Judge James C. Chalfant, Case 22STCV10072 2022-07-28 Tentative Ruling

Plaintiff Shenzhen Deji Air Agency Ltd. (“Shenzhen”) applies for a right to attach order against Defendant Golden Wings Jet Holding LLC (“Golden Wings”) in the amount of $1,121,000.

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 Shenzhen filed this Complaint against Defendant Golden Wings and its manager Defendant Elyakim Eidad Lieberman (“Lieberman”) on March 23, 2022, alleging causes of action for (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) unjust enrichment, and (4) fraud/misrepresentation. The Complaint alleges as follows.

On May 19, 2021, the parties entered into an Air Cargo Jet Leasing Agreement and supplemental agreement (collectively “Agreement”), whereby Golden Wings would provide a cargo jet with two flights per week between Shenzhen Bao'an Airport and Los Angeles International Airport (“LAX”), starting June 20, 2021. The parties later changed the Chinese departure point to Hong Kong International Airport. Pursuant to the Agreement, Shenzhen paid $540,000 on May 23, 2021.

On July 28, 2021, Golden Wings signed a Confirmation that it would arrange for four cargo jet flights on August 12, 15, 22, and 29, 2021. Golden Wings was to refund payments made if the flights were cancelled; this included the $540,000 made before and $581,000 paid in September 2021.

Golden Wings has not made any of the required flights and demands for refunds have failed. Shenzhen seeks $1,121,000 in compensatory damages, interest at the legal rate, punitive damages, restitution, equitable relief, and attorney’s fees and costs.

2. Course of Proceedings

On April 7, 2022, Plaintiff Shenzhen served Defendant Golden Wings with the Complaint and Summons by substitute service, effective April 17, 2022.

On April 13, 2022, Plaintiff Shenzhen served Defendant Lieberman with the Complaint and Summons by substitute service, effective April 23, 2022.

On June 7, 2022, the Defendants filed separate Answers.

On June 13, 2022, Shenzhen filed a declaration of intent to file a demurrer as to both Answers.

On June 17, 2022, Shenzhen served Defendant Golden Wings with the application for right to attach papers.

On July 7, 2022, both Defendants filed separate amended Answers.

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.

Generally, 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 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.

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).

The amount to be secured by the attachment is the sum of (1) the amount of the defendant’s indebtedness claimed by the plaintiff, and (2) any additional amount included by the court for estimate of costs and any allowable attorneys’ fees under CCP section 482.110. CCP §483.015(a); Goldstein v. Barak Construction, (2008) 164 Cal.App.4th 845, 852. This amount must be reduced by the sum of (1) the amount of indebtedness that the defendant has in a money judgment against plaintiff, (2) the amount claimed in a cross-complaint or affirmative defense and shown would be subject to attachment against the plaintiff, and (3) the value of any security interest held by the plaintiff in the defendant’s property, together with the amount by which the acts of the plaintiff (or a prior holder of the security interest) have decreased that security interest’s value. CCP §483.015(b). A defendant claiming that the amount to be secured should be reduced because of a cross-claim or affirmative defense must make a prima facie showing that the claim would result in an attachment against the plaintiff.

Before the issuance of a writ of attachment, the plaintiff is required to file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action. CCP §489.210. The undertaking ordinarily is $10,000. CCP §489.220. If the defendant objects, the court may increase the amount of undertaking to the amount determined as the probable recovery for wrongful attachment. CCP §489.220. The court also has inherent authority to increase the amount of the undertaking sua sponte. North Hollywood Marble Co. v. Superior Court, (1984) 157 Cal.App.3d 683, 691.

On May 19, 2021, Shenzhen and Golden Wings entered into the Agreement whereby Golden Wings would provide cargo jets for 61 flight plans with two flights per week between Shenzhen Bao'an Airport and Los Angeles International Airport (“LAX”), starting June 20, 2021. Li Decl., ¶2; App. Ex. A[2]. The parties later changed the Chinese departure point to Hong Kong International Airport. Li Decl., ¶2.

Under Agreement section 2.3, Shenzhen was to pay a fixed settlement amount of $544,000, with 35% of the advance payment to be paid within three days of signing the Agreement. Li Decl., ¶2; App. Ex. A. Golden Wings was to complete the air route approval within 30-40 days of that, with 65% of the remaining balance due three days before the flight. Li Decl., ¶2; App. Ex. A. Any loss and damages incurred when Golden Wings could not work normally for reasons caused by Shenzhen would be Shenzhen’s responsibility, while any flight delay or cancellation due to Golden Wing’s failure to timely deliver the plane would be Golden Wings’ responsibility. App. Ex. A. If a flight was delayed or cancelled due to Golden Wings’ failure, Shenzhen was entitled to a return of costs within 7 days plus 20% of the amount of each flight as liquidated damages. App. Ex. A, §2.3.5. The return of the amount paid for a flight shall occur within three days. App. Ex. A, §9.8.

Section 12.2 of the Agreement requires that the parties arbitrate any disputes based thereon through the Shenzhen Court of International Arbitration. App. Ex. A.

Shenzhen paid $540,000 pursuant to the Agreement on May 23, 2021. Li Decl., ¶3.

On July 28, 2021, Golden Wings via Lieberman signed the Confirmation that it would arrange for four cargo jet flights on August 12, 15, 22, and 29, 2021. Li Decl., ¶3, Ex. B. Shenzhen would pay the full balance payment for the first flight and 35% of the advance payment for the remaining three within two days. App. Ex. B. The Confirmation provided that Golden Wings would refund the payments made within one day and bear all losses if the flights were cancelled. Li Decl., ¶3.

In September 2021, Shenzhen made an additional advance payment of $581,000. Li Decl., ¶4.

Golden Wings did not make any of the required flights. Li Decl., ¶4. Demands for refunds since October 2021 have failed, with Golden Wings saying that the refund request was still with the legal department for review and not providing Shenzhen the name of its counsel. Li Decl., ¶5; Ex. C. The total amount owed is $1,121,000. Li Decl., ¶6.

Lieberman signed the Chinese version of the Agreement and had it orally translated but does not recall if he signed an English version. Lieberman Decl., ¶1. Arranging flights, per the Agreement, is a complex process requiring multiple parties and weeks to reschedule in the event of a cancellations. Lieberman Decl., ¶2.

Between May and August 2021, Shenzhen made changes to dates of flights on three separate occasions and also changed the destinations of flights from Los Angeles to either Chicago or New York at significant cost to Golden Wings for crew, flight authorizations, and other critical paperwork. Lieberman Decl., ¶4. Shenzhen did not pay for the full cost of the flights, instead sending a single payment for $581,000 on August 9, 2021. Lieberman Decl., ¶3, Ex. 1.

Shenzhen sent an undated letter to Golden Wings demanding payment of $1,130,000 by February 9, 2022. Lieberman Decl., ¶4, Ex. B. Golden Wings had informed Shenzhen that its repeated changing of the flight plan resulted in extra costs, but Shenzhen refused to pay the penalties incurred. Lieberman Decl., ¶4.

The parties have engaged in business negotiations since the filing of the Complaint and this application on various issues. Lieberman Decl., ¶5.

Defendants provided Shenzhen the Agreement in Chinese. Li Reply Decl., ¶2. An email from Golden Wings confirms that Lieberman signed the original Agreement. Li Reply Decl., ¶2, Ex. A.

Schenzhen pre-booked the flights, but Golden Wings failed to provide flights as scheduled and frequently asked to reschedule. Li Reply Decl., ¶3. On June 16, 2021, Shenzhen emailed Golden Wings to confirm that Golden Wings was ready to provide a flight on July 15, having failed to do so earlier. Li Reply Decl., ¶3, Ex. B. This flight was important because it was the last day the cargo could be shipped without breaching a cargo transportation contract Shenzhen had with another party. Ex. B. Golden Wings assured Shenzhen that the flight would be ready. Ex. B. However, Golden Wings failed to arrange a flight on July 15, 2021. Li Reply Decl., ¶3.

On August 30, 2021, Shenzhen asked for details about a Golden Wings flight that was to occur on September 6, 2021. Li Reply Decl., ¶4, Ex. C. However, no flight was arranged on that day. Li Reply Decl., ¶4.

On November 6, 2021, Golden Wings apologized for repeated delay in providing flights due to the pandemic and claimed to be in the final stages of processing a refund request. Li Reply Decl., ¶5, Ex. D.

From October 2021 through February 2022, Shenzhen kept messaging Golden Wings staff that it had not received the refund and 30% of liquidated damages required under the Agreement. Li Reply Decl., ¶8, Ex. E. Lieberman replied that he sent a wire payment that his bank claimed had been transmitted to China, but that the corresponding Chinese bank had not confirmed receipt. Li Reply Decl., ¶8, Ex. E. Shenzhen questioned why Lieberman waited to long for the bank to confirm. Li Reply Decl., ¶8, Ex. E.

Golden Wings has served a discovery request on Shenzhen in this action. Li Reply Decl., ¶6. Because no flight ever occurred, the two payments made by Shenzhen represent the advance 35% payment and another 35% payment three days before flight departure. Li Reply Decl., ¶7. Golden Wings never requested further payment because no flight ever occurred. Li Reply Decl., ¶7.

Plaintiff Shenzhen applies for a right to attach order against Defendant Golden Wings in the amount of $1,121,000, none of which are for fees or costs.

Shenzhen’s claim is based on the Agreement whereby Golden Wings was to provide flights over a period of time for the settlement amount plus costs combined with the Confirmation whereby Golden Wings would provide specific flights in August 2021 but return payments if it failed. Li Decl., ¶¶ 2-3; Ex. A-B. The claimed amount is $1,121,000. Li Decl., ¶6; Reply Ex. 2. This is a claim 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).

The Agreement calls for Shenzhen to pay for the costs and losses of each trip unless caused by Golden Wings, in which case it must return all costs paid by Shenzhen. Li Decl., ¶2; App. Ex. A. Additionally, the settlement amount listed in section 2.3.2 of the Agreement is $540,000, with 35% to be paid upon signing the Agreement and 65% of the balance to be paid three days before the plane’s departure. Li Decl., ¶2; App. Ex. A. If a flight was delayed or cancelled due to Golden Wings’ failure, Shenzhen was entitled to a return of costs within either three or 7 days plus 20% of the amount of each flight as liquidated damages. App. Ex. A, §§ 2.3.5, 9.8. The Confirmation for flights in August also provided that Golden Wings would refund the payments made within one day and bear all losses if the flights were cancelled. Li Decl., ¶3. Shenzhen asserts that Golden Wings never arranged any successful flights under the Agreement. Li Reply Decl., ¶7.

The damages are readily ascertainable under the Agreement because Golden Wings owes Schenzhen a refund of its $1,121,000 costs.

Golden Wings claims that, between May and August 2021, Shenzhen made changes to dates of flights on three separate occasions and also changed the destinations of flights from Los Angeles to either Chicago or New York at significant cost to Golden Wings for crew, flight authorizations, and other critical paperwork. Lieberman Decl., ¶4. Because of these costs, Shenzhen did not pay for the full cost of the flights. Lieberman Decl., ¶3, Ex. 1. Under the Agreement, Shenzhen was required to credit Golden Wings for all the losses incurred on flights it rescheduled. Li Decl., ¶2; App. Ex. A.

Shenzhen has the better evidence because it provides details. Schenzhen pre-booked the flights, but Golden Wings failed to provide flights as scheduled and frequently asked to reschedule. Li Reply Decl., ¶3. On June 16, 2021, Shenzhen emailed Golden Wings to confirm that Golden Wings was ready to provide a flight on July 15, having failed to do so earlier. Li Reply Decl., ¶3, Ex. B. This flight was important and Golden Wings assured Shenzhen that the flight would be ready. Ex. B. However, Golden Wings failed to arrange a flight on July 15, 2021. Li Reply Decl., ¶3.

The evidence supports a conclusion that Golden Wings is at fault for cancelling or delaying flights. As a result, Shenzhen has shown a probability of success that Golden Wings owes $1,121,000 subject to the following defenses.

Lieberman signed the Chinese version of the Agreement and had it orally translated, but does not recall if he signed the English version. Lieberman Decl., ¶1. Golden Wings argues that Shenzhen only had the English translation prepared afterwards. App. Ex. A. Golden Wings asserts that a properly verified and fully executed English translation is essential to the validity of the parties’ agreement. Opp. at , 7.

As Shenzhen notes, the Chinese version of the Agreement was prepared by Golden Wings and delivered to Shenzhen. Shenzhen only had an English translation prepared for the court. Reply at 2. The Agreement also was signed by Liberman, as shown by the signature and email. Li Reply Decl., ¶2, Ex. A. As Shenzhen is seeking to enforce the Agreement, it has no need to produce a version signed by it. The Agreement is valid.

Golden Wings asserts that because section 12.2 of the Agreement requires arbitration, Shenzhen cannot sue in court. App. Ex. A. Shenzhen asserts that Golden Wings did not enforce this right because it has answered. Li Reply Decl., ¶6.

An arbitration provided for in a contract can be waived. The court need not decide whether that has occurred because it can issue a provisional remedy even where arbitration is not waived. CCP §1281.8. At this stage, the Agreement’s arbitration clause is not an impediment to Shenzhen’s probability of success.

Golden Wings asserts that by constantly changing the time and destination of flights, Shenzhen made performance impossible. Opp. at 7; Lieberman Decl., ¶4.

California law provides for impossibility as an excuse for non-performance of a contract where it is strictly impossible or only possible because of extreme and unreasonable difficulty. Autry v. Republic Productions, (1947) 30 Cal.2d 144, 148-49. Where the reason the parties entered the agreement has been frustrated by a supervening circumstance that was not anticipated, such that the value of performance by the party standing on the contract is substantially destroyed, the doctrine of commercial frustration applies to excuse performance. See, e.g. Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga, (2009) 175 Cal.App.4th 1306, 1336. “A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.” Id. at 1336.

Golden Wings fails to provide any evidence beyond mere conclusions that Shenzhen made timely cargo flights impossible and Golden Wings incurred damages in the process. Nor is this a supervening circumstance that neither side anticipated because the Agreement specifically provides for Shenzhen’s liability if it occurs. App. Ex. A. The defense of impossibility therefore fails.

Golden Wings argues that Shenzhen failed to pay the full amount in the Agreement, and it is entitled to offset its damages from the underpayment. Opp. at 3, 8-9.

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.

Golden Wings fails to meet its prima facie burden for offset. It does not show that it was damaged by Shenzhen’s failure to pay the full Agreement price – Shenzhen shows that Golden Wings never asked for the final 35% payment three days before flight departure because no flight ever occurred (Li Reply Decl., ¶7) -- or that it has a claim for costs incurred from Shenzhen’s delay of flights.

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). Shenzhen only seeks an attachment to ensure recovery should it prevail on the underlying breach of contract claim. Shenzhen seeks attachment for a proper purpose.

The application for a right to attach order against Golden Wings for $1,121,000 is granted. No writ shall issue until the $10,000 bond is posted.

[1] Plaintiff failed to lodge a courtesy copy of the reply in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. Its counsel is admonished to provide courtesy copies for all future filings in this case.

[2] Although the Agreement is in Chinese, Plaintiff has provided a translated copy courtesy of Connie Chen (“Chen”) of the American Translator Association (“ATA”), and Northern California Translator Association (“NCTA”).