Samson MCA LLC v. Hudson's Edge Catering & Events LLC

Samson MCA LLC v Hudson's Edge Catering & Events LLC 2024 NY Slip Op 30755(U) March 12, 2024 Supreme Court, Ontario County Docket Number: Index No. 134865-2022 Judge: Daniel J. Doyle 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.

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STATE OF NEW YORK SUPREME COURT COUNTY OF ONTARIO

SAMSON MCA LLC,

Plaintiff, Index #: 134865-2022

-vs-

HUDSONS EDGE CATERING AND EVENTS LLC D/B/A HUDSON'S EDGE CATERING & EVENTS LLC And BRYAN WILSON,

Defendants.

Special Term March 5, 2024

Appearances on Submission

Ariel Bouskila, Esq., Berkovitch & Bouskila, PLLC- for Plaintiff Marshall E. Garson, Esq., J.S. Fritzson Law Firm P.C.-for Defendants

DECISION

Doyle, J.

This is a merchant advance agreement case. Pending before the Court is Plaintiffs

motion to dismiss the Counterclaim s pursuant to CPLR 3211(a)(1) and (7). 1

For the reason set forth herein, the motion to dismiss is GRANTED.

1 The Notice of Motion mistakenly cites to CPLR 3221 instead of 32u. This error is disregarded pursuant to CPLR§2001.

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LAWSUIT FACTS

This action is related to the parties' agreemen t for Plaintiff to purchase Defendant s'

future receivables having an agreed value of $67,455.00 on October 19, 2022. It is alleged

that the Company Defendan t remitted $22,755.88 of the receivables, leaving a balance of

$44,699. 12 .

The Answer sets forth Counterclaims sounding m civil usury, criminal usury,

fraudulent induceme nt and negligent misreprese ntation.

LEGAL ANALYSIS

CPLR 3211(a)(1) allows for dismissal for a defense based upon document ary evidence.

"A motion to dismiss pursuant to CPLR 3211(a)(1) will be granted if the document ary

evidence 'resolves all factual issues as a matter of law, and conclusively disposes of the

[plaintiffs] claim[s]."' Baumann Realtors, Inc. v. First Columbia Century-30, LLC, 113A.D.3d

1091, 1092 (4 th Dept. 2014) (citation omitted). The motion to dismiss will be granted if the

document ary evidence "utterly refute(s)" the factual allegations made in the Complaint.

See Priester v. Frangakis, 198 A.D.3d 1295, 1296 (4 th Dept. 2021).

Dismissal is also sought for failure to state a cause of action. "On a motion to dismiss

for failure to state a cause of action under CPLR 3211(a)(7), '[w]e accept the facts as alleged

in the complaint as true, accord plaintiff[] the benefit of every possible favorable inference,

and determine only whether the facts as alleged fit within any cognizable legal theory."'

Connaugh ton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 141 (2017) (citation omitted).

"At the same time, however, 'allegations consisting of bare legal conclusions as well as

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factual claims flatly contradicted by documentary evidence are not entitled to any such

consideration."' Simkin v. Blank, 19 N.Y.3d 46, 52 (2012) (citation omitted) . "Dismissal of

the complaint is warranted if the plaintiff fails to assert facts in support of an element of

the claim, or if the factual allegations and inferences to be drawn from them do not allow

for an enforceable right of recovery." Connaughton , 29 N.Y.3d at 142.

"'When ruling on a motion to dismiss pursuant to CPLR 3211(a)(7), it is well settled

that 'the criterion is whether the proponent of the pleading has a cause of action, not

whether he [or she] has stated one."' Wilczak v. City of Niagara Falls, 174 A.D.3d 1446, 1447

(4 th Dept. 2019) (citation omitted). '"Thus, [a]ffidavits and other evidentiary material may

be considered to establish conclusively that [the] plaintiff has no cause of action."' Id.

(citation omitted).

Usury Counterclaims

In assessing whether a transaction is truly a usurious loan, "the courts will be vigilant

to judge the transaction by its real character rather than by the form and color which the

parties have seen fit to give it." Archer Motor Co. v. Relin, 255 A.D. 333,335 (4 th Dept 1938).

It is "common practice for those engaged in usury to disguise the true nature of their

transactions .... " Matter of People v. JAG NY. LLC, 18 A.D.3d 950, 952 (3 rd Dept. 2005). The

Court of Appeals has stated:

The question in each case is, and necessarily must be, whether the agreement be fair and reasonable, or a mere device to evade the usury statutes ... "what we have to find in the transaction is the intention of the parties.*** It was early recognized by the courts than if the form of the contract were to be controlling, the statute against usury would be substantially unenforceable, and thus it was made the duty of the court in each case presented to examine into the substance of the transaction

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between the parties and determine whether the intent which pervaded it was one which violated the statute."

Hartleyv Eagle Ins. Co. of London, England, 222 NY 178,185 (1918) (citation omitted).

The agreement between the parties in the case at bar contained a mandatory right

of reconciliation, did not have a finite term, was subject to a "downturn" in Defendants'

business, and did not make a bankruptcy filing an event of default. The Agreement is

consequently not a loan that is subject to usury laws. Accordingly, documentary evidence

provides a defense to the usury counterclaims.

The motion to dismiss the First and Second Counterclaims is GRANTED.

Fraudulent Inducement

The Third Counterclaim alleges that Plaintiff made false and misleading statements

to induce Defendant to enter into the Agreement and that the statements were made with

the purpose of inducing Defendants to rely on them. It is further alleged that Defendants

justifiably relied on them.

"A plaintiff seeking to invalidate a release due to fraudulent inducement must

'establish the basic elements of fraud, namely a representatio n of material fact, the falsity

of that representatio n, knowledge by the party who made the representatio n that it was

false when made, justifiable reliance by the plaintiff, and resulting injury."' Centro

Empresarial Cempresa S.A. v. America Movil. S.A.B. de C.V., 17 N.Y.3d 269, 276 (2011).

Here, the Third Counterclaim lacks the requisite specificity to support a claim of

fraud. See CPLR 3016. Defendants fail to allege what statements were made by Plaintiff that

were fraudulent or when the statements were made. "CPLR 3016(b) is satisfied when the

facts suffice to permit a 'reasonable inference' of the alleged misconduct." Eurycleia

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Partners, LP v. Seward & Kissel. LLP, 12 N.Y.3d 553, 559 (2009). Conclusory statements of

fraud are insufficient to withstand this burden. Id.

The motion to dismiss the Third Cause of Action is GRANTED.

Negligent Misrepresen tation

The Fourth Counterclaim alleges that Plaintiff made false and misleading

misrepresent ations, had no ground to believe them to be true, and that Plaintiff knew or

should have known the statements were false and misleading. It is alleged that these

representatio ns were made with the intent to induce Defendant to act in reliance on them,

and that Defendants did not know they were false and were consequently induced to enter

into the Agreement.

For the reasons set forth supra, the motion to dismiss the Fourth Counterclaim is

also GRANTED.

Plaintiff shall submit a proposed order to opposing counsel for approval, and

thereafter to the Court, by April 16, 2024.

Signed at Rochester, New York on March~' 2024.

Supreme Court Justice

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