Before the Court is the motion, submitted by Defendants, Pro Builders Supplies, Inc. D/B/A/ Pro Builder's, Pro Builders Supplies Inc., and Joshua James Emigh ("Defendants"), to dismiss the complaint based on lack of standing and for sanctions against various parties. Also before the Court is the motion of Plaintiff, Black Olive Capital, LLC's ("BOC" or "Plaintiff"), for leave to serve an amended complaint. The Court has read and considered the following [*2]NYSCEF documents in deciding the motion.^[FN1]

On January 8, 2024, Pro Builders Supplies, Inc. D/B/A Pro Builders Supplies; ("Merchant") entered into a Revenue Purchase Agreement ("RPA") with Plaintiff on behalf of the named companies.^[FN2] Joshua James Emigh also personally signed the agreement as guarantor of the contract. Per the terms of the RPA, Merchant sold $148,500.00 of its future receivables to BOC for $110,000.00. Merchant agreed to make weekly payments to BOC in the amount of $2,652.00 until the $148,500.00 was paid. The weekly payment was set at 9% of Merchant's weekly receivables. According to Plaintiff, on January 8, 2024, $104,751.00 ($110,000.00 less applicable fees) was transferred to Merchant's bank account in accordance with the Agreement (NYSCEF 17 ¶ 9; NYSCEF 24).

This action was commenced by way of a Summons and Complaint filed on May 13, 2024. (NYSCEF 1). Plaintiff alleged that Defendants breached the RPA after remitting $42,963.00 of the amount owed, leaving a balance of $105,537.00. Plaintiff also alleged that Defendants owed $70.00 for NSF fees, $2,500.00 in default fees, and $26,384.25 in attorneys' fees, for a total of $134,491.25 plus interest costs and disbursements. (Id. ¶¶ 11, 14). Defendants filed an Answer with nine affirmative defenses on June 12, 2024. (NYSCEF 4).

On July 11, 2024, Plaintiff moved for summary judgment pursuant to CPLR § 3212 on the claims of breach of contract and the personal guarantee. The motion was denied by Decision and Order entered October 29, 2024.

On November 25, 2024, Defendants brought a motion by Order to Show Cause seeking (1) dismissal of the complaint based upon lack of standing; (2) an order for counsel to Plaintiff to upload its notarization records; (3) an award of legal fees to Defendants; (4) sanctions against [*3]Plaintiff and various individuals for failure to disclose an Assignment Agreement; and (5) sanctions against Plaintiff's counsel, Ariel Bouskila, Esq., for his alleged fraudulent notarization.

On January 15, 2025, Plaintiff filed a motion seeking leave to serve an amended complaint ("Amended Complaint"). The motions are addressed in turn below.

Defendants submit that Plaintiff lacks standing in this action based upon their failure to disclose that Black Olive Capital LLC assigned all its revenue purchase agreements to Kalamata Capital Group LLC ("Kalamata") pursuant to an assignment agreement dated April 1, 2022 ("Assignment Agreement"). BOC is an affiliate of Kalamata. Mr. Brandon Laks is the manager of BOC and the Co-President of Kalamata. Berkovitch & Bouskila is a New York based law firm that represented Plaintiff in this matter at the time of commencement by Ariel Bouskila, Esq. Defendants aver that in a similar action before another justice of this Court, Black Olive Capital LLC v Denise Renee Lozano, Index No. 030007/2024, (the "Lozano Action"), it was established that BOC has a blanket assignment agreement with Kalamata in which all revenue purchase agreements are assigned by BOC to Kalamata upon execution. Defendants aver this assignment agreement includes the RPA between BOC and the Defendants. Defendants submit that because BOC assigned the Pro Builders Agreement to Kalamata before the complaint was filed, BOC had a duty to disclose the Assignment Agreement to Defendants at the commencement of this action. According to Defendants, the chain of ownership of the underlying agreement is instrumental in establishing the standing of the proper plaintiff in a breach of contract action. Defendants aver that Berkovitch & Bouskila and Ariel Bouskila, Esq., individually, had a professional and ethical duty to upload the Assignment Agreement to NYSCEF before the summary judgment motion was decided by this Court on October 29, 2024.

In the alternative to a dismissal, Defendants seek the following relief:

An order directing BOC to amend the complaint solely to plead the Assignment Agreement and to attach the Assignment Agreement as an Exhibit to the Amended Complaint. Defendants seek permission to submit an answer to the Amended Complaint. Finally, Defendants seek permission to file a motion to dismiss this action thereafter. (NYSCEF 39 at ¶ 26).

In opposition, Plaintiff submits that the Order to Show Cause makes "a mountain out of a molehill." Plaintiff does not dispute that an Assignment Agreement exists between BOC and Kalamata, its affiliate. Nor does BOC dispute that it did not disclose the existence of that agreement until a deposition occurred in separate, unrelated matter. Plaintiff argues that neither BOC nor its counsel were obligated to disclose that agreement in this action. Finally, Plaintiff argues that the assignment's existence in a separate litigation has no effect on whether this action may proceed to trial.

Attorney Bouskila submits that neither he nor any member attorneys at his law firm knew about the Assignment Agreement when it filed this action. He submits that commencement of this action in BOC's name was appropriate and proper pursuant to New York law and CPLR § 1018.

With leave of Court, Defendants submitted a supplemental memorandum of law, with Exhibits A — U, however, the Court declines to consider it as discussed below.

The Court notes at the outset that Defendants' soporific submissions drastically violate the rules of the Supreme Court regarding word count. 22 NYCRR § 202.70 (17) (i) clearly states [*4]that leave of court is required to submit a memorandum of law that exceeds 7,000 words. The rule mandates that each submission include a separate page at the end wherein counsel certifies that the word count requirements have been met. Defendants' memorandum of law (NYSCEF 39) ("Memorandum") far exceeds the 7,000-word limit. Counsel did not seek leave to exceed the maximum word count. The submissions also lack the requisite certifications. The bulk of Defendants' 35-page Memorandum contains repetitious recitations of facts and allegations about individuals that are clearly extraneous to the limited issues raised in the motion before the Court.^[FN3] Defendants' recounting these matters in excessive detail is a resounding waste of judicial resources, as are the twenty-two exhibits annexed to the Memorandum.

Defendants' Memorandum is only surpassed by their supplemental memorandum of law (NYSCEF 90) which clocks in at walloping 68 pages (with twenty-one exhibits). That memorandum is also devoid of a word count certification. The Court generously granted leave to Defendants on December 12, 2024, to submit an "amendment" that would be "germane" to their original application. (NYSCEF 139). As a guide, reply memoranda are subject to a 4,200-word limit per Rule 202.70 (17). Again, no leave of court was sought in this instance to drastically exceed the word count limit. As a result, the Court shall not consider Defendants' supplemental memorandum of law. (See Excelsior 57th Corp. v Kotogianni, 2024 NY Slip Op 32758[U] [Sup. Ct. NY Co 2024]).

While the Court, in its discretion, considered the entire Memorandum despite the multiple rule violations, astonishingly, the purported memorandum of "law" contains virtually no citations or legal authority to support the dismissal of the complaint due to lack of standing. Citing absolutely no statute, precedent or other law, Defendants argue that Plaintiff's alleged intentional decision not to disclose the Assignment Agreement in this action was designed to injure Defendants by denying them the information necessary to assert a valid defense and a motion to dismiss. Defendants do not challenge the substantive validity of the Assignment Agreement. Rather, they ground their arguments not on the law, but upon the alleged nefarious motives of the named individuals. Defendants have failed to establish any actual prejudice or harm. No support is proffered to demonstrate how the failure to disclose the Assignment Agreement impaired Defendants' rights or would have changed the outcome of the summary judgment motion, which was decided in Defendants' favor.

Plaintiffs aver that the issue of standing here turns on the application of CPLR § 1018 — Substitution upon Transfer of Interest, which states:

Upon any transfer of interest, the action may be continued by or against the original parties unless the court directs the person to whom the interest is transferred be substituted or joined in the action.

Plaintiff contends that at all relevant times BOC had and maintains standing in this action pursuant to CPLR § 1018 despite the assignment having been effected prior to commencement. This provision generally applies to assignments post-commencement. (See e.g. Wells Fargo [*5]Bank, N.A. v. Hudson, 98 AD3d 576, 577 [2d Dept 2012]). However, "'[i]t is well settled that an amendment which would shift a claim from a party without standing to another party who could have asserted that claim in the first instance is proper since such an amendment, by its nature, does not result in surprise or prejudice to the defendants who had prior knowledge of the claim and an opportunity to prepare a proper defense.'" JCD Farms v. Juul-Nielsen, 300 AD2d 446 [2d Dept 2002] [internal citations omitted]). Where a party does not challenge the substantive validity of the assignment or the assignee's right to continue in the action dismissal is not warranted. See Cent. Fed. Sav., F.S.B v. 405 W. 45th St., Inc., 242 AD2d 512 [1st Dept 1997]). Defendants contend that Kalamata was the party in interest on the date of commencement and therefore is the proper plaintiff. They have failed to adequately establish any surprise or actual prejudice that would result from the substitution of Kalamata as plaintiff.

Notwithstanding the above, the application for dismissal based upon lack of standing is moot as both parties consent to the substitution of Kalamata Capital Group Capital Group, LLC for Black Olive Capital, LLC as plaintiff herein and to adding the Assignment Agreement.

The Court shall order the amendment as set forth below.

Defendants move the Court for a laundry list of sanctions against Plaintiff, its manager, and its former attorney, pursuant to NYCRR § 130-1 for acts in this proceeding as well as in 63 actions before other courts (including the Lozano Action).

Plaintiff submits that Defendants' application is fraught with hyperbolic accusations of fraud and attacks on BOC's principal and attorneys. Plaintiff points out that the application encompasses numerous acts and court actions outside of, and unrelated to, the instant matter. Plaintiff argues that the total amount of sanctions sought are far above the maximum permitted by law.

First, Defendants seek sanctions against Ariel Bouskila, Esq. for acting as an electronic notary without the proper license on multiple occasions involving the signature of BOC's manager, Brandon Laks. Uploading the relevant documents to NYSCEF, Defendants claim, is a violation of New York's Public Notary Law and New York Penal Law.

At the outset, Defendants' pettifogging about claims of improper notarization here and in other unrelated actions, and other alleged improper acts of counsel, are misplaced. This is not an attorney disciplinary proceeding. There are proper forums to raise those issues. This is not the appropriate forum. Clearly, this Court has no jurisdiction to enforce the Penal Law. The Court agrees with Plaintiff's request that Defendants be admonished to refrain from brazen accusations of criminality against Mr. Laks, Mr. Bouskila and any other individuals. Such issues are not within the jurisdiction of this Court and will be disregarded.

The use and protocols for electronic notarization in New York is found in NY Exec. Law § 135-c, (effective January 31, 2023). Under this statute, to perform an electronic notarization act in New York, among other requirements, the notary public must be located in New York State at the time of the notarization, while the principal is not required to be located within the state. The notary must identify the signer as prescribed in the statute, including having personal knowledge of the identity of the principal or identification through the use of credential analysis. After the principal electronically signs the document, the notary must affix their electronic signature and electronic notary stamp to the document. The notary's signature must be on file [*6]with the Secretary of State in the county clerk's office in which the notary is registered. Id.

Brandon Laks affirms that until December 2024 when Mr. Bouskila shared with him the requirement for separate electronic notary registration, he was unfamiliar with New York protocols for electronic notarization. Mr. Bouskila is licensed as a traditional notary public in New York State. (NYSCEF 50). He acknowledges that at the time of commencement of this action, he was not compliant with NYS electronic notary law requirements. Mr. Bouskila affirms that he was employing an outdated methodology sanctioned during the pandemic lockdown to notarize remotely. Mr. Bouskila affirms that he coordinated for the remote notarization via a video-conferencing service to "virtually notarize" Mr. Laks's signature on the complaint. Given his personal knowledge of Mr. Laks and familiarity with his signature, based on his years of representation, Mr. Bouskila was comfortable virtually notarizing the BOC complaint. Mr. Bouskila asserts that he cured his noncompliance by obtaining a remote notary license, issued December 2, 2024. (NYSCEF 80). Mr. Bouskila affirms that at all times, he believed that he was compliant with NY Exec. Law § 135-c.

Plaintiff submits that this Court cannot impose sanctions against Mr. Laks and Mr. Bouskila because the application was not directed to them or served on them personally. Similarly, Plaintiff argues that the Court cannot impose sanctions against Berkovitch and Bouskila, PLLC as the Order to Show Cause was served only upon Berkovitch and Bouskila, PLLC in its capacity as "Attorneys for Plaintiff." (See NYSCEF 78). Plaintiff asserts that these individuals and the law firm were not properly noticed of the application for sanctions against them and were not given an opportunity to respond.

Plaintiff also argues that the sanctions application is palpably improper because it far exceeds the statutory limitations. Defendants' application seeks more than $260,000 in sanctions and fails to acknowledge the $10,000 limit on any single occurrence of frivolous conduct per 22 N.Y.C.R.R. § 130-1.2.

The Court declines to impose sanctions upon Mr. Laks, Mr. Bouskila, or Berkovitch and Bouskila, PLLC. Pursuant to 22 NYCRR § 130-1.1(c), conduct is frivolous if (1) it is completely without merit in law and cannot be supported by reasonable argument for an extension, modification, or reversal of existing law; or (2) it is undertaken primarily to delay or prolong the resolution of this litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false. None of these requirements have been established by Defendants. Thus, the Court declines to find that Plaintiff's conduct was frivolous.

In fact, here it is Defendants' conduct that is unduly frivolous. First, they seek sanctions against parties who were not served with the application. Rule 130 "authorizes an award of costs or the imposition of sanctions in favor of 'any party or attorney' in any civil proceeding 'before the court.'" (In re Alice D., 113 AD3d 609, 612 [2d Dept 2014]) (citing 22 NYCRR § 130-1.1[a]). Service of process on a person or entity is a jurisdictional prerequisite to granting relief against that person or entity, and failure to serve the respondent mandates denial. (See Mitelman & Son Meat Processing, Inc. v Meat Packers & Butchers Supply Co., 272 AD2d 531 [2d Dept. 2000]). Where the movant did not serve the person against whom they seek relief the Court cannot grant the relief requested. (See Jenkins v Lugo, 2023 NY Misc. LEXIS 35077 [Sup. Ct. Rockland Co. Dec. 7, 2023]). Rule 130.1.1 (d) provides that sanctions may be imposed after a reasonable opportunity to be heard. Similarly, the application for sanctions against Plaintiff, its manager, and its counsel for acts in the Lozano lawsuit or any other action not before this Court is clearly frivolous and shall be denied.

Additionally, based upon Mr. Bouskila's personal acquaintance with Mr. Laks and his familiarity with his signature, the Court it is satisfied with the notary affixed to Mr. Laks's signature on the documents filed to date herein. Moreover, as set forth below, the complaint at issue will be superseded by an amended complaint that the Court expects will have an infallible notary signature affixed to the verification.

Concordantly, Defendants' request for an order directing Mr. Bouskila to upload his notarization records is denied.

Defendants seek sanctions against BOC for failing to disclose the Assignment Agreement and against Brandon Laks, Ariel Bouskila, and Berkovitch & Bouskila for allegedly aiding and abetting BOC in the purportedly intentional decision not to disclose the Assignment Agreement to this Court and to Defendants. Defendants allege that the failure to disclose the Assignment Agreement was intended to injure Defendants by denying them information necessary to assert a valid defense and/or successfully move to dismiss the complaint. Plaintiff counters that no materially false statement was made regarding the Assignment Agreement. Plaintiff argues it never hid the Assignment Agreement. Further, Plaintiff points out that it consented to amend the caption to add Kalamata as the party in interest, but Defendants would not agree. Plaintiff asserts that there is no requirement that one plead an assignment as an element of a claim, and even if there were, it would be an argument for dismissal without prejudice under CPLR § 3211(a) (7), and not a basis for sanctions.

The Court does not find that the failure to disclose the Assignment Agreement was a materially false statement, and notes again that Defendants have not challenged the validity of the Assignment Agreement. Defendants have failed to establish how failing to shift the claim from BOC to Kalamata, the party in interest on the date of commencement, has caused prejudice or has changed their defense. Again, the Court reminds Defendants that they prevailed on the summary judgment motion, in that Plaintiff's motion was denied.

For the reasons set forth above related to the application for sanctions based on Mr. Bouskila's notary license, the Court declines to impose sanctions upon Brandon Laks, Ariel Bouskila, or Berkovitch & Bouskila.

Defendants also seek an award of counsel fees but failed to submit any of the required evidence in support such as a retainer agreement or billing records. Further, the application is disingenuous as Plaintiff points out that Defendants' co-counsel, Mr. Dale, informed the Court that Defendants have not incurred any fees to his firm in this proceeding. (NYSCEF 69 p.1, n.1). Accordingly, the application for a counsel fee award is denied.

Motion Seq. # 3 seeks leave to serve an amended complaint pursuant to CPLR 3025 (b) and to amend the caption accordingly. As discussed above, both parties have consented to the filing of an amended complaint to identify Kalamata Capital Group as a party and adding the Assignment Agreement as an Exhibit. As a result, the Court shall grant the request in Motion Seq. # 3 to amend the caption. The caption shall be amended to the following:

Plaintiff also seeks leave to amend of the body of the complaint to add additional facts on which their claims are based. In opposition, Defendant, Joshua James Emigh, alleges that such relief would cause great prejudice as it would render Defendants' defenses against BOC moot. Defendants' Memorandum of Law in Opposition to Motion Seq. # 3 once again is devoid of a word count certification and far exceeds the word count limit without proper leave of Court, and therefore shall not be considered in rendering the decision on this motion.

Authority to grant leave to amend pleadings is committed to the discretion of the court. (See Selective Insurance Co. v. Northeast Fire Protection Systems, Inc., 300 AD2d 883 [3rd Dept. 2002]). Leave to amend pleadings shall be freely granted unless the amendment sought is palpably improper or insufficient as to a matter of law, or unless prejudice or surprise directly results from delay in seeking such amendment (See Arnica Mutual Ins. Co. v. Hart Alarm Systems, Inc., 144 AD2d 538 [2d Dept 1988]; Barlow v Skroupa, 76 Misc 3d 587 [Sup. Ct. NY Co. 2022]). Mere lateness in seeking to amend pleadings is not a bar to amend; it must be lateness coupled with significant prejudice to the adversary. (See Pasternak v. Arrow Exterminating Co., Inc., 2008 NY Slip Op 30300[U] [Sup. Ct. Nassau Co. 2008] citing Edenwald Contr. Co., Inc. v. City of New York, 60 NY2d 957 [1983]). Courts generally find an absence of prejudice where the amendment does not alter the theory of liability. (See Harding v. Filancia, 144 AD2d 538 [2d Dept 1988]).

The proposed Amended Complaint changes neither the theory of liability nor the acts, transactions, or occurrences alleged. The Court does not find that the Amended Complaint is palpably improper or insufficient as to a matter of law. The Court disagrees with Defendant Emigh's position that defenses will be moot as Defendants will have the opportunity to serve an answer to the Amended Complaint. Also, there shall be no prejudice to Defendants as discovery remains in the very early stages. Defendants have not alleged that any surprise would be caused by the allegations in the Amended Complaint. Defendants have gone on ad infinitum alleging Plaintiff's lack of transparency. The Amended Complaint will serve to illuminate the facts underlying the causes of action at issue which should facilitate the defense of this action. Accordingly, leave to serve the Amended Complaint is granted.

In ruling on these motions, the Court has identified a vast amount of frivolous conduct by Defendants including, but not limited to:

a. Repeatedly and blatantly ignoring the Rules of Court governing word count [*7]requirements for court submissions;

b. Duplicative applications;

c. Seeking relief and sanctions in unrelated court actions;

d. Applying for counsel fees after acknowledging that no fees were paid to counsel.

Defendants are cautioned to refrain from all such conduct going forward in this action.

All Counsel herein are directed to refrain from filing any motions or additional correspondence, addressing matters other than scheduling, to NYSCEF on this docket without first requesting a conference before this Court.

The Court has considered the remainder of the arguments and deem them to be without merit.

Accordingly, it is

ORDERED, that Defendants' motion to dismiss the complaint is DENIED; and it is further

ORDERED, that Plaintiff's motion for leave to serve the Amended Complaint is GRANTED; and it is further

ORDERED, that Plaintiff's counsel shall upload the Amended Complaint within ten days of this Decision and Order; and it is further

ORDERED, that Defendants shall have twenty days from the date the Amended Complaint is uploaded to NYSCEF to file and serve their Answer; and it is further

ORDERED, that Defendants' motion for sanctions is DENIED; and it is further

ORDERED, that Defendants' motion for counsel fees is DENIED; and it is further

ORDERED, that Defendants' motion for an order directing counsel to Plaintiff to upload its notarization records is DENIED; and it is further

ORDERED, that all counsel are directed to appear before the Court at a date and time to be scheduled by the Court via a separate notice to be uploaded to NYSCEF.

The foregoing constitutes the Decision and Order of this Court on Motion Seq. #2 and #3.