Judge Edward B. Moreton, Jr., Case Number: 24SMCV00073, Date: 2024-03-19 Tentative Ruling

Judge: Edward B. Moreton, Jr., Case: 24SMCV00073, Date: 2024-03-19 Tentative Ruling

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

ARCHWAY REAL ESTATE INCOME FUND I SPE I, LLC,

Plaintiff,

ALAN GOMPERTS, et al.,

Defendants.

Case No.: 24SMCV00073

Hearing Date: March 19, 2024

[TENTATIVE] ORDER RE:

PLAINTIFF’S APPLICATIONS FOR WRIT

OF ATTACHMENT

This action arises from a default on a promissory note. Broadway Avenue Investments LLC (“Borrower”) executed a promissory note (“Note”) in the original amount of $16,942,500 in favor of Plaintiff Archway Real Estate Income Fund I SPE I, LLC. The purpose of the Note was for Borrower to refinance an existing loan on a parcel of real property. The Note was secured by a first deed of trust on the real property commonly known as 737 S. Broadway, Los Angeles, California (the “Property”).

Repayment of the Note was guaranteed jointly and severally, by Alan Gomperts and Daniel Halevy (together with non-party David Halevy, now deceased) (hereinafter the “Guarantors”). Guarantors guaranteed to Plaintiff the prompt payment of all sums owed by Borrower to Plaintiff and agreed to pay all costs and reasonable attorneys’ fees incurred by Plaintiff in the collection of any and all amounts due under the Note. The Guaranty is unsecured.

Borrower defaulted on the Note, and the Guarantors failed to make payments on their Guaranty. After the default, Borrower entered into a settlement and loan modification agreement which provided, among other things, that the Note was all due and payable by December 1, 2023. Broadway defaulted on the settlement agreement, and neither Guarantor made any payments on their Guaranty.

The operative complaint alleges five causes of action, all for breach of guaranty. Two claims are against Alan Gomperts; two against Daniel Halevy, and one against Sue Halevy.

This hearing is on Plaintiff’s applications for writ of attachment against Gomperts and Daniel Halevy in the amount of $15,398,393.93 (principal of $15,241,093.00, attorneys’ fees of 4 $154,300.93 and costs of $3,000.00). Plaintiff argues that its applications meet the conditions for an attachment under Code Civ. Proc. § 483.010 because its claims are (1) based on a contract, (2) for a fixed and readily ascertainable sum, (3) not secured by any interest in real or personal property, and (4) arose from Defendants’ conduct of a trade, business or profession.

“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.”¿ (Code Civ. Proc. § 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.¿ (Code Civ. Proc. § 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.”¿ (Code Civ. Proc. § 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.¿

“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.”¿ (Code Civ. Proc. § 481.190.) In determining the probable validity of a claim where the defendant makes an appearance, the court must consider the relative merits of the positions of the respective parties and make a determination of the probable outcome of the litigation.”¿ (See Loeb & Loeb v. Beverly Glen Music, Inc. (1985) 166 Cal.App.3d 1110, 1120.)¿¿

At the times prescribed by Code Civ. Proc. § 1005(b), the defendant must be served with summons and complaint, notice of application and hearing, and the application and supporting evidence.¿ (Code Civ. Proc. § 484.040.)¿¿¿

Attachment is a drastic remedy in that it provides for the collection of a debt by seizure in advance of trial and judgment, as security for the eventual satisfaction of the judgment. Thus, under California law, attachment is a purely statutory remedy, subject to strict construction. (Epstein v. Abrams¿(1997) 57 Cal.App.4th 1159, 1168.)

The opposition was due by March 6, 2024, nine court days before the hearing. (Code Civ. Proc. § 1005(c).) Defendants filed their opposition on March 12, 2024. As the opposition is untimely, the Court declines to consider it. The Court also declines to rule on Defendants’ evidentiary objections to the Declarations of Bobby Khorshidi and Vivian Prieto as they too are untimely.

Plaintiff has established the probable validity of its claims for breach of guaranty. Plaintiff issued a promissory note to Borrower in the amount of $16,942,500. (Khorshidi Decl. ¶3.) Repayment of the Note was guaranteed by Gomperts and Halevy. (Id. ¶¶6-7.) The Borrower defaulted on the Note, and neither Guarantor has made any payment on the Guaranty. (Id. ¶9.) The principal due on the Note is $15,241,093. (Id. ¶28.) Accordingly, the undisputed facts are that there is a contract; Gomperts and Halevy breached the contract, and Plaintiff suffered damages as a result.

“[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.” (Code Civ. Proc. § 483.010(a).) “An attachment may not be issued on a claim which is secured by any interest in real property arising from agreement ….” (Code Civ. Proc. § 483.010(b).)

“It is a well-recognized rule of law in this state that an attachment will lie upon a cause of action for damages for a breach of contract where the damages are readily ascertainable by reference to the contract and the basis of the computation of damages appears to be reasonable and definite. [Citations.] The fact that the damages are unliquidated is not determinative. [Citations.] But the contract sued on must furnish a standard by which the amount due may be clearly ascertained and there must exist a basis upon which the damages can be determined by proof.’¿” (See CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App. 4th 537, 541.)

Plaintiff’s applications for writ of attachment are based on claims for breach of guaranty. The claims are for a fixed and readily ascertainable sum. Gomperts and Halevy are indebted to Archway in the principal sum of $15,241,903. (Khorshidi Decl. ¶28; Prieto Decl. ¶7.) Also, under the terms of the Guaranty, Archway is entitled to recover reasonable attorneys’ fees and costs incurred in its collection efforts. (Khorshidi Decl. ¶29.) Pursuant to the default schedule set forth in Rule 3.214(a) of the Los Angeles Superior Court, Archway seeks $154,300.93 for its attorneys’ fees. (Id.) Archway also seeks costs of $3,000. (Id.) Accordingly, Archway’s damages are readily ascertainable by reference to the contracts, and the basis of the computation of damages appears to be reasonable and definite.

Purpose and Amount of Attachment

Code of Civil Procedure section 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.”

Plaintiff declares that attachment is not sought for a purpose other than the recovery on Plaintiff’s claim. (Appl. ¶ 4.) The amount to be secured is greater than zero.

Code Civ. Proc. §484.020(e) 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.”¿ Plaintiff identifies specific real property owned by Gomperts and Halevy, as well as clear categories of items it intends to attach in its Applications for Right to Attach Order and Order for Issuance of Writ of Attachment.¿¿¿¿

Section 483.010, subdivision (c)¿prohibits a prejudgment¿attachment against a defendant who is a natural person unless the claim arises out of a¿trade, business or profession. The terms¿trade, business or profession may be found to encompass almost any activity engaged in¿for profit with frequency and continuity. A purpose of the¿attachment statutes is to confine¿attachments to commercial situations and to prohibit them in consumer transactions. The language “trade, business or profession” in¿section 483.010, subdivision (c), fulfills¿that purpose by limiting the use of¿attachments to “commercial transactions” and precluding them in “consumer transactions.” (Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson¿(1987) 197 Cal.App.3d 1, 4 (Kadison).)

Here, the Guaranty was executed in connection with Guarantors’ trade, business or profession. Gomperts and Halevy are members of the Borrower, and they are involved in substantial real estate projects which serve as the basis of their livelihood. Their obligation under the Guaranty arose from their conduct of the Borrower’s business. (Khorshidi Decl. ¶¶ 14-24.)

Defendants have not claimed any specific exemptions.

Reduction of Amount to be Secured

Code of Civil Procedure section 483.015(b) provides that the amount to be secured by the attachment shall be reduced by, inter alia:

(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 the 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.

“[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.).)

Defendants have not asserted an attachable defense or claim for offset.

Code of Civil Procedure section 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment. Code of Civil Procedure section 489.220 provides, with exceptions, for an undertaking in the amount of $10,000.