Regal Capital Inc. v. Nomad Ventures LLC

Regal Capital Inc. v Nomad Ventures LLC 2024 NY Slip Op 31027(U) March 20, 2024 Supreme Court, Kings County Docket Number: Index No. 530946/2022 Judge: Ingrid Joseph 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 03/27/2024 02:41 PM INDEX NO. 530946/2022 NYSCEF DOC. NO. 15 RECEIVED NYSCEF: 03/27/2024

At an IAS lAS Part 83 of of the Supreme;: Supreme Court of the . State of New York held in and for the County of Kings at 360 A~s A~s Street, Broo Iyn,New yn, New York, on t h~e ~ clay the Clayof of d 2024. . 2024; PRESENT PRESENT:: HON. INGRID JOSEPH, J.S.C. SUPREM SUPREME E COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ·---------------------------------------------------------------------X ----------------------------------------------------------------------)( Index Index No: 530946/20 530946/2022 REGAL CAPITAL INC., INC, Plaintiff(s)) Plaintiff(s -against- NOMAD VENTUR VENTURES ES LLC d/b/a FIRST A AVEVE AUTO, RONIN ORDER ORDER VENTURES LLC, and GLENN ALLEN WOODAR VENTURES WOODARD, D, Defendan Defendant(s) t(s) ------------ ----------------------------------------------------------X ----------------------------------------------------------------------)( The The following following e-filed e-filed papers papers read read herein: herein: · NYSCEF NYSCEF Nos.: Nos.: Notice of Notice of Motion/Aff irmation in Support/M Motion/Affirmation Support/Memo Support/ emo in Support/ Affidavits Affidavits Annexed/E xhibits Annexed Annexed/Exhibits Annexed .............. .............. ....... . 3-7; 3-7; 14 Affirmation Affirmation in Opposition Opposition/ / Affidavits Affidavits Annexed/E Annexed/Exhibits Annexed .. . xhibits Annexed 8-12 8-12

In In this this action, Nomad Ventures action, Nomad Ventures LLC LLC D/B/A D/B/A First First Ave Ave Auto Auto and and Ronin Ronin Ventures Ventures LLC, LLC, ("Defend ants") move ("Defendants") move to dismiss dismiss Regal Regal Capital Capital Inc.' Inc.' s ("Plaintif ("Plaintiff')f') complain complaint t for lack lack of of personal personal jurisdiction, and failure jurisdiction, failure to state state a cause cause of of action pursuant to CPLR action pursuant CPLR 3211 (a)(7) (a)(7) and (8), and and in in the the . alternativ alternativee for an extension extension oftime of time to serve serve an answer. answer. Plaintiff Plaintiff has opposed opposed the motion. motion.

This This action action .arises arises from from an agreemen agreement t dated dated Septembe Septemberr 9, 9,2022, entered info 2022, entered into between between the the parties wherein parties wherein Plaintiff paid Defendan Plaintiff paid Defendantsts a sum of of$50,000.qo $50,000 . 0.0 to purchase all of purchase aH Defendants'ts' of Defendan future receivables valued future receivables valued at $75,000.0 $75,000.000 ("Agreem ent"). Plaintiff ("Agreement"). Plaintiff commenc commenced this action ed this action by the by the filing filing of ofaa Verified Verified Summon Summonss and Complain Complaint t on October October 25, 25,2022, and asserts 2022, and asserts causes causes of of action action for breach breach of of contract contract and breach breach of of a personal guarantee.. personal guarantee .

In In support support of of their motion, Defendan their motion, Defendantsts argue argue that that Plaintiff' Plaintiff s complain complaint t should should be be dismissed dismissed for for lack lack of personal jurisdiction of personal jurisdiction because because Defendan Defendant t Ronin Ronin is an LLC LLC organized organized in in . .

Nebraska Nebraska and was never and was never a party party to any agreemen agreement t with with Plaintiff.

Plaintiff. Additiona Additionally, Defendantsts argue lly, Defendan argue that that they were never they were never personally personally served with the Summon served with Summonss and Complain Complaint t or by any any other other acceptabl acceptablee means means of of service. service. Moreove Moreover,r, Defendan Defendantsts allege allege that that Plaintiff Plaintiff seeks seeks repayment of repayment of ·. $85,937.5 $85,937.500 in less than than a year, year, which which far exceeds exceeds an annualize annualizedd rate rate of of sixteen sixteen percent (16%) and percent (16%) and thus is considere consideredd a usurious usurious loan under New loan under New York York Law.

In In oppositio opposition,n, Plaintiff Plaintiff states that Pursuant states that Pursuant to Section Section 4.5 of of the Purchase Purchase Agreement, the. · Agreement, the parties parties explicitly explicitly agreed agreed that that the Agreeme Agreementnt would would be governed ". governed by the laws laws of of New New York and York and .. . that that the the parties parties consente consentedd to New New York York or Texas jurisdiction, venue, Texas jurisdiction, venue, and choice choice of oflaw, and that law, and that I of 5 [* 1] FILED: KINGS COUNTY CLERK 03/27/2024 02:41 PM INDEX NO. 530946/2022 NYSCEF DOC. NO. 15 RECEIVED NYSCEF: 03/27/2024

Defendants Defendants waived waived personal personal service service in favor favor of of service service via via certified certified mail mail with with return return receipt receipt requested. requested. Further, Further, Plaintiff Plaintiff argues argues that that it has sufficiently sufficiently plead plead viable viable causes causes of of action action for breach breach of of contract contract and breach breach of of a personal personal guarantee. guarantee. Plaintiff Plaintiff states states that that the the language language of of the the Agreement Agreement does does not not indicate indicate that that it is a loan, loan, thus thus its terms terms cannot cannot be considered considered a usurious usurious loan loan under New under New York York law.

Generally, Generally, a nondomiciliary nondomiciliary is subject subject to the jurisdiction jurisdiction of of a New New York York court court if if it has purposefully purposefully transacted transacted business business within within the the State State and there there is a "substantial "substantial relationship" relationship" between between this activity activity and and the the plaintiff's plaintiffs cause cause of of action action (Keutter McFadden Oil Corp., 71 (Keutter v McFadden A.D.2d AD.2d 460 [1988]; Latman, 202 A.D.3d Fanelli v Latman, [1988]; Fanelli AD.3d 758 [2d Dept.

Dept. 2022]).

2022]). While While the the ultimate ultimate burden of burden of proof proof regarding regarding personal jurisdiction rests personal jurisdiction rests with with the the party party asserting jurisdiction, the asserting jurisdiction, the plaintiff plaintiff in opposition opposition to a motion motion to dismiss dismiss pursuant CPLR 321 pursuant to CPLR 3211l(a)(8) (a)(8) need need only only make make a prima prima facie showing showing ·that that the the defendant defendant was subject subject to the personal jurisdiction of personal jurisdiction of the Supreme Supreme Court Court (Daniel Katz & Associates (Daniel B. Katz Associates Corp. v Midland Rushmore, LLC, 90 A.D.3d Midland Rushmore, AD.3d 977 [2d [2d Dept.

Dept.

2011]; Jacobs Stepheson Corp., 138 A.D.3d Jacobs v 201 Stepheson AD.3d 693 [2d Dept.

Dept. 2016]; 2016]; Cornely Cornely v Dynamic Dynamic HVAC Supply, HVAC LLC, 44 A.D.3d Supply, LLC, AD. 3d 986 [2d Dept.

Dept. 2007]).

2007]).

A contractual contractual forum forum selection selection clause clause is prima prima facie valid valid and and enforceable enforceable unless unless it is shown shown by the challenging party to be unreasonable, challenging party unreasonable, unjust, contravention of unjust, in contravention public policy, of public policy, invalid invalid due to fraud fraud or overreaching, overreaching, or it is shown shown that that a trial trial in the the selected selected forum forum would would be so so gravely gravely difficult difficult that that the the challenging party would, challenging party would, for all practical practical purposes, purposes, be deprived deprived of of its day in court court (Somerset Fine Home (Somerset Fine Building, Inc., 185 A.D.3d Home Building, AD.3d 752 [2d Dept Dept 2020]; Lifetime 2020]; Lifetime Brands, Inc., v Garden Brands, Ridge, L.P., 105 A.D.3d Garden Ridge, AD.3d 1011 [2d Dept.

Dept. 2013]; 2013]; Creative Mobile Creative Mobile Technologies, LLC v Smart Technologies, LLC Technologies, Inc., 97 A,.D.3d Modular Technologies, Smart Modular AD.3d 626 [2d Dept.

Dept. 2012]).

2012]). Parties Parties to a contract contract may may freely freely select select a forum forum which which will will resolve resolve any disputes disputes over over the the interpretation interpretation or performance performance of the contract ofthe contract (Somerset Fine Homes (Somerset Fine Buildings, Inc. at 753).

Homes Buildings, 753). Thus, Thus, a forum forum selection selection clause clause will will be given given effect effect in the absence absence of a oLI 'strong 'strong showing' showing' that that it should should be set aside aside (US. Distributors, Inc., 122A.D.3d Merchandise, Inc. v L & R Distributors, (US. Merchandise, 122AD.3d 613 [2d Dept.

Dept. 2014]; 2014]; Horton v Concerns Horton Concerns of Police Survivors, of Police A.D ....D Survivors, Inc., 62 AD D 836 [2d Dept.

Dept. 2009]).

2009]).

General General Obligations Obligations Law Law § 5-1402 provides S5-1402 provides that a party party may may maintain maintain an action New action in New York against a foreign York against foreign defendant if the parties defendant if parties have have entered into an agreement entered into agreement that that (i) contains contains a New York New York forum forum selection selection clause, clause, (ii) contains contains a New New York c:hoice of York choice of law provision, and (iii) law provision, involves involves a transaction transaction that that in the aggregate over $1 million. aggregate is over million. This This section, section, however, however, is not a

2 of 5 [* 2] FILED: KINGS COUNTY CLERK 03/27/2024 02:41 PM INDEX NO. 530946/2022 NYSCEF DOC. NO. 15 RECEIVED NYSCEF: 03/27/2024 limitation limitation on the use and and effectiveness effectiveness of of forum forum selection selection clauses. clauses. Rather, Rather, it contains contains a statutory statutory mandate mandate that that a clause clause designating New York designating New York as the forum forum "shall" "shall" be enforceable, enforceable, in cases cases involving involving $1 $1 million million or more, more, regardless regardless of of any inconvenience inconvenience to the parties. parties. Therefore, Therefore, in actions actions involving than $1 million, involving less than million, forum forum selection selection clauses, are enforceable enforceable according according to their their terms terms (see Natl. Union Fire Fire Ins. Co. of Pittsburgh, Pa. v Worley, 257 AD2d of Pittsburgh, AD2d 228, 228, 231 [1st Dept Dept 1999]; Bizfund Bizfund LLC LLC v Holland Sliger Steel, LLC, 71 Misc.3d Holland & Sliger Misc.3d 12226[A] [Sup. Ct. Kings 12226[A] [Sup. Kings County County 2021 ]).

2021]).

Here, Here, RoninVentures RoninVentures LLC LLC is listed listed as an additional additional entity entity subject terms of subject to the terms of the contract. contract. Further, Further, Plaintiff Plaintiff has established established that that the Agreement between the Agreement between parties included the parties included a Choice of Choice of Law Law clause clause designating New York designating New York as the forum pertaining to any disputes forum pertaining disputes regarding regarding the contract, contract, which which Defendants Defendants signed, signed, subjecting subjecting them them to the personal jurisdiction of personal jurisdiction of the Court.

Court.

In challenging challenging the legitimacy legitimacy of of the Choice Choice of of Law Law clause, clause, the Defendants Defendants do not not argue argue that that the forum forum selection selection clause clause is unreasonable, unreasonable, unjust, unjust, in contravention contravention of public policy, of public policy, invalid invalid due to fraud or overreaching, overreaching, or argue argue that that a trial trial in the selected selected forum would be so gravely forum would gravely difficult difficult that the challenging party would, challenging party would, for all practical practical purposes, deprived of purposes, be deprived of its day in court. court.

Additionally, Additionally, Section Section 4.5 the Agreement Agreement states states in part part that: "Merchant "Merchant andand Guarantor Guarantor hereby agree to waive hereby agree waive any formal personal service formal personal service of of process and agree process agree that that any summons summons and/or and/or complaint complaint or other process to other process commence commence any litigation litigation by RCI will be properly properly served served ifif sent sent by certified certified mail, mail, return return receipt receipt requested, requested, to the mailing mailing address address listed page 1 of listed on page of this Agreement, Agreement, or any other other address provided in writing address provided writing to RCI from the Merchant/Guarantor Merchant/Guarantor which which includes includes any address listed o~ the address listed the' 'Exhibit Exhibit A,' if any." A,' if any." Plaintiff Plaintiff submits submits an affidavit affidavit of of service service and return return receipt receipt indicating indicating that that Defendants Defendants were were served served in accordance accordance with with the terms terms of of the contract. contract. Accordingly, Accordingly, the Court Court has jurisdiction jurisdiction over over this this matter matter and that branch of that branch of Defendant's Defendant's motion motion to dismiss dismiss is denied. denied.

When When a party party moves moves to dismiss dismiss a complaint complaint pursuant CPLR 321 l(a)(7), pursuant to CPLR 1(a)(7), the standard standard is whether whether the pleading pleading states cause of states a cause of action, action, not whether whether the proponent proponent of of the pleading pleading has a cause cause of of action action (Leon (Leon v. Martinez, 84 NY2d v. Martinez, NY2d 83, 87 [1994]; [1994]; Skefalidis Skefalidis v China Pagoda NY, Inc., China Pagoda A.D.

AD. 3d 925 [2d Dept.

Dept. 2022]); 2022]); Oluwo Sutton, 206 A.D.3d Oluwo v Sutton, AD.3d 750 [2d Dept.

Dept. 2022]; 2022]; Sokol Sokol v Leader, 74 A.D.3d Leader, AD.3d 1180 [2d Dept.

Dept. 201 0]). Whether 2010]). plaintiff can ultimately Whether a plaintiff ultimately establish establish its allegations part of allegations is not part of the calculus calculus in determining determining a motion motion to dismiss dismiss (Eskridge (Eskridge v Diocese Diocese of of Brooklyn, 210 A.D.3d Brooklyn, AD.3d 1056 [2d Dept.

Dept. 2022]; Zurich American 2022]; Zurich American Insurance Insurance Company City of Company v City of

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New York, 176 A.D3d New A.D3d 1145 [2d Dept.

Dept. 2019]; EEC lIne.

2019]; EBC I Inc. vGoldman, v Goldman, Sachs Sachs & Co., 5 NY3d NY3d [2005]).

On a motion mati an made pursuant to made pursuant CPLR 321 taCPLR l(a)(7) to 3211(a)(7) to. dismiss dismiss a complaint, camplaint, the burden burden never never shifts to the non-moving to.the party to nan-maving party rebut a defense to.rebut defense asserted asserted by the moving party (Sokol maving party (Sokol at 1181; . . .

Rovella v Orofino Rovello Realty Co. Inc., 40 NY2d Orofino Realty NY2d 970 [1976]). [1976]). CPLR CPLR 3211 allows a plaintiff to. submit allaws a:plaintiffto submit affidavits, but it does affidavits, but daes not nat oblige ablige him or ar her to to. do do. so so. on penalty of an penalty dismissal (Id.; Sokol af dismissal n 81).).

Sokol at 1181 Affidavits Affidavits may may be received received for far a limited purpose only, limited purpase anly, serving serving normally normally to to. remedy remedy defects defects in the complaint camplaint and such such affidavits affidavits are not nat to to. be examined examined for purpose of far the purpase af determining determining whether whether there there is evidentiary evidentiary support suppart for far the pleading Rovella at 635; Nonon pleading (Id.; Rovello Nanon at 827).

827). Thus, Thus, a plaintiff plaintiff will not penalized because nat be penalized because he has not nat made made an evidentiary evidentiary showing shawing irt iIi support suppart of af its ·. complaint. camplaint.

Unlike Unlike on an a motion mati an for far summary judgment, where summary judgment, where the court caurt searches searches the record record and assesses sufficiency of assesses the sufficiency af evidence, evidence, on an a motion motian to to. dismiss, dismiss, the court caurt merely merely examines examines the adequacy of adequacy afthe pleadings (Davis the pleadings (Davis v. Boeheim, 24 NY3d v. Boeheim, NY3d 262,268 262, 268 [2014]). [2014]). The The appropriate apprapriate test of the sufficiency afthe sufficiency of af a pleading pleading is whether whether such pleading gives such pleading gives sufficient sufficient notice natice of af the the . transactions, transactians, occurrences, accurrences, or series of ar series af transactions transactians or ar occurrences accurrences intended intended to proved and to. be praved whether whether the requisite elements of requisite elements af any cause cause of af action actian known knawn to to. our aur law law can can be discerned discerned from its averments (V averments (V Groppa Pools, Inc. v. Groppa Pools, Massella, 106'AD3d v. Massello, 106'AD3d 722, 723 [2d Dept 722,723 Dept 2013]; Moore v 2013]; Moore Johnson, 147 AD2d Johnson, AD2d 621 [2d Dept Dept 1989]).

To To. plead cause of plead a cause af action actian for breach of far breach af contract, cantract, a plaintiff plaintiff must must allege (l) the existence allege (1) existence of af a contract, cantract, (2) plaintiff's plaintiff's perfarmance performance pursuant pursuant to the contract, to.the cantract, (3) defendant's breach of defendant's breach the· afthe. contractual cantractual obligations; abligatians; and (4) damages damages resulting resulting from that breach (34-06 that breach 73, LLC (34-0673, LLC v Seneca Seneca Insurance Company, Insurance Company, 39 NY3d NY3d 44 [2022]). [2022]). Plaintiff's Plaintiff's allegations allegatians must must identify identify the provisians provisions of af the contract cantract that that were breached (Id.). were breached (ld.).

Here, Here, the Complaint Camplaint sets forth farth the particular particular terms terms of af the contract upon which cantract upan which Plaintiff's Plaintiff's claim claim is based. based. Additionally, Additianally, . the allegations allegatians made made in the the Complaint Camplaint as. well well as the the incorporated incarporated contract cantract gives gives sufficient sufficient notice natice of af the transactions, transactians, occurrences, accurrences, or ar series series of af transactions transactiansoror occurrences accurrences intended intended to proved and state to. be praved state a valid cause of valid cause action for afactian breach of far breach af contract. cantract.

Accordingly, Accardingly, the Plaintiff Plaintiff has sufficiently sufficiently stated stated a cause cause of af action actian to breach of to. breach af contract cantract and that branch of that branch af Defendant's Defendant's motion mati an to to. dismiss dismiss is denied. denied.

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The rudimentary rudimentary element element of usury is the existence of usury existence of of a loan loan or forbearance forbearance of of money, money, and where where there there is no loan, loan, there there can can be no usury, usury, however unconscionable the contract however unconscionable contract may may be" be" (LG Funding, LLC Funding, LLC v. v. United United Senior Props. of Senior Props. Olathe, LLC, 181 o/Olathe, 181 A.D.3d A.D.3d 664,665, 664,665, 122 N.Y.S.3d N.Y.S.3d 309). To determine determine whether whether a transaction transaction constitutes usurious loan: "The constitutes a usurious court must "The court must examine examine whether whether the plaintiff plaintiff is absolutely absolutely entitled entitled to repayment under all circumstances. repayment under circumstances. Unless Unless a principal sum advanced principal advanced is repayable repayable absolutely, absolutely, the transaction transaction is not not a loan. Usually, Usually, courts courts weigh three weigh three factors when determining factors when whether repayment determining whether repayment is absolute absolute or contingent: contingent: (1) whether whether there there is a reconciliation provision in the agreement; reconciliation provision agreement; (2) whether whether the agreement agreement has a finite finite term; and (3) whether whether there there is any recourse recourse should should the merchant merchant declare bankruptcy (Id. at 665-666; declare bankruptcy 665-666; Principis Capital, Principis LLC v I Do, Inc., 201 A.D.3d Capital, LLC A.D.3d 752 [2d Dept.

Dept. 2022]).

2022]).

Here Here defendants only state defendants only state in a conclusory fashion that conclusory fashion that the Agreement Agreement is usurious usurious because the amount because amount of of repayment Plaintiff seeks repayment Plaintiff seeks is greater greater than 16% permitted permitted under under New York New York State law, and that that Plaintiff harassed defendants Plaintiff has harassed defendants in seeking repayments. Conclusory seeking repayments. Conclusory statements statements alone alone are insufficient insufficient to allege allege that that a contract contract is usurious. usurious. The Court Court finds finds that that Defendants Defendants have have failed failed to proffer proffer the contract contract or any case law in their their moving moving papers. papers. The function of function ofreply reply papers papers is to address address arguments arguments made opposition to the position made in opposition taken by the position taken movant and not movant not to permit the movant permit the movant to introduce new arguments introduce new arguments in support support of, or new new grounds grounds for the motion motion (Ditech (Ditech Financial, LLC v Connors, Financial, LLC AD3d 694 -[2d Connors, 206 AD3d [2d Dept. 2022]; Wells Fargo Dept. 2022]; Fargo Bank, NA.

NA. v Marchione, Marchione, 69 AD3d AD3d 204 [2d Dept. 2009]; 2009]; quoting Harleysville Ins. Co. v Rosario, quoting Harleysville Rosario, AD3d AD3d 677 [2d Dept.

Dept. 2005]).

2005]). Thus, Thus, documents documents and arguments arguments submitted submitted for the first time time in reply papers papers generally generally should should be disregarded disregarded by the court, court, especially especially when when the the other other party party is not given given the opportunity opportunity to respond respond to the reply reply papers papers (Citimortgage, (Citimortgage, Inc v Espinal, Espinal, 134AD3d 134AD3d 876 [2d Dept. 2015]; 2015],' Central Mortg. Co. v Jahnsen, Central Mortg. Jahnsen, 150 AD3d AD3d 661 [2d Dept.

Dept. 2017]).

2017]).

Accordingly, it is hereby, Accordingly, hereby, ORDERED, that Defendants' ORDERED, that Defendants' motion motion to dismiss dismiss is denied, denied, and it is further, further, ORDERED, ORDERED, that that Defendants Defendants are granted granted an extension extension of of 30 days days from the notice of entry notice of entry of of this Order Order to file and serve serve an Answer.

Answer.

This This constitutes the decision constitutes the decision and order order of of the the court. court.

-~- Hon.

Hon. l ~ e p h J.S.C. Ingri~eph l.S.C. 5 II of 5 Hoh.

HOh. Ingrid Joseph Joseph [* 5] Supreme Supreme Court Court Justice Justice II