Judge James C. Chalfant, Case 22STCV25303 2022-10-25 Tentative Ruling

LaundryLux Funding Services, LLC, v. Cleotilda Ortiz and Alberto Castro, individually and dba Lavanderia Rio Grande,

Tentative decision on applications for writ of possession: denied

Plaintiff LaundryLux Funding Services, LLC (“LaundryLux”) seeks a writ of possession against Defendants Cleotilda Ortiz (“Ortiz”) and Alberto Castro (“Castro”), each doing business as Lavanderia Rio Grande (“Lavanderia”), to recover (1) four Vascomat W762 62 lb washers; (2) two Wascomat W777 77 lb washers; and (3) thirteen Wascomat TD30xJ0 30 lb x 30 lb dryers (collectively, the “Equipment”).

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

Plaintiff LaundryLux filed the Complaint on August 5, 2022, alleging causes of action for (1) breach of promissory note; (2) breach of guaranty; (3) money lent; and (4) claim and delivery. The Complaint alleges as follows.

On March 28, 2018, Ortiz and Castro executed and delivered to LaundryLux a Secured Promissory Note and Agreement (“Note”) for $119,786.93 secured by the Equipment as collateral. Pursuant to the Note, Lavanderia agreed to repay the principal of $119,786.93 plus interest at an annual rate of 8.49%.

On June 12, 2020, Ortiz and Castro, individually and doing business as Lavanderia, executed and delivered to LaundryLux an Amendment to the Note (“Amended Note”) whereby Lavanderia would make 135 payments of $1,500 and a final payment of $2,738.70 on October 10, 2031. Both the Note and Amended Note provide that failure to make timely payments would result in a 5% or $5 late charge, whichever is greater.

To induce entry into the Note, Ortiz and Castro, individually and doing business as Lavanderia, signed an Irrevocable Guaranty to the Agreement for the full amount owed under the Note.

Ortiz and Castro last made a payment on the Note and Amended Note on July 7, 2022. They have not cured the default despite demand letters to do so. Lavanderia, Ortiz, and Castro now owe $130,366.71 plus interest at the default rate of 15.9% per year. The Note also permits repossession of the Equipment after default.

LaundryLux seeks (1) $130,366.71, plus interest at the default rate of 15.9% from June 22, 2022; (2) repossession of the Equipment; and (3) attorney’s fees and costs.

On August 27, 2022, LaundryLux personally served Castro with the Complaint, Summons, and application for writ of possession with notice.

On September 28, 2022, LaundryLux requested entry of default against Castro. Department 53 (Hon. Robert B. Broaddelt) denied a default on October 3, 2022 for failure to match the name of the Defendant on the Complaint and Summons.

On October 6, 2022, LaundryLux served Ortiz with the Complaint and Summons through substitute service, effective October 16. No proof of service is available for Ortiz for the application for writ of possession.

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

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

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

A plaintiff must make a written application for a writ of possession. CCP §512.010(a), (b); (Mandatory Form CD-100); CCP §512.010(a). A verified complaint alone is insufficient. 6 Witkin, California Procedure, (5th ed. 2008) §255, p.203. The application may be supported by declarations and/or a verified complaint. CCP §516.030. The declarations or complaint must set forth admissible evidence except where expressly permitted to be shown on information and belief. Id.

The application must be executed under oath and include: (1) A showing of the basis of the plaintiff's claim and that the plaintiff is entitled to possession of the property claimed. If the plaintiff's claim is based on a written instrument, a copy of it must be attached; (2) A showing that the property is wrongfully detained by the defendant, how the defendant came into possession of it, and, the reasons for the detention based on the plaintiff’s best knowledge, information, and belief; (3) A specific description of the property and statement of its value; (4) The location of the property according to the plaintiff’s best knowledge, information, and belief. If the property, or some part of it, is within a private place which may have to be entered to take possession, a showing of probable cause to believe that the property is located there; and (5) A statement that the property has not been taken for (a) a tax, assessment, or fine, pursuant to a statute, or (b) an execution against the plaintiff’s property. Alternatively, a statement that if the property was seized for one of these purposes, it is by statute exempt from such seizure. CCP §512.010(b).

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

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

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

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

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

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

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

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

On March 28, 2018, Ortiz and Castro, individually and doing business as Lavanderia, entered into the Note for $119,786.93 in exchange for a security interest in the Equipment. Miguel Decl., ¶4, Ex. 1. Under the Note, Lavanderia promised to pay $119,786.93 plus 8.49% annual interest. Miguel Decl., ¶5, Ex. 1.

Should they default for failure to make payments within 10 days of the due date, the Note charged a late penalty of the greater of $5 or 5%. Miguel Decl., ¶7, Ex. 1. All future payments were to also become immediately due and payable with 15.9% annual interest. Miguel Decl., ¶9, Ex. 1. LaundryLux would also be entitled to recovery of the Equipment and attorney’s fees for enforcement of the Note. Miguel Decl., ¶¶ 12, 16, Ex. 1.

Ortiz and Castro also signed an Irrevocable Guaranty (“Guaranty”) that held each personally liable for the debts incurred through the Note. Miguel Decl., ¶10, Ex. 1.

On June 12, 2020, Ortiz and Castro executed and delivered the Amended Note. Miguel Decl., ¶6, Ex. 2. The Amended Note changed the payment schedule to 135 payments of $1,500 and a final payment of $2,738.70 on October 10, 2031. Miguel Decl., ¶6, Ex. 2.

Ortiz and Castro have not made a payment since July 7, 2022 and therefore have defaulted. Miguel Decl., ¶8. The amount owed is $130,366.71, plus interest at the default rate of 15.9% from June 22, 2022. Miguel Decl., ¶9.

The value of the Equipment, based on the personal experience of LaundryLux Financial Services Manager Antonio Miguel, is $50,000. Miguel Decl., ¶17. At the time this action was commenced, the Equipment was located at 1835 W. Pico Blvd. Los Angeles, CA 90006, the address on the Amendment. Miguel Decl., ¶15, Ex. 2.

Plaintiff LaundryLux seeks a writ of possession against Castro and Ortiz to recover the Equipment. Neither Defendant opposes.

The application for Ortiz must be denied for lack of notice. Under CCP section 1005, Ortiz is entitled to 16 court days’ notice of the application. CCP §1005. Plaintiff LaundryLux served Ortiz with the Complaint and Summons on October 6, 2022, but not notice of the application for writ of possession. Assuming arguendo that LaundryLux served this application with the Summons and Complaint by substitute service, the service was not effective until ten days after the October 10, 2022 mailing, or 20, 2022. See CCP §415.20(a). This effective October 20 date is only two court days before the instant hearing and is insufficient notice. The application is denied for Ortiz.

LaundryLux provides evidence that both Defendants signed the Note, the Guaranty, and the Amended Note. Miguel Decl., ¶¶ 4, 6, 10, Exs. 1-2. Under the Amended Note, Defendants were to make 135 payments of $1,500 and a final payment of $2,738.70 on October 10, 2031. Miguel Decl., ¶6, Ex. 2. Upon default, the Note permitted LaundryLux to accelerate the amount owed, charge 15.9% interest, pursue attorney’s fees for enforcement, and repossess the Equipment. Miguel Decl., ¶¶ 7, 9, 12, 16, Ex. 1. LaundryLux provides evidence of the likely location of the Equipment which matches the address on the Amendment. Miguel Decl., ¶15, Ex. 2.

In seeking a writ of possession, the supporting declaration must be set forth with particularity. CCP §516.030. This means that the plaintiff must show evidentiary facts rather than the ultimate facts commonly found in pleadings. A recitation of conclusions without a foundation of evidentiary facts is insufficient. See Rodes v. Shannon, (1961) 194 Cal.App.2d 743, 749 (declaration containing conclusions inadequate for summary judgment); Schessler v. Keck, (1956) 138 Cal.App.2d 663, 669 (same). 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.

LaundryLux’s evidence is inadequate. LaundryLux provides conclusory evidence that the Defendants have defaulted and did not make any payment after June 2022, which leaves an outstanding balance of $130,366.71 plus interest. Miguel Decl., ¶¶ 8-9. LaundryLux fails to show by payment history or calculation that the amount owed is $130,366.71. This is necessary for purposes of an undertaking because LaundryLux claims that the amount owed is greater than the value of the Equipment and no undertaking is necessary. See Miguel Decl., ¶18.

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