Judge James C. Chalfant, Case 22STCV25674 2022-10-13 Tentative Ruling

Plaintiff Pawnee Leasing Corp. (“Pawnee”) applies for right to attach orders against Defendants Campo Verde Packing, Inc. (“Campo Verde”) and Jose Alfredo Juarez Romo, aka Jose Alfredo Juarez (“Juarez”) in the amount of $29,845.93.

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

A. Statement of the Case

1. Complaint

Plaintiff filed this Complaint against Defendants Campo Verde and Juarez on August 9, 2022, for (1) breach of written agreement; (2) breach of guaranty; (3) open book account; (4) reasonable value; (5) account stated; (6) indebtedness; (7) unjust enrichment; (8) claim and delivery; and (9) conversion. The Complaint alleges in pertinent part as follows.

On May 30, 2019, Pawnee and Campo Verde entered into a written Lease Agreement (“Lease”) under which Campo Verde would pay monthly rent of $2,295.80 for 36 months for certain forklift equipment. Campo Verde was also liable for taxes, fees, charges and other obligations as set forth in the Lease. Also on May 30, 2019, Juarez signed a Guaranty of Lease (“Guaranty”) for the full amount owed by Campo Verde.

On April 15, 2022, Campo Verde failed to make the monthly payments due and owing pursuant to the Lease. Pawnee has accelerated the rental payments owed under the Lease, which total $4,591.60 after discounting 4% pursuant to the Lease. Campo Verde also owes (1) $5,562.60 for the Purchase Option; (2) $1,677.15 for Open Property Tax Charges; (3) $1,026.46 as a Tax on Contract Obligation; (4) $13,393.12 for Other Miscellaneous Charges Due; and (5) a $95 termination fee. This total owed is $26,345.93. The Lease also charges annual interest at 24%.

Pawnee seeks (1) $26,345.93 in damages, with interest at an annual rate of 24% or 10%; (2) late charges; (3) delinquency charges; (4) property taxes, fees, and liens; (5) an order requiring the release of the equipment to Pawnee; (6) recovery of the fair market value of the equipment at the time of conversion if delivery cannot be had; (7) fair compensation for the time and money properly expended in pursuit of recovering the equipment; (8) immediate possession of all collateral and books and records pertaining thereto as set forth in the Lease; and (9) attorney’s fees and costs.

2. Course of Proceedings

On August 30, 2022, Pawnee personally served Juarez and Campo Verde Packing with the Complaint, Summons, and moving papers for the instant applications.

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.

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.

On May 30, 2019, Pawnee and Campo Verde entered into a Lease for the equipment, under which Campo Verde would pay $2,295.80 in monthly rent for 36 months. Fitzgerald Decl., ¶¶ 4-5, Ex. 1.[1] The Lease held Campo Verde liable for state and federal taxes and fees and for finding and paying for insurance. Fitzgerald Decl., ¶6, Ex. 1. The schedule of rental payments shows that “Rent with Tax” remains $2,295.80. Fitzgerald Decl., ¶6, Ex. 1.

Campo Verde’s failure to pay rent when due results in a 15% late charge, plus an annual interest rate of 24%. Fitzgerald Decl., ¶6, Ex. 1. The failure also constitutes a default, which would entitle Pawnee to (1) all unpaid rent and other amounts owed under the Lease; (2) all future unpaid rent and other amounts owed under the Lease, discounted by 4% per year; and (3) termination of the Lease and return of the equipment upon demand. Fitzgerald Decl., ¶6, Ex. 1. The Lease also charged a $95 termination fee and makes Campo Verde liable for any attorney’s fees incurred in collection efforts. Fitzgerald Decl., ¶¶ 6, 11, Ex. 1.

Upon demand after default, Campo Verde must either return the equipment on Pawnee’s terms or notify Pawnee that it intends to exercise the Lease’s purchase option for the equipment. Fitzgerald Decl., ¶6, Ex. 1. The purchase price would be the fair market value, not exceeding 10% of the $55,626 Equipment Cost plus applicable sales tax. Fitzgerald Decl., ¶6, Ex. 1.

The Lease included a Guaranty signed by Juarez, in which he guarantied all debts that Campo Verde incurred under the Lease. Fitzgerald Decl., ¶12, Ex. 1.

On April 15, 2022, Campo Verde defaulted by failing to pay under the Lease. Fitzgerald Decl., ¶8, Ex. 2. Pawnee sent an invoice for (1) $4,591.60 for the remaining balance of rent after the 4% annual discount; (2) $5,562.60 for the purchase option; (3) $1,677.15 pursuant to open property tax charges; (4) $1,026.46 as a tax on contract obligation; (5) $13,393.12 as other miscellaneous charges due; and (6) the $95 termination fee. Fitzgerald Decl., ¶¶ 8-9, 15, Ex. 2. The invoice divided the “open property tax charges” and “other miscellaneous charges due” into (1) $13.17 in sales and use taxes; (2) $180 in return charges; (3) $151.83 in PPT prep fees; (4) $1,677.15 in property taxes; (5) $4,264.37 in finance charges; and (6) $8,783.75 in late charges. Fitzgerald Decl., ¶¶ 8-9, 15, Ex. 2. Defendants also owe $3,500 in attorney’s fees and costs. Fitzgerald Decl., ¶17.

According to Campo Verde’s Statement of Information, Juarez is its Chief Executive and Financial Officer, Secretary, and agent for service of process. Fitzgerald Decl., ¶16, Ex. 3.

Pawnee applies for right to attach orders against Defendants Campo Verde and Juarez in the amount of $29,845.93, including $1,500 in costs and $2,000 in attorney’s fees.

Plaintiff’s claim for $29,845.93 against Campo Verde is based on the Lease, and the claim for the same amount against Juarez is based on the Guaranty included in the Lease. Fitzgerald Decl., ¶¶ 4, 12, Ex. 1. Pawnee has a claim on which attachment can be based against each Defendant.

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).

Pawnee asserts that the unpaid principal is $26,345.93, which includes (1) $4,591.60 for the remaining balance of rent after the 4% annual discount; (2) $5,562.60 for the purchase option; (3) $1,677.15 pursuant to open property tax charges; (4) $1,026.46 as a tax on contract obligation; (5) $13,393.12 as other miscellaneous charges due; and (6) the $95 termination fee. Fitzgerald Decl., ¶¶ 8-9, 15, Ex. 2. The invoice divided “open property tax charges” and “other miscellaneous charges due” into (1) $13.17 in sales and use taxes; (2) $180 in return charges; (3) $151.83 in PPT prep fees; (4) $1,677.15 in property taxes; (5) $4,264.37 in finance charges; and (6) $8,783.75 in late charges. Fitzgerald Decl., ¶¶ 8-9, 15, Ex. 2. Although these charges purport to incur interest at 24% per year, the application does not rely on this interest rate. Fitzgerald Decl., ¶6, Ex. 1.

The default occurred on April 15, 2022, meant that Defendants had yet to make 2 of the 36 monthly payments of $2,295.80. Fitzgerald Decl., ¶6, Ex. 1. The second unpaid payment must be discounted at an annual rate of 4%, or 0.33% for one month. Fitzgerald Decl., ¶6, Ex. 1. The outstanding base rent of $2,295.80 + ($2,295.80 x 0.9967) = $4,584.02 is ascertainable.

Upon default, the Lease gives Pawnee the right to demand return of the equipment. Fitzgerald Decl., ¶6, Ex. 1. Campo Verde could then elect to exercise the purchase option. Fitzgerald Decl., ¶6, Ex. 1. The purchase price would be the fair market value, not to exceed 10% of the Equipment Cost plus applicable sales tax. Fitzgerald Decl., ¶6, Ex. 1. The invoice lists a purchase price of $5,562.60, which is 10% of the equipment value in the Lease. Fitzgerald Decl., ¶6, Exs. 1-2. Pawnee provides no evidence that it has demanded the return of the equipment or that Campo Verde will exercise the purchase option instead. Pawnee also provides no evidence that the fair market value exceeds $5,562.60, such that $5,562.60 is the price Campo Verde would pay. The Purchase Option damages are not ascertainable and disallowed.

The invoice lists a variety of taxes and fees, including (1) $1,677.15 in property taxes; (2) $1,026.46 as a tax on contract obligation; (3) $4,264.37 in finance charges; (4) $151.83 in PPT prep fees; (5) $13.17 in sales and use taxes; and (6) $180 in return charges. Fitzgerald Decl., ¶¶ 8-9, 15, Ex. 2. Although the Lease holds Campo Verde liable for all fees and taxes, these appear to be fees and taxes incurred by Pawnee to state and federal authorities. Fitzgerald Decl., ¶6, Ex. 1. Pawnee fails to explain what property taxes and sales and use taxes have been incurred and with what taxing authority. Nor does Pawnee explain what a “tax on contract obligation” is. Further, the $4,264.37 in finance charges for two unpaid monthly payments in 2022 appears unlawful on its face. Pawnee further fails to explain why there is a $180 return charge for equipment that has not been returned, and what $151.83 in PPY prep fees are. Nor are any of these charges reflected in the Lease terms. The taxes and fees are disallowed.

As to late charges, the Lease provides for late charges at 15% of the amount owed. Fitzgerald Decl., ¶6, Ex. 1. Only $4,584.02 in damages is ascertainable. The late charge for is therefore $4,584.02 x 0.15 = $687.60. The invoice late charges of $8,783.75 above that amount are disallowed.

Finally, the Lease imposes a $95 termination fee, which the invoice reflects. It is therefore ascertainable. Fitzgerald Decl., ¶¶ 6, 9, Exs. 1-2.

Pawnee further claims that it expects to incur $2,000 in attorney’s fees and $1,500 in costs. Fitzgerald Decl., ¶17. Although the Lease provides that Campo Verde would be responsible for these fees and costs, neither estimate is supported by an attorney declaration. These costs are therefore disallowed. Fitzgerald Decl., ¶6, Ex. 1.

In sum, the damages are readily ascertainable in the amount of $4,584.02 + $687.60 + $95 = $5,366.62.

Pawnee provides evidence that Campo Verde signed the Lease for the equipment, and that Juarez signed the Guaranty. Fitzgerald Decl., ¶¶ 4, 12, Ex. 1. In the event of default, the Lease allowed Pawnee to collect all past and future rent owed, subject to an annual discount, and repossess the equipment unless Campo Verde exercised the purchase option. Fitzgerald Decl., ¶6, Ex. 1. Pawnee has demonstrated that Campo Verde defaulted on April 15, 2022. Fitzgerald Decl., ¶¶ 8, 15, Ex. 2. Pawnee has shown that Juarez did not pay Campo Verde’s debt under the Guaranty.

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).

According to Campo Verde’s Statement of Information, Juarez is its Chief Executive and Financial Officer, Secretary, and agent for service of process. Fitzgerald Decl., ¶16, Ex. 3. He signed the Guaranty to induce Pawnee’s entrance into the Lease. Fitzgerald Decl., ¶12, Ex. 1. His liability arose from his course of business.

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.

For Juarez, the application asks for attachment of (1) deposit accounts pursuant to CCP section 488.455; (2) accounts receivable or general intangibles pursuant to CCP section 488.470; and (3) real property at Karen Lane and Seven Springs. This is an adequate description of the property to attach.

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). Pawnee seeks attachment for breach of both contracts, a proper purpose.

Pawnee’s applications for right to attach orders are granted in part for each Defendant in the amount of $5,366.62. Pawnee has not filed proposed right to attach orders for each Defendant and is ordered to do so within two court days or they will be deemed waived. No writ shall issue for either Defendant until Pawnee files a $10,000 undertaking for that Defendant.

[1] The Lease is illegible at times. Pawnee’s counsel is admonished to provide a better quality or larger font scan of agreements in future filings.