Nextwave Enterprises LLC Filed Suit: 7 Questions to Answer Before You Respond

Although it can be tempting to either ignore or reflexively answer a summons and complaint from Nextwave Enterprises, LLC, without getting legal advice, I would strongly recommend at least talking to an experienced lawyer before responding to the suit. Failure to respond to the complaint in a timely manner can lead to serious consequences. You need to figure out several things right away, many of them required even if you hire a lawyer or consultant to help you.

1. Is this a lawsuit?

Usually the first question is whether this is really a legal case. If you were served a summons from a court and a document from a lawyer that says “complaint” on top, then it is a suit. It is important to figure that out up front. If it’s not a lawsuit, then other responses might be possible, but I would still recommend getting legal help. If it is a lawsuit, then you need to be sure to respond to it.

2. Who is sued, and where?

Make a copy of every page of the documents you’ve received in the lawsuit, then check them over to make sure you know who the plaintiff and defendant are, and where the case will be heard. Can you locate the document’s caption, the line or two that identifies the case? It will give the court’s name and case number. Be sure to look at every name listed to see if the plaintiff is suing more than just you. A business and the owner of the business may both be sued. Is this suit about the business, or the owner, or both?

3. When is your deadline?

Once you figure out where the suit was filed, the next question is the deadline for your response. This question can be trickier than it looks. Don’t lose track of your deadlines by waiting to see if the case is going to go away by itself. If there’s anything about the date you don’t understand, ask a lawyer.

If the suit was filed in NY state court and a copy of the summons was given to you personally in the State of New York, your deadline is typically 20 days after service. That means from the day you were handed the papers, not when you first looked at the envelope. However, in NY there are different deadlines if someone left the court documents for you with someone else, or if the documents were served by nailing them up and mailing them to you, or out of state; then it is 30 days after service is complete.

The clock runs even if you’re sick. It runs even if you’re considering settling. Phone calls with the plaintiff or the plaintiff’s attorney don’t change the deadline. Delaying your response puts you at risk of default. However, even if it is late, the court may still let you answer if you have a reasonable excuse. But don’t count on getting this, and don’t put it off.

4. Does the balance add up?

The amount listed as the balance due or the amount demanded is not always trustworthy. Check the numbers being claimed in the lawsuit, particularly the debt balance and the fees. Don’t be bullied by the numbers. Pull your records and do some calculations. See whether any amounts are wrongly included. Sometimes an amount has been paid but not credited on the balance, or the fees are incorrect. It’s important to decide what you do or don’t owe and what you need to verify, as early as you can.

5. Is it an advance or a loan?

Claiming to be a “merchant cash advance” or a loan does not make it true. But even if both sides use the word advance, that does not decide it. The law decides, not the name on the document. In one NY case (2020), the court asked three things: (1) was there a reconciliation between payments and revenue, (2) was the payment period fixed, and (3) would the funder be collecting after bankruptcy. Here’s a good reason why it matters. New York law says that a corporation cannot use a claim of usury to get out of the contract. The exception is criminal usury, charging more than 25% annual interest, which is a crime.

6. What else is exposed?

As a company owner, often your biggest worry is the threat to your personal finances from this suit. If the lawsuit names you personally, as well as a company, you should check the documents or your contract to see if a personal guaranty exists. Was there a basis for the default? The obligations of the business and the owner are separate and not always the same. The decision that makes the most sense for the business may be different than the one that protects the individual.

Don’t panic, but be careful and get things figured out. Even if your bank account is frozen or your customers start getting letters, that does not mean that everything the plaintiff is claiming is correct. Check to see what document or notice you received. All of the details need to be checked. That includes any UCC filings, documents filed with the court, or letters being sent to your customers. Do not move your accounts or transfer assets without getting advice. Do not think that because a lawyer sends you a letter that your bank account is automatically free and clear.

7. Is there already a judgment?

Check the documents and the case records to see if there is a default judgment entered. It may take some digging. Default judgments can be upsetting, but you do not have to throw in the towel. For state court cases in New York, you can petition the court to undo the judgment within a year after you were served with the judgment with notice of entry. To qualify, you need a good reason why you didn’t respond to the lawsuit or defend against it, one that the court will accept. Moving to vacate a judgment is not a sure thing.

Since 2019, New York has limited where and how confessions of judgment can be filed. They can only be filed in the county where the signer lived at signing or now lives. There’s a three-year limit after signing the confession of judgment. A business counts as living in any county where it has a place of business. There may be some options, so talk to a lawyer as soon as you can.

If you settle or otherwise resolve the lawsuit before a judgment, that has many consequences. Be sure to specify the timing, total amount, and who must be paid. Do not assume that a business settlement covers personal obligations. Get a date for case dismissal and the release of restraints. If UCC filings will be released, put it in the settlement. Get answers on what happens if you miss a payment.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.