Judge: Deirdre Hill, Case: 21TRCV00443, Date: 2022-10-11 Tentative Ruling

Case Number: 21TRCV00443    Hearing Date: October 11, 2022    Dept: M

Hearing Date:                          October 11, 2022

Moving Party:                         Cross-Complainant Grandtower Group, Inc.

Responding Party:                  Cross-Defendant Marcia Pyin-Shan Chiang

Motion for A Right to Attach Order and Issuance of Writ of Attachment

            The court considered the moving, opposition, and reply papers.

RULING

            The motion is GRANTED.

BACKGROUND

            On June 16, 2021, plaintiff Marcia Pyin-Shan Chiang filed a complaint against defendants Joseph Yeh aka Joseph Cha-Dea Yeh, IDJ Enterprise Inc., and Grandtower Group Inc. for (1) breach of contract and (2) declaratory relief and cancellation of instruments.

            On July 9, 2021, the court found this matter was related to 21TRCV00414.

            On October 20, 2021, defendants/cross-complainants Yeh, IDJ, and Grandtower filed a cross-complaint against plaintiff/cross-defendant Chiang for (1) breach of written contract, (2) breach of oral contract, (3) breach of the covenant of good faith and fair dealing, and (4) breach of the covenant of good faith and fair dealing.

LEGAL AUTHORITY

“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 sought.”  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] shall 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 issue a right to attach order if the court 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 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.

DISCUSSION

            Defendant and cross-complainant Grandtower seeks a right to attach order and an oder for issuance of writ of attachment against cross-defendant Marcia Pyin-Shan Chiang in a total amount of $103,075.54.

            Request for Judicial Notice

            Cross-defendant Chiang requests judicial notice of:  (1) the Articles of Incorporation of IDJ Enterprise Inc. filed with the California Secretary of State on January 5, 2018; (2) the Statement of Information for IDJ Enterprise Inc. filed with the California Secretary of State on July 28, 2020; (3) the Sate of Information for IDJ Enterprise Inc. filed with the California Secretary of State on August 17, 2021; (4) the Contractor’s License Detail for License #1049359 on the California Contractors State License Board website as it appeared on September 20, 2022; (5) the Articles of Incorporation of Grandtower Group Inc. filed with the California Secretary of State on October 12, 2010; (6) the Certificate of Dissolution for Grandtower Group Inc. filed with the California Secretary of State on April 4, 2019; (7) the Statement of Information for Grandtower Group Inc. filed with the California Secretary of State on August 2, 2016; (8) the Statement of Information for Grandtower Group Inc. filed with the California Secretary of State on March 27, 2019; (9) the Public License Lookup – DRE for License ID #01061506 on the California Department of Real Estate website as it appeared on July 5, 2022; (10) the Articles of Incorporation of Yokohama Group Inc. with the California Secretary of State on October 12, 2010; (11) the Statement of Information for Yokohama Group Inc. filed with the California Secretary of State on November 13, 2020; (12) the Statement of Information for Yokohama Group Inc. filed with the California Secretary of State on August 17, 2021; and (13) the Grant Deed for the property known as 1926-1936 Pacific Coast Highway, Lomita, California 90717-2603 recorded in the Los Angeles County Recorder’s Office on July 29, 2011. 

            The court notes that Exhibits B (the Statement of Information for IDJ Enterprise Inc. filed with the California Secretary of State on July 28, 2020), C (the State of Information for IDJ Enterprise Inc. filed with the California Secretary of State on August 17, 2021), K (the Statement of Information for Yokohama Group Inc. filed with the California Secretary of State on November 13, 2020), and L (the Statement of Information for Yokohama Group Inc. filed with the California Secretary of State on August 17, 2021) are blank.  To this extent, the request is denied as to these documents.

            The request is granted as to the remaining documents.

                        Probable Validity of Claim

            This motion is based on a claim for breach of a lease agreement.  To establish a claim for breach of contract, a plaintiff must prove: (1) existence of a contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach of the contract, and (4) damages incurred by plaintiff as a result of the breach.  Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367.)

            Grandtower submitted a declaration from Sharyn Liu, the Chief Executive Officer, director, and registered agent for service of process for Grandtower from the time of its inception in October 2010 until it dissolved on April 4, 2019.  Liu Decl., ¶ 2.  Liu is the current Vice President for Yokohama Group, Inc., which hired Grandtower to be its property manager for the premises that is the subject of the lease agreement.  Id.  Yokohama Group, Inc. has since taken over as property manager for the subject premises.  Id.

            According to Liu, Grandtower and Chiang entered into a lease agreement on January 9, 2019 wherein Chiang agreed to lease the premises from Grandtower for a ten-year period for the purpose of operating a Chinese food restaurant on the premises.  Liu Decl., ¶ 4, Ex. A.  Pursuant to the terms of the lease agreement, Grandtower agreed to provide Chiang a six-month rent-free period from January 10, 2019 through July 10, 2019 in order to allow Chiang to apply for necessary permits for her restaurant.  Id., ¶ 5.  The lease agreement provided that Chiang would pay pro-rated rent in the amount of $2,996.67 for July 2019.  Id., ¶ 6.  When Chiang was unable to obtain the necessary permits for the construction/renovation of her restaurant, she reached out to Liu and asked for a rent reduction.  Id.  Liu agreed to reduce Chiang’s rent to $2,000 for August, September, and October 2019.  Id.  Chiang failed to make a single payment to Grandtower despite her possession of the premises.  Id.  According to Liu, Chiang owed rent in a total amount of $95,985.54.  Id., ¶ 8.

            Grandtower’s evidence is sufficient to support all elements of a breach of lease agreement claim against Chiang and establish the probable validity of its breach of lease agreement claim.

            In opposition, Chiang argues that Grandtower has failed to establish the probable validity of its claim because (1) IDJ, Grandtower and Yokohama Group Inc. are all alter egos of Joseph Yeh; (2) the lease agreement is void; and (3) Chiang’s performance was excused under the lease agreement.

            Regarding Chiang’s argument that IDJ, Grandtower and Yokohama Group Inc. are all alter egos of Joseph Yeh, the court finds it is unclear how this demonstrates Grandtower has not established the probable validity of its breach of lease agreement claim.  Contending that it would be unequitable for IDJ, Grandtower and Yokohama Group Inc. to be treated as separate entities for the purposes of evaluating the contract at issue does not show Grandtower has not established the probable validity of its breach of lease agreement claim.

            Chiang argues that the lease agreement is void because the lease agreement was procured by fraud.  To support this argument, Chiang relies on her own declaration providing the following:  Chiang entered into the lease as part of a series of transactions through which Yeh and his various entities would build her a Chinese restaurant at the property; that a material term of Chiang’s agreement was that the Chinese restaurant would be completed by June 30, 2019 because Chiang would have to begin paying monthly rent in July 2019; that cross-complainants unilaterally decided to extend the performance date for the completion of the Chinese restaurant at the property to October 2019 without Chiang’s agreement or consent; that Grandtower began charging Chiang rent before the restaurant was completed; that Chiang made at least $14,847.30 in payments under the lease; that Yeh urged Chiang to sign a promissory note for $40,000 when she never received any funds to repay; and that Chiang only executed the promissory note because she feared construction would be completed only if she did so.  Chiang Decl., ¶¶ 3-7, 9.

            Chiang’s evidence is insufficient to demonstrate that she was fraudulently induced into entering the lease agreement.  Chiang’s argument is premised on an alleged agreement that the restaurant would be completed by June 30, 2019.  There are no indications from the lease agreement that this was a material term in the parties’ execution of the lease agreement.  Even if a representative of Grandtower made such a promise, there is insufficient evidence of any intent to defraud.  That Yeh and his companies unilaterally extended the completion date for construction of the restaurant to October 2019 is insufficient to show that they never intended to have the restaurant completed by the June 30, 2019 date.  That Grandtower began charging Chiang rent before the restaurant was completed does not evidence fraudulent inducement when there are no indications from the lease agreement that rent is only to commence after the restaurant is opened.  In fact, the lease agreement specifically provides rent was to commence on July 1, 2019.  Chiang Decl., ¶ 4, Ex. A, Lease Agreement.  That Yeh urged Chiang to sign a promissory note also does not show any intent to fraudulently induce Chiang into entering the lease agreement, which is a separate agreement from the promissory note. 

            Chiang asserts that her performance under the lease agreement was excused because of the failure to complete construction by the agreed-upon time of June 30, 2019.  A review of the lease agreement does not show any terms providing that construction of the restaurant needs to be completed before Chiang is liable for payment of rent, much less any terms indicating the construction of the restaurant must be completed by June 30, 2019.  Chiang Decl., ¶ 4, Ex. A, Lease Agreement.  In fact, it appears Chiang’s argument that the entire basis for the parties’ agreements was that cross-complainants would build a Chinese restaurant for Chiang in exchange for which she would enter into a ten-year lease agreement for the restaurant space appears to be based on a separate oral agreement for the construction of the restaurant, not the subject lease agreement. 

Chiang also argues she is excused from performing because of frustration of purpose.  Chiang has failed to show frustration of purpose applies.  As acknowledged by Chiang, frustration of purpose may be established “where, at the time a contract is made, a party’s principal purpose is substantially frustrated without his fault by a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made.”  FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 398.  Here, the lease agreement provides that the premises is to be used for a restaurant only and for no other purpose.  Chiang Decl., ¶ 4, Ex. A, Lease Agreement.  Chiang declares construction of the restaurant was never completed and the restaurant never opened.  Chiang Decl., ¶ 10.  However, Chiang has failed to present evidence that she was without fault in the restaurant never being completed and opening.  While she states the restaurant was never completed and opened, Chiang has not explained why that is the case.  On the other hand, Grandtower has presented evidence showing that, under the lease agreement, Chiang was responsible for obtaining all permits necessary for the maintenance and operation of her business; that Chiang agreed on January 9, 2019 that she would obtain all necessary permits for the construction, renovation, and operation of the restaurant at the premises; that, as of January 9, 2019, the date on which Chiang signed the lease, she had not yet commenced efforts to secure permits for construction, renovation, and operation of the restaurant; that Chiang applied for permits on April 3, 2019 and April 4, 2019; that the permits were issued on August 2, 2019; and that the date for completion of construction depends on the date on which permits allowing for construction to commence are issued.  Liu Decl., ¶ 4, Ex. A, Lease Agreement, § 36.4; Yeh Decl. in Support of Reply, ¶¶ 4-5; Berschauer Decl. in Support of Reply, ¶ 2, Ex. B, Chiang’s Response to Special Interrogatories, Set One, No. 64.  Based on Grandtower’s evidence, it would appear that Chiang’s failure to apply for permits until April 2019 even though the lease was made in January 2019 at least contributed to the delay in the construction of the restaurant.  Thus, it appears Chiang was not without fault in the construction of the restaurant not being completed, at least by the purported agreed-upon date of June 30, 2019.  Under these circumstances, Chiang cannot claim an excuse based on frustration of purpose.

While Grandtower has generally established the probable validity of its breach of lease agreement claim, the court notes that Grandtower has not established the probable validity of its breach of lease agreement claim in the requested amount of $95,985.54.  While Liu declares that Chiang owes $95,985.54 in rent, Chiang declares that she paid at least $14,847.30 for leasing the property.  Chiang Decl., ¶ 7.  A review of the copies of cancelled checks submitted by Chiang only supports payment in the amount of $4,000.00, not $14,847.30 as claimed by Chiang.  Chiang Decl., ¶ 7, Ex. C.  As Chiang’s evidence shows that she paid $4,000.00 in rent, the court finds Grandtower has only established the probable validity of its breach of lease agreement claim in the amount of $91,985.54.

                        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).  “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).

            “If the action is against a defendant who is a natural person, an attachment may be issued only on a claim which arises out of the conduct by the defendant of a trade, business, or profession.”  CCP § 483.010(c).  “An attachment may not be issued on a claim against a defendant who is a natural person if the claim is based on the sale or lease of property, a license to use property, the furnishing of services, or the loan of money where the property sold or leased, or licensed for use, the services furnished, or the money loaned was used by the defendant primarily for personal, family, or household purposes.”  Id.

            Grandtower’s motion for issuance of a writ of attachment is based on an express contract—i.e., the written lease agreement.  The total amount allegedly due on the agreement is readily ascertainable and more than $500.  There are no indications Chiang holds an interest in real property to secure the amount of the claim. 

            Despite Chiang’s contention, Grandtower has also demonstrated that the claim arises out of Chiang’s business because Chiang leased the premises for the purpose of running a restaurant.  Liu Decl., ¶ 4, Ex. A, Basic Lease Provisions, § I.  That the restaurant was never finished does not mean the claim does not arise out of Chiang’s business when all indications are Chiang leased the premises for the purpose of running a restaurant.

                        Purpose and Amount of Attachment

            CCP § 484.090 states that the court shall issue a right to attach order if “the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based . . . [and] the amount to be secured by the attachment is greater than zero.”  CCP § 484.090.

            Grandtower declares that the attachment is not sought for a purpose other than recovery on its claim.  Application, ¶ 4.  The amount to be secured is greater than zero.

                        Subject Property

            Grandtower requests attachment against a natural person.

            CCP § 487.010 provides that where the defendant is a natural person, all of the following property is subject to attachment:

(1)               Interests in real property except leasehold estates with unexpired terms of less than one year.

(2)               Accounts receivable, chattel paper, and general intangibles arising out of the conduct by the defendant of a trade, business, or profession, except any such individual claim with a principal balance of less than one hundred fifty dollars ($150).

(3)               Equipment.

(4)               Farm products.

(5)               Inventory.

(6)               Final money judgments arising out of the conduct by the defendant of a trade, business, or profession.

(7)               Money on the premises where a trade, business, or profession is conducted by the defendant and, except for the first one thousand dollars ($1,000), money located elsewhere than on such premises and deposit accounts, but, if the defendant has more than one deposit account or has at least one deposit account and money located elsewhere than on the premises where a trade, business, or profession is conducted by the defendant, the court, upon application of the plaintiff, may order that the writ of attachment be levied so that an aggregate amount of one thousand dollars ($1,000) in the form of such money and in such accounts remains free of levy.

(8)               Negotiable documents of title.

(9)               Instruments.

(10)           Securities.

(11)           Minerals or the like (including oil and gas) to be extracted.

CCP § 487.010(c).

            Grandtower seeks attachment of:  interests in real property; accounts receivable, chattel paper, and general intangibles arising out of conduct by Chiang of a trade, business, or profession; equipment; farm products; inventory; final money judgments arising out of the conduct by Chiang of a trade, business, or profession; money on the premises where a trade, business, or profession is conducted by Chiang; negotiable documents of title; instruments; securities; and minerals or the like to be extracted.  The request for attachment of this property is appropriate under CCP § 487.010(c).

            In opposition, Chiang argues that Grandtower has failed to sufficiently describe the property it seeks to attach.  The court disagrees.  CCP § 484.020 provides that “[w]here the defendant is a natural person, the description of the property shall be reasonably adequate to permit the defendant to identify the specific property sought to be attached.”  CCP § 484.020(e).  In Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, the Court of Appeal examined whether the plaintiff’s attachment application adequately specified the property the plaintiff sought to attach.  There, the plaintiff sought “to attach all of the following types of property owned by defendants:  real property, personal property, equipment, motor vehicles, chattel paper, negotiable other instruments, securities, deposit accounts, safe deposit boxes, accounts receivable, general intangibles, property subject to pending actions, final money judgments, and personalty in estates of decedents.”  Bank of America, supra, 207 Cal.App.3d at 264.  The Court of Appeal found that these descriptions were reasonably adequate to inform the defendants what property was targeted for attachment.  Id. at 268.  In making such a finding, the Court of Appeal examined the Comment of the Law Revision Commission regarding CCP § 484.020 and found that the requirement of specificity only appeared designed to avoid unnecessary hearings where an individual defendant is willing to concede that certain described property is subject to attachment and that the requirement did not prohibit a plaintiff from targeting for attachment everything an individual defendant owns.  Id.  The Court of Appeal also found that CCP § 484.020(e) allows for the possibility that a plaintiff may want to make a comprehensive attempt to attach the individual defendant’s property to potentially resolve an individual defendant’s exemption claims all at once.  Id.

            Here, like in Bank of America, Grandtower has described the property to be attached based on the property that may be attached under CCP § 487.010(c).  This is adequate under Bank of America.

                        Reduction of Amount to be Secured

            CCP § 483.015(b) provides the amount to be secured by the attachment shall be reduced by:

(1)   The amount of any money judgment in favor of the defendant and against the plaintiff that remains unsatisfied and is enforceable

(2)   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

(3)   The amount of any claim of the defendant asserted as a defense in answer pursuant to Section 431.70 if the defendant’s claim is one upon which an attachment could be issued had an action been brought on the claim when it was not barred by the statute of limitations

(4)   The value of any security interest in the property of the defendant held by the plaintiff to secure the defendant’s indebtedness claimed by the plaintiff, together with the amount by which the value of the security interest has decreased due to the act of the plaintiff or a prior holder of the security interest

CCP § 483.015(b).

            “[T]o sustain reduction in a writ amount, most courts require that the defendant provide enough evidence about its counterclaims and/or defenses to prove a prima facie case [for attachment against Plaintiff].”  Ahart, California Practice Guide: Enforcing Judgments and Debts, ¶ 4:64 (1998 rev.).

            Chiang has not asserted any reductions pursuant to CCP § 483.015(b) and thus has not shown that the amount of attachment should be further reduced.

                        Undertaking

            CCP § 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment.  Pursuant to CCP § 489.220, the amount of the undertaking will be $10,000 absent an objection.  The failure to post an undertaking prior to the issuance of the writ of attachment renders the writ of attachment void ab initio.  Vershbow v. Reiner (1991) 231 Cal.App.3d 879, 883.

            Neither party has addressed nor argued for a different amount of undertaking.

                        Costs

            CCP § 482.110 provides the court with discretion to include an estimated amount for costs and allowable attorney’s fees in the amount to be secured by the attachment.  CCP § 482.110(a).

            Grandtower seeks attorney’s fees in the amount of $7,090.00.  This amount consists of $3,140.00 for attorney’s fees incurred in the related unlawful detainer action and $3,950.00 incurred in this action. 

            The parties dispute whether Grandtower may recover the $3,140.00 in attorney’s fees incurred in the related unlawful detainer action.  Grandtower argues that, as the premises management company, it is entitled to recover fees incurred by owner Yokohama Group to oust Chiang.  Grandtower’s argument is unpersuasive.  Grandtower has not supported how it is able to recover attorney’s fees incurred in a separate, albeit related, action.  Even if such fees could be recovered in this action, Grandtower has failed to justify the amount sought.

            Grandtower has also failed to support the $3,950.00 in costs.  Grandtower’s counsel has submitted a declaration indicating counsel bills at an hourly rate of $300 and that the $3,950.00 was incurred with regards to Grandtower’s efforts to recover unpaid rent and attorney’s fees pursuant to the cross-complaint.  Berschauer Decl., ¶¶ 2-3.  This general information is insufficient to support $3,950.00 requested for attorney’s fees. 

            Accordingly, the court declines to include allowable attorney’s fees in the amount to be secured by the attachment.

Exemptions

Chiang has filed Notice of Claim of Exemption, claiming a homestead exemption for real property located at 16853 MacLaren Street, La Puente, CA 91744.

“If a defendant filing a notice of opposition desires to make any claim of exemption as provided in Section 484.070, the defendant may include that claim in the notice of opposition filed pursuant to this section.”  CCP § 484.060(b).  A claim of exemption must describe the property to be exempted and specify the statute section supporting the claim.  CCP § 484.070(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.”  CCP § 484.070(d).

            The plaintiff must oppose any claim of exemption filed by the defendant by filing a “notice of opposition” not less than two days before the hearing.  CCP § 484.070(f).  “If the plaintiff does not file and serve a notice of opposition as provided in this subdivision, no writ of attachment shall be issued as to the property claimed to be exempt.”  Id.; see also Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 270.  However, if the plaintiff has timely filed a notice of opposition to the defendant’s claim of exemption, the burden is on the defendant to prove that the property is exempt from attachment.  CCP § 484.070(g).

Here, Grandtower filed a reply on September 27, 2022, but not a notice of opposition to the claim of exemption.  Grandtower’s reply also makes no arguments that Chiang is not entitled to the homestead exemption asserted in the claim of exemption.  As Grandtower has not filed a notice of opposition in compliance with CCP § 484.070(f) to oppose the claim of exemption, no writ of attachment shall be issued as to the property located at 16853 MacLaren Street, La Puente, CA 91744.  CCP § 484.070(f).

Based on the foregoing, the motion for a right to attach order and issuance of writ of attachment is GRANTED in the reduced amount of $91,985.54.

            The granting of the motion is conditioned upon Grandtower’s posting of an undertaking in the amount of $10,000.00 and submission of a proposed right to attach order and order for issuance of writ of attachment after hearing (Form AT-120).  The proposed order shall indicate that property located at 16853 MacLaren Street, La Puente, CA 91744 is exempt from attachment.

            Cross-complainant Grandtower is ordered to give notice of the ruling.