Not a Lexis Advance subscriber? Try it out for free.

Hamilton Capital VII, LLC v Khorrami, LLP

Supreme Court of New York, New York County

August 17, 2015, Decided

650791/2015

Opinion

Shirley Werner Kornreich, J.

Defendants Khorrami, LLP (the Law Firm) and Shawn Khorrami (Khorrami) move by order to show cause, pursuant to CPLR 3211, to dismiss the complaint. Defendants' motion is denied for the reasons that follow.

I. Procedural History & Factual Background

As this is a motion to dismiss, the facts recited are taken from the complaint and the documentary evidence submitted by the parties.1

Plaintiff Hamilton Capital VII, LLC (Hamilton),2 a Delaware LLC based in New York, provides "alternative litigation financing" to law firms that represent plaintiffs in tort cases on a  [**2]  contingency basis. As discussed further below, public policy favors this type of financing because it "allows lawsuits to be decided on their merits, and not based on which party has deeper pockets." Complaint ¶ 4. Hamilton essentially functions as a factor; that is, it lends money to law firms, and the loans are secured by the firm's accounts [*2]  receivable.

Khorrami is a partner at the Law Firm, a California limited partnership based in Los Angeles. On June 17, 2009, Hamilton and the Law Firm entered into a Credit Agreement, pursuant to which the Law Firm was provided with a $6 million revolving credit facility with a maturity date of June 12, 2012. See Dkt. 108. The money borrowed by the Law Firm under this credit facility was secured by Collateral, defined in Section 1.20 to mean:

[A]ll property and proceeds thereof now owned or hereafter acquired by [the Law Firm] or any other Person who has granted Lien to [Hamilton], in or upon which a Lien hereafter exists in favor of [Hamilton], as security for the Obligations.

See id. at 6. The Law Firm provided Hamilton with a $6 million note (see Dkt. 111), and the Collateral was secured pursuant to a Security Agreement. See Dkt. 110. Khorrami also personally guaranteed the Law Firm's [*3]  payment obligations under the Credit Agreement. See Dkt. 5. These contracts are collectively referred to in the Credit Agreement as the "Transaction Documents." See Dkt. 108 at 14.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

2015 N.Y. Misc. LEXIS 2954 *; 2015 NY Slip Op 51199(U) **; 48 Misc. 3d 1223(A); 22 N.Y.S.3d 137

 [**1]  Hamilton Capital VII, LLC, I, Plaintiff, against Khorrami, LLP (f/k/a KHORRAMI & BOUCHER, LLP; f/k/a KHORRAMI BOUCHER SUNER, SANGUINETTI, LLP; and f/k/a KHORRAMI, POLLARD, & ABIT, LLP) and SHAHIM KHORRAMI (a/k/a SHAWN KHORRAMI), Defendants.

Notice: THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED OFFICIAL REPORTS.

PUBLISHED IN TABLE FORMAT IN THE NEW YORK SUPPLEMENT.

Subsequent History: Motion granted by Hamilton Capital VII, LLC v. Khorrami, LLP, 2015 N.Y. Misc. LEXIS 3856 (N.Y. Sup. Ct., Oct. 26, 2015)

CORE TERMS

law firm, credit agreement, parties, Funding, Lawsuit, obligations, cases, lender, gross revenue, contracts, financing, contingency, default, courts, event of default, applicable law, choice of law, maximum rate, non-lawyer, rights, choice of law provision, accounts receivable, security interest, oral argument, public policy, unenforceable, collecting, maturity, receiver, accrued