Judge James C. Chalfant, Case 22STCV33424 2023-01-05 Tentative Ruling

BMO Harris Bank N. A. v. The Beasley Group, LLC, Roy Beasley, Jacqueline Cormier, Andrea Spencer, 22STCV33424

Tentative decision on applications for writ of possession: denied

Plaintiff BMO Harris Bank N. A. (“BMO”) seeks a writ of possession against Defendants Beasley Group, LLC (“Beasley Group”) and Jacqueline Cormier (“Cormier”), to recover (1) two 2015 Freightliner Cascadia Series: CA12564SLP 125”BBC Conv. Cab w/72"RR SLPR Tractor 6x4 (“2015 Tractors”); and (2) one 2018 International LT Series: LT625 6x4 (“2018 Vehicle”). BMO also seeks a writ of possession against Defendant Andrea Spencer (“Spencer”) for the 2015 Tractors. It also seeks a writ of possession against Defendant Roy Beasley (“Beasley”) for the 2018 Vehicle.

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

Plaintiff BMO filed the Complaint on October 13, 2022, alleging causes of action for (1) two breaches of written agreement; (2) four breaches of continuing guaranty; (3) claim and delivery; and (4) conversion. The Complaint alleges as follows.

On July 21, 2020, BMO and the Beasley Group entered into a written Loan and Security Agreement account ending in 4001 (“Agreement 4001”) for the financing of the 2015 Tractors. To induce entry into Agreement 4001, Cormier and Spencer entered into guaranties (“Guaranty”) for the full amount owed thereunder.

On September 10, 2021, BMO and the Beasley Group entered into a written Loan and Security Agreement account ending in 3001 (“Agreement 3001”) for the financing of the 2018 Vehicle. To induce entry into Agreement 3001, Cormier and Beasley entered into Guaranties for the full amount owed thereunder.

The Beasley Group breached Agreement 3001 on June 1, 2022 for failure to make the monthly installment due. It has also failed to make further payments due. The principal balance now due and owing is $66,394.74, together with 8.75% interest before September 26, 2022 and 18% interest after.

The Beasley Group breached Agreement 4001 on June 10, 2022 for failure to make the monthly installment due. It has also failed to make further payments due. The principal balance now due and owing is $27,498.33, together with 13.72% interest before September 26, 2022 and 18% interest after.

BMO seeks (1) damages, interest, late charges, repossession costs, and attorney’s fees against all Defendants. BMO also seeks (1) the return of the 2015 Tractors and 2018 Vehicle (collectively “Collateral”), (2) recovery of the fair market value of the Collateral in case delivery cannot be had, (3) compensation for the time and money properly expended in pursuit of the Collateral, and (4) costs of suit.

On October 21, 2022, Department 40 (Hon. David Sotelo) issued notice of an Order to Show Cause (“OSC”) re: failure to file proof of service. Department 40 will hear the OSC on March 8, 2023.

On December 15, 2022, BMO served Spencer with the Complaint, Summons, and moving papers for this application for writ of possession by substitute service, effective December 25, 2022. No proof of service is on file for the other Defendants.

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 July 21, 2020, the Beasley Group entered into Agreement 4001 with BMO to finance the purchase of the 2015 Tractors. Oliver Decl., ¶6, Ex. 1. Agreement 4001 required the Beasley Group to make 38 monthly installments of $1,789.04 beginning September 10, 2020. Oliver Decl., ¶6, Ex. 1. BMO calculated the amount owed based on 13.72% interest. Oliver Decl., ¶6, Ex. 1. The Beasley Group granted BMO a security interest in the 2015 Tractors. Oliver Decl., ¶6, Ex. 1.

On September 10, 2021, the Beasley Group entered into Agreement 3001 with BMO to finance the purchase of the 2018 Vehicle. Oliver Decl., ¶12, Ex. 2. Agreement 3001 required the Beasley Group to make 48 monthly installments of $1,879.34 from November 1, 2021. Oliver Decl., ¶12, Ex. 2. BMO calculated the amount owed based on 8.75% interest. Oliver Decl., ¶12, Ex. 2. The Beasley Group granted BMO a security interest in the 2018 Vehicle. Oliver Decl., ¶12, Ex. 2.

In the event of default, each Agreement entitled BMO to (1) declare a default and accelerate all debts owed, (2) declare any other debt owed to BMO due and payable, and (4) exercise the right to repossession of the Collateral. Oliver Decl., ¶¶ 6, 12, Exs. 1-2. Acceleration would also cause all debts owed to accrue interest at 1.5% per month, or 18% per year. Oliver Decl., ¶¶ 6, 12, Exs. 1-2.

The certificates of title for all Collateral reflect BMO’s security interest. Oliver Decl., ¶18, Ex. 3.

The Beasley Group breached Agreement 3001 on June 1, 2022 for failure to make the monthly installment due. Oliver Decl., ¶13. It has also failed to make further payments due. Oliver Decl., ¶13. BMO accelerated the balance due on September 26, 2022. Oliver Decl., ¶14. The principal balance now due and owing is $66,394.74, together with 8.75% interest before September 26, 2022 and 18% interest after. Oliver Decl., ¶14.

The Beasley Group breached Agreement 4001 on June 10, 2022 for failure to make the monthly installment due. Oliver Decl., ¶7. It has also failed to make further payments due. Oliver Decl., ¶7. BMO accelerated the balance due on September 26, 2022. Oliver Decl., ¶8. The principal balance now due and owing is $27,498.33, together with 13.72% interest before September 26, 2022 and 18% interest after. Oliver Decl., ¶8.

The Beasley Group is liable to BMO for late charges, repossession costs, and other fees under the Agreements. Oliver Decl., ¶¶ 9, 15. Demands for payment have failed. Oliver Decl., ¶¶ 10, 16.

The Collateral is in the possession or control of Defendants. Oliver Decl., ¶20. Because the address for the Beasley Group on each Agreement’s signature page is 375 Redondo Avenue 550, Long Beach, CA 90814, BMO believes the Collateral is at that location. Oliver Decl., ¶21(a), Exs. 1-2.

Black Book Values for the Collateral range (1) from $61,900 to $77,425 for the 2018 Vehicle; and (2) from $32,125 to $45,475 for each of the 2015 Tractors. Oliver Decl., ¶26, Ex. 4.

Plaintiff BMO seeks writs of possession against the Beasley Group, Beasley, Spencer, and Cormier for the Collateral under Agreements 3001 and 4001.

There is no proof of service for the Summons and Complaint on file for any Defendant except Spencer, effective December 26, 2022. As a result, the court lacks jurisdiction to proceed against the other Defendants.

Additionally, no proof of service for the moving papers for any Defendant except Spencer, again effective December 26, 2022. A defendant is entitled to 16 court days’ notice of the application. CCP §1005. The hearing date is January 5, 2023 and all moving papers were required to be served before December 14, 2022. The applications are denied for lack of jurisdiction and insufficient notice.

Assuming arguendo that Defendants have been timely served, BMO relies only on Agreements with the Beasley Group, none of which suggest that Roy, Spencer, or Cormier are liable for claim and delivery for the Collateral. Oliver Decl., ¶¶ 6, 12, Exs. 1-2. The applications for writs of possession against Roy, Spencer, and Cormier must be denied.

As to the Beasley Group, BMO presents evidence that the Beasley Group entered into two Agreements for the financing purchase of the Collateral. Oliver Decl., ¶¶ 6, 12, Exs. 1-2. The Agreements provided that the Beasley Group was to make monthly payments. Oliver Decl., ¶¶ 6, 12, Exs. 1-2. Upon default, the Agreements permitted BMO to accelerate the amounts due, charge 1.5% interest per month, and seek repossession of the Collateral. Oliver Decl., ¶¶ 6, 12, Exs. 1-2. BMO perfected its interest in the collateral via the certificates of title. Oliver Decl., ¶18, Ex. 3.

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.

BMO’s evidence would be inadequate if any Defendant opposed. BMO provides conclusory evidence that the Beasley Group defaulted and did not make any payment after June 2022 under either Agreement, which leaves outstanding balances of $27,498.33 and $66,394.74 before interest. Oliver Decl., ¶¶ 7-8, 13-14. BMO fails to support this conclusion with a payment history or calculation that these are the amounts owed. As the Beasley Group has not opposed, the court may overlook this evidentiary defect.

The maximum Black Book Values for the Collateral is $77,425 for the 2018 Vehicle and $45,475 for each of the 2015 Tractors. Oliver Decl., ¶26, Ex. 4. The Beasley Group’s interest in the 2018 Vehicle is $77,425 minus $66,394.74, or $11,030.26. The Beasley Group’s interest in the 2015 Tractors is $90,950 ($45,475 times 2) minus $27,425, or $63,525. 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. CCP §515.010(a). Therefore, the undertaking for the 2018 Vehicle is $22,060.52 and the undertaking for the 2015 Tractors is $127,050. The Beasley Group’s undertaking to prevent recovery shall be in the same amounts.

Because the address for the Beasley Group on each Agreement’s signature page is 375 Redondo Avenue 550, Long Beach, CA 90814, BMO believes the Collateral is at that location. Oliver Decl., ¶21(a), Exs. 1-2. This is sufficient probable cause for the levying officer to enter the location if it is a private location. CCP §512.060(b).

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