Judge Gary I. Micon, Case Number: 23CHCV03109, Date: 2024-03-19 Tentative Ruling

Judge: Gary I. Micon, Case: 23CHCV03109, Date: 2024-03-19 Tentative Ruling

Case Number: 23CHCV03109 Hearing Date: March 21, 2024 Dept: F43

Dept. F43

Date: 3-20-24

Case #23CHCV03109 , Financial Pacific Leasing, Inc. v. Mikael Mikaelyan, et al.

Trial Date: NA

WRIT OF ATTACHMENT & WRIT OF POSSESSION

MOVING PARTY: Plaintiff Financial Pacific Leasing, Inc.

RESPONDING PARTIES: NA

RELIEF REQUESTED

Writ of Attachment and Writ of Possession

RULING

Plaintiff’s application for a writ of attachment is TENTATIVELY GRANTED in the reduced amount of $35,131.18 subject to Plaintiff posting the required undertaking in the amount of $10,000.00 within 30 days. The Court sets an Order to Show Cause re: posting of the undertaking on April 17, 2024. The Court notes the OSC will be discharged if the undertaking is posted and the writ issued.

Plaintiff’s application for a writ of possession is DENIED without prejudice.

SUMMARY OF ACTION

This is a breach of contract action arising from an equipment financing agreement. On October 16, 2023, Plaintiff Financial Pacific Leasing, Inc. filed its Complaint against Defendants Cornwall Group, Inc., Mikael Mikaelyan, and Does 1-10, inclusive, asserting four causes of action for (1) Breach of Equipment Finance Agreement; (2) Breach of Guaranty; (3) Account Stated; and (4) Claim and Delivery.

Plaintiff alleges that on February 4, 2021, Defendants Cornwall Group, Inc. and Does 1-5 entered into a written equipment financing agreement (the “Lease Agreement”) with Plaintiff and leased certain equipment (KL80FQ Technogen Generator Mega Silent s/n 20.63961) with Plaintiff. (Declaration of Janet D. Gonzales, ¶ 4; Ex. “1.”) To induce Plaintiff to enter into the Lease Agreement with Defendant Cornwall, Defendant Mikael Mikaelyan and Does 6-10, inclusive each executed in writing a Personal Guaranty (the “Guaranty”) to the Lease Agreement. (Id. at ¶ 5; Ex. “1.”) On or about February 15, 2023, Plaintiff alleges Defendants Cornwall and Does 1-5 defaulted pursuant to the terms of the Lease Agreement by not making the payment then due, nor any payments due thereafter. Failure to make timely payments is an event of default under the terms of the Lease Agreement. Defendant Cornwall failed to make any payments under the terms of the agreement. Therefore, Defendant Cornwall and Does 1-5, inclusive, have been in default since February 15, 2023, and are currently delinquent of the Lease Agreement. (Id. at ¶ 6.)

On October 30, 2023, Plaintiff filed the instant applications for writ of attachment and writ of possession against Defendants Cornwall Group, Inc. and Mikael Mikaelyan. Plaintiff seeks an attachment of $37,079.61, inclusive of estimated costs of $600.00 and estimated attorney fees of $1,348.43. Plaintiff also seeks a writ of possession for KL80FQ Technogen Generator Mega Silent s/n 20.63961; FMV $33,000.00.

No opposition has been filed.

WRIT OF ATTACHMENT

Plaintiff seeks an attachment of $37,079.61, inclusive of estimated costs of $600.00 and estimated attorney fees of $1,348.43.

Legal Standard

“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.)

Discussion

1. Probable Validity of Claim

“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.)

This application is based on a claim for breach of the 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.)

Plaintiff submitted the declaration of its custodian of records in support of its motion, which provides as follows. On February 4, 2021, Defendants Cornwall Group, Inc. and Does 1-5 entered into the Lease Agreement with Plaintiff and leased certain equipment (KL80FQ Technogen Generator Mega Silent s/n 20.63961) with Plaintiff. (Gonzales Decl., ¶ 4; Ex. “1.”) To induce Plaintiff to enter into the Lease Agreement with Defendant Cornwall, Defendant Mikael Mikaelyan and Does 6-10, inclusive each executed in writing a Personal Guaranty to the Lease Agreement. (Id. at ¶ 5; Ex. “1.”) On or about February 15, 2023, Plaintiff alleges Defendant Cornwall and Does 1-5, inclusive, defaulted pursuant to the terms of the Lease Agreement by not making the payment then due, nor any payments due thereafter. Failure to make timely payments is an event of default under the terms of the Lease Agreement. Defendant Cornwall failed to make any payments under the terms of the agreement. Therefore, Defendant Cornwall and Does 1-5, inclusive, have been in default since February 15, 2023, and are currently delinquent of the Lease Agreement. (Id. at ¶6.) In accordance with the Lease Agreement, and as a proximate result of Defendant Cornwall’s default, Plaintiff has declared the entire balance of the payments under the Lease Agreement to be immediately due and payable to Plaintiff. Pursuant to the Lease Agreement, there became due the sum of $60,244.36 exclusive of prejudgment interest, attorney’s fees and costs, no portion of which has been paid by Defendant Cornwall and Does 1-5, inclusive. (Id. at ¶ 7.) Plaintiff has performed all of its obligations under the terms of the Lease Agreement, except as excused or prevented by the conduct of Defendant Cornwall. As a proximate cause of Defendant Cornwall’s breach, Plaintiff has been damages in the total amount of $64,947.66 plus prejudgment interest at the rate of 18% per annum from February 15, 2023, until judgment is entered. (Id. at ¶ 10; Ex. “2.”)

Based on the foregoing, Plaintiff’s evidence is sufficient to support all elements of a breach of the Lease Agreement against Defendants. Plaintiff has thus established the probable validity of its breach of the Lease Agreement.

2. 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.)

Plaintiff’s application for issuance of a writ of attachment is based on an express contract—i.e., the Lease Agreement. The total amount allegedly due on the agreement is readily ascertainable and more than $500. Plaintiff asserts (1) an unsecured amount of $31,947.66 (amount owed to Plaintiff $64,947.66 less FMV of equipment $33,000.00); (2) interest of $3,183.52; (3) attorneys’ fees of $1,348.43; and (4) costs of $600.00. (Gonzales Decl., ¶¶ 19-20, 22.) Further, there are no indications Defendant Mikaelyan holds an interest in real property to secure the amount of the claim. Last, Plaintiff has demonstrated that the claim arises out of Defendant Mikaelyan’s business based on Mikaelyan’s position as president/CEO of Defendant Cornwall and execution of the Guaranty. (Gonzales, ¶ 5, Ex. “1.”)

3. 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.”

Plaintiff 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. Plaintiff also has no information or belief that the claim is discharged in a proceeding under Title 11 of the United States Code or that prosecution of the action is stayed in a proceeding under Title 11 of the United States Code. (Gonzales, ¶ 13; Application, ¶ 4.)

4. Subject Property

CCP § 487.010(a) provides that “[w]here the defendant is a corporation, all corporate property for which a method of levy is provided” is subject to attachment.

Where the defendant is a natural person, the description of the property must be reasonably adequate to permit the defendant to identify the specific property sought to be attached. (CCP § 484.020(e).) Although the property must be specifically described, the plaintiff may target for attachment everything the individual defendant owns. (Bank of America v. Salinas Nissan, Inc., (1989) 207 Cal.App.3d 260, 268.) The requirement of specificity avoids unnecessary hearings where an individual defendant is willing to concede that the described property is subject to attachment. (Id.) A general list of categories - e.g., “real property, personal property, equipment, motor vehicles, chattel paper, negotiable and other instruments, securities, deposit accounts, safe-deposit boxes, accounts receivable, general intangibles, property subject to pending actions, final money judgments, and personal property in decedents’ estates” – is sufficient. (Id.)

For Defendant Cornwall, the application asks for attachment of any property of Defendant Cornwall. For Defendant Mikaelyan, the application asks for attachment of: (1) property including equipment and inventory of a going business pursuant to CCP sections 488.375 and 488.395; (2) all vehicles of a going business pursuant to CCP section 488.385; (3) deposit accounts thereof pursuant to CCP section 488.455; and (4) any account receivable or general intangibles pursuant to CCP section 488.470. These descriptions of property to attach are sufficient.

5. Exemptions

No opposition has been filed and thus no exemptions are claimed.

6. Reduction of Amount to be Secured

Because no opposition has been filed, Defendants have not supported an attachable defense or claim for offset.

7. 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.)

Plaintiff has not addressed nor argued for a different amount of undertaking.

8. 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.

The Lease Agreement and Guaranty provide for the payment of reasonable attorney’s fees and costs in the event suit is instituted to enforce the provisions thereof. (Gonzales Decl., ¶ 12.) Plaintiff seeks attorney’s fees in the amount of $1,348.43 and costs of $600. (Id. at ¶ 22.) However, there is no evidence to support these amounts. The Court thus declines to include allowable attorney’s fees and costs in the amount to be secured by the attachment.

Accordingly, Plaintiff’s application for a writ of attachment is TENTATIVELY GRANTED in the reduced amount of $35,131.18 subject to Plaintiff posting the required undertaking in the amount of $10,000.00 within 30 days. The Court sets an Order to Show Cause re: posting of the undertaking on April 17, 2024. The Court notes the OSC will be discharged if the undertaking is posted and the writ issued.

WRIT OF POSSESSION

Plaintiff also seeks a writ of possession for KL80FQ Technogen Generator Mega Silent s/n 20.63961.

Legal Standard

“Upon the filing of the complaint or at any time thereafter, the plaintiff may apply pursuant to this chapter for a writ of possession by filing a written application for the writ with the court in which the action is brought.” (CCP § 512.010(a).)

Pursuant to Code of Civil Procedure section 512.010(b), the application must be submitted under oath and include:

(1) A showing of the basis of the plaintiff's claim and that the plaintiff is entitled to possession of the property claimed. If the basis of the plaintiff's claim is a written instrument, a copy of the instrument shall be attached.

(2) A showing that the property is wrongfully detained by the defendant, of the manner in which the defendant came into possession of the property, and, according to the best knowledge, information, and belief of the plaintiff, of the reason for the detention.

(3) A particular description of the property and a statement of its value.

(4) A statement, according to the best knowledge, information, and belief of the plaintiff, of the location of the property and, if the property, or some part of it, is within a private place which may have to be entered to take possession, a showing that there is probable cause to believe that such property is located there.

(5) A statement that the property has not been taken for a tax, assessment, or fine, pursuant to a statute; or seized under an execution against the property of the plaintiff; or, if so seized, that it is by statute exempt from such seizure.

Before the hearing on the Writ of Possession, the defendant must be served with (1) a copy of the summons and complaint; (2) a Notice of Application and Hearing; and (3) a copy of the application and any affidavit in support thereof. (CCP § 512.030.)

“The writ will be issued if the court finds that the plaintiff's claim is probably valid and the other requirements for issuing the writ are established.” (CCP § 512.040(b).)

Prior to the issuance of a writ of possession, the Plaintiff must file an undertaking “in an amount not less than twice the value of the defendant's interest in the property or in a greater amount.” (CCP § 515.010(a).)

Discussion

Plaintiff has applied for a writ of possession of certain equipment (KL80FQ Technogen Generator Mega Silent s/n 20.63961. Plaintiff alleged a cause of action for claim and delivery of this equipment in its Complaint. (Compl. ¶¶ 20-26.) Further, Plaintiff has personally served Defendants with the requisite papers. However, the Court finds Plaintiff has not followed the statutory requirements of CCP § 512.010. In particular, section eight of Plaintiff’s application fails to identify “that the property has not been taken for a tax, assessment, or fine” or “seized under an execution against the property of the plaintiff[.]” (CCP § 512.010(b).)

Accordingly, Plaintiff’s application for a writ of possession is DENIED without prejudice.

CONCLUSION

Plaintiff’s application for a writ of possession is DENIED without prejudice.

Moving party to provide notice.