Judge: Curtis A. Kin, Case: 24STCV27427, Date: 2025-05-29 Tentative Ruling

Case Number: 24STCV27427    Hearing Date: May 29, 2025    Dept: 86

Plaintiff Ningbo Master Electronic Technology Co. Ltd. (“NMET”) moves for a right to attach order against defendant Atlantic Representations Inc. (“Atlantic”) in the amount of $1,773,541.18.  The motion is GRANTED IN PART.

I.       Factual Background

            On June 6, 2017, NMET entered into a written contract with Atlantic, wherein NMET agreed to provide television mounts and related products to Atlantic per its orders. (Mtn. at 1; Lee Decl. ¶ 2 & Ex. 1; Opp. at 2, Dardashti Decl. ¶ 2 & Ex. A.) The parties understood that Atlantic’s orders would be resold to Wal-Mart and its subsidiaries. (Dardashti Decl. ¶ 4; Lee Decl., Ex. 1 at 2, 10.) The parties agreed that Atlantic would pay 30% of the invoice in advance of receiving the products and that the remainder would be paid 30 days after delivery. (Dardashti Decl. ¶ 5; see also Lee Decl. Ex. 1 [terms of payment].)  In 2024, NMET provided Atlantic with $1,773,541.18 worth of products, for which NMET claims it has not received payment. (Mtn. at 1; Lee Decl. ¶¶ 3-6 & Ex. 2.)  Atlantic’s CEO Leo Dardashti has acknowledged in emails sent in August and September of 2024 that Atlantic owes plaintiff “a lot of money” for payments not made. (Lee Decl. ¶ 7 & Exs. 3-4.)  By September 17, 2024, NMET demanded payment in full before any ordered products would ship to Atlantic, as well as a minimum of 10% of the amount for outstanding unpaid invoices. (Dardashti Decl. ¶ 12 & Ex. C.)  

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. § 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).)

            “The Attachment Law statutes are subject to strict construction….” (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.)

III.     Evidentiary Issues

          Atlantic objects to the evidence submitted with NMET’s Reply on the ground that it should have been submitted with the moving papers because this new evidence relates to the same issues that NMET had the burden of initially proving. (See Objections at 2-3.) The Court OVERRULES the objection.  New evidence is permitted on reply where it fills in gaps in the evidence created by the opposing party’s opposition and does not raise new substantive issues for the first time. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.) NMET does not attempt to raise new substantive issues on Reply; rather, as is discussed further below, the evidence submitted on Reply fills in the gaps and directly responds to claims made in Atlantic’s opposition.

            Atlantic additionally objects to various portions of Graham Lee’s Reply Declaration on various grounds, including hearsay and lack of personal knowledge. These objections are OVERULED in their entirety.

IV.     Analysis

1.            Basis of Attachment

“[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).) 

            NMET’s claim for breach of contract is based on a written contract with Atlantic, as well as invoices billed in 2024 for products Atlantic received but did not pay for, totaling $1,773,541.18. (Mtn. at 3-4; Lee Decl. ¶¶ 2-3, 5, 8-10 & Exs. 1-2.)

In opposition, Atlantic argues that the amount in question is uncertain because Atlantic paid NMET over $1.5 million in 2024, part of which was used to pay invoices in dispute. (Opp. at 7-8; Dardashti Decl. ¶ 7.) Additionally, Atlantic provides copies of invoices from NMET in 2023 with Atlantic’s payment notes thereon, which, according to Atlantic, demonstrate overpayment of $31,288.32 that should be applied to unpaid 2024 invoices. (Opp. at 7-8; Dardashti Decl. ¶ 8 & Ex. B.) Also, Atlantic asserts that it had paid NMET $50,000 for products it had never received. (Dardashti Decl. ¶ 9.)  As claimed in the declaration of Atlantic’s President and CEO, he and his personnel still “are continuing [their] calculations,” but he asserts in conclusory fashion that the amount unpaid on the disputed 2024 invoices is “likely several hundred thousand dollars less than [NMET] claims.” (Dardashti Decl. ¶ 7.)

NMET contends that the amount due under the disputed 2024 invoices remains unpaid in its entirety. (See Reply at 1; Lee Reply Decl. ¶ 6.) NMET acknowledges that Atlantic paid $1,463,697.71 but attributes such payment to invoices not at issue in this litigation. (Lee Reply Decl. ¶ 6 & Ex. 4.) In contrast to Atlantic’s evidentiary showing in support of its position, which is lacking, NMET provides detailed itemization with supporting documents indicating all payments Atlantic made to NMET in 2024. (Lee Reply Decl. ¶ 6 & Ex. 4.)  Such itemization indicates that the $1,463,697.71 Atlantic paid was for products that shipped between August 2023 and March 2024, but the products for which NMET has not received payment began shipping in March 2024 and continued thereafter. (Lee Reply Decl. ¶ 6 & Exs. 1, 4.)  Thus, the $1,463,697.71 was paid to satisfy invoices not at issue in the instant litigation. (Lee Reply Decl. ¶ 6.)  Indeed, in September 12, 2024, Alice Chen of Atlantic sent an email to NMET confirming that, per Atlantic’s records, it owed NMET $2,021,605.18. (Lee Reply Decl. ¶ 5 & Ex. 3.)

Likewise, with respect to Atlantic’s claim that it had made a payment of $50,000 to MNET for products it had never received, NMET demonstrates with documentary evidence that the payment was used to satisfy prior invoices not at issue in this litigation. (Reply at pg. 8; Lee Reply Decl. ¶ 8 & Ex. 4.)

As for Atlantic’s claim of overpayment in 2023, NMET confirms such overpayment and does not oppose crediting this overpayment toward the amount at issue in this litigation. (Reply at pg. 8; Lee Reply Decl. ¶ 9.)

In light of the foregoing, the Court is not persuaded by Atlantic’s claim that the amount owed is uncertain, as NMET has established with sufficient evidence a readily ascertainable amount for its breach of contract claim.  Accordingly, NMET has sufficiently demonstrated that an attachment may be issued pursuant to CCP § 483.010(a) in the reduced amount of $1,742,252.86 ($1,773,541.18 in unpaid invoices minus $31,288.32 for overpayment made in 2023).

2.            Probable Validity of Plaintiffs’ Claims

“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.)

NMET’s application for attachment is based on its breach of contract claim. The elements for a breach of contract are: (1) the existence of a contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach of the contract, and (4) the resulting damages to the plaintiff. (Oasis West Realty, LLC v. Goldman¿(2011) 51 Cal.4th 811, 821.)  Atlantic does not raise any argument contesting NMET’s claim that Atlantic breached its agreement with NMET by failing to pay for certain invoices in 2024. Upon review of the invoices submitted and the underlying contract entered into between NMET and Atlantic, the Court finds that NMET has demonstrated for purposes here that Atlantic breached its obligations and that, as discussed above, NMET has been damaged in the amount of $1,742,252.86. (Lee Decl. ¶¶ 2-3, 5 & Exs. 1-2.)

Accordingly, NMET demonstrates that its claim against Atlantic is probably valid.

3.            Purpose and Amount of Attachment

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).)

NMET declares that “[a]ttachment is not sought for a purpose other than the recovery on a claim upon which the attachment is based.” (App. ¶ 4.) NMET also demonstrate that the amount to be secured by the attachment is greater than zero. (App. ¶ 8.)

            In opposition, Atlantic argues that the amount to be secured by attachment should be offset. The amount to be secured by an attachment shall be reduced by the “amount of any indebtedness of the plaintiff that the defendant has claimed in a cross-complaint filed in the action if the defendant’s claim is one upon which an attachment could be issued.” (CCP § 483.015(b)(2).)  Here, Atlantic claims NMET damaged Atlantic when it unilaterally changed their longstanding payment terms by demanding full payment for orders before they would be shipped. (Opp. at 8-9; Dardashti Decl. ¶¶ 4-5, 10-12.) Atlantic contends that, before NMET made its demand for full payment before orders would ship, Atlantic had received several orders from Wal-Mart and placed corresponding orders with NMET. (Dardashti Decl. ¶ 10.) After NMET changed the terms of payment, Atlantic lacked the financial means to pay for the products it ordered, which forced Atlantic to abandon its orders from Wal-Mart, purportedly valued at over $514,000. (Dardashti Decl. ¶¶ 13-14.) In response to Atlantic’s abandonment, Wal-Mart proceeded to withdraw all other pending orders, totaling over $1 million, and ultimately ended its business arrangement with Atlantic. (Dardashti Decl. ¶14 & Ex. D.) Atlantic’s claim for offset of damages stems from NMET’s decision to change the long-standing payment arrangement between them, which Atlantic equates to a breach of contract resulting in damage to Atlantic. 

The problem with Atlantic’s claim for offset is that NMET’s purported indebtedness to Atlantic has not actually been claimed by Atlantic in a cross-complaint filed in the action.  Further, such claim is not one upon which attachment could be issued, because Atlantic could not establish the probable validity of any such claim.  Here, it is undisputed that Atlantic was first to breach the contract with NMET by failing to pay certain invoices.  Thus, Atlantic cannot seek to recover for any purported breach that occurred thereafter. (Plotnick v. Meihaus (2012) 208 Cal.App.4th 1590, 1602 (“[O]ne who himself breaches a contract cannot recover for a subsequent breach by the other party . . . in contract law a material breach excuses further performance by the innocent party.”)  Accordingly, given the failures to satisfy the requirements of CCP § 483.015(b)(2), Atlantic is not entitled to offset any of the amount to be attached.

4.    Bankruptcy

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).” NMET provides this statement. (App. ¶ 5.)

5.    Property Subject to Attachment

CCP § 487.010(a) states that where the defendant is a corporation, all corporate property for which a method of levy is provided in CCP § 488.300 et seq. is subject to attachment. NMET moves to attach any property of Atlantic.

6.    Exemptions

No claim of exemption was filed.

7.    Undertaking

CCP § 489.210 requires the 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, which NMET is willing to post. (Mtn. at 10.) Atlantic does not discuss the proper amount of undertaking. The Court will order an undertaking in the amount of $10,000.

V.      Conclusion

The application against defendant Atlantic is GRANTED IN PART in the amount of $1,742,252.86. Plaintiff shall submit a Proposed Order in accordance herewith on the applicable Judicial Council form.