Opinion
Index No. 656596/2022
10-20-2022
Express Trade Capital, Inc., Plaintiff, v. Fariborz Poursaeed and FASHION CODE COUTURE CORPORATION, Defendants.
Jason B. Jacobs, Esq., New York, NY, for plaintiff. No appearance for defendants.
Unpublished Opinion
Jason B. Jacobs, Esq., New York, NY, for plaintiff.
No appearance for defendants.
Gerald Lebovits, J.
Plaintiff, Express Trade Capital, Inc., moves under CPLR 3213 for summary judgment in lieu of complaint to enforce guarantees executed by defendants, Fariborz Poursaeed and Fashion Code Couture Corporation, of a nonparty obligor's obligations under related merchant factoring and finance agreements. The guarantees, as unconditional guarantees of payment, qualify as instruments for the payment of money only within the meaning of CPLR 3213. And plaintiff has established that its service of process on defendants complied with the terms of the service provision in the guarantees.
Plaintiff's submissions, in the form of an affidavit from its managing director supported by documentary evidence, establish that it is entitled to summary judgment against defendants-albeit not for the full amount plaintiff seeks.
Plaintiff claims it is owed, as of December 31, 2021, the sum of $314,540.74-$251,728.27 owed under the financing agreement and $62,812.47 owed under the factoring agreement. (See NYSCEF No. 2 at 1; NYSCEF No. 3 at 5 & n 2.) Plaintiff also seeks "interest thereon from January 1, 2022 at the rate of 24% per annum." (NYSCEF No. 2 at 1.) But plaintiff is not entitled either to the full amount assertedly owed under the financing agreement, or to that full additional increment of interest.
With respect to the financing agreement, that agreement provides that "if an advance is not repaid within 30 days, then interest shall accrue on the unpaid principal balance at the rate of 24% per annum." (NYSCEF No. 5 at § 5.) Similarly, "[a]ll amounts that may be owing to Express after termination of this agreement... shall bear interest at the default rate of twenty-four (24%) percent per annum until all amounts are paid in full." (Id. at § 15.)
These provisions, on their face, impose 24% annual simple interest on unpaid amounts. (Cf. R.F. Schiffmann Assocs., Inc. v Baker & Daniels LLP, 147 A.D.3d 482, 483 [1st Dept 2017] ["In the absence of an express agreement by [defendant] to pay compound interest, plaintiffs are entitled to only simple interest"].) Plaintiff's supporting ledger and account statements, on the other hand, make clear that the $251,728.27 claimed under the financing agreement reflects the assessment of compound interest from April 2020 onward. (See NYSCEF no. 9 at 2 [April 2020 through June 2020], 3-21 [July 2020 through January 2022].) Plaintiff cannot collect this greater amount in interest under the terms of the financing agreement or the guarantees. Thus, instead of $251,728.27 through the end of 2021, plaintiff is entitled under the financing agreement to $234,358.09-reflecting the amount outstanding as of April 1, 2020, plus 24% annual simple interest on that sum.
Because this limitation on the accrual of interest derives from the scope of the obligations imposed by the finance agreement on the obligor-and thus to the extent of the guarantors' obligations under their guarantees-it is not waived by the unconditional nature of the guarantees at issue. (See 549 LLC v Luna, 2022 NY Slip Op 50852[U], at *2 [Sup Ct, NY County Sept. 7, 2022] [discussing this point].)
With respect to interest, the $314,540.74 on which plaintiff seeks 24% annual interest represents the combined amount of the guarantors' obligations under the financing agreement and the factoring agreement. As a result, for plaintiff to receive interest accruing at that rate, both the financing agreement and the factoring agreement would have to provide for 24% default interest. They do not. Post-termination interest under the financing agreement accrues at 24%. (See NYSCEF No. 5 at § 15.) But post-default interest under the factoring agreement accrues at a lesser rate: the greater of (i) 15.25% or (ii) 10% plus the prime rate announced by JPMorgan Chase Bank. Interest on the two components of the guarantors' obligations must therefore be calculated separately.
(See NYSCEF No. 4 at § 7.3 [providing for post-default interest at the contractually defined "Default Rate"]; § 15 [defining Default Rate as the Interest Rate plus six percent; defining Interest Rate as the greater of 9.25% or the Prime Rate plus four percent; defining Prime Rate as the prime interest rate announced by JPMorgan Chase Bank].)
Finally, plaintiff requests an award of attorney fees incurred in this action. (See NYSCEF No. 3 at ¶¶ 28-30.) Attorney fees are provided for under both guarantees. (See NYSCEF No. 6 at 2; NYSCEF No. 7 at 2.) Plaintiff's request is granted; the amount of plaintiff's reasonable attorney fees shall be determined by this court on motion, supported by appropriate documentation.
Accordingly, it is
ORDERED that plaintiff's CPLR 3213 motion for summary judgment in lieu of complaint is granted in part and denied in part; and it is further
ORDERED that plaintiff is awarded a money judgment against defendants, jointly and severally, of (i) $234,358.09, with interest on that sum at 24% running from January 1, 2022; plus (ii) $62,812.47, with interest on that sum at the greater of 15.25% or 10% plus the contractually defined prime rate, running from January 1, 2022; plus (iii) costs and disbursements, to be taxed by the Clerk up on the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on defendants by certified mail, return receipt requested, directed to their last-known addresses; and on the office of the County Clerk, which shall enter judgment accordingly; and it is further
ORDERED that plaintiff is granted leave to enter a supplemental judgment for the amount of plaintiff's reasonable attorney fees, which shall be determined by this court on motion, to be filed by plaintiff within 30 days of entry of this order.