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New York MCA Defense Attorney: Vacating COJs and Fighting NY Lawsuits

What a NY MCA defense attorney actually does in practice. Motions to vacate COJs, NY-specific defenses, and how to handle a NY Commercial Division case.

By Bar Alezrah13 min readPublished April 16, 2026 · Updated April 16, 2026

A New York MCA defense attorney handles the most contested side of the merchant cash advance dispute: responding to a lawsuit or a pre-2019 judgment, building a record that supports viable defenses, and driving the case toward either dismissal, favorable settlement, or trial. The work is highly procedural, heavily document-driven, and shaped by the specific appellate framework New York courts have developed. This article covers the mechanics: motions to vacate COJs, NY-specific affirmative defenses, Commercial Division process, discovery strategy, and the judgment call between settling and fighting. For the broader search and hiring process see New York MCA Attorney, for the legal framework see MCA Attorney New York, and for the NY statutory context see MCA Laws in New York.

Motions to Vacate Pre-2019 COJs (CPLR 5015)

For merchants who had a Confession of Judgment entered against them before the 2019 reform, the first defense move is a motion to vacate under CPLR 5015. This rule, available at the New York Unified Court System public portal, provides the grounds on which a court can relieve a party from a judgment. In the MCA context, the three grounds that most often support vacatur are fraud or misrepresentation under 5015(a)(3), lack of personal jurisdiction under 5015(a)(4), and excusable default with a meritorious defense under 5015(a)(1).

The defense attorney's work on a vacatur motion runs through a specific sequence. First, pull the full filing record at the county clerk's office: the confession document, the underlying contract, the default affidavit, and any enforcement filings. Second, cross-check the default affidavit against the contract. The funder's affidavit typically states the amount due and the basis for default. Inflated amounts, incorrect default dates, or misstatements about reconciliation requests are all grounds for a fraud attack. Third, evaluate execution validity. The confession had to be signed with specific formalities. Notary defects, signature authenticity challenges, and venue-based jurisdictional arguments are all on the table.

The motion itself is a substantial filing: a notice of motion, a supporting affidavit from the merchant, a supporting attorney affirmation, a memorandum of law citing the appellate authorities, and documentary exhibits. It is usually returnable in six to ten weeks depending on the court. Oral argument is common. The typical flat fee ranges from $3,000 to $8,000, though complex factual disputes can push higher.

If the motion is granted, the judgment is vacated and the underlying contract dispute reverts to ordinary civil litigation with notice, answer, discovery, and motion practice. If denied, the judgment remains enforceable, though appellate review is available.

NY-Specific Affirmative Defenses

New York MCA defense turns on a specific catalog of affirmative defenses that defense counsel raise in the answer and then develop through discovery and motion practice. The core defenses include the following.

Recharacterization as a disguised loan. This is the headline defense. The theory is that despite the contract's "purchase of receivables" label, the economic substance of the transaction is a loan. New York appellate courts have developed a multi-factor test that weighs reconciliation mechanics, term structure, personal guarantee scope, and the reality of contingent versus guaranteed payment. The Champion Auto Sales v. Pearl Beta Funding line and the Davis v. Richmond Capital Group line together frame the analysis. The cluster sibling New York MCA Loan Attorney covers recharacterization in depth.

Civil and criminal usury. If the court recharacterizes the MCA as a loan, New York's 16% civil usury cap (General Obligations Law §5-501) and 25% criminal usury cap (Penal Law 190.40) become live. The practical annual rate on most MCAs is well above both caps. Criminal usury can render the contract void. Civil usury can result in partial voidance or rate reduction. Usury is not a standalone defense; it is the remedy that follows successful recharacterization.

Unconscionability. Both procedural and substantive unconscionability are defenses under NY contract law. Procedural unconscionability focuses on the circumstances of contracting: sophistication of the parties, take-it-or-leave-it presentation, time pressure, language barriers. Substantive unconscionability focuses on the terms themselves: commercially unreasonable pricing, one-sided default triggers, unreasonable personal guarantees. Courts require a showing of both, though one can be weaker if the other is strong.

Breach of the reconciliation covenant. Most MCA contracts include a reconciliation clause allowing the merchant to request an adjustment of the daily or weekly pull when revenues drop. Funders who refuse good-faith reconciliation requests are in breach, which both supports recharacterization (by showing the "purchase" was in form only) and provides an independent breach defense that can reduce damages.

Lack of commercial good faith (UCC §1-304). The Uniform Commercial Code imposes a duty of good faith in every contract within its scope. Systematic funder practices like falsified default affidavits, excessive chargeback fees, and inflated payoff demands can violate this duty.

Fraud in the inducement. Misrepresentation by the broker or funder about the effective cost, the reconciliation process, or the default consequences can support rescission. This defense requires specific factual allegations and is hard to maintain past a motion to dismiss without documentary support.

Responding to a NY Commercial Division Summons

When a funder files a plenary lawsuit in the New York Commercial Division, the defense clock starts immediately. Under CPLR 3012, the defendant has 20 days to serve an answer if personally served within New York, or 30 days if served by substituted service, by mail, or outside New York. Missing this deadline risks entry of a default judgment, which is often harder to vacate than a contested judgment.

The answer must include affirmative defenses (defenses that would defeat the claim even if the factual allegations are true) and any counterclaims (claims the defendant asserts against the funder). Affirmative defenses not raised in the answer are generally waived, so the defense attorney must develop the full defense theory before drafting the answer. This is why an early document review matters so much: the answer locks in the defense strategy for the rest of the case.

Common pre-answer moves in NY MCA defense include:

• Motion to dismiss under CPLR 3211. Grounds include lack of personal jurisdiction, failure to state a cause of action, documentary evidence that refutes the complaint, and statute of limitations. Motions to dismiss can dispose of a case early but have high legal burden and are often denied in favor of letting discovery proceed.
• Motion to transfer venue. If the plaintiff filed in an inconvenient county, CPLR 510 allows a motion to change venue to a more appropriate county.
• Removal to federal court. If diversity jurisdiction exists (parties from different states, amount in controversy over $75,000) and the funder is not a New York citizen, removal is available.

After the answer is filed, the case moves into a preliminary conference within 45 days under Commercial Division rules, where the judge sets a discovery schedule. This is the first real substantive interaction with the judge and sets the tone for the case.

Discovery Strategy in NY MCA Cases

Discovery is where NY MCA defense cases are often won or lost. The contract and the funder's complaint tell one story. The funder's internal documents often tell a different one. An effective defense discovery plan targets the documents that expose the gap.

Key document requests include:

• Reconciliation records. Every reconciliation request the merchant made, the funder's response, and any internal notes about why requests were denied. If the contract promises reconciliation and the funder systematically refuses, the recharacterization argument becomes much stronger.
• ACH pull history. The actual daily or weekly debits against the merchant's account. Compare the actual pulls to the contract terms and to the merchant's actual revenue. Large variances reveal funder practice.
• Internal default affidavits and supporting documents. The funder's internal calculation of the amount due, any communications with the merchant about alleged default, and the basis for the default affidavit.
• Broker commission and origination documents. The broker's commission structure, the broker's communications with the merchant, and any broker misrepresentations. Broker conduct is often imputed to the funder for fraud purposes.
• Other merchant files. In recharacterization cases, documents showing how the funder treats other merchants can support an argument that the "purchase" structure is pretextual. Courts vary on the scope of this discovery, but it is available in the right case.

Deposition targets. The funder's in-house counsel or CFO, the broker who originated the deal, and any merchant relations personnel who handled reconciliation requests are the typical witnesses. Depositions in NY MCA cases are fact-intensive and usually take six to eight hours each.

Discovery disputes are common. NY Commercial Division judges tend to enforce proportionality and will reject fishing expeditions, but a well-tailored request connected to specific defenses usually survives objection.

When to Settle vs When to Fight in NY

The decision to settle or fight is ongoing, not a single choice. Defense counsel re-evaluates at each procedural milestone based on how the record has developed. Here are the practical inflection points in NY MCA defense.

Pre-answer. Settlement at this stage is usually at the worst discount for the merchant because the funder has invested little. Occasionally a funder with a weak case will settle before answering to avoid discovery exposure, but most funders refuse pre-answer settlement at meaningful discounts.

Post-motion to dismiss (denied). A denied motion to dismiss is not great news for defense, but it often coincides with the funder's first real cost investment. Settlement discussions at this stage can produce meaningful discounts, typically 30% to 50% off the demanded amount.

Post-discovery (pre-summary judgment). This is often the best settlement window. Both sides have absorbed discovery costs, the factual record is set, and the funder faces a real risk of partial summary judgment against it on reconciliation or recharacterization grounds. Settlements of 40% to 70% off the demanded amount are realistic in strong defense cases.

Post-summary judgment (denied). If the funder's summary judgment motion is denied and the court has ruled that factual disputes exist on recharacterization, the funder faces trial cost and uncertainty. Settlements at this stage can reach 70% or more off for the strongest defense cases.

Trial. Trial is rare in NY MCA cases. Most funders prefer a known discount to an uncertain outcome. When trial does happen, the cost on both sides usually exceeds the dispute's economic value, which is why both sides usually find a number before opening statements.

The cluster sibling New York MCA Debt Attorney covers the settlement mechanics in depth for merchants who want attorney-led negotiation without full litigation defense. The pillar MCA Attorney Complete Guide covers settlement timing across states, and if you are already served, the cross-cluster MCA Lawsuit Being Sued Playbook covers the initial response framework.

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