### Citilink Motors, LLC v Joel K. Holding Co, LLC 2024 NY Slip Op 32560(U) July 25, 2024 Supreme Court, Kings County Docket Number: Index No. 510636/2024 Judge: LeonRuchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op30001(U), are republished from various New York State and local governmentsources, including the New

York State Unified Court System's eCourtsService. This opinion is uncorrected and not selected for official publication.

### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

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### SUPREME CO.ORT 

### OF THE STATE ·op

### NEW

## ·yoRK C_OUNTY OF KINGS : CIVIL TERM:. COMMERCIAL 8



## .----------.---.----.-----.--.-·-.-.-.-------x .CITILINKMOTORS, 

## LLC

**~**

## _MR. SAMUEL

# M. HECHT, Plaintiff,

- against
- JOEL K-. HOLD.ING

## co, LLC & MR. YOEL: 

### KLEIN, 

## Defendant~ -·-·-.--------- ·--·-·-·---.-·------.·--- ·.---------x PRESENT: HON. LEON RUCHELSMAN 

### Decision_.and qrder Iridex

### ~o. 5l0636/2b24 

### July.25, 20.24 Motion seq..#1 & 

### #2 The 

### plaintiffhas 

### mov~d pursuant 

### to CPLR §3213 seeking 

### s-ummary judgement 

### in lieu b"f 

### a complain;t. 

### 'l'he. defe_ndants hav:e 

### cross-moved seeking to dismiss the- 

### action on the 

### gr.ounds, there
was improper service and als.o see.ksummary judgement dismissing the 

### action.. The.motions 

### have be~n:OPPO:SE;!d 

### respect..ively. 

### Papers were-submitted 

### bythe 

### parties 

### and.arguments held. 

### .AJter reviewing-o-f 

### all the arguments, this court

### now tnak,e·s the following deteri:ni.riat~on-~- on

### NovembE;ir 29, .2017, the d~:i:endant Yoel Klei.n as borrower 

### executed a p,romissqry

### nQte ta.

### tti.e plaintiff in the 

### amount of $·707,000. ·The de.fendant 

### Yael Klei.n

### gua.;r:anteed the debt 

### ih

### his individual capacity. Tl.1.e def1;;ndant 

### has hot

## made any

## payments pursuant to 

### the.note 

### and guaranty. on.Janua.ry· 5, 2.018, the d_efendant

### Yo·e1 Klein. as bOrrowe-r exe_cutE!_d a promissory note to the plaintiff in the amount of $275,000. 

### The defei1dant Yoel Klein -guaranteed the debt 

### in his



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

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### individual capacity. The defend.ant has not made any payments pursuant to the note and guaranty. on February 2, 2018, the defendant Yael Klein as borrower executed a promissory note to the plaintiff in the amount of $342,500. The defendantYciel Klein guaranteedthe debt in his individual capacity. The defendant has not made anypayments pursuant to the note and guaranty. The plaintiff now moves seeking summaryjudgement concerning the f1rst note including interest inthe amountof $1,998, O 

### 74,

. . . 

### the second note including interest in the amount of $772,334.63 and the third note including interest in the amount of $979•,669.07 

### plus interest until judgement is entered. The defendants, as noted, have cross-movedarguing they were never served withprocess.
Conclusions ofLaw It is well s.ettled that the ,statutory framework for 

### service of process is to fairly notifythe defendant of an impending action andprovide the defendant with the tnechanisms necessary to ad,equately respond (Valz v. 

### SheepsheadBay Bungalow Corporation., 

### 249 NY 122 

### 163 NE 124 [1928]). 

### Moreover, service 

### of process is also an exercise ofthe court's power ..

### and authority over litigants and thu$, such service of proces-s infuses.the 2



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

3 of 10 litigation with court sanctionedlegitimacy (McDonald v. Ames Supply Co.r 22 NY2d 111, 291 NYS2d 32·8 [1968]). It is forthese
reasons that simple notice is insufficient to confer jurisdiction
over a defendant (BankersTrust Company of California, N. A. v. Tsoukas, 303 AD2d 343, 756 NYS2d 92 [2dDept., 2003]). Likewise, the failure to abide by any of the necessary requirements for the lawful service of

### a summons and complaint will result in the failure to confer jurisdiction (Persaud v. Teanech Nursing Center, Inc., 290 AD2d 350, 736 NYS2d 367 [Pt Dept., 2002]) . Pursuant to CPLR§311..:..a service upon a company such as the defendant in t11is case can only be made "to any otherperson designated

### by the limited liability company to receive process, in the manner provided by law for service of a summons as if such person was a defendant" (id). Generally a process server's affidavit provides pd.ma facie ev:idence of proper serv.i,ce (HouseholdFinance Realty Corp., ofNew York v. Brown, 13 AD3d 340, 785 NYS2d 742: [2d Dept., 2004]). To contend that service was improper and that defendant is entitled to a hearing onthe matter, the defendant must allege facts 

### to support the contention (Mortgage Electronic: Registration Systems, Inc.., v. Schotter, 50 AD3'd 983, 857 NYS2d 592 [2d Dept., 2008, Hannover Insurance Company

## v. Gannon Express Corp., 1 AD3d 358, 766 NYS2d 

### 853 [2d Dept. , 2003]) .



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

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### The affidavit;of th~pro_cess. .serve-r, JohnAth-an:a:3atos, states that on April 1.6, 2024, at the defendant's home 

### a woman 

### stated she 

### knew of the corporation.and 

### .also kr:iew tli.e defendan·t Y6el 

### Kleiri 

### ·(see, Affidavit of 

### Service [NYSCEF Doc. Mo. 1-5)). 

### This 

### woman was Molly 

### Klein, the wife 

### of Yael 

### Klein and 

### she accepted service 

### onbehalf 

### of both 

### defendants. In 

### Ciaforie

### v.. Queens Center for Rehabilitation and Residential Healthcare, .12_6 

### AD3d 662, 

### 5 NYS3d 

### 462 [2d D_ep.t., 2015] 

### the 

### co.v.rt he-1.d 

### tha.t "jurisdiction was not obtained by 

### the allegecfdelivery of the
summons and complaint·to an 

### etnplo_yee at 

### ·the facili_ty's -s!;!!c;;urity deskbecause it is a lirnited liability 

### .c.ompan_y, and its f:our 

### individual members 

### are the only

### p.e.rsons authorized 

### to accept :.serv-ice on: 

### l.ts behalf.'; (.:Ld).• Thus, se'rvice 

### c:an11ot

## pe e.ffe¢tuated 

### pursuant to CPLR 

### §311-a by 

### delivery to s.omeon.e of suitabJ.e c1ge .i3.nd 

### cl.iscretionpursuant to CPLR §308

### (2). Therefore, the_ motion 

### seeking to dismiss 

### the defendant-.Joel K. 

### Holding Cq.., 

### LLC. is 9ranted. Turning 

### to the 

### defendant Yoe·1 .Klein, 

### he 

### was s_erved in his 

### individual 

### ca:pac-ity pursui:l.nt to C.PLR S3·08(2).•.. 

### The·re: 

### is

## ·no bas-is to. challenge the service effectuated 

### on hi_s wife. 

### as someone

### with suitabie age and 

### discretion. The 

### ni.etr·e denial 

### of receipt, 

### w-i"thout mo-re;- is.

### insuf·fici:en.t to, 

### rebut 

### thepresumption 

### of proper service created by 

### a statutorily sufficient affidavit 

### of service (Indymac 4



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

5 of 10 Federal Bank 

### FSBv. Ouattrochi; 

### 99 AD3d 

### 763, 952 NYS2d 239 [2d Dept., 2012]). Therefore, there isno pp.s·is to contendthat service upon Yael Klein was improper andno evidence hasbeen pre~ented that
even warrants a hearing. Therefore, 

## the motion seeking to dismiss the complaint as to Yoel Klein based upon service of prqcess is denied. Turning to the timeliness of the lawsuit, pursuant to CPLR §231(2) the statute of limitations for a breach of contract claim is six yea.rs. Moreover, the statuteof limitations begins to run when a causeof action accrues (CPLR §203(a)) which means "when

. . . . . . . . . all of the facts necessaryto the cause of action have occurred
so that the party would be entitled to obtain relief in court" (see, AetnaLife & CasualtyCompany v. Nelson, 67 NY2d 169, 5Ql NYS2d 313 [19861). Thus, according to the notes the payments were due on February21, 2018, April 2, '2018 and April 11, 2018. cons.equently, any lawsuit was required to be filed within six years of those dates. The lawsuit was commenced on April 15, 2024. While that date appears to be later than six years, On March 20, 2020, Governor Andrew Cuomo signedExecutive Order Z02.8, which tolled the state statute of limitatibns due to the Covid-19 pandemic (see, 9 NYCRR §8.202). The toll was extended until November 

### 3, 2020 {see, §§8.202.14, 8,202.28, 8.202.38, 

### 5



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

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### 8.202.48, H.202.55, 8.202.55.1, 8.202.60, 8.202.63, and 

### 8.202.67. Executive Order 202.72 stated the tolling of time limits established by Execμtive Order 202.8 would no longer be in effect
as of November 4, 2020) andtherefore the statute of limitations
was tolledfor 

### 228 days (see, McLaughlin v. Snow-lift Inc., 

### 214 AD3d 720, 185 NYS3d 212 [2dDept., 2023]). Considering the toll in place this action was timely commenced. Next, the defendants argue the plaintiffs do 

### not maintain any standingto pursue this action since they are not the holders of any o,f the notes. The first and third note lists David Genuth
as the payee and the secondnote lists Joseph Hecht 

### as the payee. However, Mr. Genuth assigned the right to pursue the lawsuit to 

### :the plaintiff Samuel Hecht (~, Affidavit of David Ge:tmth, 

### 'TI'TI6, 45 [NYSCEF DQc. No. 23]). Likewise; Mr. Joseph Hecht assigned the right to pursue the lawsuit to the plaintiff Samuel Hecht (see, Affidavit of Joseph Hecht, 'TI'.IT7, 41, 46 [NYSCEF Doc. No. 24]). Therefore, the plaintiffs maintain standing to pursue this action. Next, the defendant argues the notes are criminally usurious loans, Indeed, all three notes state the interest rate is 

### twenty-nine percent 

### per annum. .In

### NewYork, 

### a 

### rate of 

### interest that 

### exceeds twenty-fivepercent is criminally usurious (PL ,§190.

### 40). 

### Thus, the .loans. are 

### usur.ious; Furthermore, the 6



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

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### existence of what is commonly termed a "usury savings clauself or a 

### "usuryavqidance clause" whic::h purports to reduce :the interest statedto

### a permitted amount does not save the loan from.being usurious. In 

### Fred Schutzman Company v. Park Sloo·e Advanced Medical, PLLC, 128 AD3d 1007, 9 

### NYS3d 682 [2nd Dept., 2015]) 

### the court explained that "a clause in the subjectpromissory note purporting to reduce the rate of 

### interestto a hon-usurious rate if the rate originally imposed was foundto be usurious couldnot save the note from being usurious" (id)• Theplaintiffs presentnumerous arguments why the court should notvoid the contract. First, they assertthe parties entered 

### into a Heter 

### I.ska, a religious document utilized to circumvent the Jewish prohibitiort again.st interest bytreating all loans as partnerships orbusiness ventures (see, 

# In re Venture Mortgage Fund L.P., 245 BR 460 

### [S.D,N.Y. 2000]). Thus, they assert that in fact no loan tookplace. However, the notes clearly evidence loans and obligations pursuant to the notes. are 

### not affectedby a Heter Iska (8430985 

### Canada The., v. 

### United Realty Advisors LP, 148 

### AD3d 428 1 48 NYS3d 402 [1s~ 

### Dept., 

### 2017]). Thus, 

### a Heter 

### Iska is "merely a compliance in form with Hebraic 

### law" arid 

### does 

### not actually create 

### any partne.rship, 

### joint 

### venture, or some 

### otherprofit sha.ring agreement (~, Kirzner v. 

### Plasticwa:re LLC, 47 

### Misc3d 1209(A), 

### 16 NYS3.d 792 [Supreme Court: 

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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

8 of 10 Kings County 2015]). Therefore, there is no basis to assert the notes are hot really loans. The plaintiff next as$erts that there-is no conclusive
consensus whether criminally usurious loans are void andthe court should not declare the loans void when to do so would absolve the diefendant of paying the loans, an unjust and unconscionable result. General Obligations Law §5,...511 states that usurious contracts contained within General Obligations Law §5-501 are void. General Obligations Law 

### §5-501 governs civil usury. The voiding statute does not mention criminal usury at all. Therefore, in Sabella v. Scantek Medical Inc., 20-09 WL 3233703 [S.D.N,Y. 2009] the court held it was an "open question'' whether criminally usurious 1·oans are void. However, while that ma:y be true in the Federal Courts (see, Inre Venture Mortgage Ftirid L.P., 282 F3d 185 [2d Cir. 2002]) there is no question that contracts that contain rates that are criminally usurious are void ab initio in New York state courts. Thus, in Fareri v. Rain's International Ltd., 1'87 AD2d 481, 589 NYS2d 579 [2dDept., 1992] where a contract had an effective interest rate above twenty-fivepercent the court explicitly stated that ''the agreement is in vio.lation

## of Penal Law 190.40 andwas void ab initio" (id). In Funding Group Inc., v; Water Chef Inc.; 19 Misc3d 483, 852 NYS2d 736 [Supreme <:ourt New York

. . . . 8



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

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### County

### 2008] the court sought to distinguish 

### Fareri (supra) by essentiallyasserting that Fareri merely copied language from an earlier case that dealt with civil usury and inadvertently applied therule to Criminal usury as well. To the extent other courts impute :such explanations in attempts to soften the result of Fareri, this court is bound by itsplain language. Again, in Blue Wolf Capital Fund 

### II. L.P. 

### v.. American Stevedoring Inc., 105 

### AD3d 178, 961 

### NYS2d 86 [

### pt 

### Dept., 2Q13] the court held that a note with criminallyusurious interest was void (see, In re 

### BH SuttonMezz IIC, 2016 WL 8352445 [S.D.N.Y. 2016] essentially disagreeing with Blue Wolf (supra) and consistent with Federal

.. . 

### decisions refusedto declare the note void). Finally, in Venables

## v. Sagona, 85 

### AD3d 904, 925 

### NYS2d 578 

### [2d Dept., 2Dll] 

### the court explicitly upheld the dismissal o.f 

### a "causeof action seeking recovery 

### of principal and interestpayments pursuant to the demand note on the ground that the subjecttransaction was void and unenforceable,- (id) where the rate of interest was 

### criminally usurious (see, also, Roopchand V; 

### Mohammed, 154 AD3d 986, 62 

### NYS3d 514 [2d 

### Dept., 2017],. 

### Powercap Partners LLC v. 

### Beaux Equities LLC, 77 Misc~d 1221{A), 179 

### NYS3d 894 [Supreme court 

### New Yor:k county

### 2023], sasidharan

### v. Pivercter, 43 Misc3d 12.31,(A), 993 rYS2d 646 

### [Supreme Court Kings County 

### 2014]).

9



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### FILED: KINGS COUNTY CLERK 07/25/2024 02:28 PM INDEX NO. 510636/2024 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 07/25/2024

10 of 10 These cases are direct and binding authority that any contract that contains usurious interest rates is void. The court is constrainei;:I. to follow th(;) above precedent and is unable 

### totemper the harshne.ss

# of this result. Any efforts to amend the law and validate usurious contracts, at least conc(;)rning the principle, must be addressedto the Legislature. Therefore, the notes which contain criminallyusurious interest are unenforceable~ Cohsequently the ~laintiff's motioh s~ekihg summary judgement is denied artd the cross-motion seeking dismissal 

### of the lawsuit is granted. 

### Soordered.

DATED: July 25, 2024 Brooklyn N.Y.

10 Hoh. Leoh Ruchelsman JSC



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