Merchant Cash Advance Attorney for Texas Businesses

The last page of the agreement decides the first day of the lawsuit

Nothing about a merchant cash advance looks like a venue problem while it is working. The remittance comes out daily, the paperwork sits in a drawer, and the clause that matters is the one nobody reads: the agreement is governed by New York law and disputes are brought in a New York court.

When the funder files, that clause is the reason a company trading in Houston, Dallas or anywhere else in Texas is suddenly a defendant two thousand miles away. The distance is real and it is the least of it — the deadlines, the rules and the judge are New York's.

What New York's own statutes do and do not do for that clause

New York has two sections written to make its courts a reliable venue for commercial contracts, and both carry dollar figures. GOL § 5-1401 lets parties choose New York law for a transaction of at least $250,000 whether or not it has any connection to the state. § 5-1402 lets a party sue a non-resident here where that choice was made, the transaction covers at least $1,000,000, and the contract contains a submission to New York jurisdiction. Where it applies, CPLR 327(b) forbids dismissing the case as an inconvenient forum.

Most advances are smaller than either figure. That does not make the clause void; it means the clause is tested the ordinary way, on what the document says and how the suit was brought, rather than being underwritten by statute. It is a question worth asking early, because it is the one question that can change where the whole case happens.

The clock that runs before anything else

A defendant appears in a New York action by serving an answer or a notice of appearance, or by making a motion that extends the time to answer, and CPLR § 320 sets that at twenty days after service of the summons, with longer periods in defined circumstances including particular methods of service.

It is short, and it does not pause because the defendant is in another state, has never been to New York, or is still looking for a lawyer. What follows a missed appearance is a default judgment, which is a harder and slower thing to undo than an answer filed on time.

Appearing in that court requires a lawyer admitted in New York, or admitted for the single case. That is the practical reason a Texas company finds itself retaining a New York firm about a Texas problem.

What to do first, from Texas

1. Read the caption, not the number. The court named on the first page tells you which state's rules you are under and who can appear for you. The balance demanded is the funder's arithmetic and can wait an hour.
2. Write down the date and the manner of service. Both feed the deadline, and "the week of the fifteenth" is not good enough once a default is being argued about.
3. Leave the banking alone. Moving money between accounts while a claim is live creates problems of its own, and it is a pattern creditors look for.
4. Get the agreement in front of someone admitted where the case is. The clause, the guaranty and the payment history are the three documents that decide what happens next.

What the case looks like once it is answered is set out in how an MCA lawsuit is defended. If a judgment has already been entered, or an account has already stopped working, a confession of judgment and a restrained account describe the two mechanisms behind most of it.