Frequently, a New York judgment creditor has a judgment against an out of state debtor whose bank account was opened and maintained in a bank in the debtor’s home state but the bank, in fact, has an office or branch in New York. The judgment creditor serves a garnishment or other enforcement device on the New York office or branch in order to garnish the funds in the account maintained by the judgment debtor in his home state. To avoid this result, New York has adopted the separate entity rule. Matter of B&M Kingstone, LLC v Mega Intl. Commercial Bank Co., Ltd., 131 “A.D.3d 259, 266, First Dept. [2015]:

“The separate entity rule is that "each branch of...

Merchant Cash Advance ("MCA") companies headquartered in New York City lend money all over the country. To collect a judgment, and garnish accounts located outside New York City, the attorneys for MCA companies hire New York City Marshals. A City Marshal is not a public official, but a private business person who must compete for business. To get business from MCA companies, several City Marshals have sent levy or garnishment notices to banks or credit card processors with addresses outside of the City of New York. According to the New York City Department of Investigation, which supervises the City Marshals, "a Marshal's jurisdiction and authority to...

New York law permits a confession of judgment, meaning that if a debtor signs an affidavit permitting the creditor to file a judgment upon a bona fide debt, the creditor can file the judgment immediately, without a lawsuit, depending on the terms in the affidavit.

The affidavit must state the residence address of the debtor. If the debtor resides in New York State, the confession of judgment can only be entered in the county in which the debtor resides. If the debtor resides out of state, the judgment can only be entered in the county authorized in the affidavit. Even though the statute says “the county” in which such a judgment may be entered” there is...

If the defendant in the action has not timely answered, the plaintiff can submit a default judgment. (CPLR 3215[a]).

After the default judgment is entered, it can be opened or vacated. (CPLR 5015). Within one year of notice of the judgment, it can be vacated on the ground of excusable default, newly discovered evidence, or fraud or misconduct. At any time, no matter how long after the judgment was entered, it can be vacated on the ground of lack of jurisdiction. Improper service of the summons is a common way of establishing lack of jurisdiction. New York City requires process servers to be licensed. If the action was served by an unlicensed process ser...

Under New York law, a loan that charges annual interest over 25% is illegal, even if the borrower is a corporation.

Merchant Cash Advance agreements are notorious for charging more than 25% interest. For the first time, a New York State Supreme Court Justice ruled, on a contested motion, that a Merchant Cash Advance agreement was a usurious loan. The Court voided a confession of judgment that was based on a Merchant Cash Advance agreement. See Merchant Funding. Representing the merchant-borrower: Amos Weinberg.

The lenders making Merchant Cash Advance agreements all try to mask their loan agreements as investments in your company's future receipts or rec...

New York based lenders want the freedom of filing a lawsuit in whichever county in New York State they choose. One county may be much faster than another at entering judgments. One county may be friendlier to the lender’s legal arguments than another. The lender wants the freedom of hiring the cheapest lawyer in any county in New York State. To keep this freedom of choice, lenders put in their contract a provision that the borrower cannot object to the lender’s choice of county, or “venue.” However, such a contract provision does not necessarily work.

Under the statute, NY CPLR §503(a), a lawsuit must be brought in the county where one of the parties re...

New York State laws are friendly to creditors. When a creditor gets a judgment against you in New York State, its attorney can freeze any account you have with any institution that has any address in New York. America’s major banks have branches in almost every state. No matter where you opened your account, if that bank has an address or branch in New York, a judgment-creditor can freeze your account by sending a notice to the New York branch or office. The same is true if you have an account with American Express or PayPal or any other credit card processor with a New York address. The following are some other credit card processing companies that ar...

A lender makes sure that it can sue you where it resides, not where you reside. This is done by a contract stating that you agree to be sued in New York. The Supreme Court of the United States has approved such contract provisions. So have New York courts, except where there is blatant consumer fraud. The big question for someone living outside of New York, who gets sued by a lender in New York, is: What are your rights if you do not defend the New York action? What if you wait until the lender gets their New York judgment and tries to enforce it in your home state? In your home state, can you still contest the action on the merits and force the lende...

A credit card company usually tries to beat the consumer in court just by proving that there was no objection to the monthly statements. To do so the company must prove the mailing of the credit card statements by someone with personal knowledge of the mailing or personal knowledge of a regular mailing practice. (2005 NY Slip Op 52015[U]).

The same type of proof is needed for the mailing of the credit card agreement. (2007 NY Slip Op 51041[U]). The proof of mailing must be by a person employed by the credit card company at the time of the mailings. (2013 NY Slip Op 51697[U]).

The account statements must show usage of the credit card, not just an open b...

The State Insurance Fund (“Fund”) provides workers' compensation insurance policies that are to be governed by ordinary rules of contract construction. (20 A.D.3d 173).

To establish a breach of contract to pay the premium due, the Fund must prove the terms of the workers’ compensation policy (11 Misc 3d 802). To succeed on an account stated--a cause of action based upon an underlying contractual relationship where one party has not objected to the statement of account or invoice sent by the other party--the Fund must submit evidence that its statement was mailed to the employer and no protest received. (11 Misc 3d 802).

The Fund must prove the audits, up...