Judge Helen Zukin, Case 22SMCV01270 2022-12-16 Tentative Ruling

Judge: Helen Zukin, Case: 22SMCV01270, Date: 2022-12-16 Tentative Ruling

Case Number: 22SMCV01270 Hearing Date: December 16, 2022 Dept: 207

Background

Plaintiff Ryan MacDhubhain (“Plaintiff”) brings this action against Defendant Advanced Nutrients, Inc. (“Defendant”) and others stemming from his employment with Defendant. Plaintiff’s operative Complaint, filed August 2, 2022, asserts causes of action for breach of contract, intentional infliction of emotional distress, negligent infliction of emotional distress, and unlawful failure to pay wages upon termination. Plaintiff seeks a right to attach order and writ of attachment as to Defendants in the amount of $380,985.35 in connection with his cause of action for breach of contract. Defendant opposes Plaintiff’s application.

Objections to Evidence

The Court SUSTAINS Defendant’s objections 13 and 14 to the Declaration of Plaintiff. Defendant’s objections are otherwise OVERRULED.

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 brings this application to attach Defendant’s assets in connection with his cause of action for breach of contract. Plaintiff was previously employed by Defendant as its national sales manager and alleges Defendant has not paid him the severance and bonus he is entitled to by contract.

1. A Claim Based on a Contract

Plaintiff’s application is based on his claim for breach of contract. Defendant does not dispute his claim is one upon which attachment may be based.

2. An Amount Due that is Fixed and Readily Ascertainable

Plaintiff seeks attachment of $327,632.26 in unpaid severance and $53,353.09 in unpaid bonuses. Plaintiff calculates these amounts based on calculations derived from the terms of the alleged contracts which form the basis of his claim. Defendant does not dispute the amounts sought by Plaintiff are fixed and readily ascertainable.

3. Improper Purpose

Defendant argues Plaintiff has not demonstrated his request for attachment is not sought for an improper purpose because he has shown: (1) Defendant would conceal the assets that plaintiff seeks to attach; (2) the assets sought to be attached would be substantially impaired in value; (3) the assets sought to be attached would otherwise be made unavailable if the right to attach order were not issued at this time; or (4) Defendant is insolvent or is in danger of becoming insolvent prior to the adjudication of Plaintiff’s lawsuit. (Opposition at 7.) Defendant argues Plaintiff was required to make such showings, citing Code Civ. Proc. §§ 485.010(b)(1)-(2).

By its express terms, section 485.010 does not apply to Plaintiff’s application. Section 485.010(a) states in pertinent part “no right to attach order or writ of attachment may be issued pursuant to this chapter unless it appears from facts shown by affidavit that great or irreparable injury would result to the plaintiff if issuance of the order were delayed until the matter could be heard on notice.” The term “this chapter” in section 485.010 refers to Chapter 5 of Title 6.5 of Part 2 of the Code of Civil Procedure. Chapter 5 is titled “Ex Parte Hearing Procedure for Obtaining Writ of Attachment.” Plaintiff’s application was not brought on an ex parte basis under Chapter 5 and section 485.010 but rather was brought under section 484.010, et seq., in Chapter 4 of Title 6.5, which provides the “Noticed Hearing Procedure for Obtaining Writ of Attachment.” Under section 484.020(c), a Plaintiff bringing an application on a noticed hearing need only provide a “statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based.” Plaintiff has satisfied this requirement. (See MacDhubhain Decl. at ¶12; Form AT-105 Application at ¶4.)

4. Probability of Success

Defendant contends Plaintiff has not established a probability of success on his claims against Defendant. Plaintiff’s claim for unpaid severance stems from a December 10, 2019, letter from Defendant’s CEO and founder, Michael Straumietis (“Straumietis”). The letter states Plaintiff is an “at-will” employee, but in order to provide him with assurances that his employment would continue at least until December 31, 2022, Defendant would pay him six-months’ earnings as severance if his employment was “terminated without cause before December 31, 2022.” (Ex. A to MacDhubhain Decl. [emphasis in original].) The letter further states if Plaintiff’s employment was terminated with cause prior to December 31, 2022, the “contract terms are void and the Company will not be liable for any additional payment.” (Id.)

Plaintiff argues he was terminated without cause and claims he was never provided “with any evidence or reason supporting [Defendant’s] decision to terminate him.” (MPA at 4-5.) Defendant argues Plaintiff’s employment was terminated with cause, specifically for insubordination and misconduct. In support of its argument, Defendant submits the May 2, 2022, termination letter sent to Plaintiff, which states “This letter provides notice that you will be relieved of all duties and responsibilities as an employee of Advanced Nutrients effective on 05/02/2022 due to insubordination and misconduct.” (Ex. A to Straumietis Decl.) Defendant also submits evidence that Plaintiff failed to input all sales calls into Defendant’s customer relation management system as required, and also failed to visit customers in his territory as required. (Straumietis Decl. at ¶¶5-6; Aragon Decl. at ¶3.) Defendant also submits evidence indicating Plaintiff stated he would “fight” a directive given to him by Straumietis to hire field representatives. (Cain Decl. at ¶3.)

Plaintiff has filed no reply in support of his application and thus has not submitted any evidence which rebuts the evidence put forth by Defendant as to the cause of Defendant’s termination of his employment. As the evidence currently before the Court suggests Plaintiff was terminated with cause, Plaintiff cannot establish a probability of success on his claim for severance based on a termination without cause.

Plaintiff’s claim regarding his unpaid bonus is based on a December 22, 2021, email from Straumietis. (Ex. B to MacDhubhain Decl.) In the email, Straumietis states the recipients of the email “WILL be receiving a bonus for your hard work in 2021” which “will be 9.16% (of your total salary in 2021).” (Id. [emphasis omitted].) This bonus was to be “split between multiple payments over the course of three months” beginning in February 2022. (Id.) Plaintiff states Defendants made an initial bonus payment to him of $6,669.14 on May 13, 2022. (MacDhubhain Decl. at ¶9)

Defendant argues Plaintiff has not established the email in question was ever sent to him, as the subject and to lines of the email indicate it was sent to and from Straumietis. Plaintiff has provided sworn testimony stating Straumietis sent him the email in question. (MacDhubhain Decl. at ¶8.) This is testimonial evidence of Plaintiff’s receipt of this email which is uncontroverted by Defendant. The Court notes that while Straumietis submitted a declaration in connection with Defendant’s opposition to this application, he does not deny sending the December 22, 2021, email to Plaintiff or otherwise dispute its authenticity. Straumietis could have sent the email to himself with blind carbon copies, or BCCs, to any number of any other individuals, including Plaintiff. The Court thus finds Plaintiff has sufficiently alleged his receipt of the email in question.

Defendant next argues the email itself does not support Plaintiff’s claim that he was entitled to a bonus of $60,022.23 as it states bonuses would be paid at 9.16% of an employee’s “total salary” and Plaintiff by his own admission was not paid a salary while employed with Defendant but instead was compensated solely on commission. The Court agrees. While Plaintiff has submitted testimonial evidence indicating Defendant paid him some sort of bonus on May 13, 2022, in the amount of $6,669.14, the Court does not have before it any evidence suggesting this payment of $6,669.14 was intended as a partial payment of the 9.16% bonus mentioned in the December 2021 email. Indeed, the email itself states the first bonus payments would be made in February 2022, whereas Plaintiff states he received the $6,669.14 payment in May 2022. Nor does the $6,669.14 payment support Plaintiff’s calculation of a $60,022.23 bonus based on his total earnings. Accordingly, the Court finds Plaintiff has not demonstrated a probability of success on his claim for breach of contract stemming from an alleged unpaid bonus due to him by virtue of the December 2021 email.

As Plaintiff has not established a probability of success on either basis for his claim of breach of contract, his application is DENIED.

Conclusion

Plaintiff’s application for right to attach order and writ of attachment is DENIED.