MEMORANDUM DECISION and ORDER I. INTRODUCTION AND BACKGROUND On February 12, 2020, plaintiff Tailored Fund Cap LLC (“Tailored Fund” or “plaintiff”) entered into a Merchant Agreement (“Merchant Agreement”) with defendants RWDY, Inc. (“RWDY” or “the debtor defendant”); Rackback Services LLC; Tripping LLC, Tripping; Spud Systems LLC; Completion Tech, LLC; Zipper Completion LLC; Multi-Well, LLC; and Pusher, LLC. Dkt. 1-1 (“Compl.”), 4. The founder of those companies, defendant Brian Thomas Owen (“Owen” or the “individual defendant”, together “defendants”), also agreed to guarantee that his companies would abide by the Merchant Agreement.1 Id. 6. According to that agreement, defendants received a purchase price of $5,000,000.00 from plaintiff. Dkt. 8-2, p. 1. In exchange, plaintiff was permitted to withdraw $7,495,000.00 from defendants’ accounts receivable in weekly installments of $315,000.00. Id. But as might be gleaned by Tailored Fund filing suit, the Merchant Agreement did not go according to plan. Instead, defendants only paid $637,800.00 of the fees they owed, leaving $6,857,200.00 on the balance and $2,550.00 in fees unpaid, amounting to a total debt of $6,859,750.00, not including interest. Compl.
9, 12. Despite plaintiff’s demands for payment, no more funds have been paid. Id. 10. Apparently skeptical of its chances of recovering what it was owed under the Merchant Agreement through any other means, Tailored Fund filed a complaint in New York State Supreme Court, Ontario County (the “state court”) on March 17, 2020. Compl. pp. 4, 9. Plaintiff alleged four causes of action: (1) breach of the Merchant Agreement against RWDY; (2) personal guarantee against Owen; (3) unjust enrichment against all defendants; and (4) conversion against all defendants. Id. at 6-8. Only two days later, the parties signed a stipulation of settlement, laying out a payment plan they all hoped defendants would be able to follow. Dkt. 8-3, 2. But anticipating the potential for that hope to come up empty, the stipulation of settlement also included provisions allowing Tailored Fund to move for default judgment under N.Y. C.P.L.R. §3215(i)2 (“§3215(i)”) should defendants again fail to keep the payment schedule. Id. 9. In the same vein, in agreeing to the settlement defendants acknowledged that “they will have no right to cure any [future] missed payments….” Id. 8. According to Tailored Fund, the repayment began smoothly enough, with defendants making the first three weekly payments of $16,666 per week. Dkt. 8-4, 14. But when the time came to increase the weekly payments to $315,000, plaintiff alleges defendants again bogged proceedings down by making off-schedule payments of less than the amount due. Id.
