Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Colonial Funding Network, Inc. v. Mcnider Marine, LLC

United States District Court, S.D. New York

November 21, 2017

COLONIAL FUNDING NETWORK, INC., Plaintiff,
v.
MCNIDER MARINE, LLC, et al., Defendants. MCNIDER MARINE, LLC, et al., Counterclaim Plaintiffs,
v.
COMPLETE BUSINESS SOLUTIONS, INC., et al., Counterclaim Defendants.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, DISTRICT JUDGE

         Plaintiff Colonial Funding Network, Inc. (“Colonial Funding”) sued Defendants McNider Marine, LLC and Bruce McNider (the “McNider Parties”) for overdue payments on a financing transaction. The McNider Parties settled with Plaintiff, but joined fourteen counterclaim defendants, each a financial institution with whom the McNider Parties had entered into similar transactions. The McNider Parties have resolved their claims against all but six of the counterclaim defendants.

         Movants are five of the remaining counterclaim defendants -- Complete Business Solutions Group, Inc. (“CBSG”), Retail Capital, LLC (“Retail Capital”), Richmond Capital Solutions, LLC (“Richmond”), Yellowstone Capital, LLC (“Yellowstone”) and IBIS Capital Group, LLC (“IBIS”) (these five collectively, the “Counterclaim Defendants”). They move to dismiss the “Third Amended Complaint” -- which is actually the McNider Parties' third amended answer and counterclaims (the “Counterclaims”). Their motions are granted. The Counterclaims against Counterclaim Defendants are severed from the main action, which is closed, and are dismissed without prejudice.[1] For the same reasons, the Counterclaims against the sixth counterclaim defendant, Flat Fee Merchant Services, LLC (“Flat Fee”), which has not appeared in this action, are also severed and dismissed.

         The McNider Parties move to amend the caption to name themselves as “Plaintiffs” and the remaining counterclaim defendants as “Defendants.” The McNider Parties' motion is denied as moot.

         I. BACKGROUND

         The following alleged facts are taken from the Counterclaims and are accepted as true for purposes of this motion. The facts are construed, and all reasonable inferences are drawn, in favor of Plaintiff as the non-moving party. See Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir. 2016), cert. denied, 137 S.Ct. 2279 (2017).

         A. Factual History

         McNider Marine, LLC is an Alabama-based marina that sells and repairs boats. McNider and his wife, Melissa McNider, own McNider Marine, LLC.

         The Counterclaims allege that the McNider Parties “entered into a continuous series of criminally usurious loans with the [Counterclaim] Defendants and other[s] . . . beginning with Retail Capital on May 22, 2014.” The Counterclaims further allege that, “as a direct and proximate result of the financial strain resulting from this initial loan with Retail Capital, ” the McNider Parties entered into a series of similar agreements to sell a percentage of future receivables -- “factoring agreements” -- with Counterclaim Defendants and others. In total, the McNider Parties entered into no fewer than twenty-one such agreements with at least twelve different lenders over a more than two-year period. Relevant here, the agreements include three agreements with Retail Capital on May 22, 2014, September 23, 2014, and December 3, 2014; one agreement with Ibis on October 6, 2016; two agreements with Yellowstone on July 21, 2016, and October 19, 2016; and one agreement with Richmond/CBSG on November 17, 2016.

         The Counterclaims do not describe the circumstances that precipitated each agreement or that surrounded any alleged event of default. However, they allege that the McNider Parties were the victims of an unlawful “pyramid scheme, ” stating that Counterclaim Defendants “lured” them into these transactions by “sharing customer information” and “actively seeking other [lenders] to place new loans.”[2] The Counterclaims allege broadly that each counterclaim defendant falsely “held [itself] out as providing expert financial consulting services, ” representing that “McNider's business would be able to afford and comply with the terms and conditions of each transaction, ” when in fact it could not. The Counterclaims further allege that Counterclaim Defendants made “false promises” that would “help McNider's business grow, as represented and promised” when, to the contrary, they knew that “the merchant is pushed toward an unsustainable level of indebtedness.” The alleged scheme was furthered with the purported factoring agreements that falsely represented the fair market value of receivables and other terms. The result was alleged “sham” sales of receivables that in fact were usurious loans, causing the McNider Parties to suffer “indivisible injuries, ” including loss of goodwill and profits, devaluation of McNider Marine, LLC, deterioration of the McNider Parties' credit profiles and, as to McNider, mental anguish and distress.

         In addition to negligence and/or negligent misrepresentation, the Counterclaims allege violations of Alabama law against Counterclaim Defendants; breach of contract against Retail Capital and Yellowstone; and violations of New York law against Yellowstone.

         B. Procedural History

         Colonial Funding initiated this action against the McNider Parties on or around March 20, 2017, in the Supreme Court of the State of New York. The Complaint alleged various breach of contract claims arising out of an agreement whereby Plaintiff allegedly purchased $351, 000.00 of McNider Marine's future receivables for $260, 000.00. The McNider Parties filed a Notice of Removal on April 12, 2017.

         On April 17, 2017, the McNider Parties filed the Answer and Counterclaims, asserting claims against fourteen counterclaim defendants, including the six remaining counterclaim defendants. The McNider Parties filed the Amended Answer and Counterclaims on April 26, 2017, the Second Amended Answer and Counterclaims on May 22, 2017, and the operative pleading at issue here, styled as the “Third Amended Complaint, ” on June 27, 2017. On the same day that the McNider Parties filed the purported “Third Amended Complaint” -- i.e., their third amended answer and counterclaims -- the parties filed a Stipulation of Discontinuance, resolving the underlying dispute between Plaintiff and the McNider Parties. The ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.