Opinion
Index No. 507221/2023
05-10-2024
Vox Funding LLC, Plaintiff, v. Pensare Group, Inc. d/b/a HUBBARD DESIGN GROUP and CHRISTOPHER A. HUBBARD, Defendants.
Medolla Law, PLLC, Manhattan (Blaire P. Fellows of counsel), for plaintiff. Usher Law Group P.C., Brooklyn (Amanda Philip of counsel), for defendants.
Unpublished Opinion
Medolla Law, PLLC, Manhattan (Blaire P. Fellows of counsel), for plaintiff.
Usher Law Group P.C., Brooklyn (Amanda Philip of counsel), for defendants.
HON. AARON D. MASLOW, JUSTICE
The following numbered papers were used on this motion:
Submitted by Plaintiff in Support of Motion
NYSCEF Doc No. 24: Notice of motion
NYSCEF Doc No. 25: Derek M. Medolla, Esq. affirmation
NYSCEF Doc No. 26: Exhibit 1, summons & complaint
NYSCEF Doc No. 27: Exhibit 2, Sept. 8, 2023 order
NYSCEF Doc No. 28: Answer
NYSCEF Doc No. 29: Louis Calderone affidavit
NYSCEF Doc No. 30: Exhibit A.1, agreement, Aug. 25, 2022
NYSCEF Doc No. 31: Exhibit A.2, agreement, Oct. 27, 2022
NYSCEF Doc No. 32: Exhibit B.1, Flagstar Bank ACH transaction, Aug. 24, 2022
NYSCEF Doc No. 33: Exhibit B.2, Flagstar Bank ACH transaction, Oct. 27, 2022
NYSCEF Doc No. 34: Exhibit C.1, transaction history, Aug. 31, 2022-Dec. 28, 2022
NYSCEF Doc No. 35: Exhibit C.2, transaction history, Nov. 3, 2022-Dec. 29, 2022
NYSCEF Doc No. 36: Exhibit D, transaction history-settled/returned, action dates Sept. 2, 2022-Feb. 1, 2023
NYSCEF Doc No. 37: Statement of material facts
NYSCEF Doc No. 38: Memorandum of law
Submitted by Defendants in Opposition to Motion
NYSCEF Doc No. 40: Memorandum of law
NYSCEF Doc No. 41: Christopher A. Hubbard affidavit
NYSCEF Doc No. 42: Statement of counter facts
NYSCEF Doc No. 43: Affirmation of service
Upon the foregoing papers, having heard oral argument, and due deliberation having been had, the within motion is determined as follows.
The Court calls attention to the provisions requiring that an opinion or decision be included in the record on appeal should an appeal be taken (see CPLR 5526; 22 NYCRR 1250.7 [b] [4],[d] [1] [iii]). Transcripts may be procured from the court reporter (see Matter of Lewandowski v Office of Ct. Admin., 173 Misc.2d 335 [Sup Ct, Albany County 1997]).
This is an action commenced by the plaintiff, alleging breach of a contract by the defendant business to sell its future receivables to the plaintiff, otherwise known as a merchant cash advance contract. Plaintiff is moving for summary judgment on the causes of action in its complaint. (See generally NYSCEF Doc No. 29, Calderone aff.)
Plaintiff Vox Funding LLC alleges that it entered into a contract with Defendant business Pensare Group Inc. to purchase $131,100.00 of said Defendant's future receivables ($117,300.00 in one contract and $13,800.00 in a second contract). Defendant Christopher A. Hubbard is alleged to have personally guaranteed payment. Plaintiff alleges further that it performed its duties in the contract by remitting a total sum of $95,000.00 ($85,000.00 plus $10,000.00) minus fees to purchase the receivables. (See id.)
Plaintiff alleges that Defendant businesses breached the contract by failing to continue to make payments of receivables (see id.)
Plaintiff's summary judgment motion seeks to hold Defendants liable in the sum of a total of $95,225.31, comprised of $83,844.06 ($73,312.50 plus $10,531.56) in unpaid receivables plus $11,381.25 in default fees and/or contractual penalties (see id.).
Summary judgment is a drastic remedy that should be granted only if no triable issues of fact exist and the movant is entitled to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985]; Andre v Pomeroy, 35 N.Y.2d 361, 364 [1974]). The party moving for summary judgment must present a prima facie case of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact, and the failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see CPLR 3212 [b]; Smalls v AJI Industries, Inc., 10 N.Y.3d 733 [2008]; Alvarez v Prospect Hosp., 68 N.Y.2d at 324). Once a prima facie showing has been made, however, the burden shifts to the nonmoving party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution or tender an acceptable excuse for the failure to do so; mere expressions of hope are insufficient to raise a genuine issue of fact (see Zuckerman v City of New York, 49 N.Y.2d 557 [1980]). If there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied (see Rotuba Extruders, Inc. v Ceppos, 46 N.Y.2d 223, 231 [1978]).
In support of Plaintiff's motion, it submitted several exhibits, including what purport to be the contracts (see NYSCEF Doc Nos. 30, 31), proof of payment of the purchase prices (see NYSCEF Doc Nos. 32, 33), payment histories (see NYSCEF Doc Nos. 34, 35), and a rejected transactions history (see NYSCEF Doc No. 36).
Defendants oppose Plaintiff's motion for summary judgment. They do this in the affidavit of Defendant Hubbard (see NYSCEF Doc No. 41), a statement of counter facts (see NYSCEF Doc No. 42), and the memorandum of law of counsel (see NYSCEF Doc No. 40). Among the arguments Defendants have made are: (a) The contracts were in reality usurious loans (see generally NYSCEF Doc Nos. 41, 42). (b) Plaintiff failed to lay a proper foundation for any business records (see NYSCEF Doc No. 40 ¶¶ 12-20). (c) No bank records were submitted to substantiate Plaintiff's claims (see NYSCEF Doc No. 40 ¶ 6). (d) They challenge the evidence submitted by Plaintiff regarding alleged payments from Plaintiff to Defendant business (see id. ¶¶ 4, 6). (e) Defendant business was not afforded an opportunity to have the periodic payments to Plaintiff adjusted through a reconciliation process (see NYSCEF Doc No. 41 ¶ 4). (f) The amounts mentioned by Plaintiff are inaccurate (see NYSCEF Doc No. 42 ¶¶ 11-12). (g) Summary judgment is premature as discovery has not yet taken place (see NYSCEF Doc No. 41 ¶ 7).
In order for business records to be admissible in evidence, either on a motion or at trial, they have to meet the requirements mandated by law, as provided in CPLR 4518 and in case law. For this motion, Plaintiff relies on NYSCEF Doc No. 29, which is the affidavit of Louis Calderone, its president, to lay a foundation for the admissibility of the submitted contract, proof of payment of the purchase price, Defendant's payment history, and the rejected transactions history.
To be admissible in evidence, first, the records must be made in the regular course of business (see CPLR 4518 [a]). This Court finds that the said affidavit does establish this with respect to the submitted proof of payment of the purchase price, Defendant's payment history, and rejected transactions history (see NYSCEF Doc No. 29 ¶¶ 10-11, 13-14, 21).
To be admissible in evidence, second, it must be the regular course of business to make such records (see CPLR 4518 [a]). This Court finds that the said affidavit fails to establish this with respect to the submitted contract, proof of payment of the purchase price, Defendant's payment history, and rejected transactions history (see generally id.).
To be admissible in evidence, third, the records must have been made at the time of the act or occurrence or within a reasonable time thereafter (see CPLR 4518 [a]). This Court finds that the said affidavit fails to establish this with respect to the submitted contract, proof of payment of the purchase price, Defendant's payment history, and rejected transactions history (see generally id.).
To be admissible in evidence, fourth, the records must be made by a person who has personal knowledge of the act or occurrence and is under a business duty to report it. This foundational element is important in the realm of financial transactions because often acts or occurrences are recorded by one person or company and then transmitted to or incorporated into another company's records. It is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted (see Johnson v Lutz, 253 NY 124 [1930]; Bank of New York Mellon v Gordon, 171 A.D.3d 197 [2d Dept 2019]; Coolidge Capital LLC v Marine Plus LLC, 81 Misc.3d 1206 [A], 2023 NY Slip Op 51278[U] [Sup Ct, Kings County 2023]; Capybara Capital LLC v Zilco N.W. LLC, 78 Misc.3d 1238 [A], 2023 NY Slip Op 50476[U] [Sup Ct, Kings County 2023]).
In this motion, the fourth foundational element to establish the business record exception was not met because the entries contained in the submitted payment history emanated from a financial institution who engaged in Automated Clearing House (ACH) electronic transfers of money on Plaintiff's behalf, as indicated from the term "ACHWorks" (see NYSCEF Doc Nos. 34, 35). In other words, someone at the financial institution is privy to said financial institution's records, which apparently are relied upon by Plaintiff although it does not state such explicitly. However, nowhere in Plaintiff's papers is the financial institution identified, there is no reference to the records of the financial institution, and there is no affidavit from someone at the financial institution with knowledge of its records. The Court relies on its decision in Fenix Capital Funding LLC v Sunny Direct, LLC (81 Misc.3d 1243 [A], 2024 NY Slip Op 50131[U] [Sup Ct, Kings County 2024]). Each participant in the chain producing the record, from the initial declarant to the final entrant, must be acting within the course of regular business conduct or the declaration must meet the test of some other hearsay exception (see Johnson v Lutz, 253 NY at 128).
Further denuding Plaintiff's documents of admissibility are the following: (a) Whoever at Plaintiff made the payment history record entries in its own records is unidentified in its papers (see Capybara Capital LLC v Zilco N.W. LLC, 2023 NY Slip Op 50476). (b) The submitted payment and rejected transactions histories fail to identify the purchaser of the future receivables (see NYSCEF Doc Nos. 34-36). (c) The submitted rejected transactions history contains coded data in the form of codes X08, 01TS, and 01RS, which are not explained in the Calderone affidavit which purports to authenticate it (see NYSCEF Doc No. 29).
There cannot be a breach of contract if the plaintiff's performance is not established (see Merchant Advance LLC v PP Services Corp., 2022 NY Slip Op 34022 [Sup Ct, Kings County 2022]). Here, proof of payment by Plaintiff to Defendant business in exchange for the future receivables is deficient because there is no authenticating affidavit from someone with knowledge at either Plaintiff's or Defendant business's financial institutions, Flagstar Bank and Bank of America respectively, who ostensibly processed the transactions of the alleged payments by Plaintiff to Defendant business (see NYSCEF Doc Nos. 32, 33).
To the extent that the attorney affirmation of Derek M. Medolla attempts to authenticate the submitted documents and have them deemed business records admissible under an exception to the hearsay rule, it is deficient because although he avers to be familiar with the facts and circumstances underlying this action, he failed to allege personal knowledge of Plaintiff's recordkeeping practices and procedures (see NYSCEF Doc No. 25; Ingber v Martinez, 191 A.D.3d 959 [2d Dept 2021]).
Plaintiff, through its affidavit, attorney affirmation, and proffered exhibits, has failed to establish its entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact (see CPLR 3212 [b]; Smalls v AJI Industries, Inc., 10 N.Y.3d 733; Alvarez v Prospect Hosp., 68 N.Y.2d at 324), because it failed to establish prima facie that Defendants committed a breach of contract. In this regard, Defendants are correct in their arguments. There being no prima facie case by Plaintiff on its motion for summary judgment, the burden of proof did not even shift to Defendants to establish a material fact in dispute. Accordingly, Plaintiffs motion for summary judgment is DENIED.