Judge James C. Chalfant, Case 22STCP21044 2023-02-28 Tentative Ruling

Plaintiff 7007 Romaine-Orange Square (LA), LLC (“Landlord”) applies for right to attach orders against Defendants Common Grounds La Brea, LLC ( “Tenant”) and Common Grounds Holdings, LLC (sometimes “New Guarantor”) in the amount of $1,062,639.54.

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

Plaintiff Landlord filed the Complaint on June 27, 2022 alleging (1) breach of lease and (2) breach of guaranty. The Complaint alleges in pertinent part as follows.

On March 27, 2018, Tenant entered into a lease for seven years and four months (“Lease”). Terms of the Lease included payment of Base Rent and Common Area Maintenance (“CAM”) expenses. Section 11.2 defined default as failure to pay Base Rent or other monthly payment under the lease (collectively, “Rent”) within five days of written notice from Landlord. In the event of default, section 12.2 permitted the Lease to continue until Landlord terminated Tenant’s possession. Landlord could meanwhile enforce all rights and remedies under the Lease. Under Article 38, the prevailing party in any litigation may recover attorney’s fees.

Incorporated into the Lease, on March 16, 2018, Pacifica Enterprises, Inc. (“Pacifica”) entered into a guaranty (“Guaranty”) whereby Pacifica guaranteed all Tenant obligations under the Lease.

On February 14, 2019, Landlord and Tenant entered into the First Amendment to the Lease (“First Amendment”). On August 11, 2021, Landlord and Tenant entered into the Second Amendment to the Lease (“Second Amendment”). The Second Amendment included a new guaranty (“New Guaranty”) that released Pacifica as Guarantor and named Common Grounds Holdings, LLC as the New Guarantor. Section 16 of the New Guaranty entitled the prevailing party in any litigation to recover attorney’s fees.

The Second Amendment defined the Repayment Amount as $512,663.20. The Second Amendment provided that Tenant would repay the Repayment Amount in equal monthly installments without interest over the Repayment Period, with the last payment equal to the remaining balance. Landlord could accelerate the Repayment Amount if the Tenant breached the Lease and failed to cure within the express cure period. Section 2 provided that Landlord agreed to defer the monthly Base Rent payments and parking charges (“Deferral Amount”) and could accelerate the Deferral Amount if the Tenant breached the Lease and failed to cure.

Tenant defaulted on the Lease for failure to pay Rent. On May 10, 2022, Landlord sent a demand letter to Tenant and New Guarantor. Neither responded. Landlord is filing an unlawful detainer action (“UD Action”) against Tenant based on the unpaid Rent.

The Complaint seeks (1) $512,663.20 in overdue Rent from Tenant, plus unpaid Rent as it becomes due and interest at the maximum rate; (2) $937,819.42 in overdue Rent from New Guarantor, plus unpaid Rent as it becomes due and interest at the maximum rate; and (3) attorney’s fees and costs.

2. Course of Proceedings

On July 7, 2022, Landlord served New Guarantor with the Complaint and Summons by substitute service, effective July 17, 2022.

On July 8, 2022, Landlord served Tenant with the Complaint and Summons by substitute service, effective July 18, 2022.

On September 30, 2022, Defendants filed their Answer.

On January 4, 2023, the case was reassigned to Department 74 (Hon. Colin P. Leis).

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, supra, 197 Cal.App.3d at 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); see also CCP §483.010(b) (“an attachment may not be issued on a claim which is secured by any interest in real property arising from agreement, statute, or other rule of law…However, an attachment may be issued where the claim was originally so secured but, without any act of the plaintiff or the person to whom the security was given, the security has become valueless or has decreased in value to less than the amount then owing on the claim). 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 March 27, 2018, Landlord’s predecessor-in-interest, 7007 W. Romaine (LA), LLC (“Prior Landlord”) and Tenant entered into the Lease for a seven-year and four-month term. Jackson Decl., ¶2, Ex. A. The rented premises consist of 17,241 rentable square feet (“Premises”). Jackson Decl., ¶2, Ex. A.

Although the Effective Date of the Lease was March 16, 2018, this was not the Rent Commencement Date. Jackson Decl., ¶2, Ex. A. Section 1.6 of the Lease defines the Rent Commencement Date as the earlier of (1) three months after the later of the Commencement Date and the date Tenant has all government approvals necessary for the Permitted Uses and Tenant Improvements; and (2) the date the Tenant opens its business to the public. Jackson Decl., ¶2, Ex. A. The Commencement Date in turn is the date that Prior Landlord substantially completes the required work and delivered Premises to the Tenant, with an anticipated date of July 1, 2018. Jackson Decl., ¶2, Ex. A. The first Lease Month is from the Rent Commencement Date to the end of that month, and the Lease Year is a period of twelve Lease Months. Jackson Decl., ¶2, Ex. A.

Per section 1.7, the Base Rent due on the first day of each calendar month is (1) $51,723.00 per month for the first year; (2) $53,274.69 per month for the second; (3) $54,872.93 per month for the third; (4) $56,519.12 for the fourth year; and (5) $58,214.69 per month for the fifth year, with additional increases thereafter. Jackson Decl., ¶2, Ex. A.

Section 3.3 of the Lease requires Tenant to pay CAM expenses as part of Rent. Jackson Decl., ¶2, Ex. A. At the end of each calendar year, Prior Landlord will deliver to Tenant an estimate of Tenant's Proportionate Share of CAM expenses (“CAM Estimate”) for the next calendar year, along with the total Tenant paid in CAM expenses the year before. Jackson Decl., ¶2, Ex. A. Tenant will then pay a twelfth of the CAM Estimate every month the next year. Jackson Decl., ¶2, Ex. A. Once per calendar year, Prior Landlord has the right to revise the CAM Estimate, after which Tenant will CAM expenses based on the revised estimate. Jackson Decl., ¶2, Ex. A.

Within 120 days of the end of each calendar year, Prior Landlord will deliver a statement of the actual CAM expenses and Tenant’s share thereof (“Annual Statement”). Jackson Decl., ¶2, Ex. A. Tenant will pay Prior Landlord any underpayment within 60 days. Jackson Decl., ¶2, Ex. A. If Tenant overpays, Prior Landlord will either refund the overpayment or credit it against the next year’s Rent. Jackson Decl., ¶2, Ex. A.

Section 11.2 of the Lease defines Default to include Tenant’s failure to pay Rent within five days of written notice from Prior Landlord. Jackson Decl., ¶2, Ex. A. In the event of Default, section 12 allows Prior Landlord to terminate the Lease and, pursuant to applicable law, enter the Premises and remove Tenant without prejudice to any remedies available under the Lease or the law. Jackson Decl., ¶2, Ex. A. Alternatively, section 12.2 allows Prior Landlord to continue the Lease for as long as it does not terminate Tenant’s right to possession and enforce rights thereunder, including the right to recover Rent as it becomes due. Jackson Decl., ¶2, Ex. A.

Per section 4.5, all Tenant alterations to the Premises shall remain after termination of the Lease and become Prior Landlord property without compensation to Tenant. Jackson Decl., ¶2, Ex. A. Should Prior Landlord so choose, Tenant shall remove any such alterations and pay to repair any damage that causes. Jackson Decl., ¶2, Ex. A. Section 16.2 also allows Prior Landlord to retain or dispose of Tenant alterations or personal property that Tenant does not remove from the premises. Jackson Decl., ¶2, Ex. A. Prior Landlord retains title to any such alterations that it keeps, and Tenant waives all claims for damages to Tenant from Prior Landlord’s decision to retain or dispose of them. Jackson Decl., ¶2, Ex. A. The exception is that Tenants will retain and remove any trade fixtures, equipment, furniture, and intellectual property related to the “Common Grounds” tradename. Jackson Decl., ¶2, Ex. A.

Section 38 of the Lease provides that the court shall award legal expenses to the prevailing party in any litigation arising from the Lease. Jackson Decl., ¶2, Ex. A.

Section 7.9 also gives Prior Landlord the right to sell, transfer, hypothecate, or assign any or all of its rights and obligations under this Lease, provided that it does not disturb Tenant’s rights thereunder or use of the Premises. Jackson Decl., ¶2, Ex. A.

The Lease also includes the Guaranty, signed March 16, 2018, whereby Pacifica guaranteed all Tenant obligations under the Lease. Jackson Decl., ¶3, Ex. B. Prior Landlord does not release Pacifica from the Guaranty through failure to enforce any of the rights or remedies under the Lease. Jackson Decl., ¶3, Ex. B.

On February 14, 2019, Prior Landlord and Tenant entered into the First Amendment. Jackson Decl., ¶4, Ex. C.

On August 11, 2021, Prior Landlord and Tenant entered into the Second Amendment in light of the problems that stemmed from the COVID-19 Coronavirus pandemic (“Pandemic”). Jackson Decl., ¶5, Ex. D. Prior Landlord applied the $103,466 security deposit to the then overdue rent, provided that Tenant pay it by January 1, 2023. Jackson Decl., ¶5, Ex. D. After application the security deposit, Section I of the Second Amendment identified $183,425.62 as the Remaining Overdue Rent Amount. Jackson Decl., ¶5, Ex. D.

Section K defined the Deferral Amount as $327,237.58, based on Base Rent that would accrue under the Lease between May 1, 2021 and October 31, 2021 (“Deferral Period”). Jackson Decl., ¶5, Ex. D. Section L combined the Deferral Amount with the Remaining Overdue Rent Amount to calculate a total Repayment Amount of $512,663.20. Jackson Decl., ¶5, Ex. D.

Section 2 provides that if the Tenant breached the Lease and did not cure within an expressly provided cure period, the Deferred Amount would become immediately due and payable and Prior Landlord would have no obligation to defer the monthly Base Rent for the rest of the Deferral Period. Jackson Decl., ¶5, Ex. D. Tenant must also still pay (1) CAM expenses and other additional rent during the Deferral Period; and (2) Base Rent, CAM expenses, and other additional rent from the first day after the Deferral Period. Jackson Decl., ¶5, Ex. D. Prior Landlord would also apply any overpayment during the Deferral Period to the unpaid balance of the Repayment Amount. Jackson Decl., ¶5, Ex. D.

Section 3 provides that Tenant will pay the Repayment Amount without interest in equal monthly installments over the Repayment Period from January 1, 2023 through June 30, 2026. Jackson Decl., ¶5, Ex. D. The last payment would be equal to whatever balance of the Repayment Amount remained on the last day of the Repayment Period. Jackson Decl., ¶5, Ex. D. If Tenant breached the Lease and did not cure within an expressly provided cure period, the then-current balance of the Repayment Amount would become due and payable. Jackson Decl., ¶5, Ex. D.

The Second Amendment included a New Guaranty naming Holdings as New Guarantor. Jackson Decl., ¶6, Ex. E. Per section B.1, the Guaranty Amount would be (1) $875,000; (2) $437,500 on the last day of the third Lease Year; (3) $218,750 on the last day of the fourth Lease Year; and (4) eliminated on the last day of the fifth lease year. Jackson Decl., ¶6, Ex. E. Notwithstanding, the Guaranty Amount would never be less than the then-outstanding balance of the Repayment Amount. Jackson Decl., ¶6, Ex. E.

Under section 12, New Guarantor would be liable to Prior Landlord for any costs of collection of amounts owed under the Lease and Second Amendment. Jackson Decl., ¶6, Ex. E. Per section 16 of the New Guaranty, the prevailing party is entitled to reimbursement for costs and expenses in any action brought to enforce the New Guaranty. Jackson Decl., ¶6, Ex. E.

On March 11, 2022, Prior Landlord had a Grant Deed recorded that conveyed to Landlord the property underlying the Premises. Jackson Decl., ¶7, Ex. F. Tenant vacated the Premises on September 2022. Jackson Decl., ¶8.

Tenant has defaulted on payments of Rent from October 2021 to August 2022. Jackson Decl., ¶9. On May 10, 2022, Landlord wrote a demand letter to Tenant for the Rent then due. Goodkin Decl., ¶2, Ex. A. At the time, the Rent due included: (1) Base Rent of $292,694.58; (2) CAM expenses of $92,924.07; and (3) the full $512,663.20 balance of the Repayment Amount. Goodkin Decl., ¶2, Ex. A. This totaled $883,516.52. Goodkin Decl., ¶2, Ex. A. Neither this nor any later written demand from Landlord prompted the Tenant to remedy the default. Jackson Decl., ¶10. Landlord has performed all obligations under the Lease. Jackson Decl., ¶¶ 11-12.

On June 28, 2022, Landlord filed a UD Action against Tenant based on a Three-Day Notice to Pay or Quit Rent dated June 21, 2022. Goodkin Decl., ¶5. The parties settled the UD Action, and Tenant stipulated to vacate the Premises in September 2022. Goodkin Decl., ¶5.

Tenant did not pay Base Rent from January 2022 through August 2022. Jackson Decl., ¶17, Ex. G. Based on the Base Rent schedule in the Lease and a Rent Commencement date of February 25, 2019, the Base Rent is: (1) $51,723.00 per month from February 2019 to February 2020; (2) $53,274.69 per month from March 2020 to February 2021; (3) $54,872.93 per month from March 2021 to February 2022; and (4) $56,519.12 per month from March 2022 to February 2023. Jackson Decl., ¶¶ 2, 15-16, Ex. A. Based on these calculations and Landlord’s summarized ledger of Tenant’s debt (“Summary”), the unpaid Base Rent from January to August 2022 is $440,380.95. Jackson Decl., ¶¶ 13, 17, Ex. G.

The CAM Estimate for October 2021 was in excess of $366.61. Jackson Decl., ¶20, Ex. G. The CAM Estimate from January 2022 to April 2022 was $13,874.95 per month. Jackson Decl., ¶20, Ex. G. The CAM Estimate from May 2022 to August 2022 was $9,674.37 per month. Jackson Decl., ¶20, Ex. G. Reconciliation for 2022 was not to occur until after December 31, 2022, after filing of this motion. Jackson Decl., ¶19. The total amount of CAM owed is $94,563.89. Jackson Decl., ¶20, Ex. G.

Upon default, the full balance of the Repayment Amount under the Second Amendment became due and payable. Jackson Decl., ¶¶ 21-22, Ex. D. This Repayment Amount is $512,663.20. Jackson Decl., ¶23, Ex. G.

The total amount owed under the Lease, including the Second Amendment, is $1,047,608.04. Jackson Decl., ¶24, Ex. G.

Counsel for Landlord charges $450 hour for partners, $265 - $345 per hour for associates, and $95 per hour for paralegals. Goodkin Decl., ¶7. The fees sought are not for preparation of this application. Goodkin Decl., ¶8. Landlord seeks $2,031.50 in attorney’s fees and $10,000 in costs, plus $3,000 in attorney’s fees for preparation of the reply to the opposition and for attending the hearing. Goodkin Decl., ¶7. The total amount Landlord seeks to attach is $1,062,639.54. Goodkin Decl., ¶8.

Defendants’ business reconfigures and leases commercial properties to various businesses and individuals for use as collaborative workspaces. Delgado Decl., ¶4. From 2018 to summer of 2022, Tenant operated a workspace location on the Premises. Delgado Decl., ¶5. As part of the business, Tenant spent $4 million to develop the Premises as a collaborative workspace with both structural changes and furniture. Delgado Decl., ¶7. Tenant expected the Lease to continue through 2023. Delgado Decl., ¶6.

Until the Pandemic, Tenant rented the Premises to an entertainment company. Delgado Decl., ¶8.

In August 2022, Tenant agreed to return the Premises to Landlord. Delgado Decl., ¶9. Landlord now rents this property directly to businesses that seek to use the offices. Delgado Decl., ¶10. To further this, Defendants agreed to leave their improvements on the Premises. Delgado Decl., ¶11.

In August 2022, Landlord and Tenant negotiated an assignment of all 11 licenses for the use of the Premises from Tenant to Landlord (“August 2022 Assignment”). Jackson Reply Decl., ¶4, Ex. A. The August 2022 Assignment was part of the stipulation that settled the UD Action. Jackson Reply Decl., ¶4, Ex. A. In exchange for the August 2022 Assignment, Landlord agreed to dismiss the UD Action without prejudice. Jackson Reply Decl., ¶4, Ex. A.

Landlord reserved the right to collect any sums owed under the Lease and New Guaranty, and Tenant reserved all claims and defenses in response. Jackson Reply Decl., ¶4, Ex. A. As with the Lease and New Guaranty, if any litigation arose out of the August 2022 Assignment, the prevailing party could recover attorney’s fees. Jackson Reply Decl., ¶4, Ex. A.

On November 2, 2022, counsel for Landlord served both Defendants with several discovery requests, including identical Requests for Admission (“RFA”). Mikhael-Fard Decl., ¶2, Ex. A. The RFAs asked Defendants to confirm the authenticity of the versions of the (1) Lease, (2) Guaranty, (3) First Amendment, (4) Second Amendment, and (5) New Guaranty attached to the RFAs. Mikhael-Fard Decl., ¶¶ 3-4, Exs. B-C. Both Defendants admitted to all five documents’ authenticity. Mikhael-Fard Decl., ¶¶ 3-4, Exs. B-C.

Plaintiff Landlord applies for right to attach orders against Defendants La Brea and Holdings in the amount of $1,062,639.54, including $10,000 in costs and $5,031.50 in attorney’s fees.

Strict compliance is required with statutory requirements for affidavits for attachment. 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.

In reply, Landlord attempts to remedy these defects. First, Landlord asks the court to judicially notice the Lease documents, but the court has declined to do so. Defendants admitted in the opposition and the August 2022 Assignment that Tenant leased the Premises, but they did not admit that the Lease Documents are the operative documents between the parties.

Second, Landlord submits a Supplemental Declaration of Kelli Jackson explaining that she is responsible for Landlord’s leasing administration of the Property. Reply Jackson Decl., ¶2. In that regard, she monitors ongoing tenant operations at the Property, oversees tenant transactions. Id. She has been Landlord’s primary contact with Tenant and New Guarantor since August 2019. Reply Jackson Decl., ¶3. This declaration still does not show that Jackson is a custodian of records who has authenticated the Lease Documents and laid a business record or other hearsay foundation.

Third, Landlord attaches the RFA answers of both Tenant and New Guarantor. Mikhael-Fard Decl., ¶3, Exs. B, C. These answers authenticate the Lease Documents. Since they are genuine, they also are admissible because they are the operative agreements between the parties. As such, they do not need to be separately established as business records. See Jazayeri v. Mao, (2009) 174 Cal.App.4^th 301, 316-17 (“documents containing operative facts, such as the words forming an agreement, are not hearsay”). The Lease Documents are authentic and admissible.

Landlord’s claim against Tenant is based on the Lease. Jackson Decl., ¶2, Ex. A. Landlord’s claim against New Guarantor is based on the New Guaranty. Jackson Decl., ¶6, Ex. E. Both contract claims are claims on which attachment may be based.

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).

Landlord bases its damages on unpaid (1) Base Rent, (2) CAM expenses, (3) the Repayment Amount, and (4) attorney’s fees.

Landlord provides the Lease that defines the terms of the Rent. After the Rent Commencement Date begins the first Lease Year, the Base Rent is: (1) $51,723.00 per month for the first year; (2) $53,274.69 per month for the second; (3) $54,872.93 per month for the third; (4) $56,519.12 for the fourth year; and (5) $58,214.69 per month for the fifth year, with additional increases thereafter. Jackson Decl., ¶2, Ex. A.

The parties agree that Tenant’s possession of the Premises began in 2018. Jackson Decl., ¶8; Delgado Decl., ¶5. Landlord asserts that the Rent Commencement Date was February 25, 2019. Jackson Decl., ¶15, Ex. A. Based on this date, Landlord has calculated the Base Rent as (1) $51,723.00 per month from February 2019 to February 2020; (2) $53,274.69 per month from March 2020 to February 2021; (3) $54,872.93 per month from March 2021 to February 2022; and (4) $56,519.12 per month from March 2022 to February 2023. Jackson Decl., ¶¶ 2, 16, Ex. A.

Landlord calculates the unpaid Base Rent from January to August 2022 as $440,380.95. Jackson Decl., ¶¶ 16-17, Ex. G. The $440,380.95 in unpaid Base Rent is readily ascertainable.

The Lease requires Tenant to pay its proportionate share per month based on a CAM Estimate at the beginning of the year. Jackson Decl., ¶2, Ex. A. Landlord has the right to adjust the CAM Estimate and the monthly CAM expenses once in the middle of each year. Jackson Decl., ¶2, Ex. A. At the end of the year, the Lease requires Landlord to reconcile actual CAM expenses with the amount Tenant paid. Jackson Decl., ¶2, Ex. A. This includes either a demand that Tenant pays the outstanding balance or a credit or refund to Tenant for excess payment. Jackson Decl., ¶2, Ex. A.

Landlord claims unpaid CAM expenses of $94,563.89. Jackson Decl., ¶20, Ex. G. Landlord does not provide sufficient information to ascertain the CAM expenses. The Lease requires Landlord to use a CAM Estimate to set the monthly installment at the beginning of the year, then use the Annual Statement to determine the refund or additional amount due. Jackson Decl., ¶2, Ex. A. Without both the CAM Estimate and Annual Statement for each year, which Landlord does not provide, the CAM expenses portion of the Rent is not ascertainable.

Landlord explains that reconciliation for 2022 was not due until December 2022, implying that the Annual Statement was not ready as of the filing of this application. Jackson Decl., ¶19. Landlord filed its reply in 2023 but still did not provide the 2022 Annual Statement. More important, Landlord did not provide the CAM Estimate and Annual Statement for 2021 but claims an outstanding balance for October of that year. Jackson Decl., ¶20, Ex. G. The balance of $366.61 for October 2021 suggests that this is for a partial month without explanation. Jackson Decl., ¶13, Ex. G. All CAM expenses are disallowed as not readily ascertainable.

The Second Amendment combines the Remaining Overdue Rent Amount of $183,425.62 after the $155,169 security deposit was applied with the Deferral Amount of $327,237.58 for Base Rent that would become due between May and October 2021, creating the $512,663.20 Repayment Amount. Jackson Decl., ¶5, Ex. D. If Tenant did not breach the Lease or Second Amendment, it would not have to pay any of this until the Repayment Period began in January 2023. Jackson Decl., ¶5, Ex. D. Landlord could accelerate the full Repayment Amount if Tenant breached and did not cure the breach within the express cure period. Jackson Decl., ¶5, Ex. D.

The Summary shows that none of the Repayment Amount has been paid and it all is due. Jackson Decl., ¶23, Ex. G. This amount only became due before January 2023 if Tenant defaulted on another form of Rent or otherwise breached the Lease. Jackson Decl., ¶5, Ex. D. As discussed above, Tenant breached the Lease for failure to pay Base Rent from January 2022, before the Repayment Amount would otherwise be due. Jackson Decl., ¶13, Ex. G. This accelerated the $512,663.20 Repayment Amount, which is readily ascertainable.

Landlord assumes that New Guarantor is liable under the New Guaranty for the same damages as Tenant. Mot. at 9. However, the opposition correctly notes that the New Guaranty sets a limit to New Guarantor’s liability. Opp. at 10-11. The Guaranty Amount is: (1) $875,000 at the outset; (2) $437,500 on the last day of the third Lease Year; (3) $218,750 on the last day of the fourth Lease Year; and (4) eliminated on the last day of the fifth lease year. Jackson Decl., ¶6, Ex. E. Notwithstanding, the Guaranty Amount would never be less than the then-outstanding balance of the Repayment Amount. Jackson Decl., ¶6, Ex. E.

The parties agree that Tenant began to occupy the Premises in 2018. Jackson Decl., ¶8; Delgado Decl., ¶5. The Rent Commencement Date was February 25, 2019. Jackson Decl., ¶15, Ex. A.

Based on a February 25, 2019 Rent Commencement Date, February 25, 2022 was the last day of the fourth Lease Year. Both the Lease and Second Amendment define failure to pay Rent as default if Tenant fails to remedy the default after written notice from the Landlord. Jackson Decl., ¶¶ 2, 5, Exs. A, D. Landlord provides proof of written notice in May 2022, during the fifth Lease Year. Goodkin Decl., ¶2, Ex. A. The Guaranty Amount at the time was $218,750. Jackson Decl., ¶6, Ex. E. Because the outstanding Repayment Amount of $512,663.20 is greater, the Guaranty Amount matches the $512,663.20 Repayment Amount. Jackson Decl., ¶6, Ex. E.

As discussed above, ascertainable damages for the Tenant include $440,380.95 in Base Rent and the $512,663.20 Repayment Amount, for a total of $953,044.15 ($440,380.95 + $512,663.20). Because this exceeds the $512,663.20 Guaranty Amount, readily ascertainable damages against New Guarantor are limited to $512,663.20.

Both the Lease and the New Guaranty entitle the prevailing party to recover attorney’s fees and costs in litigation that stems from the agreements. Jackson Decl., ¶¶ 2, 6, Exs. A, E.

Landlord provides an attorney declaration with the hourly rates of its attorneys’ partners, associates, and staff to justify the estimated $5,031.50 in attorneys’ fees. Goodkin Decl., ¶6. Landlord’s counsel also estimates $10,000 in costs. Goodkin Decl., ¶6. These fees and costs are allowable as an estimate. The $15,031.50 in estimated attorney’s fees and costs are readily ascertainable.

The readily ascertainable damages for Tenant are $968,075.65 ($440,380.95 + $512,663.20 + $15,031.50). The readily ascertainable damages for New Guarantor are $527,694.70 ($512,663.20 + $15,031.50).

Landlord presents evidence that on March 27, 2018, Prior Landlord and Tenant entered into the Lease. Jackson Decl., ¶2, Ex. A. The Lease defined the monthly Rent to include Base Rent and CAM expenses. Jackson Decl., ¶2, Ex. A. It defined default as failure to pay Rent as it becomes due and after five days’ written notice from Prior Landlord. Jackson Decl., ¶2, Ex. A. The Lease provided that Prior Landlord could continue the Lease after a breach and continue to collect rent, provided it does not terminate Tenant’s right to occupy the Premises. Jackson Decl., ¶2, Ex. A. The Lease also allowed Prior Landlord to transfer its rights thereunder, which it did when it conveyed the property to Landlord via Grant Deed on March 11, 2022. Jackson Decl., ¶¶ 2, 7, Exs. A, F.

In August 2021, Prior Landlord and Tenant entered into the Second Amendment that established a Repayment Amount based on overdue rent and deferred rent during a Deferral Period. Jackson Decl., ¶5, Ex. D. None of this amount would become due until 2023 unless Tenant breached the Lease and did not cure after written notice. Jackson Decl., ¶5, Ex. D. If so, the full amount would become immediately due. Jackson Decl., ¶5, Ex. D. Also in August 2021, Prior Landlord and New Guarantor signed a New Guaranty that rendered New Guarantor liable for Tenant’s breach of the Lease, up to an amount that decreased over time. Jackson Decl., ¶6, Ex. E.

Landlord presents evidence that on May 10, 2022, it sent a demand letter that alleged Tenants had defaulted and owed Rent, including the Repayment Amount. Goodkin Decl., ¶2, Ex. A. Neither Tenant nor New Guarantor responded. Jackson Decl., ¶10.

Defendants assert that Tenant invested over $4 million in personal property and improvements at the Premises which should offset any damages. Opp. at 9-10; Delgado Decl., ¶¶ 7, 11.

A defendant may raise a claim of offset for any indebtedness of the plaintiff to the defendant raised in a cross-complaint or affirmative defense in an answer. CCP §483.015(b)(2), (3). The defendant’s offset claim under CCP section 483.015(b)(2) or (3) must be supported by sufficient evidence to prove a prima facie case of attachment in its own right. Lydig Construction, Inc. v. Martinez Steel, (2015) 234 Cal.App.4th 937; Pos-A-Traction, Inc. v. Kelly Springfield, (C.D. Cal. 1999) 112 F.Supp.2d 1178, 1183. Defendants do not provide any evidence of what property and improvements have been left at the Premises or their value. Reply at 6. The defense fails.

Defendants also waived this argument in the Lease. Reply at 7. Per section 4.5, all Tenant alterations to the Premises shall remain after termination of the Lease and shall become Landlord property without compensation to the Tenant. Jackson Decl., ¶2, Ex. A. Should Landlord so choose, Tenant shall remove any such alterations and pay to repair any damage that causes. Jackson Decl., ¶2, Ex. A. Section 16.2 also allows Landlord to retain or dispose of the Tenant alterations or personal property that Tenant does not remove from the premises. Jackson Decl., ¶2, Ex. A. The Landlord retains title to any such alterations that it keeps, and Tenant waives all claims for damages to Tenant from Landlord’s decision to retain or dispose of them. Jackson Decl., ¶2, Ex. A. The exception is that Tenant will retain and remove any trade fixtures, equipment, furniture, and intellectual property related to the “Common Grounds” tradename. Jackson Decl., ¶2, Ex. A. Because Tenant agreed to leave property and improvements under the Lease, it cannot now use them to offset damages for its breach.[3]

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). Landlord seeks attachment for a proper purpose.

The applications for right to attach orders are granted in the amount of $968,075.65 for Tenant and $527,694.70 for New Guarantor.

No writ shall issue until Landlord posts an undertaking for each. 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.

Defendants’ only argument for an increased undertaking is an incorporation of its arguments why the court should not grant the applications. Opp. at 11. There is no reason to deviate from the customary $10,000 bond. Defendants have provided no evidence of the amount they might recover from wrongful attachment. See CCP §489.220.¿ The undertaking is $10,000 for each Defendant.¿ No writ shall issue for either Defendant until the bond is posted.

Jackson has been in the real estate business for over eight years and is responsible for the leasing administration for the Property. Jackson Second Supp. Decl., ¶¶ 2-3. She oversees all tenant transactions and the negotiation of leases, including the Tenant’s Lease, and monitors the ongoing operations of tenants at the Property. Jackson Second Supp. Decl., ¶3. Jackson also worked for Prior Landlord for seven years until March 2022. Jackson Second Supp. Decl., ¶4.

In March 2022, a grant deed was recorded conveying the property underlying the Premises from Prior Landlord to Landlord. Jackson Second Supp. Decl., ¶5, Ex. A. On February 23, 2022, Prior Landlord also assigned to Landlord all rights to leases for premises on the property. Jackson Second Supp. Decl., ¶7, Ex. B.[4] Jackson remained an employee during the transfer. Jackson Second Supp. Decl., ¶6.

Jackson is the leasing administrator for the Property and has been Landlord’s primary point of contact with Tenant since August 2019. Jackson Second Supp. Decl., ¶¶ 3, 9. She is the custodian of records for the Lease (Jackson Decl., ¶2, Ex. A; Jackson Second Supp. Decl., ¶11, Ex. C), its Guaranty (Jackson Decl., ¶3, Ex. B; Jackson Second Supp. Decl., ¶12, Ex. D), the First Amendment (Jackson Decl., ¶4, Ex. C; Jackson Second Supp. Decl., ¶13, Ex. E), the Second Amendment (Jackson Decl., ¶5, Ex. D; Jackson Second Supp. Decl., ¶14, Ex. F), the New Guaranty (Jackson Decl., ¶6, Ex. E; Jackson Second Supp. Decl., ¶15, Ex. G), and detailed ledger (“Full Ledger”) of all charges against Tenant (Jackson Second Supp. Decl., ¶23, Ex. H). Jackson Second Supp. Decl., ¶10.

Jackson oversees all tenant transactions and the negotiation of leases, including Tenant’s Lease. Jackson Second Suppl. Decl., ¶3. She monitor’s tenant operations, lease obligations, and rental payments. Id. She checks Landlord’s accounts receivable to see which tenants have paid their rental obligations and reach out to those who have not. Jackson Second Supp. Decl., ¶18. She has worked with Tenant regarding the Lease since its execution. Jackson Second Supp. Decl., ¶3. She therefore knows that Tenant has defaulted on its payments of Rent from October 2021 until August 2022. Jackson Second Supp. Decl., ¶19.

As of December 6, 2022, the Full Ledger showed that Tenant owed $1,047,608.04. Jackson Second Supp. Decl., ¶23, Ex. H. Jackson used the Full Ledger to make the simplified Summary attached to the original application for a right to attach order. Jackson Decl., ¶17, Ex. G; Jackson Second Supp. Decl., ¶24, Ex. I.

Tenant and New Guarantor object to the timeliness of the supplementary declaration. The court’s order permitted Landlord to submit a supplemental declaration by February 16, 2023. Mot. to Strike, Ex. A. Landlord served the declaration a day late on February 17 at 4:00 p.m. Landlord provides no excuse for the late filing. However, Tenant and New Guarantor still had from February 17 to February 21, 2023 to respond to the declaration. While Defendants note that this gave them only one court day to respond, they were able to do so.[5] As there has been no prejudice, the motion to strike is denied.

Landlord submitted a supplemental declaration from Jackson to establish the authenticity and admissibility of the Lease Documents (the Lease, First and Second Amendments, the Guaranty, and the New Guaranty), to which Tenant objected. Jackson Second Supp. Decl., ¶¶ 11-15, Exs. C-G. This supplemental declaration establishes that Jackson was an employee of Prior Landlord and is an employee of Landlord. She is both the custodian of record and lease administrator for the Property and its tenants and has been Landlord’s primary contact with Tenant. Coupled with Tenant’s admissions (Mikhael-Fard Decl., ¶3, Exs. B, C), the Lease Documents are authentic and admissible. Jackson also has laid a foundation for Tenant’s default and the calculation of the amount owed.

Jackson also submits a copy of the February 2022 Assignment of Prior Landlord’s right to leases for premises on the property to Landlord. Jackson Second Supp. Decl., ¶7, Ex. B. Defendants assert that she did not negotiate or sign it and therefore cannot testify to its terms. Mot. at Strike at 3, n. 1. The court concludes that, as custodian of records and leasing administrator for the Property, she can and did authenticate the Assignment. Jackson Second Supp. Decl., ¶3.

Defendants also object that the Assignment does not attach the list of leases transferred to the Landlord. Mot. to Strike at 3. See Jackson Second Supp. Decl., ¶7, Ex. B. This is true, but the grand deed shows that Landlord owns the Property and the Assignment states that it has assigned all of Prior Landlord’s rights to the Property’s leases. Jackson Second Supp. Decl., ¶7, Ex. B. It is undisputed that the Lease is a tenant lease of a portion of the Property.

Landlord now presents the Full Ledger on which Jackson based the Summary in the original application. Jackson Second Supp. Decl., ¶¶ 23-24, Exs. H-I. It shows that as of December 6, 2022, Tenant owed $1,047,608.04, not including attorney’s fees. Jackson Second Supp. Decl., ¶23, Ex. H.

The court previously found that the $440,380.95 in unpaid Base Rent as a result of Tenant’s breach of the Second Amendment and the $512,663.20 Repayment Amount are readily ascertainable damages. Of this, the New Guarantor is only liable for the $512,663.20 Guaranty Amount. Jackson Decl., ¶6, Ex. E. When combined with attorney’s fees, the total attachable amount for Tenant was $968,075.65 ($440,380.95 + $512,663.20 + $15,031.50) and $527,694.70 for New Guarantor ($512,663.20 + $15,031.50) as to New Guarantor.

While the supplemental declaration also cures the issue whether the CAM expenses are readily ascertainable, the court only continued the hearing to permit Landlord to cure defects in the foundation and admissibility of evidence for Base Rent and Repayment Amount. The CAM expenses remain excluded.

When the court calculated the amount owed, it did not have evidence of payments made during the period of default. The Full Ledger now shows that Landlord received payments in April, May, and July 2022 totaling $32,451.96. Jackson Second Supp. Decl., ¶23, Ex. H. Landlord has credited these payments against the balance owed, including $27,266.31 owed prior to the default. Jackson Second Supp. Decl., ¶23, Ex. H. While this also is not within the scope of the court’s order, fairness requires that Landlord’s admission of payments be included in readily ascertainable damages. The balance owed by Tenant is reduced to $965,309.34 ($968,075.65-$27,266.31). Because New Guarantor’s liability is limited under the New Guaranty, the damages against it remain $527,694.70.

The applications for right to attach orders are granted in the amount of $965,309.34 for Tenant and $527,694.70 for New Guarantor. No writ shall issue until Landlord posts a $10,000 undertaking for each. CCP §489.220 .

[1] Landlord failed to lodge a courtesy copy of its reply in violation of the Presiding Judge’s First Amended General Order for electronic filing. Landlord’s counsel is admonished to provide courtesy copies in all future filings.

[2] In reply, Landlord asks the court to judicially notice: (1) the Lease; (2) the Guaranty; (3) the First Amendment; (4) the Second Amendment; and (5) the New Guaranty (the “Lease Documents”). Jackson Decl., ¶¶ 2-6, Exs. A-E. Reply at 8-10.

Landlord never filed a separate request for judicial notice as required by CRC 3.1113(l). Landlord argues that the court can judicially notice the Lease Documents because of the “circumstances and arguments” raised in the opposition and because it is referred to in the recitals to the August 2022 Assignment and Tenant’s admissions in discovery responses. Reply at 9-10. Aside from Landlord’s failure to comply with CRC 3.1113(l), Defendants’ opposition and the August 2022 Assignment do not concede that the Lease Documents are authentic and admissible. Nor do Defendants’ answers to Requests for Admission (“RFAs”) make an exhibit subject to judicial notice. The requests are denied.

The court has ruled on the parties’ written objections. The court’s rulings on Defendants’ objections reflect that the Lease Documents were not properly authenticated; this evidence is included in the court’s Statement of Facts only for completeness. The clerk is directed to scan and electronically file the court’s rulings.

[3] Landlord further cites to the Assignment settling the UD Action in which Tenant assigned 11 licenses for the use of the Premises, the parties reserved all claims against each other, and Landlord reserved its right to collect sums owing under the Lease Documents. Jackson Reply Decl., ¶4, Ex. A. Reply at 4-5.

[4] Landlord fails to attach the Assignment’s list of leases assigned (Ex. C to Exhibit B). Jackson Second Supp. Decl., ¶7, Ex. B.

[5] The court has ruled on Defendants’ evidentiary objections, with one objection overruled under Fibreboard Paper Products Corp. v. East Bay Union of Machinists, Local 1304, Seelworkers of America, AFL-CIO, (1964) 227 Cal.App.2d 675, 712 (court may overruled objection if any portion of objected to material is admissible). The clerk is ordered to scan and electronically file the court’s ruling.