MCA Lawsuit: 7 Papers in the Court File and What Each One Means

The Seven Papers You Are Most Likely to Find

A lawsuit from a merchant cash advance funder rarely arrives as a single document. Instead, several documents make up the whole process. These documents are important, of course, but you don’t need to understand every single bit of legalese in them. The key is understanding the document’s function in the lawsuit. The seven papers you are most likely to find are the summons, the complaint, the affidavit of service, a motion for summary judgment in lieu of complaint, a confession of judgment, a judgment with notice of entry, and a restraining notice. Certain documents initiate the lawsuit. Others add necessary information to the lawsuit. Others are indicators of stages within the process.

Usually, the summons isn’t much more than an official notification that you have been served with a lawsuit. It lists all the parties to the lawsuit and gives the docket number for reference. It usually tells you, in plain language, that you have a limited number of days to respond to the complaint. This document is the first step. It informs you that you need to do something.

When you get a summons, the time to respond starts running. This timeframe depends on the court you are dealing with, and how the summons was served. In New York, if it is handed to you in person in the state, you usually get 20 days to respond. If it was served in some other way - such as leaving it with another person and mailing a copy to you, or serving the Secretary of State - you usually have 30 days after the service is complete. Don’t assume 30 days from the day you open the envelope. Calls to the funder to settle or settlement negotiations will not extend it.

The complaint explains why you are being sued. This document is the “meat” of the lawsuit. It tells you who is suing you. That might be your funder or an assignee. It will probably list you, your business, and any other defendants (another owner, or the principals of the business.) The defendants are the ones who need to answer the lawsuit. If the complaint is verified - that means it is signed and sworn to - then your answer has to be verified as well, with only limited exceptions. Know what it is that your funder is claiming. It may be incorrect. You need to be able to identify the amount that is claimed, then pull out your agreements and compare the numbers.

An affidavit of service is an official statement from the person who delivered the summons. It states exactly how the papers were delivered to you. The way it was delivered can affect deadlines. Do you know if you were served in a legal way? If you have some doubt, read the affidavit. Service has to be completed in 120 days after filing, unless the court extends it. Do you have any reason to think they missed the deadline? It’s important to seek legal help as soon as you can after being served.

A motion for summary judgment in lieu of a complaint is a request that the court enter judgment against you without going through all the procedures you would have otherwise. This document is basically a claim that the funder has everything it needs to skip past a trial and go straight to a judgment. When you receive this motion, look for a notice of motion. It will have a date and time for a hearing. In order to get a money judgment without a full trial, the funder must base the lawsuit on an instrument for the payment of money only, or on a judgment.

A confession of judgment is an official statement from a defendant that allows the funder to skip straight to a judgment without a trial. In New York, the confession must state the sum being confessed and the county where the defendant lives. It can only be filed within three years of the signing. And it has to be filed with the clerk of the county where you lived when you signed, or live now. A business can be found in the county where they have a place of business. But if you signed a confession of judgment, does that mean you have no defense? Not necessarily. If the judgment was not filed in the proper county, it may not be valid. You need to consult with an experienced attorney who can review the documents and offer you a full and thorough evaluation of your situation.

Judgment with Notice of Entry

When the case is over, the funder sends you a judgment with notice of entry. This document tells you what the court has decided in your case. If you were served with a summons and complaint and failed to respond within 20 or 30 days, the court can decide the case without a trial. This is called a default judgment. You need to act fast, though. You have a year to file a motion to vacate for excusable default, but you need to know that the year starts from the date you are served with a notice of entry of judgment. You have thirty days to appeal the judgment, or more if it was mailed to you. If you have lost a judgment, make sure to talk with an attorney as soon as possible.

In New York, once a judgment is entered against you, a funder can send a restraining notice to your bank. This restraint of your account can last for up to a year, or until you pay or vacate the judgment. If the bank ends up holding double what the judgment was, it stops covering for the rest. If you were served with an information subpoena after a judgment against you, those answers need to be filled out within seven days. If you get a notice of a UCC filing, that is not a court restraint. Talk with an experienced attorney to learn about your rights and options.

Settlement Agreement

A settlement can help you to avoid legal headaches, but make sure that the settlement is a true settlement. A settlement agreement may let your funder enter a judgment for a set amount without notifying you if you miss a payment. It is entered by the clerk, based on your funder’s affidavit. Be sure to read the agreement carefully to make sure that you understand the consequences of late payment. A settlement with a judgment can end up putting you back where you started.

Funder lawsuits can be document heavy. Don’t let yourself get buried in a blizzard of papers and emails, and don’t let any one of them fall through the cracks. Seek the help of a qualified attorney.