Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on September 16, 2026

2024-08949, (Index No. 523958/22)

Cheryl E. Chambers, J.P.

Paul Wooten

Lillian Wan

Phillip Hom, JJ.

[*1]

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the defendants appeal from an order of the Supreme Court, Kings County (Robin K. Sheares, J.), dated April 18, 2024. The order denied the defendants' motion, among other things, to vacate a clerk's judgment of the same court entered May 24, 2023, upon their failure to comply with a stipulation of settlement dated August 22, 2022, which is in favor of the plaintiff and against the defendants in the total sum of $2,419,778.17.

ORDERED that the order is affirmed, with costs.

In 2022, the plaintiff, a New Jersey corporation, and the defendants, Build Retail, Inc., and James Wesley Cashwell, both based in North Carolina, entered into three separate written merchant agreements whereby the plaintiff purchased from the defendants a portion of their future receivables for a discounted price. The defendants thereafter defaulted on their obligations under these agreements, and the parties executed a stipulation of settlement to resolve the plaintiff's breach of contract claims. The stipulation of settlement, inter alia, set forth a repayment schedule for the defendants and provided that, if the defendants failed to make timely payments in accordance with this schedule, a judgment would be entered against them for the remaining balance without further notice or application to the court.

The defendants failed to make any payments required by the stipulation of settlement, and thereafter, a clerk's judgment was entered against them in the total sum of $2,419,778.17. The defendants moved, inter alia, to vacate the stipulation of settlement and the clerk's judgment. In an order dated April 18, 2024, the Supreme Court denied the motion. The defendants appeal.

"CPLR 2001 permits the court, at any stage in an action, to permit a mistake, omission, defect, or irregularity to be corrected upon terms as may be just, or, if a substantial right of a party is not prejudiced, the mistake, omission, defect, or irregularity shall be disregarded" (Matter of Britton v Milio Cousins, Inc., 237 AD3d 693, 693). CPLR 5019(a) similarly provides that "[a] judgment . . . shall not be stayed, impaired or affected by any mistake, defect or irregularity in the papers or procedures in the action not affecting a substantial right of a party."

Here, the caption of the clerk's judgment incorrectly identified the plaintiff as "Blade Funding LLC," rather than its legal name of "Blade Funding Corp." The defendants, however, failed demonstrate any prejudice as a result of this mistake. Therefore, contrary to the defendants' contention, the Supreme Court providently exercised its discretion in disregarding the mistake (see id. §§ 2001, 5019[a]; Matter of Britton v Milio Cousins, Inc., 237 AD3d at 693; see also Glanz v Parkway Kosher Caterers, 176 AD3d 686, 687).

General Obligations Law § 5-1402 provides that any person may maintain an action against a foreign corporation or nonresident when the action relates, inter alia, to any contract "for which a choice of New York law has been made"; the contract arises out of "a transaction covering in the aggregate, not less than one million dollars"; and the contract contains a provision "whereby such foreign corporation or non-resident agrees to submit to the jurisdiction of the courts of this state" (id. § 15-1402[1]).

Contrary to the defendants' contention, General Obligations Law § 5-1402 applied to the agreements at issue, as the agreements provided that the parties submitted to the jurisdiction of the courts of New York State, the agreements would be governed by New York State law, and the agreements related to transactions covering more than $1 million. The Supreme Court, therefore, had subject matter jurisdiction over the action.

"Stipulations of settlement are favored by the courts and not lightly cast aside" (Hallock v State of New York, 64 NY2d 224, 230). "The party seeking to vacate or set aside a stipulation of settlement has the burden of establishing good cause sufficient to invalidate a contract, such as that the stipulation was the result of duress, fraud, or overreaching, or that the terms of the stipulation were unconscionable, in order to be relieved from the consequences of the stipulation" (Carbone v ISS Facility Servs., Inc., 241 AD3d 489, 490 [internal quotation marks omitted]).

Here, the defendants failed to establish that the stipulation of settlement was the result of fraud. The record demonstrates that the plaintiff did not misrepresent the nature of the agreement or the purpose of filing an action by summons with notice. Furthermore, the record demonstrates that the defendants were represented by an attorney during negotiation of the stipulation of settlement and that their attorney reviewed the stipulation of settlement.

Finally, the defendants failed to demonstrate that the agreements were usurious. "The rudimentary element of usury is the existence of a loan or forbearance of money, and where there is no loan, there can be no usury, however unconscionable the contract may be" (True Bus. Funding, LLC v Guerrero A Constr. Corp., 239 AD3d 787, 788 [alteration and internal quotation marks omitted]; see Crystal Springs Capital, Inc. v Big Thicket Coin, LLC, 220 AD3d 745, 746). "To determine whether a transaction constitutes a usurious loan: The court must examine whether the plaintiff is absolutely entitled to repayment under all circumstances. Unless a principal sum advanced is repayable absolutely, the transaction is not a loan" (True Bus. Funding, LLC v Guerrero A Constr. Corp., 239 AD3d at 788 [internal quotation marks omitted]). "Courts generally weigh three factors when determining whether repayment is absolute or contingent: (1) whether there is a reconciliation provision in the agreement; (2) whether the agreement has a finite term; and (3) whether there is any recourse should the merchant declare bankruptcy" (id. [internal quotation marks omitted]).

Here, the record demonstrates that the agreements contained a clause that provided the defendants reconciliation to adjust payments upward or downward in response to fluctuations in their weekly receipts and that the agreements had an indefinite term. Furthermore, the agreements did not include bankruptcy as an "event of default" and provided, in effect, that the defendants would not be liable for repayment of any outstanding amounts in the event of bankruptcy. Taken together, these factors demonstrated that the transactions at issue were purchases of future receivables and not criminally usurious loans (see id.).

Accordingly, the Supreme Court properly denied the defendants' motion, inter alia, to vacate the clerk's judgment.

The defendants' remaining contentions are either without merit or improperly raised for the first time on appeal.

CHAMBERS, J.P., WOOTEN, WAN and HOM, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court