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

Zomongo.TV USA Inc. v Capital Advance Servs., LLC 2024 NY Slip Op 31701(U) May 14, 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 05/14/2024 02:49 PM INDEX NO. 512735/2021 NYSCEF DOC. NO. 286 RECEIVED NYSCEF: 05/14/2024

SUPREME COURT OF THE STATE 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 . .. . ..

CAPITAL ADVANCE SERVICES, LLC; Defendant, May 14, 2024 - . -----.----·----------- . -- .--------.--------.x PRESENT: HON. LEON RUCHELSMAN Motion Seq. #9

The plaintiff has moved pursuant to CPLR §3025 seeking to amend the complaint to add causes of action for trespass, conversion, a claim for RICO pursuant to 18 USC §1962 Cc) and cairn for RICO pursuant to 18 USC §1962 (d) . The defendant has opposed the rn.otion.

As recorded in prior orders, the plaintiff, Zomongo, a corporation involved in the advertising industry, entered into two merchant cash agreements with the defendant. The first agreement was dated February 12, 2018 whereby the defendant purt:ha5ed $449,700 of plaintiff's future .t:eceivabl.e:s for $300,000. The second agreement was dated April 11, 2018 whereby the defendant purchased $861,925 of plaintiff's future receivables for $575,000. The complaint alle:ges the defendant failed to deliver the .:purchased .amounts pursuant.to the agreements and improperly withdre.w daily amounts in excess of the amounts to which the partie.s agreed. The plaintiff now seek$ to amend the complaint as noted ..

Conclusions of Law On May 4, 2022 in another action between the same parties the court held that levies served upon a bank in Illinois and Arizona was void (gg, Decision and Order fNYSCEF Doc. 219]).

Further, in another action with the same plaintiff and a different defendant, with a similarly improper levy, the plaintiff withdrew tort claims for trespass and conversion. The court in that case explained that "the plaintiffs contend that in Plymouth Venture Partners, the court of Appeals conclusively decided that the proper avenue for litigating claims like the plaintiffs' claims concerning the issuance of an unlawful levy is by filing a CPLR §524 O ni.otion under the Index Number f ram which the levy stemmed. Accordingly, the plaintiffs cross-.,.move to withdraw thqse of their c1aims which they feel ate improper under Plymouth Venture Partners" (.§.§.§., ZomongoTV.USA Inc., v. GTR Source LLC, 78 Misc3d 461, 185 NYS3d 559 [Supreme Court Nassau County 2023]); That withdrawal was based upon Plymouth Venture Partners, II, LP v. GTR Source, LLC, 37 NY3d 59:1, i63 NYS3d 467 [2021] which held that the exclusive: remedy available following an improper levy is to file a motion pursuant to CPLR §5420 and that "CPLR 5240 provides courts with the ability to craft £1.exible and equitable responses to claims that arise with respect to enforcement of valid money judgntents" (id). The court categorically rejected the argument th.at tort causes of action

The plaintiff argues that they have satisfied the requirements of GPLR §5240, have obtained a determination the levy was improper, and now, after that determination, may pursue tort claims. However, that would essentially permit any party aggrieved by an improper levy to eventually pursue tort claims.

Plymouth Venture Partners, IL LP v. GTR Source, LLC (supra) never endorsed a delayed pursuit ocf tort claims at all. Indeed, the decision states that ''CPLR article 52 •.. is the exclusive avenue .for a judgment debtor seeking relief from the use of an enforcement mechanism that does not comply witha.rticle 52's requirements" (id). The decision does not support the plaintiff's argument that it is just the exclusive first step for a judr;_i-e:tnent debtor, in what amounts to a two..,step process, but rather it is the exclusive avenue in all ways. Further, the decision noted that CPLR Article 52 is sufficient by "providing a flexible array of procedures for relief from violations of the statute" (..id.), To the extent the remedies available pursuant to CPLR Article 52 are not as broad or as advantageous as tort claims, the legislature's decision to curtail them is a determination which cannot addressed in this forum. Lastly, the plain:tiff~s reliar:ice upon the dissent iri Plymouth Venture Partners. II. LP v. GTR source, LLC cannot possibly c~rry any weight considerJ,.ng the majority's conclusions.

Therefore, the plaintiff is ba.rred from asserting ahy tort claims and the motion seeking to amend the complaint to add claims for trespass and conversion is denied.

Turning to the RICO claims, to succeed on a RICO claim, the moving party must demonstrate three elements: (1) a violation of the RICO statute, 18 USG §1962; (2) an injury to business or property; and (3) the injury was caused by the violation of section 1962 (Spool v. World Child Int'l Adoption Agency, 520 F.3d 178 [2d. Cir. 2008]). Under 18 USC §1962(c) it is unlawful for any person employed by or associated with any enterprise engaged in, or the activiti.es of whic:h affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity. Racketeering activity is defined a.s any activity included within 18 use §1961 (1). That statute includes within racketeering activity the collection of an unlawful debt {id). For pur~oses of this lawsuit unlawful debt. is .defined as .any debt "which was incurred . . . .:Ln connection with the business of .•.. lending money or a thing of value at a rate usuriou.'.3 under State or Federal law, where the usurious rate is at least twice the enforceable rate" ( 18 use §1961 ( (6) ( B) ) .

Tb maintain an action for unlawf.ui clebt it must bie estaplished that Cl) the debt was unenforceable irt whole or ih part because of state or. fecteral law.s relating to illegal usury,

{2) the debt was incurred in t:onne~tion with "the business of lending money.; .at a [usurious] rate," (3) the usurious rate was at least twice the enforceable rate, and (4) as a result of all the above factors the plaintiff was injured in his or her business or property (Durante Bros . .& Sons Inc. , v. Flushing National Bank, 755 F2d 239 [2d Cir. 1985]).

The court has already det:errnined that the plaintiff ffi<:lY not assert claims based upbri. usury. Thus, notwithstanding, there are independent reasons the RICO statute may not be pleadecf. In addition to establishing ra¢keteering, the plaintiff must demonstrate the defendan:ts engaged in an enterprise.. A RICO enterprise is "any individual, partnership, corporation, association, or oth:er legal entity, arid arty union or group bf individuals associated in fact although not a legal entity" (see, 18 USC §1961(4)). Thus, the 'enterprise' must be an entity ''separate and apart from the pattern of activity in which it engagesii (United States v. Turkette, 452 us 576, 101 S.Ct 2524 [1981]). Tn Goldfine v. Sichenzia, 118 F.Supp2d 392 [:S • .D •. N.Y. 2002] the court held that ''in a fr<:iud:-based RICO claim, if the . .

sole purpose of the alleged enterprise is to perpetuate the alleged fraud, ther·e cart be no enterprise for RICO purposes'' (id) . This does not conflict with Second Circuit precedent coricerriirig the definition of an enterprise which does not really address the narrow issue raised here, namely that the sole

Indeed, the Fropo·sed Amended Complaint asserts that "The RICO Persons have organized tri:emselves and the E:nterprise into a .cohesive group with specific and assigned responsibilities and a command structure to operate as a unit in order to accomplish the common goals and purposes of collecting upon unlawful debts" {see, J?roposed Amended Complaint {Redline version}, '!l320 [NYSCEF Doc, No .. 192] ) . The Amended Complaint further asserts '~ since at least 2012 antj continuing through the present, the members of the Enterprise have had ongoing relations with each other through common control/owrtership, shared personnel and/or one or more contracts or agreements relating to and for the purpose of collecting upon fraudulent fees through electronic wires (see, Proposed Amended Complaint {Redline Version}, !J[318 [NYSCEF Doc.

No. 192]). Thus, according to the Proposed Amended Complaint the entire enterprise was created merely to defraud the plaintiffs.

Upon those representations the plaintiff has failed to

So ordered.

ENTER:

DATED: May 14, 2024 Brooklyn N.Y. Hon. Leon Ruchelsman JSC