Judge Curtis A. Kin, Case Number: 22STCP03916, Date: 2024-06-04 Tentative Ruling

Plaintiffs Daniel Wang and Grace Lee move for a right to attach order against defendant 360 Capital Ventures Inc. in the amount of $912,443.89.

On December 8, 2018, plaintiffs Daniel Wang and Grace Lee entered into a written contract with defendant 360 Capital Ventures Inc. (“360 Capital”) to construct a single-family dwelling on real property located at 15105 Weddington St., Sherman Oaks, CA 91411 (“Property”). (Wang Decl. ¶ 4 & Ex. A at § 2.1.) Plaintiff Wang paid a total of $912,443.89 in connection with the construction work on the property. (Wang Decl. ¶ 6.)

Plaintiffs allege that 360 Capital’s work on the property was defective. (Wang Decl. ¶ 7.) Neither 360 nor its owner, defendant Sachin Patel, were licensed contractors. (Wang Decl. ¶ 7.) Plaintiffs sued 360 Capital and its officers, Patel and Miguel Soltero, for Restitution, Negligence, and Breach of Written Contract.

360 Capital and Patel filed a First Amended Cross-Complaint against, among others, plaintiffs Wang and Lee. 360 Capital and Patel alleged that Lee and Wang contracted with RE3 Restoration LLC (“RE3”), not 360 Capital. (FAXC ¶ 18.) RE3, a non-party, is allegedly a licensed contractor. (FAXC ¶ 18.) 360 Capital allegedly handled administrative functions for RE3, and RE3 performed the construction work on the Property. (FAXC ¶¶ 20, 21, 24.) 360 Capital allegedly erred in not having included RE3 in the agreement between 360, Wang, and Lee. (FAXC ¶ 25.) Among other causes of action, 360 Capital and Patel sought to reform the agreement to reflect that RE3 was the general contractor under the agreement. (FAXC ¶ 40, 42, 43.)

On March 29, 2024, the Court (Hon. Theresa M. Traber) heard Wang and Lee’s motion for summary adjudication on their Restitution cause of action in their First Amended Complaint and on 360 Capital and Patel’s Reformation cause of action in the First Amended Cross-Complaint. Judge Traber granted Wang and Lee’s motion as to both causes of action because 360 was not a licensed contractor, thereby entitling Wang and Lee to restitution for all sums paid under the agreement and rendering 360 Capital ineligible to seek to reform the agreement. (Ruttenberg Decl. ¶ 3 & Ex. B at 8-13.)

“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.

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

“[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’ claim for restitution is based on their written contract with 360 Capital pursuant to which $912,443.89 was paid. (Wang Decl. ¶¶ 4, 6 & Ex. A.) Plaintiffs have demonstrated a proper basis for attachment.

“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.)

Defendant/cross-complainant 360 Capital contends that plaintiffs intended for licensed contractor RE3 Restoration, LLC, not 360 Capital, to perform construction work on the Property.[1] 360 Capital contends that the ruling on Wang and Lee’s motion for summary adjudication did not resolve the merits of the case or related litigation in RE3 Restoration LLC v. Wang et al., LASC Case No. 23STCV06250 seeking reformation of the agreement.

360 Capital and Patel’s only cause of action against moving parties Wang and Lee in the First Amended Cross-Complaint was for Reformation. The Reformation cause of action was adjudicated in favor of Wang and Lee. (Ruttenberg Decl. ¶ 3 & Ex. B at 11-12.) Indeed, an interlocutory judgment on the First Amended Cross-Complaint in favor of Wang and Lee and against 360 (and Patel) has already been entered.

Moreover, Wang and Lee’s cause of action for Restitution against 360 Capital in their First Amended Complaint has also already been adjudicated in their favor. (Ruttenberg Decl. ¶ 3 & Ex. B at 7-11.) “[A] person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract.” (Bus. & Prof. Code § 7031(b).) 360 Capital does not dispute that plaintiffs have paid $912,443.89—the amount of attachment sought in the instant application—for construction work on the Property. (Wang Decl. ¶ 6.)

While non-party RE3 may be seeking reformation of the agreement in a separate action (Mah Decl. ¶ 6 & Ex. G), the instant application for a right to attach order is against 360 Capital in the matter at hand. As noted, Wang and Lee’s Restitution cause of action has already been adjudicated in their favor. While their Negligence and Breach of Written Contract causes of action, based on purported construction defects (FAC ¶¶ 24, 25, 30), remain to be adjudicated, these other causes of action can only add to, not subtract from, Wang and Lee’s recovery.

For the foregoing reasons, 360 Capital’s Reformation claim does not defeat plaintiffs’ entitlement to attachment based on their Restitution claim. The summary adjudication of Wang and Lee’s Restitution cause of action establishes the probable validity of their request for attachment in the amount of $912,443.89.

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 “[a]ttachment is not sought for a purpose other than the recovery on a claim upon which the attachment is based.” (App. ¶ 4.) Plaintiffs also demonstrate that the amount to be secured by the attachment is greater than zero. (App. ¶ 8.)

360 Capital argues that the amount to be secured by attachment will be offset because RE3 will prevail on its claim for reformation of the agreement. The amount to be secured by an attachment shall be reduced by the “amount of any indebtedness of the plaintiff that the defendant has claimed in a cross-complaint filed in the action if the defendant’s claim is one upon which an attachment could be issued.” (CCP § 483.015(b)(2).) 360 Capital may not invoke an offset based on a non-party such as RE3. RE3 is not a defendant, and RE3 has not filed any cross-complaint. Although 360 Capital asserted an affirmative defense based on offset (Mah Decl. ¶ 2 & Ex. A at 5:9-13 [20th Affirmative Defense]), 360 Capital does not explain how it would be entitled to an offset based on a non-party’s alleged entitlement to relief in a separate action. Moreover, Judge Traber found in plaintiffs’ motion for summary adjudication that 360 Capital acted as a contractor, notwithstanding its contention that it performed only administrative tasks. (Ruttenberg Decl. ¶ 3 & Ex. B at 10-11.) Pursuant to the principle of disgorgement set forth in Business and Professions Code § 7031(b), plaintiffs are entitled to attach the amount paid to 360 Capital.

As 360 Capital does not establish entitlement to an offset, the Court finds that plaintiffs are entitled to a right to attach order in the amount of $912,443.89.

CCP § 484.020(d) requires a “statement that the applicant has no information or belief that the claim is discharged in a proceeding under Title 11 of the United States Code (Bankruptcy) or that the prosecution of the action is stayed in a proceeding under Title 11 of the United States Code (Bankruptcy).” Plaintiffs provide this statement. (App. ¶ 5.)

CCP § 487.010(a) states that where the defendant is a corporation, all corporate property for which a method of levy is provided in CCP § 488.300, et seq. is subject to attachment. Plaintiffs move to attach any property of 360 Capital.

CCP § 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment. CCP § 489.220 provides, with certain exceptions, for an undertaking in the amount of $10,000. Plaintiffs do not discuss the proper amount of undertaking. The Court will order an undertaking in the amount of $10,000.

The application for a writ of attachment as to defendant 360 Capital Ventures Inc. is GRANTED in the amount of $912,443.89. Plaintiffs Daniel Wang and Grace Lee are ordered to post an undertaking in the amount of $10,000 before any writ shall issue.

[1] The Notice of Opposition indicates that the opposition is filed by “360 Capital Ventures, Inc, et al.” However, the instant application seeks attachment against 360 Capital, not defendants Patel or Soltero.