Limelight International, Ltd. v. OneWorld Apparel, LLC, 22STCV38443

Tentative decision on application for a right to attach order: denied

 

           

           

Plaintiff Limelight International, Ltd. (“Limelight”) applies for a right to attach order against Defendant OneWorld Apparel, LLC, aka One World Apparel, LLC (“OneWorld”) in the amount of $586,962.09.

            The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

 

            A. Statement of the Case

            1. Complaint

            On December 9, 2022, Plaintiff Limelight filed the Complaint using Form PLD-C-001 against Defendant OneWorld alleging (1) breach of contract and (2) three claims for common counts.  The Complaint alleges in pertinent part as follows.

            Limelight sent invoices for goods that OneWorld purchased on April 3, May 15, June 1, and September 4, 2022.  Each invoice required that OneWorld pay within 60 calendar days.  OneWorld has not timely paid any of the invoices.  Limelight seeks the total debt owed of $586,962.09.

 

            2. Cross-Complaint

            RLoom, LLC (“RLoom”), formerly known as OneWorld, filed a Cross-Complaint against Limelight, Catherine Yan (“Yan”), and Sylvia Ha Huynh (“Huynh”) on January 27, 2023, alleging (1) fraud in inducement, (2) fraud in concealment, (3) conspiracy to defraud, (4) breach of fiduciary duty, (5) aiding and abetting a breach of fiduciary duty, (6) civil theft under Penal Code section 496, (7) unfair business practices under Business & Professions Code section 17200, and (8) recission.  The Cross-Complaint alleges in pertinent part as follows.

            RLoom is a wholesaler of women’s clothing.  In July 2016, Huynh began employment with RLoom as production manager.  In January 2020, she became its Vice President and subsequently President.  In those roles, she was to plan and coordinate manufacturing processes for garment orders, approve the manufacturers and pricing for garment orders, and ensure that those orders were with well-reputed overseas manufacturers with the best pricing and highest quality garments.  In connection with her employment, Huynh signed an agreement in the employee handbook that she understood that (1) RLoom prohibited all employees from receiving any gifts or gratuities, including bribes, kickbacks, presents, incentives and/or bonuses, from any customer or supplier; and (2) any employee who receives such a gift must immediately report it to RLoom.

            Huynh selected Limelight as an overseas manufacturer.  In early 2021, RLoom began its multi-million dollar relaunching of the luxury brand “Cynthia Vincent.”  Huynh directed RLoom to place the majority of its garment production with Limelight.  By late 2021, the clothing line had not gained traction and RLoom had to shut down the relaunch. 

            What RLoom did not know was that Limelight was charging excessive prices for production of the garment orders, and manufacturing low quality garments which could not be sold in the marketplace.  In exchange for kickbacks, Huynh had agreed to Limelight’s excessive pricing for orders and to payment terms outside of RLoom’s ordinary course of business.  Huynh admits that Limelight paid her “commissions,” which she did not disclose at the time.  The excessive pricing and lower quality of the goods contributed to the product’s failure.

            During her employment with RLoom, Huynh received bribes and kickbacks from suppliers other than Limelight in exchange for excessive pricing and payment terms outside of RLoom’s ordinary course of business.  Huynh also was an employee of Limelight and held herself out as its Founder and Sales Executive during her employment with RLoom.

            RLoom seeks (1) at least $2 million in damages plus interest as the highest legal rate, (2) punitive damages, (3) treble damages under Penal Code section 496(c), (4) injunctive relief and for restitution and disgorgement of all money and profits in connection with the unfair or fraudulent conduct, (5) an order that rescinds all contracts between RLoom and Limelight and requires Limelight to disgorge all sums RLoom paid thereunder, and (6) attorney’s fees and costs.

 

            3. Course of Proceedings

            On December 28, 2022, Limelight served OneWorld with the Complaint, Summons, and moving papers for this application.

            On January 27, 2023, OneWorld filed its Answer to the Complaint.  As RLoom, it also electronically served the Cross-Complaint.

 

            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.

            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.