QFS Capital, LLC v. MMOA Group LLC

QFS Capital, LLC v MMOA Group LLC 2025 NY Slip Op 31526(U) April 28, 2025 Supreme Court, Rockland Counrty Docket Number: Index No. 033212/2024 Judge: David Fried 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. 033212/2024 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 04/28/2025

To commence the statutory time period for appeals as of right (CPLR §5513 !al), you are advised to serve a copy of this O rder, with notice of entry, upon all parties.

SUPREME COURT OF T HE STAT E OF EW YORK CO TY OF ROCKLA D ----------------------------------------------------------------------X QFS CA PTTAL, LLC,

Plaintiff, DECISION & ORDER

-against- Index o.033212/ 2024 Motion Sequence o. 3 MMOA G ROUP LLC and A NA LEAL,

Defendants. ----------------------------------------------------------------------X HON. DAVID FRIED, A.J.S.C.

The papers filed electro nically via YSCEF numbered 41 through and including 50 ("Motio n") were read and considered herein. Upon such reading and consideration, the Motion is disposed as follows:

BACKGROUND

This action was commenced by way of the filing o f a Summons and Verified Complaint on June 7, 2024, stemming from D efendants MMOA Group LLC (" Defendant Company") and Anna Lcal's ("Guarantor" and, together ,vith D efendant Company, " Defendants") alleged failure to deliver the future receivables purchased by Plaintiff QFS Capital, LLC ("Plaintiff') in accordance with an agreement entered betw een the parties.

Plaintiff contends that in accordance with the agreement, Plaintiff is owed the balance o f $35,515.49, plus NSF fees in the amount of $1,085.00, an early termination fee in the amount of $482.1 9, a UCC filing fee in the amo unt of $250.00, and attorney's fees in the amount of $8,878.87, totaling $46,211.25, plus interest from the date o f default, January 22, 2024, plus cost and disbursements in the amount of $455.00.

otwithstanding that Defendants filed an Answer with affirmative defenses to the Complaint on July 7, 2024, this Court struck Defendants' r\nswer at a March 31, 2025 compliance conference due to D efense Attorney Jeffrey Davis' repeated failure to appear before the undersigned, despite being ordered to do so, and the utter failure to comply ,vith any of the Court's discovery orders. Attorney

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Davis first failed to appear at a preliminary conference on ovember 20, 2024. o twithstanding said nonappearance, Attorney Davis was informed of the discovery schedule issued at the conference by way of a letter uploaded to YSCEF (NYSCEF D ocument o. 26). On l\farch 11, 2025, in response to letters filed by Plaintiff's counsel indicating that Defendants had been unresponsive to several discovery demands, the Court directed attorneys of record to appear for a compliance conference on March 31, 2025 and to confer telephonically beforehand as to the scheduling of deposition dates. At the March 31, 2025 conference, Attorney Davis failed to appear for a second time - sending coverage in his place, despite the clear and unequivocal order of this Court that attorneys of record appear, and Plaintiffs counsel informed the Court that Defendants made absolutely no progress with discovery in the four months since the issuance of the discovery scheduling order. Thus, in addition to striking Defendants' Answer, the Court directed that if Plaintiff intended to move for a default, to do so by May 2, 2025 - as Plaintiff still needed to establish the viability of its claim in order to secure relief herein.

On March 31, 2025, Plaintiff filed the within Motion, pursuant to CPLR §3215, seeking an Order for a default judgment against Defendants. Defendants oppose the Motion, contending flippantly and \vith apparent disregard to the procedural history of this matter, that the Motion is "baseless," " makes no sense whatsoever," and that same is " preposterous and worthy of san ctions and costs to Defendants" (NYSCEF Document No. 50 il1 4 & 9). oteworthy, the same attorney who repeatedly failed to appear as required and who did not comply with the Court's discovery scheduling o rder, is the affirmant who places such wholly frivolous contentions before this Court.

DISCUSSION

CPLR §3215(a) states in pertinent part: "When a defendant has failed to appear, plead o r proceed to trial of an action reached and called for trial, or when the court orders a dismissal for any other neglect to proceed, the plaintiff may seek a default judgment against him." Plaintiff has established that a default judgment against Defendants is appropriate here. As set fortl1 above, this Court previously struck D efendants' Answer at a March 31, 2025 conference before the undersigned, and thereby, D efendants are in default. With respect to the requirement mat a meritorio us action be shown, Plaintiff submits a Verified Complaint and A ffirmatio n of Benjamin H inke, Plaintiffs Manager, which demonstrates merit ilierein (see Clarke v. Lber(y Mutual r'tre Ins., 150 t\D3d 1192 [2d Dept 20171). D efendants have not raised any meritorio us defense to tl1e within motion, and ilieir opposition appears to have been drafted wiiliout insight as to ilie procedural impacts of tl1e striking of one's p leading.

"The D efault Fee [termed in Plaintiff's supporting papers as an 'an early termination fee'], however, is an unenforceable penalty. Here, the amount of damages upon a breach is readily ascertainable: it is the sum remaining due on the factoring agreement .... Plaintiffs in this industry are unquestionably capable and able to calculate ilie amount due on a default, as continuously illustrated by ilie pleiliora of cases of mis type filed in tl1e [Ninili] Judicial District" (see Byzftmder 1 Y I.LC v. Ho/y Ci(y Co//isio11 LLC, 80 Misc3d 1208[A], 194 NYS3d 924 [Sup Ct Ontario Cry 2023]).

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Plaintiff is also requesting a fn:ed attorneys' fee award of 25% of the balance of the amount due. The Supreme Court is not bound by the fixed percentage set forth in the agreement but, instead, has the inherent authority to determine reasonable attorneys' fees. Orix Credit Alliance Inc. 11. Grace Tndmtries, Inc., 261 A.D.2d 521 , 521-522, 690 .Y.S.2d 651 (2d Dept. 1999); Prince 11. Schacher, 125 A.D.3d 626,628, 2 N .Y.S.3d 585 (2d Dept. 2015). Thus, an award of attorneys' fees pursuant to a contractual provision may only be enforced to the extent that the amount is reasonable and warranted for the services actually rendered. Kamco Supp!J Corp. v. A nnex Contracting Inc., 261 A.D.2d 363, 689 .Y.S.2d 189 (2d D ept. 1999); Lupo v. Anna's J_,1,t/laby Cafl, LLC, 189 A.D.3d 1205, 138 N.Y.S.3d 103 (2d Dept. 2020); Coflry v. Tretola, 179 A.d.3d 889, 890, 119 N.Y.S.3d 179 (2d Dept. 2020).

Accordingly, "a fixed percentage fee, as requested here, is ,·iewed only as a maximum fee, limiting the amount of reasonable attorney's fees which the plaintiff may charge upon proving the extent o f the necessary services." Mead v. first Trust & Deposit Co., 60 A.D.2d 71, 78, 400 N.Y.S.2d 936 (4th Dept. 1977). An award of reasonable attorneys' fees is within the sound discretion of the court, based upon such factors as the time and labor required, the difficulty of the issues involved, and the skill and effectiveness of counsel. S0/Bluestar LLC v. Cancmie Hotel Corp., 33 A.D.3d 986, 825 .Y.S.2d 80, 82 (2d Dept. 2006).

Plaintiff may be entitled to recover an attorney's fee of a fixed percentage if it can demonstrate that the quality and quantity of the legal services rendered were such as to warrant, on a quantum memit basis, that full percentage. Indus/nal Equipment Credi! Corp. v. Green, 92 A. O.2d 838, 460 N .Y.S.2d 337 (1st Dept. 1983). If the Plaintiff does not make that demonstration, then a reasonable attorney's fee should be set by the court upon a quantum meruit basis. Id. Where the value of the legal services rendered by Plaintiff's counsel is not evident from the record, the matter may be remanded for an assessment of those damages. Id. Here, Plaintiff has offered absolutely no evidence, by way of billing statements or otherwise, that the amount of time expended by counsel related to its pursuit of this debt.

Sin ce a quantum mentil award cannot be issued on this record, if Plaintiff does intend for the Court to contemplate an award o f attorney's fees, Plaintiff is accorded fifteen (15) days from the date of this Decision & O rder, to provide a proper affirmation, along with billing statements, and other proofs ("supporting documents"), to this Court in furtherance of a quantum menu/ assessment. Submit the supporting documents, via YSCEF, as correspondence to the Court. Ensure that the submission is filed in connection with this motion sequence, and in the description, enter: "D ocuments in Support of Attorney Fee Application." Do not initiate a new motion. Plaintiff shall not enter Judgment for the principal sum awarded herein until such time that the attorney's fees assessment is determined by the Court. Failure to strictly comply with the directives contained herein shall constitute a waiver of the application for attorney's fees.

If Plaintiff no longer wishes the Court to contemplate an award of attorney's fees, then, Plaintiff may enter Judgment against Defendants in the amount o f S36,850.49 plus pre-judgment interest at 9% from

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January 22, 2024 to the date of entry of judgment, post-judgment interest, and costs and disbursements as taxed by the Rockland County Clerk.

In light o f the foregoing, it is hereby

ORDERED, that Plaintiffs Motion for a default judgment in favor of Plaintiff, as against Defendants, is GRANTED to the extent specified herein; and it is further

ORDERED, that if Plaintiff docs intend for the Court to contemplate an award of attorney's fees, Plaintiff is accorded fifteen (15) days from the date of this Decision & Order, to provide a proper affirmation, along with billing statements, and other proofs ("supporting documents"), to this Court in furtherance of a quanllfm memil assessment. Submit the supporting documents via NYSCEF as correspondence to the Court. Ensure that the submission is filed in connection with this motion sequence, and in the description, enter: "Documents in Support of Attorney Fee Application." Do not initiate a new motion. Plaintiff shall no t enter Judgment for the principal sum awarded herein until such time that the attorney's fees assessment is determined by the Court. Failure to strictly comply with the directives contained herein shall constitute a waiver of the application for attorney's fees; and it is further

ORDERED, that if Plaintiff no lo nger wishes the Court to contemplate an award of attorney's fees, then, Plaintiff may enter Judgment against Defendants, jointly and severally, in the amount of THIRTY SIX THOUS1\ND E IGHT HUNDRED FIFTY DOLLARS AND 49/ 100 CENTS ($36,850.49) plus pre-judgment interest at 9% from J anuary 22, 2024, to the date of entry of judgment, post-judgment interest, plus cost and disbursements as taxed by the Rockland County Clerk, without further leave of Court; and it is further

ORDERED, that Plaintiff shall serve a copy of this Decision & Order, with otice of Entry, upon Defendants via NYSCEF and certified mail within ten (10) days of the entry hereof, and by such date shall also upload to YSCEF, an affirmation o f such service. Annex to said affirmation of service, proof of said certified mailing and include the certified mailing tracking number.

T he foregoing constitutes the Decision & Order of this Court.

Dated: ew City, ew York E TER: April 28, 2025

• a HON. DAVID FRIED, A.J.S.C. STATE OF EWYORK COU TY OF ROCKLA D

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