Opinion
Index No. 152658/2022
12-13-2022
Propella Capital, LLC, Plaintiff, v. K&J Construction Co. LLC and KYLE POSTON, Defendants.
Berkovitch & Bouskila, PLLC, New York, NY (Ariel Bouskila of counsel), for plaintiff. Dreher Law Group, PLLC, Lake Worth Beach, FL (Rachel Lee Dreher of counsel), for defendants.
Unpublished Opinion
Berkovitch & Bouskila, PLLC, New York, NY (Ariel Bouskila of counsel), for plaintiff.
Dreher Law Group, PLLC, Lake Worth Beach, FL (Rachel Lee Dreher of counsel), for defendants.
Gerald Lebovits, J.
This is an action on a merchant cash-advance agreement. Plaintiff, Propella Capital, LLC, entered into the agreement with defendant K & J Construction Co. LLC, guaranteed by a principal of K & J, defendant Kyle Poston. Propella has alleged that defendants breached their obligations under the contract.
On this motion, defendants move to dismiss for lack of personal jurisdiction and failure to state a cause of action, or in the alternative for an extension of time to answer. Plaintiff cross-moves for sanctions under 22 NYCRR 130-1.1. The motion and cross-motion are denied.
DISCUSSION
I. Defendants' Motion to Dismiss
1. Defendants argue that this court lacks personal jurisdiction over them because they operate and reside in North Carolina and have not transacted business in New York within the meaning of CPLR 302. This argument fails because both K & J Construction and Poston have expressly consented to this court's exercise of personal jurisdiction. Section 11 of the underlying contract provides that "[t]he Parties hereby agree that the exclusive venue for all Claims filed in court shall be in the County of New York, State of New York" and that the defendants "waive any claim against or objection to the in personam jurisdiction [of] and venue in" Supreme Court, New York County. (NYSCEF No. 2 at ¶ 11.) This provision's express consent to the jurisdiction of this court, and its forum-selection clause, doubly foreclose defendants' jurisdictional challenge. (See Pala Assets Holdings, Ltd. v Rolta, LLC, 206 A.D.3d 438, 439 [1st Dept 2022] [consent]; National Union Fire Ins. Co. of Pittsburgh, Pa. v Williams, 223 A.D.2d 395, 398 [1st Dept 1996] [forum-selection clause].)
There is no merit to defendants' claim that plaintiff failed to meet its burden to establish jurisdiction by having "alleg[ed] jurisdiction on the basis of an agreement between the parties" and attached a copy of the agreement. (NYSCEF No. 7 at ¶ 9.)
Defendants do not claim that either the agreement's express consent to jurisdiction or its forum-selection clause result from fraud or overreaching, or that enforcement of these contractual terms would be unfair. Rather, on reply, they assert that they have sufficiently argued in their opening motion papers that "the contract is invalid and therefore personal jurisdiction has not been obtained over them." (NYSCEF No. 18 at ¶ 8.) But defendant's motion papers merely articulate the requirement that plaintiffs have pleaded the existence of a valid contract, without identifying reasons to believe that the contract is invalid. (See NYSCEF No. 7 at ¶¶ 22-24.) That is not enough.
Defendants' suggestion in their opening motion papers that plaintiff's breach-of-contract allegations must be "pled with particularity" is groundless. (NYSCEF No. 7 at ¶ 21.)
2. Defendants also contend that plaintiff has failed to allege sufficiently the elements of its breach-of-contract claim against K & J Construction. This court disagrees. The allegations of plaintiff's complaint allege the existence of a valid contract, that plaintiff performed, that K & J Construction breached, and that plaintiff was damaged as a result. (See NYSCEF No. 1 at ¶¶ 6, 9, 10, 14, 16, 20.) The complaint specifies the nature of the alleged breach by K & J Construction (See id. at ¶¶ 10-12, 17-19.) And it attaches a copy of the contract as an exhibit. No more is required to state a cause of action. (See Chrysler Capital Corp. v Hilltop Egg Farms, Inc., 129 A.D.2d 927, 928 [3d Dept 1987].)
3. Defendants assert that plaintiff has not adequately alleged its breach-of-contract claim against Poston, because the complaint alleges that Poston personally guaranteed K & J Construction's performance "[p]ursuant to the Agreement" (NYSCEF No. 1 at ¶ 22), without "plead[ing] a separate and distinct agreement" between Poston and plaintiff. (NYSCEF No. 7 at ¶ 33.) But the contract repeatedly distinguishes between K & J Construction ("merchant") and Poston ("principal"); it places the burden of performing in the first instance on K & J Construction, not Poston (see NYSCEF No. 2 at ¶¶ 1, 2, 5, 7, 8); and requires Poston to indemnify plaintiff in the event that K & J Construction defaults on its contractual payment obligations (see id. at ¶ 21). To the extent defendants' position is that the underlying contract and the guarantee must be set forth separately in different documents for a guarantee to be valid, defendants provide no authority for that proposition.
In any event, even if this court were to accept defendants' argument about the guarantee, that would mean at most that Poston should be treated as an additional obligor on the agreement between plaintiff and K & J Construction, able to raise all contractual defenses that K & J Construction may assert. (Cf. I Bldg., Inc. v Cheung, 137 A.D.3d 478, 478 [1st Dept 2016] [distinguishing between defenses that may be raised by a guarantor and those that may be raised by the principal debtor].) Defendants' guarantee argument would not be a basis to dismiss altogether plaintiff's breach-of-contract claim against Poston, as defendants appear to contend. (See NYSCEF No. 7 at ¶ 34 [requesting dismissal of the complaint "in its entirety].)
4. Defendants request in the alternative that should this court deny the motion to dismiss, the court should extend their time to answer under CPLR 2004. CPLR 3211 (f) affords 10 days from service of notice of entry of an order denying the motion to dismiss. Defendants ask that this court extend that period to 30 days from service of notice of entry. (NYSCEF No. 7 at ¶¶ 35-37.) But CPLR 2004 permits this court to grant extensions only "upon good cause shown." Defendants do not identify a reason why the 10 days provided by CPLR 3211 is insufficient, or otherwise attempt to provide good cause for an extension. The extension request is denied.
II. Plaintiff's Cross-Motion for Sanctions
On the cross-motion, plaintiff asks this court to sanction defendants and their counsel under 22 NYCRR 130-1.1, contending that the arguments raised by defendants in the motion to dismiss are frivolous and undertaken solely for purposes of delay. (NYSCEF No. 12 at ¶ 10-11.) This court is not persuaded.
To be sure, defendants' arguments on the current motion are weak and unpersuasive. This court notes that defendants' counsel has repeatedly and unsuccessfully raised the same meritless arguments, on similar facts, in four different prior actions. (See NYSCEF No. 14-17 [prior trial-court orders].) And this court is troubled that defendants' counsel responded to plaintiff's cross-motion by attacking plaintiff's counsel as "a little wet behind the ears" for failing to understand that counsel's prior motions to dismiss failed because "the courts do not like granting initial motions to dismiss and instead whenever possible allow the case to move forward to be heard on the merits." (NYSCEF No. 18 at ¶ 22.)
See Ace Funding Source LLC v Lulu Freight LLC, Index No. 514786/2021 (Sup Ct, Kings County); Kalamata Capital Group, LLC v Cajun Crawler LLC, Index No. 129795/2021 (Sup Ct, Ontario County); Green Note Capital Partners, Inc. v ABMG Builders, Index No. 129425/2021 (Sup Ct, Ontario County); Samson MCA LLC v East Winds Consulting LLC, Index No. 129406/2021 (Sup Ct, Ontario County).
Defendants' counsel also misses the mark in suggesting that "defendants waive the argument of lack of personal jurisdiction if it is not raised in a pre-answer motion to dismiss." (NYSCEF No. 18 at ¶ 22; see also id. at ¶ 24.) Defendants could instead have preserved the arguments made on their motion to dismiss by raising them in an answer. (See CPLR 3211 [e].)
Nonetheless, the prior decisions on which plaintiff's cross-motion relies were each rendered by motion courts, and thus without later precedential effect-not binding decisions of an appellate court. And this court is not persuaded that defendants or their counsel brought this motion in bad faith as a delaying tactic, as opposed to a sincere (if mistaken) view that the motion's arguments were meritorious. This court concludes that defendants' motion to dismiss is not frivolous within the meaning of 22 NYCRR 130-1.1. The court does not reach the question of whether sanctions would be warranted, should defendants repeat these nonmeritorious arguments yet again.
Accordingly, it is
ORDERED that the branch of defendants' motion seeking dismissal of the complaint is denied; and it is further
ORDERED that the branch of defendants' motion seeking in the alternative an extension of defendants' time to answer is denied; and it is further
ORDERED that plaintiff's cross-motion for sanctions is denied; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on all parties.