Fenix Capital Funding, LLC v. Memorial Wine Cellar, LLC

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Fenix Capital Funding, LLC v Memorial Wine Cellar, LLC 2024 NY Slip Op 31372(U) April 17, 2024 Supreme Court, Kings County Docket Number: Index No. 512458/2023 Judge: Francois A. Rivera 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.

BACKGROUND

On April 6, 2023, plaintiff commenced the instant action by filing a summons and

verified complaint with the Kings County Clerk's office (KCCO). On June 29, 2023, the

defendants interposed and filed a joint verified answer with counterclaims with the [* 1] 1 of 8

KCCO. On July 11, 2023, plaintiff interposed and filed a reply to defendants'

counterclaims with the KCCO.

The verified complaint alleges thirty allegations of fact in support of three

denominated causes of action: The first is for breach of contract, the second is for unjust

enrichment, and the third alleges fraud.

The verified complaint alleges the following salient facts. Pursuant to a receivable

purchase agree~nent (hereinafter the agreement) and personal guaranty dated March 24,

2023, the plaintiff purchased from the LLC defendant its future accounts receivables for

the sum of$20,000.00.

On or about March 24, 2023, in consideration of the sum of $20,000.00, the LLC

defendant sold, assigned, and transferred to plaintiff twelve ( 12%) percent of its future

sales proceeds, up to an aggregate amount of $29,200.00. By the agreement, Ryan D

Weise executed a personal guaranty if the LLC defendant defaulted.

On April 21, 2023, the LLC defendant defaulted· under the agreement by placing a

stop payment request to its bank for the ACH transfers or it closed the bank account in its

entirety. In total, the LLC defendant remitted the amount of $4,866.60 in accordance

with the agreement, leaving a balance of $24,333.40 remaining due and owing.

Accordingly, there is now due and payable to plaintiff, by the defendants, the

principal balance sum of $24,333.40, contractual default fees and penalties, and

nonsuf:ficient fund fees in the amount of$150.00, together with interest from April 23,

2023, and reasonable attorneys' fees and costs and disbursements of this action.

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LAW AND APPLICATION

There is no opposition to the instant motion. However, "[a] summary judgment

motion should not be granted merely because the party against whom judgment is sought

failed to submit papers in opposition to the motion, i.e. 'defaulted'" (Liberty Taxi Mgt.,

Inc: v Gincherman, 32 AD3d 276, 278 n [1st Dept 2006], citing Vermont Teddy Bear Co.

Inc., v 1-800 Beargram Co., 373 F3d 241,244 [2d Cir 2004] ["the failure to oppose a

motion for summary judgment alone does not justify the granting of summary judgment.

Instead, the ... court must still assess whether the moving party has fulfilled its burden of

demonstrating that there is no genuine issue of material fact and its entitlement to

judgment as a matter oflaw"]; see Cugini v System Lumber Co., Inc., 111 AD2d 114, 115

[1st Dept 1985]).

It is well established that summary judgment may be granted only when no triable

issue of fact exists (Alvarez v Prospect Hosp., 68 NY2d 320, 324-25 [1986]). The burden

is upon the moving party to make a prima facie showing that he or she is entitled to

summary judgment as a matter oflaw by presenting evidence in admissible form

demonstrating the absence of material issue of fact ( Giuffrida v Citibank, I 00 NY2d 72,

81 [2003]).

A failure to make that showing requires the denial of the summary judgment

motion, regardless of the adequacy of the opposing papers (Ayotte v Gervasio, 81 i'q'Y2d

· 1062 [1993]). If a prima facie showing has been made, the.burden shifts to the opposing

party to produce evidentiary proof sufficient to establish the existence of material issues

of fact (Alvarez, 68 NY2d at 324). [* 3] 3 of 8

Pursuant to CPLR 3212 (b ), a court will grant a motion for summary judgment

upon a determination that the movant's papers justify holding, as a matter of Jaw, that

. there is no defense to the cause of action or that the cause of action or defe~se has no

merit. Furthermore, all of the evidence must be viewed in the light most favorable to the

opponent of the motion (Marine Midland Bank v Dino & Artie's Automatic Transmission

Co., 168 AD2d 610 [2d Dept 1990]).

In the case at bar, the only sworn testimony submitted by the plaintiff in support

of the motion was an affirmation of Maksim Leyvi, its counsel (hereinafter Leyvi), and

an affidavit of Alexander Ryvkin, its chief legal officer (hereinafter Ryvkin ). Leyvi 's

affinnation demonstrates no personal knowledge of any of the transactional facts alleged

in the complaint. "An attorney's affirmation that is not based upon personal knowledge

is of no probative or evidentiary significance" (Nerayoff v Khorshad, 168 AD3d 866, 867

[2d Dept 2019], citing Warrington v Ryder Truck Rental, Inc., 35 AD3d 455,456 [2d

Dept 2006]). Leyvi's affirmation states that the facts in support of the motion are

contained in the affidavit ofRyvkin .

. Ryvkin's affidavit is used to authenticate the agreement which was allegedly

breached by the defendants. Ryvkin averred that he is the chieflegal officer of the

plaintiff and, as such, has personal knowledge of its business practices and procedures.

He further averred that the factual allegations proffered in support of the motion for

summary judgment are derived from his review of the plaintiffs business records. He

then referred to business records attached to the motion, namely, the agreement, and the

documents denominated as a wire transfer confirmation and a payment ledger. [* 4] 4 of 8

It is noted that Ryvkin did not aver that he was a signatory to the agreement or that

he participated in the execu_tion of same. Ryvkin refers to the payment ledger, as proof of

the defendants' default. He_ contends that the payment ledger shows that the LLC

defendant placed a stop payment order on plaintiff's ACH withdrawal for the specified

daily amount. "A proper foundation for the admission of a business record must be

provided by someone with personal knowledge of the maker's business practices and

procedures'' (Citibank, NA. v Cabrera, 130 AD3d 861, 861 [2d Dept 2015]). Generally,

"the mere filing of papers received from other entities, even if they are retained in the

regular course of business, is insufficient to qualify the documents as business records"

(Bank of N. Y Mellon v Gordon, 171 AD3d 197, 209 [2d Dept 2019], quoting Standard

Textile Co. v National Equip. Rental, 80 Ad2d 911,911 [1981]). "However, such records

may be admitted into evidence if the recipient can establish personal knowledge of the

maker's business practices and procedures or establish that the records provided by the

maker were incorporated into the recipient's mvn records and routinely relied upon by the

recipient in its own business" (Bank ofNY Mellon, 171 Ad3d at 209).

Here, the payment ledger was not self-explanatory and was submitted without

explaining its meaning. The ledger did explain the codes contained therein and did not

state that there was a stop payment by the LLC defendant. The payment ledger did not

demonstrate that the LLC defendant closed its bank account in its entirety, as alleged in

the verified complaint. In sum, the payment ledger did not provide proof of the LLC

defendant's alleged breach. It is noted that the plaintiff did not annex a copy of its own

or the LLC defendant's bank records. "[I]t is the business record itself, not the [* 5] 5 of 8

foundational affidavit, that serves as proof of the matter asserted" (Citibank, NA. v

Potente, 210 AD3d 861, 862 [2d Dept 2022], quoting Bank ofN.Y Mellon v Gordon, 171

AD3d 197,209 [2d Dept 2019]). Accordingly, evidence of the contents of business

records is admissible only where the records themselves are introduced. Without their

introduction, a witness's testimony as to the contents of the records is inadmissible

hearsay (see Bank ofN. Y Mellon, 171 AD3d at 206). In sum, plaintiff has failed to rriake

a prima facie showing that the LLC defendant breached the agreement.

Breach of Contract

"The essential elements of a cause of action to recover damages for breach of

contract are the existence of a contract, the plaintiffs performance pursuant to the

contract, the defendant's breach of its contractual obligations, and damages resulting from

the breach" (see Cruz v Cruz, 213 AD3d 805, 807 [2d Dept 2023], quoting Klein v

Signature Bank, Inc., 204 AD3d 892, 895 (2022] [internal quotation marks omitted]).

To prevail on the instant motion, it was incumbent upon the plaintiff to prove

each of these elements as a matter oflaw. The plaintiff provided no evidence

demonstrating that the LLC defendant breached the agreement by placing a stop

payment. Consequently, the plaintiff did not meet its burden of demonstrating as a matter

of law that the defendants breached the agreement. Inasmuch as the plaintiff did not

make a prima facie showing that the LLC defendant breached the agreement, the

obligation of the guarantor, was not triggered. As a resul.t, the plaintiff also failed.to

show that the guarantor breached the agreement.

Unjust Enrichment [* 6] 6 of 8

"The elements of a cause of action to recover for unjust enrichment are (I) the

defendant was enriched, (2) at the plaintiffs expense, and (3) that it is against equity and

good con.science to permit the defendant to retain what is sought to be recovered" (Sarker

v Das, 203 AD3d 973 [2d Dept 2022], quoting Financial Assistance, Inc. v Graham, 191

AD3d 952,956 [2d Dept 2021]).

Fraud

misrepresentation or a material omission of fact which was false and known to be false

by defendant, made for the purpose of inducing the other party to rely upon it, justifiable

reliance of the other party on the misrepresentation or material omission, and injury"

(Hong Qin Jiang v: Li Wan Wu, 179 AD3d 1041, 1042 [2d Dept 2020], quoting Tsinias

Enters. Ltd. v Taza Grocery, Inc., 172 AD3d 1271, 1271 [2d Dept 2019] [internal

quotations omitted]).

The plaintiffs causes of action for unjust enrichment and for fraud were both

based on the defendants' breach of the agreement. "The existence of a valid contract

governing the subject matter of a dispute generally precludes recovery in quasi contract

for events arising out of the same subject matter" (Murtha Cons tr., Inc. v Town of

Southampton Hous. Auth., 210 AD3d 896,897 [2d Dept 2022], quoting Jaybar Realty

Corp. v Armato; 175 AD3d 1391, 1393 [2d Dept 2019]). "Merely alleging scienter in a

cause of action to recover damages for breach of contract, unless the representations

alleged to be false are collateral or extraneous to the terms of the agreement, does not

convert a breach of contract cause of action into one sounding in fraud" (Crowley Mar. [* 7] 7 of 8

Assoc. v Nyconn Assoc., 292 AD2d 334, 334 [2d Dept 2002]). Here, the plaintiff is

claiming fraud based solely on the defendants' breach of the agreement.

Consequently, the plaintiff's evidentiary submission did not make a prima facie

showing that the defendants' were unjustly enriched at the plaintiffs expense. Nor did it

plead or demonstrate that the defendants defrauded the plaintiff. The motion is therefore

denied without regard to the sufficiency or lack of opposing papers (Cugini v System Lbr.

Co., 111 AD2d I 14, 115 [1st Dept 1985]).

CONCLUSION

The motion by Fenix Capital Funding LLC for an order pursuant to CPLR 3212

granting summary judgment in its favor on its causes of action for breach of contract, .

unjust enrichment and fraud as asserted against defendants Memorial Wine Cellar, LLC

ID/BIA: Memorial Wine Cellar and Ryan D. Weise is denied.

The foregoing constitutes the decision and order of the Court.

ENTER:

J.S.C.

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