New York MCA Judgment Filed in Texas, Florida or California: What to Review Next

Enforced Just Like Any Other Local Judgment

If a judgment from a New York court has been filed against you in your home state, then it can soon be enforced just like any other local judgment. Depending on which state you’re in, this can happen after about 30 days. Check the date of the notice you received about the filing. To know what a good defense is you’ve got to find out how that out of state judgment got entered, and decide whether it can be attacked as it was, or as it’s presented in your home state. Ignore it at your own risk, because an account garnishment or property lien can come later.

Florida allows a judgment holder to record a New York judgment with a county clerk. The clerk will then mail you a notice, and the New York judgment cannot be enforced until thirty days after the clerk mailed the notice and a fee has been paid. Within thirty days of a judgment being recorded in Florida, you may challenge the jurisdiction of the New York court, or the judgment’s validity in a Florida court, by filing a lawsuit and recording a lis pendens. Doing this automatically stays enforcement and any lien.

In California, you can file a motion to vacate within thirty days after receiving notice of entry of judgment. You can use any defense you had to a suit on the New York judgment in California. In California the judgment holder must wait thirty days to get a writ of execution, after serving you with the notice of judgment. If you don’t reside in California, then writ of execution can be obtained sooner.

In Texas, a judgment, properly filed, has the same force as a local judgment. You can reopen, vacate, or stay it like any other Texas judgment. The creditor files an affidavit with both addresses, and notices you that way. If your appeal is pending and you posted security in the New York court, a Texas court must stay its enforcement.

A Confession of Judgment

Go back to the New York judgment, and ask how it was entered. Since August 30, 2019, a confession of judgment can be filed only in the county of New York where the debtor resides. A business resides wherever it has a place of business. If you’re a business, and you have no physical location in New York, there’s a good chance that your confession of judgment can’t be filed in New York. Check the date the judgment was filed, so you know whether or not the creditor followed this rule.

Suppose instead you ignored a New York court summons, and the court entered a judgment against you. The judgment goes to your home county, it’s filed there, and that’s how they can enforce it. It doesn’t matter whether it was confessed or defaulted.

In Florida a confession signed before the suit is void. A funder of NY confessions has turned that to its advantage by confessing in New York, then coming to Florida to execute. The two legal remedies are a motion to vacate in NY, even though you’ve never been there; and a challenge of jurisdiction or of the judgment’s validity, if that can be filed in your state. File them in both states. To stop enforcement in your home state, file for a stay there, while your motion to vacate is pending in New York.

Merchant Agreement

Then look at the agreement. Is it a loan? The funder will say that it’s a sale of receivables, not a loan. So you need to ask a court to look carefully at whether the transaction is really a loan. In Florida, a person who willfully takes over 25% interest per year is guilty of criminal usury, and the debt is unenforceable. Courts see genuine purchases as not loans. They’ll consider whether reconciliation was real; whether the guaranty made repayment certain; and whether the fixed daily debits ignored receipt of incoming funds. In Florida the court asks the question of corrupt intent. Discovery into the funder’s underwriting file will answer that.

For those of you closing a deal in 2024 or later, Florida requires funders to disclose in writing before closing their purchase cost. Good luck using it in a private claim, but it may be great evidence.

Go on to the governing law and forum clauses in the merchant agreement. Did you sign something that says New York’s law applies? And did you sign something that lets them come to court in New York? A funder may have ignored the choice of law of the contract. Is the forum selection clause mandatory or permissive? Did the funder waive the clause by suing elsewhere? Does a usury defense get thrown out by this agreement?

How much is your judgment costing you? Under NY CPLR 5004, a NY judgment should bear interest of 9% a year, unless some other statute says differently. The interest will continue to run while your case is pending.

Write down the deadline. Get the notice that you received, and the agreement you signed. Call the NY court clerk to find out what’s in the NY court file.