Judge James C. Chalfant, Case 21STCV37432 2022-10-11 Tentative Ruling

Plaintiffs Eric (“Eric”) and David (“David”) Lichtbach (collectively, the “Lichtbachs”) apply for right to attach orders against Defendants Commerce Cannabis Company (“CCC”) and Arsen Kazanchian (“Kazanchian”) in the amount of $604,913.19.

The court has read and considered the moving papers, opposition, and reply,[1] and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiffs filed this Complaint against Defendants CCC and Kazanchian on October 11, 2021 for (1) breach of lease and (2) breach of guaranty. The Complaint alleges in pertinent part as follows.

The Lichtbachs co-own property at 2645 Yates Avenue, Commerce, California, 90040 (“Property”). On November 30, 2018, the Lichtbachs and CCC entered into a commercial single-tenant lease for the Property (“Lease”), with a five-year duration from January 2019 through December 2023. At the same time, Kazanchian entered into a Guaranty of Lease (“Guaranty”) for the full amount owed by CCC.

The Lichtbachs filed an unlawful detainer action against CCC on August 2, 2021 to regain possession or the Property based on default. At the time, CCC owed $73,792.30, which was the total of (1) $39,400.56 in rent, insurance, and late fees; and (2) $34,391.74 for a base rent deferral of a never performed roof replacement. A default judgment for possession only was entered on August 18, 2021 after CCC’s failure to appear.

Upon recovery of the Property via writ of possession on September 21, 2021, the Lichtbachs discovered physical damage from CCC’s neglect and break-ins and vandalism in April 2021. CCC never permitted the Lichtbachs to inspect the Property and the Lichtbachs estimate damage of $600,000 to the Property.

Demand for payment has failed. CCC owes future rent from September 22, 2021 to December 31, 2023 of $894,583.68, and the total amount owed is $1,632,175.82. The Lease also entitles the Lichtbachs to its attorney’s fees if it has to enforce the Lease.

Defendants owe (1) $1,632,175.82 in compensatory damages, and (2) attorney’s fees and costs.

2. Cross-Complaint

On November 22, 2021, CCC filed a Cross-Complaint against the Lichtbachs and Canopius Underwriting Agency, Inc., doing business as Canopius US Insurance, Inc. (“Canopius”), alleging causes of action for: (1) recission against the Lichtbachs; (2) fraud in the inducement against the Lichtbachs; (3) fraud via negligent misrepresentation against the Lichtbachs; (4) unfair business practices against the Lichtbachs; (5) declaratory relief against the Lichtbachs; and (6) breach of contract against Canopius. The Cross-Complaint alleges in pertinent part as follows.

On December 7, 2018, the Lichtbachs and CCC executed the Lease with an initial monthly rent of $24,200 subject to annual increases. Upon execution of the Lease, CCC paid $96,800 for two months’ rent plus a security deposit, and CCC has paid a total of $760,000. The Property was built in 1955 and in June 2017 the Lichtbachs received a report from a consulting firm that the building had asbestos. The Lichtbachs did not disclose the existence of asbestos; if they had, CCC would not have entered into the Lease.

On January 25, 2021, Canopius issued a Commercial General Liability Coverage policy insuring CCC for direct physical loss of or damage to the Property. On April 7, 2021, CCC suffered a covered loss, but Canopius refused to pay. CCC was deprived of $350,000 as a result.

On June 1, 2021, CCC’s hired environmental consultant found that the walls, hallways, floors, ceiling tiles, and pipe insulation all tested positive for asbestos. CCC served the Lichtbachs with notice of recission of the Lease, but they rejected the recission.

CCC seeks from the Lichtbachs (1) an order for recission of the Lease, (2) restitution of Lease payments, (3) attorney’s fees and costs, (4) a permanent injunction preventing the Lichtbachs from continuing the acts of unfair competition set forth in the Cross-Complaint, and (5) punitive damages. CCC seeks from Canopius (1) $350,000 in policy proceeds, and (2) attorney’s fees and costs.

3. Course of Proceedings

On October 14, 2021, the Lichtbachs served CCC and Kazanchian with the Complaint and Summons.

On November 22, 2021, CCC and Kazanchian served and filed an Answer and the Cross-Complaint.

On January 7, 2022, the Lichbachs filed an Answer to the Cross-Complaint.

On February 16, 2022, Canopius demurred to the Cross-Complaint.

On March 11, 2022, CCC filed a request for dismissal of the Cross-Complaint as to Canopius only.

On June 9, 2022, the parties stipulated to (1) retain Hon. Stephen J. Sundvold as a neutral to mediate the dispute and (2) reserve a mediation date of December 12, 2022.

B. Applicable Law

1. Attachment

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, supra, 197 Cal.App.3d at 4.

If the action is against a defendant who is a natural person, an attachment may be issued only on a commercial claim which arises out of the defendant’s conduct of a trade, business, or profession. CCP §483.010(c). Consumer transactions cannot form a basis for attachment. CCP §483.010(c); Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, (1987) 197 Cal.App.3d 1, 4 (action involving trust property was a commercial, not a consumer, transaction).

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.

The property exempt from attachment consists of (a) all property exempt from enforcement of a money judgment,[2] (b) property which is necessary for the support of a defendant who is a natural person or the family of such defendant supported in whole or in part by the defendant, (c) “earnings” as defined by CCP section 706.011, and (d) all property not subject to attachment pursuant to CCP section 487.010. CCP §487.020.

If the defendant claims that any personal property described in the application is exempt from attachment, the defendant may include that claim in the notice of opposition to the right to attach order (CCP §484.060(a)), or may file and serve a separate claim of exemption for the property (CCP §484.070(b)). If the defendant does not do either, the claim of exemption will be barred in the absence of a showing of a change in circumstances occurring after the expiration of the time for claiming exemptions. CCP §484.070(a); Bank of America, supra, 207 Cal.App.3d at 268 (plaintiff’s failure to oppose exemption claim concedes its propriety). This waiver applies only to personal property. Thus, a homestead exemption for a dwelling is not waived by failing to make a claim for exemption. Martom v. Aboyan, (1983) 148 Cal.App.3d 826, 831.

The defendant also may obtain a determination at the hearing whether real or personal property not described in the application or real property described in the application is exempt from attachment by including an exemption claim for such property in the notice of opposition/separate claim of exemption. The defendant’s failure to claim such property as exempt does not preclude the defendant from raising the issue at a later time. CCP §484.070(b). The claim of exemption shall (1) describe the property claimed to be exempt, and (2) specify the statute section supporting the claim. CCP §484.070(c). The claim of exemption shall be accompanied by an affidavit supporting any factual issues raised by the claim and points and authorities supporting any legal issues raised. CCP §484.070(d). The defendant must file and serve the claim of exemption and supporting papers not less than five court days before the date set for the hearing. CCP §484.070(e).

The Lichtbachs co-own the Property. David Decl., ¶3. On November 30, 2018, the Lichtbachs and CCC, through Kazanchian as Chief Executive Officer (“CEO”), entered into a commercial single-tenant lease for the Property (“Lease”)[3] with a five-year duration from January 2019 through December 2023. David Decl., ¶¶ 5, 7, Ex. 2.

The Lease defined “Rent” as all monetary obligations under the Lease. David Decl., ¶10, Ex. 2. Base Rent was due on the first of each month to in the amount of (1) $24,200 for every month in 2019, (2) $29,040.00 for every month in 2020, (3) $29,911 for every month in 2021, (4) $30,809 for every month in 2022, and (5) $31,733 for every month in 2023. David Decl., ¶5, Ex. 2.

Under Paragraphs 8 and 1.8 of the Lease, CCC was liable for insurance premiums above the annual Base Premium of $2,500, to be paid in monthly installments. David Decl., ¶10, fn. 1, Ex. 2.

Late charges for any payment more than five days overdue were the greater of 10% of the payment owed or $100. David Decl., ¶5, Ex. 2. Late payments would also accrue interest of 10% per year. David Decl., ¶5, Ex. 2.

CCC was required to pay $96,800 upon execution of the Lease as two months’ rent of $48,400 plus a security deposit in the same amount. David Decl., ¶5, Ex. 2. CCC was required to increase this deposit by the equivalent of two months’ payment for Insurance Premium Increases. David Decl., ¶5, Ex. 2.

In the Lease, the Lichtbachs warranted that, to the best of their knowledge, the Property’s improvements complied with all building codes and applicable laws, regulations, and ordinances at the time of construction. David Decl., ¶5, Ex. 2. They also warranted that the surface and structural elements of the building were free of material defects and hazardous levels of mold or fungi. David Decl., ¶5, Ex. 2. The Lease required the Lichtbachs to indemnify, defend, reimburse, and hold CCC harmless from and against all environmental damages that result from Hazardous Substances on the premises existing prior to the Lease. David Decl., ¶5, Ex. 2. The Lease defined “Hazardous Substances” as products, substances, or waste whose presence, use, manufacture, disposal, transportation, or release is either (1) injurious to public health, safety, or welfare or to the premises; (2) regulated or monitored by any governmental authority; or (3) a basis for liability to any governmental agency or third party under any applicable statute or common law theory. David Decl., ¶5, Ex. 2.

The Lease also provided that CCC acknowledged receipt of various environmental reports for the building, including an “ODIC Phase 1 Report” dated June 23, 2017. David Decl., ¶5, Ex. 2. CCC’s signature affirmed that it found the terms of the Lease commercially reasonable and that they effectuate the intent and purpose thereof. David Decl., ¶5, Ex. 2.

Upon default under the Lease, the Lichtbachs were entitled to terminate the Lease and recover (1) the unpaid Rent as of termination; (2) the value at the time of award of the unpaid Rent which would have been earned after termination until the time of award, less any rental loss the CCC shows could have been avoided; (3) the value at the time of award of the unpaid Rent for the balance of the term, less any rental loss the CCC shows could have been avoided; and (4) any other amount to compensate the Lichtbachs, such as charges for repossession and attorney’s fees for enforcement. David Decl., ¶10, Ex. 2.

The value of the unpaid Rent for the balance of the term is determined by discounting the amount by the Federal Reserve Discount Rate of the appliable district plus one percent. David Decl., ¶10, Ex. 2. If the Lichtbachs recover the Property by unlawful detainer, they still are entitled to recover the same damages by the same or separate action. David Decl., ¶10, Ex. 2.

The Guaranty attached to the Lease holds Kazanchian personally liable for all debts under the Lease. David Decl., ¶8, Ex. 2. Kazanchian agrees to waive all (1) notice of acceptance of the Guaranty, (2) demand of payment, (3) all right to assert or plead any statute of limitations relating to this Guaranty or the Lease, (4) any right to require the Lichtbachs to proceed against the CCC or any other person or entity liable, (5) any right to require the Lichtbachs to apply to any default any security deposit or other security it may hold under the Lease, and (6) any right to require the Lichtbachs to proceed under any other remedy it may have had prior to enforcing the Guaranty. David Decl., ¶9, Ex. 2.

In January 2020, the parties entered into Amendment No. 1 to the Lease (“Amendment”). David Decl., ¶6, Ex. 3. To compensate for roof replacement that CCC must begin by April 2020 and finish by July 2020, the Amendment deferred $4,840 of the Base Rent for the first six months of June 2020, thereby making the monthly rent $24,200 from January through June 2020. David Decl., ¶6, Ex. 3. It also deferred the $5,816.84 in insurance costs above the Base Premium for 2019. David Decl., ¶6, Ex. 3. The total deferred amount was $35,391.74, to be payable on July 1, 2020. David Decl., ¶12, Ex. 3. The Amendment also added a five-day grace period for each late rent payment, such that late charges do not accrue until the fifth of the month. David Decl., ¶11, Ex. 3.

On July 21, 2021, the Lichtbachs served notice that CCC had defaulted and owed $73,792.30 (“Notice”). David Decl., ¶13, Ex. 4. This amount included (1) $734.00 in Rent due for the month of June 2021, (2) $30,734 in Rent due for the month of July 2021, (3) $3,146.80 in late charges, (4) $4,785.76 based on daily Rent from July 6, 2021 through July 21, 2021, and (5) $34,391.74 in deferred Rent from the Amendment. David Decl., ¶12. The Notice gave three days for CCC or Kazanchian to pay the amount owed. David Decl., ¶13, Ex. 4.

Because CCC and Kazanchian did not cure the default, the Lichtbachs filed an unlawful detainer action. David Decl., ¶14, Ex. 1. On August 18, 2021, the court entered judgment for the Lichtbachs for possession of the Property after the defendants failed to appear. David Decl., ¶14, Ex. 1. The judgment forfeited the Lease. David Decl., ¶14, Ex. 1.

The total insurance premium for 2021 was $12,736.46, and the total insurance premium for 2022 was $23,219.88. David Decl., ¶¶ 17b-17c, n. 2-3, Exs. 5-6.

In addition to the $73,792.30 owed at the time of the Notice, Defendants owe (1) $63,799.84 in rent during a “lockout period” from August 1 to September 21, 2021 based on daily Base Rent and insurance premiums; (2) $8,850.42 in rent for the rest of September 2021 based on daily Base Rent and insurance premiums; (3) $92,292.12 in rent for the last three months of 2021 based on Base Rent and insurance premiums for 2021; and (4) $325,356.60 in Base Rent and insurance premiums from January through October 2021. David Decl., ¶¶ 16-17. The total debt without pre-judgment interest is $564,091.28. David Decl., ¶18.

Based on a 10% interest rate, the Lichbachs have calculated that pre-judgment interest through the date of the instant hearing as $37,261.91. Ventura Decl., ¶¶ 4-6, Ex. 7.

The Lichtbachs also expect to incur $3,500.00 in actual and estimated attorney's fees and $60.00 in costs of suit. David Decl., ¶19. The total attachment sought is $604,913.19. David Decl., ¶19.

CCC has paid $760,000 in rent. Kazanchian Decl., ¶11. The building on the Property was built in 1955. Kazanchian Decl., ¶5. When Kazanchian wanted to make improvements to the building, he hired Legacy Environmental Testing & Consulting (“Legacy”) a certified asbestos consultant, to perform a limited inspection on the parts of the building subject to demolition. Kazanchian Decl., ¶5, Ex. B. On June 2, 2021, Legacy issued a report that found that 40% of 48 the samples it analyzed from the walls, hallways, flooring, ceiling tiles, pipe insulation, and rooms had more than 1% of asbestos. Kazanchian Decl., ¶5, Ex. B. Kazanchian believes that this is a violation of safety orders by the Department of Industrial Relations, and he did not want to expose his employees, invitees, or customers to asbestos. Kazanchian Decl., ¶¶ 6-7.

At that point, Kazanchian reviewed the emails he had exchanged with the Lichtbachs before signing the Lease. Kazanchian Decl., ¶8. One email dated November 29, 2018 had six reports attached to it that Kazanchian did not read at the time, although he did acknowledge receipt. Kazanchian Decl., ¶8, Ex. C. One of these reports, the ODIC Phase 1 Report dated June 23, 2017, made one reference to asbestos. Kazanchian Decl., ¶8, Ex. D. It explained that while ODIC did not test for asbestos, it could be present because the building was constructed before 1978. Kazanchian Decl., ¶8, Ex. D.

On June 17, 2021, Kazanchian’s counsel emailed the Lichtbachs’ counsel rescinding the Lease based on concealment of the presence of asbestos. Kazanchian Decl., ¶9; Kadin Decl., ¶3, Ex. E. The email alleged that the building contains asbestos, included damaged and substantially damaged portions which are unsafe for humans, and requires remediation. Kazanchian Decl., ¶9; Kadin Decl., ¶3, Ex. E. The Lichtbachs’ counsel responded with a blanket rejection of all claims in the email and demanded payment of rent by either CCC or Kazanchian as its guarantor. Kazanchian Decl., ¶9; Kadin Decl., ¶3, Ex. E.

Kazanchian tried to negotiate with the Lichtbachs and filed a lawsuit, but the Lichtbachs responded that they would not negotiate until Kazanchian dismissed the lawsuit. Kazanchian Decl., ¶10. He did so, but the Lichtbachs secretly filed an unlawful detainer action. Kazanchian Decl., ¶10. Because CCC did not want to stay in an asbestos-filled building, CCC did not contest the unlawful detainer. Kazanchian Decl., ¶10. Instead, Kazanchian filed the Cross-Complaint in this instant case seeking rescission and restitution based on fraud or material breach of the Lease by the Lichtbachs’ failure to disclose the asbestos, declaratory relief, and other claims for damages. Kazanchian Decl., ¶10.

Plaintiffs apply for right to attach orders against Defendants Commerce and Kazanchian in the amount of $604,913.19, including $60 in costs and $3,500 in attorney’s fees.[4]

Plaintiffs’ claim for $604,913.19 against CCC is based on the Lease, and the claim for the same amount against Kazanchian is based on the Guaranty included in the Lease. David Decl., ¶¶ 5, 8, Ex. 2. The Lichtbachs have a claim on which attachment can be based against each Defendant.

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 Lichtbachs assert that the unpaid balance is $564,091.28 before interest and $37,261.91 in interest. David Decl., ¶¶ 16-18; Ventura Decl., ¶¶ 4-6, Ex. 7. The Lease provides the Base Rent of (1) $29,911 for every month in 2021 and (2) $30,809 for every month in 2022. David Decl., ¶5, Ex. 2.

The Lease adds to each month’s rent the average monthly installment of the insurance premiums for that year, less $2,500 for that year. David Decl., ¶10, n. 1, Ex. 2. The Lichtbachs present evidence that the premiums for 2021 and 2022 were $12,736.46 and $23,219. After deducting $2,500 from each and dividing by 12 months, this adds $853.04 and $1,726.58, respectively, to the monthly rent for those years. David Decl., ¶10, n. 1, Ex. 2.

The Lichtbachs have shown that Defendants owed $73,792.30 before the unlawful detainer action on August 2, 2021, and that Defendants have not paid rent since. As a result, they owe pre-interest debt of $564,091.28. David Decl., ¶18. Because the writ of attachment only seeks damages to date, the discount rate does not apply to the damages through the hearing date. David Decl., ¶10, Ex. 2.

Pre-judgment interest at 10% interest applies to this debt. David Decl., ¶5, Ex. 2. Plaintiffs have calculated the interest totaling $37,261.91. Ventura Decl., ¶¶ 4-6, Ex. 7.

The Lichtbachs further claim that they expect to incur $3,500 in actual and estimated attorney's fees and $60.00 in costs of suit. David Decl., ¶19. Neither estimate is supported by an attorney declaration that the estimates are reasonable. These costs are therefore disallowed.

Plaintiffs provide evidence that CCC signed the Lease for the Property and that Kazanchian signed the Guaranty. David Decl., ¶¶ 5, 8, Ex. 2. In the event of default, the Lease allowed Plaintiffs to collect all past and future rent owed even after repossession of the Property. David Decl., ¶10, Ex. 2. Plaintiffs have shown that CCC defaulted and that Kazanchian did not pay CCC’s debt under the Guaranty. David Decl., ¶13, Ex. 4. At issue is whether the Lichtbachs performed their obligations under the Lease or otherwise are not entitled to recover.

Every contract needs (1) parties capable of contracting; (2) consent; (3) lawful object; and (4) sufficient cause or consideration. CCP §1055. Defendants assert that because the Property coontained asbestos, the Lichtbachs failed to provide sufficient consideration for a contract. Had they known of the asbestos, CCC would not have entered into the Lease. Kazanchian Decl., ¶10; Opp. at 8. Not so. Plaintiffs provided the Property, which is sufficient consideration for the Lease.

Defendants provide evidence from a June 2, 2021 professional analysis by Legacy Environmental and Testing (“Legacy”) that the building contains asbestos, which Kazanchian believes is a violation of regulations by the Department of Industrial Relations. Kazanchian Decl., ¶¶ 5-7, Ex. B. Defendants allege that this violates Lease provisions ¶2.2 (building shall be free of material defects), ¶2.3 (Lessor warrants that the building complies with building codes and laws in effect at the time of improvement), and ¶6.2 (Lessor shall indemnify and hold CCC harmless from any Hazardous Substance existing on the premises prior to CCC’s occupancy). Opp. at 4-5.

Defendants note that the Lichtbachs knew about the Odic Phase I Report and should have disclosed it. They could not bury it in one sentence in a volume of documents emailed to Kazanchian. This is fraud by active concealment. Opp. at 6. Moreover, Plaintiffs did not fully perform their obligations under the Lease because they were required to deliver the premises without material defect (¶2.2) and were responsible for investigation and remediation of the asbestos (¶¶ 2.3, 6.2(f)). Opp. at 7.

Defendants’ argument is insufficiently supported. In Lease paragraph 2.3, the Lichtbachs only warranted that, to the best of their knowledge, the premises were free from material defect. It is not at all clear that the existence of asbestos on a property is a material defect. Thousands of buildings in Los Angeles contain asbestos (including this courthouse), and asbestos is of no concern unless it is disturbed.

Even if the existence of asbestos is a defect, Defendants have not shown that the Lichtbachs knew about the condition. The ODIC Phase 1 Report said that the Property possibly contains asbestos because it was built before 1978. Kazanchian Decl., ¶8, Ex. D, p. D-20. There is no evidence that the Lichtbachs knew that the building contains asbestos, only that it might. Although Defendants contend that the Lichtbachs hid this report, the Lease Addendum paragraph 60 expressly refers to the ODIC Phase 1 Report, CCC’s acknowledgement of it, and that CCC was encouraged to seek outside experts with respect to its disclosures. Kazanchian Decl., ¶8, Ex. D.

Lease paragraph 2.3 does not aid Defendants because it merely provides that the building complied with all codes and laws when constructed. There is no evidence that a building constructed in 1955 could not contain asbestos. In fact, the contrary is true.

Nor does paragraph 6.2 aid Defendants. It obligates the Lichtbachs to indemnify Defendants from environmental damages, including the cost of remediation, for any Hazardous Substances in the building prior to the Lease. The court need not assess the interplay between this obligation and paragraph 60 of the Addendum because Defendants never sought to remediate the premises and seek indemnification from the Lichtbachs. Instead, they walked away.

CCC asserts that it can rescind its obligations under the Lease based on the Lichtbachs’ fraud by concealment or negligent misrepresentation. Opp. at 8.

Fraud includes (1) the suppression of that which is true, by one having knowledge or belief of the fact (Civ. Code §1572(3)); or (2) a promise made without any intention of performing it (Civ. Code §1572(4)), when committed by or with connivance of a party to the contract with intent to deceive another party thereto or to induce him to enter into the contract. The Lease disclaims any representations as to the legal sufficiency or effect of the Lease or any transaction to which it relates. Reply at 4; David Decl., ¶5, Ex. 2. However, a seller cannot escape liability for its own fraud or false representations by the insertion of provisions to that effect. Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Development Corp., 32 Cal. App. 4th 985, 993.

In an action for negligent misrepresentation, a plaintiff must prove: (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage. Ragland v. U.S. Bank National Assn., (2012) 209 Cal.App.4th 182, 196.

At issue is whether the Lichtbachs (1) knew that the building had asbestos for purposes of fraud by concealment, or (2) had no reasonable ground to believe that the building did not have asbestos for purposes of negligent misrepresentation.

As discussed above, there is no evidence that the Lichtbachs knew that the building had asbestos; the ODIC Phase 1 report shows only that the building possibly has asbestos because it was constructed before 1978. Kazanchian Decl., ¶8, Ex. D, p. D-20. While Defendants contend that the Lichbachs buried the ODIC Phase 1 report in a November 29, 2018 email attachment of six reports, maps, and surveys (Kazanchian Decl., ¶8), they ignore the Lease Addendum which highlighted this report and encouraged Defendants to hire its own experts. Hence, Defendants knew as much about the Property as the Lichbachs did.

The Lichtbachs also argue that there is reason to doubt Defendants’ contentions that asbestos interfered with their enjoyment of the Property. Reply at 5. The parties entered into the Lease on November 30, 2018 and the five-year Lease term began on January 1, 2019. CCC stopped paying rent beginning June 1, 2021. At that time, Defendants retained Legacy for its June 2, 2021 report on asbestos, claiming that they did so because Kazanchian was “starting to make tenant improvements” at the premises. Kazanchian Decl., ¶5. Defendants fail to explain why they were making tenant improvements 30 months into the Lease, and what those improvements were, and the Lichtbachs speculate that Defendants hired Legacy to “discover” the asbestos they knew possibly was present in order to get out of the Lease. Reply at 5.

Whether or not the Lichtbachs are correct, Defendants cannot make an asbestos-based defense without showing what improvements they wanted to make and how the presence of asbestos interfered with it. As stated, the presence of asbestos is not an inherent defect and it need not be remediated unless it will be disturbed. The mere fact that the Legacy report states that it sampled only “suspect ACM/ACCM scheduled to be disturbed for renovation or demolition” is insufficient to show what CCC planned to do.

Defendants have failed to support their claim of rescission through fraud by concealment or negligent representation.

Defendants assert that the amount of attachment should be reduced based on the Lichtbachs’ failure to mitigate and through offset of their cross-claims for damages. Opp. at 8. They spent $760,000 on a Lease that they would not have entered had they known the truth. Kazanchian Decl., ¶11. Any right to attach order should therefore be reduced by the $760,000 CCC paid under the Lease. Opp. at 10; Kazanchian Decl., ¶11.

The attachable 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. Defendants fail to make a prima facie showing of a claim of offset.

As for failure to mitigate, Defendants contend that the Lichtbachs failed to mitigate their damages by renting the Property after acquiring possession in the unlawful detainer action. Opp. at 9; David Decl., ¶14, Ex. 1.

As the Lichtbachs argue, failure to mitigate is an affirmative defense for which the burden rests with the Defendants. Reply at 5. The Lease also provides that damages are reduced by any rental loss the CCC shows could have been avoided. David Decl., ¶10, Ex. 2. Provisions that shift this burden to the lessee are enforceable. Millikan v. American Spectrum Real Estate Services California, Inc. (2004), 117 Cal. App. 4th 1094, 1102. Defendants provide no evidence that any third party was interested in renting the Property or expert testimony that it could easily have been rented.

Plaintiffs have demonstrated a probability of success on their claim and Defendants have failed to meet their burden for offset and mitigation.

If the action is against a defendant who is a natural person, an attachment may be issued only on a commercial claim which arises out of the defendant’s conduct of a trade, business, or profession. CCP §483.010(c). Consumer transactions cannot form a basis for attachment. CCP §483.010(c); Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, (“Kadison”) (1987) 197 Cal.App.3d 1, 4 (action involving trust property was a commercial, not a consumer, transaction).

Kazanchian is listed on the Lease as CCC’s CEO. David Decl., ¶¶ 7-8, Ex. 2. His liability arose from his course of business.

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. Ibid. 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. Ibid.

For Kazanchian, the application asks for attachment of “all property specified under CCP section 487.010(c)(d).” While it is preferrable that the application expressly set forth the categories of property sought, the incorporation of statutory property descriptions suffices.

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). The Lichtbachs seeks attachment for breach of both contracts, a proper purpose.

The property exempt from attachment consists of (a) all property exempt from enforcement of a money judgment,[5] (b) property which is necessary for the support of a defendant who is a natural person or the family of such defendant supported in whole or in part by the defendant, (c) “earnings” as defined by CCP section 706.011, and (d) all property not subject to attachment pursuant to CCP section 487.010. CCP §487.020.

Kazanchian seeks exemptions under CCP section 487.020(b) and (c) for (1) amounts necessary to support his family, including his primary residence, and (2) wages and earnings. Opp. at 2.

A “homestead” is the principal dwelling (1) in which the judgment debtor or the judgment debtor’s spouse resided on the date the judgment creditor’s lien attached to the dwelling, and (2) in which the judgment debtor or the judgment debtor’s spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. CCP §704.710(c). The amount of the homestead exemption is the greater of (1) the countywide median sale price for a single-family home in the calendar year prior to the current calendar year, not to exceed $600,000; or (2) $300,000. CCP §704.730(a).

Kazanchian contends that he is entitled to an exemption for amounts necessary for the support his family, as well as his primary residence. Opp. at 2. While he essentially is seeking a homestead exemption, he does not provide evidence that he has a qualified homestead, its location, or its value. The homestead exemption is denied.

Kazanchian contends that he is entitled to an exemption for amounts necessary for the support his family. Opp. at 2.

The property exempt from attachment includes property which is necessary for the support of a defendant who is a natural person or the family of such defendant supported in whole or in part by the defendant. CCP §487.020(b). Kazanchian fails to provide any evidence of what this property is, why it is necessary for his family’s support, or a financial statement (CCP §703.530) Kazanchian has not met his burden of proof for exemption.

Earnings – defined as compensation payable by an employer to an employee for personal services performed by such employee, whether denominated as wages, salary, commission, bonus, or otherwise – are exempt from attachment. CCP §§ 487.020(c), 706.011(b).

Kazanchian claims an exemption for wages and earning. Opp. at 2. Kazanchian fails to provide any evidence of his wages and earnings. His non-specific request for an exemption is denied.

Plaintiffs’ applications for right to attach orders are granted for each Defendant in the amount of $601,353.19. Plaintiffs have not filed proposed right to attach orders for each Defendant and are ordered to do so within two court days or they will be deemed waived. No writ shall issue for either Defendant until Plaintiffs file a $10,000 undertaking for that Defendant.

[1] Plaintiffs failed to file a courtesy copy of their reply brief in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. Their counsel is admonished to provide courtesy copies in all future filings.

[2] The property exempt from enforcement of a money judgment is listed in CCP section 704.010 et seq.

[3] The pertinent provisions of the Lease cited by either side will be set forth as part of the Licthbachs’ evidence.

[4] Plaintiffs filed and served a single notice and application for both Defendants; a separate notice and application should have been made for each Defendant.

[5] The property exempt from enforcement of a money judgment is listed in CCP section 704.010 et seq.