Tapp Partners, LLC v. Wall Sections Inc.; Sage Livestock LLC; and Donald K. Garrett
Attorneys and Parties
Brief Summary
Enforcement of a merchant cash advance–style revenue purchase agreement with a fixed daily remittance and a personal guaranty.
The trial court granted plaintiff summary judgment on breach of contract and on the personal guaranty.
The Appellate Division reversed the grant of summary judgment and denied plaintiff’s motion.
Defendants’ submissions, including Garrett’s affidavit, raised a triable issue of fact regarding the amount of damages, precluding summary judgment; the guaranty claim is dependent on the breach claim. The court also deemed the appeal taken from the original order under CPLR 5512(a) [permits appellate review to proceed from the proper paper where the wrong paper was noticed, if timely, nonprejudicial, and the correct order is supplied].
Background
Plaintiff advanced $40,000 (less fees) to Wall Sections Inc. and Sage Livestock LLC in exchange for 15% of future revenues until $59,960 was remitted. The agreement set a daily remittance as a good-faith estimate of plaintiff’s percentage share. Plaintiff alleged the company defendants ceased remitting the daily amount despite ongoing operations and revenue, and sought unpaid amounts plus default and other fees. Donald K. Garrett executed a personal guaranty. Plaintiff moved for summary judgment, supporting the motion with the agreement, bank records, and an affidavit from its manager.
Lower Court Decision
Supreme Court, Erie County, granted plaintiff’s motion for summary judgment on the breach of contract and personal guaranty causes of action and later issued a nonsubstantive amended order.
Appellate Division Reversal
The Appellate Division unanimously reversed on the law, deemed the appeal taken from the original order, and denied plaintiff’s motion. Defendants’ evidence created a triable issue of fact as to damages resulting from the alleged breach, and the guaranty claim depended on the breach claim, preventing summary judgment.
Legal Significance
In revenue purchase (merchant cash advance) disputes, even where liability evidence is strong, unresolved factual issues regarding damages can defeat summary judgment. Personal guaranty claims rise and fall with the underlying contract claim. Procedurally, appeals may be treated as from the correct order under CPLR 5512(a) [permits appellate review to proceed from the proper paper where the wrong paper was noticed, if timely, nonprejudicial, and the correct order is supplied].
Summary judgment is improper where defendants raise a triable issue on damages in a revenue purchase agreement; guaranty liability remains contingent on the contract claim’s success.