Judge: Curtis A. Kin, Case: 24STCV12674, Date: 2024-09-10 Tentative Ruling
Case Number: 24STCV12674 Hearing Date: September 10, 2024 Dept: 86
APPLICATION FOR RIGHT TO ATTACH ORDER
Date: 9/10/24
(1:30 PM)
Case: First General Bank
v. V & K Properties LLC et al. (24STCV12674)
TENTATIVE RULING:
Plaintiff First General Bank’s
application for right to attach order with respect to defendant Thuy-Vi Vu is
GRANTED.
Plaintiff’s request to take judicial notice of Exhibit A
(Declaration of City of Fremont Code Enforcement Manager David Wage) is
GRANTED. (Evid. Code § 452(d), (h).) Otherwise, the requests are DENIED as “unnecessary
to the resolution” of the issues before the Court. (Martinez v. San Diego
County Credit Union (2020) 50 Cal.App.5th 1048, 1075.)
Pursuant to CCP §484.090, the Court finds:
Plaintiff First General Bank’s claim against defendant Thuy-Vi
Vu is for amounts due under a written Commercial Guaranty, whereby Vu guaranteed
full payment of two loans—one for $6.25 million and the other for $5
million—that plaintiff made to co-defendant V & K Properties LLC
(“Borrower”). (Lin Decl. ¶ 2 & Exs. A, B.) On November 1, 2023, Borrower
failed to make the required payment to plaintiff. (Lin Decl. ¶ 3.) A balance of
$11,601,641.69 (not including the $1,000 in costs and $235,322.82 in attorney fees
that plaintiff seeks to attach) remains on Borrower’s account. (Lin Decl. ¶ 8.)
Vu does not dispute that Borrower took out loans, that she
guaranteed the loans, or that the balance is correct. Rather, she argues that
the purpose of the loans has been frustrated. Vu, one of Borrower’s members, declares
that the purpose of the loans was to fund the purchase of a Comfort Inn hotel
in Fremont, CA. (Lin Decl. ¶¶ 4-6.) In March 2020, due to a governmental order
addressing the COVID-19 pandemic, the hotel was forced to shut down, resulting
in the loss of income. (Lin Decl. ¶¶ 7, 8.) The hotel has been repeatedly
vandalized, causing millions of dollars in property damage and preventing the
hotel from reopening. (Lin Decl. ¶¶ 9, 10.)
“[W]here performance remains possible, but the reason the
parties entered the agreement has been frustrated by a supervening circumstance
that was not anticipated, such that the value of performance by the party
standing on the contract is substantially destroyed, the doctrine of commercial
frustration applies to excuse performance.” (Habitat Trust for Wildlife,
Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1336.)
Commercial frustration is not applicable here. As conceded
by defendant, the purpose of the loans was to fund the purchase of the hotel
for Borrower to operate. (Lin Decl. ¶ 6.) The purchase was completed, and
Borrower remains in possession of the hotel. (Lin Decl. ¶¶ 5, 12.) The value of
the loan agreements has not been destroyed. Even though Borrower was unable to
operate the hotel due to a closure order, such order was temporary. (See Lin
Decl. ¶ 12 [Borrower seeks to reopen hotel].) Where a government closure order
is temporary, the doctrine of commercial frustration does not apply. (SVAP
III Poway Crossings, 87 Cal.App.5th at 896, citing 20th Century Lites,
Inc. v. Goodman (1944) 64 Cal.App.2d Supp. 938, 946.)
To the extent that vandalism of the hotel has prevented its
reopening, such risk was anticipated and reasonably foreseeable. (See SVAP
III Poway Crossings, 87 Cal.App.5th at 895 [party asserting frustration
must show that supervening event “was not reasonably foreseeable and the party
claiming frustration did not assume the risk under the contract”].) Since
October 20, 2020, the City of Fremont has warned Borrower of nuisance
conditions at the hotel and required correction of the conditions. Despite
warnings, the conditions remain unabated. (RJN Ex. A, Wage Decl. ¶¶ 6-28; see
also Lin Decl. ¶ 8.) Further, with respect to one of the loans, defendant
assumed the risk that the hotel would be vandalized; defendant waived any
defense that the hotel “changed in value, or was neglected, lost, destroyed.”
(Lin Decl. ¶ 2 & Ex. B [Unconditional Guarantee] at ¶ 6(c)(4).)
For the foregoing reasons, defendant cannot escape the
obligations to make payments under the loan agreements under the doctrine of
commercial frustration.
The property that plaintiff seeks to attach is subject to
attachment according to CCP § 487.010. Defendant asserts a homestead exemption
under CCP § 704.720. Defendant has not submitted any affidavit support of her
assertion that the real property located at 15018 Hannah Lyn Avenue,
Bakersfield, CA 93314 is her principal residence. (CCP § 484.350(c) [“The claim
of exemption shall be accompanied by an affidavit supporting any factual issues
raised by the claim and points and authorities supporting any legal issues
raised”].) In any event, plaintiff is entitled to attach any declared homestead
to the extent allowed under statute. (CCP § 487.025(a), (b).)
Defendant also claims an exemption in a life insurance
policy and a 401k. Plaintiff does not seek to attach any life insurance policy
or 401k. (See Schedule A to App.)
With respect to the undertaking, CCP § 489.210 requires the
plaintiff to file an undertaking before issuance of a writ of attachment. Defendant
argues the Court should require an undertaking of $500,000. Defendant does not
state how this proposed amount reflects the “probable recovery for wrongful
attachment if it is ultimately determined that the attachment was wrongful,”
including “[a]ll damages proximately caused to the defendant by the wrongful
attachment” and “[a]ll costs and expenses, including attorney’s fees,
reasonably expended in defeating the attachment.” (CCP §§ 489.220(b),
490.020(a)(2).) Accordingly, a writ may
issue upon the posting of a bond in the amount of $10,000. (CCP §489.220.)
For the foregoing reasons, the Court will sign the proposed
right to attach order, electronically received 6/26/24.