Judge James C. Chalfant, Case 22STCV11761 2023-02-07 Tentative Ruling

Plaintiff Vineyard Ranch, LLC (“Vineyard”) applies for right to attach orders against Defendants Stephen Cavadias (“Stephen”), Robert Rosenberg (“Robert”), and Vicky Rosenberg (“Vicky”) in the amount of $2,836,862.25.

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 Vineyard filed the Complaint against Defendants Robert, Vicky, Stephen individually and as trustee of the Cavadias Family 2003 Trust dated June 19, 2003 (“Trust”), Cavadias 995 Bay Boulevard, LLC (“995 Bay”), SMTV, LLC (“SMTV”), SMTV Ontario (“SMTV Ontario”), and Hollister Creek, LLC (“Hollister”). The Complaint alleges claims for (1) breach of contract and (2) open book account and alleges in pertinent part as follows.

On June 2, 2017, Vey’s Bandit, LLC (“Vey’s Bandit”) and Bike Bandit LLC (“Bike Bandit”) entered into an Agreement for Purchase and Sale of Assets, with Amendment No. 1 (collectively, “Agreement”). The Agreement was for Vey’s Bandit to purchase substantially all of Bike Bandit’s tangible and intangible assets, goodwill, and personal property for $2,510,000.

Vey’s Bandit executed and delivered a Secured Promissory Note (“Note”), under which Vineyard affiliate, Affinity Development Group, Inc. (“Affinity”), agreed to allow Vey’s Bandit to assume Bike Bandit’s debt for the $2,510,000 purchase price set forth in the Agreement, to be repaid with 4% annual interest per the schedule attached.

Amendment No. 1 to the Agreement later adjusted the purchase price to $2,623,342, effective the original date of the Agreement, and changed the Note’s payment schedule accordingly. The amended Note still incurred annual interest of 4% and required Vey’s Bandit to make 79 monthly installments from July 1, 2017. The first seven payments were to be interest only, and all subsequent payments to December 31, 2023 would amortize principal and accrued interest in the monthly amount of $41,042.66.

The amended Note provided that Vey’s Bandit’s failure to make payment within five days of written notice from Affinity, or Vey’s Bandit’s filing of a petition for relief under the federal Bankruptcy Code without dismissal or withdrawal in the next 30 days, would entitle Affinity to accelerate the full amount owed. It would also allow Affinity to increase the annual interest rate to 8%.

Stephen, Robert, and Vicky each executed a Guaranty (“Guaranty”) for all amounts owed by Vey’s Bandit to Affinity under the Note and any successive transactions and modifications to it.

On December 19, 2017, Affinity assigned its interest in the Note to Vineyard.

In October 2018, Vey’s Bandit entered into a Second Amendment of the Note (“Second Amended Note”). Under the Second Amended Note, Vey’s Bandit agreed to pay Vineyard (1) six monthly interest-only payments from October 2018 through March 2019, and (2) 64 fully amortized monthly interest and principal payments of $45,987.99 thereafter. This schedule would still allow for full repayment by December 31, 2023. The rest of the Note remained enforceable as stated. Guarantors delivered an Acknowledgement and Reaffirmation of Guarantors that confirmed that they were obligated to guaranty all amounts due under the Second Amended Note.

Defendants have not paid amounts owed under the Second Amended Note since September 2020. Vineyard provided notice of default on February 5, 2021 and demanded payment for all past due principal and interest within five days. When Defendants did not comply, on February 15, 2021 Vineyard accelerated all amounts owed. It also enforced the 8% default interest rate beginning that date.

After some discussion, Vineyard agreed to extend the deadline to February 26, 2021 for past-due amounts to avoid acceleration. Vineyard later extended the deadline again to April 26, 2021. To induce Vineyard’s agreement to the extension, Stephen paid $50,000 of his personal assets to Vineyard.

Defendants did not pay all past-due amounts by the extended April 26, 2021 deadline. Vineyard again accelerated all amounts owed and enforced the 8% default interest rate. Defendants have not made any payment since.

On February 7, 2022, Vey’s Bandit petitioned for Chapter 7 bankruptcy. This act is a separate basis for default under the Second Amended Note. As of April 1, 2022, the balance owed under the Second Amended Note is $2,487,558.22, plus attorney’s fees and costs.

Vineyard seeks (1) compensatory damages of at least $2,487,558.22, (2) attorney’s fees, expenses, and costs, and (3) pre-judgment and post-judgment interest at the maximum legal rate.

2. Course of Proceedings

On April 20, 2022, Vineyard served Robert, Vicky, and Stephen, the latter both as an individual and as trustee of the Trust with the Complaint and Summons by substitute service, effective April 30, 2022.

On May 31, 2022, Defendants filed a joint Answer.

On June 13, 2022, Vineyard filed notice of substitution of attorney from Peter Villar, Esq. (“Villar”) to Lauren Deeb, Esq. (“Deeb”).

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).

Vey’s Powersport, Inc.’s Statement of Information filed on June 9, 2022 identifies Robert as Chief Executive Officer, Vicky as Secretary, and Stephen as Chief Financial Officer. Deeb Decl., ¶2, Ex. A. Vicky and Robert are also directors. Deeb Decl., ¶2, Ex. A.

Vey’s Bandit’s Statement of Information filed on July 23, 2020 identifies Stephen as managing member and Robert as a member. Deeb Decl., ¶3, Ex. B. Vey’s Bandit’s Statement of Information filed on April 13, 2021 identifies Robert as a managing member and Vicky as a member. Deeb Decl., ¶4, Ex. C.

On June 2, 2017, Vey’s Bandit and Bike Bandit entered into an Agreement under which Bike Bandit sold its assets to Vey’s Bandit for $2,510,000. Skeen Decl., ¶¶ 4-5.

Affinity, an affiliate of Vineyard, was a first secured lender to Bike Bandit and agreed to allow Vey’s Bandit to assume a portion of Bike Bandit’s debt as part of Vey’s Bandit’s consideration under the Agreement. Skeen Decl., ¶6. To do so, also on June 2, 2017, Vey’s Bandit executed the Note in favor of Affinity. Skeen Decl., ¶7, Ex. 1. Pursuant to the Note, Vey’s Bandit agreed to repay a $2,510,000 principal with 4% annual interest and other fees and expenses by June 2, 2023. Skeen Decl., ¶7, Ex. 1. Robert signed the Note as president of Vey’s Bandit. Skeen Decl., ¶8, Ex. 1.

At the same time, Stephen, Robert, and Vicky each signed a Guaranty to Affinity for all amounts owed under the Note and any successive transactions and modifications to it. Skeen Decl., ¶¶ 9-11, Exs. 2-4. The recitals of each Guaranty stated that the Stephen, Robert, and Vicky would materially benefit from the loans and other financial accommodations Affinity made to Vey’s Bandit. Skeen Decl., ¶¶ 9-11, Exs. 2-4. Pursuant to the Guaranties, each “irrevocably and unconditionally” guaranteed Vey’s Bandit’s payment obligations to Affinity. Skeen Decl., ¶10. Affinity had the right to enforce each Guaranty independent of any proceeding or enforcement of the Note against Vey’s Bandit. Skeen Decl., ¶12, Exs. 2-4. The Guaranties would also inure to the benefit of Affinity’s successors and assigns. Skeen Decl., ¶13, Exs. 2-4.

At a later date, Affinity and Vey’s Bandit entered into Amendment No. 1 to the Agreement, effective June 2, 2017. Skeen Decl., ¶14, Ex. 5. Amendment No. 1 included the amended Note that increased the principal loan amount to $2,623,342. Skeen Decl., ¶15, Ex. 5. Robert signed Amendment No. 1 and the amended Note as president of Vey’s Bandit. Skeen Decl., ¶15, Ex. 5.

The amended Note continued to impose 4% annual interest and provided that interest would accrue on all interest calculated in arrears. Skeen Decl., ¶17, Ex. 5. The attached schedule showed that the first six monthly payments beginning July 1, 2017 would be $8,744.47 and would be interest only. Skeen Decl., ¶18, Ex. 5. Thereafter, the payment for every month until December 31, 2023 would be $41,042.66, and would include amortized principal. Skeen Decl., ¶18, Ex. 5.

Default would occur if Vey’s Bandit failed to pay any amounts owed when due and did not cure within five days of written notice from Affinity. Skeen Decl., ¶19, Ex. 5. Such default would accelerate all amounts owed. Skeen Decl., ¶19, Ex. 5. A default also would occur if Vey’s Bandit filed a petition for relief under the Bankruptcy Code and did not withdraw it or have it dismissed within 30 days. Skeen Decl., ¶20, Ex. 5. A default would also increase the annual interest rate to 8%. Skeen Decl., ¶17, Ex. 5. Vey’s Bandit would also owe any attorney’s fees incurred by Affinity in collecting on the amended Note. Skeen Decl., Ex. 5.

In August 2017, Stephen, Robert, and Vicky signed an Acknowledgement and Reaffirmation of Guarantors that confirmed that they were still obligated to guaranty all amounts due under the amended Note. Skeen Decl., ¶16.

On December 19, 2017, Affinity assigned 100% of its interest in the amended Note to Vineyard. Skeen Decl., ¶21, Ex. 6.

In October 2018, Vineyard and Vey’s Bandit agreed to the Second Amended Note. Skeen Decl., ¶22, Ex. 7. Robert signed the Second Amended Note as president of Vey’s Bandit. Skeen Decl., ¶22, Ex. 7. Under the Second Amended Note, Vey’s Bandit would make six payments of interest only between October 2018 and March 2019. Skeen Decl., ¶23, Ex. 7. The remaining 64 monthly payments through December 31, 2023 would be in the amount of $45,987.99. Skeen Decl., ¶23, Ex. 7. All other provisions of the amended Note remained in effect. Skeen Decl., ¶23, Ex. 7.

Stephen, Robert, and Vicky signed another Acknowledgement and Reaffirmation of Guarantors that confirmed that they were obligated to guaranty all amounts due under the Second Amended Note. Skeen Decl., ¶24, Ex. 7.

Defendants did not make any payment under the Second Amended Note or its Guaranties after August 2020. Skeen Decl., ¶26, Ex. 10. Vey’s Bandit has repaid $466,117.15 of the principal balance and $233,101.61 in interest. Skeen Decl., ¶25, Ex. 10.

On February 5, 2021, Vineyard provided notice of default to Vey’s Bandit. Skeen Decl., ¶27, Ex. 8. It demanded payment for all past-due principal and interest by February 15, 2021, more than the five days required under the amended note. Skeen Decl., ¶28, Ex. 8. It also warned that it would accelerate all amounts owed, totaling $2,327,591.62, if Vey’s Bandit did not comply. Skeen Decl., ¶29, Ex. 8. Vey’s Bandit did not make any payment by February 15, 2021. Skeen Decl., ¶30. Vineyard imposed the 8% default interest rate under the Second Amended Note. Skeen Decl., ¶31.

After some discussion, Vineyard agreed to extend the deadline to pay past-due amounts and avoid default and acceleration of debt to February 26, 2021. Skeen Decl., ¶32, Ex. 9. The parties then agreed that in exchange for a $50,000 payment, Vineyard would extend the deadline to April 26, 2021. Skeen Decl., ¶32, Ex. 9. On March 10, 2021, Vineyard sent Vey’s Bandit a letter that memorialized this agreement. Skeen Decl., ¶32, Ex. 9. Stephen, Robert, and Vicky signed this letter in their individual capacities to reaffirm their Guaranties. Skeen Decl., ¶32, Ex. 9.

Despite this extension, Vey’s Bandit and its guarantors did not make any payment by April 26, 2021. Skeen Decl., ¶33. Consequently, Vineyard accelerated the amount owed. Skeen Decl., ¶33. It also added attorney’s fees to the payment history/amortization schedule sowing the outstanding debt under the Second Amended Note. Skeen Decl., ¶35, Ex. 10. The schedule also reflects (1) default interest beginning on October 1, 2020 and (2) the $50,000 that Vey’s Bandit paid to extend the deadline to April 26, 2021. Skeen Decl., ¶35, Ex. 10. The current balance as of January 2023 is $2,836,862.25. Skeen Decl., ¶35, Ex. 10.

No interest in real property secures this claim. Skeen Decl., ¶36. This application for a right to attach order does not seek attachment for any purpose other than to recover upon Vineyard’s claims in this action. Skeen Decl., ¶37. Vineyard will file a $10,000 undertaking if this application is granted. Skeen Decl., ¶38.

On February 7, 2022, Vey’s Bandit petitioned for Chapter 7 Bankruptcy in federal court. Skeen Decl., ¶34. Robert signs the bankruptcy petition as managing member. Deeb Decl., ¶5, Ex. D. The bankruptcy petition identifies Robert as managing member of Vey’s Bandit with 0% interest and Vey’s Powersports, Inc. (“Vey’s Powersports”), as a member with 100% interest. Ex. D. Vey’s Powersports is also a creditor of Vey’s Bandit in the amount of $1.9 million. Ex. D. Stephen, Vicky, and Robert are also creditors of Vey’s Bandit. Ex. D.

The bankruptcy petition lists Vey’s Bandit’s assets as $705,300 and creditor claims as $19 million, $4,150,000 of which is secured. Deeb Decl., ¶5, Ex. D. In the year prior to the bankruptcy petition, Vey’s Powersports received a distribution from Vey’s Bandit. Deeb Decl., ¶5, Ex. D.

Vey’s Bandit paid Vey’s Powersports (1) $64,000 as a supplier or vendor in November 2021, (2) $457,606 to purchase parts inventory in the year prior to the bankruptcy petition, and (3) $103,724 in repayment of loans in the year prior to the bankruptcy petition. Ex. D.

During a March 23, 2022 creditors meeting, Robert testified that he was Vey’s Bandit’s manager. Deeb Decl., ¶8, Ex. G, p. 4. The operating agreement lists Stephen as manager. Ex. G, p. 14. Stephan and Robert participated in the negotiations with Affinity to purchase Bike Bandit in 2017. Ex. G, p. 12. At the time, Stephen was an investor and negotiator for Vey’s Bandit, and he helped Robert manage the company. Ex. G, p. 13.

Steve Isenhower (“Isenhower”) testified at another creditor’s meeting on April 21, 2022 that he worked for Vey’s Powersports when Vey’s Bandit acquired Bike Bandit. Deeb Decl., ¶8, Ex. H. On June 1, 2017, Isenhower became Vey’s Bandit’s COO. Ex. H, p. 4. He reported to Robert but had control over day-to-day operations. Ex. H, p. 5.

On July 6, 2022, Stephen prevailed in a bid to purchase Vey’s Bandit’s 49% membership

On January 23, 2023, Vey’s Bandit’s bankruptcy trustee filed a fraudulent transfer complaint against Vicky, Robert, and Stephen. Deeb Decl., ¶10, Ex. I. The various causes of action in the complaint stem from their roles as Vey’s Bandit’s officers and the persons responsible for managing the operation of the business. Ex. I.

Stephen is a retired real estate investor. Stephen Decl., ¶2. Vicky is Stephen’s daughter, and she is married to Robert. Stephen Decl., ¶1; Vicky Decl., ¶1. Robert’s and Vicky’s business is Vey’s Powersports, Inc, a brick and mortor retail store which sells powersports vehicles and does not engage in online business. Vicky Decl., ¶¶ 2-3; Robert Decl., ¶¶ 1-2. Bike Bandit is solely engaged in online sales. Robert Decl., ¶3.

Stephen, Vicky, and Robert have never worked for Bike Bandit, owned any membership interest in it, or received any revenue from it, including a share of the profits. Stephen Decl., ¶¶ 3-5; Vicky Decl., ¶¶ 4-6; Robert Decl., ¶¶ 4-6. Although they were corporate officers of Bike Bandit, they received no compensation and left day-to-day management of the company to third party Steve Isenhower (“Isenhower”) as Bike Bandit’s Chief Operating Officer. Stephen Decl., ¶6; Vicky Decl., ¶7; Robert Decl., ¶7.

Vey’s Bandit did not own real property at the time of bankruptcy. Stephen Decl., ¶2.

On May 20 and November 7, 2022, the Vey’s Bandit trustee, Affinity, and Vineyard stipulated to the sale of certain Vey’s Bandit assets and distribution of proceeds. Def. RJN Exs. 1-2. Each stipulation identified Affinity and Vineyard as “Senior Creditors” and stated that, after reimbursing the trustee for sale expenses, the proceeds would be split equally between the trustee and the Senior Creditors. Def. RJN Exs. 1-2. The bankruptcy trustee is still in the process of liquidating Vey’s Bandit’s assets. Stephen Decl., ¶9.

Stephen’s home is located at 4952 Yerba Santa Drive, San Diego, CA. Stephen Decl., ¶7. Vicky and Robert live at 13850 Jamul Drive, Jamul CA. Vicky Decl., ¶8; Robert Decl., ¶8. Defendants claim a homestead exemption for both properties.

Plaintiff Vineyard applies for right to attach orders against Stephen, Vicky, and Robert joint and severally in the amount of $2,836,862.25.

Vineyard’s claim against Stephen, Vicky, and Robert is based on the Guaranties of the Second Amended Note for damages of $2,836,862.25. Vineyard has a claim on which to base attachment.

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

Stephen, Robert, and Vicky signed the Guaranties for amounts that Vey’s Bandit owed under the Note on June 2, 2017. Skeen Decl., ¶¶ 7-11, Exs. 1-4. The Guaranties included any successive transactions and modifications to the Note. Skeen Decl., ¶¶ 9-11, Exs. 2-4. Each time the parties amended the Note, Stephen, Robert, and Vicky reaffirmed that the Guaranties applied. Skeen Decl., ¶¶ 16, 24, Ex. 7. Damages are ascertainable based on the Second Amended Note and any provisions of the amended Note still in effect.

The amended Note, effective June 2, 2017, the Note included a payment schedule based on a $2,623,342 principal and 4% annual interest rate. Skeen Decl., ¶¶ 14-15, 17, Ex. 5. The first six monthly payments beginning July 1, 2017 would be $8,744.47 and interest only. Skeen Decl., ¶18, Ex. 5. The payment for every month thereafter until December 31, 2023 would be $41,042.66 and amortized. Skeen Decl., ¶18, Ex. 5. Upon default after written notice and an opportunity to cure, the Note permitted Affinity to increase the annual interest rate to 8% and (2) accelerate all amounts owed. Skeen Decl., ¶¶ 17, 19, Ex. 5.

The Second Amended Note in October 2018 changed the payment owed between October 2018 and March 2019 to be interest only. Skeen Decl., ¶23, Ex. 7. The remaining 64 monthly payments through December 31, 2023 would be $45,987.99. Skeen Decl., ¶23, Ex. 7. All other provisions of the amended Note remained in effect. Skeen Decl., ¶23, Ex. 7.

Vey’s Bandit failed to pay from August 2020 thereafter. Skeen Decl., ¶26. At the time, it had repaid $466,117.15 of the principal balance and $233,101.61 in interest. Skeen Decl., ¶25, Ex. 10. Vineyard’s accounting shows the balance as of January 2023 as $2,836,862.25. Skeen Decl., ¶35, Ex. 10.

There is an error in this accounting. Vineyard first imposed default interest, double the original 4% interest, in October 2020. Skeen Decl., Ex. 10. Vineyard did not send the required written notice until February 5, 2021. Skeen Decl., ¶27, Ex. 8. It then gave Vey’s Bandit until February 15, 2021 to repay the balance. Skeen Decl., ¶27, Ex. 8. On March 10, 2021, Vineyard sent Vey’s Bandit a letter that extended this deadline to April 26, 2021 for $50,000. Skeen Decl., ¶32, Ex. 9. Vey’s Bandit or a guarantor paid this $50,000. Skeen Decl., ¶35, Ex. 10. As a result, Vineyard only gained the right to impose default interest and accelerate all amounts owed after the April 26, 2021 deadline. Default interest assessed before this date is improper. The accounting separates default interest from the original interest and shows that the default interest between October 2020 and April 2021 is $7,480.18 + $7,530.04 + $7,580.24 + $7,630.78 + $7,681.65 + $7,732.86 + $7,617.75 = $53,253.50. Skeen Decl., ¶35, Ex. 10. The $53,253.50 must be removed from the balance owed.

The amended Note stated that Vey’s Bandit would also owe any attorney’s fees incurred by Affinity or its assignee incurred in enforcement. Skeen Decl., Ex. 5. The Second Amended Note contained the same provision. Skeen Decl., ¶23, Ex. 7. Vineyard’s accounting includes attorney’s fees incurred to date. Skeen Decl., ¶35, Ex. 10.

Stephen, Robert, and Vicky assert that Vineyard’s damages are not readily ascertainable because of the bankruptcy stipulations to sell Vey’s Bandit assets and distribute proceeds equally between the trustee and senior creditors Affinity and Vineyard. RJN Exs. 1-2. They assert that until the trustee finalizes the sale and determines Vineyard’s share, damages under the Second Amended Note are not ascertainable. Opp. at 5.

As Vineyard argues, the bankruptcy proceeding is irrelevant to Vineyard’s claims against Stephen, Robert, and Vicky because each Guaranty provides for enforcement independent of any proceeding involving Vey’s Bandit. Mot. at 6-7; Reply at 7. The potential sale of Vey’s Bandit assets in bankruptcy does not change the amount of readily ascertainable damages owed by the Guarantors to Vineyard. Rather, it only affects the amount of assets that may be attached. If the sale of assets in bankruptcy reduces Vey’s Bandit’s debt to Vineyard under the Second Amended Note, the amount attachable from each Guarantor also will be reduced.

The readily ascertainable damages are $2,836,862.25 - $53,253.50 = $2,783,608.75.

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).

The conduct of a trade, business, or profession is generally activity “which occupies the time, attention and effort. . . for the purpose of livelihood or profit on a continuing basis.” Nakasone v. Randall, (1982) 129 Cal.App.3d 757, 764 (quoting Advance Transformer Co. v. Superior Court, (1974) 44 Cal.App.3d 127, 134). “The term ‘business,’ therefore, embraces any activity engaged in for profit or for gain. The phrase ‘engaged in business,’ however, generally is held to imply business activity of a frequent or continuous nature.” Id. There is a distinction between one who spends his time and effort in carrying on an activity for livelihood or profit on a continuing basis and one who merely conserves his personal investments. Id.

Defendants assert that they are not in the business of guaranteeing obligations of others and the management of Bike Bandit was not conduct they engaged in for the purpose of livelihood or profit on a continuing basis. Opp. at 3-4. Nor did Bike Bandit’s business have a relation to their livelihoods. Bike Bandit is solely engaged in online sales. Robert Decl., ¶3. Prior to his retirement, Stephen was a real estate investor. Stephen Decl., ¶2. Vicky and Robert’s business is Vey’s Powersports, which sells powersports vehicles and does not engage in online business. Vicky Decl., ¶¶ 2-3; Robert Decl., ¶¶ 1-2. None of them have never worked for Bike Bandit, owned any membership interest in it, or received any revenue from it, including a share of the profits. Stephen Decl., ¶¶ 3-5; Vicky Decl., ¶¶ 4-6; Robert Decl., ¶¶ 4-6. Although they were corporate officers of Bike Bandit, they received no compensation and left the day-to-day management to Isenhower as Chief Operating Officer. Stephen Decl., ¶6; Vicky Decl., ¶7; Robert Decl., ¶7.

Defendants are focused on the wrong entity. Vey’s Bandit acquired Bike Bandit and used the existing loan from Affinity to do so. Per the Recitals in each Guaranty, Stephen, Vicky, and Robert admitted that they would materially benefit from the loans and other financial accommodations Affinity made to Vey’s Bandit. Reply at 3; Skeen Decl., ¶¶ 9-11, Exs. 2-4. Vey’s Bandit’s Statement of Information from July 23, 2020 identifies Stephen as managing member and Robert as a member. Deeb Decl., ¶3, Ex. B. Vey’s Bandit’s Statement of Information from April 13, 2021 identifies Robert as a managing member and Vicky as a member. Deeb Decl., ¶4, Ex. C.

During a March 23, 2022 creditors meeting, Robert testified that he was Vey’s Bandit’s manager. Deeb Decl., ¶8, Ex. G, p. 4. Vey’s Bandit’s operating agreement lists Stephen as manager. Ex. G, p. 14. Stephan and Robert participated in the negotiations with Affinity to purchase Bike Bandit in 2017. Ex. G, p. 12. At the time, Stephen helped Robert manage the company. Ex. G, p. 13. Isenhower was Vey’s Bandit’s COO. Ex. H, p. 4. He reported to Robert but had control over day-to-day operations. Ex. H, p. 5.

Vey’s Bandit’s bankruptcy petition identifies Vey’s Powersports as the sole owner of Vey’s Bandit. Reply at 3; Deeb Decl., ¶5, Ex. D. Vicky and Robert admit that Vey’s Powersports is their primary business. Vicky Decl., ¶¶ 2-3; Robert Decl., ¶¶ 1-2. Vey’s Powersports June 9, 2022 Statement of Information identifies Robert as Chief Executive Officer, Vicky as Secretary, and Stephen as Chief Financial Officer. Deeb Decl., ¶2, Ex. A. Vicky and Robert are also directors. Deeb Decl., ¶2, Ex. A.

Thus, all three Defendants are directly involved in Vey’s Powersports as managers and officers and Vey’s Powersports is the 100% owner of Vey’s Bandit. Stephan and Robert have both been the managing member of Vey’s Bandit and both negotiated the purchase of Bike Bandit. Vicky is a member of Vey’s Bandit and has been a corporate officer of Bike Bandit. Vicky Decl., ¶7. The evidence demonstrates that each Defendant executed their Guaranty as part of a commercial transaction that was part of their business.

Stephen, Vicky, and Robert do not dispute the facts underlying the breach. Reply at 6. The same facts showing that damages are readily ascertainable show a probability of success on Vineyard’s claims for breach of Guaranty.

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). This application for a right to attach order does not seek attachment for any purpose other than to recover upon Vineyard’s claims in this action. Skeen Decl., ¶37. Vineyard seeks attachment for a proper purpose.

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.

The property that Vineyard seeks to attach includes any interest the guarantors have in real property, except leasehold estates with unexpired terms of less than one year. Skeen Decl., ¶40(a). This includes interest in (1) 13850 Jamul Drive, Jamul, CA 91935-1829; (2) 4952 Yerba Santa Drive, San Diego, CA 92115-1038; (3) 415 E. Valmonte Norte, Palm Springs, CA 92262-6034; (4) 3675 Dalbergia Street, San Diego, CA 92113-3812; (5) 3683-85 Dalbergia Street, San Diego, CA 92113-3812; (6) 3712 Rivera Drive, San Diego, CA 92109-6642; (7) 5830 Jan Drive, La Mesa, CA 91942-4108; (8) 2780 Via Orange Way, Spring Valley, CA 91978-1705; (9) 690 N. 2nd Street, El Cajon, CA 92021-5848; (10) 419 Murray Drive, El Cajon, CA 92020-4116; and (11) a vacant real estate located in Temecula, CA, APN: 921-020-067. Skeen Decl., ¶40(a).

Vineyard also seeks to attach (1) accounts receivable, chattel paper, and general intangibles

arising out of the conduct by the guarantors while engaged in a trade, business, or profession; (2) any interest in any limited liability companies or partnerships, including 995 Bay, SMTV, SMTV Ontario, and Hollister; (3) all equipment, farm products, and inventory they own either individually or with others; (4) final money judgments arising out of the conduct by the guarantors while engaged in a trade, business, or profession; (5) money on any premises where they conducted a trade, business, or profession; (6) negotiable documents of title, instruments, and securities; (7) interests in any minerals, including oil and gas, to be extracted; and (8) community property interests as attachable by law. Skeen Decl., ¶40(b)-(k).

Property exempt from attachment consists of (a) all property exempt from enforcement of a money judgment,[4] (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.

A homestead exemption exists under certain conditions. “Homestead” means 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).

Stephen claims a homestead exemption for his home is at 4952 Yerba Santa Drive, San Diego, CA. Stephen Decl., ¶7. Vicky and Robert claim a homestead exemption for their home at 13850 Jamul Drive, Jamul CA. Vicky Decl., ¶8; Robert Decl., ¶8. Although the opposition suggests that the homestead exemption defeats a writ of attachment (Opp. at 5-6), that is not what a homestead exemption does. The homestead exemption does not prevent an attachment lien; it simply provides for an amount of proceeds from a sale in favor of the homesteader and prevents the sale of homestead property in some circumstances. Reply at 8; CCP §§ 704.720, 704.800.

Defendants fail to show ownership or the value of their respective homes. The homestead exemption therefore is denied.

The applications for right to attach orders are granted in the amount of $2,783,608.75. Vineyard failed to submit a right to attach order and must do so for each Defendant in the next two court days or it will be waived. No writ shall issue for any Defendant until Vineyard posts a $10,000 undertaking for that Defendant.

[1] Defendants failed to lodge a courtesy copy of their opposition 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] Vineyard requests judicial notice of (1) Vey’s Powersports, Inc.’s Statement of Information, filed June 9, 2022 (Deeb Decl., ¶2, Ex. A), (2) Vey’s Bandit’s Statements of Information, filed July 23, 2020 and April 13, 2021 (Deeb Decl., ¶¶ 3-4, Exs. B-C), (3) Vey’s Bandit’s February 7, 2022 voluntary petition for bankruptcy (Deeb Decl., ¶5, Ex. D), (4) Vey’s Bandit’s March 14, 2022 Amendment to Schedules D-F filed in the bankruptcy court (Deeb Decl., ¶6, Ex. E), (5) a July 7, 2022 order on Chapter 7 Trustee’s motion to sell estate property (Deeb Decl., ¶7, Ex. F), and (6) a complaint filed in the bankruptcy court on January 3, 2023 (Deeb Decl., ¶10, Ex. I). Request Nos. 1-2 are granted under Evid. Code section 452(c), and Request Nos. 3-6 are granted under Evid. Code section 452(d).

Stephen, Robert, and Vicky request judicial notice of two stipulations entered in the bankruptcy court in In re Vey’s Bandit, LLC, Case No. 22-00294-CL7. RJN Exs. 1-2. The requests are granted. Evid. Code §452(d).

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