Zomongo.TV USA Inc. v. Capital Advance Servs., LLC

Zomongo.TV USA Inc. v Capital Advance Servs., LLC 2024 NY Slip Op 33872(U) October 29, 2024 Supreme Court, Kings County Docket Number: Index No. 512735/2021 Judge: Leon Ruchelsman 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 10/29/2024 01:27 PM INDEX NO. 512735/2021 NYSCEF DOC. NO. 358 RECEIVED NYSCEF: 10/29/2024

SUPREME COURT OF TI-IE STA'l'E OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 .-- .---- ·--. ---·----------·---------- .. ----.. -x ZOMONGO.TV USA INC. D/B/A ZOMONGO.TV USA, JOCELYNE LISA HUGHES-OSTROWSKI and JEREMY GENE OSTROWSKI, Plaintiffs, Decision and order - against - Index No. 512735/2021 CA.PITAL ADVANCE SERVICES,· LLC , .

Defendant, . October 29., 2024 ----------- ----- ----- ---- -------------x PRESENT: HON. LEON RUCHELSMAN Motion Seq. #13

The plaintiff has moved pursuant to CPLR §2221 seeking to .reargue a decision and orde.t dated May 14, 2024 which denied the plaintiff's motion seeking to amend the complaint to add causes .of action for: trespass, conversion, and RICO claims. The defendant has opposed the motion. Papers were submitted by the parties and arguments held. After reviewing all the arguments this Court rtow makes the following determination.

The facts have been adequately·recorded in prior orders and need not be repeated here.

Concltisions of Law A motion to rea:rgue must be based upon the fact the court overlooked o.r misapprehended fa.ct or law Or for some other reason mistakenly arrived at in its earlier decision (Deutsche Bank National Trust Co. • v. Russo, 170 AD3d 952, 96 NYS3d 61.7 [2d Dept. i 2019] ) .

The. plaintiff asse.rts tll.e court Irtisapprehended the law

Further, the RICO statute, §1962(c} describes the culpability of a 'person' conducting the affairs of the 'enterprise', clearing indicating they are two distinct entities (DeFalco v. Bernas, 244 F3d 286 2d Cir. 2001]). This distinctness requirement means "a corporate entity may not be both the RICO person and the RICO enterprise under section 62 (c) ~, ( Riverwoods Chappagua Corporation v. Marine Midland Bank, N. A., 3:0 F3d 339 [2d cir. 1994 J l .

In Anglirt Automotive .LLC v. EBF Holdings LLC, 2024 WL 1118892 [S.D.N.Y. 2024.] the court rejected RICO claims against a merchant cash funder similar to the allegations herein. The court explained that

"it is plain on the face. of these allegations tii.at .each of these wer1.terprises 11 is nothing more thari the respective MCA-Funder Defendant . .Each 1\enterprise'' consists merely of a: corporate d$fertdant and its corresponding J;ohn and; Jane Doe owners, employees, and investors; See DeFazio v. Wallis, 500 F.. $upp. ::2d

197j 209 ·(E.D.N.Y. 2007) (finding that the distin~tiveness requirement was not met· where the plaintiffs describecl the RICO enterprise as the corporate defendant and named individuals alleged to be owners, officers, and shareholders of the corporate defendant and/or its affiliates). And these John and Jane Doe Defendants are merely allege<:l to be "carrying on the regular a:f fa: ir s" of the respective MCA- Funder Defendant • Riverwoods Chappaqua Corp;, 30 F.3d at 344. Indeed, Plaintiffs assert that the MCA~Funder Defendants regularly disguise usurious loan agreements as bona fide merchant cash advance agreements to collect unlawful oebts, see, e.g., id. 'TI'TI 26, 86, 158, and further allege that the John and Jane Doe Defendants undertake the steps required to effectuate that aim, see id. 'TI 158. Nothing in the Complaint suggests that the John and Jane Doe Defendants, in setting up these agreements and collecting the resultant debts, acted beyond "the regular affairs of the corpo_ration. '1 See Riverwoods Chappaqua Corp., 30 F.3d at 344 (discussing with approval Atkinson v. Anadarko Bank & Trust Co., 808 F.2d 438, 440-41 (5th Ci:t. 1987), in which the Fifth Circuit foUhd that the plaintiffs failed to meet the distinctness requirement in alleging an association-in-fact comprised of a bank, its holding company, and its employees, given the absence of any evidence that they "were associated in :3ny manner apart from the _ activities of the bank"); Reed Const. Data Inc. v. McGraw-Hill Cos.i Inc., 745 F. Supp. 2d 343, 352 (S.D.N.Y. 2010) (explaining in the context of the distinctness requirement that where the corporate defendant's agents are alleged to participate in the very racketeering activity alleged to constitute the corporate defendant's "regular way of conducting" its business, the agents' conduct cannot be considereo as occurrir1g ''beyond the regular affairs of the corporation"). The Court thus finds that Plaintiffs have failed to plead a distinct enterprise" (id).

In this case the proposed amended complaint does riot allege anything other than the corporate defendants and their owners, officers or investors. The proposed amended complaint does assert that defendant Davis and the John arid Jane Doe investors '\are pe.tsons that exist separate and distinct from the Enterpris e'i: ( .§.§§, Propos.ed Amended Comp la_int, <iI 3 4 7 [NYSCEF Doc .

No~ 191]) howeve_r the remainder of the proposed amended complaint

However, Yellowstone, or any corporation fOr that matter, cannot possibly maintain books and records that are independerit of its owners (cf., New Y-Capp v. Arch Capital Funding LLG, 2022 WL 48.13962 [S.D.N.Y. 202.2]). Thus, t:he proposed amended complaint cannot assert that riavis owns YEillowstone and "in .his capacity as

Further, there can be no conspiracy to commit RICO i:f the substantive RICO claims are deficient (™, Havmount Urgent Car.e PC v. GoFund Advance LLC, 690 F.Supp3d 167 [S.D.N.Y. 2023, Nygard v. Bacon, 2021 WL 431 2581 [S.D,N.Y. 2021]).

Therefore, based on the foregoing, tne motion seek_ing reaigument to plead RICO cla.ims is denied.

Turning -i:o the next i.ssue, th.e. court de.nied the requE!st to amertd the complaint to a.ssert causes of action for trespass and

Further, to the extent the relief is the same, this action was filed on May 26, 2021, more than a year prior to the decision requiring Zomongo to file a plenary action. Thus, this lawsuit cannot serve as that plenary action since it existed prior to the mandate that such plenary action be filed. Moreover, i t is curious Zornongo waited almost two years after the court instructed Zomongo tb file a plenary action seeking such attorney's fees.' More importantly, the cause of action seeking attorn,ey's fees in the proposed amended complaint is designated as one for trespass. The plaintiff agrees th~t nq tprt claims i:::an arise froi;n. an invali.d levy .and the plaintiff must resort to

Likewise, concerning the claim for conversion the plaintiff asserts it is merely seeking interest lcist as a result of the improper levy. However, conversion is defined as ''the value of the property at the time and place of conversion, plus interest" (Fanti s Foods Inc , , v. Starida rd Importing .Company Inc .. , 4 9 NY2d 317, 425 NYS2d 783 [1980]). Thus, the tort of cOnversibn that is foreclosed by the remedy provided in CPLR §5240 similarly forecloses any telief seeking interest .

.In addition:~ Plymouth Venture Partners, II, LP v. GTR Source,. LLC~ J7 NY3d 591, 163 NYS3d 467 [2021] specifically stated that an "article 52 proceeding is. the correct vehicle for

The plaintiff may pursue claims for attorney's fee.s if appropriate with a properly pled complaint in a plenary action.

The merits of such a claim is not present1y before_ the.- court.

The c.laims that are pled, are insufficient to ass.ert attorney's fees.

Cons.equently, the motion seeking reargurri.ent is denied in all respects.

So ordered.

ENTER:

DATED: October 29, 2024 Brooklyn N.Y. Hon. Leon Ruchelsmari JSC