Summary
In Lynx Strategies v. Ferreira, 957 N.Y.S.2d 636 (N.Y. Sup. Ct. 2010), for example, the plaintiff, a litigation funding company, purchased an interest in the proceeds of an underlying lawsuit by executing a "non-recourse" purchase agreement.
Summary of this case from Obermayer Rebmann Maxwell & Hippel LLP v. John H.C. W., Iii, & Restorative Programming, Inc.Opinion
No. 104843/10.
2010-07-6
In the Matter of the Application of LYNX STRATEGIES, LLC c/o the Law Funder, LLC, Petitioner, v. Baltazar FERREIRA and The Law Firm of Jeffrey Lessoff, Respondents.
JoAnne Baio LaGreca, Esq., for Petitioner. Jeffrey L. Lessoff, Esq., for Respondents.
JoAnne Baio LaGreca, Esq., for Petitioner. Jeffrey L. Lessoff, Esq., for Respondents.
ALEXANDER W. HUNTER, J.
The motion by petitioner for an order confirming the award of the arbitrator pursuant to C.P.L.R. § 7510 and directing that judgment be entered thereon with costs and disbursements of this proceeding, is granted.
Petitioner is a limited liability company that provides funding for legal actions, including an action brought by Baltazar Ferreira, who was represented by the law firm of Jeffrey Lessoff, the respondents. The funding in question was a non-recourse advance in the amount of $113,325.00 pursuant to an agreement reached by the parties dated September, 2006. Petitioner provided respondent with an additional advance of $6,000 pursuant to a second agreement dated January 4, 2007.
Petitioner asserts that, in accordance with the terms of the agreements reached between petitioner and respondents, Mr. Ferreira and the law firm of Jeffrey Lessoff agreed to pay petitioner from the proceeds received in the action titled, Baltazar Ferreira v. John Paillacar et al, index no. 24442/04, Supreme Court New York, County of Queens. The claim was subsequently settled for $250,000 and respondents began collecting the proceeds of the settlement on May 1, 2007.
Respondents failed to pay petitioner its share of the settlement proceeds. Petitioner subsequently initiated arbitration proceedings pursuant to the agreements on April 1, 2008 to collect its share. Arbitrator Jeremy Sussman issued an arbitration award in favor of petitioner on May 14, 2009, holding respondents jointly and severally liable for $119,325, which is the amount of the unpaid advances, plus 2.99% interest per month compounded monthly in accordance with the contract from May 1, 2007 to April 1, 2008. Additionally, the arbitrator awarded 9% interest per annum, at simple interest, from April 1, 2008 to the date of this award; attorneys fees of $12,000; and American Arbitration Association administrative fees and arbitrator compensation totaling $9,447.50. The total award is $250,363.10. (Exhibit A).
Pursuant to C.P.L.R. § 7510, this petition to confirm the arbitration award was brought within one year of the issuance of the award; C.P.L.R. § 7510 further states that arbitration awards shall be confirmed unless there are grounds to vacate or modify the awards pursuant to C.P.L.R. § 7511. The limited grounds for vacating or modifying arbitration awards include fraud or misconduct in procuring the award, partiality of an arbitrator appointed as neutral, an arbitrator overstepping his or her authority or failure to follow the state laws and procedures governing arbitration. (C.P .L.R. § 7511[1] ). Additionally, C.P.L.R. § 5004 provides that the rate of interest associated with judgments generally shall be nine percent per annum.
The interest rates articulated in the arbitration award, which are 2.99 percent, compounded monthly in accordance with the original contract, and 9 percent interest per annum at simple interest, do not provide grounds for vacatur or modification. The arbitrator appropriately applied the interest rate as specified in the parties' contract, 2.99 percent compounded monthly, to the advance covering the time period from when payment first became due to the time the arbitration proceedings commenced. Further, the arbitrator correctly applied a rate of nine percent simple interest, per annum, to the judgment amount covering the time period from when the arbitration commenced to the arbitration award, the same interest rate stated in C.P.L.R. § 5004.
Respondents claim that the interest rate that was part of the arbitration award amounts to usury. However, a defense of usury is not applicable to the matter herein. The concept of usury applies to loans, which are typically paid at a fixed or variable rate over a term. The instant transaction, by contrast, is an ownership interest in proceeds for a claim, contingent on the actual existence of any proceeds. Had respondent been unsuccessful in negotiating a settlement or winning a judgment, petitioner would have no contractual right to payment. Thus, usury does not apply to the instant case. ( See O'Farrell v. Martin, 292 NYS 581 [City Ct. N.Y.1936] [holding “[W]hen payment or enforcement rests on a contingency, the agreement is valid though it provides for a return in excess of the legal rate of interest.”] ).
While petitioner asserts that respondents are barred from seeking to vacate or modify the arbitrator's award due to the fact that respondents failed to make an application contesting the arbitration award within 90 days, as required by C.P.L.R. § 7511[a], that argument was raised for the first time in reply papers. Therefore, that issue is deemed waived. (Ritt v. Lenox Hill Hosp., 182 A.D.2d 560, 561 (1st Dept.1992) [holding [T]he function of a reply affidavit is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of the motion....”] ).
Respondents have failed to offer any substantive legal or factual basis to support their request to vacate or modify this arbitration award and have failed to set forth a ground to vacate or modify the award under C.P.L.R. § 7511.
Accordingly, it is hereby
ADJUDGED that the petition is granted and the award rendered in favor of petitioner and against respondents is confirmed; and it is further
ADJUDGED that petitioner, having an address at ___________________________________, do recover from respondent, _________________________, the amount of $_______________ plus interest at the rate of ________ % per annum from the date of, as computed by the Clerk in the amount of $, together with costs and disbursements in the amount of $_______________ as taxed by the Clerk, for the total amount of $_______________, and that the petitioner have execution therefor.