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Norman M. Valz, Esq.

Law Office of Norman M. Valz, P.C.


PA I.D. No. 61338 Filed and Attested by the
Office of Judicial Records
205 Arch Street 2nd Floor 30 AUG 2017 11:05 am
Philadelphia, PA 19106 P. DIVON

Tel. (215) 756-2424


Fax (215) 827-5758 Attorney for the Plaintiff

COMPLETE BUSINESS SOLUTIONS : PHILADELPHIA COUNTY


GROUP, INC. (D/B/A PAR FUNDING) : COURT OF COMMON PLEAS
141 N. 2nd Street :
Philadelphia, PA 19106 :
Plaintiff :
vs. : CIVIL ACTION
:
CAPITAL STACK, LLC : NOVEMBER TERM 2015
11 Broadway :
Suite 814 :
New York, NY 10004 :
Defendants : Docket No.:00166

PLAINTIFFS MOTION FOR SANCTIONS AND THE PRECLUSION OF


DEFENDANTS INTRODUCTION OF EVIDENCE IN FURTHERANCE OF THEIR
COUNTERCLAIM

Plaintiff, Complete Business Solutions Group, Inc. by and through its attorney, Norman

M. Valz file this Motion for Sanction against Defendant for obstructing the court-ordered

accounting of Defendants records as they relate to Plaintiffs investment into a syndication of

merchant cash advance transactions managed by Defendant, CBSG has incurred unnecessary

accounting and counsel fees and costs in due to Defendants willful obstruction and disregard for

this Courts Order. CBSG invested $4,095,474.57 in this Portfolio and has not received

$808,262.99 on its promised Rights to Return (RTR) based on the Portfolio. Over 75.9% of

the RTR in the Portfolio has not been paid allegedly due to defaults.

In support of this Motion, CBSG asserts as follows:

Case ID: 151100166


1. On May 2, 2017, this subsequent to Plaintiffs Motion, this Court entered a very specific ORDER

wherein Plaintiffs retained an Accounting Firm to conduct an accounting of Defendants syndication

(See Exhibit A attached herewith).

2. Subsequent to the entry of said Motion, Defendant used every mean to delay, obfuscate or deny

Plaintiffs ability to carry out said accounting.

3. The initial teleconference between the Accounting team and Defendant was to have taken place

on or before May 15, 2017, however Defendants were unresponsive and would not respond to emails

which Plaintiff initiated May 10th. Said initial telephone conference did not take place until May 22nd,

2017 solely due to Defendants failure to response.

4. Subsequent to the aforementioned telephone conference, Defendant remained unresponsive,

uncooperative and employed many delay tactics. (See Exhibit B attached herewith which is our expert

(Colleen Vallen of Citrin Cooperman, LLC).

5. For instance, Ms. Vallens report indicates that the first scheduled onsite meeting with

Defendants head of accounting was July 28, 2017. Ms. Vallen and another member of her team arrived

at Defendants offices on Wednesday July 28, 2017 at 10 am as planned. However, they were not able

to get in touch with Mr. Contreras for almost an hour after their arrival and were forced to wait in the

lobby until he, or someone at his direction, returned Ms. Vallens calls and allowed security to let us

come up to the Defendants office. (See Exhibit B, paragraph 22).

6. Paragraphs 22 -63 of Citrin Coopermans expert report (Exhibit B [specific references to

paragraphs in Exhibit B]) indicates that many meetings with Defendants staff were abruptly cut short by

Defendants representative (paragraph 28 ) That Defendants staff consistently cancelled meetings at

the last minute and would try to reschedule for a later date (paragraphs 35-37); That Defendants staff

would show up for scheduled meetings with no documentation of records (paragraphs 38-40, and 51 );

and finally, Defendants staff ceased communication with Accountant (paragraph 54 ).

7. Most tellingly, Defendant ceased communication with Accountant, subsequent to Accountants

determination from a sample that over $300,000.00 in accounts which were reported to Plaintiff as being

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in Legal, were actually listed as being Satisfied in Defendants Profit Report. (Exhibit B, paragraph

42 and Table 2 [paragraph 54 for cessation of communication]).

8. Most of the reports provided to CBSG by the Defendant simply lists the allegedly non-performing

assets and states that they have been sent to Legal with no further information. It is believed that

Legal is referring to files sent not to an independent law firm, but to Rubin Law which is managed and

owned by David Rubins (Managing Member of Defendant) wife, Anna Rubin.

9. Accountant also found that funds were comingled as there were not separate accounts for the

various investors and Defendant.

10. Plaintiff counsel has incurred accounting fees of $17,559.50 during the course of the investigation

(Exhibit C)pursuant to this Courts Order of May 2, 2017 and which remains largely incomplete due

solely to the Defendants failure to abide by the terms of the Court Order (Exhibit A).

11. Plaintiffs legal counsel has billed Plaintiff an additional $4653.25 in billable hours in drafting the

Motion for the May 2nd 2017 Court Order, in Drafting this Motion, and in setting up the original

telephone conference as well as working with the Accountant.

12. Pennsylvania Rule of Civil Procedure 4019 permits the Court to sanction a party for discovery

misconduct, including, inter alia, where a party fails to appear for a noticed deposition, fails to produce

documents, or otherwise fails to obey an order respecting discovery or make discovery. See Pa.R.Civ.P.

4019(a)(1)(iv), (vii), (viii).

13. The type of sanction to be imposed on a recalcitrant party is within the Court's discretion and

includes entering a judgment of non pros against a disobedient counterclaim Plaintiff and the preclusion

of Defendants introduction of or any other order as is just, such as dismissal of a counterclaims with

prejudice. Pa.R.Civ.P. 4019(c)(3),(5).

14. Pennsylvania appellate courts have affirmed and approved of sanction orders entering judgment

against a plaintiff for discovery conduct that demonstrates a willful disregard for court orders and the

rules of discovery, including the defiant refusal to appear for a court ordered deposition. Verbalis v.

Verbalis, 428 A.2d 646 (Pa. Super. 1981) (entering judgment non pros for refusal to appear for court

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ordered deposition); Sahutsky v. Mychak, Geckle & Welker, P.e., 900 A.2d 866 (Pa. Super. 2006), il

denied 916 A.2d 1103 (Pa. 2007) (entering judgment non pros for refusal to obey discovery orders);

Lawrence v. General Medicine Assoc., Ltd., 602 A.2d 1360 (Pa. Super. 1992) (same); Poulos v. Com.,

Dept. of Transp., 575 A.2d 967 (Pa. Commw. 1990) (same); McSloy v. Jeanes Hosp., 546 A.2d 684 (Pa.

Super. 1988) (same); Pride Contracting, Inc. v. Biehn Construction, Inc., 553 A.2d 82 (Pa. Super. 1989),

il denied 565 A.2d 1167 (Pa. 1989) (dismissing complaint for willful disregard of discovery orders);

Jetson Direct Mail Services, Inc. v. Dept. of Labor and Indus., State Workmen's Ins. Fund, 782 A.2d 631

(Pa. Commw. 2001), il denied 797 A.2d 917 (Pa. 2002) (same).

15. Permitting Plaintiff to escape without sanction would not only severely prejudice CBSG ability to

defend against Plaintiff s claims for $15 million, but would set an awful precedent for future recalcitrant

litigants like Plaintiff: openly defy court orders that are against your interests and you may get what you

want anyway.

16. Dismissal of Defendants frivolous Counterclaims is an appropriate sanction for such obdurate

misconduct.

17. But for Defendants willful violation of the May 2, 2017 Court Order, Plaintiff would not have

incurred these direct and indirect expenses.

18. This Courts Order of May 2, 2017 specifically states _If the Accountants are willfully denied

any access to any materials reasonably necessary to conduct this accounting (either directly or through

non-cooperation), Defendant shall be liable for any direct expense incurred due to said denial, and shall

have a negative inference placed against it with regard to the information sought; (See Exhibit A)

19. Additionally, Consequently, CBS is entitled to counsel fees and costs pursuant to

Pa.R.Civ.P. 4019 (g)(1).

20. The severe prejudice to CBSG resulting from Defendant in this drawn out litigation is

plain. Without access to the information Defendant is withholding, Plaintiff cannot accurately

prove or quantify its damages.

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WHEREFORE, Plaintiff respectfully requests that this Honorable Court enter an Order sustaining

its Preliminary Objection pursuant to Pa.R.C.P. 1028(a)(2) based on failure to conform, and strike

Defendants Answer, New Matter and Counter Claims in their entirety with prejudice

Respectfully Submitted,

________________________
Norman M. Valz, Esq. Attorney for Plaintiff
Law Office of Norman M. Valz
PA I.D. No. 61338
Attorney for the Plaintiff
205 Arch Street 2nd Floor
Philadelphia, PA 19106
Tel. (215) 756-2424/ Fax (215) 568-6881
nvalz@msn.com
August 29, 2017