Judge: Curtis A. Kin, Case: 22STCV37259, Date: 2023-10-19 Tentative Ruling

Case Number: 22STCV37259    Hearing Date: October 19, 2023    Dept: 82

            Plaintiff CHEP USA seeks a writ of possession against defendant Eco Pallets, Inc. with respect to plaintiff’s wooden pallets.

I.       Factual Background

            Plaintiff CHEP USA leases wooden pallets to manufacturers and distributors. (Ver. Compl. ¶¶ 15, 16, 19, 23-25.) Plaintiff’s contracts expressly prohibit the purchase or sale of the pallets, as the pallets belong to plaintiff. (Ver. Compl. ¶¶ 20-22.)  Defendant Eco Pallets, Inc. is in possession of certain of plaintiff’s pallets. (Ver. Compl. ¶¶ 31, 33, 37.) Plaintiff has no contractual relationship with defendant. (Ver. Compl. ¶ 29.) Despite demanding the return of the pallets, defendant has not allowed plaintiff to recover its property. (Ver. Compl. ¶¶ 32, 36.)

II.      Applicable Law

            “Upon the filing of the complaint or at any time thereafter, the plaintiff may apply pursuant to this chapter for a writ of possession by filing a written application for the writ with the court in which the action is brought.”  (CCP § 512.010(a).)  Pursuant to CCP § 512.010(b), the application must be submitted under oath and include the following:

(1) A showing of the basis of the plaintiff’s claim and that the plaintiff is entitled to possession of the property claimed. If the basis of the plaintiff’s claim is a written instrument, a copy of the instrument shall be attached.

(2) A showing that the property is wrongfully detained by the defendant, of the manner in which the defendant came into possession of the property, and, according to the best knowledge, information, and belief of the plaintiff, of the reason for the detention.

(3) A particular description of the property and a statement of its value.

(4) A statement, according to the best knowledge, information, and belief of the plaintiff, of the location of the property and, if the property, or some part of it, is within a private place which may have to be entered to take possession, a showing that there is probable cause to believe that such property is located there.

(5) A statement that the property has not been taken for a tax, assessment, or fine, pursuant to a statute; or seized under an execution against the property of the plaintiff; or, if so seized, that it is by statute exempt from such seizure.

            Before the hearing on the application for writ of possession, the defendant must be served with (1) a copy of the summons and complaint; (2) a Notice of Application and Hearing; and (3) a copy of the application and any affidavit in support thereof.  (Id. § 512.030.)

“At the hearing, a writ of possession shall issue if both of the following are found:      [¶] (1) The plaintiff has established the probable validity of the plaintiff’s claim to possession of the property. [¶] (2) The undertaking requirements of Section 515.010 are satisfied.” (Id. § 512.060(a).) “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.” (Id. § 511.090.)

A writ of possession shall not issue unless the plaintiff files an undertaking “in an amount not less than twice the value of the defendant’s interest in the property or in a greater amount.” (Id. § 515.010(a).)

III.     Analysis

A.           Notice

According to a proof of service filed on December 5, 2022, defendant was personally served with a copy of the summons and complaint on December 2, 2022. Proofs of service attached to the moving papers also indicate that defendant was electronically and personally served with a Notice of Application and Hearing and copy of the application and supporting affidavits on August 14, 2023. Plaintiff complied with CCP § 512.030.

The parties later stipulated to continue the hearing. (8/28/23 Joint Stipulation.) Plaintiff and the Court served notice of the continuance of the hearing on defendant. (8/28/23 Notice of Ruling; 8/28/23 Minute Order.) Defendant has filed an opposition.

B.           Description and Value of Property

The subject property are wooden pallets painted blue on their sides and inscribed with CHEP’s logo and bearing the words “PROPERTY OF CHEP.” (App. ¶ 4.) According to plaintiff, the pallets may also bear plaintiff’s toll-free telephone number (877-362-2437). (App. ¶ 4; Ver. Compl. Ex. A.)

C.           Statutory Statements

Pursuant to CCP § 512.010(b)(4) and (b)(5), the application must include:

(4) A statement, according to the best knowledge, information, and belief of the plaintiff, of the location of the property and, if the property, or some part of it, is within a private place which may have to be entered to take possession, a showing that there is probable cause to believe that such property is located there.

(5) A statement that the property has not been taken for a tax, assessment, or fine, pursuant to a statute; or seized under an execution against the property of the plaintiff; or, if so seized, that it is by statute exempt from such seizure.

With respect to CCP § 512.010(b)(5), plaintiff avers that the property at issue has not been taken for a tax, assessment, or fine, pursuant to a statute, and has not been seized under an execution against the property of the plaintiff. (Application ¶ 8(a); Miller Decl. ¶ 6.)

With respect to CCP § 512.010(b)(4), plaintiff avers that the pallets are located at defendant’s place of business located at 1349 S East End Avenue in Pomona, California. (Miller Decl. ¶ 2.) Defendant does not dispute the veracity of this averment.

D.           Basis of Plaintiff’s Claim

Plaintiff may recover possession of the subject pallets through its causes of action for conversion and recovery and possession of personal property. (State Farm Mut. Auto. Ins. Co. v. Department of Motor Vehicles (1997) 53 Cal.App.4th 1076, 1081 [remedy for conversion includes “specific recovery of the property”]; McFaddin v. H.S. Crocker Co. (1963) 219 Cal.App.2d 585, 590 [claim and delivery is an auxiliary remedy in an action for recovery of personal property].)

            Plaintiff presents evidence that it owns the subject pallets (Compl. ¶¶ 20, 21), that it leases pallets to manufacturers and distributors pursuant to written agreements (Compl. ¶¶ 15, 22-26), that it has no contractual relationship with defendant by which defendant could be in lawful possession of the pallets (Compl. ¶ 26), that defendant is in possession of plaintiff’s pallets (Compl. ¶¶ 31, 33 & Exs. B, D; Miller Decl. ¶¶ 2, 3 & Ex. 1), and that defendant refuses to allow plaintiff to recover its pallets (Compl. ¶¶ 32, 37).

            Defendant does not dispute that plaintiff owns the pallets at issue in the instant action. (Gastelum Decl. ¶¶ 3, 4 [referring to pallets as belonging to plaintiff].)

            Based on the foregoing, plaintiff demonstrates probable validity of its claim to possession of the pallets.

E.           Wrongful Detention

At issue here is whether defendant has a right to withhold possession of the pallets from plaintiff pending payment of reasonable storage fees. 

            Defendant maintains that it served a notice of good faith possession on plaintiff pursuant to Business & Professions Code § 21609.7(d). (Gastelum Decl. ¶ 3 & Ex. A.) This statute provides:

Nothing in this section prohibits a junk dealer or recycler from acquiring good faith possession of merchandise pallets based on the representations of the seller that the indicated owner cannot be located or has failed to retrieve the merchandise pallets on a timely basis. If the indicated owner can be located, a junk dealer or recycler who acquires good faith possession shall give notice of good faith possession to the indicated owner of the merchandise pallets…. A junk dealer or recycler who acquires good faith possession may require payment of reasonable storage fees for the merchandise pallets if the indicated owner demands a return within 35 calendar days after the junk dealer or recycler notifies the indicated owner of having acquired good faith possession. After 35 calendar days from when the junk dealer or recycler provides notice of good faith possession to the indicated owner, the owner shall be deemed to have relinquished possession of the merchandise pallets, at which time the junk dealer or recycler may either sell the pallets or charge reasonable storage fees if the indicated owner demands a return and the pallets are still in the possession of the junk dealer or recycler.

Defendant claims it is in possession of 504 of plaintiff’s pallets. (Gastelum Decl. ¶ 3 & Ex. A.) Defendant seeks to charge $15.00 per pallet for acquisition and transport and $4.00 per pallet for storage. (Gastelum Decl. ¶ 3 & Ex. A.) Even assuming defendant is entitled to invoke Business & Professions Code § 21609.7(d) (i.e., the entity that sold the pallets to defendant represented that plaintiff could not be located or has failed to retrieve the pallets on a timely basis), section 21609.7 does not bar plaintiff from recovering the pallets at this stage of the proceedings. The issue of whether plaintiff is entitled to a writ of possession is separate from whether defendant is entitled to storage fees under section 21609.7. (Cf. RCA Service Co. v. Superior Court (1982) 137 Cal.App.3d 1, 2-3 [finding that lessor of telephone equipment is entitled to writ of possession notwithstanding lessee’s claim that the possessed equipment was defective].)

Accordingly, defendant may not retain possession of the pallets on the ground that it has a claim for storage fees pursuant to Business & Professions Code § 21609.7(d).

F.           Undertaking

CCP § 515.010 requires an undertaking to be filed before the writ issues in the amount of “not less than twice the value of the defendant’s interest in the property.” (CCP § 515.010(a).) “The value of the defendant’s interest in the property is determined by the market value of the property less the amount due and owing on any conditional sales contract or security agreement and all liens and encumbrances on the property, and any other factors necessary to determine the defendant’s interest in the property.” (Ibid.)

Defendant requests the imposition of an undertaking in the amount of $9,576.00, based on 504 pallets multiplied by $19.00 per pallet for acquisition, transportation, and storage costs. However, defendant presents no evidence that it is entitled to invoke Business & Professions Code § 21609.7(d), including a failure to present any evidence that the seller from whom defendant bought the pallets represented that plaintiff could not be located or has failed to retrieve the pallets on a timely basis. (See generally Gastelum Decl.) Defendant thus fails to show that it has any interest in the subject pallets.

            Accordingly, the writ of possession shall issue without any undertaking from plaintiff.

IV.     Conclusion

The application for writ of possession is GRANTED.