DocketDrafterDocketDrafter

7 CPLR 4518 Attacks That Defeated MCA Summary Judgment in 2024

Analysis of 2024 Kings County decisions where MCA summary judgments were denied due to evidentiary deficiencies under CPLR 4518. A practical guide for MCA defense attorneys on challenging business records, third-party documents, and proof of funding.

Tommy EberleTommy Eberle

This is not legal advice. I've included clickable links to all cases so you can verify everything directly.

Merchant cash advance funders have long treated summary judgment as a formality. File the motion, attach some documents, and wait for the judgment. Many merchants never even respond.

But 2024 told a different story in Kings County. Justices Aaron Maslow and Francois Rivera denied MCA summary judgment motion after motion—often even when the defendants filed no opposition at all. The reason? The funders' evidence failed to meet basic requirements under CPLR 4518, New York's business records statute.

This article breaks down the specific deficiencies courts identified and explains how to raise them in your reply papers.

The Governing Standard: Unopposed Doesn't Mean Automatic Win

Before diving into specific attacks, it's worth emphasizing the standard these courts applied. As Justice Rivera explained in Capitalize Group v. R/O Gen. Contrs.:

"[A] summary judgment motion should not be granted merely because the party against whom judgment is sought failed to submit papers in opposition to the motion, (i.e., 'defaulted')... the court must still assess whether the moving party has fulfilled its burden of demonstrating that there is no genuine issue of material fact and its entitlement to judgment as a matter of law."

This principle—drawn from Alvarez v. Prospect Hospital and Winegrad v. New York University Medical Center—means the plaintiff must make a prima facie case with admissible evidence. If they don't, the motion fails "regardless of the sufficiency of the opposing papers."

Every case discussed below was denied on this basis. The courts didn't need opposition papers to find the plaintiffs' evidence lacking.

Attack #1: Generic Foundation Language

CPLR 4518(a) requires that business records be (1) made in the regular course of business, (2) where it was the regular course of business to make such records, and (3) made at or near the time of the event recorded. Many MCA affidavits recite this language in boilerplate fashion without connecting it to the specific documents submitted.

The courts aren't buying it.

In Flexibility Capital v. Highway Surfers, Justice Maslow rejected an affidavit that stated: "It is the regular course of Plaintiff's business to make its business records, which are made at or about the time of the event or transaction recorded." The problem? This language was "general in nature and not specific to any particular documents."

Justice Maslow reached the same conclusion in Advance Servicing v. ATD LLC, finding that generic 4518 language "was general in nature and not specific to the submitted contract, proof of payment of the purchase price, and Defendant's payment history."

These trial court holdings have binding Appellate Division support. In Autovest, LLC v. Cassamajor, 195 A.D.3d 672 (2d Dept. 2021), the Second Department reversed summary judgment where the affiant "failed to attest to her personal knowledge of the business practices" of the entities whose records she sought to introduce. The court held that "[a] proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker's business practices and procedures."

What to look for: Does the affidavit specifically state that each submitted document—the contract, proof of funding, payment history—was made in the regular course of business, at or near the time of the transaction? Or does it just offer boilerplate language about the plaintiff's records generally?

Attack #2: Third-Party Records Without Proper Foundation

This is perhaps the most powerful attack available. MCA funders routinely submit records that originated from third parties—banks, payment processors, ACH networks—without any foundation for those entities' record-keeping practices.

The rule comes from Bank of New York Mellon v. Gordon, 171 A.D.3d 197 (2d Dept. 2019):

"[T]he mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records."

The rule has Court of Appeals pedigree. In People v. Cratsley, 86 N.Y.2d 81 (1995), the Court explained why third-party records require special foundation: "Such papers simply are not made in the regular course of business of the recipient, who is in no position to provide the necessary foundation testimony as to the regularity and timeliness of their preparation or the source of information contained in the records."

To admit third-party records, the affiant must either (1) have personal knowledge of the third party's business practices and procedures, or (2) establish that the records were incorporated into the recipient's own records and routinely relied upon.

In Flexibility Capital v. Highway Surfers, the payment history "emanated from a different entity named Flexibility Funding, Inc." The court denied summary judgment because "nowhere in Plaintiff's papers is there reference to the records of this other entity, and there is no affidavit from someone at this entity with knowledge of its records."

The same issue arose in Advance Servicing v. ATD LLC, where the payment history came from a wire processor. Justice Maslow held: "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."

What to look for: Check the headers on payment histories and wire confirmations. Do they show a different company name than the plaintiff? Is there any foundation for that entity's practices? If the wire confirmation comes from M&T Bank or TD Bank, where's the affidavit from someone at the bank?

Attack #3: Self-Created Documents as "Proof of Funding"

One of the most striking 2024 decisions involved a funder that submitted a self-generated email as proof it wired funds to the merchant.

In RDM Capital v. Shoegod 313 LLC, the plaintiff's "proof of funding" was an internal email stating that a wire transfer "was successfully sent." Justice Maslow was unimpressed:

"It is quite evident that this email is nothing more than a self-created document which merely repeats information contained in the electronic business records of another entity, to wit, the financial institution which allegedly wired money from Plaintiff's account... Anybody can create the type of email submitted by Plaintiff on a computer."

The court held that proper proof requires "authentication of evidence of such from the financial institution which wired the money—not the entity upon whose behalf the money was wired."

What to look for: Is the "proof of funding" an actual bank record, or is it something the funder created internally? If it's an email or spreadsheet generated by the funder, challenge it as self-serving hearsay.

Attack #4: Deficient Proof of Funding

To prove breach of contract, the plaintiff must first prove it performed—i.e., that it actually paid the purchase price. Multiple 2024 decisions found this element lacking.

In Prosperum v. YHWH Brands, the proof of funding "contained only two lines and part of those lines were redacted. The document contained a typed entry stating the word 'checking' and the amount of $14,100.00 and nothing else." Justice Rivera found it "neither explained, nor authenticated nor probative of anything."

Prosperum v. Pamelas List involved a document with "three redactions" that was "not authenticated" and "not probative." The verified complaint and affidavit were also "inconsistent with each other" regarding funding.

Sometimes the numbers simply don't add up. In Capitalize Group v. R/O Gen. Contrs., the agreement called for a $20,000 purchase price, but the proof of funding showed only $6,844.78. Justice Rivera held this "discrepancy alone raises material issues of fact regarding the plaintiff's performance under the agreement."

Similarly, in Capybara Capital v. JA Systems, the affidavit claimed a $40,000 purchase price, but the proof of funding showed $38,400.

What to look for: Compare the purchase price in the agreement to the amount shown in the proof of funding. Are there unexplained redactions? Does the document actually show money going to the defendant, or just internal account activity?

Attack #5: Unexplained Payment Histories and Return Codes

MCA plaintiffs typically allege breach based on ACH return codes—R01 (insufficient funds), R08 (payment stopped), R16 (account frozen). But they often fail to explain what these codes mean or attach the underlying bank records.

In Fundfi v. Atlantic Roofing Solutions, the affiant claimed the defendant's payment failed due to an R16 code indicating "plaintiff's access and ability to make the ACH debit was restricted due to unrelated legal action." But the affiant "does not explain what R16 means, despite relying on this as evidence of default." Worse, "the bank record of FMF which purportedly reflected a code (R16) and a restriction by the defendants was not annexed to the motion."

Justice Rivera emphasized the critical principle: "[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted."

The same issue appeared in Flexibility Capital v. Highway Surfers and Advance Servicing v. ATD LLC, where R01 codes were referenced but never explained.

Electronic records present an additional hurdle. Under CPLR 4518(a), an electronic record is admissible only when submitted "in a tangible exhibit that is a true and accurate representation of such electronic record." In Palisades Collection, LLC v. Kedik, 67 A.D.3d 1329 (4th Dept. 2009), the Fourth Department reversed summary judgment where the affiant "failed to establish that the printed electronic spreadsheet submitted to the court was a true and accurate representation of the electronic record kept by plaintiff." Most MCA payment histories are electronic records printed to paper—does the affidavit address this requirement?

What to look for: Does the payment history contain coded data (R01, R08, R16, etc.)? Is the code explained in the affidavit? More importantly, is the actual bank record attached, or is the affiant just testifying about what it supposedly shows?

Attack #6: Payment History Doesn't Prove Breach

This is your fallback argument—and it's a strong one. Even if the court finds the payment history admissible, it often doesn't prove any specific act of breach by the defendant.

MCA complaints typically allege breach "in the alternative": the defendant blocked ACH access, or deposited receivables elsewhere, or changed bank accounts, or failed to make payments. But the payment history usually just shows that payments stopped. It doesn't prove why or who caused it.

In Capitalize Group v. R/O Gen. Contrs., Justice Rivera found that "although the plaintiff contended that the business defendant performed certain acts which constituted a default under the agreement, the alleged acts were stated in the alternative and the payment history did not provide proof of any one of the alleged acts."

Prosperum v. Bottego reached the same result: "the alleged acts were stated in the alternative and the payment history did not provide proof of any one of the alleged acts. Here, the payment history is submitted without explaining how to read it. It is not self-explanatory."

In Independent Funding v. Oil City Tractors, Justice Rivera noted that "nothing on the document reflected that the corporate defendant placed a stop payment on plaintiff's debits to the account or that the defendants changed the designated bank account without plaintiff's authorization."

Capybara Capital v. JA Systems put it plainly: the affiant "provided no admissible evidence demonstrating any one of the alleged acts."

What to look for: Does the payment history actually show defendant conduct, or just outcomes? An R08 code proves a payment was returned with "stop payment" status—it doesn't prove the defendant initiated the stop, as opposed to someone else or a bank error.

Attack #7: Internal Inconsistencies

Where the plaintiff's own papers contradict each other, summary judgment must be denied—even without opposition.

In Advance Servicing v. U.D. Inv. Group, the plaintiff's counsel affirmed that "neither the required payment nor any portion thereof was received." But the same affirmation acknowledged that defendants had paid $8,475.00. Justice Maslow found this inconsistency fatal:

"[I]nconsistencies which appear on the face of plaintiff's own papers prohibit the granting of summary judgment, despite the inadequacy of the opposing papers."

What to look for: Read the affidavit carefully and compare it to the complaint. Do the numbers add up? Are there contradictory statements about what was paid or when default occurred?

Conclusion

The 2024 Kings County decisions signal that courts are willing to scrutinize MCA evidence—even when defendants don't show up. For defense attorneys, this creates opportunity. CPLR 4518 challenges aren't just technical objections; they go to whether the plaintiff can prove its case at all.

These arguments can result in outright denial of summary judgment, buying your client time and leverage. They can force funders to cure deficiencies—if they even can. And at minimum, they establish a record for appeal.

The next time you receive an MCA summary judgment motion, don't assume it's bulletproof. Pull up these decisions, examine the evidence, and look for the gaps. They're often there.

Cases Cited

About This Research

I'm Tommy Eberle, CEO and co-founder of DocketDrafter. I'm not a lawyer. I compiled this analysis by:

  • Downloading MSJs and MSJ replies from NYSCEF
  • Extracting commonly cited statutes and cases
  • Building a list of common MCA plaintiffs and their attorneys
  • Searching those names in CourtListener to find additional opinions
  • Using Claude Code to analyze the findings

If you have comments or want to discuss the research process in detail, email me at tommy@docketdrafter.com.