Judge Curtis A. Kin, Case Number: 23STCV06559, Date: 2023-10-19 Tentative Ruling

Plaintiff Wildflower Brands Inc. moves for a right to attach order against defendants Maria Camacho and Juan Camacho in the amount of $8,700,218.31.

On April 20, 2018, pursuant to a written Purchase Agreement, plaintiff Wildflower Brands Inc. (“Wildflower”) agreed to pay $9.5 million to defendants Maria Camacho (“Mrs. Camacho”) and Juan Camacho (“Mr. Camacho”) (collectively, “Camachos”), and 6200 S. Wilton Place, LLC (“Wilton”) for the purchase of Exclusive Caregivers of California (“Exclusive”), a cannabis dispensary. (Pearce Decl. ¶ 3 & Ex. A at 4-5.) The Camachos were governing members of Exclusive. (Id. at 1.) Wilton owned the real property where Exclusive operated. (Ibid.)

On April 16, 2019, the parties entered into a Revised Purchase Agreement (“RPA”). (Pearce Decl. ¶ 4 & Ex. B.) Accounting for $6,146,628.50 already paid, as well as the previous issuance of a $2.05 million promissory note and 200,000 shares of Wildflower’s stock, the parties agreed that the remaining purchase price was $1,103,371.50. (Id. at 1-2.) The maturity date for the purchase of Exclusive was June 30, 2019, which was a Sunday. Accordingly, the remaining purchase price was due on July 1, 2019. (Pearce Decl. ¶ 7.)

Pursuant to the Camachos’ instructions, Wildflower attempted to pay off the remaining purchase price with three separate wire payments. (Ibid.) The second and third wire payments for $303,371.50 and $700,000, respectively, were received by the Camachos on July 2, 2019. (Ibid.) However, Wildflower had sent the first wire payment for $100,000 on June 28, 2019, which the bank had rejected. (Ibid.)

On July 3, 2019, because the Camachos had not received the first wire payment, Maria Camacho claimed that Wildflower was in default of the RPA. (Pearce Decl. ¶¶ 6, 7 & Ex. D.)

Among other claims, Mrs. Camacho filed a claim in arbitration against Wildflower for breach of the RPA based on Wildflower’s failure to pay the remaining $100,000 by July 1, 2019. (Pl. RJN Ex. 1 at 3, 10, 11.) On November 11, 2020, the Hon. Gail A. Andler (Ret.) (“Arbitrator”) ruled as follows:

[T]he Arbitrator finds that Mrs. Camacho has carried her burden of proof relating to breach of the Revised Purchase Agreement section 1(A) and Secured Promissory Note section 2(A) since Wildflower failed to pay the final $100,000 in accordance with the agreements of the parties. The Arbitrator has not ruled that Wildflower forfeited the $7,150,000 ($6,146,628.50 + $1,003,371.50) it paid toward the purchase of Exclusive and its Licenses. As set forth in the Ruling Re: Request for Clarification, when, and if, Wildflower cures its breach, Mrs. Camacho has a duty to transfer the Licenses into Wildflower’s name.

(Id. at 12, emphasis in original.) The Arbitrator found that Mrs. Camacho, Wilton, and Wildflower were entitled to specified monetary awards. (Id. at 22-23.)

On February 8, 2021, the arbitration award was confirmed in Maria Camacho v. Wildflower Brands Inc., LASC Case No. 19STCV32522 (Hon. Mel Red Recana), and judgment was entered in conformity therewith. (Pl. RJN Ex. 2.) As of August 15, 2023, Mrs. Camacho’s judgment against Wildflower with accrued interest totaled $350,563.67 ($280,073.33 principal + $70,440.34 interest + $50.00 costs). (Pl. RJN Ex. 5; M. Camacho Decl. ¶ 12.)

On July 1, 2022, Exclusive filed an action against Wildflower seeking $3,418,321. (Pearce Decl. ¶ 8; l. RJN Ex. 3.) Due to the lawsuit against Wildflower, Wildflower’s financing partner declined to proceed further in the purchase of Exclusive. (Pearce Decl. ¶ 8.)

Because the purchase of Exclusive was not completed, Wildflower now seeks restitution of the $7,150,000 it paid to the Camachos for the purchase of Exclusive. (Pearce Decl. ¶¶ 5, 8 & Ex. C.)

“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.)

Exhibit 1: Judge Gail A. Andler (Ret.)’s November 11, 2020, Final Award in JAMS Reference No. 1210036674 – GRANTED (Evid. Code § 452(d); Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 525 [arbitration award subject to judicial notice]).

Exhibit 2: Judge Mel Red Recana’s February 8, 2021, Order Confirming Award and Judgment in Los Angeles County Superior Court Case No. 19STCV32522 – GRANTED (Evid. Code § 452(d)).

Exhibit 3: July 1, 2022, Complaint in Exclusive Caregivers of California, Inc. v. Wildflower Brands Inc., Los Angeles County Superior Court Case No. 22STCV21501 – GRANTED, but only for the existence of the document, not the truth of the matters asserted therein. (Evid. Code § 452(d); Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-69).

Exhibit 4: Judge Mel Red Recana’s May 5, 2023, Minute Order Granting Maria Camacho’s Motion for Setoff in Los Angeles County Superior Court Case No. 19STCV32522 – GRANTED (Evid. Code § 452(d)).

Exhibit 5: Maria Camacho’s August 15, 2023, Memorandum of Costs after Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest filed in Los Angeles County Superior Court Case No. 19STCV32522 – GRANTED (Evid. Code § 452(d)).

Wildflower’s supplemental requests to take judicial notice of the following are GRANTED, pursuant to Evidence Code § 452(d):

Exhibit E: The September 8, 2023, Notice of Proof of Service of Plaintiff’s Application on Defendants Maria Camacho and Juan Camacho.

Exhibit F: United States District Court Judge Mark C. Scarsi’s March 20, 2023, Order Re: Motion to Dismiss.

Exhibit A: Plaintiff’s Counterclaims filed in JAMS arbitration proceeding No. 1210036674 – GRANTED, but only the existence of the document, not the truth of the matters asserted therein (Evid. Code § 452(d); Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-69)

Exhibit B: Plaintiff’s Main Closing Brief filed in JAMS arbitration proceeding No. 1210036674 – GRANTED, but only the existence of the document, not the truth of the matters asserted therein (Evid. Code § 452(d); Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-69)

Exhibit C: Hon. Gail A. Andler (Ret.)’s October 13, 2020, Ruling Re: Request for Clarification in JAMS arbitration proceeding No. 1210036674 – GRANTED (Evid. Code § 452(d); Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 525 [arbitration award subject to judicial notice]).

Defendants Maria Camacho and Juan Camacho were served with the summons and complaint by publication. (See 8/2/23 Order for Publication re: Maria Camacho; 8/10/23 Order for Publication re: Juan Camacho; 9/1/23 Proof of Publication re: Maria Camacho; 9/5/23 Proof of Publication re: Juan Camacho.) The proof of service of the moving papers indicates that service was timely. Defendants filed an opposition.

“[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).)

Wildflower asserts causes of action against defendants for quasi-contract and breach of implied contract. (Compl. ¶¶ 48-50 [quasi-contract], 59-61 [breach of implied contract].) A quasi-contract is a contract implied in law where an obligation is “created by the law without regard to the intention of the parties, and is designed to restore the aggrieved party to his or her former position by return of the thing or its equivalent in money.” (Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622, 639, quoting 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 1013, p. 1102.) The doctrine of quasi-contract is based on unjust enrichment, where money is transferred to an individual or company that is not entitled to the money. (Welborne v. Ryman-Carroll Foundation (2018) 22 Cal.App.5th 719, 725.)

Writs of attachment are available to parties who have received nothing of value in exchange for consideration paid. (Klein v. Benaron (1967) 247 Cal.App.2d 607, 609.) In other words, the law implies a promise for the return of money paid when nothing of value is received.

It is undisputed Wildflower made payments to the Camachos to purchase Exclusive. (Pearce Decl. ¶¶ 3-5 & Exs. A-C.) It is also undisputed that the sale of Exclusive to Wildflower was not completed and that the $7,150,000 Wildflower seeks as restitution in the instant proceeding has not been refunded or returned. (See Pearson Decl. ¶¶ 4, 5.) Because Wildflower seeks restitution of payments made for the purchase of Exclusive, and the law implies a promise made by defendants to return the money paid by Wildflower when it has received nothing of value, attachment may be issued on Wildflower’s claims for quasi-contract and breach of implied contract.

Mrs. Camacho does not dispute that plaintiff’s claim is the type upon which an attachment may be issued. Mr. Camacho, on the other hand, contends that he was never a party to the contracts at issue in the Complaint. (J. Camacho Decl. ¶ 9.) However, Mr. Camacho was a party to both the initial Purchase Agreement and the Revised Purchase Agreement. (Pearce Decl. ¶¶ 3, 4 & Exs. A, B.) Accordingly, Mr. Camacho impliedly agreed to return the money that Wildflower paid to purchase Exclusive if the sale was not completed.

Based on the foregoing, the Court finds that plaintiff’s claims against defendants are based on an implied contract upon which a writ of 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.)

Defendants contend Wildflower’s claim for restitution is barred by res judicata or collateral estoppel because plaintiff sought the rescission of the initial Purchase Agreement and the Revised Purchase Agreement and money damages in arbitration and the arbitrator purportedly denied Wildflower’s request. (Opp. at 12:17-13:5.) Wildflower asked for rescission and money damages in its closing brief. (Def. RJN Ex. B at 30:17-24.)

The Court disagrees. The Arbitrator never ruled on the issue presented here—whether Wildflower is entitled to recission and the return of monies in the event the purchase transaction for Exclusive was not consummated. On this, the Arbitrator was clear, stating: “The Arbitrator has not ruled that Wildflower forfeited the $7,150,000 ($6,146,628.50 + $1,003,371.50) it paid toward the purchase of Exclusive and its Licenses. As set forth in the Ruling Re: Request for Clarification, when, and if, Wildflower cures its breach, Mrs. Camacho has a duty to transfer the Licenses into Wildflower’s name.” (Pl. RJN Ex. 1 at 12, emphasis in original.) Clearly, the Arbitrator declined to address the issues of rescinding the agreement to purchase and return of monies because, consistent with the parties’ agreement, the Arbitrator made clear that Mrs. Camacho was obligated to transfer the licenses once Wildflower paid the final $100,000 for the purchase of Exclusive and its licenses.[1] Thus, the Arbitrator’s ruling did not foreclose Wildflower from seeking rescission and restitution if the purchase of Exclusive ultimately failed, because there was no final adjudication on the merits of that issue for res judicata or collateral estoppel to apply. (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797 [element of res judicata or collateral estoppel includes “the prior proceeding [having] resulted in a final judgment on the merits”].)

As stated above, defendants do not dispute that it is in possession of the $7,100,000 for which Wildflower seeks restitution and attachment or that Wildflower’s purchase of Exclusive failed to close. Wildflower thus demonstrates the probable validity of its claim for restitution under a theory of quasi-contract or breach of implied contract.

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).)

Wildflower declares that “[a]ttachment is not sought for a purpose other than the recovery on a claim upon which the attachment is based.” (Apps. ¶¶ 4.) Defendant do not argue that the instant applications were brought for an improper purpose.

Wildflower also demonstrates that the amount to be secured by the attachment is greater than zero, specifically $7,150,000. (Pearce Decl. ¶ 5 & Ex. C [Wildflower paid $7,253,371.50], Most Decl. ¶ 6 & Ex. HH [Wildflower seeks $7,150,000 in restitution].)

Defendants contend they are entitled to an offset based on a judgment that Mrs. Camacho has against Wildflower. (CCP § 483.015(b)(1) [amount to be secured by attachment reduced by “amount of any money judgment in favor of the defendant and against the plaintiff that remains unsatisfied and is enforceable”].) Wildflower does not dispute Mrs. Camacho’s right to an offset and indeed accounts for it. Wildflower has taken the principal and interest Mrs. Camacho has claimed is outstanding in a Memorandum of Costs After Judgment, Acknowledgement of Credit, and Declaration of Accrued Interest and calculated accrued interest up to October 9, 2023. (Pl. RJN Ex. 5; Most Decl. ¶ 6 & Ex. HH.) Wildflower then subtracted the total amount of principal and interest and subtracted it from the amount of restitution that it seeks to attach. (Most Decl. ¶ 6 & Ex. HH.) However, Wildflower did not account for the $50.00 in costs claimed by Mrs. Camacho. (Pl. RJN Ex. 5; Most Decl. ¶ 6 & Ex. HH [$280,073.33 principal + $70,440.34 interest = $350,513.67, $50.00 in costs not included]; see also Opp. at 14:1-4 [stating balance on judgment is $350,563.67, including post-judgment costs].) Defendants do not otherwise dispute Wildflower’s calculation concerning the amount of attachment. Accordingly, the Court reduces the amount that Wildflower seeks to attach by $50.00.

The Court finds that Wildflower is entitled to a right to attach order in the amount of $8,700,168.31 ($8,700,218.31 - $50.00).

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).” Wildflower provides this statement. (Apps. ¶¶ 4.)

CCP § 487.010(c) lists categories of property subject to attachment where the defendant is a natural person. Wildflower moves to attach property of defendants who are natural persons. (Prop. Orders ¶¶ 1.)

Wildflower seeks to attach property not expressly subject to attachment under CCP § 487.010(c), including amounts due under insurance policies and partnership distributions. “Where the defendant is a natural person, the description of the property shall be reasonably adequate to permit the defendant to identify the specific property sought to be attached.” (CCP § 484.020(e).) “The requirement of specificity [under CCP § 484.020(e) does not] … prohibit a plaintiff from targeting for attachment everything an individual defendant owns [s]o long as the property descriptions are adequate.” (Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 268.) The categories of property listed in Attachment A to the proposed orders are reasonably adequate and limited to property in which defendants have an interest.

However, the Court cannot attach the following real properties because they are located out of state: (1) 9760 SW 60th St., Miami, Florida 33173; (2) 340 5th St., Key Colony Beach, Florida 33051; (3) 300 5th S., Key Colony Beach Florida, 33051; and (4) 4309 SW 164th Court, Miami, Florida 33185. (Prop. Orders Att. A at (d)(2-5); see Pacific Decision Sciences Corp. v. Superior Court (2004) 121 Cal.App.4th 1100, 1108 [“But, of course, a California court lacks jurisdiction to command a sheriff, marshal, or constable in Florida or New Jersey to levy a California writ of attachment on a New Jersey company or a Florida bank”].) The foregoing properties shall be stricken from the proposed orders.

Further, with respect to the real property located at 777 E. Ocean Blvd., Apt. #3305, Long Beach, California 90802, defendants declare that they rent the property. (Prop. Orders Att. A at (d)(1); M. Camacho Decl. ¶ 3; J. Camacho Decl. ¶ 3.) Wildflower did not dispute defendants’ assertion. Accordingly, because the Long Beach property does not belong to defendants, the Long Beach property shall also be stricken from the proposed orders.

Defendants contend that the following are exempt from attachment under CCP § 487.020(b): (1) 340 5th St., Key Colony Beach, Florida 33051; (2) Lincoln Aviator, FL License Plate PGJJ20; and (3) accounts receivable, chattel paper, and general intangibles arising out of the conduct by trade, business, and/or profession. (See CCP § 487.020(b) [“[p]roperty which is necessary for the support of a defendant who is a natural person or the family of such defendant supported in whole or in part by the defendant” is exempt from attachment].)

With respect to the Lincoln Aviator, use of a vehicle appears necessary to tend to their businesses. (M. Camacho Decl. ¶¶ 8, 10; J. Camacho Decl. ¶¶ 8, 10.) Wildflower does not present any argument in the reply that the vehicle is not necessary for the support of defendants. Accordingly, the Court will specify in the proposed orders that the Lincoln Aviator, Florida License Plate PGJJ20 is exempt from attachment.

With respect to the accounts receivable, defendants make an insufficient showing. Defendants merely assert in conclusory fashion a monthly income of $29,690. (M. Camacho Decl. ¶ 10; J. Camacho ¶ 10.) They do not set forth sufficient facts or provide supporting evidence to establish that their monthly income is limited to $29,690 as they claim. Accordingly, even if the Court were to accept as true defendants’ monthly expenses of $29,000 (M. Camacho Decl. ¶ 11; J. Camacho ¶ 11), the Court has insufficient information to determine what amount is necessary for the support of defendants. Accordingly, defendants’ accounts receivable, chattel paper, and general intangibles arising out of the conduct by trade, business, and/or profession shall remain subject to attachment.

CCP § 489.210 requires plaintiff 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. Defendants argue that they “anticipate suffering damages, costs, expenses, and reasonable attorney’s fees exceeding $100,000” if attachment is granted. (Opp. at 7:4-7.) Defendants’ assertion is insufficient for the Court to determine the “probable recovery for wrongful attachment if it is ultimately determined that the attachment was wrongful.” (CCP § 489.220(b).) Defendants do not explain how the $100,000 was calculated.

On this showing, the Court find that a bond of $10,000 set forth in CCP § 489.220(a) for each defendant is sufficient. Wildflower filed copies of the $10,000 bonds posted for each defendant on September 13, 2023.

The application is GRANTED IN PART in the amount of $8,700,168.31. The Lincoln Aviator, Florida License Plate PGJJ20 is exempt from attachment. The aforementioned real properties in Florida and Long Beach, California are not subject to attachment.

Within two (2) court days, plaintiff shall submit a proposed order, using the Judicial Council approved Form AT-120, in accordance with the rulings herein.

[1] The Court finds ambiguous the Arbitrator’s language in a different part of the Award, stating: “Although Respondent’s [Wildflower] Main Closing Brief states it is seeking rescission of the contracts and money damages only and is silent as to specific performance of the Purchase Option, as set forth in the Ruling Re: Request for Clarification, to the extent Respondent is still seeking specific performance, the Arbitrator finds that Wildflower failed to establish it is entitled to such relief.” (Pl. RJN Ex. 1 at 15-16.) In context, the “such relief” to which the Arbitrator finds Wildflower not entitled would appear to be Wildflower’s request for specific performance. But, as noted above, the Arbitrator found that, upon paying $100,000, Wildflower would be entitled to the transfer of licenses per the agreement. (Pl. RJN Ex. 1 at 12.) Regardless, this statement is not a prelusive finding that Wildflower is not entitled to recission in the event the purchase is never finalized.