Radium2 Capital, LLC v Platinum Asset Funding, LLC 2025 NY Slip Op 32143(U) June 15, 2025 Supreme Court, New York County Docket Number: Index No. 652120/2020 Judge: Andrea Masley Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. FILED: NEW YORK COUNTY CLERK 06/16/2025 12:50 PM INDEX NO. 652120/2020 NYSCEF DOC. NO. 567 RECEIVED NYSCEF: 06/15/2025
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 48 -----------------------------------------------------------------------------------X RADIUM2 CAPITAL, LLC (F/K/A RADIUM2 CAPITAL INDEX NO. 652120/2020 INC.),
Plaintiff, MOTION DATE N/A
-v- MOTION SEQ. NO. 012 013 PLATINUM ASSET FUNDING, LLC, ARENA PRFG, LLC, PRIME MERIDIAN SPECIAL OPPORTUNITIES FUND, DECISION + ORDER ON LP, ARENA INVESTORS, LP, and CETERIS PORTFOLIO MOTION SERVICES, LLC,
Defendants. -----------------------------------------------------------------------------------X
HON. ANDREA MASLEY:
The following e-filed documents, listed by NYSCEF document number (Motion 012) 430, 431, 432, 433, 434, 435, 436, 437, 438, 439, 440, 441, 442, 443, 444, 445, 446, 447, 448, 449, 481, 483, 504, 505, 506, 507, 508, 509, 532, 533, 534, 535, 536, 537, 538, 539, 540, 541, 542, 563 were read on this motion to/for SUMMARY JUDGMENT (AFTER JOINDER) .
The following e-filed documents, listed by NYSCEF document number (Motion 013) 450, 451, 452, 453, 454, 455, 456, 457, 458, 459, 460, 461, 462, 463, 464, 465, 466, 467, 468, 469, 470, 471, 472, 473, 474, 475, 476, 477, 478, 479, 482, 484, 485, 486, 487, 488, 489, 490, 491, 492, 493, 494, 495, 496, 497, 498, 499, 500, 501, 502, 503, 511, 512, 513, 514, 515, 516, 543, 562 were read on this motion to/for1 SUMMARY JUDGMENT (AFTER JOINDER) .
This action arises out of an alleged scheme by defendants Platinum Asset
Funding, LLC (PAF), Arena PRFG, LLC (Arena PRFG), and Arena Investors, LP (AILP)
to convert monies owed to plaintiff Radium2 Capital, LLC (f/k/a Radium2 Capital Inc.)
(Radium) in connection with certain receivables that Radium allegedly purchased from
Platinum Rapid Funding Group Ltd. (PRFG), a merchant cash advance provider,
1The court read and considered, where appropriate, documents mentioned in the parties’ papers but omitted in this autogenerated caption. 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 1 of 23 Motion No. 012 013
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pursuant to a Master Participation Agreement between Radium and PRFG.2 According
to Radium, although it purchased these receivables outright from PRFG, defendants
wrongfully transferred the receivables to PAF through a sham Uniform Commercial
Code (UCC) Article 9 sale.
In motion sequence number 012, Radium moves pursuant to CPLR 3212 for
partial summary judgment on liability on Radium’s causes of action for (i) declaratory
judgment and (vi) conversion.3 In motion sequence number 013, defendants PAF,
Arena PRFG, AILP, Prime, and Ceteris move pursuant to CPLR 3212 for summary
judgment dismissing the complaint.
Background
PRFG
PRFG provides cash advances to small and medium-sized businesses in
exchange for future receipts or future receivables, which are deducted in incremental
amounts from the merchant’s bank account as a percentage of the merchant’s gross
revenue until the full purchased amount is paid out. (NYSCEF 445, JSUF ¶ 2.)
2 The action was discontinued against PRFG. (NYSCEF Doc. No. [NYSCEF] 222, Mar. 29, 2021 Order.) Moving defendants PAF, Arena PRFG, AILP, Prime Meridian Special Opportunities Fund, LP (Prime), and Ceteris Portfolio Services, LLC (Ceteris) are the only remaining defendants. (See id. [discontinuance against PRFG, PRFG SPV #1 LLC, Ali Mayar, Vincent Bardong, and Michael Peragine; NYSCEF 233, Decision and Order at 1 [mot. seq. no. 006] [dismissing CFG Merchant Solutions, LLC].) 3 Radium’s motion is limited to the 161 Funding Agreements between PRFG and
nonparty merchants that are subject to the parties’ Joint Statement of Undisputed Facts; Radium reserves its right to continue prosecuting this action as to the remaining 115 Funding Agreements in which it allegedly participated. (NYSCEF 445, Joint Statement of Undisputed Facts [JSUF] at 5 n 5.) 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 2 of 23 Motion No. 012 013
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The Master Participation Agreement
On January 5, 2016, Radium and PRFG entered into a Master Participation
Agreement (MPA). (Id. ¶ 5; NYSCEF 325, MPA.) Pursuant to the MPA, PRFG agreed
to present Radium with funding opportunities to co-invest; Radium could elect to
participate in these funding opportunities by directly investing its funds with PRFG
“under the same terms and conditions as detailed in the individual Funding
Agreement(s).”4 (NYSCEF 325, MPA at Recital B.) Upon an agreement to participate,
Radium would purchase a certain share of the “Collections”5 received by PRFG under
the Funding Agreements in PRFG’s name. (See id. at Recital B; id. § 1.11.) Pursuant
to section 2.5 of the MPA, PRFG agreed to “collect payments from the Clients and
provide to [Radium] on a weekly basis an amount equal to the pro-rata co-investment
percentage minus deductions … .” (Id. § 2.5.)
Radium participated in 161 Funding Agreements in accordance with the MPA.
(NYSCEF 445, JSUF ¶ 7; id. at 5 n 5; NYSCEF 317, Schedule II.)6 With respect to
4 Funding Agreement is defined as “[t]hat certain Funding Agreement described in the Recitals between [PRFG] and Client, including but not limited to a Merchant Cash Advance Agreement, a Revenue Based Financing Agreement and /or a Business Loan Agreement and all related documents.” (NYSCEF 325, MPA § 1.14.) The Recitals state that PRFG “may choose to enter into Funding Agreements with Client(s) under the terms acceptable to each as detailed in the individual Funding Agreement(s).” (Id. at Recital A.) Client is defined as “[a] business which enters into a Funding Agreement with [PRFG] and Participants.” (Id. § 1.8.) Radium is defined as a Participant. (Id. at 1.) 5 Collections as denied as “[p]roceeds of Purchased Receivables received by the
[PRFG], a portion of which may be passed on to [Radium] on a pro rata basis in accordance with [Radium]’s participation interest.” (NYSCEF 325, MPA § 1.11.) 6 Radium contends that it participated in 276 Funding Agreements. (NYSCEF 445,
JSUF at 5 n 5; NYSCEF 318, Schedule III [remaining 115 Funding Agreements].) As stated supra, Radium’s motion is limited to its participation in the 161 Funding Agreements that are subject to the JSUF. 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 3 of 23 Motion No. 012 013
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each, PRFG would first email Radium, often with a subject heading referencing a
“‘Syndication Opportunity,’” with the name of the prospective merchant(s) in either the
subject line or body of the e-mail, asking Radium to confirm via email by a specific date
as to whether Radium “would commit within the maximum amount PRFG made
available to Radium.” (NYSCEF 445, JSUF ¶ 6[a]-[b].) After Radium’s confirmation of
acceptance and “how much it would fund within the maximum syndication dollar amount
being offered to Radium,” “there would be a submission with wire instructions to PRFG’s
specified bank account.” (Id. ¶ 6[c].) Sometimes, however, a syndication opportunity
would be offered and accepted orally and ultimately memorialized in a periodic
syndication sheet. (Id. ¶ 6[d].) Pursuant to section 2.4 of the MPA, once Radium
accepted the investment opportunity and delivered the funds, PRFG was then to
simultaneously fund “the full contracted amount as specified on the Clients Funding
Agreement with all co-investment monies.” (NYSCEF 315, MPA § 2.4).
The Credit Agreements
In 2017, PRFG formed PRFG SPV #1 LLC (SPV), which was fully owned by
PRFG. (NYSCEF 445, JSUF ¶ 8; NYSCEF 326, Certificate of Sole Manager ¶ 1.) In
2018 and 2019, SPV, as borrower, and PRFG, “‘in its individual capacity’” and as
servicer, entered into Credit Agreements with Arena PRFG, as lender, collateral agent,
and administrative agent, for a $25 million secured loan. (NYSCEF 445, JSUF ¶¶ 9-10;
NYSCEF 328, 2018 Credit Agreement; NYSCEF 329, 2019 Credit Agreement.) Prime
was an additional lender under the 2019 Credit Agreement. (NYSCEF 445, JSUF ¶ 10;
NYSCEF 329, 2019 Credit Agreement at 109/138.) Pursuant to two Receivables
Purchase Agreements and several Assignments, PRFG transferred to SPV specific
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merchant receivables that SPV pledged as collateral as defined in the Credit
Agreements to Arena PRFG. (NYSCEF 445, JSUF ¶ 10[a]-[b]; NYSCEF 328, 2018
Credit Agreement § 5.1[a]; NYSCEF 329, 2019 Credit Agreement § 5.1[a]; NYSCEF
330, 2018 Receivables Purchase Agreement; NYSCEF 331, 2019 Receivables
Purchase Agreement; NYSCEF 332-340, sample assignments.) SPV was to deposit
the merchant collections in an account at Signature Bank (Collection Account)
controlled by Arena PRFG. (See NYSCEF 445, JSUF ¶¶ 16, 23; NYSCEF 328, 2018
Credit Agreement § 5.2[a]; NYSCEF 329, 2019 Credit Agreement § 5.2[a].) Arena
PRFG was issued a security interest in the funds in the Collection Account,
Receivables, and proceeds, among other things. (NYSCEF 328, 2018 Credit
Agreement §§ 5.1[a][i], [xv], [xviii], 5.2[b]; NYSCEF 329, 2019 Credit Agreement §§
5.1[a][i], [xv], [xviii], 5.2[b]; NYSCEF 423, December 28, 2017 Control Account
Agreement § 4; NYSCEF 350, February 28, 2020 Control Account Agreement § 3.)
Arena PRFG was also issued a security interest in the equity interests in SPV.
(NYSCEF 445, JSUF ¶ 14[a]; NYSCEF 343, Pledge Agreement.) Arena PRFG filed
UCC-1 financing statements. (NYSCEF 445, JSUF ¶ 17; NYSCEF 351, New York
UCC-1.)
The Promissory Notes
Radium loaned to PRGF $3 million through three promissory notes, each for the
principal amount of $1 million:
(i) Note Serial #00137 “made the 29th day of November, 2019” and signed
by PRFG on November 30, 2018 (NYSCEF 27) and Corrected Note and
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Acknowledgement of Subordination Serial #00137 signed by PRFG
“March___, 2019” (NYSCEF 455),
(ii) Note Serial #00139 “made the 25th day of March, 2019” and signed by
PRFG on April 2, 2019 (NYSCEF 28), and Subordinate Note and
Acknowledgement of Subordination Serial #00139 “made the 25th day of
March, 2019” and signed by PRFG “April___, 2019” (NYSCEF 456 at 2-4),
and
(iii) Note serial #00140 “made the 29th day of March, 2019” signed by PRFG
April 2, 2019 (NYSCEF 29) and Subordinate Note and Acknowledgement
of Subordination Serial #00140 “made the 29th day of March, 2019” and
signed by PRFG “April___, 2019” (NYSCEF 456 at 5-7).
The subordinated versions state that the notes are subordinate to 2018 Credit
Agreement. It is disputed which versions of the notes are operative. Radium’s
representative testified that he never signed the versions containing the subordination
language. (NYSCEF 489, tr at 166:11-14, 169:10-14 [Caruso depo].) One of PRGF’s
owners averred that Radium falsified the unsubordinated versions of the notes.
(NYSCEF 97, Mayar aff ¶¶ 119-123.)
PRFG Defaults under the Credit Agreements
On February 29, 2020 and March 5, 2020, Arena PRFG notified PRFG that SPV
was in default under the Credit Agreements. (NYSCEF 445, JSUF ¶ 19; NYSCEF 353,
Feb. 29, 2020 Notice; NYSCEF 354, Mar. 5, 2020 Notice.) By March 31, 2020 Notice,
Arena PRFG notified PRFG that it was exercising voting control over SPV. (NYSCEF
445, JSUF ¶ 22; NYSCEF 360, Mar. 31, 2020 Notice.) Ceteris began servicing the
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collections of the receivables pursuant to a April 8, 2020 Servicing Agreement.
(NYSCEF 445, JSUF ¶¶ 24, 40; NYSCEF 361, Servicing Agreement.) On May 1, 2020,
Arena PRFG issued notices stating that it intends to foreclose upon the Collateral as
defined in the Credit Agreements and sell the same in accordance with UCC Article 9
on May 15, 2020. (NYSCEF 445, JSUF ¶ 26; NYSCEF 363, May 1, 2020 Notification at
2, 4.) Arena PRFG assigned its rights as the administrative agent and collateral agent
under the Credit Agreements to PAF. (NYSCEF 445, JSUF ¶ 25; NYSCEF 362,
Assignment of Agency § a.) The foreclosure sale was advertised in two newspapers.
(NYSCEF 445, JSUF ¶ 28; NYSCEF 365, affs of publication) and took place on May 15,
2020. (NYSCEF 445, JSUF ¶ 34.) PAF was the only bidder that appeared and “credit
bid” $1 million, and thus, PAF won the auction. (Id. ¶¶ 35-37.) PAF foreclosed on the
collateral which included participant syndicate portions of the receivables, including
Radium’s. (Id. ¶ 38; NYSCEF 371, Memo of Sale; Notice of Public Foreclosure Sale.)
Although Arena PRFG had previously delivered revenue from the syndicated portions of
the Collection Account to syndicate participants including Radium, as provided in
section 2.6 of the Credit Agreements, it ceased doing so on the date of the foreclosure
sale. (NYSCEF 445, JSUF ¶ 23.) Radium has not received any remittances in
connection with its share of Collections since May 2020. (Id. ¶ 39.) On May 29, 2020,
Radium filed this action. (See NYSCEF 1, Summons with Notice.)
Claims
Radium’s remaining claims in this action are for:
(i) declaratory judgment against all defendants stating that Radium “has absolute
ownership and an unconditional right of possession to its participation interest in and its
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pro rata share of the participation payments from the collection of the Syndication
Receivables” (NYSCEF 12, Complaint ¶ 200),
(ii) declaratory judgment against AILP, Arena PRFG, and PAF (collectively,
Arena Defendants) stating that (1) the Arena Defendants “acted in a commercially
unreasonable manner … and in violation of UCC §§ 9-610 and 9-615(f)” in conducting
the UCC sale, (2) the UCC sale is null and void, and (3) Radium “has absolute
ownership and an unconditional right of possession to its participation interest in and its
pro rata share of the participation payments from the collection of the Syndication
Receivables” (id. ¶ 217),
(iii) tortuous interference with the MPA against the Arena Defendants and Ceteris
who allegedly “intentionally and tortiously interfered with and improperly caused and
procured [PRFG]’s breach of the MPA by, inter alia, misappropriating Radium’s
participation interest and its rights to weekly participation payments from the collection
of the Syndication Receivables” (id. ¶ 223),
(v) tortious interference with PRFG’s promissory notes against the Arena
Defendants by “interfere[ing] with Radium’s rights to repayment under the Notes” by
“improperly taking possession and control of … the Note Receivables and the proceeds
thereof” and by “direct[ing] [PRFG] … to divert the proceeds from the Note Receivables
that should have gone back to pay the Notes, to [AILP] and Arena PRFG” (id. ¶¶ 248-
249, 255), and
(vi) conversion against the Arena Defendants in that “Arena PRFG improperly
exercised dominion and control of Radium’s participation interest in the Syndication
Receivables and interfered with Radium’s absolute and superior right to such
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participation interest by improperly transferring same [sic] to” PAF in the UCC sale. (Id.
¶ 266; see NYSCEF 239, Decision and Order at 7 [dismissing claims (ix) and (x) and
alter ago liability] [mot. seq. no. 003].)
Legal Standard
Under CPLR 3212, “the proponent of a summary judgment motion must make a
prima facie showing of entitlement to judgment as a matter of law, tendering sufficient
evidence to demonstrate the absence of any material issues of fact.” (Alvarez v
Prospect Hosp., 68 NY2d 320, 324 [1986] [citations omitted].) Once the movant has
made such a showing, the burden shifts to the opposing party to demonstrate, with
admissible evidence, facts sufficient to require a trial, or summary judgment will be
granted. (See Winegrad v NY Univ. Med. Ctr., 64 NY2d 851, 853 [1985].) “[S]ummary
judgment may be granted as to one or more causes of action, or part thereof, in favor of
any one or more parties, to the extent warranted, on such terms as may be just.”
(CPLR 3212 [e].) “New York courts routinely grant summary judgment where …
summary resolution may be determined as a matter of law based on the plain language
of the operative contracts.” (CNY Residential LLC v 68-70 Spring Partners, LLC, 2024
NY Slip Op 30176[U], *8 [Sup Ct, NY County 2024] [citations omitted].)
Discussion
Radium’s Rights Vis-à-Vis the Purchased Receivables
Radium contends that it has an undivided ownership interest in the Funding
Agreements in which Radium participated pursuant to the MPA (Radium FAs), entitling
Radium to commensurate collections on Radium FAs (Radium RTR), including any
collections after the foreclosure sale; that Radium’s ownership interest in Radium FAs
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could not have been transferred to SPV; that Arena PRFG’s UCC-1 financing
statements are immaterial because Radium’s ownership interest in Radium FAs was
never transferred to SPV; and that the Arena Defendants converted Radium’s
ownership interest in Radium MAs through the foreclosure sale. Conversely, the Arena
Defendants, Prime, and Ceteris argue that Radium was an unperfected or unsecured
creditor of PRFG and its ownership claim on the collateral was, at most, a subordinate
security interest which was legally extinguished when Arena PRFG, as SPV’s creditor,
foreclosed on the collateral.
The contract at issue is the MPA. Although the parties also examine the Credit
Agreements, Receivable Purchase Agreements, and Assignments in their motion
papers, the court declines to do the same in determining Radium’s rights under the
MPA. Radium is not a signatory to these agreements, and thus, these agreements do
not alter the Radium-PRFG relationship which is controlled by MPA. (Highland
Crusader Offshore Partners, L.P. v Targeted Delivery Tech. Holdings, Ltd., 184 AD3d
116, 121 [1st Dept 2020] [holding that “[i]t is a general principle that only the parties to a
contract are bound by its terms” (citation omitted)].)7
Radium asserts that the MPA is a true participation agreement. The court
agrees.
“Courts have developed two tests to determine whether a transaction is a true participation or whether it is in fact a disguised loan. The following factors indicate that a transaction is a true participation: 1) money is advanced by participant to a lead lender; 2) a participant’s right to repayment only arises when a lead lender is paid; 3) only the lead lender can seek legal recourse against the borrower; and 4) the document is evidence of the parties[’] true intentions.” (Rothenberg v Oak Rock Fin., LLC, 2015 US Dist LEXIS 44032, *26-27, 2015
7The court notes that the parties do not argue that Radium falls into any exception to this general principal. 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 10 of 23 Motion No. 012 013
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WL 10663413, *7 [ED NY, Mar. 31, 2015, No. 14-cv-3700] [citation omitted].)
The MPA satisfies each of these factors.
Nevertheless, the court must examine the language of the MPA to determine
what Radium bargained for. The MPA defines several terms, including but not limited to
“‘Collateral’” (“All collateral and guarantees received by or granted to [PRFG] pursuant
to a [Funding] Agreement, or otherwise securing a Client’s Obligations”), “‘Collections’”
(“Proceeds of Purchased Receivables received by [PRFG], a portion of which may be
passed on to [Radium] on a pro rata basis in accordance with [Radium]’s participation
interest”), “‘Participant’s Share of Collections’” (“[Radium]’s pro-rata share of the
Collections based upon [Radium]’s percentage of participation”), “‘Participant’s RTR’ or
‘Participant’s Right to Receive’” (“The total amount of credit card or bank deposit
receivables which [Radium] has invested in and owns outright as a co-investor”),
“‘Purchased Receivables’” (“Credit card receivables or bank deposit receivables
purchased by [PRFG] and [Radium] from a Client as described in a Funding
Agreement”), and “‘RTR’” (“[PRFG]’s and [Radium]’s ‘Right to Receive,’ which
represents the full receivable due and payable under the [Funding] Agreement”).
(NYSCEF 325, MPA §§ 1.10, 1.11, 1.20, 1.21, 1.26, 1.31.) With the exception of
“Collections” none of these defined terms are used outside of Section 1 (Definitions) of
the MPA.8 Section 4.2 provides
“[o]n a weekly basis [PRFG] shall pay to [Radium], its pro-rata share, less those amounts described in Section 2.4 above, of Collections via ACH transfer to a bank account designated by [Radium] to receive payments. If for any reason
8“Participant’s Share of Collections” is used in section 2.7 of the MPA: “Participant acknowledges and accepts that Add-On Financings may result in a dilution of Participant’s Share of Collections from a given Funding Agreement.” (NYSCEF 325, MPA § 2.7.) 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 11 of 23 Motion No. 012 013
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[PRFG] shall hold on to [Radium’s] share of Collections, it is acknowledged by [PRFG] that such Collections are the property of [Radium] and shall be held for the benefit of [Radium] except in circumstances where this amount is used to offset any unpaid costs or extraordinary expenses associated with this Agreement. All payments due hereunder shall be made by ACH transfer.” (Id. § 4.2.)
Radium argues that it owns the Purchased Receivables, or at least a portion
thereof, but what Radium bargained for is the Collections, which are the proceeds of the
Purchased Receivables and not the Purchased Receivables themselves. That the MPA
defines “‘Participant’s RTR’ or ‘Participant’s Right to Receive’” as “[t]he total amount of
credit card or bank deposit receivables which [Radium] has invested in and owns
outright as a co-investor” (Id. § 1.21) does not advance Radium’s ownership argument.
“A fundamental tenet of contract law is that agreements are construed in accordance with the intent of the parties and the best evidence of the parties’ intent is what they express in their written contract. Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms, without reference to extrinsic materials outside the four corners of the document.” (Goldman v White Plains Ctr., 11 NY3d 173, 176 [2008] [internal quotation marks and citations omitted].)
The MPA is unambiguous and neither party makes an argument to the contrary.
Accordingly, the court declines to look outside the MPA’s four corners in determining
Radium’s rights under the MPA. The fact that the defined term “‘Participant’s RTR’ or
‘Participant’s Right to Receive’” is not used anywhere else in the MPA besides the
Definitions section, whereas the defined term “‘Collections’” is so used, evidences the
parties’ intent that Radium bargained for the right to receive proceeds from the
Purchased Receivables but not the Purchased Receivables themselves. Thus,
Radium’s ownership argument fails. Radium’s interest is in the Collections. PRFG only
had a contractual obligation to pay Radium a portion of the proceeds of the Purchased
Receivables once collected. (See NYSCEF 325, MPA § 4.2; In re Yale Express Sys., 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 12 of 23 Motion No. 012 013
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Inc., 245 F Supp 790, 792 [SD NY 1965] [participant’s “right to repayment would arise
only upon the receipt by [lender] of payment from [borrower]”]; see also In re Okura &
Co., 249 BR 596, 610 [Bankr SD NY 2000] [same].) The Collections, however, were
ultimately subsumed as collateral in connection with the Credit Agreements.
Arena PRFG’s Security Interest
Article 9 of the UCC makes clear that there is no distinction between security
interests and outright sales of receivables with respect to the priority, attachment, and
perfection rules. (See UCC § 9-109, comment 5 [2001] [“This Article applies to both
types of transactions. The principal effect of this coverage is to apply this Article’s
perfection and priority rules to these sales transactions”].) Comment 5 to UCC § 9-109
addresses this situation: PRFG’s transfer of the Purchased Receivables to SPV as part
of a secured transaction.
“Following a debtor’s outright sale and transfer of ownership of a receivable, the debtor-seller retains no legal or equitable rights in the receivable that has been sold. … This is so whether or not the buyer’s security interest is perfected. … However, if the buyer’s interest in accounts or chattel paper is unperfected, a subsequent lien creditor, perfected secured party, or qualified buyer can reach the sold receivable and achieve priority over (or take free of) the buyer’s unperfected security interest under Section 9-317. … It is so for the simple reason that Sections 9-318 (b), 9-317, and 9-322 make it so. … Because the buyer’s security interest is unperfected, for purposes of determining the rights of creditors of and purchasers for value from the debtor-seller, under Section 9- 318(b) the debtor-seller is deemed to have the rights and title it sold. Section 9- 317 subjects the buyer’s unperfected interest in accounts and chattel paper to that of the debtor-seller’s lien creditor and other persons who qualify under that section.” (Id.)
“The creation of a valid and enforceable security interest requires (1) the secured
debtor receive some value, (2) the debtor have rights in the collateral at issue, and (3)
an agreement.” (U.S. Claims, Inc. v Flomenhaft & Cannata, LLC, 519 F Supp 2d 515,
520 [ED Pa 2006]; see UCC § 9-203[b].) 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 13 of 23 Motion No. 012 013
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“When all three requirements [of creating a valid and enforceable security interest] are met, a security interest ‘attaches’ to the collateral and is enforceable between the parties to the agreement. UCC § 9-203(a). The next step, ‘perfection,’ is necessary in order to maximize the secured creditor’s rights (i.e. to establish priority) against third persons laying claim to the same collateral. 4 James J. White & Robert S. Summers, Uniform Commercial Code § 30-1(b) (5th ed. 2002). Where there are conflicting security interests in the same collateral, priority is determined by looking to the order of perfection. See UCC § 9-322(a). Perfected security interests take priority over conflicting unperfected interests. UCC § 9-322(a)(2). The subjective knowledge of a secured creditor with regard to another’s conflicting security interest is irrelevant: the first to perfect prevails. UCC § 9-322, cmt. 4, ex. 2.” (U.S. Claims, Inc., 519 F Supp 2d at 520-21.)
First, SPV obtained rights in the Purchased Receivables. PRFG transferred the
Purchased Receivables to SPV. (See NYSCEF 445, JSUF at 5 n 5 [“The parties … do
not dispute that PRFG transferred PRFG’s title and interest in the Radium [F]As … to
SPV, pursuant to Assignments”]9; NYSCEF 332, Assignment § 2[a], [d] [“[PRFG] does
hereby sell, transfer, assign, set over and-otherwise convey to the Purchaser, without
recourse … all right, title and interest of [PRFG] in and to the following: (a) the Related
9 The parties concede that PRFG transferred to SPV Purchased Receivables pertaining to the 161 Funding Agreements in which Radium participated. (NYSCEF 445, JSUF at 5 n 5; NYSCEF 317, Schedule II.) Radium contends that it also participated in the 115 Funding Agreements listed on Schedule III to the JSUF that are not subject to the JSUF. (NYSCEF 445, JSUF at 5 n 5; NYSCEF 318, Schedule III.) Upon review of Schedule III and submitted sample Assignments, there are no issues of fact that Purchased Receivables pertaining to the following 27 Funding Agreements listed on Schedule III were also transferred to SPV (i) pursuant to Feb 1, 2018 Assignment: RPMT-0004198, RPMT-0004164, RPMT-0004067, RPMT-0003932, RPMT-0003873, RPMT- 0003863, RPMT- 0003652, RPMT-0003654, RPMT-0003548, RPMT-0003545, RPMT-0003498, RPMT-0003453, RPMT-0003454, RPMT-0003374, RPMT-0003347, RPMT-0003159, RPMT-0003295, RPMT-0003307, RPMT-0003272 (see NYSCEF 332, Feb 1, 2018 Assignment at 5-14/14), (ii) pursuant to July 19, 2018 Assignment: RPMT- 0004642, RPMT-0004635, RPMT-0004614, RPMT-0004581, RPMT-0004567, RPMT- 0004563, RPMT-0004553 (see NYSCEF 334, July 19, 2018 Assignment at 5-8/9), and (iii) pursuant to May 17, 2019 Assignment: RPMT-0005571. (See NYSCEF 336, May 17, 2019 Assignment at 7/8.) Although an issue of fact exists as to whether the Purchased Receivables pertaining to the remaining 88 Funding Agreements listed on Schedule III in which Radium allegedly participated were assigned to SPV, this issue does not prevent summary judgment in defendants’ favor. Indeed, Radium proffered no evidence that it participated in the 88 Funding Agreements. 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 14 of 23 Motion No. 012 013
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Receivables listed on Schedule A to this Assignment” and “(d) all payments on or under
and all proceeds” (emphasis added)].10) Thus, SPV had rights in the Purchased
Receivables that SPV pledged as collateral. (See UCC § 9-203[b][2].) That the
Assignments’ Schedule A specified as to each transferred receivable “PRFG %
Ownership” or “Open Right-to-Receive Percentage” (NYSCEF 445, JSUF at 7 n 8) is of
no consequence. As discussed supra, PRFG remained the owner of the Purchased
Receivables, whereas Radium received a contractual right to receive a percentage of
the proceeds of the Purchased Receivables.
Further, value has been given to SPV as borrower pursuant to the Credit
Agreements. (See UCC § 9-203[b][1].) Finally, SPV pledged the Purchased
Receivables and proceeds to Arena PRFG as collateral as defined in the Credit
Agreements. (See UCC § 9-203[b][3][A]; NYSCEF 328, 2018 Credit Agreement §§ 1.1,
5.1[a][i],[xv],[xviii], 5.2[b]; NYSCEF 329, 2019 Credit Agreement §§ 1.1,
5.1[a][i],[xv],[xviii], 5.2[b].) Thus, there are no issues of fact that Arena PRFG held
security interest in the Purchased Receivables and proceeds pertaining to the 161
Funding Agreements that are subject to the JSUF (NYSCEF 445, JSUF at 5 n 5;
NYSCEF 317, Schedule II), as well as the Purchased Receivables and proceeds
pertaining to the 27 Funding Agreements listed on Schedule III to the JSUF. (See supra
at 14 n 9.)
Next, Arena PRFG properly filed a UCC-1 form listing as collateral “[a]ll of
[PRFG]’s right, title and interest in and to, whether now existing or hereafter created, the
10The parties concede that “[t]he Assignments at issue are in all material respects substantively the same as relevant to this action.” (NYSCEF 445, JSUF at 7 n 8; see NYSCEF 332-340, Assignments) 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 15 of 23 Motion No. 012 013
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Receivables and Related Security … sold pursuant to that certain Receivables
Purchase Agreement, dated as of February 1, 2018 … by and between [PRFG] and
[SPV]” as well as “all Collections and other money received with respect to the Related
Receivables.” (NYSCEF 351, UCC-1 at 6, 8/44; see id. at 14, 16/44 [same as to assets
transferred pursuant to August 28, 2019 Receivables Purchase Agreement between
PRFG and SPV]; see Lashua v La Duke, 272 AD2d 750, 751 [3d Dept 2000] [“In order
for a security interest to be valid and enforceable …, the debtor must sign a document
describing the collateral, the security interest must attach, and [the interest] must be
perfected” (citations omitted)].) Additionally, Arena PRFG perfected its security interest
in the Collection Account by control. (See NYSCEF 445, JSUF ¶¶ 16, 23; NYSCEF
328, 2018 Credit Agreement §§ 5.2[a]; NYSCEF 329, 2019 Credit Agreement § 5.2[a];
NYSCEF 423, December 28, 2017 Control Account Agreement § 3; UCC § 9-312[b][1]
[perfection by control].)11 Radium admits that it did not file its own UCC financing
statement. (See NYSCEF 446, Moving Brief at 32/34.) Simply put, Arena PRFG had a
perfected security interest in the Purchased Receivables, and Radium did not.12 Arena
11 Radium takes issue with the fact that the Credit Agreements identify the account ending 3387 as the Collection Account, and the December 28, 2017 Control Account Agreement pertaining to the account ending 3387 is entered into by PRFG and not SPV. The December 28, 2017 Control Account Agreement, however, shows that the account ending 3387 was subject to Arena PRFG’s control. To the extent another account was created to hold collections, the account ending 8588, the evidence demonstrates that that account was likewise controlled by Arena PRFG. (NYSCEF 350, Feb. 28, 2020 Control Account Agreement.) In any event, the fact that Arena PRFG had control over the Collection Account is conceded. (See NYSCEF 445, JSUF ¶ 23.) 12 In the alternative, Radium argues that its interest in the Collections constitutes
payment intangibles and is automatically perfected upon purchase of such payment intangibles. Assuming without deciding that Radium purchased payment intangibles, its interest did not attach because the MPA does not “provide[] a description of the collateral” (UCC § 9-203[b][3][A]), i.e. fails to identify the Purchased Receivables in whose Collections Radium allegedly acquired an interest. (See UCC § 9-108[a] [“a 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 16 of 23 Motion No. 012 013
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PRFG, in its secured position, has no obligation to Radium. (See Spielman v Acme
Natl. Sales Co., 169 AD2d 218, 223 [3d Dept 1991] [“secured creditor” “not … bound to
contracts entered into between the debtor and third parties, notwithstanding the secured
creditor’s possession of the debtor’s assets as collateral after default” (citations
omitted)].)
Contrary to Radium’s argument, the Credit Agreements’ section 2.6 (b), which
excludes “any amounts required to be paid as Receivables Participation Payments to a
Receivables Participant” from weekly distribution to the Credit Agreements’ parties,
does not evidence Arena PRFG’s intent to take on PRFG’s obligations to Radium under
the MPA. (NYSCEF 328, 2018 Credit Agreement § 2.6[b]; NYSCEF 329, 2019 Credit
Agreement § 2.6[b].) Indeed, Arena PRFG specifically disclaimed assumption of any
such obligations. (NYSCEF 328, 2018 Credit Agreement § 12.27 [“None of the Agents
or the Lenders have assumed or will assume any obligations with respect to any
Contract or any Receivables Participation Agreements”]; NYSCEF 329, 2019 Credit
Agreement § 12.27 [same].)
description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described”].) Radium fails to proffer any other documents providing a description of the relevant Purchased Receivables. (See Ultimore, Inc. v Bucala (In re Bucala), 464 BR 626, 630 [Bankr SD NY 2012] [“A court may look to multiple documents to determine whether a valid and enforceable security agreement exists” (citation omitted)].) Thus, Radium cannot benefit from the automatic perfection rule. (See UCC § 9-309[3] [“The following security interests are perfected when they attach: … a sale of a payment intangible”]; Pascack Community Bank v Universal Funding, LLP, 419 NJ Super 279, 290 [Super Ct of NJ, App Div 2011] [The sale of a payment intangible is granted automatic perfection upon ‘attachment,’ i.e., when the security interest becomes enforceable against the debtor” (citations omitted)].) 652120/2020 RADIUM2 CAPITAL, LLC (F/K/A vs. PLATINUM ASSET FUNDING, LLC Page 17 of 23 Motion No. 012 013
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Causes of Action
(i) and (ii) Declaratory Judgment
For the reasons discussed supra, Radium’s claims for (i) and (ii) declaratory
judgment seeking declaration that Radium “has absolute ownership and an
unconditional right of possession to its participation interest in and its pro rata share of
the participation payments from the collection of the Syndication Receivables”
(NYSCEF 12, Complaint ¶¶ 200, 217) fail.
Radium also seeks a declaratory judgment stating that (1) the Arena Defendants
“acted in a commercially unreasonable manner … and in violation of UCC §§ 9-610 and
9-615(f)” in conducting the UCC-9 sale, and (2) the UCC-9 sale is null and void. (Id. ¶
217.) Radium seeks damages in excess of $8,484,517. (Id.)
“[A] person is liable for damages in the amount of any loss caused by a failure to
comply with this article” 9 of UCC. (UCC § 9-625[b].) Radium, however, is “neither a
debtor, obligor nor one holding a security interest” in the foreclosed collateral and thus
is not entitled to damages under the UCC. (Airball Capital LLC v Rosenthal &
Rosenthal Inc., 73 Misc 3d 1218[A], 2021 NY Slip Op 51082[U], *7 [Sup Ct, NY County
2021]; see UCC § 9-625 [“(c) [Persons entitled to recover damages; statutory damages
if collateral is consumer goods.] Except as otherwise provided in Section 9-628: (1) a
person that, at the time of the failure, was a debtor, was an obligor, or held a security
interest in or other lien on the collateral may recover damages under subsection (b) for
its loss”].) Accordingly, Radium lacks standing to seek declaration that the sale was
commercially unreasonable. (Phelan v Buffalo, 54 AD2d 262, 264 [4th Dept 1976]
[“Whether an individual has standing to seek [declaratory] relief is largely determined by
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whether he has a matured legally protectible interest in the outcome of the case such as
to assure concrete adverseness in the presentation of issues” (citation omitted)].)
Next, the declaratory judgment claim fails to the extent Radium seeks the
declaration that the sale is null and void. The court has no “authority to unwind a
concluded UCC sale” as a matter of law. (Atlas MF Mezzanine Borrower, LLC v
Macquarie Texas Loan Holder LLC, 174 AD3d 150, 161 [1st Dept 2019] [dismissing
“cause of action seeking a declaration invalidating and setting aside the sale …
because this remedy is not provided for in the UCC”].)
(iii) Tortious Interference with the MPA
Radium alleges that the Arena Defendants and Ceteris “intentionally and
tortiously interfered with and improperly caused and procured [PRFG]’s breach of the
MPA by, inter alia, misappropriating Radium’s participation interest and its rights to
weekly participation payments from the collection of the Syndication Receivables.”
(NYSCEF 12, Complaint ¶ 223.)
“To state a claim for tortious interference with contract, a plaintiff must allege (1)
the existence of a valid contract, (2) the defendant’s knowledge of that contract, (3) the
defendant’s intentional procuring of the breach of that contract, and (4) damages.” (111
W. 57th Inv. LLC v 111 W57 Mezz Inv. LLC, 220 AD3d 435, 436 [1st Dept 2023]
[citation omitted].)
Arena PRFG’s withholding of merchant collection, including proceeds of the
Purchased Receivables subject to the MPA, with the assistance of Ceteris, the servicer,
following the foreclosure sale does not evidence intentional procurement of a breach of
the MPA. Where, as here, “creditors … have a right to protect [their] own legal or
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financial stake in the breaching party’s business” and act to protect that right, the
tortious interference claim cannot stand absent a showing of malice or fraudulent or
illegal means. (111 W. 57th Inv. LLC v 111 W57 Mezz Inv. LLC, 2022 NY Slip Op
34258[U], *11 [Sup Ct, NY County 2022] [internal quotation marks and citation omitted],
affd as mod 220 AD3d 435 [1st Dept 2023]; see also White Plains Coat & Apron Co.,
Inc. v Cintas Corp., 8 NY3d 422, 426 [2007] [economic interest defense applied where
“defendant was the breaching party’s creditor”]; Collins v E-Magine, LLC, 291 AD2d
350, 351 [1st Dept 2002] [“[a]s a general matter, economic interest precludes a claim
for tortious interference with a contract unless there is a showing of malice or illegality”],
lv denied 98 NY2d 605 [2002].) There is no evidence of malice or illegality on Arena
PRFG or Ceteris’ part. Thus, the tortious interference with the MPA claim fails.
(v) Tortious Interference with the Notes
Radium alleges that the Arena Defendants tortiously interfered with Radium’s
promissory notes by “interfere[ing] with Radium’s rights to repayment under the Notes”
by “improperly taking possession and control of … the Note Receivables and the
proceeds thereof” and by “direct[ing] Platinum … to divert the proceeds from the Note
Receivables that should have gone back to pay the Notes, to [AILP] and Arena PRFG.”
(NYSCEF 12, Complaint ¶¶ 248-249, 255.)
The Arena Defendants’ alleged diversion of the note receivables to satisfy
PRFG’s obligations under the Credit Agreements likewise cannot constitute tortious
interference. (See supra at 19-20.) Indeed, “[p]rocuring the breach of a contract in the
exercise of equal or superior right is acting with just cause or excuse and is justification
for what would otherwise be an actionable wrong.” (Felsen v Sol Cafe Mfg. Corp., 24
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NY2d 682, 687 [1969] [internal quotation marks and citation omitted].) Additionally,
there is no evidence of malice or illegality on the Arena Defendants’ part.
Swift Funding, LLC v Isacc, 144 AD3d 471, 472 (1st Dept 2016) is
distinguishable as there is no indication that defendant in that case acted to protect their
economic interest. Bernberg v Health Mgt. Sys., 303 AD2d 348, 349 (2d Dept 2003),
where plaintiff defeated dismissal on CPLR 3211(a)(7) motion by pleading that
“defendants destroyed the financial well-being of [breaching party] with the intention of
procuring [breaching party]’s default on the notes” is likewise distinguishable; there is no
evidence that the Arena Defendants intentionally procured PRFG’ default of the notes.
The allegations that the Arena Defendants commandeered PRFG to obtain funds from
Radium under false pretenses (NYSCEF 12, Complaint ¶¶ 244-246) is not supported by
evidence. Thus, the claim for tortious interference with the notes fails.
(vi) Conversion
The claim for (vi) conversion of Radium’s participation interest in the Purchased
Receivables (id. ¶ 266) fails. (See Spielman, 169 AD2d at 223 [secured creditor’s
disposal of collateral does not support conversion claim].) Additionally, Radium lacks
“legal ownership or an immediate right of possession to specifically identifiable funds” at
issue. (Whitman Realty Group, Inc. v Galano, 41 AD3d 590, 592 [2d Dept 2007]
[conversion requires showing that plaintiff “had legal ownership or an immediate right of
possession to specifically identifiable funds and that the defendant exercised an
unauthorized dominion over such funds to the exclusion of the plaintiff’s rights” (citation
omitted)].) Radium’s “mere right to payment cannot be the basis for a cause of action
alleging conversion.” (Selinger Enters., Inc. v Cassuto, 50 AD3d 766, 768 [2d Dept
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2008]; see also Stack Elec., Inc. v DiNardi Constr. Corp., 161 AD2d 416, 417 [1st Dept
1990] [“by failing to allege that the defendants had ‘ownership, possession or control’ of
the specific funds in question, but, rather, that the defendants had an obligation to pay
the plaintiff what it was owed after receiving payment from the State University
Construction Fund, plaintiff failed to allege the necessary elements for a cause of action
for conversion” (citations omitted)]; Independence Discount Corp. v Bressner, 47 AD2d
756, 757 [2d Dept 1975] [conversion claim failed where “[t]he security agreement did
not impose a duty upon [defendant] to pay over to plaintiff the specific proceeds of the
sale of each appliance covered by the agreement” and “there was no specific fund from
which payment had to be made”].)
The court has considered the balance of the parties’ arguments and finds them
either without merit or otherwise not warranting an alternate result.
Accordingly, it is
ORDERED that Radium2 Capital, LLC (f/k/a Radium2 Capital Inc.)’s motion
sequence 012 is denied; and it is further
ORDERED that defendant Platinum Asset Funding, LLC, Arena PRFG, LLC,
Arena Investors, LP, Prime Meridian Special Opportunities Fund, LP, and Ceteris
Portfolio Services, LLC’s motion sequence 013 is granted and the complaint is
dismissed with costs and disbursements to said defendants as taxed by the Clerk upon
the submission of an appropriate bill of costs; and it is further
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ORDERED that the Clerk is directed to enter judgment accordingly.
6/15/2025 DATE ANDREA MASLEY, J.S.C. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION
□ GRANTED DENIED X GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
.
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