Velocity Capital Group LLC. v. Georgia Fine Foods, Inc.

Velocity Capital Group LLC. v Georgia Fine Foods, Inc. 2025 NY Slip Op 34598(U) December 16, 2025 Supreme Court, Erie County Docket Number: Index No. 813636/2025 Judge: Michael A. Siragusa 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: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 At a term ofthe Supreme Court, Part 29, hetd in and for the County of Erie, State ofNew York at 50 Delaware Avenue, Buffalo, on the l6th day of December 2025. PRESENT: HON. MICHAEL A. SIRAGUSA.4J.S.C SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ERIE VELOCITY CAPITAL GROUP LLC.. Plaintiff. -vs- DECISION AND ORDER INDEX NO.81363612025 GEORGIA FINE FOODS, INC. D/B/A JOHN'S FINE FOOD and DAVID EDWARD SEAGRAVES. Defendants. PRELIMINARY STATEMENT Plaintifi Velocity Capital Group LLC (hereinafter "plaintiff'), brought this Amended Motion pursuant to CPLR $321l(a)(7) seeking to dismiss defendants' Georgia Fine Foods, Inc. D/B/A John's Fine Food and David Edward Seagraves (hereinafter "defendants"), counterclaims for failure to plead facts sufficient to state a claim and seeking to dismiss defendants' affirmative defenses. See NYSCEF Doc. No. 25. Plaintiff submitted the affirmation of attomey Junyao Yang Esq., in support of plaintilf s motion and a memorandum of [aw. See NYSCEF Doc. No.c. 23 & 24. Defendants submitted the attomey alfirmation of Robert C. Jacovetti, Esq', and a memorandum of law in opposition to plaintiff s motion to dismiss the defendants' counterclaims and affirmative defenses. See NYSCEF Doc. Nos. 32 & 33. In deciding the motion, the Court has reviewed and considered NYSCEF Doc. Nos. l-6 and 23-34. Counsel for the respective parties have agreed to submission ofthe motion on papers 1 [* 1] 1 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 only, as well as having waived oral argument. The motion having regularly come on to be heard, this Court hereby issues the following Decision and Order. FACTS On August 7,2025, plaintiff commenced this action against defendants. According to the plaintifls complaint, plaintiffand defendants entered into a revenue purchase agreemenl on June 11,2025, wherein defendants sold $89,940.00 ("The Purchase Amount") of their future receipts to plaintiff, to be paid to plaintiff at a rate of 80% of defendants' daily sales receivables, for an upfront sum of $60,000.00 ("The Purchase Price"). See NYSCEF Doc. Nos. I & 2. Plaintiff alleges that it paid the purchase price and defendants only partially performed in the amount of$17, 988.04. See NYSCEF Doc. No. 4. Thereafter, on or about August 5, 2025, plaintiff alleges that defendants defaulted by failing to perform their obligations under the agreement, in that they did not pay the installment payment due; by blocking plaintifls access to the designated bank account, thereby making it impossible to collect its purchased accounts receivable; and by discontinuing payments into said designated bank account. See NYSCEF Doc. Nos. 1,23 & 24. On August 18,2025, defendants filed an answer to the complaint. See NYSCEF Doc. No. 6. In their answer, defendants raised the following affirmative defenses: 41. Plaintiff lacks personal jurisdiction over defendants. 42. To the extent that this contract lacks consideration. A transaction that fails to establish consideration is not an enforceable contract. 43. To the extent that this contract is unconscionable. This contract is so grossly unreasonable that it should be deemed unenforceable. 44. To the extent established in discovery, plaintifls complaint fails to set forth claims upon which reliel can be granted. 45.To the extent established in discovery, each cause ofaction in the complaint is barred because the defendants have not breached any obligation that they may have had with plaintiffs. ) [* 2] 2 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 46. To the extent established by discovery, all or part of plaintiff s claims are barred in whole or in part by one or more equitable doctrines, including accord and satisfaction, unconscionability, waiver, release, estoppel, laches and unclean hands. 47. To the extent established in discovery, all or part of plaintilf s claims are baned in whole or part by the statute of frauds. 48. To the extent established in discovery, all or part of plaintiff s claims are barred in whole or in part and any contract entered into by defendants with plaintifls entitled to a rescission because any such contract was entered into by the defendants under economic duress and/or through undue influence or fraud on behalf ol plaintifi 49. To the extent established in discovery, upon information and beliefthe defendants dispute any and all amounts set forth in the documents referenced in the complaint. 50. To the extent established in discovery, upon information and belief plaintiffs claims are barred as a result ofpayment having been made to ptaintiffby defendants. 51. To the extent established in discovery, upon information and belief, the contract is unenforceable due to fraud. 52. To the extent established in discovery, upon information and belief, the contract is usurious and unenlorceable pursuant to General Business Law, Section 5-521, and Penal Law, Section 190.40. 53. Defendants presently have insufficient knowledge or information upon which to form a beliefas to whether they may have additional al'firmative defenses. On that basis, the defendants reserve the right to amend this answer to asset[sic] additional affirmative defenses in the event discovery indicates the additional defenses appropriate' See NYSCEF Doc, No. 6. Defendants also interposed two counterclaims against plaintiff, one on behalfofthe business and one on behatfofDavid Edward Seagraves, seeking to recover damages for breach of contract. See Id. ln their counterclaims, defendants allege that pursuant to the agreement, they had the right to request a reconciliation to more closely reflect their receivables and that plaintiff denied such request which constituted a breach of the agreement causing them to suffer monetary damages. In the section of the answer entitled "Counter-Facts", defendants allege that they performed pursuant to the agreement, that they requested a reconciliation, that plaintiff denied that request, and that plaintiff breached the conttact. See Id. Plaintiff now moves pursuant to CPLR $3211(a)(7), seeking to dismiss defendants' counterclaims for failure to plead facts sufficient to state a claim, and pursuant to CPLR plead with $3211(b), seeking to dismiss all ofdefendants' affirmative defenses for failure to 3 [* 3] 3 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 facts and to dismiss defendants' usuary defenses as a matter of law. See NYSCEF Doc. Nos.23- 25. DEFENDANTS' COUNTERCLAIMS The New York State Court ofAppeals has explained that "although on a motion to dismiss the allegations are presumed to be true and accorded every favorable inference, conclusory allegations and claims consisting ofbare legal conclusions with no factual specificity are insufficient to survive a motion to dismiss." Godfreyv.Spano, )3N.Y3d358,373 [2009]. The court is not bound to accept as true a legal conclusion couched as a factual allegation. While legal conclusions can provide the framework ofa complaint, they must be supported by factual allegations. Sikorsky v City of Newburgh, 2018 N.Y. Slip. Op 33920[U], *8 (Sup. Cl Orange Cty. 2018); Davydov v. YousseJi, 205 A.D.3d 879, 880 [2'd Dept. 2022]. In this matter, defendants do not offer any specifics or factual statements to support their position. They simply allege that they performed according to the agreement and requested a reconciliation of the specified payment to more closely reflect their receivables at that time, but plaintiff denied such request and demanded payment in full of all remaining receivables. See NYSCEF Doc. No. 6. Defendants' pleading is missing facts that would suggest a reconciliation should be performed or would have had any effect. Defendants have not provided any dates of said requests or indicia that a reconciliation request was made by defendants to plaintiff, or anything suggesting that defendants submitted the corporate defendants' bank statements to plaintiffthat would have allowed plaintiffto perform a reconciliation. Defendants also allege that they suffered money damages as a result of plaintiff s breach ofthe agreement without any claimed amount. Delendants vague and conclusory allegations contained in both counterclaims are insufficient to state a cause ofaction for breach of contract. 4 [* 4] 4 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 Connaughton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d at 142; Cloudfund LLC v. Broughton Constr. Co. LLC, 2023 N.Y. Misc. LEXIS 23043 (Sup. Ct. Nassau Cty. 2\23)(Commercial Division); Velocity Cap. Grp. LLC v. Allstate Commer. Glass Inc., 2024 N.Y. Misc. LEXIS 5272 (Sup. Ct. Kings Cty. August 23,2024). Fvther, defendants do not provide any factual assertions in their opposition papers to remedy the defects. Therefore, deflendants' counterclaims are dismissed pursuant to CPLR $321 1(aX7). AFFIRMATIVE DEFENSES DISMISSED I N PART CPLR $321l(b) states that "a party may move for judgment dismissing one or more defenses, on the grounds that a defense is not stated or has no merit." When a plaintiff moves to dismiss an affrrmative defense, the plaintiffbears the burden of demonstrating that the affirmative defenses are without merit as a matter of law because they either do not apply under factual circumstances of the case or fail to state a defense. Bank of Am., N.A. v. 414 Midland Ave. Assoc., LLC, 78 A.D.3d 746, 748 [internal quotation marl<s omitted]: see Lewis v. U.S. Bank, N.A., 186 A.D.3d 694, 697 [2'd Depr. 2020]; Shas v. Mitra, 171 A.D.3d at 971. On a motion pursuant to CPLR $3211(b), the court should apply the same standard it applies to a motion to dismiss pursuant to CPLR $3211(aX7), and the factual assertions ofthe defense will be accepted as true. Weils Fargo Banh N.A. v. Rios, 160 A.D.3d 912, 913 [2'd Dept. 20181; LG Funding LLC v. Ihnited Senior Props. OfOlathe' LLC, 181 A.D.3d 664, 665 [2d Dept. 2020]. A. Lack of Personal Jurisdiction Weived and Dismissed In this case, defendants raise the affirmative defense oflack ofpersonal jurisdiction in their answer. After filing their answer, defendants never made a motion to dismiss the complaint 5 [* 5] 5 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 on the basis of lack of personal jurisdiction. Consequently, the affirmative defense set forth in paragraph 4l of the answer has been waived by defendants and is dismissed. CPLR $311(e). B. Lack of Consideration Here, in this case, the revenue purchase agreement (see NYSCEF Doc. No. 2) demonstrates that plaintiff agreed to pay $60,000 in exchange for the maximum purchase amount of$89,400.00. Defendants concede this in their answer. See NYSCEF Doc. No. 6. Since defendants have conceded through their own answer that there was consideration for the contract, defendants' affirmative defense contained within paragraph 42 ofthe answer is dismissed. C. Unconscionable "An unconscionable agreement is one such as no person in his or her own senses not under delusion would make on the one hand, and as no honest and lair person would accept on the other, the inequality being so strong and manifest as to shock the conscience and confound the judgment of any person of common sense." Sfrah v. Milra, 171 A.D.3d al 977; citing Christian v. Christian, 42 N.Y.2d 63, 71 U9771. Here, defendants provide no factual basis and no more than mere legal conclusions to support their affirmative defense that the contract is unconscionable. They merely conclude that the contract is unenforceable and unconscionable. Katz v. Miller, 120 A.D.3d 768, 769-770 f2',d Dept. 20141. Therefore, the affirmative defense contained within paragraph 43 ofthe answer is dismissed. D. Fraud, economic duress, undue influence Defendants have submitted no particularized allegations offraud in their answer, in their motion papers, nor have they provided any evidence to support the bare allegations of fraud, 6 [* 6] 6 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 undue influence, or duress. Shah v. Mitra, 171 A.D.3dat975; Polito v. Polito, 121 A.D.2d611, 615 [2d Dept. 1986J; Hearst v. Hearst, 50 A.D.3d 959, 961-962 [2'd Dept. 2008J. Therefore, the affirmative defenses contained in paragraphs 48 & 5l of the answer are dismissed. E. Failure to State a Cause of Action With respect to the affrrmative defense alleging failure to state a cause ofaction as set forth in paragraph 44 of the answer, that branch of plaintiff s motion is denied . Ochoa v. Townsend, 209 A.D.3d 867, 868 [2'd Dept. 2022]. "No motion by plaintiff lies under CPLR $3211(b) to strike the defense of failure to state a cause ofaction, as this amounts to an endeavor by the plaintiff to test the sufficiency of his or her own claim. Butler v. Catinella' 58 A.D.3d 145, 150 [2il Dept. 2008J; Jacob Marion. LLC v. Jones, 168 A.D.3d 1043, 1044 [2'd Dept. 2019J. F. Usury The affirmative defense set forth in paragraph 52 ofthe answer asserts that the agreement is unenforceable as usurious. The primary and fundamental element of usury is the existence of a loan or forbearance ofmoney, and where there is no loan, there can be no usury, however unconscionable the agreement may be. LG Funding, LLC v United Senior Props. Of Olathe, LLC, 181 A.D.3d at 665. Courts examine whether the plaintiffis absolutely entitled to repayment under all circumstances. Courts have held that unless a principal sum advanced is repayable absolutely, the transaction is not a loan. Id. at 666. Courts further weigh three factors when determining whether repayment is absolute or contingent: (l) whether there is a reconciliation provision in the agreement; (2) whether the agreement has a finite term; and (3) whether there is any recourse should the merchant declare bankruptcy' 1d 7 [* 7] 7 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 In this case, the evidence in the record demonstrates that the subject agreement provided that the defendants will sell a portion of a future revenue stream to the plaintiffat a discount, not that they are borrowing money from the plaintiff. There is no interest rate or payment schedule and no time-period during which the purchased amount must be collected by the plaintiff. See NYSCEF Doc. No. 2. Moreover, the plaintiff assumes the risk that future receipts may be remitted more slowly than the plaintiffmay have anticipated or projected because the defendants' business has slowed down, and the risk that the full purchase amount may never be remitted because the defendants' business went bankrupt or defendants otherwise ceased operations in the ordinary course ofbusiness, to the extent not caused by the defendants' breach ofthe agreemenl. See Id. The evidence in the record further demonstrates, as defendants state in their answer, that the agreement included a procedure allowing them to request a retroactive reconciliation and a prospective adjustment. See /d. Because the subject agreement was not subject to a finite term, allowed for certain events to excuse the defendants' performance, thereunder, and contained reconciliation and adjustment provisions, the subject agreement is not a loan. Therefore, the affirmative defense premised upon usury is without merit and is dismissed. Principis Capital, LLC v. I Do, Inc., 201 A.D.3d 752,754-755 [2'd Dept. 2022]. G. Remaining Affirmative Defenses The evidence in the record demonstrates that the affirmative delenses set forth in paragraphs 45,46,47,49, 50, and 53 of the answer, merely plead conclusions of law without proffering any supporting facts. By pleading that these alfirmative defenses were being made "to the extent established in discovery" and "upon information and belief', defendants 8 [* 8] 8 of 9 FILED: ERIE COUNTY CLERK 12/16/2025 01:53 PM INDEX NO. 813636/2025 NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 12/16/2025 acknowledged that they were not aware ofany facts to support these affirmative defenses at the time they were interposed. Further, while a party may remedy any defects in a pleading by submitting evidence in opposition to a motion to dismiss, here, defendants submit no such evidence in opposition to plaintiff s motion. Bank of Am., N.A. v. 414 Midland Ave. Assoc., LLC, 78 A.D.3d 746, 750 [2'd Dept. 2010]; Fireman's Fund Ins. Co. v. Farrell, 57 A.D.3d 721, 723 [2'd Dept.2008]; Diazv.297 SchaeferSt. RealtyCorp., 195A.D.3d794,796 [2'd Depr.2021J; Benjamin v. Yeroushalmi, 178 A.D.3d 650, 653 [2019]. Accordingly, it is hereby, ORDERED that the branches of plaintilFs motion brought pursuant to CPLR $3211(a(7) seeking to dismiss defendants' counterclaims, is GRANTED; and it is further ORDER-ED that the branches of plaintiff s motion brought pursuant to CPLR $321 l(b) seeking to dismiss defendants' affirmative defenses set forth in paragraphs 41, 42, 43, 45, 46, 47 , 48,49,50,51, 52, and 53 oftheir answer, are GRANTED; and it is further ORDERED that the branch of plaintiffs motion brought pursuant to CPLR $3211(b) seeking to dismiss defendants' affirmative defense set forth in paragraph 44 oftheir answer, is DENIED; and it is further ORDERED that the defendants' informal application to replead its counterclaims and affirmative defenses is DENIED. SO ORDERED Dated: December 16,2O25 ENTER: o . MICHAEL A. SIRAG A.J.S.C. 9 [* 9] 9 of 9