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Kelly, Grossman & Flanagan, LLP v Quick Cash, Inc. :: March, 2012 :: New York Ot... 

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Kelly, Grossman & Flanagan, LLP v Quick Cash, Inc. 

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[*1] Kelly, Grossman & Flanagan, LLP v Quick Cash, Inc. 2012 NY Slip Op 50560(U) 

Decided on March 29, 2012 Supreme Court, Suffolk County Pines, J. Published by New 

York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is 

uncorrected and will not be published in the printed Official Reports. 

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Decided on March 29, 2012 

Supreme Court, Suffolk County 

Kelly, Grossman & Flanagan, LLP, FLANAGAN & ASSOCIATES, PLLC, MURACA & KELLY, 

DENNIS KELLY, DAVID GROSSMAN, and SUZANNE FLANAGAN, Plaintiff, 

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against 

Quick Cash, Inc., CASEFUNDING,, INC., GUARDIAN ADVISORS LP I, GUARDIAN 

ADVISORS LP II and MONEY FOR LAWSUITS LP V, Defendants. 

04283-2011 

Attorney for Plaintiffs 

Isaac Zucker, Esq. 

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Emily Pines, J. 

ORDERED that the motion (001) by Defendants to dismiss the complaint, converted by 

the Court into a motion for summary judgment, is granted. 

ORDERED that Defendants' request for attorneys' fees is referred to a hearing on April 

23, 2012, at 10:00 a.m. before the undersigned. 

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In this action, Plaintiffs seek a judgment declaring that certain agreements between the 

parties [*2]are void as criminally usurious in violation of Penal Law §190.04. The record 

reveals that Plaintiffs, as partners in a law firm, executed certain documents which 

provided that Plaintiffs would repay to Defendants a principal amount plus a fee which 

Plaintiffs allege amounted to an annualized interest rate in excess of 40%. 

The complaint alleges that in May 2005, non-party Personal Injury Funding IV, LP, an 

affiliate and/or predecessor of one of the Defendants, extended a loan in the amount of 

$46,250 to plaintiff Muraca & Kelly, LLP. It alleges that, in October 2006, defendant 

Money For Lawsuits LP V extended a loan in the amount of $287,500 to plaintiff Muraca 

& Kelly, LLP; and the complaint alleges further that in December 2006, defendant 

Money For Lawsuits LP V extended a loan in the amount of $227,500 to plaintiff Muraca 

& Kelly, LLP. In April 2007, defendant Money For Lawsuits LP V extended a loan in the 

amount of $79,500 to plaintiff Muraca & Kelly, LLP. In September 2007, according to 

Plaintiffs, defendant Money For Lawsuits LP V extended a loan in the amount of $23,000 

to plaintiff Muraca & Kelly, LLP. Plaintiffs allege that each and every one of the loans 

provided for the repayment of the principal loan plus a fee at an interest rate in excess 

of 40%. Plaintiffs also allege that they have repaid defendants in excess of one million 

dollars. 

Plaintiffs contend that each and every payment they received from the Defendants was 

a loan and, therefore, subject to Criminal Usury laws under NY Penal Law §190.04. In 

support of this contention, Plaintiffs rely on the language of the original client 

agreements, which set forth that the Plaintiffs are "the Borrower" and the various 

defendants "the Lender". There was never any doubt, according to Plaintiffs, that 

Defendants were "lending" money. It was only in August 2009, state Plaintiffs, when all 

the agreements were consolidated, that Defendants converted the word "loan" to the 

word "advance" in order to mask the obvious fact that Defendants were covering for the 

lending of funds at a criminally usurious rate. 

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Plaintiffs further assert that these loans were never non-recourse loans, despite their 

"label", because the Defendants were not at risk. For example, if a judgment debtor 

were unable to pay a judgment entered in favor of one of Plaintiffs's clients in an 

underlying case, the individual Plaintiffs were still personally liable to Defendants. In 

addition, Defendants received their repayment without any reduction for Plaintiffs' costs 

or expenses. Moreover, if Plaintiffs were discharged as counsel and unable to find 

replacement counsel, Plaintiffs were required to find a new case to replace the collateral 

(i.e. former case ) or pay liquidated damages. 

The complaint further alleges that from December 2007 through February 2008 

Defendants extended loans to plaintiff Flanagan & Associates. In August 2009, Plaintiffs 

and Defendants executed an Addendum to all prior agreements which provided that 

plaintiff Kelly, Grossman & Flanagan, LLP would assume responsibility for all 

outstanding loans and would provide additional collateral to secure the outstanding 

loans. Plaintiffs allege that the Addendum required them to pay an interest rate in 

excess of 40% annually. The instant action seeking declaratory relief voiding the 

alleged loans was commenced. [*3] 

Defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(7). By order 

dated November 23, 2011 (Pines, J.), this Court converted the motion into a summary 

judgment motion and directed the parties to file and serve supplemental affidavits and 

other available proof, if desired, on thirty days' notice. 

Kenneth Bradt avers in his personal affidavit that he is the President and CEO of 

defendants Quick Cash, Inc, Case Funding, Inc., and is a general partner in defendants 

Guardian Advisors LP I, Guardian Advisors LP II, and Money For Lawsuits LP V (Quick 

Cash Entities). He states that the principal purpose of the Quick Cash Entities is to 

advance money to attorneys and/or plaintiffs involved in litigation in either recourse 

loans or non-recourse advances. Bradt states that in a recourse loan, the attorneys 

grant a lien to the Quick Cash Entity against the attorneys' fees expected to be received 

on cases handled by the attorney/firm, and the attorney makes either monthly 

payments to the Quick Cash Entity or pays when each case settles and/or at the end of 

the term of the loan. Bradt avers however, that if the agreement is a non-recourse 

advance, the attorney assigns to the Quick Cash Entity a portion of their expected fee 

from the case or cases in which the attorney represented one or more of the parties,



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and pays the Quick Cash Entity only as each case settles. If there is no recovery in the 

case, then no money is due the Quick Cash Entity. 

Bradt states all of the agreements at issue in this case were non-recourse advances, 

except for one contract dated February 29, 2007, which was subsequently converted to 

a non-recourse advance. At the time of the first advance made by Quick Cash to 

plaintiff Muraca & Kelly, in May 2005, it was agreed that Plaintiffs would provide their 

anticipated attorneys' fees recovered from three pending actions, and that Quick Cash 

would be paid only in the event of a recovery in those cases. It was also agreed that 

the obligation would increase at the rate of 3.5% compounded monthly. Plaintiffs Kelly 

and Grossman personally guaranteed the performance of this contract. 

Bradt states that in October 2006, November 2006, April 2007, September 2007, 

plaintiff Muraca & Kelly requested financing from Quick Cash. The parties agreed that 

these were non-recourse advances. Plaintiffs also paid a processing fee and an 

origination fee with each advance. Plaintiffs Kelly and Grossman personally guaranteed 

the performance of each contract. Muraca and Kelly agreed to assign their anticipated 

fees in 27 pending actions as collateral. It was further agreed that the obligation would 

increase at the rate of 3.99% compounded monthly. 

Bradt states that Flanagan & Associates obtained financing from Quick Cash in June 

2007 and pledged all of their anticipated fees in two pending actions as collateral. 

Flanagan & Associates paid a processing fee. It was agreed that this advance was to be 

non-recourse funding. In October 2007, Flanagan paid off this contract in full. 

Bradt further avers that in December 2007, plaintiffs Flanagan & Associates and Kelly & 

Grossman requested a second cash advance from Quick Cash and entered into three 

contracts on December 18, 2007. The Plaintiffs paid a processing fee. It was further 

agreed that these advances were to be non-recourse funding, and the obligation would 

increase at the rate of 40% compounded quarterly. The Plaintiffs agreed to provide 

periodic status updates on the cases held as collateral. [*4]Flanagan, Kelly, and 

Grossman personally guaranteed the performance of the contracts. A third cash 

advance made to Flanagan & Associates on December 20, 2007, reflected a true loan 

agreement with a maturity date of December 19, 2009. The Plaintiffs agreed to assign 

their anticipated fees from several pending actions and paid an application fee. Plaintiffs 

also agreed to provide periodic status updates regarding the cases held as collateral. 

Flanagan personally guaranteed the performance of the contract. 

In February 2008, plaintiffs Flanagan and Flanagan & Associates requested a fourth 

cash advance from Quick Cash. Flanagan & Associates pledged fees from specific 

pending actions as collateral and Quick Cash agreed to make the advance a recourse 

loan agreement. Flanagan & Associates agreed to pay off the loan made on December 

20, 2007, obtain an additional amount of funding, and pay an origination fee. 

In May 2009, plaintiff Kelly, Grossman & Flanagan, a newly formed partnership, 

requested funding from Quick Cash for advertising fees and agreed to continue to 

prosecute the cases provided by Muraca & Kelly and Flanagan & Associates. 

Bradt states that the Addendum was entered into by the parties on August 13, 2009, to 

modify some of the payment terms, wherein the Kelly & Grossman attorneys agreed to 

pay to Quick Cash 75% of the attorney fees and permitted retention of 25% of the 

attorney fees from the collateral. The anticipated attorneys' fees from sixteen pending 

actions were added to the collateral. In addition, a provision for liquidated damages was 

added in the amount of two times the payment obligation if a breach occurred. The 

Addendum converted the Flanagan recourse loan agreement dated February 29, 2008, 

into a non-recourse agreement, removed the requirement of Flanagan's personal 

guarantee, and deemed the Flanagan recourse loan agreement to be null and void. 

Bradt states that the actual amount that was paid to all the Plaintiffs plus fees and costs 

was one million two hundred thousand sis hundred sixty one dollars and thirteen cents 

($1,215,66.13). In contrast to the Plaintiffs' allegation that they have paid Defendants 

in excess of $1,000,000, Bradt avers that Quick Cash's records indicate that the actual 

amount received from the Kelly & Grossman attorneys was $451,136.27, and the 

amount received from Flanagan was $122,711.91. In addition, Bradt states that the 

Plaintiffs are in breach of the contracts, including not paying pursuant to the terms of



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the agreements, not providing accurate up to date status of the collateral cases and 

refusing to provide the settlement documents as required by the contracts. 

A party moving for summary judgment must make a prima facie showing of entitlement 

as a matter of law, offering sufficient evidence to demonstrate the absence of any 

material issues of fact. Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 487 NYS2d 

316 (1985); Zuckerman v New York, 49 NY2d 557, 427 NYS2d 595 (1980). Of course, 

summary judgment is a drastic remedy and should not be granted where there is any 

doubt as to the existence of a triable issue, Stewart Title Ins. Co. v Equitable Land 

Servs., 207 AD2d 880, 616 NYS2d 650 (2d Dept 1994), but once a prima facie showing 

has been made, the burden shifts to the party opposing the motion to produce 

evidentiary proof in admissible form sufficient to establish material issues of fact which 

require a [*5]trial of the action. Alvarez v Prospect Hosp., 68 NY2d 320, 508 NYS2d 

923 (1986). 

"[I]t is well settled that when parties set down their agreement in a clear, complete 

document, their writing should . . . be enforced according to its terms.'" South Rd. 

Assoc., LLC v International Bus. Machs. Corp., 4 NY3d 272, 277, 793 NYS2d 835 

(2005), quoting Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475, 

775 NYS2d 765 (2004). When interpreting a contract, "the court should arrive at a 

construction which will give fair meaning to all of the language employed by the parties 

to reach a practical interpretation of the expressions of the parties so that their 

reasonable expectation will be realized." Herzfeld v Herzfeld,50 AD3d 851, 857 NYS2d 

170 (2d Dept 2008). If the terms of a written contract are clear and unambiguous, 

intent of the parties must be found within the four corners of the contract. Correnti v 

Allstate Props., LLC, 38 AD3d 588, 832 NYS2d 594 (2d Dept 2007). Extrinsic evidence 

of the parties' intent may be considered only if the agreement is ambiguous, which is 

an issue of law for the courts to decide. Innophos, Inc. v Rhodia, S.A., 10 NY3d 25, 852 

NYS2d 820 (2008). A contract is unambiguous if the language it uses has a definite and 

precise meaning, unattended by the danger of misconception in the purport of the 

agreement itself and there is no reasonable basis of difference of opinion. Greenfield v 

Philles Records, Inc., 98 NY2d 562, 750 NYS2d 565 (2002). 

In order to constitute a transaction subject to the Penal Code § 190.40, prohibiting 

criminal usury, such transaction must constitute a loan. Donatelli v Siskind, 170 AD2d 

433, 565 NYS2d 264 (2d Dep't 1991). Usury laws do not apply to investments (GOL § 5 

-501[2]). Where a transaction involves interest to be paid based upon a contingency 

which is in the control of the debtor, usury will not apply. Summer v People, 29 NY 337 

(1864). In order to determine whether a particular transaction qualifies as a loan 

subject to a criminal usury prohibitions, courts look to the purpose of the transaction; 

i.e., to lend money at a usurious rate dictated by the lender. Donatelli v Siskind, 170 

AD2d 433, 565, NYS2d 224 (2d Dep't 1991). Thus, the purpose of a transaction is 

determined by its true character, under all circumstances, rather than by its title. 

Vjuetta v Euro-Quest Corp., 29 AD3d 895 (2d Dep't 2006). 

The contracts dated May 6, 2005, October 10, 2006, December 7, 2006, April 9, 2007, 

June 5, 2007, and September 9, 2007 provide at paragraph 4.7 or 4.8 : 

"Attorney represents and warrants that Attorney fully understands that the Advance 

made hereunder is not a recourse loan, but a non-recourse financial transaction 

pursuant to which Investor's funds are at full risk." 

The Addendum to the Agreements by and among Quick Cash, Money For Lawsuits and 

Casefunding and affiliated entities, Muraca & Kelly, Dennis Kelly, Esq., David Grossman, 

Esq., Flanagan & Associates, PLLC, Suzanne Flanagan, Esq., and Kelly Grossman & 

Flanagan, LLP, dated August 13, 2009, page 8, provides, in part: 

* * * Upon the signing of this Addendum, the Flanagan Recourse Agreement(s) shall be 

deemed null and void and the amounts due pursuant to those recourse agreement(s) 

are now incorporated in full [*6]herein as non-recourse. 

Defendants have demonstrated their prima facie entitlement to judgment as a matter of 

law by proving that the disputed contracts are non-recourse advance agreements. In 

support of their motion, defendants contend that none of the contracts that exist as of



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today are true loan documents and they are not subject to the usury statutes. Copies of 

the alleged loan documents executed between the parties all so demonstrate. 

Plaintiffs' contention that the language in the contacts was ambiguous, that "borrower" 

and "lender," automatically qualify the contracts as loans and that the origination fees 

and processing fees, typically charged in connection with loans, qualify the contracts as 

loans is unpersuasive. In fact, the Defendants were always at risk of no recourse 

whenever one of the underlying cases went to trial and resulted in no recovery. Such 

circumstances simply cannot be stated to constitute a "loan". The Court finds that the 

language in the contracts was not ambiguous, and the intent of the parties is clear, as 

demonstrated by the plaintiffs' express acknowledgment, as sophisticated attorneys, in 

each contract that a non-recourse agreement for a cash advance was entered into and 

not a loan. 

The Court finds the holding in Matter of Strategies, LLC v. Ferreira (28 Misc 3d 1205[A], 

2010 NY Slip Op 51159[U][2010]), to be persuasive. In that proceeding to confirm an 

arbitration award, the petitioner was a limited liability company that provided funding 

for a legal action brought by respondent Baltazar Ferreira, in which he was represented 

by respondent, the law firm of Jeffrey Lessoff. The funding, approximately $120,000, 

was a non-recourse advance pursuant to two agreements between the parties. The 

respondents agreed to pay petitioner from the proceeds received in the underlying 

action. The underlying action was subsequently settled for $250,000 and respondents 

began collecting the settlement proceeds. After respondents failed to pay petitioner its 

share of the settlement proceeds, petitioner initiated arbitration proceedings pursuant 

to the agreements to collect its share. An arbitrator issued an award in favor of 

petitioner holding respondents jointly and severally liable for approximately $120,000, 

plus 2.99% interest per month compounded monthly in accordance with the contract, 

plus additional simple interest and attorneys' and arbitration fees. In granting 

petitioner's motion to confirm the award of the arbitrator, the Supreme Court, New York 

County (Hunter, J.) rejected the respondents claim that the interest rate that was part 

of the arbitration award amounted to usury. In holding that the defense of usury was 

not applicable, the Court stated: 

The concept of usury applies to loans, which are typically paid at a fixed or variable rate 

over a term. The instant transaction, by contrast, is an ownership interest in proceeds 

for a claim, contingent on the actual existence of any proceeds, Had respondents been 

unsuccessful in negotiating a settlement or winning a judgment, petitioner would have 

no contractual right to payment. Thus, usury does not apply to the instant case. (See 

O'Farrell v. Martin, 292 NYS 581 [City Ct. NY 1936] [holding "[W]hen payment or 

enforcement rests on a contingency, the agreement is valid though it provides for a 

return in excess of the legal rate of interest."]). [*7] 

Similarly, here, the transactions between the parties create ownership interests in 

proceeds of claims, contingent on the actual existence of any proceeds. Plaintiffs would 

have no contractual right to payment had Defendants been unsuccessful in negotiating 

settlements or winning judgments in the underlying actions. Therefore, under the 

circumstances, usury does not apply and the Defendants' motion for summary 

judgment dismissing Plaintiffs' complaint is granted. 

Defendants' request for an award of its attorneys' fees is referred to a conference on 

April 23, 2012, at 10:00 a.m. before the undersigned. 

This constitutes the DECISION and ORDER of the Court. 

Dated: March 29, 2012 

Riverhead, New York 

EMILY PINES 

J. S. C.



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