Summary Judgment in MCA Cases
Why Funders Move Early and What Defeats the Motion

The motion papers decide the case before any trial date exists.

Funders move for summary judgment early, in order to convert a payment dispute into a judgment before defenses mature. The strategy succeeds when the papers show entitlement as a matter of law with no material factual issue, and it fails when the movant neglects its own burden. What defeats these motions is rarely creativity. It is the record, read closely, against the standard the movant must meet. The sections below follow a single denied motion and the characterization disputes that create fact issues in others.

The Burden the Moving Party Carries

In the 2023 Pirs decision denying summary judgment, a New York trial court restated the rule that governs every such motion. The movant must make a prima facie showing of entitlement to judgment as a matter of law, with evidence showing no material factual issue, and must establish that the affirmative defenses raised in opposition are inapplicable. Failure on that burden requires denial regardless of the opposing papers. Motion courts recite this formulation so regularly that weak motions hide inside its familiar cadence.

The motion failed. The debt survived. That is the showing to attack. Counsel should test each exhibit against the standard before drafting opposition. Denial is not dismissal.

The Governing Law Stated in the Agreement

In the summer of 2023, the Pirs agreement selected Florida law in its section 4.5, to the exclusion of conflicts principles, and the movant briefed the motion without a single Florida authority, statutory or decisional, behind its claims. Absent any showing of entitlement under the chosen law, the court held the burden unmet. Choosing Florida law and briefing only New York law leaves the burden unmet by the movant's own papers.

Read and compare the governing law clause with any amendments before assuming the forum supplies the substance. Forum, jurisdiction and governing law present separate questions, and a New York caption does not convert every issue to New York substance. Do not assume the same omission marks another funder motion, since the actual papers may address the chosen law or involve a different agreement. Our files hold no tally of how frequently this defect recurs, only the opinions that discuss it.

Jurisdiction Defenses on the Papers

The Pirs answer asserted lack of personal jurisdiction, and the movant answered with proof of proper service and a waiver argument. The court separated the two. Service and jurisdiction invite an extremely common confusion. Service proves delivery, and delivery begins the analysis rather than ending it. Often we see the guarantor named without a separate jurisdictional basis, and the motion papers glide past the gap. There is an uncanny confidence in motions that cite service as jurisdiction.

The jurisdiction argument begins with service, encounters the consent clause halfway through and ends with counsel counting defendants rather than authorities. The complaint described a Tennessee company with a Texas principal place of business and a Texas domiciliary guarantor, which left only the long arm categories for the court to consider, and the papers alleged facts fitting none of them. Nor did the agreement supply consent to suit in New York, unlike a companion Pirs agreement the court distinguished. The defenses the answer preserves, or abandons, in those early pages will frame the motion long before it is briefed.

Characterization Disputes That Create Fact Issues

Where the defense attacks the advance as a loan, the court examines whether repayment was absolute under all circumstances. New York decisions weigh the MCA characterization factors: the reconciliation provision, the finite term and the bankruptcy recourse. Provisions accelerating the full balance on bankruptcy, enforcing the guaranty on filing or demanding a confession on default suggest the funder assumed little revenue risk. A characterization dispute hangs over the motion like weather over a morning docket, visible to all and controlled by none. The funder will insist the clause is freely negotiated (a position the payment history tests better than adjectives do).

Since the movant must show the absence of triable issues, a supported characterization dispute keeps the case alive past the motion. The burden is extremely demanding. Counsel counts pages, not promises.

Preparation Before the Response Date

And the response date arrives faster than the file suggests. Obtain and assemble the complete motion with exhibits, the executed agreement with amendments and a calendar that leaves room for research, drafting and revision. Counsel should review and analyze the governing law showing, the jurisdictional proof and the reconciliation record, then build the opposition around the thinnest part of the movant burden. Resist the urge to answer the motion with a letter to the judge. Judges disregard correspondence that evades the motion procedure, and the disregard costs credibility. The opposition should name the exact exhibit and page where the movant showing thins, since general denials move no burden back. Any statement about the debt, even a brief one to funder counsel, can become evidence used against the defense in the case against the business.

Owners bring the motion papers in a folder that has lived in a truck cab. The folder is welcome as it is. Delancey Street offers a free confidential initial review of business debt concerns, and a merchant facing a summary judgment motion can ask whether the account is eligible for settlement assistance. The company acts as a settlement company and coordinates legal matters with independent counsel, since it is not a law firm. Consultation is where this conversation begins. Simply deliver the complete file, and ensure the response date is calendared before any discussion of strategy. Motions are won in the exhibits before they are won in the argument.