Judge James C. Chalfant, Case 19STCV40941 2023-02-07 Tentative Ruling

Plaintiff Eliot Griner (“Executor”) as Executor of the Estate of Son Falls (“Son”) applies for a right to attach order against Defendant Aton Setty (“Aton”) as Trustee of the Setty Family Revocable Trust (“Trust”) in the amount of $381,139.50.

The court has read and considered the moving papers (no opposition was filed) and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiff Executor commenced this action on November 12, 2019. The operative pleading is the First Amended Complaint (“FAC”) filed on January 9, 2020 against Susan Setty (“Mother”) and Donald Setty (“Husband”),[1] the latter both individually and as Mother’s conservator. The FAC’s causes of action include (1) breach of contract; (2) unjust enrichment; (3) breach of fiduciary duty; (4) conversion; (5) fraud; and (6) negligent misrepresentation. The FAC alleges in pertinent part as follows.

Executor is the executor of Son’s estate. The estate acceded to all of Son’s assets, rights, benefits, and claims upon his death on October 10, 2016. Eric Falls (“Brother”) was Son’s predeceased brother, and Mother was Eric’s mother.

Mother conspired with Brother to deceive governmental authorities and some of Brother’s creditors through joint tenancy of $400,000 in Brother’s family-derived assets. Son learned about these accounts and wanted to prevent Husband from reaching and taking those assets.

On July 1, 2016, Son, Susan, and Husband entered into a written settlement and release agreement (“Agreement”) for the distribution of assets from Brother’s estate. Under the Agreement, Mother would receive all of Brother’s estate’s assets except for a condominium at 17150 Burbank Blvd., Unit 26, Encino, CA (“Condominium”), which was Brother’s primary residence. The Condominium would go to Son and its value was about equal to the $400,000 Mother had received through joint tenancy with Brother. The Agreement entitled the prevailing party in any action to enforce the Agreement to recover reasonable attorney’s fees.

On November 14, 2016, Mother and Husband sold the Condominium for $423,884 and kept the net proceeds of $381,139.50. FAC, ¶14. Mother never provided accounting of Brother’s estate to Son or to his estate. FAC, ¶16. Demands for payment of the proceeds have failed. FAC, ¶18.

On April 5, 2017, Mother fraudulently represented in probate court that she was entitled to receive all of Brother’s assets, including the Condominium. FAC at ¶37.

Executor seeks (1) at least $381,139.50 in damages, (2) exemplary damages, (3) an award twice the amount of the Condominium value per Probate Code section 859; (4) attorney’s fees and costs, (5) pre-judgment and post-judgment interest, and (6) an order rescinding or modifying the probate court’s order to reflect Son’s rights under the Agreement.

2. Course of Proceedings

On December 3, 2019, Executor personally served Husband, both as an individual and Mother’s conservator, with the Complaint and Summons. Executor also served Mother with the Complaint and Summons through substitute service, effective December 13, 2019.

On January 9, 2020, Executor served both Defendants with the FAC.

On January 23, 2020, Executor filed Notice of a Related Case for Griner, Executor of the Estate of Robert Falls v. Susan Setty, Donald Setty et al, Case No. 17STPB06166 (“Griner I”), with Department 49 (Hon. Stuart Rice). On March 5, 2020, Department 49 ordered the notice refiled in Department 1 (Hon. Samantha Jessner). On June 26, 2020, Department 1 found this case related to Griner I and ordered this case reassigned to Department 79 (Hon. Ana Maria Luna).

On December 15, 2020, Department 79 denied Defendants’ motion to strike the FAC.

On December 28, 2020, Mother passed away. During a hearing on Don’s ex parte application for extension of time to file an Answer on February 1, 2021, Department 11 observed that an estate for Mother needed to be established for the litigation to proceed and that Husband’s health was precarious and required a conservatorship.

On April 19, 2021, Husband filed an Answer as an individual and as Susan’s conservator.

On June 8, 2021, Executor personally served Husband, as Trustee of the Trust, with the FAC, Summons, and an Amendment to the FAC not yet on file.

On August 8, 2021, Executor amended the FAC to add Husband as Trustee of the Trust and Defendant. It also moved for an order to correct Husband’s name from “Donald” to “Don”, which Department 11 granted.

On August 10, 2021, Department 11 denied Executor’s motion to continue prosecution of the FAC against Mother through her surviving spouse Husband. The court observed that the purpose of the motion was unclear because Husband already was a Defendant.

On September 14, 2021, Executor amended the FAC to add Erez Setty (“Erez”), Husband’s temporary conservator, as a Defendant.

On September 27 and 30, 2021, Department 11 rejected Executor’s requests for entry of default against Husband as Trustee of the Trust.

On October 7, 2021, Executor amended the FAC to add Erez as Defendant in her capacity as Trustee of the Trust.

On October 14, 2021, Executor amended the FAC to add Defendants (1) Aton, as successor Trustee of the Trust; and (2) Sheryl Kaplan (“Kaplan”) as successor Trustee of the Trust.

On October 28, 2021, Erez filed an Answer to the FAC.

On November 6, 2021, Executor served Aton with the FAC, Summons, and Amendment to the FAC by substitute service, effective November 16, 2021.

On December 20, 2021, on Executor’s request, Department 11 entered a default against Aton as successor Trustee of the Trust.

On December 23, 2021, Aton filed an Answer to the FAC.

On February 25, 2022, per stipulation, Department 11 vacated the entry of default against Aton.

On December 12, 2022, Executor served the moving papers for this application by electronic mail.

B. Applicable Law

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 (CCP §481.010 et seq.) that meets the due process requirements set forth in Randone v. Appellate Department, (1971) 5 Cal.3d 536. See Western Steel & Ship Repair v. RMI, (12986) 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 ($500). CCP §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. CCP §487.010(a), (b). While a trustee is a natural person, a trust is not. Therefore, a trust’s property is subject to attachment on the same basis as a corporation or partnership. Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, (“Kadison”) (1987), 197 Cal.App.3d 1, 4.

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. CCP §484.010. Notice of the application must be given pursuant to CCP section 1005, sixteen court days before the hearing. See 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. CCP §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. CCP §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. CCP §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., (“Bank of America”) (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 CCP section 484.060 not later than five court days prior to the date set for hearing. CCP §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. CCP §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 the hearing. CCP §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. CCP §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 (CCP §484.090(a)(1)); (2) the plaintiff has established the probable validity of the claim (CCP §484.090(a)(2)); (3) attachment is sought for no purpose other than the recovery on the subject claim (CCP §484.090(a)(3); and (4) the amount to be secured by the attachment is greater than zero (CCP §484.090(a)(4)).

A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. CCP §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. CCP §484.050(b).

Except in unlawful detainer actions, 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 CCP section 482.110. CCP §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. CCP §483.015(b). A defendant claiming that the amount to be secured should be reduced because of a cross-claim or affirmative defense must make a prima facie showing that the claim would result in an attachment against the plaintiff.

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. CCP §489.210. The undertaking ordinarily is $10,000. CCP §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. CCP §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.

On July 1, 2016, Son, Mother, and Husband entered into the Agreement for distribution of the assets from Brother’s estate. Griner Decl., ¶3, Ex. A. Mother and Husband agreed to disclaim any interest in the Condominium and Son waived any claims to the rest of Brother’s estate. Griner Decl., ¶4, Ex. A.

Son died on October 10, 2016. Griner Decl., ¶5. On November 14, Mother sold the Condominium for $423,884 and deposited the net proceeds of $381,139.50 in the Trust. Griner Decl., ¶¶ 6, 8. On December 19, 2016, Mother transferred the $381,139.50 to Brother’s estate. Griner Decl., ¶9.

A statement for the Trust’s bank account between March 22 and April 21, 2017 shows a $384,040.77 deposit from another bank account on April 10, 2017. Griner Decl., ¶8, Ex. B.

On April 17, 2017, the probate court closed Brother’s estate with an order to distribute all of its assets to Mother, including the Condominium. Griner Decl., ¶10. Mother did not disclose the existence of the Agreement or Son’s rights to the Condominium to either the probate court or Son’s estate. Griner Decl., ¶¶ 7, 10.

After the probate court ordered distribution of Brother’s estate, Mother transferred the $381,139.50 from the sale back into the Trust’s bank account. Griner Decl., ¶11. Son’s estate never received funds from the sale, despite demands from counsel. Griner Decl., ¶¶ 12-13.

Plaintiff Executor, as the executor for Son’s estate, applies for a right to attach order against the Trust in the amount of $381,139.50, which does not include attorney’s fees or costs. Son, Brother, and Mother are now deceased. Husband is under a conservatorship.

Executor’s application is against Aton as Trustee of the Trust. A trust’s property is subject to attachment on the same basis as a corporation or partnership. Kadison, supra, 197 Cal.App.3d at 4. This application is not against a natural person but rather the Trust’s property.

The claim against the Trust is based on the Agreement as to ownership of the Condominium that Mother sold. Griner Decl., ¶3, Ex. A. Executor has a claim on which to base attachment.

A claim is “readily ascertainable” where the damages may be readily ascertained by reference to the contract and the basis of the calculation appears to be reasonable and definite. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41. The fact that the damages are unliquidated is not determinative. Id. But the contract must furnish a standard by which the amount may be ascertained and there must be a basis by which the damages can be determined by proof. Id. (citations omitted).

The Agreement was for the parties’ distribution of Brother’s estate. Griner Decl., ¶3, Ex. A. Mother and Husband agreed to disclaim any interest in the Condominium and Son waived any claim to the rest of Brother’s estate. Griner Decl., ¶4, Ex. A. Assuming arguendo that Mother or another Defendant sold the Condominium, Son’s ownership entitles his estate to the proceeds. Damages are readily ascertainable from the Agreement insofar as Executor proves the amount obtained by Mother from the sale.

Executor alleges that on November 14, 2016, Mother sold the Condominium for $423,884 and deposited the net proceeds of $381,139.50 in the Trust. Griner Decl., ¶¶ 6, 8. On December 19, 2016, Mother transferred the $381,139.50 to an account for Brother’s estate. Griner Decl., ¶9.

Executor then alleges that the probate court closed Eric’s estate on April 17, 2017 with an order to distribute all assets to Mother, including the Condominium sale proceeds. Griner Decl., ¶10. Mother did not disclose the existence of the Agreement or Son’s rights to the Condominium proceeds to either the probate court or Son’s estate. Griner Decl., ¶¶ 7, 10. She then transferred the $381,139.50 sale proceeds back into the Trust’s bank account. Griner Decl., ¶11. Son’s estate never received funds from the sale, despite demands from counsel. Griner Decl., ¶¶ 12-13.

Strict compliance is required with statutory requirements for affidavits for provisional remedies. See Anaheim National Bank v. Kraemer, (1932) 120 Cal.App. 63, 65. The court must apply the same evidentiary standard to the declarations in an attachment hearing as to a case tried on oral testimony. VFS Financing, Inc. v. CHF Express, LLC, (2009) (C.D. Cal.) 620 F.Supp.2d 1092, 1096-97. The declarant must show personal knowledge of the relevant facts, and such evidence must be admissible and not objectionable. Id. All documentary evidence, including contracts and canceled checks, must be presented in admissible form, and admissibility as non-hearsay evidence or exception to the hearsay rule, such as the business records exception. Lydig Construction, Inc. v. Martinez Steel Corp., (2015) 234 Cal.App.4^th 937, 944; Pos-A-Traction, Inc., v. Kepplly-Springfield Tire Co., (C.D. Cal. 2000) 112 F.Supp.2d, 1178, 1182. For business records, evidence should be presented to establish that the record was made in the regular course of business, at or near the time of the act or event, and the custodian of records or other qualified witness must identify the record and its mode of preparation, as well as the sources of information and method and time of preparation. Id.

Executor’s declaration consists of conclusions without any foundation. Almost no documentary evidence is provided or authenticated. There is no grant deed, sale documents, or probate orders, and the sole exhibit supporting the transfer of funds is misrepresented. Executor claims that the attached Trust statement from U.S. Bank for October 25 to November 22, 2016 shows the deposit of $381,139.50 net sale proceeds. Griner Decl., ¶8. Yet, the attached U.S. Bank statement is for the period between March 22 and April 21, 2017. Griner Decl., ¶8, Ex. B. The bank statement shows a deposit on April 10, 2017 of $384,040.77, almost $3,000 higher than the alleged sale proceeds. The on April 10 does not indicate the source of funds. Griner Decl., ¶8, Ex. B.

Most significantly, because Executor admits that Mother transferred the Condominium sale proceeds to Brother’s estate (Griner Decl., ¶9), he cannot demonstrate a breach unless the funds were returned to Mother or the Trust. Executor does not provide the probate court’s order on April 17, 2017 awarding Mother the proceeds along with the rest of Brother’s estate. Griner Decl., ¶10. There is no evidence that Mother received the Condominium sale proceeds from Brother’s estate other than Executor’s contention to that effect. Griner Decl., ¶11.

Executor has not shown a probability of success on his claim for breach of the Agreement.

Attachment must not be sought for a purpose other than the recovery on the claim upon which attachment is based. CCP §484.090(a)(3). Executor seeks attachment for a proper purpose.

[1] Don Setty is Husband but apparently is not the father of either Son or Brother.