Saturn Funding, LLC v. NRO Boston, LLC, et al. (Lawyers Weekly No. 12-017-17)



SUFFOLK, ss.                                                                       SUPERIOR COURT

                                                                                                CIVIL ACTION

NO.: 16-2523B


















The defendants move under Mass. R. Civ. P. 55(c) and 60(b) to vacate a Default Judgment by Confession against NRO Boston, LLC, North River Outfitters, NRO Sport, LLC, NRO Edgartown LLC, Alice Indelicato, and Jason Indelicato that was obtained by Saturn Funding, LLC. Plaintiff opposes this motion on the grounds that the defendants have not shown good cause under Mass.R.Civ.P. 55(c) to set aside the entry of Mass.R.Civ.P. 55(a) default. Pursuant to the plaintiff’s request under Mass. R. Civ. P. 55(b)(1), defendants were all defaulted. [1]  Judgment by Default entered on January 3, 2017.  For the reasons stated herein, the defendants’ motion is ALLOWED.


Mass.R.Civ.P. 60(b) states in part:


On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b) , (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void… or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order or proceeding was entered or taken… This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to set aside a judgment for fraud upon the court…


Whether or not to grant relief under Mass.R.Civ.P. 60(b) “rests within the sound discretion of the judge” and is “to be applied ‘toward the objective that legal procedure becomes the vehicle for determination of the issues upon their merits instead of upon refinement of procedure…’” Berube v. McKesson Wine & Spirits Co., 7 Mass. App. Ct. 426, 429 (1979) (quoting Florida Investment Enterprises, Inc. v. Kentucky Co., 160 So. 2d 733, 736 (Fla. Dist. Ct. App. 1964)). “Rule 60(b) is remedial in character and subject to a liberal interpretation and application in a situation where the mischief leading to the judgment occurs at the pretrial stage.” Berube, 7 Mass. App. Ct. at 429. The instant case deals with Rule 60(b)(1), as defendants seek relief from a final judgment due to mistake, inadvertence, surprise, or excusable neglect. The burden of proving that one of these conditions exists, and that it merits relief falls on the defendants. Hermanson v. Szafarowicz, 457 Mass. 39, 46 (2010) (citing Gath v. M/A–Com, Inc., 440 Mass. 482, 497 (2003)).

Whether relief should be granted is determined by the circumstances of each case, considering the following factors:

(1) [W]hether the offending party has acted promptly after entry of judgment to assert his claim for relief therefrom; (2) whether there is a showing either by way of affidavit, or otherwise apparent on the record, that the claim sought to be revived has merit; (3) whether the neglectful conduct occurs before trial, as opposed to during, or after the trial; (4) whether the neglect was the product of a consciously chosen course of conduct on the part of counsel; (5) whether prejudice has resulted to the other party; and (6) whether the error is chargeable to the party’s legal representative, rather than to the party himself; for “the courts have been reluctant to attribute to the parties the errors of their legal representatives.” (Internal citations omitted)


Hermanson, 457 Mass. at n. 11; Berube, 7 Mass. App. Ct. at 430-431.

  1. The Defendants Have Acted Promptly

The moving parties in the case at hand have acted promptly in filing their motion to vacate the New York judgment by confession. [2]  Plaintiff filed its verified complaint to domesticate the judgment by confession in Suffolk Superior Court on August 16, 2016. Def. Exh. A at para. 7. A default judgment was entered against the defendants on January 3, 2017 and the defendants filed their motion to vacate along with their answer to the complaint and affirmative defenses on January 9, 2017. Def. Exh. B. Docket at 2.  If plaintiff’s service was good, an answer was due by December 14, 2016. Def. Exh. A at para. 8; contra, Hermanson, 457 Mass. at 47 (finding that the defendant did not act promptly by filing motion for relief from judgment until seven months after sheriff’s levy was entered on his property); Garabedian v. Schomer, 86 Mass. App. Ct. 1126, *1 (2014) (finding the trial court judge did not abuse their discretion by denying plaintiff’s motion to vacate judgment of dismissal when motion was filed almost one year after the dismissal).

  1. The Claims Defendants Seek To Revive Have Merit

The second factor to consider is whether the claim the defendants seek to revive has merit. The evidence provided so far supports a determination that the defendants may have a meritorious defense to the judgment by confession. The defendants do not have to prove their claim has a “certainty of success”, only that “the claim is one ‘worthy of judicial investigation because [it] rais[es] a material question of law meriting discussion and decision, or a real controversy as to essential facts arising from conflicting or doubtful evidence.’” Berube, 7 Mass. App. Ct. at 433 (quoting Russell v. Foley, 278 Mass. 145, 148 (1932)).

The defendants assert that the judgment by confession should be vacated because 1) the underlying instrument is void for confessing judgment in a promissory note and 2) the interest rates charged in the loan agreements between the plaintiff and defendants were usurious.  Mass. G.L. c. 231, § 13A states that:

Any stipulation in a contract, promissory note or other instrument, or in any memorandum or writing relating thereto, whereby a party thereto agrees to confess judgment in any action which may be brought thereon or authorizes or agrees to authorize another person to confess judgment as aforesaid shall be void and any judgment by confession taken in pursuance of such a stipulation shall be set aside or vacated on motion of the defendant. (Emphasis added)


The contested documents here are a series of loan agreements entered into between the parties between April 8, 2016 and July 12, 2016. While Massachusetts is required to give full faith and credit to lawfully executed judgments from other states, these all appear to be Massachusetts agreements. Contra McDade v. Moynihan, 330 Mass. 437, 441-442 (1953) (where the agreement was executed in Pennsylvania and was to be performed in Pennsylvania, Massachusetts could not refuse full faith and credit to the agreement); C.F. Trust, Inc. v. Peterson, 6 Mass.L.Rptr. 505, *4 (1997) (“The maker and endorsers were Virginia residents, the notes were executed and performed in Virginia, and they were secured by Virginia property.”) See also Gramatan Nat. Bank & Trust Co. of Bronxville v. Montgomery, 343 Mass. 129, 130 (1961). Here, the agreements were executed in Massachusetts, by Massachusetts residents and Massachusetts businesses, through a Massachusetts notary. While the agreements may satisfy the requirements for a judgment by confession under New York Civil Practice Law and Rules § 3218, the plaintiff offers no explanation as to how these were not, for all intents and purposes, “Massachusetts agreements”.  However, Ex. A, the Merchant Agreement dated June 16, 2016 specifically states, in pertinent part, in Par. 4.5:

This Agreement shall be governed by and construed in accordance with the laws of the state of New York, without regards to any applicable principals of conflicts of law.  Any suit, action or proceeding arising hereunder, or the interpretation, performance or breach hereof, shall, if SF so elects, be instituted in any court sitting in New York, (the “Acceptable Forums”).  Merchant agrees that the Acceptable Forums are convenient to it, and submits to the jurisdiction of the Acceptable Forums and waives any and all objections to jurisdiction or venue.  Should such proceeding be initiated in any other forum, Merchant waives any right to oppose any motion or application made by SF to transfer such proceeding to an Acceptable Forum.  Additionally, Merchant agrees that any summons and/or complaint or other process to commence any litigation by SF will be properly served if mailed by certified mail, return receipt requested.  To the mailing address(es) listed on page 1 of this Agreement. . . .


Plaintiff choose the venue in its Merchant Agreement and appropriately filed its


Complaint in New York.


Furthermore, even if the judgment by confession is permitted in Massachusetts under the full faith and credit doctrine, the defendants assert that the loan documents  violate G.L. c. 93A, § 2 by charging a criminally usurious interest rate. In re Tavares, 298 B.R. 195, 202-203 (Bankr. D. Mass. 2003). G.L. c. 93A, § 2(1) prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce…” The plaintiff is a commercial lending business that loaned money to the defendants in a commercial, not private, capacity. See Begelfer v. Najarian, 381 Mass. 177, 190 (1980). An act or practice is unfair or deceptive for purposes of 93A, § 2 if “(1) It is oppressive or otherwise unconscionable in any respect; … (3) It fails to comply with existing statutes, rules, regulations or laws, meant for the protection of the public’s health, safety, or welfare promulgated by the Commonwealth… intended to provide the consumers of this Commonwealth protection….” 940 C.M.R. § 3.16. The usury statute appears in Chapter 271 of the General Laws, denominated ‘Crimes Against Public Policy, and the plaintiff has not yet substantively responded to defendants’ position, except to state that the Affidavit of Confession of Judgment signed by defendants had an “annual rate of 16%[3] per annum. . . .” p.1 of Plaintiff’s Opposition.  The Merchant Agreement (Ex. A) defendants provided states that the purchase price of $ 60,000.00 (is borrowed at a) “Specified Percentage 15% Specific DAILY Amount $ 1,549.00 (for the) Purchased Amount: $ 85,200.00.

The Merchant Agreement also states plaintiff, SF (for Saturn Funding, LLC,)

“will debit the Specific Amount ($ 1,549.00) each business day. . . . If Merchant’s bank is closed on a business day, then SF (Saturn Funding LLC) will debit the Specific Amount for that day on the next business day in addition to the regularly scheduled debit . . . Merchant (Defendants) understands that it is responsible for ensuring that the Specific Amount to be debited by SF (Saturn Funding, LLC) remains in the Account and will be responsible for any fees incurred by SF (Saturn Funding, LLC) resulting from a rejected ACH (Authorization Agreement) attempt or an Event of Default.”


SF (Saturn Funding, LLC) also requires that the Merchant pay its fees including $ 50.00 for every Bank Charge Fee and $ 50.00 for every “wired fee”, as well as $ 25.00 for every “rejected ACH (Authorization Agreement)/Blocked ACH/Default Fe (sic) as well as $ 35.00 for up to two times “Insufficient Funds (NSF) Fee. The Merchant’s representative provided an Authorization Agreement allowing plaintiff to withdraw $ 1,549.00 every Monday-Friday or 15% of each Banking Deposit every Monday-Friday.

Having now reviewed the documents defendants provide, the Merchant Agreement appears to be at a usurious interest rate.  The Affidavit of Confession of Judgment, however, states the Merchant was given “$ 85,200.00 at the annual rate of 16% per annum”, but that Affidavit of Confession of Judgment appears to bear no relationship to the DAILY interest rate specified in the Merchant Agreement.  This Court thus far finds irrefutable the defendants’ position that a violation of G.L. c. 271, § 49 would likely constitute a violation of G.L. c. 93A, § 2…”  The defendants also assert that because “the usury statute embodies a policy ‘designed to protect necessitous debtors from outrageous demands by lenders,’”  violating the usury statute is a violation of G.L. c. 93A, § 2. In re Tavares, 298 B.R. at 203-204 (quoting Begelfer 381 Mass. at 182).

Criminal usury occurs when “in exchange for either a loan of money… [a person] knowingly contracts for, charges, takes or receives… interest and expenses the aggregate of which exceeds an amount greater than twenty per centum per annum upon the sum loaned or the equivalent rate for a longer or shorter period…” G.L. c. 271, § 49. Here, the defendants allege the plaintiff in effect annually charged the defendants 147% interest on the first loan, 182% interest on the second loan, 194% interest on the third loan, and 204% interest on the fourth loan.[4]  Plaintiff advances no argument in its papers that it was  in compliance with the oversight required by the Attorney General’s Office under c. 271, § 49 to charge such a high interest rate or that the interest rates asserted by the defendants are inaccurate. As such, it appears uncontested that, in the underlying loan documents, the plaintiff charged the defendants a criminally usurious interest rate.

The defendants also assert that the interest rates charged by the plaintiff are criminally usurious under New York law. New York Penal Law § 190.40 states that criminal usury in the second degree is when “not being authorized or permitted by law to do so, [a person] knowingly charges, takes or receives any money or other property as interest on the loan… at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period.” While an annual interest rate of 25% is higher than the 20% interest rate allowed in Massachusetts, the interest rates the plaintiff allegedly charged still appear exceptionally higher than either statute allows. Again, other than the Merchant Agreement stating the “Specific Percentage is 15%, Specific: DAILY Amount: $ 1,549.00” and the Affidavit of Confession of Judgment stating the interest rate is “16% per annum,” the plaintiff has provided no evidence that the DAILY interest rate charged of $ 1,549.00 is not as high as the defendants allege or that the interest rates are otherwise in compliance with New York state law. In New York, criminally usurious contracts are unenforceable and would be void. Szerdahelyi v. Harris, 67 N.Y.2d 42, 48 (N.Y. 1986); Hammelburger v. Foursome Inn Corp., 54 N.Y.2d 580, 590 (N.Y. 1981); Blue Wolf Capital Fund II, L.P. v American Stevedoring, Inc., 105 A.D.3d 178, 182 (1st Dep’t 2013).

Plaintiff does inform the court that “if a judgment in another state’s court was based on a confession of judgment and was valid in that state,” i.e. New York in this case, then this court must give full faith and credit to that New York Judgment.  See Plaintiff’s Opposition at p.6 citing McDade v. Moynihan, 330 Mass. 437 (1953).  What the defendants seek is to be allowed to file a Motion to Vacate in New York.  Given the allegations defendants have asserted, this court has serious concerns as to whether the New York Judgment plaintiff obtained is a valid judgment.  Accordingly, at this stage, this court has serious concerns as to whether this court is obligated to give full faith and credit to the Confession of Judgment plaintiff obtained in New York, which judgment may well be invalid and thus void.

  1. Defendants’ Actions Occurred Before Trial


The remaining Berube factors do not weigh heavily against the defendants. This not a post-trial motion for relief from judgment since there was no trial. Plaintiff received a Judgment by Confession in a New York court as part of a provision of the loan documents signed by the defendants, a Judgment obtained without ever notifying these defendants.  The defendants’ failure to answer the complaint here in Suffolk occurred prior to any trial. “Rule 60(b) is remedial in character and subject to a liberal interpretation and application in a situation where the mischief leading to the judgment occurs at the pretrial stage.” Berube, 7 Mass. App. Ct. at 429.  This rule “provides a procedure for removing the burdens of a judgment where the interests of justice and fairness require relief.”  Berube at 429 citing Pulliam v. Pulliam, 478 F.2d 935, 936-937 (D.C. Cir. 1973).

  1. There Is No Consciously Chosen Conduct By Defense Counsel

There also appears to be no “consciously chosen” conduct on the part of counsel of the kind that would defeat the defendants’ motion. See, e.g., Pagano v. Dolaher, 85 Mass. App. Ct. 1117, n. 6 (2014) (error in updating address was “not a consciously chosen course of conduct”).  The plaintiff attempts to demonstrate that the defendants’ actions are disingenuous by providing a single e-mail regarding settlement sent from defendants’ counsel in September 2016, but nowhere does the e-mail reference receiving service of the complaint, either by current defense counsel or the parties themselves, and the defendants deny that they received the Suffolk complaint allegedly served at their last and usual address.  Def. Exh. A at 6, 8, 10-12. The settlement communication could just as easily demonstrate an attempt by the defendants to settle their debt with plaintiff outside of any judicial proceeding.



  1. Plaintiff Is Not Prejudiced By Granting The Defendants’ Motion

Any prejudice to the plaintiff is also minimal because they never had to try their case against the defendants. Scannell v. Ed. Ferreirinha & Irmao, LDA, 23 Mass. App. Ct. 465, n. 7 (1987); contra Garabedian v. Schomer, 86 Mass. App. Ct. 1126, *2 (2014) (finding there was prejudice against the defendant where the plaintiff sought to reopen the case fourteen months after the statute of limitations had expired) (citing Kennedy v. Beth Israel Deaconess Medical Center, Inc., 73 Mass. App. Ct. 459, 468-469 (2009)).

  1. Unclear Whether The Parties Or Counsel Are At Fault For Delay

Finally, there is insufficient information to determine at this stage whether the failure to timely answer the complaint was the fault of the defendants themselves or their counsel. The defendants allege that they only became aware of this action in early December 2016 after the Trustee Defendant notified the defendants’ Boston counsel of this lawsuit.  The defendant Jason Indellicato admits he made a mistake in failing to answer in 20 days, a mistake allegedly based on the content of the docket of this case.  Def. Exh. A at para. 8. Whether any error was due to the defendants’ other counsel or due to the plaintiff’s allegedly ineffectual service, nothing in the record shows that the defendants were negligent in pursuing their rights or that defense counsel’s actions constituted serious inattention. Berube, 7 Mass. App. Ct. at 431 (“‘the courts have been reluctant to attribute to the parties the errors of their legal representatives.’”) (quoting Barber v. Tuberville, 94 U.S. App. D.C. 335, 337 (1954)); McIsaac v. Cedergren, 54 Mass. App. Ct. 607, 610 (2002); Hanscom v. Read, 60 Mass. App. Ct. 1114, *2 (2004). Given the strong showing of meritorious defense and the timely action taken by the defendants, plaintiff’s alleged prejudice of having to prove its claim is not a determinative factor.

In conclusion, under the factors set by Berube and Mass.R.Civ.P. 60(b)(1), there is more than sufficient reason to allow the defendants’ motion to vacate the judgment by confession on grounds of inadvertence, mistake and excusable neglect. The defendants have raised meritorious defenses, especially with regard to their allegations that the plaintiff charged them criminally usurious interest rates. Additionally, the defendants took timely action within days of the default judgment being entered. There is also no showing of substantial prejudice to the plaintiff or any other factor that would weigh heavily against the defendants’ motion. As such, their motion to vacate the judgment is allowed.


Defendants’ NRO Boston, LLC and North River Outfitters, NRO Sport, LLC, NRO Edgartown, LLC, Jason Indelicato, and Alice Indelicato’s Motion to Remove Default and File Answer and Affirmative Defenses Late is ALLOWED pursuant to

Mass. R. Civ. P. 55(c) and 60(b).  Defendants’ Proposed Answer and Affirmative Defenses shall be docketed.



Elizabeth M. Fahey

Justice of the Superior Court


Dated:  February   , 2017

[1] Plaintiff filed a complaint in New York and obtained an ex parte Attachment in the amount of a New York Judgment on August 16, 2016, never having served or notifying these defendants.  Plaintiff made service of this Suffolk Complaint mostly at the last and usual addresses on or about September 13, 2016.  Plaintiff claims it served NRO Boston, LLC and North River Outfitters through service on a store manager, which defendants claim is insufficient as she is neither a corporate officer nor a responsible party.   Plaintiff then sought to default the defendants on October 5, 2016, and also sought a Rule 55(b)(1) Default Judgment on November 28, 2016 which was allowed on January 3, 2017. (Leighton, J.)  In this case, defendants assert plaintiff did not properly serve any of the defendants.  Plaintiff attempted to perfect service on defendant NRO Sport, LLC through a clerk who defendants claim is neither a corporate officer nor a responsible party.  The docket reflects that plaintiff served Jason Indelicato and Alice Indelicato at their last and usual address, 15 Bird Hill Avenue, Wellesley Hills, MA which each denies receiving.  Defendants assert such service is insufficient.  Defendants admit to learning of this lawsuit from the Trustee defendant Boston Private Bank, which was served in August 2016 with the Suffolk complaint.

[2] It is undisputed that plaintiff never served the complaint filed in New York on defendants prior to obtaining the Judgment in New York.  Defendants only learned of the New York Judgment after plaintiff filed this lawsuit in Suffolk, requesting this court to give full faith and credit to the New York Judgment.

[3]  It appears that the Affidavit of Confession of Judgment which states 16% interest rate per annum bears no relationship to the Merchant Agreement which states 15% interest DAILY.

[4] These interest rates are alleged in Defendants’ Memorandum of Law in Support of their Motion to Vacate the Judgment by Confession which Motion to Vacate defendants intend to file in New York, should their motion be allowed here in Suffolk.

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