Judge: Curtis A. Kin, Case: 23STCV23660, Date: 2024-03-21 Tentative Ruling

Case Number: 23STCV23660    Hearing Date: March 21, 2024    Dept: 82

Plaintiff Teichman Enterprises, Inc. moves for right to attach orders in the amount of $2,103,754.57 against defendants 4Front California Capital Holdings, Inc. and 4Front Ventures Corporation, Inc.

I.       Factual Background

            On December 1, 2018, plaintiff Teichman Enterprises, Inc. and defendant 4Front California Capital Holdings, Inc. f/k/a Cannex Holdings (California), Inc. (“4Front California”) entered into a Master Lease to lease property located at 6100 Bandini Blvd. in Commerce from February 1, 2019 to January 31, 2019. (Teichman Decl. ¶ 4; Landgraf Decl. ¶ 3.) Defendant 4Front Ventures Corporation, Inc. f/k/a Cannex Capital Holdings, Inc. (“4Front Ventures”) guarantied 4Front California’s performance under the Master Lease. (Teichman Decl. ¶ 5; Landgraf Decl. ¶ 3.)

The property consists of a industrial building and surrounding parking. (Landgraf Decl. ¶ 3.) 4Front California used the property for the process, manufacture, distribution, and/or cultivation of marijuana. (Landgraf Decl. ¶ 4.)

            The Master Lease has been amended twice. (Teichman Decl. ¶¶ 6, 8; Landgraf Decl. ¶ 5.) As of May 22, 2020, the date of the First Amendment to the Master Lease, 170,000 rentable square feet were leased under the Master Lease. (Teichman Decl. ¶¶ 6, 7.) Under the Second Amendment to the Master Lease, defendants agreed to a payment schedule to pay plaintiff delinquent license fees. (Teichman Decl. ¶ 8.) Defendants also agreed that any future failure to pay license fees shall constitute a default the Master Lease based on failure to pay rent. (Teichman Decl. ¶ 8.)

             While in possession of the property, 4Front California converted the property from an empty shell to a space amenable to manufacturing or distribution, including by removing outdated plumbing and electrical wiring, building walls to separate manufacturing and distribution space, installing an electrical panel, and making repairs to the roof. (Landgraf Decl. ¶¶ 6, 7, 12 & Ex. 2.)

            In August 2023, 4Front California notified plaintiff of its intent to vacate the property. (Landgraf Decl. ¶ 8.) On October 24, 2023, 4Front California vacated the property. (Landgraf Decl. ¶ 9.)

II.      Applicable Law

            “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.

(4) The amount to be secured by the attachment is greater than zero.

(CCP § 484.090(a)(1-4).)

            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.)

III.     Analysis

            Plaintiff’s evidentiary objections to the declaration of Ray Landgraf set forth in the reply are OVERRULED. The paragraphs to which plaintiff objects have sufficient foundation, as Landgraf declares that he oversaw 4Front California’s operations at the subject property. (Landgraf Decl. ¶ 1.) The exhibits are admissible under the business records hearsay exception. (Evid. Code § 1271; Landgraf Decl. ¶ 2.)

“[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).) 

            It is undisputed that plaintiff’s claims are based on rent owed under a Master Lease and license fees under the Second Amendment to the Master Lease. (Teichman Decl. ¶¶ 4, 8-11; Landgraf Decl. ¶ 3 [admitting to existence of Master Lease and 4Front Ventures’ guaranty of Master Lease].)

However, plaintiff provides no explanation of how it calculated $2,103,754.57 as the amount to be attached. Specifically, plaintiff provides no explanation of how it calculated $1,766,911.32 for unpaid rent, $360,000 for past due license fees, and $560,000 for unpaid license fees for 2022. (Teichman Decl. ¶¶ 9-11.) Plaintiff does not state which months are unpaid. Further, plaintiff does not refer to any specific contractual provisions providing “a clear and definite formula for the computation of damages.” (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App.4th 537, 541.) Plaintiff is correct that “an attachment will lie upon a cause of action for damages for a breach of contract where the damages are readily ascertainable by reference to the contract and the basis of the computation of damages appears to be reasonable and definite.” (Lewis v. Steifel (1950) 98 Cal.App.2d 648, 650, quoting Force v. Hart (1928) 205 Cal. 670, 673.) However, as the moving party, it is plaintiff’s burden to set forth the basis on which its damages can be computed. Instead, plaintiff merely states in conclusory fashion the amount of unpaid rent and license fees without reference to the contract or any meaningful computation from which this Court could determine to what attachment, if any, plaintiff may be entitled.

Because plaintiff does not show that the total amount of its claims is a readily ascertainable amount, the Court finds that plaintiff’s claim for payment of the amount due under the Master Lease and Second Amendment thereto is not one upon which attachment may be issued. 

            The applications are DENIED.