How Our Firm Successfully Opposed a Motion for Summary Judgment:

In today’s business landscape, many small companies face significant financial challenges, particularly when it comes to securing necessary capital. This financial pressure has given rise to Merchant Cash Advances (MCAs), which are often marketed as quick liquidity solutions for businesses in need. However, not all MCAs are what they appear to be, and some, as our recent case demonstrates, cross the line into predatory lending.

Our firm recently represented a client in opposing a motion for summary judgment filed by RDM Capital Funding, LLC, which sought to enforce an MCA agreement that we argued was, in reality, an unlawful and usurious loan. We are pleased to announce that the court sided with our client, denying the plaintiff’s motion. This victory not only protected our client but also set an important precedent in combatting unfair financial practices targeting small businesses.

Understanding the Case

At the heart of this case was the distinction between a Merchant Cash Advance and a traditional loan. While MCAs are structured as forward contracts—where a business sells a portion of its future receivables in exchange for an upfront payment—many MCA agreements blur the line and act more like loans, often at exorbitant interest rates that would otherwise be illegal.

The plaintiff, RDM Capital Funding, LLC, sought to enforce an MCA agreement against our client, claiming that the business had breached the terms by failing to make weekly payments. However, we argued that this agreement was not a true purchase of receivables but rather a disguised loan with a usurious interest rate, which violated New York’s strict lending laws.

Key Legal Arguments

In opposing the motion for summary judgment, we presented three main arguments:

• Breach of Agreement by the Plaintiff: We demonstrated that the plaintiff itself had breached the contract by ignoring our client’s multiple requests for reconciliation, as allowed under the terms of the agreement. When our client experienced a significant decline in revenue, the agreement permitted adjustments to the weekly payments. Despite our client’s compliance with these provisions, the plaintiff refused to engage in reconciliation, effectively nullifying their claim of breach.

• Reconciliation Requests Ignored: Our client made several good-faith efforts to request reconciliation, as the contract allowed, but the plaintiff disregarded these requests. This was a clear violation of the agreement and further evidence that the plaintiff was attempting to enforce terms more typical of a traditional loan rather than a contingent purchase of future receivables.

• The Agreement as a Usurious Loan: Most crucially, we successfully argued that the agreement was, in fact, a loan with a criminally usurious interest rate. While the plaintiff framed the transaction as an MCA, the fixed repayment amounts, lack of true reconciliation, and the interest rate exceeding 25% demonstrated that the agreement functioned as a loan under New York law. Usury laws in New York strictly prohibit interest rates above 25%, and any loan with such terms is considered void and unenforceable.

Why This Matters

This case is significant for both legal professionals and business owners. For attorneys, it reinforces the importance of scrutinizing MCA agreements to ensure they don’t violate usury laws. For business owners, particularly those struggling with cash flow, it serves as a warning that not all financial solutions are what they seem. Many MCA companies operate in a legal gray area, and it’s essential to seek legal advice before entering into such agreements.

Our Firm’s Role

Our firm prides itself on protecting clients from deceptive practices and fighting for fairness in the courtroom. In this case, we carefully dissected the agreement, highlighting the inconsistencies and illegalities that worked against our client. By staying vigilant and deeply understanding the nuances of MCA agreements, we were able to secure a favorable outcome.

If you believe your business has been targeted by unfair lending practices, or if you’re facing a motion for summary judgment, contact us today. Our team is here to provide the expertise and advocacy you need to protect your rights."

In this recent case, we had the privilege of representing Suburban Waste Services, Inc., owned by Mr. David Dienno and Ms. Christina Bizzari, against claims brought by Kapitus Servicing, Inc. The lawsuit revolved around two Revenue-Based Factoring Agreements, where Kapitus alleged that our client had defaulted on their obligations, leading to a demand for over $353,000, including fees for breach of contract and returned payments.

Kapitus filed a motion for summary judgment, claiming that the agreements were legitimate sales of future receivables, while we argued that they were actually usurious loans disguised as factoring agreements. Despite Kapitus' efforts to enforce these agreements, the court ruled in our client’s favor on key points. The judge rejected Kapitus’ argument that the agreements were sales of receivables, determining them to be loans instead. Although our client did not secure a full summary judgment in their favor, this outcome preserved their ability to continue defending against the claims.

The case highlights our firm's commitment to defending businesses against aggressive financial claims and ensuring that contractual agreements are scrutinized thoroughly. Our team remains dedicated to ensuring Suburban Waste Services' continued success as we move forward in the case.

Corporate Officers and Discrimination Liability Introduction In Doe v. Bloomberg, L.P. (2021), the New York Court of Appeals addressed a critical question in employment law: Can corporate officers be held personally liable for discriminatory practices under New York City’s Human Rights Law (HRL)? The decision is a key development in understanding individual liability within business entities. Case Summary The case examined whether Michael Bloomberg, as a corporate officer, could be personally liable for discriminatory actions that occurred at Bloomberg L.P. The Court clarified that corporate officers are not automatically liable as “employers” under the HRL, but they may face liability if they have ownership interest or significant control over the decision-making process that leads to discriminatory conduct. This ruling establishes a clear boundary between personal and corporate liability under New York’s HRL, ensuring that corporate officers cannot be sued solely because of their title or ownership stake, unless there is direct involvement in the unlawful conduct. Key Takeaways for Employers • Limited Personal Liability: Corporate officers are not personally liable under HRL unless directly involved in the discriminatory acts. • Legal Clarity for Business Owners: This ruling provides corporate executives with more certainty regarding their personal legal exposure in employment-related matters

Understanding the ‘Good Guy Guaranty’ Case and Its Impact on Commercial Leasing (2023) Introduction The “Good Guy Guaranty” (GGG) has become a common clause in New York commercial leases, but a recent case in the New York Court of Appeals could reshape its interpretation. As businesses emerge from the pandemic, this case could have a wide-reaching impact on commercial real estate practices across the state. Case Overview In 2023, the New York Court of Appeals agreed to review a dispute over the interpretation of the Good Guy Guaranty. The case involves a tenant who vacated their leased space but continued to face liability under the GGG clause for unpaid rent. The landlord argued that the tenants remained liable for the rent, even after leaving the property. The Court’s review will clarify how far GGG clauses extend and whether landlords can enforce rental guarantees post-vacation. This decision will be crucial for small businesses and landlords alike, particularly in Manhattan, where these clauses are prevalent in commercial leases. Key Implications for Commercial Tenants • Potential for Extended Liability: If the Court sides with the landlord, tenants could be on the hook for rent long after they vacate a property. • Commercial Lease Negotiations: Businesses should carefully negotiate GGG clauses in their leases to limit potential liability.

Case Analysis:

Implied Covenant of Good Faith in Business Contracts Introduction The New York Court of Appeals recently ruled on a significant business law case, Singh v. City of New York (2023), which holds important lessons for contract law, particularly regarding the implied covenant of good faith and fair dealing. This decision highlights the limitations of this covenant when clear contractual disclaimers are in place. Overview of the Case The case revolved around the claim by taxi medallion owners that New York City devalued their medallions by allowing ride-sharing services like Uber and Lyft to operate without stringent regulation. Plaintiffs argued that this undermined the implicit guarantee of good faith and fair dealing tied to the original contracts for medallion purchases. However, the Court ruled against the plaintiffs, citing that the bid forms the medallion owners signed contained disclaimers, expressly stating that the city made no warranties about the medallions’ future value. These disclaimers negated any implied promises of maintaining medallion value post-purchase. Key Takeaways for Business Owners • Implied Covenant of Good Faith: While New York law generally implies a covenant of good faith and fair dealing in contracts, it cannot override explicit disclaimers within an agreement. • Contractual Disclaimers Matter: Business contracts should be carefully reviewed for disclaimers, especially when dealing with government entities or public assets like medallions