Elixir Capital, LLC v. Krayola Kid'z Childcare LLC

Elixir Capital, LLC v Krayola Kid'z Childcare LLC 2025 NY Slip Op 31891(U) May 20, 2025 Supreme Court, Kings County Docket Number: Index No. 534083/2024 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 05/22/2025 10:03 AM INDEX NO. 534083/2024 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 05/22/2025

Atan IASTrial Term, Part 75 of the Supreme Cowt of the State of New York, Kings County, at the Courthouse located at Adams Street, Brooklyn, New York on the20 th day ofMay2025 PRES ENT: HON.ANNEJ. SWBRN;lS.C.

ELIXIR CAPITAL, LLC, DECISION & ORDER IndexNo.: 534083/2024 Plaintiff(s), Calendar No.: 15 & 54 -against- Motion Seq.: 001 &002 KRAYOLA KID'Z CHILDCARE LLC d/lJ/aKRAYOLA IGD'Z CHILDCARE, and EBONYNIKKAA BRUNSON, 37-38 Defendant(s).

Recitation ofthe following papers as required by CPLR 2219(a): Papers Numbered Notice of Motion, Affirmation, Affidavits and Exhibits (NYSCEF 23-31) .......... ,............ ,................................ l~ 2 Affirmation and Exhibits in Opposition (NYSCEF 34) ................... ,.. , ............... .3 Memorandum of Law in Reply (NYSCEF 39) .................................................... .4 Notice of Cross-Motion,ilifirmation , Affidavits and Exhibits (NYSCEF 33-3 7) ., ......... '., ...... ,..... , .......... ,....... , ......... ,.. ,5, 6 Affirmation, Memorandum of Law in Opposition (NYSCEF 38,...39) ................. ,7 Upon the foregoing papers and after oral argument; the decision and order ofthe Court is as Jo/lows: This is an action to recover damages arising from defendants' alleged breach ofa Merchant Agreement for the pUJ:"chase of defendants' future receivables. The purchase>price was $35,000.00 less an origim1tion fee $2,500.00. (NYSCEF 27, p.3). The payments under the agreement were to be electronically debited from a designated account until the purchase price was fully paid (NYSCEF24> ,f7). It is alleged that defendantohlyremitted $1,834.50 of the sale 534()83/2014 Page I o/7

Defendant has served a cross-motion to dismiss complaint alleging, inter alia, that the merchant agreement is actually a loan charging usurious interest and therefore void ab initio. In ·opppsitiontopla.intiff's motion for summary judgment, defendantalleges·that plain:tiffbreached the agreement by debiting the account for an amount in excess of the 15 .1 7% interest rate (NYSCEF 37, fflS-16). It is also alleged thatplairttiff did offer defendant areconcili<1tion plil'suantto the terms of the Merchant Agreement (id ,r24).

Law and Analysis a) Summacy Judgment- CPLR § 3212 Summary judgment may be granted only when no triable issue of fact exists (Alvarez v Prospect Hospital, 68 NY2d 320, [1986]). ''A party moving for summary judgment must make a prima facie ·showing. of entitlement to judgment as a matter oflaw, producing sufficient evidence to· demonstrate the absence· of any material issue of fact,. However, . a failure to· demonstrate . a prima fade entitlement to Sul11111ary judgment motion, requires a denial of the motion regardless of the adequacy of the opposing papers" (Ayotte v Gervasio, 81 NY2d 1062, 1063 [1993 ], citing Atvarezv Prospect Hospital; 68 NY2d.324).· "Once this showing has been made, the-burden shifts to the noiimoving party to produce evidentiary proofin admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution" (Giuffrida v Citibank; 100 NY2d 72, 81 [2003] and Alvarez v. Prospect Hospital, 68 NY2d 324).

The Court's only role upon a motion for summary judgment is to identify the existence of triable issues, and not to determine the merits of any such issues (Vega v Restarzi Construction Corp., 18 NY3d 499;505 [2012]) orthe credibility of the movant's versio11 of events (see.Xiang

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Fu He v Troon Management, Inc;; 34 NY3d 167, 175 [2019] [internal cit1tio11s omitted]). The Court must view the evidence in the light mostfavorable to the nonmoving party, affording them the benefit of all reasonable inferences that can be drawn from the evidence (see Negri v Shop & Stop, Inc'., 65 NY2d 625, 626 [1985]). The motion should be denied where the facts are in dispute, where different inferences may· be drawn froni the evidence, or where· the credibility of the witnesses is in question (see Cameron v City o/Limg Beach, 297 AD2d 773, 774 [2d Dept.

2002]).

b) Motion to Dismiss on Documentary Evidence - CPLR § 3211 (al lll "A motion pursuantto CPLR,§ 3211 [a] [l] to dismiss the complainton the ground that the action is barred by documentary evidence may be [appropriatelyl granted only where the documentary evidence utterly refutes the plarritiff's factual allegations, thereby conclusively establishing a defense, as a matter oflaw'' (Karpovich v City a/New York, 162 AD3d 996, 997 [2dDept 2018] citing Mawere v Landau, 130 AD3d 986, 987 [2d Dept 2015]; see also Beal Sdv.

Bank v Sommer, 8 NY3d 318, 324 [2007] and Goshen v Mutual Life Insurance Co. ofN. Y., 98 NY2d 314, 326 [2002]). "To co11stitute 'docwn,entary' evidence, the evidence must be unambiguous, authentic, a11d undeniable, such as judicial records and documents reflecting out- of-court transactions such as mortgages, deeds, contracts; and other papers, the contents of which ate essentially undeniable" (Karpovich v City ofNew York, 162 AD3d at 997-998; see Prott v Lewin & Baglio; 150 AD3d 908, 909 [2d Dept 2017]). Affid~.vits submitted in support of such motion do not.qualifyas dpcumentary evidence: becau~e their "contep.ts can be controverted by .other evidence, such as another a:ffida:yit" (Phil! ips v Taco Bell Corp., 152 AIJ3d 806; 807[2d Dept2017]; Pratt v Lewin & Bag/io, 150 AD3d 909).

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Plaintiffs.may submit affidavits -in opposition to a motion to. dismiss pursuant. to -CPLR § 3211 _.[a] [7] b1,1t the statutedoe_s not obligatethem to do ·so-to avoi4 ~1di$-missal (See Rov(Jllo·v Orofino Realty Co., 40 NY2d 633,635 [1976]). Therefore, plaintiffmay stand on the pleadings aloile·, ·"confident that its allegati9ns are sufficient to state all ofthe necessary ,elements of a cognizable t)ause ofactiorr' to survive a motion to dismiss under-CPLR§ 3:211 [a] [7] (id).

c) Motion to Dismiss, Failure to State a Cause of Action• CPLR§ 3211 [al [11 When determining a CPLR .§3211 .[a] [7] -motion, the Court must accept the "factual allegations in:the complairttas true and·"a~cord_plaintiffs ihe benefit.of every possible favorable inference and d,etermine only whether the facts as alleged :fit into any cognizable legaLtheoty'' (Lef)n vMdrtin_ezt, 84 NY2d 83, 88 [1994]), However, •~bare legal conclusions as well as factual claims _flatly contradicted by the··record are not entitled tO:.such consideration.-. :not are· legal _conclusions or factual claims which are inherently incredible" (Strunkv NY State Bd. of Electicms~ 126"AD3d 777; 778 [2d. Dept 20 i 5]).

When the parties submitevidentiaiy material outsjde the-pl~fidings. for the. Court's consideration and the motion is not converted to o_ne for summary juclgment, "the question becomes whet:lier the pieruler has· a cause of action., not wh~er the pleader-has stated one and, unless it has been shown-that atriaterial . fa:ct as. claimed by the ple@deris . not . afactat.aU, and . . unless it can be said thatno significantdispute exists regarding it, [a] dismis~al should not the grantedr' (Board-ofMgts.. of JOO" Congres.s Condominium v SDS G_ongress, LLC, 152 AD3d 478; [2d Dept. 2017]).

d) The Defense of Usury_ . .

"The,rudimentary ·element of .usury is the existe11-ce pf a· loan or forbearance ofmoney, and where there is no loan,. there can b~ no usury. however unconscionable the contract may be~'

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Analysis Plaintiff's· motion for.summary judgment and.defendant's motion to dismiss pursuant to CPLR § 3211 [a] [I] and [71 are denied.

Uncler the terms of the Merchant Agreement (NYSCEF 27), repaytnent of the purchase.

price is conditional not absolute. The agreement.( 1) cop.tains a reconciliation pl"ovisipn (id ts) and (2) i$ for an indefinite term. The purchase price is·s].Jbject to forgiveness due;:. to unforeseen circumstances outside of defendants/sellers' contrQl and di~chargeable in bankruptcy,. absent fraud or the lack of good faith by ·defeQdants/sellers•. (id il6) Therefore, the, Merchant Agreement is j1ot a usurious loan as alleged by .defendant and void ab initio· (LG Funding,. LLC v United Senior Props. a/Olathe, LLC, 181 AD3d 665-666).

Defendants/sellers' reliance on People by James V. Yellowstone Capital LLC, Index #45075:0/2024is with6ut merit. While.some MerchantAgreements may be chaiienged bythe New York State Attorney General, the App(!llate Divisions have held that such. agreements are not usurious and may be enforced (LQ Funding, LLC v United Senior PrQps. o/0/athe, LLC~ 181 AD3d 665:.666 andChqmp ionAuto Sales, LLCvPear lBetaFund tng, LLC, 159AD3d 507,.507 (.1 st Dept2018] ). Therefote, until S\ICh time as the ]N'ew York State .Legislature· enacts legislation

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------ [* 5] ------ ------ ------ ··-·-·· ···-··· of 7 ····· FILED: KINGS COUNTY CLERK 05/22/2025 10:03 AM INDEX NO. 534083/2024 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 05/22/2025 prohibiting suchagreements, the defense ofusury is withoutmerit under these facts. Therefore, defendant's motion for an order pursuant to CPL:R. §3211 [al [lJ and [7] must be .denied.

The essential elements to recover damages for breach ofcontract are the existence of a contract, plaintiff's performance, defendant's breach of its contractual obUgations, and damages (see Cruz v Cruz, supra). Here,plaintiffhas failed to establish all the elements of a breach of contract claim (Cruz v Cruz, 213 ADJd 805, 807 [2d Dept 2023]) and a primafacie entitlement to swnmaryjudgment through admissible evidence (Alvarez v Prospect Hospital, 68 NY2d 324 artd Giuffrida v Citibank, ·1on NY2d 81 )..·Plaintiff did not submit certifiecl bank records from Bank United to establish proof of funding via a wire transfer or a canceled bank check (CPLR § 4518). Therefore, plaintiff did not establish through admissible evidence that it performed its contractual obligation by tending the agreed upon purchase price. The print-out from what appears to be the bank's website is inadmissible hearsay (NYSCEF28). Likewise; the print~out of the. debit history from an unknown bank submitted as· evidence· of defendant's breach Constitutes inadmissible hearsay (NYSCEF 29) ..

Based on the foregoing, it is unnecessary to address the sufficiency of defendants/sellers' opposition papers (Ayotte v Gervasio, 81 NY2d 1063). Although the burclen never shifted, the Court notes that defendanfs affidavit demonstrated the existence ofquestions offact concerning whether plaintiff breached the teIT11s of the agreement. Therefore, the Court cannot resolve questions ofcredibility on the papers (Xiang Fu He v Troon Manr;tgement,1nc., 34 NY3d 175 and Cameron v. City ofLong Beach, 297 AD2d 774).

The Court has considered the parties remaini11g contentions and finds sam~ to be without merit.

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Accordingly, it is hereby ORDERED that plaintiff's motion for summary judgment pursuant to CPLR § 3212 is denied, and it is further ORDERED that defendant's motion to dismiss the complaint pursuant to CPLR § 3211 [a] [1] & [7] is denied.

This constitutes the decision and order of the Court.

For Clerks use only: MG _ _ MD _ _ Motion seq . # _ _ _ _

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