IN RE: the LCF Group (2026)

NYSCEF docs. 1 through 12 were read and considered in deciding this petition.

Relief Requested

The petitioner commenced this proceeding pursuant to CPLR article 75 to confirm an arbitration award.

Background

This matter stems from a breach of contract ("the contract") entered into by the petitioner and the respondent Starplaya Productions LLC d/b/a Starplaya Productions ("company respondent") on January 20, 2026, for the sale of future receivables. According to the contract, the respondent Gerderrick Moncriff ("guarantor") executed a personal guaranty of all the obligations of the company respondent set forth in the contract. Additionally, the parties agreed to arbitrate any dispute arising from the contract. On or about January 27, 2026, the respondents allegedly defaulted by failing to comply with the terms of the contract.

According to the petition, the petitioner commenced arbitration on or about February 3, 2026. In an arbitration award dated March 31, 2026, the arbitrator, Victoria A. Coyle, determined that the claimant (petitioner herein) is entitled to $11,555.63 (see Exhibit 1). The arbitrator stated in pertinent part:

The Arbitrator hereby finds in favor of the Claimant, having met the burden of proof that an Event of Default under the Agreement, Section 1.13, occurred. Claimant has proven that Respondents committed an Event of Default under the Agreement on or around January 27, 2026 when Respondents instructed the banking institution, where Respondents held the designated bank account from which the transactions were to be made, to "stop payment," referred to as an "R08" event. Under Agreement Section 1.13(b), an R08 event constitutes an Event of Default. At the Arbitrator's request, Claimant submitted third-party documentation from the banking institution substantiating the R08 event. The amount of the damages award is comprised of (1) the outstanding borrowed amount (less payments made by the borrower), and (2) the liquidated legal and collection fee (Agreement Section 1.14(II)), as follows: Outstanding borrowed amount left unpaid: $8,666.94 Liquidated legal and collection fee (33.33% of outstanding borrowed amount): $2,888.69 The Arbitrator has reviewed the legal support under New York law provided by Claimant in support of its claimed damages in this matter. The Arbitrator finds that the liquidated legal and collection fee (Agreement Section 1.14(II)) is enforceable as a reasonable probable loss to the Claimant—including, without limitation, the Claimant's costs of collection, costs of litigating any claim, and costs of enforcing any judgment—which loss would be difficult to estimate precisely at the time of contracting. The damages amount does not include additional "default fees" under the Agreement (Agreement Section 1.14(II)(c)). Claimant seeks $5,105 in such fees. The Arbitrator, having reviewed the caselaw submitted by the Claimant, finds that under New York law, the default fees, sought in addition to the liquidated legal and collection fee, constitute stacked penalties that are punitive and not enforceable. Enforcing both the liquidated damages and the default fee would be grossly disproportionate to the harm suffered

(Id.).

On April 8, 2026, the petitioner commenced this proceeding to confirm the arbitration award. According to affirmations of service, the respondents were served with the verified petition and supporting papers (see NYSCEF docs. 10, 12). Service was effectuated upon the guarantor by personally serving him with the commencement papers and via first class mail (see NYSCEF doc. 10). Service was effectuated upon the company respondent by leaving the commencement papers with the guarantor, a person authorized by appointment or by law to accept service on behalf of the company respondent, and via first class mail (see NYSCEF doc. 12).

The respondents did not submit opposition papers.

Law and Application

This Court finds that it does not have jurisdiction over the respondents. "Ordinarily a court can acquire jurisdiction of the person of a defendant only by service of process within the jurisdiction of the court; but that rule does not apply where the defendant has agreed in advance to accept, or does in fact accept, some other form of service as sufficient" (Matter of New Brunswick Theol. Seminary v Van Dyke, 184 AD3d 176, 179 [2d Dept 2020] [internal quotation marks omitted]; see Alfred E. Mann Living Trust v. ETIRC Aviation S.A.R.L., 78 AD3d 137, 140 [1st Dept 2010]; see also Putnam Leasing Co. v Sweet, 2015 NY Misc LEXIS 5896, at *3 [Sup Ct, Nassau County Aug. 4, 2015, No. 602836/15]).

Here, in paragraph 3.3 of the contract, the "notices" paragraph of the personal guaranty, and paragraph 18 of the security agreement, the parties agreed that "[e]ach of the signatories . . . irrevocably consents to service of process by Certified Mail at the address listed" in the relevant sections (Exhibit 2). Since the methods of service were contrary to the terms of the contract and guaranty, service was ineffective and therefore, this Court does not have jurisdiction over the respondents (see Matter of Republique Francaise [Cellosilk Mfg. Co.], 309 NY 269, 279 [1955] ["(t)he method of service by which parties have agreed to be bound must be complied with according to the exact terms thereof in order that the requirements of due process be satisfied"]; cf. Teresta v New York, 304 NY 440, 442 [1952]; Romer v W. Chamson Corp., 210 AD2d 7 [1st Dept 1994]).

In light of this determination, the petition must be denied.

Conclusion

Accordingly, it is hereby,

ORDERED, that the petition to confirm the arbitration award is DENIED.

This shall constitute a decision and order of this Court.

Dated: August 24, 2026

Mineola, New York

E N T E R:

HON. SARIKA KAPOOR, A.J.S.C.

Sarika Kapoor, J.