Judge Curtis A. Kin, Case Number: 21STCV19358, Date: 2023-07-11 Tentative Ruling

Hon. Mary H. Strobel The clerk for Department 82 may be reached at (213) 893-0530.

Plaintiffs Iron Hammer Properties, LP and Magnum, LP move for a writ of attachment against defendant Shyon Keoppel in the amount of $3,888,500.

On October 29, 2018, plaintiffs Iron Hammer Properties LP and Magnum LP entered into a written Lease with defendant 8155 Heights, LLC (“8155 Heights”) for the premises located at 8151-8155 Melrose Avenue in Los Angeles for an initial ten-year term. On November 1, 2018, 8155 Heights started occupying the subject premises.

Prior to signing the Lease, members of 8155 Heights purportedly represented that 8155 Heights had the financial ability to remain current on rent and that it would spend more than $3 million to improve the premises within a reasonable time. Plaintiffs agreed to enter into the Lease based on the 8155 Heights members’ representations.

Under paragraph 55 of the Lease, 8155 Heights agreed to spend at least $1,250,000 to improve the premises within a reasonable time. On October 29, 2018, defendant Shyon Keoppel, a manager-member of 8155 Heights, signed a written Guaranty of 8155 Heights’ obligation to spend at least $1,250,000 toward tenant improvements.

8155 Heights allegedly has not spent the required sum for tenant improvements. 8155 Heights also allegedly has not paid for rent and triple net charges amounting to $439,893.70 as of April 30, 2021.

8155 Heights and Keoppel filed a Cross-Complaint against Iron Hammer Properties, LP (“Iron Hammer”) and Magnum, LP (“Magnum”), as well as Iron Hammer general partners Eddie Leisner and Irene Leisner—trustees of The Eddie and Irene Leisner Family Living Trust—and Magnum general partners Steven Leisner and Carol Leisner—trustees of The Steven and Carol Leisner Living Trust. According to the Cross-Complaint, the Cross-defendants allegedly misrepresented that the premises complied with applicable building codes and that they were suitable for operating a restaurant and bar. It is further alleged that the retractable roof at the premises was installed without building permits and that the premises did not have a fire sprinkler system or other necessary improvements to operate a restaurant and bar.

“Upon the filing of the complaint or at any time thereafter, the plaintiff may apply pursuant to this article for a right to attach order and a writ of attachment by filing an application for the order and writ with the court in which the action is brought.” (CCP § 484.010.)

The application shall be executed under oath and must include: (1) a statement showing that the attachment is sought to secure the recovery on a claim upon which an attachment may be issued; (2) a statement of the amount to be secured by the attachment; (3) a statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based; (4) a statement that the applicant has no information or belief that the claim is discharged or that the prosecution of the action is stayed in a proceeding under the Bankruptcy Act (11 U.S.C. section 101, et seq.); and (5) a description of the property to be attached under the writ of attachment and a statement that the plaintiff is informed and believes that such property is subject to attachment. (CCP § 484.020.)

The application for a writ of attachment must be supported “by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based.” (CCP § 484.030.)

The Court shall consider the showing made by the parties, as well as the pleadings and other papers in the record. (CCP § 484.090(a), (d).) The Court shall issue a right to attach order if it finds all of the following:

(1) The claim upon which the attachment is based is one upon which an attachment may be issued.

(2) The plaintiff has established the probable validity of the claim upon which the attachment is based.

(3) The attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based.

At the times prescribed by CCP § 1005(b), the defendant must be served with a copy of the summons and complaint, notice of application and hearing, and a copy of the application and supporting affidavits. (CCP § 484.040.)

“The Attachment Law statutes are subject to strict construction….” (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.)

Because plaintiffs seek to attach defendant Keoppel’s property, the following discussion focuses on Keoppel.

On August 19, 2021, defendants, including Keoppel, filed an Answer to the Complaint.

According to the proof of service, the moving papers were served on Keoppel by personal service on June 15, 2023, which was 16 court days before the hearing. Keoppel maintains that the moving papers were served by electronic service and that he is unaware of any other service. (Morasse Decl. ¶ 2 & Ex. 1.) The deadline to electronically serve the moving papers was June 13, 2023. (See CCP § 1010.6(a)(3)(B) [two court days added to deadline for electronic service].) Accordingly, if the moving papers were served only by electronic service, such service would have been untimely.

Nonetheless, even if the moving papers were untimely served, Keoppel had opportunity to address and has addressed the merits of the application on substantive grounds. Accordingly, the Court rules on the merits of the application.

“[A]n attachment may be issued only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500) exclusive of costs, interest, and attorney's fees.” (CCP § 483.010(a).) “An attachment may not be issued on a claim which is secured by any interest in real property arising from agreement ….” (CCP § 483.010(b).)

Plaintiffs’ assert claims against Keoppel for amounts owed under a Performance and Completion Guaranty (“Guaranty”). (Compl. ¶¶ 23-35.) Under the Lease between plaintiffs and 8155 Heights, 8155 Heights agreed to spend at least $1,250,000 in tenant improvement costs. (Keoppel Decl. ¶ 2 & Ex. 1 at Addendum ¶ 55.) Under the Guaranty, if 8155 Heights failed to spend at least $1,250,000 to improve the subject premises, Keoppel agreed to spend the amount necessary to improve the property up to $1,250,000, as well as fully pay all laborers for the costs of the project. (Id. ¶ 4 & Ex. 2.)

Accordingly, to the extent that plaintiffs’ claims are based on the Guaranty, the Court finds that plaintiff’s claim is one upon which attachment may be issued.

“A claim has ‘probable validity’ where it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim.” (CCP § 481.190.) “If the defendant opposes the application, ‘the court must then consider the relative merits of the positions of the respective parties and make a determination of the probable outcome of the litigation.’ [Citations.]” (Pech v. Morgan (2021) 61 Cal.App.5th 841, 855.)

As a preliminary matter, the declaration of Ed Leisner in support of the application is not executed under penalty of perjury under the laws of the State of California, as required by CCP § 2015.5. The declaration is missing a signature page.

Even considering the Leisner declaration on the merits, plaintiffs have not demonstrated that Keoppel caused $3,888,500 from any breach of the Guaranty.

Plaintiffs maintain that, instead of spending at least $1,250,000 to improve the property, 8155 Heights destroyed the interior of the subject property without spending the required amount for improvements under the Lease or the Guaranty. (Leisner Decl. ¶ 15.) In contrast, Keoppel, as manager of 8155 Heights, maintains that 8155 Heights spent over $1,350,000 in construction costs. (Keoppel Decl. ¶ 7.) Keoppel provides a table showing various payments adding up to $1,215,891.70. (Id. ¶ 7 & Ex. 5.) However, the following entries do not clearly indicate that they pertain to tenant improvements:

Date	Memo	Payment
10/30/2018	Admin/Legal/Key Money	$264,212.26
12/31/2019	Brand Concepts	22,500.00
TOTAL:		$286,712.26

Nevertheless, even if all the entries in the table that Keoppel presented pertain to tenant improvements, the total amount reflected in the entries is still below $1,250,000. While Keoppel maintains that 8155 Heights spent over $1,350,000, Keoppel does not demonstrate that any amount above $1,215,891.70 were spent on improvements to the premises. Accordingly, plaintiffs establish a probability that it will obtain a judgment on their claim against Keoppel for claims based on breach of the Guaranty.

However, plaintiffs do not establish that they are entitled to attach Keoppel’s property in the amount of $3,888,500. Under the Guaranty, Keoppel guaranteed full payment to third-party laborers for construction on the premises. (Leisner Decl. ¶ 11 & Ex. 2; see also Keoppel Decl. ¶ 4 & Ex. 2.) To the extent that 8155 Heights has not paid contractors for construction services, plaintiffs do not set forth the amount of construction costs that remain unpaid. (See Leisner Decl. ¶ 13 [unpaid costs to contractor not stated].)

Plaintiffs note that the unpaid rent under the Lease is $1,482,159.26 and that it will take $1.8 million in construction costs and $880,000 in holding costs to prepare the property for rental. (Leisner Decl. ¶¶ 14, 17.) Putting aside Keoppel’s objection that Leisner lacks personal knowledge to aver to necessary construction costs, Keoppel never guarantied payment of rent or more than $1,250,000 in improvement costs. (Leisner Decl. ¶ 11 & Ex. 2; see also Keoppel Decl. ¶ 4 & Ex. 2.)

To the extent that plaintiffs’ request for attachment in the amount of $3,888,500 is based in part on the alleged misrepresentation that 8155 Heights would spend more than $3 million to improve the premises (see Compl. ¶¶ 39, 51, 61), not only does the Lease contain an integration clause (see Keoppel Decl. ¶ 2 & Ex. 1 at ¶ 22), but plaintiffs cannot seek attachment for a claim not based in contract. (CCP § 483.010(b).)

Based on the table presented by Keoppel, plaintiffs are entitled to attachment of Keoppel’s property in the amount of $320,820.56 ($1,250,000 Guaranty amount – $1,215,891.70 improvements reflected in Keoppel table + $286,712.26 entries not clearly linked to improvements)).

The other required findings under CCP § 484.090 are that the “attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based” and that the “amount to be secured by the attachment is greater than zero.” (CCP § 484.090(a)(3), (a)(4).)

Plaintiffs declare that attachment is not sought for a purpose other than the recovery on plaintiff’s claim. (App. ¶ 4.) The amount to be secured is greater than zero.

Plaintiffs moves to attach property in which Keoppel has an interest. (Proposed Order ¶ 3(c).) The property which plaintiffs seek to attach are permissible under CCP § 487.010(c)(7), (c)(9), and (c)(10).

CCP § 489.210 requires the plaintiffs to file an undertaking before issuance of a writ of attachment. CCP § 489.220 provides, with exceptions, for an undertaking in the amount of $10,000. Keoppel does not argue for a different amount of undertaking.

The application is GRANTED in the amount of $320,820.56. Plaintiffs Iron Hammer Properties, LP and Magnum, LP are ordered to post an undertaking in the amount of $10,000 before a writ of attachment shall issue.

IRON HAMMER PROPERTIES, LP, et al., vs. 8155 HEIGHTS, LLC, et al.,	Plaintiffs, Defendants.	Case No. 23STCV03980 [TENTATIVE] RULING ON APPLICATION FOR ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT Dept. 82 (Hon. Curtis A. Kin)