Judge: Edward B. Moreton, Jr, Case: 24SMCV03640, Date: 2025-01-14 Tentative Ruling

Case Number: 24SMCV03640    Hearing Date: January 14, 2025    Dept: 205

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

BACKGROUND

               This case arises from an alleged breach of guaranty between Plaintiff American First National Bank (“Bank” or “Plaintiff”) and Defendant Dr. Simon Lavi (“Defendant” or “Dr. Lavi”) pursuant to promissory note, executed by Park View Apt, LLC (“Borrower”) and Plaintiff Bank whereby Borrower agreed to pay the Bank the original principal sum of $9,170,000 (“Note”) in exchange for a loan (“Loan”). Plaintiff alleges Dr. Simon Lavi, as the Manager of the Borrower, signed the Note which sets forth a maturity date for the Loan of January 31, 2024. (Compl., ¶ 8, Ex. 1.) As security for repaying of the Note, the Borrower executed and delivered to the Bank the (1) Loan (Id., Ex. 2); (2) the Deed of Trust dated January 31, 2019 (“Deed”) (Id., Ex. 3); and (3) as additional security for the obligations, Borrower’s Indebtedness and obligations under the Loan (the “Guaranty”) (Id., ¶ 12; Ex. 4.)  The Guaranty provides, in pertinent part, as follows:

CONTINUING GUARANTY. THIS IS A ‘CONTINUING GUARANTY’ UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON ANY OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THE GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.”

Plaintiff alleges that the Guaranty further states that Guarantor waives any right to notice, and that the lender may pursue its rights under the Guaranty without first exhausting its other remedies against the Borrower or against the other collateral. (Compl., ¶ 14.) Plaintiff contends that the Borrower then defaulted under the Loan Documents by (a) failing to pay the full payment of the principal and interest due on the maturity date of January 31, 2024; and (b) failing to pay the property taxes due on the Property. Pursuant to a letter dated February 14, 2024, the Bank then demanded payment from Borrower and Guarantor, but  Plaintiff maintains both have failed and refuse to pay such delinquent amounts which Defendant disputes in opposition. Now, in accordance with the terms of the Loan, Plaintiff asserts the following sums are delinquent and are now due and payable to the Bank from the Borrower as follows:

(a)   Principal in the sum of $8,393,369.07 plus accrued and accruing unpaid interest of $672,944.85 as of July 9, 2024, and daily interest/per diem of $4,510.1357.

(b)   Accrued and accruing late charges of $4,146.14.

(c)   $26,911.98 advanced by the bank for payment of property insurance.

(d)   $599,990.41 advanced by the bank for payment of property taxes;

(e)   Trustee’s fees and expenses, and foreclosure costs of $30,263.10.

Consequently, on July 30, 2024, Plaintiff filed the underlying action for breach of guaranty, followed by an application of Right to Attach Order and Order for Issuance of Writ of Attachment (AT-120) on November 12, 202, as well as a Declaration of Fivan Tang; the Notice of Application and Hearing (AT-115); and the Order for Issuance of Writ of Attachment (AT-105). On November 21, 2024, the parties stipulated to set aside the Default that had been entered on September 24, 2024 against Defendant after Defendant disputed it on grounds of improper service.

On January 2, 2025, Defendant then filed an Ex Parte Application for Continuance of Hearing on Plaintiff’s Application for Writ of Attachment and Right to Attach Order and Related Deadlines, requesting a 30-day continuance of the January 14, 2025 hearing and related deadlines. On January 6, 2025, the Court denied Defendant’s Ex Parte Application for continuance, providing in pertinent part, as follows:

The application is denied because it does not set forth facts demonstrating exigent circumstances justifying ex parte relief and because it does not set forth sufficient good cause for the substantive relief sought.

(See 01.06.25 Min. Order)

On January 7, 2025, Defendant filed the Opposition to Right to Attach Order and Claim of Exemption, along with the Declarations of Defendant Dr. Lavi and Defendant’s Counsel, Evan C. Borges. There is no reply on file.  

DISCUSSION

“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. 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.)

Here, (1) Tang’s Declaration attached to Plaintiff’s instant application sets forth that the purpose of the Loan was to acquire the property that was also pledged as collateral for the Loan. However, the Court notes Tang does not declare or establish that the attachment is sought to secure the recovery on a claim upon which an attachment may be issued. (Tang Decl., ¶ 20.)  (2) The application sets forth the amount to be secured by the attachment consists of (a) the principal in the sum of $9,020,271.46, plus interest of $446,552.78; (b) accrued late charges of $4,146.14; (c) $26,911.98 advanced by the Bank for payment of property insurance; (d) $599,990.41 advanced by the Bank for payment of property taxes; (e ) Trustee’s fees and expenses, foreclosure and estimated legal costs of $101,509.20; and (f) costs and reasonable attorneys’ fees in the amount of according to proof. (3) Tang does not provide a statement expressly declaring that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based. (4) As provided on the signed AT-105 form filed by Plaintiff, Plaintiff ratifies that Plaintiff has no information or belief that the claim is discharged or the prosecution of the action is stayed in a preceding under the title 11 of the United States Code (Bankruptcy). (AT-105, ¶ 5.) The only affirmative statement Tang separately declares in his attached declaration with respect to bankruptcy is that “Borrower defaulted under the Loan Documents by (a) . . . (c) filing bankruptcy on August 6, 2024. Since the bankruptcy filing, no enforcement action has occurred against the Borrower or its property, but the Bank filed in this action against Dr. Lavi as the Guarantor. (Id., ¶ 15.)

On the other hand, Defendant opposes the instant application on the grounds that

Defendant’s opposition states the federal Bankruptcy Court evidence adverse findings of fact against the Bank, which the Bank does not disclose in the instant application, and which bind the Bank under the doctrine of collateral estoppel, establishing that:

(1)   the Writ Application grossly overstates the alleged ‘reasonable ascertainable amount” of the Bank’s claim if this action were litigation to judgment and the Bank were to prevail.

(2)   The Bank does not and cannot meet its burden of establishing by evidence the “probably validity” of its claim in a reasonably ascertainable amount of $9, 577, 279. 58; and

(3)   The Bank’s claim for payment of the indebtedness under the Note, which is the predicate for its claim on the Guaranty, is fully protected and will be paid in full based upon unrebutted evidence and findings of fact by the Bankruptcy Court that bind the Bank regarding the value of its Collateral, the Property.

(Opp., pg. 3.)

Finally, as Defendant points out, (5) there is not a proper description of the property to be attached and critically, Plaintiff does not establish through evidence or declaration that Dr. Lavi is the legal owner of the properties listed in the first item of the “Schedule A” attachment which consists of items (a) – (f). The Court further notes that when the Loan was executed, the Deed of Trust conveyed a security interest to the Bank in the Property at 307 N. Saltair Avenue, Los Angeles (“Subject Property”) (Compl., ¶ 10).  Despite Plaintiff averring that the Lavi Guaranty makes it so Plaintiff is not limited to the Subject Property, nor obligated to prioritize or exhaust it as collateral before Dr. Lavi’s other property, it is notably missing from Plaintiff’s Schedule A.  Instead, Plaintiff itemizes properties in the Schedule A which are supported by no exhibits or evidence demonstrating ownership. Thus, the Court cannot determine if such properties are properly subject to attachment or who their rightful owner is. Defendant contends on Opposition that such properties are not Defendant’s and moreover, some are not even real properties.

In sum, the Court agrees with Defendant that the attachment statutes are subject to strict construction and that unless specifically provided for by the attachment law, no attachment procedure may be ordered by the Court. (VFS Financing, Inc. v. CHF Express, LLC (2009) 620 F.Supp.2d 1092, 1095.)

CONCLUSION

            For the foregoing reasons, the Court DENIES the application of the writ of attachment   and DENIES the order for issuance of writ of attachment.    

DATED:  January 14, 2025                                   ___________________________

Edward B. Moreton, Jr.

Judge of the Superior Court