FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS
`
`NOVUS CAPITAL FUNDING LLC,
`
`Plaintiff,
`
`-against-
`
`QUANTUM VALVE AND OILFIELD
`SOLUTIONS LLC D/B/A QUANTUM
`VALVE AND OILFIELD SOLUTIONS,
`BLACK FERN INVESTMENTS, LLC,
`SILVERBACK CHEMICAL LLC,
`REBOURN MANAGEMENT, LLC, ION
`EYES AUTOMOTIVE, LLC, ION EYES
`BUILDINGS, LLC, BLACK FERN
`RESOURCES, LP, and JOHN LUKE REED,
`
`Defendants.
`
`
`TO THE ABOVE-NAMED DEFENDANTS;
`
`Index No.:
`
`Date Filed: July 9, 2021
`
`SUMMONS
`Plaintiff’s Place of Business:
`7 Elmwood Drive, Suite 301
`New City, NY 10956
`Plaintiff designates Kings County as
`the place of trial. The basis of venue
`is Plaintiff’s place of business and by
`Agreement pursuant to CPLR § 501.
`
`YOU ARE HEREBY SUMMONED to appear in the Supreme Court of the State of New
`York, County of Kings at the office of the Clerk of said county at 360 Adams Street, Brooklyn,
`NY 11201, and to answer the Complaint in this action and serve a copy of your Answer, or, if the
`Complaint is not served with the Summons, to serve a Notice of Appearance, on the Plaintiffs
`attorney within 20 days after the service of this Summons, exclusive of the day of service; or
`within 30 days after the service is complete if this Summons is not personally delivered to you
`within the State of New York; and in case of your failure to appear or answer, judgment will be
`taken against you by default for the relief demanded in the Complaint.
`
`
`1
`
`1 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`
`Dated: July 9, 2021
`New York, NY
`
`
`
`
`
`
`
`
`
`
`________________________
`David J. Austin, Esq.
`AUSTIN LLP
`43 West 43rd Street, Suite 288
`New York, NY 10036-7424
`Tel. 646-328-0710
`Fax 917-924-4403
`david.austin@austinllp.com
`Attorneys for Plaintiff
`
`
`To:
`QUANTUM VALVE AND OILFIELD SOLUTIONS LLC D/B/A QUANTUM VALVE AND
`OILFIELD SOLUTIONS
`BLACK FERN INVESTMENTS, LLC
`SILVERBACK CHEMICAL LLC
`REBOURN MANAGEMENT, LLC
`ION EYES AUTOMOTIVE, LLC
`ION EYES BUILDINGS, LLC
`BLACK FERN RESOURCES, LP
`6500 West FWY, STE 706
`Fort Worth, TX 76116
`
`JOHN LUKE REED
`900 W FM 1885
`Weatherford, TX 76088
`
`
`
`2
`
`2 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS
`
`NOVUS CAPITAL FUNDING LLC,
`
`Plaintiff,
`
`-against-
`
`QUANTUM VALVE AND OILFIELD
`SOLUTIONS LLC D/B/A QUANTUM
`VALVE AND OILFIELD SOLUTIONS,
`BLACK FERN INVESTMENTS, LLC,
`SILVERBACK CHEMICAL LLC,
`REBOURN MANAGEMENT, LLC, ION
`EYES AUTOMOTIVE, LLC, ION EYES
`BUILDINGS, LLC, BLACK FERN
`RESOURCES, LP, and JOHN LUKE REED,
`
`Defendants.
`
`Index No.:
`
`Date Filed: July 9, 2021
`
`VERIFIED COMPLAINT
`Plaintiff’s Place of Business:
`7 Elmwood Drive, Suite 301
`New City, NY 10956
`Plaintiff designates Kings County as
`the place of trial. The basis of venue is
`Plaintiff’s place of business and by
`Agreement pursuant to CPLR § 501.
`
`
`
`Plaintiff Novus Capital Funding LLC (“Novus Capital” or “Plaintiff”), by and through its
`
`attorneys, Austin LLP, as and for its Verified Complaint, alleges upon information and belief as
`
`follows:
`
`INTRODUCTION
`
`1.
`
`This is an action to recover debts owed to Novus Capital by Quantum Valve and
`
`Oilfield Solutions LLC D/B/A Quantum Valve and Oilfield Solutions, Black Fern Investments,
`
`LLC, Silverback Chemical LLC, Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion
`
`Eyes Buildings, LLC, Black Fern Resources, LP (“Quantum Valve”) and John Luke Reed (“Mr.
`
`Reed”) (collectively “Defendants”).
`
`2.
`
`Upon information and belief, Quantum Valve and Oilfield Solutions LLC D/B/A
`
`Quantum Valve and Oilfield Solutions, Black Fern Investments, LLC, Silverback Chemical LLC,
`
`1
`
`3 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion Eyes Buildings, LLC and Black Fern
`
`Resources, LP are in the business of providing commercial products and services.
`
`3.
`
`Mr. Reed, on behalf of himself doing business under the name Quantum Valve and
`
`Oilfield Solutions LLC D/B/A Quantum Valve and Oilfield Solutions, Black Fern Investments,
`
`LLC, Silverback Chemical LLC, Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion
`
`Eyes Buildings, LLC and Black Fern Resources, LP, approached Novus Capital for funding to
`
`help expand Quantum Valve’s business.
`
`4.
`
`On or about March 25, 2021, Novus Capital provided $150,000.00 in funding to
`
`Quantum Valve in exchange for the right to $224,850.00 of Quantum Valve’s future revenue.
`
`5.
`
`Under a first Revenue Purchase Agreement (the “first RPA”), Quantum Valve
`
`promised and covenanted to pay a portion of its future revenue to Novus Capital until the full
`
`amount of Novus Capital’s interest in Quantum Valve’s future revenue satisfied. A true and
`
`correct copy of the first RPA is attached as Exhibit A.
`
`6.
`
`Novus Capital fulfilled its obligation under the first RPA by providing the purchase
`
`price of the purchased revenue to Quantum Valve, as required by the first RPA.
`
`7.
`
`Pursuant to the first RPA, Quantum Valve agreed and was obligated to deliver to
`
`Novus Capital a 25% share of its future revenue daily (M-F) until the purchase price was paid in
`
`full.
`
`8.
`
`In addition, John Luke Reed signed a personal guarantee of performance under the
`
`first RPA.
`
`9.
`
`Pursuant to the first RPA, the personal guarantee provides that in the event of
`
`Quantum Valve’s default under any of the terms of the first RPA, including blocking ACH debits
`
`or depositing its revenue, including accounts-receivable, into a bank account other than the one
`
`2
`
`4 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`provided to Novus Capital, Novus Capital may enforce its rights against the personal guarantor, in
`
`this case Mr. Reed, without first seeking recourse from Quantum Valve.
`
`10.
`
`Initially, Quantum Valve met its obligations under the first RPA and deposited its
`
`revenue into the account it provided to Novus Capital for payment of the future revenue Novus
`
`Capital purchased and from which Novus Capital was authorized to debit payment.
`
`11.
`
`However, within weeks after Novus Capital transferred payment to Quantum Valve
`
`for its future revenue, Quantum Valve began diverting its revenue from the account provided and
`
`ceased making payments to Novus Capital.
`
`12.
`
`Quantum Valve refuses to remit the agreed percentage of its revenue to Novus
`
`Capital, has been withholding the revenue it sold to Novus Capital, and has refused to continue
`
`performance under the terms of the first RPA.
`
`13.
`
`During the course of the agreement, the unremitted sums become due and payable
`
`to Novus Capital in full as required by Novus Capital or pursuant to the terms of the first RPA in
`
`the event of any action constituting a default or breach of any covenants or warranties contained
`
`in the first RPA. Any outstanding balance owed by Quantum Valve at the time of default became
`
`immediately due and payable to Novus Capital.
`
`14.
`
`Quantum Valve defaulted under the terms of the first RPA by breaching its
`
`representations and warranties to Novus Capital.
`
`15.
`
`Quantum Valve has refused to remit payment for the revenue purchased by Novus
`
`Capital pursuant to the first RPA, despite due demand therefore.
`
`16.
`
`At present there remains a balance due of $92,188.50, plus fees as provided by the
`
`first RPA, in addition to costs and attorney’s fees. As such, Defendants Quantum Valve and Mr.
`
`Reed are in default of the first RPA.
`
`3
`
`5 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`17.
`
`Pursuant to the first RPA, in the event of a default, Novus Capital is entitled to
`
`recover a refund of the $224,850.00 revenue purchase amount from Quantum Valve and Mr. Reed
`
`less any amounts paid. Exhibit A at Paragraphs 27-30.
`
`18.
`
`Of the $224,850.00 of revenue purchased, Quantum Valve have delivered a total of
`
`$132,661.50 of the revenue purchased to Novus Capital prior to default, leaving a revenue
`
`purchased balance of $92,188.50.
`
`19.
`
`A true and correct copy of an itemization of Quantum Valve’s account with Novus
`
`Capital is attached as Exhibit B.
`
`20.
`
`Pursuant to the first RPA, Novus Capital is entitled to collect fees related to
`
`Quantum Valve’s actions regarding the designated account from which ACH debit payments were
`
`to be made. Exhibit A at Paragraphs 17-19, 29 and Rider 2.
`
`21.
`
`Quantum Valve incurred $30,562.21 in Fees, itemized as follows:
`
`a) Non-Sufficient Fund (NSF) Fees - $140.00; and
`
`b) Default Fee - $30,422.21.
`
`Exhibit B; Exhibit A at Paragraphs 17-19, 29 and Rider 2.
`
`22.
`
`The total amount due at the time of default is the remaining unpaid revenue
`
`purchased balance of $92,188.50 and the Fee amount of $30,562.21. Therefore, the total amount
`
`due at the time of default is $122,750.71.
`
`23.
`
`In the event of a default, Novus Capital is also entitled to costs and interest. Exhibit
`
`A at Paragraph 29.
`
`24.
`
`Thus, Defendants Quantum Valve and Mr. Reed are liable to Novus Capital for the
`
`amount of $122,750.71, pursuant to the first RPA, interest from June 28, 2021, the date of default,
`
`plus costs and attorney’s fees.
`
`4
`
`6 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`25.
`
`On or about May 5, 2021, Novus Capital provided $107,000.00 in additional
`
`funding to Quantum Valve in exchange for the right to an additional $160,393.00 of Quantum
`
`Valve’s future revenue.
`
`26.
`
`Under a Revenue Purchase Agreement (the “second RPA”), Quantum Valve
`
`promised and covenanted to pay a portion of its future revenue to Novus Capital until the full
`
`amount of Novus Capital’s interest in Quantum Valve’s future revenue satisfied. A true and
`
`correct copy of the second RPA is attached as Exhibit B.
`
`27.
`
`Novus Capital fulfilled its obligation under the second RPA by providing the
`
`purchase price of the purchased revenue to Quantum Valve, as required by the second RPA.
`
`28.
`
`Pursuant to the second RPA, Quantum Valve agreed and was obligated to deliver
`
`to Novus Capital a 25% share of its future revenue daily (M-F) until the purchase price was paid
`
`in full.
`
`29.
`
`In addition, John Luke Reed signed a personal guarantee of performance under the
`
`second RPA.
`
`30.
`
`Pursuant to the second RPA, the personal guarantee provides that in the event of
`
`Quantum Valve’s default under any of the terms of the second RPA, including blocking ACH
`
`debits or depositing its revenue, including accounts-receivable, into a bank account other than the
`
`one provided to Novus Capital, Novus Capital may enforce its rights against the personal
`
`guarantor, in this case Mr. Reed, without first seeking recourse from Quantum Valve.
`
`31.
`
`Initially, Quantum Valve met its obligations under the second RPA and deposited
`
`its revenue into the account it provided to Novus Capital for payment of the future revenue Novus
`
`Capital purchased and from which Novus Capital was authorized to debit payment.
`
`5
`
`7 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`32.
`
`However, within weeks after Novus Capital transferred payment to Quantum Valve
`
`for its future revenue, Quantum Valve began diverting its revenue from the account provided and
`
`ceased making payments to Novus Capital.
`
`33.
`
`Quantum Valve refuses to remit the agreed percentage of its revenue to Novus
`
`Capital, has been withholding the revenue it sold to Novus Capital, and has refused to continue
`
`performance under the terms of the second RPA.
`
`34.
`
`During the course of the agreement, the unremitted sums become due and payable
`
`to Novus Capital in full as required by Novus Capital or pursuant to the terms of the second RPA
`
`in the event of any action constituting a default or breach of any covenants or warranties contained
`
`in the second RPA. Any outstanding balance owed by Quantum Valve at the time of default
`
`became immediately due and payable to Novus Capital.
`
`35.
`
`Quantum Valve defaulted under the terms of the second RPA by breaching its
`
`representations and warranties to Novus Capital.
`
`36.
`
`Quantum Valve has refused to remit payment for the revenue purchased by Novus
`
`Capital pursuant to the second RPA, despite due demand therefore.
`
`37.
`
`At present there remains a balance due of $74,849.96, plus fees as provided by the
`
`second RPA, in addition to costs and attorney’s fees. As such, Defendants Quantum Valve and
`
`Mr. Reed are in default of the second RPA.
`
`38.
`
`Pursuant to the second RPA, in the event of a default, Novus Capital is entitled to
`
`recover a refund of the $160,393.00 revenue purchase amount from Quantum Valve and Mr. Reed
`
`less any amounts paid. Exhibit B at Paragraphs 27-30.
`
`6
`
`8 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`39.
`
`Of the $160,393.00 of revenue purchased, Quantum Valve have delivered a total of
`
`$85,543.04 of the revenue purchased to Novus Capital prior to default, leaving a revenue
`
`purchased balance of $74,849.96.
`
`40.
`
`A true and correct copy of an itemization of Quantum Valve’s account with Novus
`
`Capital is attached as Exhibit D.
`
`41.
`
`Pursuant to the second RPA, Novus Capital is entitled to collect fees related to
`
`Quantum Valve’s actions regarding the designated account from which ACH debit payments were
`
`to be made. Exhibit B at Paragraphs 17-19, 29 and Rider 2.
`
`42.
`
`Quantum Valve incurred $24,840.49 in Fees, itemized as follows:
`
`a) Non-Sufficient Fund (NSF) Fees - $140.00; and
`
`b) Default Fee - $24,700.49;
`
`Exhibit D; Exhibit B at Paragraphs 17-19, 29 and Rider 2.
`
`43.
`
`The total amount due at the time of default is the remaining unpaid revenue
`
`purchased balance of $74,849.96 and the Fee amount of $24,840.49. Therefore, the total amount
`
`due at the time of default is $99,690.45.
`
`44.
`
`In the event of a default, Novus Capital is also entitled to costs and interest. Exhibit
`
`B at Paragraph 29.
`
`45.
`
`Thus, Defendants Quantum Valve and Mr. Reed are liable to Novus Capital for the
`
`amount of $99,690.45, pursuant to the second RPA, interest from June 29, 2021, the date of default,
`
`plus costs and attorney’s fees.
`
`46.
`
`47.
`
`
`
`Accordingly, Quantum Valve and Mr. Reed have forced Novus Capital to bring
`
`this action to obtain a Judgment against Quantum Valve and Mr. Reed.
`
`7
`
`9 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`PARTIES, JURISDICTION AND VENUE
`
`48.
`
`Plaintiff Novus Capital Funding LLC is a limited liability company organized and
`
`existing under the laws of the State of New York and registered to do business in the State of New
`
`York. Novus Capital Funding LLC’s principal place of business is 7 Elmwood Drive, Suite 301,
`
`New City, NY 10956 in Kings County, New York.
`
`49.
`
`At all times relevant to this action, Novus Capital has been engaged in the business
`
`of purchasing future revenue, e.g., accounts-receivable, from small and medium-sized businesses
`
`across the United States.
`
`50.
`
`Upon information and belief, Defendants Quantum Valve and Oilfield Solutions
`
`LLC D/B/A Quantum Valve and Oilfield Solutions, Black Fern Investments, LLC, Silverback
`
`Chemical LLC, Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion Eyes Buildings,
`
`LLC and Black Fern Resources, LP are, and at all times relevant to this action have been, a limited
`
`liability companies and a limited partnership having a principal place of business at 6500 West
`
`FWY, STE 706, Fort Worth, TX 76116.
`
`51.
`
`Upon information and belief, Defendant John Luke Reed is, and at all times relevant
`
`to this action has, resided at 900 W FM 1885, Weatherford, TX 76088, and is the owner or at least
`
`co-owner of Quantum Valve and Oilfield Solutions LLC D/B/A Quantum Valve and Oilfield
`
`Solutions, Black Fern Investments, LLC, Silverback Chemical LLC, Rebourn Management, LLC,
`
`Ion Eyes Automotive, LLC, Ion Eyes Buildings, LLC and Black Fern Resources, LP.
`
`52.
`
`Pursuant to the RPAs, Defendants Quantum Valve and Oilfield Solutions LLC
`
`D/B/A Quantum Valve and Oilfield Solutions, Black Fern Investments, LLC, Silverback Chemical
`
`LLC, Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion Eyes Buildings, LLC, Black
`
`Fern Resources, LP and John Luke Reed agreed to accept service of process by certified mail and
`
`8
`
`10 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`email, as the RPAs at Exhibit A and Exhibit B provide, “Seller further agrees that the mailing by
`
`certified mail to the Seller’s address(es) shown on page 1 of this Agreement or the emailing to the
`
`email address(es) shown on page 1 of this Agreement of any process required by any such court
`
`will constitute valid and lawful service of process against each Seller, without the necessity for
`
`service by any other means provided by statute or rule of court, but without invalidating service
`
`performed in accordance with such other provisions. Seller agrees that the service of such process
`
`and any legal papers served subsequently thereafter shall be deemed complete upon such mailing
`
`or transmission of such email irrespective of weather such mailing or email is actually received by
`
`each Seller and/or Guarantor.” Exhibit A and Exhibit B at Paragraph 7, pg.17.
`
`53.
`
`Jurisdiction and venue are proper in Kings County because Plaintiff maintains an
`
`office located in Kings County, New York.
`
`54.
`
`Defendants agreed to submit to the jurisdiction of any court in the State of New
`
`York including without limitation, Kings County, and have waived any and all objections to
`
`jurisdiction and venue as per the terms of the RPAs by and between the parties.
`
`55.
`
`This Court has jurisdiction as the RPAs at Exhibit A and Exhibit B provide,
`
`“Governing Law, Venue and Jurisdiction. This Agreement shall be governed by and construed
`
`exclusively in accordance with the laws of the State of New York, without regards to any
`
`applicable principles of conflicts of law. Any lawsuit, action or proceeding arising out of or in
`
`connection with this Agreement shall be instituted exclusively in any court sitting in New York
`
`State, (the “Acceptable Forums”). The parties agree that the Acceptable Forums are convenient
`
`and submit to the jurisdiction of the Acceptable Forums and waive any and all objections to
`
`inconvenience of the jurisdiction or venue. Should a proceeding be initiated in any other forum,
`
`each of the parties to this Agreement irrevocably waives any right to oppose any motion or
`
`9
`
`11 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`application made by any other party to transfer such proceeding to an Acceptable Forum. Seller
`
`and its Guarantor(s) acknowledge and agree that the Purchase Price is being paid and received by
`
`Seller in New York, that the Specified Percentage of the Future Receipts are being delivered to
`
`NCF in New York, and that the transaction contemplated in this Agreement was negotiated, and
`
`is being carried out, in New York. Seller and its Guarantor(s) acknowledge and agree that New
`
`York has a reasonable relationship to this transaction.” Exhibit A and Exhibit B at Paragraph 43.
`
`56.
`
`This Court has jurisdiction over Defendants Quantum Valve and Oilfield Solutions
`
`LLC D/B/A Quantum Valve and Oilfield Solutions, Black Fern Investments, LLC, Silverback
`
`Chemical LLC, Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion Eyes Buildings,
`
`LLC and Black Fern Resources, LP, as the limited liability companies and a limited partnership
`
`are a party to the RPA.
`
`57.
`
`This Court has jurisdiction over Defendant John Luke Reed, as guarantor of the
`
`RPAs.
`
`58.
`
`Venue is proper in Kings County under CPLR § 503 as Novus Capital Funding
`
`LLC’s principal place of business in located in Kings County.
`
`59.
`
`Venue is also proper in Kings County as the RPAs at Exhibit A and Exhibit B
`
`provide, “Governing Law, Venue and Jurisdiction. This Agreement shall be governed by and
`
`construed exclusively in accordance with the laws of the State of New York, without regards to
`
`any applicable principles of conflicts of law. Any lawsuit, action or proceeding arising out of or in
`
`connection with this Agreement shall be instituted exclusively in any court sitting in New York
`
`State, (the “Acceptable Forums”). The parties agree that the Acceptable Forums are convenient
`
`and submit to the jurisdiction of the Acceptable Forums and waive any and all objections to
`
`inconvenience of the jurisdiction or venue. Should a proceeding be initiated in any other forum,
`
`10
`
`12 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`each of the parties to this Agreement irrevocably waives any right to oppose any motion or
`
`application made by any other party to transfer such proceeding to an Acceptable Forum. Seller
`
`and its Guarantor(s) acknowledge and agree that the Purchase Price is being paid and received by
`
`Seller in New York, that the Specified Percentage of the Future Receipts are being delivered to
`
`NCF in New York, and that the transaction contemplated in this Agreement was negotiated, and
`
`is being carried out, in New York. Seller and its Guarantor(s) acknowledge and agree that New
`
`York has a reasonable relationship to this transaction.” Exhibit A and Exhibit B at Paragraph 43.
`
`60.
`
`Venue is proper in Kings County as to Defendants Quantum Valve and Oilfield
`
`Solutions LLC D/B/A Quantum Valve and Oilfield Solutions, Black Fern Investments, LLC,
`
`Silverback Chemical LLC, Rebourn Management, LLC, Ion Eyes Automotive, LLC, Ion Eyes
`
`Buildings, LLC and Black Fern Resources, LP, as the limited liability companies and a limited
`
`partnership are a party to the RPAs.
`
`61.
`
`Venue is proper in Kings County as to Defendant John Luke Reed, as guarantor of
`
`the RPAs.
`
`I.
`
`Novus Capital’s Business
`
`BACKGROUND
`
`62.
`
`Novus Capital is in the business of providing advance payments to small businesses
`
`in exchange for a percentage of the businesses’ future revenue. These funding transactions are
`
`also known as “merchant cash advances” or “revenue purchase agreements.”
`
`63.
`
`Under a revenue purchase agreement, Novus Capital purchases the right to a certain
`
`amount of a business’s future sales in exchange for an advance, lump-sum payment to the business.
`
`The business then remits periodic payments to Novus Capital, drawn from the business’s actual
`
`revenue, e.g., accounts receivable, until the purchased amount is satisfied.
`
`11
`
`13 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`64.
`
`Structured in this manner, a revenue purchase agreement is not a loan, but rather a
`
`purchase of a portion of a business’s future revenue and is a form of factoring that is common in
`
`the financial services industry.
`
`II.
`
`Quantum Valve’s Agreements with Novus Capital
`
`65.
`
`On or around March 25, 2021, Mr. Reed applied to Novus Capital Funding LLC
`
`for funding in an amount of approximately $150,000.00. Mr. Reed represented that he was seeking
`
`funding to expand Quantum Valve.
`
`66.
`
`Novus Capital agreed to provide Quantum Valve funding pursuant to the first RPA
`
`at Exhibit A, which is dated March 25, 2021.
`
`67.
`
`Under the first RPA, Quantum Valve agreed to sell, assign, and transfer to Novus
`
`Capital Funding LLC its right, title, and interest in $224,850.00 of its future revenue in exchange
`
`for a purchase price of $150,000.00.
`
`68.
`
`The first RPA provided that Novus Capital shall have all rights and be entitled to
`
`all benefits afforded to a secured creditor under the UCC or otherwise at law, and Quantum Valve
`
`agreed that Novus Capital may file any instruments or financing statements as a secured party
`
`necessary or desirable to perfect, protect, and preserve its security interests.
`
`69.
`
`On or around May 5, 2021, Mr. Reed again applied to Novus Capital Funding LLC
`
`for funding in an amount of approximately $107,000.00. Mr. Reed represented that he was seeking
`
`funding to expand Quantum Valve.
`
`70.
`
`Novus Capital agreed to provide Quantum Valve funding pursuant to the second
`
`RPA at Exhibit B, which is dated May 5, 2021.
`
`12
`
`14 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`71.
`
`Under the second RPA, Quantum Valve agreed to sell, assign, and transfer to Novus
`
`Capital Funding LLC its right, title, and interest in $160,393.00 of its future revenue in exchange
`
`for a purchase price of $107,000.00.
`
`72.
`
`The second RPA provided that Novus Capital shall have all rights and be entitled
`
`to all benefits afforded to a secured creditor under the UCC or otherwise at law, and Quantum
`
`Valve agreed that Novus Capital may file any instruments or financing statements as a secured
`
`party necessary or desirable to perfect, protect, and preserve its security interests.
`
`73.
`
`Pursuant to the RPAs, Novus Capital duly filed a UCC Financing Statement on
`
`April 12, 2021. A copy of the UCC Financing Statement is attached as Exhibit E.
`
`III. Quantum Valve’s Breaches of the RPAs and Notice of Breach
`
`74. Within weeks of the revenue purchase, Quantum Valve breached the first RPA by
`
`failing to remit payments to Novus Capital as provided for in the first RPA at Exhibit A.
`
`75.
`
`Upon information and belief, both prior to and after breaching the first RPA,
`
`Quantum Valve continued to collect, and continues to collect, revenue, in at least the form of
`
`accounts receivable.
`
`76.
`
`Novus Capital made several demands for payment by telephone and email.
`
`However, Quantum Valve and Mr. Reed failed to respond.
`
`77.
`
`Quantum Valve did not respond to Novus Capital’s demands for payment and
`
`requesting payment as provided by the first RPA.
`
`78.
`
`After default, Novus Capital periodically mailed notices to Quantum Valve and Mr.
`
`Reed reflecting the current balance due and demanding payment of same (“Statements of
`
`Account”).
`
`13
`
`15 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`79.
`
`Quantum Valve and Mr. Reed received and accepted these Statements of Account
`
`without timely objection, protest or dispute.
`
`80.
`
`Quantum Valve also breached the second RPA by failing to remit payments to
`
`Novus Capital as provided for in the second RPA at Exhibit B.
`
`81.
`
`Upon information and belief, both prior to and after breaching the second RPA,
`
`Quantum Valve continued to collect, and continues to collect, revenue, in at least the form of
`
`accounts receivable.
`
`82.
`
`Novus Capital made several demands for payment by telephone and email.
`
`However, Quantum Valve and Mr. Reed failed to respond.
`
`83.
`
`Quantum Valve did not respond to Novus Capital’s demands for payment and
`
`requesting payment as provided by the second RPA.
`
`84.
`
`After default, Novus Capital periodically mailed notices to Quantum Valve and Mr.
`
`Reed reflecting the current balance due and demanding payment of same (“Statements of
`
`Account”).
`
`85.
`
`Quantum Valve and Mr. Reed received and accepted these Statements of Account
`
`without timely objection, protest or dispute.
`
`AS AND FOR A FIRST CAUSE OF ACTION
`
`(Breach of Contract)
`
`86.
`
`Novus Capital repeats and realleges each of the allegations above as if fully set
`
`forth herein.
`
`87.
`
`Quantum Valve and Novus Capital entered into the first RPA at Exhibit A, which
`
`is a valid and binding contract between the parties.
`
`14
`
`16 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`88.
`
`Under the first RPA Quantum Valve expressly agreed to sell, assign, and transfer
`
`to Novus Capital $224,850.00 in future revenue for the purchase price of $150,000.00, the amount
`
`of which was paid by Novus Capital to Quantum Valve.
`
`89.
`
`90.
`
`Novus Capital performed all of its obligations under the first RPA.
`
`Quantum Valve breached its obligations under the first RPA by failing to pay
`
`amounts due under the first RPA. Specifically, Quantum Valve stopped making its payments to
`
`Novus Capital under the first RPA.
`
`91.
`
`On information and belief, Quantum Valve diverted its revenue from Quantum
`
`Valve’s bank account designated for ACH withdrawals, and/or simultaneously used multiple bank
`
`accounts or credit card processors to process its receipts.
`
`92.
`
`Pursuant to the first RPA, in the event of a default, Novus Capital is entitled to
`
`recover a refund of the $224,850.00 revenue purchase amount from Quantum Valve and Mr. Reed
`
`less any amounts paid. Exhibit A at Paragraphs 27-30.
`
`93.
`
`At present there remains a balance due of $92,188.50, plus fees as provided by the
`
`first RPA, in addition to costs and attorney’s fees. As such, Defendants Quantum Valve and Mr.
`
`Reed are in default of the first RPA.
`
`94.
`
`Of the $224,850.00 of revenue purchased, Quantum Valve have delivered a total of
`
`$132,661.50 of the revenue to Novus Capital prior to default, leaving a purchased revenue balance
`
`of $92,188.50.
`
`95.
`
`A true and correct copy of an itemization of Quantum Valve’s account with Novus
`
`Capital is attached as Exhibit B.
`
`15
`
`17 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`96.
`
`The total amount due at the time of default is the remaining unpaid purchased
`
`revenue balance of $92,188.50 and the Fee amount of $30,562.21. Therefore, the total amount
`
`due at the time of default is $122,750.71.
`
`97.
`
`Pursuant to the first RPA, Novus Capital is entitled to collect fees related to
`
`Quantum Valve’s actions regarding the designated account from which ACH debit payments were
`
`to be made. Exhibit A at Paragraphs 17-19, 29 and Rider 2.
`
`98.
`
`Quantum Valve incurred $30,562.21 in Fees, itemized as follows:
`
`a) Non-Sufficient Fund (NSF) Fees - $140.00; and
`
`b) Default Fee - $30,422.21;
`
`Exhibit B; Exhibit A at Paragraphs 17-19, 29 and Rider 2.
`
`99.
`
`As a result of Quantum Valve’s numerous breaches of the first RPA, Novus Capital
`
`has been damaged, pursuant to the first RPA, in the amount of at least $92,188.50, fees in the
`
`amount of $30,562.21, interest from June 28, 2021, the date of default, plus costs, and attorneys’
`
`fees.
`
`100. Accordingly, Novus Capital is entitled to an order and judgment holding Quantum
`
`Valve liable for the sum of $122,750.71, plus interest, costs, and attorneys’ fees incurred pursuant
`
`to the first RPA
`
`101. Quantum Valve and Novus Capital entered into the second RPA at Exhibit B,
`
`which is a valid and binding contract between the parties.
`
`102. Under the second RPA Quantum Valve expressly agreed to sell, assign, and transfer
`
`to Novus Capital $160,393.00 in future revenue for the purchase price of $107,000.00, the amount
`
`of which was paid by Novus Capital to Quantum Valve.
`
`103. Novus Capital performed all of its obligations under the second RPA.
`
`16
`
`18 of 28
`
`

`

`FILED: KINGS COUNTY CLERK 07/09/2021 07:54 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 517005/2021
`
`RECEIVED NYSCEF: 07/09/2021
`
`104. Quantum Valve breached its obligations under the second RPA by failing to pay
`
`amounts due under the second RPA. Specifically, Quantum Valve stopped making its payments to
`
`Novus Capital under the second RPA.
`
`105. On information and belief, Quantum Valve diverted its revenue from Quantum
`
`Valve’s bank account designated for ACH withdrawals, and/or simultaneously used multiple bank
`
`accounts or credit card processors to process its receipts.
`
`106. Pursuant to the second RPA, in the event of a default, Novus Capital is entitled to
`
`recover a refund of the $160,393.00 revenue purchase amount from Quantum Valve and Mr. Reed
`
`less any amounts paid. Exhibit B at Paragraphs 27-30.
`
`107. At present there remai