GCM Prime, LLC v. MM Dynamic of NY, Inc.
2024 NY Slip Op 51678(U)
| N.Y. Sup. Albany | 2024Background
- GCM Prime, LLC ("GCM") and MM Dynamic of NY, Inc. ("Dynamic") entered into a Forward Revenue Purchase Agreement (FRPA) in September 2023, where Dynamic sold $80,250 in future receivables to GCM for $60,000.
- Guarantees were provided by additional defendants, and GCM received a security interest in all defendants’ assets.
- Dynamic defaulted by halting required payments, failing to provide financial information, and ceasing communication with GCM.
- GCM declared a default, demanded payment of the remaining balance, and filed suit for breach of contract, breach of guaranty, foreclosure of security interest, unjust enrichment, conversion, and replevin.
- GCM moved for summary judgment prior to discovery; defendants opposed and sought a stay pending an Attorney General proceeding (Yellowstone), and argued for more discovery.
- Defendants asserted the FRPA was a disguised usurious loan, not a true sale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to Summary Judgment | GCM showed contract, defaults, damages, and longstanding payment defaults | Discovery needed; GCM’s damages and calculations unclear | GCM established prima facie case; summary judgment granted |
| Nature of the Transaction (Sale vs. Loan) | FRPA is a true sale of receivables, not a loan; terms allow reconciliation and indefinite term | FRPA is a disguised usurious loan; rigid payment structure is loan-like | FRPA is a sale, not a loan; usury defense fails |
| Stay for Related Proceedings | Yellowstone proceeding unrelated to GCM’s claims, no basis for stay | Similarity to Yellowstone (predatory lending) warrants stay | Stay denied; no exceptional circumstances shown |
| Need for Further Discovery | All necessary evidence provided; defendants failed to raise material issues | Essential facts remain to be discovered | No sufficient evidentiary basis for further discovery; request denied |
Key Cases Cited
- Alvarez v. Prospect Hosp., 68 N.Y.2d 320 (movant must establish prima facie entitlement to summary judgment)
- Zuckerman v. City of New York, 49 N.Y.2d 557 (burden shifts to opponent once prima facie case is shown)
- Adirondack Classic Design, Inc. v. Farrell, 182 A.D.3d 809 (elements of breach of contract claim)
- Urstadt Biddle Props., Inc. v. Excelsior Realty Corp., 65 A.D.3d 1135 (requisite for recovery under unconditional guaranty)
- Vega v. Restani Constr. Corp., 18 N.Y.3d 499 (summary judgment evidence viewed most favorably to opponent)
- Principis Capital, LLC v. I Do, Inc., 201 A.D.3d 752 (merchant cash advance is sale, not loan, under similar facts)