The following numbered papers were read on this motion:

Upon the foregoing papers and having heard oral argument on the record, the within motion is determined as follows.

Plaintiff Capybara Capital LLC commenced this action, asserting that it purchased [*2]$36,500.00 of Defendant Zilco NW LLC's ("Zilco") future receivables for $25,000.00 on April 20, 2022, and that said Defendant has defaulted in its obligations. Defendant Richard Zillmer ("Zillmer") executed a personal guarantee. Plaintiff's complaint alleges causes of action for breach of contract and breach of personal guarantee. Judgement in the amount of $31,303.16 plus interest from May 9, 2022, and costs and attorneys' fees, was sought. In their answer, Defendants mostly denied Plaintiff's allegations and alleged various affirmative defenses, including that Plaintiff induced Defendants into entering into an unlawful usurious loan and not an asset purchase agreement (see generally NYSCEF Doc No. 6, Answer).

The within motion by Plaintiff seeks summary judgment against both Defendants "on the grounds that there is no genuine issue as to any material fact and Plaintiff is entitled to judgment as a matter of law and for such other and further relief as is just and proper" (NYSCEF Doc No. 9, Notice of Motion, at 1).

Summary judgment is a drastic remedy that should be granted only if no triable issues of fact exist and the movant is entitled to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Andre v Pomeroy, 35 NY2d 361, 364 [1974]). The party moving for summary judgment must present a prima facie of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact, and the failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see CPLR 3212 [b]; Smalls v AJI Industries, Inc., 10 NY3d 733 [2008]; Alvarez, 68 NY2d at 324). Once a prima facie showing has been made, however, the burden shifts to the nonmoving party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution or tender an acceptable excuse for the failure to do so (see Zuckerman v City of New York, 49 NY2d 557 [1980]). If there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied (see Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 [1978]).

Amongst other papers submitted in support of its motion, Plaintiff relies on an affidavit of Elette Maxwell, its Collections Coordinator (NYSCEF Doc No. 14). Attached to it were an "Agreement for Purchase and Sale of Future Receipts" (NYSCEF Doc No. 15), and what purported to be a "Remittance History"^[FN1] (NYSCEF Doc No. 16).

Ms. Maxwell's affidavit purports to describe the facts upon which Plaintiff's motion relies (NYSCEF Doc No. 14):

1. I am over the age of 18 and reside in the State of New York. I am the COLLECTIONS COORDINATOR of CAPYBARA CAPITAL LLC, and as such, I am fully familiar with the facts and circumstances stated herein. I am authorized to make this affidavit on behalf of CAPYBARA CAPITAL LLC.

2. I have reviewed Plaintiff's books and records as they pertain to this file and am fully familiar with such. The business records annexed to this affidavit are made in the regular [*3]course of business and are maintained under my supervision and control. The records were made in the regular course of Plaintiff's business at or around the time of the transactions reflected therein (or within a reasonable time thereafter). The information reflected in the records was given to the recorder by someone with personal knowledge and a business duty to transmit the information accurately. I make this Affidavit in Support of Plaintiff's Motion for an Order pursuant to CPLR §3212 granting summary judgment in favor of Plaintiff and against Defendants ZILCO NW LLC ("Merchant") and RICHARD ZILLMER ("Guarantor" and together with the Merchant, the "Defendants") in the amount of $31,303.16 and for such other relief as this Court deems just and proper (the "Motion").

3. On April 20, 2022, Plaintiff and Merchants entered into a Revenue based Factoring Agreement (the "Merchant Agreement") pursuant to which Plaintiff purchased 10.4% (the "Specified Percentage") of the Merchant's total future accounts receivable up the sum of $36,500.00 (the "Purchased Amount") in exchange for an upfront purchase price of $25,000.00 (the "Purchase Price"). A true and accurate copy of the Merchant Agreement is attached hereto as Exhibit A (hereinafter cited to as "Merchant Agreement").

4. Pursuant to the provisions of the Merchant Agreement, Merchant was required to deposit all of its receipts into one approved deposit account (the "Account").

5. The Purchased Amount was to be remitted to Plaintiff via daily ACH debits of the Specific Daily Amount of $304.17, which amount was a good faith estimate of the Specified Percentage of Merchant's daily receipts based upon the due diligence conducted by Plaintiff in the underwriting process, would be debited each day and credited toward the Specified Percentage. See Merchant Agreement at p. 1.

6. The Specific Daily Amount, however, was subject to a mandatory reconciliation, or "true up" provision contained in the Merchant Agreement that ensured that the Specific Daily Amount received pursuant to the Merchant Agreement would be adjusted to reflect the Specified Percentage of Merchant's actual daily receipts. Notably, the Plaintiff was not required to perform the reconciliation unless the Merchant provided the required bank statements. Merchant never provided its bank statements such that a reconciliation or "true up" was never performed.

7. Pursuant to a Guaranty (the "Guaranty") contained in the Merchant Agreement, Guarantor guaranteed the prompt and punctual performance of Merchant's obligations to Plaintiff pursuant to the Merchant Agreement. See Exhibit A.

8. Plaintiff funded the $25,000.00 Purchase Price, less applicable and disclosed upfront fees on or about April 20, 2022.

9. On or about May 9, 2022, Merchant defaulted under the provisions of the Merchant Agreement by placing a stop payment on Plaintiff's debits to the account or by otherwise taking measures to interfere with Plaintiff's ability to collect the Future Receivables. A copy of the Remittance History as Exhibit B.

10. Guarantor breached the provisions of the Guaranty by failing to perform Merchant's obligations to Plaintiff pursuant to the Merchant Agreement when Merchant defaulted.

11. Plaintiff seeks summary judgment in the amount of $31,303.16, which amount is comprised of the outstanding balance owed on the Purchased Amount of receivables plus [*4]fees and cost.

12. Based on the foregoing, it is respectfully requested that the Court grant the relief requested in the Motion.

In opposition, Defendant Zillmer states the following in his affidavit (NYSCEF Doc No. 25):

1. I am the Defendant and the authorized agent of the Corporate Defendants in this matter and as such I am fully familiar with all the facts and circumstances surrounding this matter.

2. Usher Law Group P.C. was retained as attorneys for the instant matter, specifically I retained Mikhail Usher, Esq. to represent me in this matter.

3. The Plaintiff herein seeks to recover funds that they allege are owed to them by me, I vehemently deny that this is the case. I assert that I was induced by the Plaintiff into entering a usurious loan agreement, not an asset purchase agreement as I intended to enter into. I assert that I was lied to about a great many factors surrounding this agreement and how it would affect my business.

4. I assert that I did not have a chance to reconcile, I did not understand this agreement and I was induced to sign it by the Plaintiff and their representatives.

5. The Plaintiff reached out to me, I never directly contacted the Plaintiff to ask for a loan, they bombarded me with offers and they knew I was desperate and took advantage of that as they are continuing to take advantage even now by saying that I don't even deserve my day in Court.

6. Litigation of this matter in Kings County, New York is extremely costly and incredibly burdensome for me, as I am a resident of Oregon and I do not conduct substantial business in New York. I never expected to defend against litigation in New York as Plaintiff reached out to me in Oregon to offer me funding for my business, the Plaintiff solicited me.

7. Even the basics of how much money is being claimed and how much money is being presented to have been given is so starkly different in this case that I believe it would be a great injustice to not investigate this matter further and not permit basic discovery in this case and see what actually went on here.

8. Therefore I'm asking this Court to allow me my day in Court, allow me the opportunity to have my attorneys get discovery in this case that will show that the Plaintiff's case is not what it seems and they have indeed treated myself and my company unfairly and unlawfully.

Defendant Zillner's statement in paragraph 7 regarding the how much Plaintiff is owed contests Plaintiff's version and places the claim in issue (see Rosenblatt v St. George Health & Racquetball Assoc., LLC, 119 AD3d 45 [2d Dept 2014]). This implicates an issue of fact as to the evidence submitted by Plaintiff concerning key elements of its case: how much was paid by Defendant Zilco (transferred from its account to Plaintiff), how much is allegedly owed, and whether Defendants defaulted. As noted above, Plaintiff relies on what is denoted as a Remittance History, which appears as Exhibit B (NYSCEF Doc No. 16) to Ms. Maxwell's affidavit (NYSCEF Doc. 14). This document is set forth as a spreadsheet with 11 columns and [*5]76 lines. No explanation of what is reflected in the spreadsheet was provided by Ms. Maxwell. While this Court might speculate as to some of the information (there are column headings), it was the burden of Plaintiff to provide the explanation, which it did not do.

More importantly, there was a need for Plaintiff to authenticate the spreadsheet as a business record pursuant to the business records exception to the hearsay rule. When a party relies on that exception to the hearsay rule in attempting to establish its prima facie case, a proper foundation for the admission of the business record must be provided by someone with personal knowledge of the maker's business practices and procedures (see U.S. Bank N.A. v Zakarin, 208 AD3d 1275 [2d Dept 2022]; LNV Corp. v Almberg, 194 AD3d 703 [2d Dept 2021]; U.S. Bank N.A. v Kochhar, 176 AD3d 1010 [2d Dept 2019]; Bank of NY Mellon v Gordon, 171 AD3d 197 [2d Dept 2019].

It is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted (see U.S. Bank N.A., 208 AD3d 1275).

Here, Plaintiff's affiant, Ms. Maxwell, did not allege that she was familiar with Plaintiff's record keeping practices and procedures and, thus, she did not lay a proper foundation for the admission of Defendant Zilco's payment and debt record, which presumably what was intended to be shown in the Remittance History. Moreover, she did not assert that she had personal knowledge of Defendant Zilco's payment history. Her statement that "the information reflected in the records was given to the recorder by someone with personal knowledge" (NYSCEF Doc No. 14, ¶ 2) only raises questions as to who did have such knowledge and who was the recorder. The fact that the records "are maintained under my supervision and control" (id.) does not impart any authentication of the accuracy of the records. Ms. Maxwell's statement that the records "are made in the regular course of business" (id.) cannot be from personal knowledge since she conceded that someone else created them. In fact, her statements in the paragraph 2 do not identify which "records" which she is referring to. In paragraph 9, Ms. Maxwell stated that Defendant "Merchant" defaulted but, other than referring to the Remittance History" (her Exhibit B), she does not state the source of her knowledge.

Actions alleging nonpayment of financial obligations such as mortgage foreclosures and suits upon nonpayment of loans entail the plaintiff having to submit and authenticate electronically maintained financial records when it makes a motion for summary judgment (e.g., U.S. Bank N.A., 208 AD3d 1275 [mortgage foreclosure]; U.S. Bank N.A, 176 AD3d 1010 [mortgage foreclosure]; Cadlerock Joint Venture, L.P. v Trombley, 150 AD3d 957 [2d Dept 2017] [nonpayment of promissory note]; Citibank, N.A. v Cabrera, 130 AD3d 861 [2d Dept 2015] [breach of home equity loan contract]. This may not be a simple task. However, this does not relieve a plaintiff of its evidentiary burden because ultimately the electronically maintained record embodies the necessary evidence to prove the cause of action.

The foregoing case law regarding the admission of financial records must apply likewise in the context of an action by a purchaser of future receivables. This Court has been the forum for numerous motions by financial entities which engage in such purchases. Said entities, also known as factoring companies, purchase future receivables at what would constitute a high interest rate, if the transaction were a loan. Concededly said financial transactions are controversial. In many instances a merchant who executed a contract to sell future receivables defaults on payments, and litigation then ensues. The merchant regrets having entered into the transaction due to the onerous terms. In the litigation, the merchant will then claim that the transaction amounted to a usurious loan which he or she was fraudulently induced to enter into, [*6]as opposed to a legitimate purchase of receivables. There is sufficient case law concerning how to resolve the issue (e.g., Principis Capital, LLC v I Do, Inc., 201 AD3d 752 [2d Dept 2022]; LG Funding, LLC v United Senior Properties of Olathe, LLC, 181 AD3d 664 [2d Dept 2020]; Blue Wolf Capital Fund II, L.P. v American Stevedoring, Inc., 105 AD3d 178 [1st Dept 2013]). It is not for this Court at this moment to decide whether the instant transaction was a loan or a purchase. That issue is premature where, as here, Plaintiff financial entity has not met the evidentiary threshold on its summary judgment motion to establish that there was a default and that a certain sum of money is still owed on the part of the merchant.

Here, Ms. Maxwell failed to lay a foundation for records purportedly reflecting Defendant Zilco's payment history and default (see CPLR 4518[a]; U.S. Bank N.A, 176 AD3d 1010; Federal Natl. Mtge. Assn. v Marlin, 168 AD3d 679 [2d Dept 2019]). Her affidavit statements regarding the records constitute inadmissible hearsay (see U.S. Bank N.A., 208 AD3d 1275). Even if she reviewed records maintained in the normal course of business, that did not vest her with personal knowledge; it is the records themselves which needed to be properly placed in evidence to prove the financial details (see U.S. Bank N.A. v Ramanababu, 202 AD3d 1139 [2d Dept 2022]; Deutsche Bank Trust Co. Ams. v Miller, 198 AD3d 867; JPMorgan Chase Bank, N.A. v Grennan, 175 AD3d 1513 2d Dept 2019].

Since Plaintiff's motion for summary judgment was based on evidence that was not in admissible form, this Court finds that Plaintiff failed to establish its prima facie entitlement to judgment as a matter of law. Plaintiff failed to demonstrate that there are no material issues of fact as to a default and, if so, how much it is owed. There remain triable issues of fact. The sufficiency of Defendants' papers is academic.

Accordingly, it is hereby ORDERED that Plaintiff's motion for summary judgment is DENIED.