to fra.ud or overreachi ng, otit is shown that a trial :in the selected forum wouhi be so gravely difficult that---the challengin g party would,. for all practical purpose be dep.rived of its day ir1 coµit" See., For a Financial Warehouse, LLC "V. PMGL LLC.-83 M15c.3d 1208(A), 210 N.Y.S.3d 924 (Sup, Ct.1 Nassau Co., 2024}, .citing, Horton v. Concerns of Police Survivbrs. Inc;, 6i A.1;l.3d -836 (2 nd I)ept., 2009). Here,the cont:ractin dkates thatthe parties agreed thatNew York would be the forum of any d~sputes and that defendant s waived any otijections to venue. The proofs of service..e,,fO"ed under NYSCEF 0-ocumeli.t #s :Z, 4, tl, and 20 show that the defendant s were served in accordanc e with.the ..terms of the agreement The court finds tha,t_the defendant s have failed to make any showing as towhy the forum selection clause should not be ~riforced and_.set a.~ide; Lastly, defendant s argue tha,t pufs:uant to Gene_ral Obligation s Law 5;;1402,.th1s court lac:ks jurisdictio n as to the claims raised by plaintiff becaus_e they d_c;> ·not satisfy the $1 miilton threshold. General Obligations Laws:..14oz provides: Notwithst anding ariy act which limits or affects the_right of a. per~on to maintain an a_ction or proceedin g any ._person may maintain an action or proceedin g against a foreign corporatio n, non-reside nt, or foreign state where the action or :proceedin g arises out of or relates to any .contract, agreemen t or ·undertaki ng for which a choice of New York law has been made in. whole or in partpursµ ant to section 5~40.1 4

[4] of 6 [* 4] and which (a) is a contract, agreement or undertaking, contingent or otherwise, in consideration of, or relating to any obligation arising out of a transaction covering in aggregate, not less than one million dollars, and (b) which provisions or provisions whereby such foreign corporation or non-tesidentagrees to submit to the jurisdiction of the courts of this state. This court finds the defendants' argument without merit See, National Union Fire Ins. Co. qf Pittsburg.Pa. v. Worley. 257 AD.2d228,690N.Y.S.2d 57 (1st Dept., 1999), where the court held that GO L 5 ~ 140 2 !'is hot a lirriita:tfo n on the use and effectiveness of forumselection clauses. Rather it contains a statutory mandate that a clause designating NewYorkas the forum 'shall' be enforceable!, in cases involving $1 million or more, regardless of any incohvenJence to the parties." In analyzing the applicable sections ofGeneralObligations Law §§ S-140J(l)and 5..:1402(1), the Court of Appeals held that "New York substantive law must govern, since the parties designated New York in their choice of law provision in the guarantee and that the transaction exceeded $250;000." See, IRB~Braxil Resseguros, A.A. v. Inepar1nvestments, S,A., 20 N.Y.3d 310,958 N.Y:Zd 689(2012). Excessive fees . The agreement states that the defendants shall pay the plaintiff fees, costs, and expenses consisting of a ''insufficient funds (bounce) fee" of $35.00; "UCC filing fee" of $250,00, and/;liquidated damages" .of the greater of $5,000;00 orl8o/oofthe then purchased receipts amount outstanding balance, representing, inter alia, carrying cost of capital and costs of collection (page 5, paragraph 32}. The burden is on the party seeking to avoid liquidated damages-here, the defendants-to show that the stated liquidated damages are, in fact, a penalty. See, [MD Holding Corp. v CongressFin. Corp .• 4 N.Y.3d 373; 795 N.Y.S.2d 502 (2005). In the case at bar, the defE!ndants have failed to satisfy their prima fade burden that the insufficient funds fee, UCC filingfee, and liquidated damages provisions at issue are unenforc:eable penalties~ The party chaHenging a liquidated damages clause must establish either that• actual damages were readily ascertainable at·the time the Contract was entered into or that the liquidated damageswere conspicuously.disproport ionate toforeseeable or probable losses. See, United Tit. Agencv. LLC vSut,fside-3 Mar.. Inc., 65 A.D.3d 1134, 885 N.Y;S,2d 334 (2 nd Dept.,2009). Here, the defendants did not provide any evidentiary proof as to either of those factors. Accordingly, defendants' motion to dismiss the complaint pursuantto321 l(a)(8) for lackof personal jurisdiction is hereby denied in the entirety. The defendants' motion to dismiss the complaint pursuant to CPLR3211(a)(7) for failure to state a cause ofa:ction is only granted to the extent that plaintiff's cause of action for unjust enrichment is hereby dismissed. s

[5] of 6 [* 5] The defendants' motion to dismiss the complaint due to excessive fees is hereby denied in the entirety. ,.__, ;,;: c= This constitutes the decision and order of this court. ...,.. r--> :z C') t- Cf) Dated: Brooklyn, New York ~ :z: .,,g -c: January 7, 2025 rz 1'1 -1 O -< (") 'rn::,:: :;;o 6

[6] of 6 [* 6]