A New York Court Refused to Enforce an MCA Settlement Stipulation.
A May 5, 2026 Monroe County decision denied default judgment on a Samson MCA settlement, finding stacked attorneys' fees and high-pressure formation procedurally and substantively unconscionable. Funders running New York stipulation playbooks should price for this.
On May 5, 2026, a New York Supreme Court judge in Monroe County refused to enter default judgment for an MCA funder on a settlement stipulation it had signed with a defaulted merchant, and the reasoning is worth reading. In Samson MCA LLC v. DI Construction LLC , Justice Daniel J. Doyle held the stipulation unconscionable on both procedural and substantive grounds, citing the First Department's 2026 decision in People v. Richmond Capital Group for the proposition that sophistication asymmetry between an MCA shop and a construction-company guarantor is itself a defect in formation. The structure the court rejected is not exotic. It is the same structure most New York-venued MCA settlements run on: a default on a pre-printed agreement, a Rochester lawsuit served on out-of-state guarantors, a take-it-or-leave-it stipulation with a percentage-based attorneys' fee already baked in, and a CPLR 3215(i) clerk-judgment mechanism that converts the stipulation into a money judgment without further notice. Samson built that exact path. The court took it apart. This is narrower than "courts are skeptical of MCAs." The stipulation is now treated as a second MCA contract that has to survive on its own merits, and the fee stack funders used to bury inside settlement paperwork is the part the court reads first. The original May 2024 agreement bought $798,000 of future receivables at 6% of daily ACH, with a clause setting attorneys' fees at 30% of the unremitted purchased amount on breach. Defendants paid down to a $351,879 balance, then defaulted. Samson sued in Rochester, served Timothy Miller and Brent Myers in Dawsonville, Georgia, and presented a stipulation for $457,442.70, which is the balance plus $105,563.70 in pre-baked 30% fees. The defendants signed without counsel, paid $3,627, and stopped. Samson then moved for default judgment under CPLR 3215(i) for $567,724.62, which added another 25% in attorneys' fees on the unpaid stipulation amount, layered on top of the first 25%. Total fees sought on the $351,879 balance: $219,017.62, or roughly 62%. The court would not enforce the second layer, and once it would not enforce the second layer, the stipulation as a whole could not stand. Doyle leaned on Kamco Supply Corp. v. Annex Contracting and Mead v. First Trust & Deposit Co. for the rule that a percentage-based attorneys' fee in a New York contract is a ceiling, not an entitlement, and is only enforceable to the extent of services actually rendered. He also leaned on Gillman v. Chase Manhattan Bank and King v. Fox for the broader unconscionability frame. "The high pressure tactics of the merchant advance industry, coupled with being faced with a lawsuit brought against Defendants in a different jurisdiction and Defendants' acknowledgement of the debt and desire to recognize their debt created an atmosphere inconsistent with the formation of a valid contract between parties enjoying equal bargaining power." Justice Daniel J. Doyle, Samson MCA LLC v. DI Construction LLC, May 5, 2026 Doyle treats the underlying MCA contract and the settlement stipulation as one continuous transaction, and imports the bargaining-power finding from Richmond Capital (which the New York Attorney General also used to extract a $534 million Yellowstone settlement, canceled in April 2026 ) directly into the question of whether a routine post-default stipulation is enforceable. A guarantor who admits the debt, signs the paper, and then stops paying can still attack the stipulation. The funder's win, in other words, was always conditional. A 30%-of-balance attorneys' fee clause in the funding agreement is now a documented unconscionability risk if it is invoked without time records, billing detail, and a defensible link between the fee and work performed. Stacking a second percentage fee on top, inside a settlement stipulation, makes that risk substantially worse. The same is true of any settlement template that relies on guarantor signature without counsel, out-of-state service, or CPLR 3215(i) clerk-judgment shortcuts. Courts have read those mechanics for years. They are now writing about them. Warehouse lenders and forward-flow buyers already discount MCA portfolios for confession-of-judgment risk, reconciliation language, and state-disclosure exposure. Stipulation enforceability is now on that list. A judgment that depends on a 25% attorneys' fee surviving substantive review is not a recovery; it is a litigated outcome. The diligence question is no longer "do you have the COJ." It is "what does the settlement template look like, who signs without counsel, and is the fee provision priced as a maximum or charged as a rate." Samson's counsel, Berkovitch & Bouskila, is a frequent presence in MCA enforcement litigation, and the decision is one of several recent New York rulings narrowing what an MCA funder can rely on at the end of the file. It will not be the last. Funders running a New York settlement playbook should expect more guarantor-side counsel to read the fee math the way Doyle did, and price for it. More on MCA enforcement at plutusai.net .