Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of motion filed on July 2, 2024, under motion sequence number one, by Fenix Capital Funding, LLC (hereinafter Fenix or the plaintiff), for an order pursuant to CPLR 3212 granting plaintiff summary judgment on the claims asserted against JPS Clothing Corporation d/b/a Nacirema (hereinafter the company defendant) and James P. Smith (hereinafter the individual defendant) (hereinafter collectively the defendants) for a sum certain. The motion is opposed.

Exhibits A-F

On June 7, 2024, plaintiff commenced the instant action by filing a summons and verified complaint (hereinafter the commencement papers) with the Kings County Clerk's Office (KCCO). On June 27, 2024, the defendants jointly interposed and filed an answer with the KCCO.

The verified complaint alleges forty-nine allegations of fact in support of five causes of action. The first cause of action is for breach of contract. The second cause of action is for unjust enrichment. The third cause of action is for fraud. The fourth cause of action sounds in conversion. The fifth cause of action is for the defendants' unlawful retention of the plaintiff's collateral.

The verified complaint alleges the following salient facts, among others. On May 24, 2024, the plaintiff and the corporate defendants entered into an agreement (hereinafter the agreement) whereby the plaintiff agreed to purchase all rights to the company defendant's future receivables having an agreed-upon value of $43,500.00 for the purchase price of $30,000.00.

Pursuant to the agreement, the company defendant agreed to have one bank account approved by the plaintiff (hereinafter the bank account) from which the company defendant authorized the plaintiff to make daily ACH withdrawals until $43,500.00 was fully paid to the plaintiff. The agreement also granted the plaintiff a security interest in all of the company defendant's assets, including, without limitation, its then-existing and future receivables as they are generated in the ordinary course of business (hereinafter the collateral).

In addition, the individual defendant agreed to guarantee all amounts owed to the plaintiff by the company defendant in the event of a breach of performance by the company defendant. The plaintiff remitted the purchase price for the future receivables to the company defendant as agreed. Initially, the company defendant met its obligations under the agreement. The company defendant allegedly breached the agreement by placing a stop payment request to its bank for the ACH transfers or by closing the bank account in its entirety.

The company defendant made total payments in the amount of $1,242.84 in accordance with the agreement, leaving a balance of $42,257.16 remaining due and owing. On or before May 24, 2024, the defendants made an express misrepresentation to the plaintiff, who reasonably relied on the misrepresentation to its detriment and was damaged in an amount to be determined at trial, but in no event less than $42,257.16. Specifically, the defendants agreed to sell 11% percent of their future accounts receivable, up to an aggregate amount of $43,500.00, to the plaintiff for the purchase price of $30,000.00. The defendants further assured the plaintiff that payment would be made through daily ACH withdrawals. In reliance on the defendants' representations, the plaintiff remitted the sum of $30,000.00 to the defendants. Notwithstanding the fact that defendants received the said amounts from the plaintiff, they failed and/or refused to provide the plaintiff with their future accounts receivable as promised. At all times when the above misrepresentations were made, the defendants were aware of their falsity. The defendants engaged in a "bait and switch" scheme to commit the plaintiff to purchasing their future accounts receivable, which they never intended to provide to the plaintiff.

It is well established that summary judgment may be granted only when no triable issue of fact exists (Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]). The burden is upon the moving party to make a prima facie showing that he or she is entitled to summary judgment as a matter of law by presenting evidence in admissible form demonstrating the absence of any material issues of fact (Giuffrida v Citibank, 100 NY2d 72, 81 [2003]).

A failure to make that showing requires the denial of the summary judgment motion, regardless of the adequacy of the opposing papers (Ayotte v Gervasio, 81 NY2d 1062, 1063 [1993]). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact (Alvarez, 68 NY2d at 324).

"Pursuant to CPLR 3212 (b), a court will grant a motion for summary judgment upon a determination that the movant's papers justify holding, as a matter of law, 'that there is no defense to the cause of action or that the cause of action or defense has no merit.' Furthermore, all the evidence must be viewed in the light most favorable to the opponent of the motion" (People ex rel. Spitzer v Grasso, 50 AD3d 535, 544 [1st Dept 2008], quoting Marine Midland Bank v Dino & Artie's Automatic Transmission Co., 168 AD2d 610, 610 [2d Dept 1990]).

"The essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of its contractual obligations, and damages resulting from the breach" (R. Vig Properties, LLC v Rahimzada, 213 AD3d 871, 873 [2d Dept 2023] quoting Davydou v Youssefi, 205 AD3d 879, 880 [2d Dept 2022]; Cruz v Cruz, 213 AD3d 805, 807 [2d Dept 2023]).

"The elements of a cause of action to recover for unjust enrichment are (1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (Sarker v Das, 203 AD3d 973, 975 [2d Dept 2022], quoting Financial Assistance, Inc. v Graham, 191 AD3d 952, 956 [2d Dept 2021]).

A plaintiff's cause of action for unjust enrichment may not be maintained if a valid contract governing the subject matter exists. Under such circumstances, recovery in quasi contract for events arising out of the same subject matter are generally precluded (CSI Group, LLP v Harper, 153 AD3d 1314, 1317 [2d Dept 2017], citing EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 23 [2005], and citing Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]). Plaintiff's claim for breach of contract is undisputedly based on the subject agreement. Consequently, plaintiff may not maintain a claim for unjust enrichment.

"In an action to recover damages for fraud, the plaintiff must prove a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Atlasman v Korol, 238 AD3d 826, 829 [2d Dept 2025], quoting Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]). "A cause of action to recover damages for fraud cannot be sustained where 'the alleged misrepresentations amounted only to a misrepresentation of the intent or ability to perform under [a] contract'" (id., quoting Gorman v Fowkes, 97 AD3d 726, 727 [2d Dept 2012], and citing Michael Davis Constr., Inc. v 129 Parsonage Lane, LLC, 194 AD3d 805, 807-808 [2d Dept 2021]).

Here, the allegations of fact in the verified complaint and in the affidavit of Ryvkin demonstrate that the corporate defendant's alleged fraud was misrepresenting its intent to [*3]perform under the agreement. As a result, the plaintiff did not make a prima facie showing that the corporate defendant perpetrated a fraud against it.

Under New York law the elements of conversion are: (1) that the plaintiff has a "right to possession" of the property converted; (2) the defendant's possession of the property was unauthorized; (3) the defendant acted to exclude the rights of the lawful owner of the property; (4) the property is "specifically identifiable"; and (5) the defendant is obligated to return the property (Key Bank of New York v Grossi, 227 AD2d 841, 843 (3d Dept 1996).

For the reasons set forth below, the Court finds that the plaintiff did not make a prima facie showing of the corporate defendant's breach of the agreement. A fortiori, they do not make a prima facie showing that the corporate defendant committed conversion of the funds or collateral that were allegedly due to the plaintiff under the agreement.

Moreover, and for the same reason, the plaintiff's request for an order directing the corporate defendant to turn over the collateral securing the corporate defendant's performance of the agreement is denied as unsupported and premature.

In the case at bar, the only sworn testimony submitted by plaintiff in support of the motion was an affirmation of Maksim Leyvi, its counsel (hereinafter Leyvi) and an affidavit of Alexander Ryvkin, plaintiff's legal officer (hereinafter Ryvkin). Leyvi's affirmation contends that the facts in support of the motion are contained in the affidavit of Ryvkin.

Leyvi's affirmation demonstrates no personal knowledge of any of the transactional facts alleged in the complaint. "An attorney's affirmation that is not based upon personal knowledge is of no probative or evidentiary significance" (Nerayoff v Khorshad, 168 AD3d 866, 867 [2d Dept 2019], citing Warrington v Ryder Truck Rental, Inc., 35 AD3d 455, 456 [2d Dept 2006]).

It is noted that Ryvkin did not aver that he was a signatory to the agreement or that he participated in the execution of same. Ryvkin does aver personal knowledge of the business practices and procedures of the plaintiff. He further avers that the factual allegations proffered in support of the motion for summary judgment are derived from reviewing the plaintiff's business records. Ryvkin's affidavit is used to authenticate the agreement which was allegedly breached by the corporate defendant. Ryvkin then refers to the following documents attached to the motion, namely, the agreement, the payment ledger, the wire transfer confirmation document, and a UCC-1 financing statement.

Ryvkin refers to the payment ledger annexed as exhibit C to his affidavit, as proof of the corporate defendant's default. "A proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker's business practices and procedures" (Citibank, N.A. v Cabrera, 130 AD3d 861, 861 [2d Dept 2015]).

Generally, "the mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records" (Bank of NY Mellon v Gordon, 171 AD3d 197, 209 [2d Dept 2019] quoting Standard Textile Co. v National Equip. Rental, 80 AD2d 911, 911 [1981]). "However, such records may be admitted into evidence if the recipient can establish personal knowledge of the maker's business practices and procedures or establish that the records provided by the maker were incorporated into the recipient's own records and routinely relied upon by the recipient in its own business" (Bank of NY Mellon, 171 AD3d at 209).

The plaintiff did not annex the corporate defendant's bank records or statements from which the ACH withdrawals were made. Ryvkin attempts to admit the payment ledger without explaining the source of any of the data contained therein. Nor does Ryvkin explain how the [*4]data from the corporate defendant's bank records became part of the plaintiff's records. Nor does he allege that the corporate defendant's bank records were incorporated into the plaintiff's records and routinely relied upon by the plaintiff in its own business. In sum, there is an insufficient foundation for the admission of the payment ledger as a business record.

"[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted" (Citibank, N.A. v Potente, 210 AD3d 861, 862 [2d Dept 2022], quoting Bank of NY Mellon, 171 AD3d at 205). Accordingly, evidence of the contents of business records is admissible only where the records themselves are introduced. "Without their introduction, a witness's testimony as to the contents of the records is inadmissible hearsay" (Bank of NY Mellon, 171 AD3d at 205). The payment ledger was the sole evidence proffered of the defendant's default on the agreement. As a result, the plaintiff did not make a prima facie showing that the corporate defendant breached the agreement. Furthermore, the individual defendant's guaranty of the corporate defendant's performance of the agreement was not triggered.

Accordingly, the plaintiff's motion is denied in its entirety without regard to the sufficiency of the defendants' opposition papers (see Cugini v System Lbr. Co., 111 AD2d 114, 115 [1st Dept 1985], citing Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 852 [1985]).

The motion by plaintiff by Fenix Capital Funding for an order pursuant to CPLR 3212 granting plaintiff summary judgment on the claims asserted against JPS Clothing Corporation d/b/a Nacirema and James P. Smith is denied.

The foregoing constitutes the decision and order of this Court.