LG Funding lawsuit: what the Second Department held in United Senior

LG Funding lawsuit coverage of United Senior: the Second Department kept usury defenses alive and dismissed only the usury counterclaim.

Updated 2026-10-30

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By Anonymous MCA industry contributor Research, writing and editorial review · MCA sales background

An LG Funding lawsuit search usually lands on private New York collection litigation naming LG Funding, LLC, and on the Second Department opinion that coined the three-factor test later panels still recite. The lead published signal is LG Funding, LLC v. United Senior Props. of Olathe, LLC, 2020 NY Slip Op 01607, 181 AD3d 664. Kings County denied LG's motion for summary judgment and to dismiss usury defenses; the Second Department modified that order on March 11, 2020: it dismissed the merchants' criminal-usury counterclaim (usury is a shield, not a sword for corporations/LLCs) but affirmed the denial of summary judgment and left the usury affirmative defenses alive because discretionary reconciliation, bankruptcy-as-default, and confession-of-judgment language raised triable questions whether repayment was absolute. This page sticks to that Slip Opinion and the Kings order it reviewed. It is not a prediction about your file.

Editorial update: 2026-10-27 · Desk research of the published Second Department opinion (and the Kings order it modified). Not legal advice.

Quick answer

Item	Public record
Lead published case	LG Funding, LLC v. United Senior Props. of Olathe, LLC, 2020 NY Slip Op 01607, 181 AD3d 664 (2d Dept Mar. 11, 2020)
Trial court	Supreme Court, Kings County (Fisher, J.), order dated May 7, 2018 (Index No. 500056/18; App. Div. docket 2018-09950)
Trial posture	LG's CPLR 3211(a) motion to dismiss usury defenses/counterclaim and SJ on the complaint denied
Appellate outcome	Order modified: counterclaim dismissed; otherwise affirmed (SJ and dismissal of affirmative defenses remain denied); costs to LG on the modification
Core holding	Discretionary "may… at sole discretion" reconciliation + bankruptcy/inability-to-pay defaults + confession-of-judgment path → triable issue whether deal is a criminally usurious loan; criminal usury may be pled as a defense, not as a counterclaim

Soft next step if papers name LG Funding: compare your reconciliation language (mandatory vs discretionary), bankruptcy default, and confession-of-judgment clauses to the package Kings and the Second Department left for trial before you assume either label controls.

What happened below and on appeal

On February 7, 2017, LG and United Senior Properties of Olathe, LLC entered a written merchant agreement. LG purchased future receivables for $100,990. United authorized debits of 15% of daily revenue, capped at $2,499 per week, until LG received $129,267.20. On default, the full uncollected purchased amount plus fees (including reasonable attorneys' fees) became immediately due. Linda Julian and Paul Thoma signed personal guaranties. LG funded on February 9, 2017.

LG sued in July 2017 for breach. The defendants raised affirmative defenses and a counterclaim that the deal was a criminally usurious loan. LG moved under CPLR 3211(a)(1) and (7) to dismiss those defenses and the counterclaim, and for summary judgment on the complaint. Kings denied the entire motion on May 7, 2018. LG appealed.

What the Second Department held

Usury requires a loan; without a loan there is no usury. Courts look at real character, not labels, and ask whether the funder is absolutely entitled to repayment under all circumstances. The familiar three factors are reconciliation, finite vs indefinite term, and bankruptcy recourse (K9 Bytes; Funding Metrics).

On this agreement:

Reconciliation said LG "may, upon [United's] request, adjust the amount of any payment… at [its] sole discretion and as it deems appropriate."
United's written admission of inability to pay, or bankruptcy, were events of default entitling LG to immediate full repayment of the unpaid purchased amount.
On bankruptcy (voluntary or involuntary), LG could enforce the personal guaranties, United had to deliver a confession of judgment for the purchased amount, and LG could enter that confession as a judgment.

Those provisions suggested LG did not assume the risk of less-than-expected or zero revenues. The panel therefore agreed with Kings that the usury affirmative defenses survived CPLR 3211 dismissal, and that LG failed to eliminate triable issues for summary judgment.

Separately, criminal usury may be asserted as an affirmative defense (General Obligations Law § 5-521[3]; LLC Law § 1104[c]; Penal Law § 190.40), but not as a counterclaim. Kings should have dismissed the counterclaim under CPLR 3211(a)(7). Scheinkman, P.J., Hinds-Radix, LaSalle, and Barros concurred.

Why this matters for "LG Funding lawsuit" searches

United Senior is the merchant-leaning Second Department template that pairs with Principis: same Department, same three-factor vocabulary, opposite SJ result when reconciliation is discretionary and bankruptcy triggers absolute repayment tools. Later funder wins (Principis, Apollo, Spin, Diesel, True Business Funding) usually show mandatory adjustments, non-finite terms, and no bankruptcy-as-default. Compare:

Principis Capital lawsuit: 2d Dept reverse/grant for funder where monthly adjustments, non-finite term, and no BK default (I Do).
Crystal Springs Capital lawsuit: 2d Dept vacated default and dismissed as criminally usurious after fixed daily debits, no reconciliation duty, and BK/default acceleration (Big Thicket).
Apollo Funding lawsuit: 2d Dept reverse/grant; unused recon not treated as illusory (Dave Reilly).
Spin Capital lawsuit: 2d Dept affirmed Nassau SJ on remittance adjustments (Bridgelink).
Diesel Funding lawsuit: 2d Dept affirmed Kings vacatur denial (Build Retail).
Richmond Capital lawsuit: AG / First Department enforcement track (different caption family).

If your caption is LG collecting after a discretionary-recon / bankruptcy-default package, United Senior is the published Second Department signal that usury defenses can survive SJ even while a usury counterclaim gets dismissed.

Related funder lawsuit pages

Other funders' cases, along with this one, are collected in our MCA lawsuit tracker.

Sources (public)

LG Funding, LLC v. United Senior Props. of Olathe, LLC, 2020 NY Slip Op 01607, 181 AD3d 664 (2d Dept Mar. 11, 2020), NY Courts reporter; Justia republication

Takeaway

Treat "LG Funding lawsuit" search intent primarily through United Senior: Kings denied funder SJ and kept usury defenses alive; the Second Department affirmed that denial after highlighting discretionary reconciliation, bankruptcy-as-default, and confession-of-judgment language, while dismissing the merchants' usury counterclaim as unavailable. That is the multi-opinion origin story for the three-factor test later opinions cite, not a statewide ban and not an FTC refund story.

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