FILED: ROCKLAND COUNTY CLERK 04/12/2024 04:29 PM
`NYSCEF DOC. NO. 35
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`INDEX NO. 036662/2023
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`RECEIVED NYSCEF: 04/12/2024
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`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF ROCKLAND
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`COMPREHENSIVE MERCHANT
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`CAPITAL,
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`Index No.: 036662/2023
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`Plaintiff,
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`-against-
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`LOVE FACTOR, INC. (THE) D/B/A THE
`LOVE FACTOR, THE LOVE FACTOR,
`INC, THE LOVE FACTOR-COEUR
`D'ALENE, GLOBAL HUT INC.,
`VOVICOM, INC., LOVE FACTOR-COEUR
`D'ALENE, ID, LOVE FACTOR-LIBERTY
`LAKE, WA, LOVE FACTOR, INC. and
`MATTHEW WILEY RECKINGER-ROWE,
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`Defendants.
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`PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION TO
`DEFENDANTS’ MOTION TO DISMISS
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`AINSWORTH GORKIN PLLC
`Yeshaya Gorkin, Esq.
`40 Wall Street, Suite 2504
`New York NY 10005
`(212) 913-0217
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`Attorneys for Plaintiff
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`FILED: ROCKLAND COUNTY CLERK 04/12/2024 04:29 PM
`NYSCEF DOC. NO. 35
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`INDEX NO. 036662/2023
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`RECEIVED NYSCEF: 04/12/2024
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`PRELIMINARY STATEMENT
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`Plaintiff, COMPREHENSIVE MERCHANT CAPITAL (“Plaintiff”), by and through
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`its attorneys, Ainsworth Gorkin PLLC, submits this memorandum of law in opposition to the
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`motion to dismiss (the “Motion to Dismiss”) filed by Defendants, LOVE FACTOR, INC.
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`(THE) D/B/A THE LOVE FACTOR, THE LOVE FACTOR, INC, THE LOVE FACTOR-
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`COEUR D'ALENE, GLOBAL HUT INC., VOVICOM, INC., LOVE FACTOR-COEUR
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`D'ALENE, ID, LOVE FACTOR-LIBERTY LAKE, WA, LOVE FACTOR, INC. (hereinafter
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`“Merchants”), and MATTHEW WILEY RECKINGER-ROWE (“Guarantor,” and collectively
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`with Merchants, the “Defendants”).
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`Defendants move to dismiss the case under N.Y. C.P.L.R. § 3211(a)(2), alleging that
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`Plaintiff lacks capacity to continue the action under N.Y. BUS. CORP. LAW § 1301 (a) and
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`N.Y. BUS. CORP. LAW § 1312 (a). This Court must deny Defendants’ Motion to Dismiss as
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`Defendants’ arguments are without merit. Accordingly, Plaintiff respectfully requests this
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`Court deny Defendants’ Motion to Dismiss in its entirety.
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`FACTUAL BACKGROUND
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`On or about November 21, 2023, Plaintiff and Merchants entered into a written cash
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`advance agreement (the “Agreement”), whereby Merchants sold to Plaintiff $37,750.00
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`(“Purchased Amount”) of Merchants’ future receivables, contract rights, and other obligations
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`arising from or relating to the payment of monies from Merchants’ customers and other third
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`party payors (“Receivables”) for the sum of $25,000.00 (“Purchase Price”), to be paid to
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`Plaintiff from 16% of Merchants’ weekly revenue. (See Exhibit A to the Complaint, NYSCEF
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`Doc. No. 2).
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`Merchants agreed to grant Plaintiff access to a designated bank account in which
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`Merchants would deposit all of its Receivables and from which Plaintiff would withdraw a
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`weekly payment until the Purchased Amount was paid in full (the “Designated Account”). The
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`FILED: ROCKLAND COUNTY CLERK 04/12/2024 04:29 PM
`NYSCEF DOC. NO. 35
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`INDEX NO. 036662/2023
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`RECEIVED NYSCEF: 04/12/2024
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`weekly payment was to reflect the Parties’ good faith estimates of 16% of Merchants’
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`receivables (the “Weekly Payments”). The Parties agreed that Merchants may submit a request
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`for Plaintiff to reconcile the Weekly Payments received by Plaintiff, and the actual amount of
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`Receivables received by Merchants (a “Reconciliation Request”), so that the Weekly Payments
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`would more accurately reflect Merchants’ actual receipts. (Id. at § 1.3).
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`Pursuant to the Agreement, an Event of Default would occur if Merchants or Guarantor
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`violated any representation or warranty in the Agreement, if Merchants interfered with
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`Plaintiff’s right to collect the Weekly Amount, Merchants failed to provide timely notice to
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`Plaintiff such that for any event where an ACH transaction was attempted by Plaintiff was
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`rejected, inter alia. (Id. at ¶ 3.1). Merchants agreed that in the event of its default under the
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`Agreement, the full Purchased Amount, minus the amounts already paid to Plaintiff, plus all
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`fees due under the Agreement would become immediately due and payable in full to Plaintiff,
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`inter alia. (Id. at ¶ 3.3). On or about December 4, 2023, Merchants breached the Agreement,
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`leaving a total outstanding balance of $50,669.10, which includes: a receivable balance of
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`$35,107.00, a default fee of $4,995.00, plus a bounce fee of $35, plus an attorney’s fee of 30%
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`of the outstanding balance ($10,532.10).
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`Accordingly, on or about December 22, 2023, Plaintiff filed the instant action to collect
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`the outstanding balance.
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`ARGUMENT
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`I.
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`PLAINTIFF MAY MAINTAIN THE INSTANT ACTION
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`Section 1312 of the Business Corporation Law states in pertinent part: “A foreign
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`corporation doing business in this state without authority shall not maintain any action or
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`special proceeding in this state unless and until such corporation has been authorized to do
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`business in this state and it has paid to the state all fees and taxes.”
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`FILED: ROCKLAND COUNTY CLERK 04/12/2024 04:29 PM
`NYSCEF DOC. NO. 35
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`INDEX NO. 036662/2023
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`RECEIVED NYSCEF: 04/12/2024
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`In other words, only a foreign corporation’s ability to maintain an action is impaired if
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`it is unregistered, not its ability to initiate one. Arp Films, Inc. v. Marvel Entertainment Group,
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`645 F. Supp. 876 (S.D.N.Y. 1986) (“The New York courts have consistently held that lack of
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`good standing is not a bar to commencing suit, is not a ground for dismissal, and that a plaintiff
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`may continue an action as soon as it regains good standing”); Hot Roll Mfg. Co. v Cerone
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`Equip. Co., 38 AD2d 339, 340-41 [3d Dept 1972] (“Subdivision (a) of section 1312 of the
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`Business Corporation Law prohibits a foreign corporation doing business in this State without
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`authorization from maintaining an action. To be prohibited from maintaining an action,
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`however, is different from being prohibited from commencing an action. Hence, it has been
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`held that such a corporation, after commencing an action, could obtain authority and, thereafter,
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`maintain a lawsuit”).
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`After it has initiated a suit, the corporation would have the opportunity to register and
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`then maintain its action. Manhattan Fuel Co., Inc. v New England Petroleum Corp., 422 F Supp
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`797, 801 [SDNY 1976], adhered to, 439 F Supp 959 [SDNY 1977], affd, 578 F2d 1368 [2d Cir
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`1978] (“a corporation . . . can, after commencing an action, obtain authority and thereafter
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`maintain the lawsuit."); Scrty PCFC Mrtg. R. Est. v. CNDN LND, 690 F. Supp. 1214, 1223
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`n.22 (S.D.N.Y. 1988) (“Under New York law, however, it is clear that plaintiff may cure its
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`incapacity in the course of this litigation.”).
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`This is in accordance with the intent of the statute, which had been to allow unregistered
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`corporations to more easily initiate lawsuits in New York courts: “In fact it appears that the
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`passage of BCL s 1312 was intended to liberalize General Corporation Law s 218 in permitting
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`foreign corporations to sue in New York.” Ayer v Gen. Dynamics Corp., 82 FRD 115, 119
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`[SDNY 1979].
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`Defendants cite Alliance Textiles, Inc. v. Zipes, Index No. 653287/2013 (N.Y. Sup. Ct.
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`2014) for the proposition that non-compliance with BCL 1312 can lead to an action being
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`FILED: ROCKLAND COUNTY CLERK 04/12/2024 04:29 PM
`NYSCEF DOC. NO. 35
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`INDEX NO. 036662/2023
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`RECEIVED NYSCEF: 04/12/2024
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`dismissed. But in that case, the court ordered that the plaintiff comply with the statute within
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`60 days. Alliance Textiles, Inc. v. Zipes, Index No. 653287/2013, 3 (N.Y. Sup. Ct. 2014). The
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`plaintiff submitted only documents from its application for registration, not proof that it had
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`actually been registered by the Secretary of State. As defendants in that case noted, the plaintiff
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`only submitted partial proof that it had applied with the secretary of state. The plaintiff had
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`submitted these documents to the court after its deadline–in fact, they were dated and signed
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`after that deadline. INDEX NO. 653287/2013 NYSCEF DOC. NOs. 63, 65. Nonetheless, the
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`Alliance Textiles defendants’ motion was denied.
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`Here, Plaintiff has attached a copy of the search results for Plaintiff in the New York
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`Department of State’s Corporation and Business Entity Database. See attached as Exhibit A.
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`Defendants quite rightly cite Section 1312 of the Business Corporation Law as the
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`specific rule detailing how foreign corporations may and may not initiate and maintain actions
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`in New York courts. However, Defendants’ parallel reference to Section 1301 of the Business
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`Corporation Law, which regards how foreign corporations may lawfully “do business”–and
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`not their ability to sue in court–is self-evidently inapposite.
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`Accordingly, Defendants’ motion should be denied in its entirety and the Court should
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`grant Plaintiff’s motion to amend the complaint.
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`CONCLUSION
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`WHEREFORE, Plaintiff respectfully requests that the Court deny Defendants’ Motion
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`to Dismiss in its entirety and grant Plaintiff such other and further relief as the court deems
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`just, proper, and equitable.
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`Dated: New York, New York
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`April 12, 2024
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`________________________
`Yeshaya Gorkin, Esq.
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`FILED: ROCKLAND COUNTY CLERK 04/12/2024 04:29 PM
`NYSCEF DOC. NO. 35
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`INDEX NO. 036662/2023
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`RECEIVED NYSCEF: 04/12/2024
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`CERTIFICATION OF WORD COUNT
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`I hereby certify that the word count of this affirmation complies with the word limits of
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`22 New York Codes, Rules and Regulations § 202.8-b(a). According to the word-processing
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`system used to prepare this affirmation, the total word count for all printed text exclusive of
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`the material omitted under 22 N.Y.C.R.R. § 202.8-b(b) is 1,185 words.
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`Dated: New York, New York
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`April 12, 2024
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` _______________________
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` YESHAYA GORKIN, ESQ.
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