This case was last updated from Los Angeles County Superior Courts on 07/17/2021 at 02:25:05 (UTC).

OUTSOURCE, LLC VS HORIZON COMMUNICATIONS TECHNOLOGIES, INC., ET AL.

Case Summary

On 06/03/2020 OUTSOURCE, LLC filed a Contract - Other Contract lawsuit against HORIZON COMMUNICATIONS TECHNOLOGIES, INC . This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is JAMES C. CHALFANT. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******0862

  • Filing Date:

    06/03/2020

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

JAMES C. CHALFANT

 

Party Details

Plaintiff

OUTSOURCE LLC

Claimant

SUNWEST BANK

Defendants

DEGRAW MICHAEL E.

HORIZON COMMUNICATIONS TECHNOLOGIES INC.

Attorney/Law Firm Details

Plaintiff Attorney

PARCELLS DAYTON B. III

Defendant Attorneys

FORSYTHE MARC C.

FORSYTHE MARC CLEMENT

 

Court Documents

Case Management Order

7/14/2021: Case Management Order

Minute Order - MINUTE ORDER (HEARING ON MOTION - OTHER PETITION FOR HEARING TO DETERMINE V...)

7/14/2021: Minute Order - MINUTE ORDER (HEARING ON MOTION - OTHER PETITION FOR HEARING TO DETERMINE V...)

Ex Parte Application - EX PARTE APPLICATION EX PARTE APPLICATION TO EXTEND BRIEFING DEADLINE AND/OR A SHORT CONTINUANCE OF THE HEARING

2/4/2021: Ex Parte Application - EX PARTE APPLICATION EX PARTE APPLICATION TO EXTEND BRIEFING DEADLINE AND/OR A SHORT CONTINUANCE OF THE HEARING

Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION TO EXTEND BRIEFING DEADLINE A...)

2/5/2021: Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION TO EXTEND BRIEFING DEADLINE A...)

Request for Entry of Default / Judgment

12/11/2020: Request for Entry of Default / Judgment

Case Management Statement

12/11/2020: Case Management Statement

Request for Entry of Default / Judgment

11/23/2020: Request for Entry of Default / Judgment

Writ - Return

10/22/2020: Writ - Return

Notice Re: Continuance of Hearing and Order

9/29/2020: Notice Re: Continuance of Hearing and Order

Notice Re: Continuance of Hearing and Order

9/29/2020: Notice Re: Continuance of Hearing and Order

Proof of Service (not Summons and Complaint)

8/19/2020: Proof of Service (not Summons and Complaint)

Declaration - DECLARATION SUPPLEMENT TO THIRD PARTY

9/1/2020: Declaration - DECLARATION SUPPLEMENT TO THIRD PARTY

Writ of - WRIT OF ATTACHMENT

7/15/2020: Writ of - WRIT OF ATTACHMENT

Writ of - WRIT OF ATTACHMENT

7/15/2020: Writ of - WRIT OF ATTACHMENT

Writ of - WRIT OF ATTACHMENT

7/6/2020: Writ of - WRIT OF ATTACHMENT

Writ of - WRIT OF WRIT OF ATTACHMENT FOR HORIZON FOR LOS ANGELES COUNTY

6/26/2020: Writ of - WRIT OF WRIT OF ATTACHMENT FOR HORIZON FOR LOS ANGELES COUNTY

Civil Case Cover Sheet

6/3/2020: Civil Case Cover Sheet

Notice of Case Assignment - Unlimited Civil Case

6/3/2020: Notice of Case Assignment - Unlimited Civil Case

56 More Documents Available

 

Docket Entries

  • 01/24/2023
  • Hearing01/24/2023 at 09:30 AM in Department 39 at 111 North Hill Street, Los Angeles, CA 90012; Non-Jury Trial

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  • 01/12/2023
  • Hearing01/12/2023 at 09:00 AM in Department 39 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 07/14/2021
  • Docketat 09:00 AM in Department 39; Hearing on Motion - Other (Petition for Hearing to Determine Validity of Third-Party Claim) - Held

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  • 07/14/2021
  • Docketat 09:00 AM in Department 39; Case Management Conference - Held

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  • 07/14/2021
  • DocketCase Management Order; Filed by Clerk

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  • 07/14/2021
  • DocketCertificate of Mailing for ((Hearing on Motion - Other Petition for Hearing to Determine V...) of 07/14/2021); Filed by Clerk

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  • 07/14/2021
  • DocketMinute Order ( (Hearing on Motion - Other Petition for Hearing to Determine V...)); Filed by Clerk

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  • 07/14/2021
  • DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore; Filed by Outsource, LLC (Plaintiff)

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  • 07/14/2021
  • DocketMinute Order ( (Case Management Conference)); Filed by Clerk

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  • 06/22/2021
  • Docketat 1:30 PM in Department 39; Hearing on Motion - Other (Petition for Hearing to Determine Validity of Third-Party Claim) - Not Held - Advanced and Continued - by Court

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69 More Docket Entries
  • 06/22/2020
  • DocketDeclaration (of Dayton B. Parcells III Re: Undertakings in Support of Right to Attach Order); Filed by Outsource, LLC (Plaintiff)

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  • 06/22/2020
  • DocketEx Parte Right to Attach Order and Order for Issuance of Writ of Attachment (Resident); Filed by Outsource, LLC (Plaintiff)

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  • 06/22/2020
  • DocketEx Parte Right to Attach Order and Order for Issuance of Writ of Attachment (Resident); Filed by Outsource, LLC (Plaintiff)

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  • 06/08/2020
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 06/08/2020
  • DocketOrder to Show Cause Failure to File Proof of Service; Filed by Clerk

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  • 06/03/2020
  • DocketCivil Case Cover Sheet; Filed by Outsource, LLC (Plaintiff)

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  • 06/03/2020
  • DocketSummons (on Complaint); Filed by Outsource, LLC (Plaintiff)

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  • 06/03/2020
  • DocketComplaint; Filed by Outsource, LLC (Plaintiff)

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  • 06/03/2020
  • DocketCivil Case Cover Sheet; Filed by Outsource, LLC (Plaintiff)

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  • 06/03/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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Tentative Rulings

Case Number: 20STCV20862    Hearing Date: May 3, 2021    Dept: 39

Outsource, LLC v. Horizon Communications Technologies, Inc.

Case No. 20STCV20862

Petitioner re: Validity of Third-Party Claim

Plaintiff Outsource, LLC (“Outsource”) allegedly entered into a Master Service Agreement for Temporary Staffing with Defendant Horizon Technologies, Inc. (“Horizon”). Horizon allegedly breached this agreement by failing to pay for Outsource’s services. On or about February 11, 2019, the parties allegedly entered into an agreement to resolve the issue, pursuant to which Horizon acknowledged the debt of $433,261.66, and Outsource agreed to accept payment on a schedule.

Outsource allegedly defaulted on the schedule, giving rise to this action. Outsource obtained writs of attachment and attached certain property of Horizon, including $193,973.14 on deposit with Comerica Bank. Now, Horizon petitions this Court to determine the validity of a claim by Sunwest Bank (“Sunwest”). Outsource argues that Sunwest’s security interest invalid and not entitled to priority over Outsource’s creditor’s lien. Outsource argues that: (1) Sunwest’s agreements with Horizon state that it shall not have the rights and remedies of a secured party under the California Commercial Code unless there has been a default; (2) Sunwest does not identify or articulate any event of default or the amount owed; and (3) At the time of the filing of Sunwest’s claim.

Outsource’s arguments fail. Sunwest filed a “Third Party Claim of Lien by Sunwest Bank,” dated July 31, 2020, stating as follows: (1) Horizon had a business loan agreement from Sunwest with respect to the loan ending in 4001 (the “4001 Loan”); (2) The 4001 Loan required Horizon to maintain a “borrowing base” of $1 million or 80% of the aggregate of their eligible accounts; (3) Horizon had a business loan agreement with Sunwest with respect to the loan ending in 5001; and (4) Horizon is entitled to the entirety of the funds held by Comerica Bank. (Third Party Claim of Lien by Sunwest Bank, Declaration of Michael Hadden, dated July 31, 2020, pp. 1-3 & Exhs. A-I.) Then, Sunwest filed a “Supplement to Third Party Claim of Lien by Sunwest Bank” reiterating the information contained in the original claim and stating: (1) Horizon breached the provisions of the 4001 Loan by allowing it to become over-advanced by $56,688; (2) The 4001 Loan matured on August 10, 2020, but Horizon has not made any payments of the outstanding amount; and (3) As of August 24, 2020, the 4001 Loan had an outstanding amount of $903,641.72 in principal plus interest. (Supplement to Third Party Claim of Lien by Sunwest Bank, Declaration of Michael Hadden, dated August 27, 2020, pp. 6-7 & Exhs. #1-#5.) Based upon the foregoing, it is clear that Sunwest’s security interest is not invalid.

Code of Civil Procedure section 697.590(b) states in relevant part:

Conflicting interests rank according to priority in time of filing or perfection. In the case of a judgment lien, priority dates from the time filing is first made covering the personal property. In the case of a security interest … priority dates from the earlier of the time a filing is first made covering the personal property or the time the security interest … is first perfected, if there is no period thereafter when there is neither filing nor perfection.

(Code Civ. Proc. § 697.590(b).) Sunwest filed its UCC statements with the California Secretary of State on August 10, 2018. Plaintiff sought a right of attachment on June 22, 2020. Therefore, Sunwest Bank has the senior lien.

CONCLUSION AND ORDER

The Court finds that the third-party claim filed by Sunwest Bank is valid and entitled to priority over claims by Outsource LLC. The Court finds that because Horizon’s debt to Sunwest exceeds the amount of funds attached and held by Comerica Bank ($193,973.14), Sunwest is entitled to those funds. Sunwest shall provide notice and file proof of such with the Court.

Case Number: 20STCV20862    Hearing Date: December 14, 2020    Dept: 39

[TENTATIVE] RULING:

Based on the priorities of Sunwest Bank and Plaintiff’s filings, the court finds Sunwest Bank has a senior lien on the Collateral from its UCC Statement securing the loan ending in 4001 and greater priority to the $193,973.41 on deposit with Comerica Bank.

Non-party Sunwest Bank is instructed to give notice.

Background

Plaintiff Outsource, LLC (“Outsource” or “Plaintiff”) alleges it entered into a Master Service Agreement for Temporary Staffing (the “MSA”) with Defendant Horizon Communications Technology, Inc. (“Horizon”) on or about September 12, 2011, wherein Plaintiff agreed to provide staffing services to Defendant in exchange for compensation. Compl. ¶ 7. Defendant Michael E. Degraw (“Degraw”) allegedly unconditionally guaranteed Horizon’s payment of its obligations under the MSA. Id.

On or about May 8, 2018, Defendants allegedly breached the MSA by failing to pay for the services provided. Compl. ¶ 9. On or about February 11, 2019, Plaintiff and Defendants allegedly entered into an Agreement for Payment Plan (the “Payment Agreement”), in which Defendants acknowledged the debt owed in the sum of $433,261.66 and Plaintiff agreed to permit Defendants to pay the balance owed on an established schedule. Compl. ¶ 10.

Defendants allegedly defaulted on the Payment Agreement by not delivering their required payments by their due date. Compl. ¶ 11. On March 4, 2020, Plaintiff allegedly provided Defendants with notice by email of the delinquency. Compl. ¶ 11. Defendants allegedly acknowledged receipt of the notice but have not cured the default. Id. According to Plaintiff, it has incurred $498,538.06 in damages as a result of Defendants’ breach of the Payment Agreement. Compl. ¶ 12.

Plaintiff filed the Complaint on June 3, 2020, alleging four causes of action for (1) breach of written contract, (2) account stated, (3) open book account, and (4) common counts.

Plaintiff filed an ex parte application for right to attach order that came to hearing on June 23, 2020, at which time the court granted right to attach orders against Defendants Degraw and Horizon in the amount of $562,652.90. On June 22, 2020, the Santa Clara County Sheriff, under a writ of attachment, levied on the property of Defendant Horizon Communications Technologies, Inc. and took possession of $193,973.41 on deposit with Comerica Bank (the “Property”). On August 3, 2020, non-party Sunwest Bank delivered a verified claim to the levying officer, asserting a lien on the Property.

Plaintiff now petitions the court to determine the validity of Sunwest Bank’s third-party claim. Sunwest Bank filed a Supplement to the third-party claim on September 1, 2020.

Discussion

I. Legal Standard

In the case of a third-party claim by a secured party, the third-party claim constitutes the pleading of the third person and the creditor’s statement constitutes the pleading of the creditor, subject to the power of the court to permit an amendment in the interest of justice. Code Civ. Proc. § 720.350(a). “At a hearing on a third-party claim, the third person has the burden of proof.” Id. § 720.360. “At the conclusion of the hearing, the court shall give judgment determining the validity of the third-party claim and may order the disposition of the property or its proceeds in accordance with the respective interests of the parties. Subject to Section 720.420, the judgment is conclusive between the parties to the proceeding.” Id., § 720.390.

All subsequent statutory references will be to the Code of Civil Procedure unless otherwise specified.

II. Scope of the Pleadings

On August 3, 2020, Sunwest Bank delivered a verified claim to the levying officer, asserting a lien on the Property. Pet. ¶ 4. Sunwest Bank subsequently delivered a Supplement to Third Party Claim of Lien to the levying officer. Plaintiff filed the Supplement on September 1, 2020.

Plaintiff requests the court exclude from any evidence any writing which was not attached to the third-party claim. Pet. ¶ 5(D). Plaintiff’s filing of the Supplement with the court demonstrates that it received notice of this document more than three months prior to the continued hearing on the Petition. As Plaintiff received timely notice of the document, the court finds the interests of justice warrant consideration of this document. See Code Civ. Proc. § 720.350(a).

III. Analysis

Sunwest Bank presents evidence Horizon obtained two loans from Sunwest Bank on or about August 6, 2018, each in the original principal sums of $1,000,000 (the “Sunwest Loans”), which were secured by a “blanket” lien interest against Horizon’s personal property, including Horizon’s deposit accounts (the “Collateral”). Supp. to Claim Ex. 1 at Exs. E, G. Sunwest Bank additionally presents evidence its lien interests in the Collateral were perfected by UCC Financing Statements Sunwest Bank filed with the California Secretary of State on August 10, 2018, as Document Nos. 72265710002 and 72265760002. Id. at Ex. H.

Plaintiff contends, on information and belief, that Horizon was not in default at the time of filing of Sunwest Bank’s third-party claim. Pet. ¶ 5(C).

Sunwest argues Horizon breached its business loan agreements by the loan ending in 4001 to become over-advanced by $56,688 relative to the aggregate of the eligible accounts and by failing to make payment of the amounts outstanding when the loans became due on August 10, 2020. Supp. to Claim at 6-7. According to Sunwest, $903,641.72 of principal and accrued, unpaid interest remain due and payable under this loan as of August 24, 2020. Id. at 7, Ex. 5. This evidence is sufficient to demonstrate Defendant Horizon defaulted on the secured loan by nonpayment as of August 10, 2020.

Code of Civil Procedure section 697.590(b) states, with exceptions not applicable here, “Conflicting interests rank according to priority in time of filing or perfection. In the case of a judgment lien, priority dates from the time filing is first made covering the personal property. In the case of a security interest … priority dates from the earlier of the time a filing is first made covering the personal property or the time the security interest … is first perfected, if there is no period thereafter when there is neither filing nor perfection.”

Sunwest Bank filed its UCC statements with the California Secretary of State on August 10, 2018. Supp. to Claim Ex. 1 at Ex H. Accordingly, Sunwest Bank’s interest in the Collateral has priority from August 10, 2018. See Code Civ. Proc. § 697.590(b).

Plaintiff sought a right to attach through its ex parte applications, dated June 22, 2020, and the priority of its claim has priority from that date.

Based on the priorities of Sunwest Bank and Plaintiff’s filings, the court finds Sunwest Bank has a senior lien on the Collateral from its UCC Statement securing the loan ending in 4001. Sunwest Bank demonstrates $903,641.72 remains due and payable on secured loans as of August 24, 2020. As this amount exceeds the $193,973.41 on deposit with Comerica Bank, Sunwest Bank has a senior claim to the full amount of the Property.

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