New York Supreme Court, Kings County, 2025

Zlur Funding LLC v. Liberty Contr. & Sec. Inc.

New York Supreme Court, Kings County · Decided April 17, 2025

2025 NY Slip Op 31341(U)

Opinion

Zlur Funding LLC v Liberty Contr. & Sec. Inc. 2025 NY Slip Op 31341(U) April 17, 2025 Supreme Court, Kings County Docket Number: Index No. 524269/2024 Judge: Anne J. Swern 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 04/17/2025 12:35 PM INDEX NO. 524269/2024 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 04/17/2025

At ariJASTr ialTenrt, Part75 of the• ·Supreme Court. of the State of New York,.

Kings County, at .the Courthouse located at Adams Street, Brooklyn, New York on the 17th dayofAp til2025 PR ESE NT: JION. ANNE J.SWERN, J.S.Ci ZLUR FUNDING LLC, DECISI ON & ORDER Plaintijf(s), Index No.: 524269/2024 "'.against-. Calendar No;: 51 LIBERTY CONTRACTING AND SECURITY Motion Seq.: ·001 INC. AND LATECIA I. MOORE, Return Date: 2/13/2025 Defen.dant(s/

Recitation ofthefoll owingpa pers aSrequir edbyCPL R 2219(a): Papers Numbere d Notice of Motion, Affirmation, Affidavit, Memorandunt ofLaw and Exhibits (NYSCEF 12-23) ................... ,.............. ,... 1, 2 Affirmations in Opposition (NYSCE F24-25), ., .. ,................................................ J Reply Memoran dum of Law (NYSCEF 26) .......................... ,........ ;............. ,..... .A Upon the Jore going papers, the decision and order of the Court is asfollow s: Procedural Historv Plaintiffi'purchaser commenced this action to recover damages based on defendants/sellers' breach ofa MerchantAi;i;reement (''future receivables") and personal guaranty executed by defendant Latecia L Moore. 1 Defendants served an unverified answer setting forth general denials and 15 affirmative defenses; including usury? Plaintiff has now moved for summary judgmen t supported by an Affidavit of Facts from Yosef Travis, an authorized i Ex. D (NYSCEF 19) Ex. E (NYSCEF 20) 52426912024' Page.I of5

1 of 5 [* 1] FILED: KINGS COUNTY CLERK 04/17/2025 12:35 PM INDEX NO. 524269/2024 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 04/17/2025 edge ofplaintiff's business representative of plaintiff. The affidavit, based on his personal knowl and record keeping practices, authenticated the exhibits annexed to the motiori. 3 In opposition, defend ant did not submit ah affida vit from an individual with personal the Merch antAg reeme nt knowledge ofthe facts concerning the execution and performance of and the affirmative defenses and denials in the unverified answer.

~ account and Pursuao.t to the Merchant Agreement, plaintiff agreed to purchase future as generated in the course payment obligatior1s owing to defendants/sellers from their customers of$13,200.00.("Receivables of defendants/sellers' business or "future receivables" in the amoun t of $8,000.00:5 The Purch asedA mounf '). 4 Plaintiff/purchaser paid an upfront purchase price EF 13, ~8). $13,200.00 equaled 11.02% ofdefe ndants /seller s' total future sales (NYSC h daily ACH debits of Defendants/sellers were obligated to repay the balance of $5,200.00 throug weekly paymerits of $300 intoplaintifli'seller's designated bank account. Thisa moun tedto c;- $5,200.00), $3,500.00 ($300.00 x 7) and a 28.5% per annum intere st rate ($3,500;00 daily receipts.

The agreement contemplated unforeseen decreases to defendants/sellers' the right to a reconciliation Therefore, the Merchant Agreement provided defendants/sellers with their Scheduled "at its sole andab solute discretion [ and] to request a modification to d from its·repayment Remittance,"7 . The parties also agreed that the purchaser would he excuse ss ccitiditiorts which obligation under the Merch ant Agreement provided that the adverse busine

3 NYSCE F 13; 1[1[1 -6 . .

4 1d at iJ4; and Ex. A, p.3 (NYSC EF 36) f funding in the am.oi.mt of $7,200. 00 represents Ex. A, p.3 (NYSC EF36); and Ex. B (NYSC EF 17). The proofo • NYSCE F36, pp.3 and,r6[ a] through [k]J. the ''NetFu ndsPro vided" pertheM erchan tAgree ment(E x,A ent( Affidav it of Yosef ng applica ble fees listed in th¢ agreem Defendants/sellers receive d an $800 credit after deducti Travis- NYSCE F 13, iJ9). 6 Affidav it ofYose f Travis (''Affid avit") at 1[11 {NYSC EF 13) and Ex. A, p.3 (NYSC EF 36) Ex.; A, §X [~] (NYSC EF 36) .

524269/1024 Pilge2o f5

2 of 5 [* 2] FILED: KINGS COUNTY CLERK 04/17/2025 12:35 PM INDEX NO. 524269/2024 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 04/17/2025 caused a decrease in sales or closure ofdefen dants/sellers' business were outside their controL fraudat The repayment obligation could also be dischar gedinba nkruptc yprovid edthere was no t the inception ofthe Merchant Agreement. 9 Defendants/sellers acknowledged that the Merchan d Agreement was· nota loan requiring an absolute and unconditional repayment oh a specifie d] maturity date and thedgh t of plaintiff/purchaser to be repaid was conditioned on the [continue performance ofdefen dants/se llers' business. 10 Defendants/sellers remitted payments in the total amount of $4,500.00 until 8/23/2024 when it changed the designa ted bank account for the daily ACH debits of $300.00 without plaintiff/purchaset'sauthorization and placing a stoppayme11t on the debits. This caused plaintiff/seller's account to have insufficient funds and impeded plaintiff 's ability to collect future receivables. 12 Law andAnalysis Summaryjudgmentmc.1.y be granted only when no triable issue of fact exists(A lvarez v make a Prospect Hospital, 68 NY2d 320,.[1986)). "A partym ovingfo t summary judgme nt must e prima facie showing of entitlem entto judgme nt as a matter of law, producing sufficient evidenc a to demonstrate the absence of any materia l issue offact. However, a failure to demonstrate ss prima facie entitlement to summar yjudgm ent motion, requires a denial of the motion regardle citing of the adequacy of the opposing papers" (Ayotte v Gerva.sio, 81 NY2d 1062, 1063 [ 1993], Alvarez vProspe ct Hospital, 68 NY2d 324). "Once this showing has been made, the bur<:l.en to shifts to the nomnoving party to produce (!Videntiary proof in adtnissible form sufficient 8 Id. at §XUI [i], sub. "il1Iil& [ii1 Id. at §XIII {il, sub."i[ [iii] andXVU l [k] told. at §Xlll [k] ·11 Affidavitat"i[l 1 (NYSCEF 13) a:nd Ex. A, p.5 (NYSCEF 36) Affidavit at1'ill4 & l6;and Ex, C(NYSC EF 18)

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[* 3] 3 of ---- ····· ····· ····· ····· ··-· ····- 5 ---- ---- ---- ---- ---- ---- FILED: KINGS COUNTY CLERK 04/17/2025 12:35 PM INDEX NO. 524269/2024 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 04/17/2025 establish the existence of materialissues of fact that require a trial for resolution'' (Giuffrida v Citibank, 100 NY2d 72, 81 [2003] and Alvarez v. Prospect Hospital, 68NY2d 324).

"The rudimentary element of usury is the existence.of a loan or forbearance ofmoney; and where there is no loan, there can be no usury, howevetunconscionable the contract may be" arid "unless a principal sum advanced is repayable absolutely, the transaction is not a loan',; (LG Funding, LLCviUnited Senior Props. of Olathe, LLC, 181 AD3d664, 665-666 [2dDept2020] [internal citations omitted]). A loan is usurious and unenforceable if the interest rate exceeds 25% per clllilum (CPL§ 190.4OandGOL § 5-521 [c]). The Court weights threefactors when detennining whether the obligation ofrepaymeri.t is absolute or contingent, i.e., ''(I) whether there is a reconciliation provisionin the agreement; (2) whether the agreement has a finite tenn; and (3) whether there is any recourse. should the. merchant declare bankruptcy" (id): Plaintiff's motion for summary judgment is denied without prejudice and leave to renew in accordance with the following: Under the terms of the Merchant Agreement, repayment of the. purchase priceis conditional not absolute. The agreement (1) contains a reconciliation provision and (2) is for an indefinite term. The purchase price ( 1) is subj ectto forgiveness due to unforeseen circumstances outside ofdefendants/sellers' control and not the result of its own actions and (2) ·dischargeable in bankruptcy, absent fraud or the hickof good faith by defendants/sellers (id.). Therefore, the Merchant Agreement is not a usurious loan despite ari. 285% per annum interest fate. (LG Funding, LLC v United Senior Props. ·of Olathe, LLC, 181 AD3cl 665-666)~ llowever, plaintiff has. failed to establish all the elements ofa breach. of contract .( Cruz v Cruz, 213 AD3d 805,807 [2d De:pt 202;3]) and aprzniafacie entitiement to.irnmmary Judgment (Alvarez· v Prospect Hospital, .68 NY2d. 324). Plaintiff did not submit the required .business

$24269fl024 .

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4 of 5 [* 4] FILED: KINGS COUNTY CLERK 04/17/2025 12:35 PM INDEX NO. 524269/2024 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 04/17/2025 certification from Optin'ni.m Bank for the proof of funding vfa a wire transfer(CPLR §"4518).

Likewise_, itis i.mknoy.n Whether MCA Track is computer software program utilized by plaintiff/purchaser in the reg11lar ~ourse ofbusiness or an, outside entity requiring the same.

business ..certification. per the .CPLR..

Based on the foregoing, it is--Utlllecessary tc,-address "the stJ.fficiency of defendants/sellers' opposition papers (Ayotte- v Gervasio~ 8J NY2d 1063). However,. the Court _.will address defendants/sellers' reliance on People byJanzes v Yellowstone Capitai LLC,Index #4507$0/2024 .. While Metchan:tAgreemeilts may be disfavored by"°the New York State Attorney General, the Appellate Divisions have held that such agreements are not usurious .and 111ay be .enforced (LG Funding; lLCv UnitedSe_nior.Props. of Olathe; LLC; 181AD.3d 665-666 and Champion Auto Sales. LLC v Pearl.Bera Funding, LLC, 159AP~d 507~ 507 [1 Dept2018] ). st

Therefore;._ until such time as the New York S~te Legislature enacts legislationptohibiting Such -agreem.eri.fs, the defense:• of usury is without merit-under the$e facts_.

Accordingly, it is hereby ORDERED that plaintiff's· motion for Summary judgment pursuant C,l?LR -§ 321.2 is denied without prejudice and with leave fo renew, and it is further ORDERED that plaintiff shall serve a copy ofthis Order with Notice, ofEntry through NYSCEFw ithin30day s ofentryin NYSCEF, andtt is further this constitutes the decision and order of the Court.

ENTER:

Hon.AnneJ._.Sw.~rn,J.S.C~.

Dated: 4/17/2025 For Clerks use only: MG _ __ MD _X_ . . ..

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Case-law data current through December 31, 2025. Source: CourtListener bulk data.