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Successful Reversal Supreme Court’s Denial of Summary Judgment in $1.5 Million Dollar Dispute by Applying Principles of Comity: Judgment in Client's Favor for One Million Dollars

Taylor Bldg. Mgt., Inc. v Priority Payment Sys., LLC
(Appellate Division, Second Department, 1/24/2012)

In Taylor Building Management, Inc. v. Priority Payment Systems, LLC, we vindicated the basic principles of comity and got reversed the Supreme Court's denial of summary judgment for its client in a $1.5 million dollar dispute regarding credit card processing services.

Taylor Building Management ("Taylor"), and Priority Payment Systems ("Priority") entered into an agreement whereby Priority would provide credit card services to Taylor and would open a reserve funds account which Priority would use to cover potential chargebacks to Taylor's accounts. Taylor asserted that Priority was retaining an excessive percentage of the fees from the reserve account and the parties thereafter terminated the contract and entered into settlement negotiations. Before the parties reached a settlement, however, Priority assigned all of its rights and obligations under the contract to Global Payments Direct, Inc. ("Global"). Taylor then sued both Priority and Global to recover damages for breach of contract.

Taylor subsequently brought a motion for summary judgment, arguing that it was entitled to payment under the contract as a matter of law. In its opposition papers, Priority alleged that genuine issues of material fact existed because of a lawsuit currently pending in Georgia state court against Taylor. In the Georgia suit, Global sued Taylor's alter-ego entity, Woogo NY, LLP ("Woogo"), alleging that Global was entitled to damages because Woogo had committed fraud in transactions between the two companies. In the New York case, Priority claimed that Taylor was not entitled to summary judgment because Global would be entitled to retain the funds to off-set the Georgia transactions if Taylor was found liable in the Georgia case. The Supreme Court found that Priority's brief in opposition raised triable issues of fact and therefore declined to grant summary judgment.

Principles of comity dictate that one state court should respect another state court's ability to adjudicate competently the matters before it. Likewise, basic notions of fairness dictate that a party should not be bound prematurely by a judgment by one state court on the basis of allegations against it in a proceeding pending in another state court.

Therefore, the Appellate Division, Second Department, reversed the Supreme Court's ruling that plaintiff's summary judgment motion was premature and granted summary judgment in favor of Taylor. In so doing, the Court found that "until Taylor is found liable to Global and a judgment is entered in Global's favor, any claim by Global that it is entitled to retain the funds contained in the reserve is speculative." Moreover, the Court found that because Priority's opposition papers focused only on a fraud case pending before a court in another state, Priority had failed to dispute any of the allegations that Taylor had raised in its complaint, and Taylor was therefore entitled to judgment as a matter of law.  Link to Full Text of Decision


Taylor Bldg. Mgt., Inc. v Priority Payment Sys., LLC

(New York State Supreme Court, Suffolk County – Commercial Division, 5/22/2012)


Following our successful appeal to the Appellate Division, Second Department, see below, Taylor Building Management ("Taylor") moved for an order for the entry of judgment for the approximately $1.5 million in dispute. In opposition, defendant Priority Payment Systems, LLC ("Priority") characterized Taylor's motion as a motion for summary judgment in the issue of damages, and contended that several issues of fact existed that precluded such relief. Priority asserted that Taylor had breached the Merchant Agreement between the parties, and accordingly, that it was entitled to an offset in damages; further, Priority argued that it should be able to offset the damages for its legal fees and investigation costs. Itkowitz argued that these arguments had never been raised previously in this action and were thus precluded; further, because Priority had failed to raise such issues in a counterclaim, it had waived them. The Supreme Court agreed and held that because Priority had not asserted any counterclaims for such offsets, it was prohibited from asserting them now. Therefore, the Supreme Court granted Plaintiff's motion for entry of judgment for approximately $1.5 million. Link to Full Text of Decision

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