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Pacific Business Capital Corporation v. Time Warner Cable

July 20, 2012

PACIFIC BUSINESS CAPITAL CORPORATION, PLAINTIFF,
v.
TIME WARNER CABLE, LLC; TIME WARNER NY CABLE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Honorable Ronald S.W. Lew Senior, U.S. District Court Judge

#:6794

ORDER Re: Defendants Time Warner Cable, LLC and Time Warner NY Cable, LLC's Motion for Partial Summary Judgment [120]

Before the Court is Defendants Time Warner Cable, LLC and Time Warner NY Cable, LLC's ("Defendants") Motion for Partial Summary Judgment [120]. The Motion was set for hearing for June 6, 2012, and taken under submission on June 5, 2012. After considering all of the papers and arguments submitted on this matter, THE COURT NOW FINDS AND RULES AS FOLLOWS:

The Court hereby DENIES Defendants' Motion for Partial Summary Judgment.

I. BACKGROUND

Plaintiff Pacific Business Capital Corporation ("Plaintiff") is an asset-based lending company, whose primary business is factoring. Factoring companies like Plaintiff, purchase accounts receivable, such as invoices, for a discount from the face value of the invoice. As part of its business, Plaintiff made advances to third-party Wire to Wire ("WTW").

WTW was a cable installation contractor for Defendants from approximately September 2006 to mid-2008. WTW's principal member was a man named Louis Friedman. In April 2005, WTW signed a factoring agreement with Plaintiff called the Restated Accounts Receivable Purchase & Security Agreement ("A/R Purchase Agreement").

For invoices identified on a Schedule of Accounts, Plaintiff would factor or purchase those invoices from WTW for a purchase price that would be equivalent to a percentage of the face value of the invoice. As a matter of course, part of this purchase price would initially be paid to WTW. Plaintiff, however, would hold back a percentage of the purchase price owed to WTW as a "contingent reserve" for the purpose of protecting itself in case the value of the invoice could not be collected. Once Plaintiff received payment from Defendants for the face value of the invoice, Plaintiff would reduce the "contingent reserve" by an amount equivalent to Plaintiff's factoring fees. The balance left over in the "contingent reserve" would be deposited in an "Earned Reserve" account, which would be money that WTW was entitled to. Plaintiff, however, could choose to either pay the "Earned Reserve" amount to WTW or to hold onto the "Earned Reserve" as a collateral against debt that WTW may have with Plaintiff.

Defendants acquired relevant portions of its Los Angeles operation when it bought Adelphia in 2006. Mike Ramirez, a Technical Supervisor, continued working for Defendants when Defendants bought Adelphia. For an invoice to be verified by Defendants, Defendants required that each invoice be accompanied with its corresponding work order. WTW's owner, Friedman, typically emailed Ramirez and Plaintiff in the same email to verify invoices, and Ramirez always stated that he would forward the invoices for processing.

Some invoices were paid to Plaintiff. However, at a certain point in time, Defendants stopped paying invoices to Plaintiff. On November 26, 2007, Plaintiff sent Defendants a list of outstanding invoices, totaling $3.9 million. However, Defendants advised Plaintiff that some of these invoices appeared to have already been paid. In April 2008, Defendants stopped using WTW and instead entered into a contract with a new company owned by Friedman, named Wired or Not, and in July 2008, Wired or Not subsequently entered into a separate factoring agreement with Counterclaimant Canfield Funding d/b/a Millennium.

II. LEGAL STANDARD

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A genuine issue is one in which the evidence is such that a reasonable fact-finder could return a verdict for the non-moving party. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986).

A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other ...


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