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PRELIMINARY STATEMENT

This action arises out of a series of merchant cash advance transactions that Plaintiff, Acme Capital Funding, LLC, has mischaracterized as outright “purchases” of future receivables in order to evade New York’s usury laws. Defendants DOE ENTERPRISES LLC and JOHN A. DOE respectfully submit this Memorandum of Law in opposition to Plaintiff’s motion, made pursuant to CPLR 3212, for summary judgment on its breach-of-contract claims. Summary judgment is a drastic remedy that may not be granted where, as here, the record discloses genuine disputes of material fact. Although the Revenue Purchase Agreement is styled as an absolute sale of receivables, its operative terms — a reconciliation right exercisable in Plaintiff’s sole discretion, a fixed daily debit untethered to actual receipts, and a personal guaranty backed by an affidavit of confession of judgment — raise, at the very least, triable issues as to whether the instrument is in substance a usurious loan under LG Funding, LLC v. United Senior Props. of Olathe, LLC. Because Plaintiff has not established its prima facie entitlement to judgment as a matter of law, and because the characterization of the agreement turns on disputed facts reserved for the trier of fact, the motion should be denied in its entirety.

STANDARD OF REVIEW

1.Summary judgment is a drastic remedy that deprives a litigant of its day in court and may be granted only where the movant has tendered evidence in admissible form demonstrating the absence of any material issue of fact. The proponent of a motion for summary judgment bears the initial burden of establishing its prima facie entitlement to judgment as a matter of law, and a failure to make that showing requires denial of the motion regardless of the sufficiency of the opposing papers. See Alvarez v. Prospect Hospital. The court’s function on such a motion is issue-finding, not issue-determination, and the evidence must be viewed in the light most favorable to the party opposing the motion.

2.These principles apply with particular force where the dispute turns on the proper characterization of a financing instrument. It is settled that courts look to substance rather than form, and that the labels a drafter affixes to an agreement are not dispositive of its legal character. Whether a merchant cash advance is a bona fide purchase of receivables or a disguised usurious loan is a fact-intensive inquiry that turns on the totality of the agreement’s terms and the parties’ actual course of dealing — an inquiry that ordinarily precludes summary judgment. See Adar Bays, LLC v. GeneSYS ID, Inc..

3.Nor may the Court resolve the parties’ competing inferences on a paper record. Summary judgment is inappropriate where the resolution of an issue depends upon the credibility of witnesses or the inferences to be drawn from conflicting evidence regarding the reconciliation, contingency, and term provisions on which Plaintiff relies. Those matters are quintessentially for the trier of fact and cannot be adjudicated on the present motion.

ARGUMENT

4.Plaintiff’s motion fails because the Revenue Purchase Agreement, dated March 14, 2024, is in substance a loan subject to New York’s criminal usury cap. The total amount advanced to DOE ENTERPRISES LLC was $48,000.00, against which Plaintiff demanded fixed total repayment of $71,760.00 — an effective annualized rate that, on this record, far exceeds the twenty-five percent criminal usury threshold of Penal Law § 190.40. A transaction bearing such a return is presumptively usurious and, at a minimum, raises a triable issue precluding summary judgment.

5.The reconciliation provision on which Plaintiff relies is, at best, ambiguous and, on Defendants’ evidence, illusory. By its express terms, any adjustment to the daily debit is available only “in [Plaintiff’s] sole and absolute discretion” and requires Defendants to submit a written request supported by bank records within a narrow window. Whether such a discretionary, gatekept right renders repayment contingent under LG Funding, LLC v. United Senior Props. of Olathe, LLC is a disputed question of fact that defeats Plaintiff’s motion.