Judge: Curtis A. Kin, Case: 24STCV03200, Date: 2024-04-04 Tentative Ruling

Case Number: 24STCV03200    Hearing Date: April 4, 2024    Dept: 82

Plaintiff Sitrick Group, LLC moves for a right to attach order against defendant Randall Emmett in the amount of $115,515.51.

I.       Factual Background

            Plaintiff Sitrick Group, LLC is a crisis management and public relations firm. (Sitrick Decl. ¶ 1 & Exs. 1, 2.) Defendant Randall Emmett is a movie producer. (Hofmeister Decl. ¶ 2.)

            On June 3, 2022, defendant retained plaintiff to provide public relations and crisis management services to address an investigation by the Los Angeles Times concerning his movie production business. (Sitrick Decl. ¶ 2 & Ex. 3.) The investigation concerned allegations of sexual misconduct, abuse of employees, questionable business practices, non-payment of loans, exorbitant producer fees, and civil fraud. (Hofmeister Decl. ¶¶ 2, 3 & Ex. 7.)

            From June 11, 2022 to February 3, 2023, plaintiff provided services to mitigate the effect of the potential story by the Los Angeles Times. (Sitrick Decl. ¶ 3 & Ex. 4; Hofmeister Decl. ¶ 3.) A balance of $100,515.51 remains. (Sitrick Decl. ¶ 4 & Ex. 5.)

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

1.    Notice

The proof of service filed on March 1, 2024 indicates that service was timely. Despite proper service, no opposition has been filed.

2.    Arbitration

Plaintiff represents that the parties are set to begin a trial in binding arbitration on March 13, 2024. (Nemecek Decl. ¶ 4.)

CCP § 1281.8(b) states in pertinent part (emphasis added):

A party to an arbitration agreement may file in the court in the county in which an arbitration proceeding is pending, or if an arbitration proceeding has not commenced, in any proper court, an application for a provisional remedy in connection with an arbitrable controversy, but only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief.

The Court cannot grant an attachment if this showing has not been made. (California Retail Portfolio Fund GMBH & Co. KG v. Hopkins Real Estate Group (2011) 193 Cal.App.4th 849, 856-57.)

In California Retail Portfolio Fund, the Court of Appeal held “the apparent insolvency of a party to an arbitration agreement, or other evidence showing that the party was experiencing severe financial difficulties, is sufficient to satisfy the ineffectual relief requirement.” (California Retail Portfolio Fund, 193 Cal.App.4th at 857.) The California Retail Portfolio Fund court concluded there was sufficient evidence of insolvency where the defendant’s CFO wrote in an email that he was concerned about the defendant’s overall liquidity, that there was a risk of defaulting on certain notes, that income was down, that revenue was not covering overhead costs, and that assets would need to immediately be sold off. (Id. at 860.) The California Retail Portfolio Fund court reached this conclusion after relying on a federal case, China National Metal Products Import/Export Co. v. Apex Digital Inc. (C.D. Cal. 2001) 155 F.Supp.2d 1174, in which evidence of “the company's unwillingness to pay its debts, threats by its customers for claims of indemnification in the millions of dollars, and a statement from the company's president that the company was having financial difficulties, thus making it hard to meet its obligations,” was sufficient to satisfy the ineffectual relief requirement. (Id. at 856.)

“The term ‘insolvency’ has two generally accepted definitions: (1) where there is an excess of liabilities over assets; and (2) where one is unable to meet his obligations as they mature in the ordinary course of business.” (Id. at 859-60.) “[T]he inability to pay damages is an alternative to insolvency” and can also satisfy section 1281.8. (Id. at 862.)

            Here, plaintiff does not provide any evidence that any arbitration award, were it to obtain a judgment in its favor in arbitration, would be rendered ineffectual without issuance of the writ of attachment. Plaintiff states that defendant has listed his real property for sale with a proposed purchase price of $4,595,000. (Nemecek Decl. ¶¶ 2, 3 & Exs. 8, 9.) Plaintiff merely speculates that, because defendant has listed his real property for sale, the proceeds will not be available to plaintiff. (Mot. at 3:15-16.) Accordingly, plaintiff has not shown, with evidence, that the arbitration award to which plaintiff may be entitled may be rendered ineffectual without provisional relief.

IV.     Conclusion

            For the foregoing reasons, the application is DENIED.