Judge Daniel M. Crowley, Case 22SMCV01590 2023-04-13 Tentative Ruling

Judge: Daniel M. Crowley, Case: 22SMCV01590, Date: 2023-04-13 Tentative Ruling

Case Number: 22SMCV01590 Hearing Date: April 13, 2023 Dept: 207

Background

Plaintiff 11770 SVB, LLC (“Plaintiff”) brings this action for breach of contract against Defendant Kreation Juicery, Inc. (“Defendant”) alleging Defendant breached a commercial lease between the parties. Plaintiff now submits an application for writ of attachment on its cause of action for breach of contract against Defendant in the amount of $956,579.41. Defendant opposes Plaintiff’s application.

Legal Standard

Attachment is a prejudgment remedy providing for the seizure of one or more of the defendant’s assets to aid in the collection of a money demand pending the outcome of the trial of the action. (See Whitehouse v. Six Corporation (1995) 40 Cal.App.4th 527, 533.) In 1972, and in a 1977 comprehensive revision, the legislature enacted attachment legislation (C.C.P. §481.010 et seq.) which meets the due process requirements set forth in Randone v. Appellate Department (1971) 5 Cal.3d 536. (See Western Steel & Ship Repair v. RMI (1986) 176 Cal.App.3d 1108, 1115.) As the attachment statutes are purely the creation of the Legislature, they are strictly construed. (Vershbow v. Reiner (1991) 231 Cal.App.3d 879, 882.)

A writ of 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. (C.C.P. §483.010(a).) A claim is “readily ascertainable” where the amount due may be clearly ascertained from the contract and calculated by evidence; the fact that damages are unliquidated is not determinative. (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41 [attachment appropriate for claim based on rent calculation for lease of commercial equipment].)

All property within California of a corporation, association, or partnership is subject to attachment if there is a method of levy for the property. (C.C.P. §§ 487.010(a), (b).) The plaintiff may apply for a right to attach order by noticing a hearing for the order and serving the defendant with summons and complaint, notice of the application, and supporting papers any time after filing the complaint. (C.C.P. § 484.010.) Notice of the application must be given sixteen court days before the hearing pursuant to Code Civ. Proc. § 1005. (Ibid.)

The notice of the application and the application may be made on Judicial Council forms (Optional Forms AT-105, 115). The application 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. (C.C.P. § 484.030.)

Where the defendant is a corporation, a general reference to “all corporate property which is subject to attachment pursuant to subdivision (a) of Code of Civil Procedure Section 487.010” is sufficient. (C.C.P. § 484.020(e).) Where the defendant is a partnership or other unincorporated association, a reference to “all property of the partnership or other unincorporated association which is subject to attachment pursuant to subdivision (b) of Code of Civil Procedure Section 487.010” is sufficient. (C.C.P. § 484.020(e).) A specific description of property is not required for corporations and partnerships as they generally have no exempt property. (Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 268.)

A defendant who opposes issuance of the order must file and serve a notice of opposition and supporting affidavit as required by Code Civ. Proc. § 484.060 not later than five court days prior to the date set for hearing. (C.C.P. § 484.050(e).) The notice of opposition may be made on a Judicial Council form (Optional Form AT-155). The plaintiff may file and serve a reply two court days prior to the date set for the hearing. (C.C.P. § 484.060(c).)

At the hearing, the court determines whether the plaintiff should receive a right to attach order and whether any property which the plaintiff seeks to attach is exempt from attachment. The defendant may appear at the hearing. (C.C.P. § 484.050(h).) The court generally will evaluate the attachment application based solely on the pleadings and supporting affidavits without taking additional evidence. (Bank of America, supra, 207 Cal.App.3d at 273.) A verified complaint may be used in lieu of or in addition to an affidavit if it states evidentiary facts. (C.C.P. § 482.040.) The plaintiff has the burden of proof, and the court is not required to accept as true any affidavit even if it is undisputed. (See Bank of America, supra, at 271, 273.)

The court may issue a right to attach order (Optional Form AT-120) if the plaintiff shows all of the following: (1) the claim on which the attachment is based is one on which an attachment may be issued (C.C.P. § 484.090(a)(1)); (2) the plaintiff has established the probable validity of the claim (C.C.P. § 484.090(a)(2)); (3) attachment is sought for no purpose other than the recovery on the subject claim (C.C.P. § 484.090(a)(3); and (4) the amount to be secured by the attachment is greater than zero (C.C.P. § 484.090(a)(4)).

A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. (C.C.P. § 481.190.) In determining this issue, the court must consider the relative merits of the positions of the respective parties. (Kemp Bros. Construction, Inc. v. Titan Electric Corp. (2007) 146 Cal.App.4th 1474, 1484.) The court does not determine whether the claim is actually valid; that determination will be made at trial and is not affected by the decision on the application for the order. (C.C.P. § 484.050(b).)

The amount to be secured by the attachment is the sum of (1) the amount of the defendant’s indebtedness claimed by the plaintiff, and (2) any additional amount included by the court for estimate of costs and any allowable attorneys’ fees under Code Civ. Proc. § 482.110. (C.C.P. § 483.015(a); Goldstein v. Barak Construction (2008) 164 Cal.App.4th 845, 852.) This amount must be reduced by the sum of (1) the amount of indebtedness that the defendant has in a money judgment against plaintiff, (2) the amount claimed in a cross-complaint or affirmative defense and shown would be subject to attachment against the plaintiff, and (3) the value of any security interest held by the plaintiff in the defendant’s property, together with the amount by which the acts of the plaintiff (or a prior holder of the security interest) have decreased that security interest’s value. C.C.P. § 483.015(b).

Before the issuance of a writ of attachment, the plaintiff is required to file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action. (C.C.P. § 489.210.) The undertaking ordinarily is $10,000. (C.C.P. § 489.220.) If the defendant objects, the court may increase the amount of undertaking to the amount determined as the probable recovery for wrongful attachment. (C.C.P. § 489.220.) The court also has inherent authority to increase the amount of the undertaking sua sponte. (North Hollywood Marble Co. v. Superior Court (1984) 157 Cal.App.3d 683, 691.)

To obtain a writ of attachment, the defendant must be served with summons and complaint, notice of application and hearing, and the application and supporting evidence by the times prescribed by Code Civ. Proc. § 1005(b). (C.C.P. § 484.040.)

Analysis

Plaintiff alleges it previously leased real property to Defendant. On November 23, 2020, Plaintiff initiated an unlawful detainer action against Defendant based on Defendant’s alleged breach of the parties’ lease. The unlawful detainer action was ultimately resolved by the parties through a stipulated judgment. Plaintiff now brings this action for breach of contract based on Defendant’s breach of the lease agreement. Specifically, Plaintiff alleges Defendant has failed to pay outstanding back rent it owes to Plaintiff as well as related costs to relet the property for which Defendant is liable under the contract. Plaintiff seeks a writ of attachment in the amount of $956,579.41, consisting of:

1. $655,025.41 in rent and late fees;

2. $296,934 in fees incurred in connection with reletting the premises to a new tenant;

3. $4,125 in attorney’s fees; and

4. $495 in costs

The stipulated judgment was granted by the Court in the unlawful detainer action on March 11, 2021. The stipulation provided for entry of judgment in Plaintiff’s favor on the issue of possession only. (Ex. 6 to Planting Decl. at ¶4.) It also permitted Defendant to remain in possession of the premises on a monthly basis by paying $20,000 to Plaintiff on the first of each month until such time as Plaintiff provided Defendant with five days’ notice to vacate the premises. (Id. at ¶1.) It further provides that the stipulation does not “in any way impact of affect the right of Plaintiff to pursue damages arising out of or related to the Lease, including without limitation, the failure of Kreation to pay rent or other amounts payable under the Lease, both prior to an dafter the date of this Stipulation.” (Id. at ¶7.) The stipulation states “all damages sustained by Plaintiff shall be reserved, and recoverable in a separate civil action.” (Id.) The stipulation was approved as to form by the parties’ attorneys and executed by C. Drew Planting on behalf of Plaintiff and by Marian Sarshar on behalf of Defendant. (Id. at p. 6.)

On August 12, 2022, Plaintiff provided Defendant with a surrender notice under the stipulation which required Defendant to vacate the premises by August 17, 2022. (Ex. 7 to Planting Decl.) Defendant vacated the premises on August 22, 2022. (Planting Decl. at ¶15.)

Section 13.4 of the lease sets out Plaintiff’s remedies in the event Defendant defaults under the terms of the lease and fails to cure that default. These remedies include collecting rent and related fees for the balance of the term absent any amounts Defendant can show Plaintiff could have reasonably avoided, as well as costs incurred to repair and restore the property after Defendant’s departure, “and any other costs reasonable to relet the Premises including real estate commissions and attorneys’ fees and costs (provided that the cost of commissions, alterations and/or improvement allowance, and attorneys’ fees and costs incurred in connection with a new lease shall be allocated over the initial term of such new lease and only the portion thereof attributable to the balance of the Term hereunder shall be charged to Tenant).” (Ex. 1 to Planting Decl. at §13.4.)

Plaintiff has calculated Defendant’s rent, common area charges, and late fees to total $655,025.41 pursuant to sections 3.1, 3.4, 6.4, and 13.4 of the lease. (Planting Decl. at ¶19, Ex. 8.) This amount credits Defendant for the $20,000 monthly payments made pursuant to the stipulated judgment. (Planting Decl. at ¶20.) Plaintiff has also calculated the fees it incurred to relet the property, consisting of $329,280 in tenant improvement allowance for the new tenant, $32,272.51 in attorneys’ fees incurred in preparing the new lease, and $178,274.58 in real estate commission paid to JLL in connection with the new lease. (Planting Decl. at ¶23.) Pursuant to section 13.4 of the lease, set forth above, Plaintiff allocated these expenses over the initial term of the new lease, which is 120 months, to arrive at a monthly amount of $4,499. Plaintiff then multiplied this by the 66 months remaining on the balance of Defendant’s term to arrive at an allocation of $296,934 to Defendant under section 13.4.

Defendant does not dispute these calculations or factual assertions. Instead, Defendant argues the declarations submitted by Plaintiff are deficient to support the facts and calculations set forth therein. The Court disagrees. For example, Defendant claims Mr. Planting is not qualified to authenticate the subject lease. Mr. Planting states he has personal knowledge of the facts relating to Plaintiff’s lease with Defendant because he is the manager of Goldstein Planting Wagman, LLC, which is the manager of Plaintiff. (Planting Decl. at ¶1.) Defendant also claims the lease attached to Mr. Planting’s declaration is unsigned and thus deficient. The lease is clearly signed by Marjan Sarshar on behalf of Defendant and Clifford Goldstein on behalf of Plaintiff. (Ex. 1 to Planting Decl. at ¶57.)

Defendant also claims neither Mr. Planting nor Mr. Taitelman have foundation to allege that Kreation Juicery merged with Kreation Organic. This merger is documented by an Agreement of Merger attached as Exhibit 1 to Mr. Taitelman’s declaration. Further, the stipulation for judgment entered in the unlawful detainer action and signed by Defendant and its counsel expressly states “on or about December 17, 2018, Kreation Juicery, Inc. (“Kreation”) and Kreation Organic entered into an Agreement of Merger (the “Merger”), whereby Kreation Organic merged into Kreation, with Kreation being the surviving entity.” (Ex. 6 to Planting Decl. at p. 2.) Defendant does not contest the merger occurred, and the Court finds Plaintiff has sufficiently established the merger through documentary evidence.

Defendant also generally alleges that Mr. Planting does not have personal knowledge of the circumstances concerning Defendant’s alleged default under the lease or the amounts owed to Plaintiff pursuant to the terms of that lease. The Court finds no basis to assume that Plaintiff’s manager would not have knowledge of Plaintiff’s dealings with Defendant, including amounts owed under the lease. The Court notes Mr. Planting executed the stipulated judgment in the unlawful detainer action, suggesting he does have knowledge of this dispute between Plaintiff and Defendant. (Ex. 6 to Planting Decl.) Defendant attacks the calculations set forth above as conclusory and unsupported, but those calculations are all based on specific lease terms as set forth in Mr. Planting’s declaration.

Defendant argues Plaintiff has not sufficiently alleged the amount claimed, citing Royals v. Lu (2022) 81 Cal.App.5th 328 which held a claim could not be considered “fixed or readily ascertainable” where the plaintiff fails to plead a basis for determining exactly what the damages are. (Id. at 350-351.) A claim is “readily ascertainable” where the damages may be readily ascertained by reference to the contract and the basis of the calculation appears to be reasonable and definite. (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App.4th 537, 540-41.) The fact that the damages are unliquidated is not determinative. (Id.) But the contract must furnish a standard by which the amount may be ascertained and there must be a basis by which the damages can be determined by proof. (Id.) Here, as set forth above, the lease itself provides a standard by which the damages can be determined by proof. The lease makes Defendant liable for certain base rent, additional rent, late fees, common area fees, and certain costs incurred to relet the property following Defendant’s default. Defendant does not dispute it defaulted under the lease, and does not contest the accuracy of Plaintiff’s calculations concerning the amounts owed by Defendant as a result of that default. Defendant does not claim Plaintiff has misinterpreted or misrepresented the terms of the lease by which Plaintiff calculated these amounts. On such facts, the Court finds Plaintiff’s claimed damages are readily ascertainable.

The Court also finds Plaintiff has demonstrated a probability of success on its claim for breach of contract against Defendant based on Defendant’s alleged default under the lease. Defendant has put forth no evidence which contradicts or contests the factual support provided by Plaintiff or otherwise establishes a defense to Plaintiff’s claims. The Court finds the undisputed evidence submitted by Plaintiff is sufficient to show a probability of success on Plaintiff’s claim.

Plaintiff seeks to attach $4,125 in attorney’s fees and $495 in costs. The subject lease contains an attorney fee provision by which Plaintiff would be entitled to collect its reasonable attorneys’ fees incurred in enforcing the lease. (Ex. 1 to Planting Decl. at §17.4.) Plaintiff would also be entitled to recover its costs as a prevailing party in this litigation. The Court finds Plaintiff has provided a sufficient basis to attach these claimed amounts in fees and costs.

Defendant is a corporate entity. Pursuant to Code Civ. Proc. § 484.020(e), where the defendant is a corporation, an application for attachment does not need to specifically identify the property to be attached and instead may seek attachment of any property of the corporation. Plaintiff’s application thus properly seeks attachment of any property of Defendant. (Application at ¶9.)

Conclusion

Plaintiff’s application for writ of attachment is GRANTED against Defendant Kreation Juicery, Inc. in the amount of $956,579.41. No writ of attachment shall issue until Plaintiff posts a $10,000 bond.