Judge James C. Chalfant, Case 21STCV43634 2022-07-28 Tentative Ruling

SLC1, LLC v. Case Farms Collective et al., 21STCV43634

Tentative decision on application for writ of possession: denied

Plaintiff SLC1, LLC (“SLC1”) seeks a writ of possession against Defendants Case Farms Collective (“Case Farms”), Waleed Mona (“Mona”), and Anthony Thomas (“Thomas”) to recover (1) a TVO-5 Double Up Package, (2) an HBX Industrial A1c 5 Package, (3) a Commercial Distillation Unit, and (4) a G27-220 (collectively “Equipment”).

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

Plaintiff SLC1 filed the Complaint on November 19, 2021, alleging causes of action for (1) breach of written agreement, (2) claim and delivery, and (3) breach of continuing guarantee. The Complaint alleges as follows.

On February 7, 2019, Case Farms through its manager Defendant Mona, entered into an Equipment Finance Agreement for Existing Equipment (“Agreement”), for purchase of the Equipment. Pursuant to the Agreement, Case Farms granted SLC1 a security interest in the Equipment as evidenced by a UCC Financing Statement. SLC1 also retained the right to repossession of the Equipment and to demand the entire remaining balance owed upon default.

In order to induce SLC1 to enter into the Agreement, on February 19, 2019, Defendants Mona, Thomas, and Mass2Media LLC (“Mass2Media”) (collectively “Guarantors”) each executed a Personal Guaranty for the Agreement.

On August 3, 2020, the parties entered into a Forbearance Agreement and Addendum to Master Equipment Lease Agreement.

On October 7, 2020, SLC1 served Case Farms, care of Mona, with a Notice of Default demanding payment of the remaining balance owed under the Agreement and the return of all Equipment.

On October 26, 2020. the parties entered into a second Forbearance Agreement and Addendum to Master Equipment, requiring Case Farms to pay $13,500 on October 26, 2020, $5,495 the following day, $50,000 on November 15, 2020, $18,995 per month starting from November 15, 2020, and two final payments of $21,088.87 each on June 15 and July 15, 2022.

Case Farms defaulted under the second Forbearance Agreement and now owes $312,708.33 and $443,109.28 if it does not surrender the Equipment. This debt also applies to the Guarantors.

SLC1 believes the Equipment is located at 724 W. Cowles St., Long Beach, CA 90813. SLC1 seeks possession of the Equipment, monetary damages from breach of the Agreement and Guarantys, and attorney’s fees and costs.

On December 10, 2021, SLC1 served Defendant Case Farms with the Complaint and Summons.

On December 13, 2021, SLC1 served Defendant Mass2Media by substitute service with the Complaint and Summons. Service was effective on December 23, 2021.

On December 15, 2021, SLC1 served Defendant Mona by substitute service with the Complaint and Summons. Service was effective on December 25, 2021.

On February 17, 2022, Defendant Extraction NewCo, LLC (“NewCo”), erroneously sued as Mass2Media, filed an Answer and a Cross-Complaint. On February 24, 2022, NewCo served SLC1 with the Cross-Complaint by mail.

On March 14, 2022, SLC1 moved to strike Case Farms, Mona, and Thomas’s unverified Answer and to enter their default. The court granted the motion to strike on July 13, 2022 and gave Defendants ten days’ leave to file a verified Answer.

On July 1, 2022, SLC1 served Defendants Case Farms, Mona, and Thomas with the instant application for writ of possession.

On July 25, 2022, Defendants Case Farms, Mona, and Thomas filed a verified Answer.

A motion to be relieved as counsel for Defendants Case Farms, Mona, and Thomas is set for hearing in the I/C court on August 16, 2022.

A writ of possession is issued as a provisional remedy in a cause of action for claim and delivery, also known as replevin. See Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1288. As a provisional remedy, the right to possession is only temporary, and title and the right to possess are determined in the final judgment.

A writ of possession is available in any pending action. It also is available where an action has been stayed pending arbitration, so long as the arbitration award may be ineffectual without provisional relief. See CCP §1281.7.

Upon the filing of the complaint or at any time thereafter, a plaintiff may apply for an order for a writ of possession. Unlike attachment, where Judicial Council forms are optional, the parties must use the mandatory approved Judicial Council forms in a claim and delivery proceeding. (Judicial Council Forms CD-100 et seq.).

A plaintiff must make a written application for a writ of possession. CCP §512.010(a), (b); (Mandatory Form CD-100); CCP §512.010(a). A verified complaint alone is insufficient. 6 Witkin, California Procedure, (5th ed. 2008) §255, p.203. As a proceeding “on application before trial for an order,” a writ of possession qualifies as a Law and Motion. Cal. Rules of Court, Rule 3.1103(a). As such, it must also be accompanied by a memorandum in support of the motion. Cal. Rules of Court, Rule 3.1112(a)(3), 3.1113(a). The application may also be supported by declarations and/or a verified complaint. CCP §516.030. The declarations or complaint must set forth admissible evidence except where expressly permitted to be shown on information and belief. Id.

The application must be executed 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 plaintiff's claim is based on a written instrument, a copy of it must be attached; (2) A showing that the property is wrongfully detained by the defendant, how the defendant came into possession of it, and, the reasons for the detention based on the plaintiff’s best knowledge, information, and belief; (3) A specific description of the property and statement of its value; (4) The location of the property according to the plaintiff’s best knowledge, information, and belief. If the property, or some part of it, is within a private place which may have to be entered to take possession, a showing of probable cause to believe that the property is located there; and (5) A statement that the property has not been taken for (a) a tax, assessment, or fine, pursuant to a statute, or (b) an execution against the plaintiff’s property. Alternatively, a statement that if the property was seized for one of these purposes, it is by statute exempt from such seizure. CCP §512.010(b).

Before noticing a hearing, the plaintiff must serve the defendant with all of the following: (1) A copy of the summons and complaint; (2) A Notice of Application and Hearing; and (3) A copy of the application and any supporting declaration. CCP §512.030(a). If the defendant has not appeared in the action, service must be made in the same manner as service of summons and complaint. CCP §512.030(b).

Each party shall file with the court and serve upon the other party any declarations and points and authorities intended to be relied upon at the hearing. CCP §512.050. At the hearing, the court decides the merits of the application based on the pleadings and declarations. Id. Upon a showing of good cause, the court may receive and consider additional evidence and authority presented at the hearing, or may continue the hearing for the production of such additional evidence, oral or documentary, or the filing of other affidavits or points and authorities. Id.

The court may order issuance of a writ of possession if both of the following are found: (1) The plaintiff has established the probable validity of the plaintiff’s claim to possession of the property; and (2) The undertaking requirements of CCP section 515.010 are satisfied. CCP §512.060(a). “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 §511.090. This requires that the plaintiff establish a prima facie case; the writ shall not issue if the defendant shows a reasonable probability of a successful defense to the claim and delivery cause of action. Witkin, California Procedure, (5th ed. 2008) §261, p.208. A defendant’s claim of defect in the property is not a defense to the plaintiff’s right to possess it. RCA Service Co. v. Superior Court, (1982) 137 Cal.App.3d 1, 3.

No writ directing the levying officer to enter a private place to take possession of any property may be issued unless the plaintiff has established that there is probable cause to believe that the property is located there. CCP §512.060(b).

The successful plaintiff may obtain a preliminary injunction containing the same provisions as a TRO that remains in effect until the property is seized by the levying officer.[1] CCP §513.010(c).

The court may also issue a “turnover order” directing the defendant to transfer possession of the property to the plaintiff (See Mandatory Form CD-120). The order must notify the defendant that failure to comply may subject him or her to contempt of court. CCP §512.070. The turnover remedy is not issued in lieu of a writ, but in conjunction with it to provide the plaintiff with a less expensive means of obtaining possession. See Edwards v Superior Court, (1991) 230 Cal.App.3d 173, 178.

Generally, the court cannot issue an order for a writ of possession until the plaintiff has filed an undertaking with the court (Mandatory Form CD-140 for personal sureties). CCP §515.010(a). The undertaking shall provide that the sureties are bound to the defendant for the return of the property to the defendant, if return of the property is ordered, and for the payment to the defendant of any sum recovered against the plaintiff. Id. The undertaking shall be in an amount not less than twice the value of the defendant's interest in the property or in a greater amount. Id. The value of the defendant's interest in the property is determined by the market value of the property less the amount due and owing on any conditional sales contract or security agreement and all liens and encumbrances on the property, and any other factors necessary to determine the defendant’s interest in the property. Id.

However, where the defendant has no interest in the property, the court must waive the requirement of the plaintiff’s undertaking and include in the order for issuance of the writ the amount of the defendant’s undertaking sufficient to satisfy the requirements of CCP section 515.020(b). CCP §515.010(b).

Plaintiff SLC1 seeks a writ of possession to recover the Equipment from Defendant Case Farms because it defaulted on the Agreement. Plaintiff makes four errors in its application.

First and foremost, an application for a writ of possession is a law and motion matter. CRC 3.1103(a)(2). All law and motion matters require a memorandum of points and authorities detailing the basis for the motion. CRC 3.1113(a). The absence of a memorandum may be construed as an admission that the motion is not meritorious. CRC 3.1113(a).

Plaintiff failed to file a supporting memorandum of points and authorities with the application.

Second, Plaintiff provides no admissible evidence. The supporting declaration only claims that the contents of the Compaint are true. Selko Decl., ¶1. The declarant is the principal of SLC1, and his declaration is essentially a verification of the Complaint. SLC1 is a corporation and its pleadings cannot be considered as an affidavit or declaration to establish the facts therein alleged. CCP §446(a).

Third, Plaintiff lumps all three Defendants in a single notice, application, and proposed order where each Defendant is entitled to a separate documents.

Finally, although the Complaint’s attached Statement of Account (Ex. 5)attached is an insufficient payment history to determine how much Defendants owe and whether an undertaking would be required.

[1] If the court denies the plaintiff’s application for a writ of possession, any TRO must be dissolved. CCP §513.010(c).