Last week, On Deck Capital continued its onslaught of lawsuits in Arlington General District Court.
On Deck Capital provides loans to small businesses. Its loan agreements contain “choice of venue” clauses providing for litigation in Arlington GDC. On Deck Capital also requires small business owners to personally guarantee its loans. So when On Deck sues a business, it also sues the business owner, personally.
On Deck Capital small business loans
A publicly traded company, On Deck Capital provides loans to small businesses with a minimum $100,000 annual revenue. Loans vary from $5,000 to several hundreds of thousands. Last week, the smallest judgment obtained was for $10,028 against Amazon Pet Market (as well as its owner), based in Hialeah, Florida. The largest judgment On Deck obtained last week was for $19,848 against 2Vapedx LLC (as well as, again, against its owner), based in Jersey City, New Jersey.
Over the past few months, On Deck has obtained hundreds of judgments simultaneously against both business and business owner.
Choice of venue: Arlington General District Court
The location of the business is irrelevant. If a business defaults on its loan with On Deck, then the litigation will take place in the General District Court of Arlington, Virginia. On Deck requires this as part of its loan agreement. “Choice of venue” contract provisions predetermine where legal proceedings will take place. On Deck also applies its choice of venue clause to arbitration.
On Deck is able to obtain a very high percentage of default judgments in the lawsuits it files because the business owners do not live anywhere near the Arlington General District Court. Once On Deck obtains a judgment in Virginia, it hires local counsel in the jurisdiction near the defendant, domesticates the judgment, and attempts collection directly against the owner. Often, the business has already gone under; the business owner remains the only entity against which to enforce its judgment.
Personal guarantee of business loans
Typically, business owners are not liable for the debts of their businesses. On Deck Capital, however, checks the business owner’s personal credit rating before it decides to extend credit, and they require a personal guarantee on every loan they make. On Deck subsequently names individual business owners as defendants in every lawsuit it files. The business owner’s personal liability on that loan gives rise to concurrent liability for business and business owner alike.
Lawsuits in Arlington General District Court
Lawsuits in Arlington General District Court are initiated by the filing of a warrant in debt. Once served, you must take action. Virginia general district court have very short timelines.
You cannot simply ignore a creditor because your business has closed, especially if you have personally guaranteed a business loan. You must mount a defense. Do not allow a default judgment to be entered simply because the business is going under or because you live far away from the choice of venue. Creditors like On Deck will use a default judgment against you. Personally.
Do not file anything with the court or talk to opposing counsel before you talk to an attorney. Lee Legal provides debt defense to clients facing lawsuits in Arlington General District Court and Alexandria General District Court. We can be reached at (202) 448-5136.