Cliq, Inc. vs. Capital Managers, LLC

4 Cliq, Inc. vs. Motion for Assignment Order and Restraining Order Capital Managers, LLC Plaintiff Cardflex, Inc. d/b/a Cliq’s Motion for Assignment Order and Restraining order is GRANTED in part and DENIED in part. 30-2021- 01220754 Plaintiff Cardflex, Inc. d/b/a Cliq shall submit a proposed order consistent with this ruling.

Defendant Capital Managers, LLC’s Request for Judicial Notice in Support of Opposition to Plaintiff’s Amended Motion for Assignment Order and Restraining Order is GRANTED as to Exhibits 1-2. (See Evid. Code, § 452,, subd. (h); Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265 [“[C]ourts have taken judicial notice not only of the existence and recordation of recorded documents but also of a variety of matters that can be deduced from the documents.”], overruled on other grounds, Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 939, fn. 13; City of Alameda v. Sheehan (2024) 105 Cal.App.5th 68, 81 fn.7 [court may take judicial notice of California Secretary of State searches and records].)

Pending Motion

Plaintiff Cardflex, Inc. d/b/a Cliq moves for an order assigning to Plaintiff “any right, title, interest, claim, or entitlement [Defendant Capital Managers, LLC] has or asserts in residual payments, commissions, and other rights to payment due or to become due, including commissions generated from merchant accounts and independent sales organization agreements, and including, without limitation, commissions paid or payable by Paysafe Services (US) Corp. d/b/a MeritCard or its successors and assignees (hereinafter, ‘Paysafe’) and Cynergy Data LLC d/b/a Priority Payment Systems or its successors and assignees (hereinafter, ‘Priority’) (collectively, the ‘Paysafe/Priority Commissions’), and any other payment rights of Judgment Debtor from any third- party payor, up to the amount necessary to satisfy the Judgment, including accrued interest, enforcement costs, and attorneys’ fees.” (Notice of

Amend. Mot. and Amended Mot. for Assignment Order and Restraining Order at pp. 2:20-3:1.)

Plaintiff also seeks a restraining order “prohibiting Judgment Debtor, and any person or entity acting on its behalf or in concert with it, from transferring, assigning, encumbering, redirecting, concealing, dissipating, collecting, receiving, or otherwise disposing of the commissions and payment rights sought to be assigned pending satisfaction of the Judgment or further order of the Court.”

Standard for Assignment Order

Civil Procedure Code section 708.510 provide that:

Except as otherwise provided by law, upon application of the judgment creditor on noticed motion, the court may order the judgment debtor to assign to the judgment creditor or to a receiver . . . all or part of a right to payment due or to become due, whether or not the right is conditioned on future developments . . . .

(Code Civ. Proc., § 708.510, subd. (a).)

Examples of rights to payment that may be ordered to be assigned include but are not limited to:

(1) Wages due from the federal government that are not subject to withholding under an earnings withholding order.

(2) Rents.

(3) Commissions.

(4) Royalties.

(5) Payments due from a patent or copyright.

(6) Insurance policy loan value.

(Ibid.)

An assignment order may also include a judgment debtor’s right to any future payment that are subject to levy, such as accounts receivable, general intangibles, judgments, and interests such as promissory notes secured by deeds of trust. (See In re Advanced Biomedical,

Inc. (Bankr. C.D. Cal. Bankr. 2016) 547 B.R. 337, 340-342, 346, [holding an assignment order assigning to Plaintiff “the interest, if any, of . . . [Defendant] . . . in its rights to payment of money due or to become due, whether styled accounts receivable, general intangibles, accounts, deposit accounts, royalties, fees, commissions, or otherwise, from its activities as a provider of clinical laboratory services to physicians, clinics, hospitals, and other healthcare providers . . . and from or through any business entity or person which they are affiliated . . . is assigned to [Plaintiff] . . . to the extent necessary to satisfy the judgment entered in this action in full” transferred title to assigned receivables].)

In determining whether to order an assignment or the amount of the assignment, the court may take into account the following:

(1) The reasonable requirements of a judgment debtor who is a natural person and of persons supported in whole or in part by the judgment debtor.

(2) Payments the judgment debtor is required to make or that are deducted in satisfaction of other judgments and wage assignments, including earnings assignment orders for support.

(3) The amount remaining due on the money judgment.

(4) The amount being or to be received in satisfaction of the right to payment that may be assigned.

(Code Civ. Proc., § 708.510, subd. (c).)

However, the court may make an assignment “only to the extent necessary to satisfy the money judgment.” (Code Civ. Proc., § 708.510, subd. (d).)

Further, if another statutory provision exempts a specific amount of the payment, the court may only assign that part of the payment that exceeds the exempt amount. (See Code Civ. Proc., § 708.510, subd. (f).)

Assignment of Residual Payments, Commissions, and Other Rights to Payment

Here, Plaintiff has shown that it holds a judgment against Defendant Capital Managers, LLC (Defendant Capital Managers) in the amount of $3,700,000 and that the entire principal amount remains due. (See ROA #1574; Decl. of Jeffrey Simon in Supp. of Amend. Mot. for Assignment Order and Restraining Order (Simon Decl.), ¶ 4, Exh. C; Decl. of Jeffrey Simon in Supp. of Ex Parte Application for Assignment Order and Restraining Order (Simon Ex Parte Decl.), ¶ 8.)

Plaintiff here seeks an assignment order of all rights to residual payments, commissions and other rights to payments payable to Defendant Capital Managers by two entities —Paysafe Services (US) Corp. d/b/a MeritCard (Paysafe) and Cynergy Data LLC d/b/a Priority Payment Systems (Priority) — as well as their unidentified successors or assigns, and “any [other] third-party payor.”

Defendant Capital Managers contends that that Plaintiff has failed to establish that Defendant Capital Managers has a right to payment from Paysafe, Priority, or any third-party payor.

Defendant Capital Managers is correct that Plaintiff fails to show that Defendant Capital Managers possesses any assignable property (i.e., right to payment) relating to any third-party payor.

However, Plaintiff does provide evidence that “Paysafe and Priority residuals were redirected to Capital Managers” by way of the three Portfolio Purchase Agreements. (See Simon Decl., ¶ 9, Exh. G at p. 68:22-23).

Plaintiff also shows that as of January 2024, Defendant Capital Managers continued to receive some income from those agreements in the form of a “couple of deposits each month.” (Id., ¶ 7, Exh. E at p. 10:19-20; see also id., Exh. F at p. 6:10-11.)

Defendant Capital Managers argues that Plaintiff fails to present any evidence that there are any specific arrangements between it and Paysafe or Priority by which it is currently receives any payments from them.

However, Defendant Capital Managers does not point to any authority that requires Plaintiff to meet such a high standard. The case law only requires that Plaintiff show that the right to payment is

concrete and not mere speculation, which Plaintiff has done.

Defendant Capital Managers also points to the fact that Defendant Eventus Holdings LLC has posted a $2.2 million bond that has stayed enforcement of the judgment.

However, the posting of the bond only stays enforcement of the judgment against Defendant Eventus Holdings. (See Code Civ. Proc., § 917.1). It does not stay enforcement of the judgment against Defendant Capital Managers.

Defendant Capital Managers next argues that any assignment order would be ineffective because Defendant’s Counsel holds a senior lien on Defendant Capital Managers’ assets, having perfected its security interest in “[a]ll of debtor’s assets.” (See Decl. of Oliver D. Griffin in Supp. of Opp’n to Pltf.’s Amend. Mot. for Assignment Order and Restraining Order, Exh.s 1-2.)

However, the evidence does not show that the assignment order would be ineffective as a matter of law, such that the court should not exercise its discretion to issue the assignment order.

First, Defendant’s Counsel’s lien may be voidable under the Uniform Voidable Transactions Act. Defendant’s Counsel filed its UCC-1 Financing Statement on February 17, 2025, over 3 months after the jury verdict finding Plaintiff was entitled to recover over $3 million in damages from Defendant Capital Managers.

“Whether a conveyance was made with fraudulent intent is a question of fact” which cannot be decided in a motion such as this one. (Annod Corp. v. Hamilton & Samuels (2002) 100 Cal.App.4th 1286, 1294; see Civil Code, § 3439.04, subd. (b) [listing “badges of fraud” that may be considered in determining fraudulent intent].)

Second, Defendant Capital Managers is a Delaware LLC but Defendant’s Counsel attempted to perfect its lien with the California Secretary of State.

Both Delaware and California require that a creditor file a financing statement in order to perfect a lien. (See Code Civ. Proc., § 697.50; 6 Del. C. § 9-310.)

In addition, both Delaware and California law provide that:

Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral.

(Cal. U. Com. Code, § 9301, subd. (1); 6 Del. C. § 9-301(1).)

Where the debtor has only one place of business, the debtor’s location is that place of business; and where the debtor has more than one place of business, its “location” is where the chief executive office is located. (Cal. U. Com. Code, § 9307, subd. (b); 6 Del. C. § 9-307, subd. (b).)

Defendant Capital Manager’s Verified Cross- Complaint states under penalty of perjury that it is “organized and existing under the laws of the state of Delaware.” (See ROA # 41, ¶ 1.) The Complaint also alleges that Defendant Capital Manager’s principal place of business is in Delaware. (See Compl., ¶ 6.)

Therefore, if Defendant Capital Managers is located in Delaware, a financing statement filed with the California Secretary of State might not perfect the lien on Defendant Capital Manager’s assets.

Third, even if Defendant’s Counsel has a senior lien on rights to payment owned by Defendant Capital Mangers, there is no evidence that the amount of debt secured by Defendant’s Counsel’ security interest exceeds the Paysafe and Priority income streams, such that an assignment order would be ineffective.

For these reasons, the court will grant the motion with respect to issuing an assignment order as to any right to payment from Paysafe and Priority to Defendant Capital Managers.

Standard for Restraining Order

“When an application is made pursuant to Section 708.510 or thereafter, the judgment creditor may apply to the court for an order restraining the judgment debtor from assigning or otherwise disposing of the right to payment that is sought to

be assigned.” (Code Civ. Proc., § 708.520, subd. (a).)

The court may grant the restraining order “upon a showing of need for the order” and also “may require the judgment creditor to provide an undertaking.” (Code Civ. Proc., § 708.520, subd. (b).)

Here, Plaintiff submits no evidence that Defendant Capital Managers has attempted to hide, transfer, distribute, or otherwise dissipate its assets, such that there is a need for a restraining order.

Plaintiff argues that the fact that Defendant Eventus Holdings sold or transferred its assets raises an inference of misconduct and that inference may be imputed onto Defendant Capital Managers because both companies are wholly or majority-owned by Defendant Sabin Burrell

However, the conduct by Defendant Eventus Holdings, however, did not affect Plaintiff’s ability to collect on the judgment against Eventus. Defendant Eventus Holdings posted a $2.2 million bond to stay enforcement of its judgment.

Thus, the court will deny the motion with respect to issuing a restraining order against Defendant Capital Mangers.

Plaintiff shall give notice of this ruling.

5 Crystalynn Motion to Be Relieved as Counsel Holding, LLC vs. SCP Food Hall LLC Counsel Karen Lee Hallock’s, Megan A. Divine’s, and DLA Piper LLP (US)’s Motion to Be Relieved as Counsel for Plaintiff Utopia Oriental Investment LLC 30-2023- is GRANTED 01324205 Counsel Karen Lee Hallock, Megan A. Divine, and DLA Piper LLP (US) are ORDERED to submit to this court a proposed Order Granting Attorney’s Motion to Be Relieved as Counsel – Civil (Form MC-053), that is completely and correctly filled out, within 10 days of this ruling.

Within 15 days of receiving the signed Form MC- 053 back from the court, Counsel Karen Lee Hallock, Megan A. Divine, and DLA Piper LLP (US) are ORDERED to serve Plaintiff Utopia Oriental