Judge James C. Chalfant, Case 22STLC04582 2022-10-18 Tentative Ruling

Plaintiff Financial Pacific Leasing, Inc. (“Financial Pacific”) applies for right to attach orders against Defendants Ramco Demolition, Inc. (“Ramco”) and Gerardo Ramirez (“Ramirez”) in the amount of $16,922.61. Financial Pacific also seeks a writ of possession against Ramco for a 2014 Peterbilt 386 Tractor VIN #1XPHD49X8ED226560 (“Tractor”)

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 Ramco and Ramirez on July 11, 2022 for (1) breach of lease agreement, (2) breach of guaranty, (3) account stated, and (4) claim and delivery. The Complaint alleges in pertinent part as follows.

On August 23, 2019, Defendant Ramco entered into a written Lease Agreement (“Lease”) with Snider Leasing Corp. (“Snider”) whereby Ramco Leased the Tractor from Snider. As part of the Lease, Ramirez entered into a Continuing Guaranty to the Agreement (“Guaranty”) for Ramco’s obligations under the Lease.

On June 28, 2021, Snider sold, assigned, and conveyed all rights, title, and interest under the Lease to Financial Pacific.

On March 1, 2022, Ramco defaulted on the Lease for failure to make the payment due and any payments due thereafter. The Lease permits Financial Pacific to immediate possession of all leased equipment upon default.

Upon default, the Lease also permitted Financial Pacific to accelerate all amounts owed, which total $14,059.86, and demand payment thereof. The Lease also permitted Financial Pacific to assess a late charge of 10% of each monthly payment. As of the date of the Complaint, the late charges totaled $742.47. The Lease further permitted collection of other charges incurred in connection with the breach which total $1,405.69. After Financial Pacific applied Ramco’s $1,626 security deposit to this debt, the outstanding damages total $14,582.02 plus contractual pre-judgment interest at an 18% annual rate.

Financial Pacific seeks (1) $14,582.02 plus interest at an 18% annual rate; (2) reasonable attorney’s fees; (3) immediate return and possession of all items in the Lease; and (4) costs of the suit.

2. Course of Proceedings

On September 11, 2022, Financial Pacific personally served Defendants Ramco and Ramirez with the Complaint, Summons, and the moving papers for the applications for both right to attach orders and the writ of possession.

B. Statement of Facts

On August 23, 2019, Defendant Ramco and Snider entered into the written Lease for the Tractor. Gonzales Decl., ¶4, Ex. 1. Under the Lease, Ramco paid a $1,626 security deposit and agreed to make 36 monthly payments of $1,626 beginning September 1, 2019. Gonzales Decl., ¶4, Ex. 1. Any amount that Ramco failed to pay within ten days of the due date would yield a late charge of 5% of the amount due. Gonzales Decl., ¶4, Ex. 1.

Amounts claimable upon early termination include (1) a $300 termination fee; (2) all sums due and not yet paid under the Lease; (3) the value of the Tractor less any sales price; (4) any fees and taxes resulting from early termination; and (5) any other amounts due under the Lease. Gonzales Decl., ¶¶ 4, 8, Ex. 1. For such purposes, the Lease defines the value of the Tractor as either (1) an amount the parties agree on in writing after repossession or (2) the highest of commercial purchase bids that Snider obtains for the Tractor. Gonzales Decl., ¶¶ 4, 8, Ex. 1.

The Lease provided that upon default for failure to pay, Snider could (1) terminate the Lease; (2) accelerate the remaining payments due and declare due all amounts identified as due upon early termination; (3) repossess the Tractor through lawful means; (4) sell of dispose of the Tractor in a commercially reasonable manner; (5) recover from Ramco all amounts then due and owing hereunder less the net sales price of the Tractor if Snider has repossessed and sold it; or (6) pursue any other remedy available at law. Gonzales Decl., ¶¶ 4, 8, 13, Ex. 1. The amount due upon default would accrue interest at a rate of 18% per year. Gonzales Decl., ¶¶ 4, 12, Ex. 1. Snider would also have the right to demand reasonable attorney’s fees and costs in an action to enforce the Lease. Gonzales Decl., ¶¶ 4, 14, Ex. 1.

The address listed on the Lease for Ramco is 2247 Cantebury Avenue, Pomona, California 91768 (“Cantebury Avenue”). Gonzales Decl., ¶4, Ex. 1.

As part of the Lease, Ramirez signed a Guaranty for Ramco’s obligations under the Lease. Gonzales Decl., ¶6, Ex. 1. The address on the Guaranty is 2347 Valle Drive, La Habra Heights, California 90631 (“Valle Drive”). Gonzales Decl., ¶6, Ex. 1. Ramirez’s signature is also on the Lease on Ramco’s behalf. Gonzales Decl., ¶4, Ex. 1.

On June 28, 2021, Snider sold, assigned, and conveyed all rights, title, and interest under the Lease to Financial Pacific, pursuant to a Master Purchase and Sale Agreement (“Sale Agreement”). Gonzales Decl., ¶5, Ex. 2.

On March 1, 2022, Ramco defaulted on the Lease for failure to make the payment due and any payments due thereafter. Gonzales Decl., ¶7. Ramco, and therefore Ramirez, owes $14,059.86 exclusive of post-default interest, attorney’s fees, and costs. Gonzales Decl., ¶8. 10% late charges add $742.47 to this amount. Gonzales Decl., ¶9. Other charges associated with the default, such as taxes and fees, total $1,405.69. Gonzales Decl., ¶10. Financial Pacific has applied the $1,626 deposit to these amounts. Gonzales Decl., ¶11. This yields total damages of $14,582.02 before post-default interest at an annual rate of 18%, which totals $913.13 as of July 6, 2022. Gonzales Decl., ¶¶ 12, 24. Ramco and Ramirez have also refused to return the Tractor pursuant to the Lease. Gonzales Decl., ¶13.

Pacific Financial has retained counsel and expects that its attorneys’ fees will total $827.46 and its costs $600. Gonzales Decl., ¶¶ 14, 24.

Based on the experience of the Vice President of Portfolio Services for Pacific Financing, the market value of the Tractor is $15,000. Gonzales Decl., ¶¶ 13, 21. The Tractor is at 10717 Inez Street, Whittier, California 90605 (“Inez Street”). Gonzales Decl., ¶18.

C. Attachment

Plaintiff Financial Pacific applies right to attach orders against Defendants Ramco and Ramirez in the amount of $16,922.61, including $600 in costs and $827.46 in attorney’s fees.

1. 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.

Pacific Financial’s claim for $16,922.61 against Ramco is based on the Lease, and the claim for the same amount against Ramirez is based on the Guaranty included in the Lease. Gonzales Decl., ¶¶ 4, 6, Ex. 1. Pacific Financial 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).

Pacific Financing asserts (1) an unpaid balance of $14,582; (2) interest of $913.13 as of July 6, 2022; (3) attorney’s fees of $827.46; and (4) costs of $600. Gonzales Decl., ¶24.

Pacific Financing alleges an unpaid balance of $14,059.86 before late charges but does not explain it. Gonzales Decl., ¶8. There is no payment history or other determination of the base payments made and owed.

Nor do Pacific Financing’s conclusions appear to be correct. If Ramco defaulted on March 1, 2022 as Pacific Financing contends, there should remain six of the 36 monthly base payments outstanding. See Gonzales Decl., ¶7. Under the Lease, Ramco paid a $1,626 security deposit and agreed to make 36 monthly payments of $1,626 from September 1, 2019. Gonzales Decl., ¶4, Ex. 1. After subtracting the security deposit equal to one month’s payment (Gonzales Decl., ¶11), the base payments owed would be $8,130.

The supporting declaration miscites the late fee for payments as 10%. Gonzales Decl., ¶9. The Lease charges a 5% late fee for any amount that Ramco failed to pay within ten days of the due date. Gonzales Decl., ¶4, Ex. 1(¶36). As the base payment owed is $8,130, the 5% late fee is $406.50.

Early termination by default incurs a $300 termination fee, which is therefore ascertainable. Gonzales Decl., ¶¶ 4, 8, Ex. 1.

Early termination renders Ramco liable for the amount, if any, by which the Net Capitalized Cost of $46,650, less all $1,152.77 monthly payments, exceeds the value of the Tractor determined in accordance with the Lease. Gonzales Decl., ¶4, Ex. 1. The Lease defines the value of the Tractor as either (1) an amount the parties agree on in writing after repossession or (2) the highest of commercial purchase bids for the Tractor after repossession. Gonzales Decl., ¶4, Ex. 1. Since it defaulted on March 1, 2022, Ramco must have made 30 payments, which reduces the amount owed by $1,152.77 x 30 = $34,583.10. The amount owed for the Tractor upon default is therefore $46,650 - $34,583.10 = $12,066.90. Pacific Financing seeks repossession of the Tractor and has demanded its return but does not allege that Ramco agreed to its value or that Pacific Financing received purchase bids. See Gonzales Decl., ¶13. Assuming arguendo that any bids would be the fair market value of $15,000, that value exceeds the remaining Capitalized Cost. Gonzales Decl., ¶13. There are no ascertainable damages per the Capitalized Cost.

Early termination also renders Ramco liable for any fees and taxes resulting from early termination. Gonzales Decl., ¶4, Ex. 1. Pacific Financing alleges that this totals $1,405.69 but provides no evidence of those fees. Gonzales Decl., ¶10. The fees and taxes are therefore not ascertainable.

The total ascertainable balance under the Lease would be $8,130 + $406.50 + $300 = $8,836.50. The Lease provides for 18% interest after default. Gonzales Decl., ¶4, Ex. 1. As of this hearing, about seven months have passed since default on March 1, 2022. Gonzales Decl., ¶24. The interest is therefore $8,836.50 x (0.18 x 7/12) = $927.83. The total amount owed would be $8,836.50 + $927.83 = $9,764.33.

Pacific Financing claims that it expects to incur $827.46 in attorney's fees and $600.00 in costs of suit. Gonzales Decl., ¶24. Neither estimate is supported by an attorney declaration that the estimates are reasonable. These costs are therefore disallowed.

If the claim were adequately supported, the damages would be readily ascertainable in the amount of $9,764.33.

Pacific Financing provides evidence that Ramco signed the Lease and that Ramirez signed the Guaranty. Gonzales Decl., ¶¶ 4, 6, Ex. 1. In the event of default, the Lease allows Pacific Financing to collect all past and future rent owed, late charges, relevant fees and taxes, a termination fee, and interest even after repossession of the Tractor. Gonzales Decl., ¶4, Ex. 1. Although Snider was the original lessor, Pacific Financing provides evidence that Snider assigned its rights under both agreements to Pacific Financing pursuant to a Sale Agreement. Gonzales Decl., ¶¶ 4-5, Exs. 1-2.

Pacific Financing alleges that Ramco defaulted on the Lease on or about March 1, 2022 without any supporting documentary evidence. Gonzales Decl., ¶7. It does not present a payment history, adequately calculate the amount owed, or provide a notice of default and demand for the Tractor. See Gonzales Decl., ¶13. As discussed ante, Pacific Financing’s conclusions are not supported by the court’s analysis of the amount readily ascertainable. Strict compliance is required with statutory requirements for affidavits for attachment (Anaheim National Bank v. Kraemer, (1932) 120 Cal.App. 63, 65), and the court applies the same evidentiary standard to the declarations in an attachment hearing as to a case tried on oral testimony. VFS Financing, Inc. v. CHF Express, LLC, (2009) (C.D. Cal.) 620 F.Supp.2d 1092, 1096-97. 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. Pacific Financing has not sufficiently supported its claim for damages.

Pacific Financing has failed to demonstrate a probability of success on the claims for breach of Lease or 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).

Ramirez signed the Guaranty, but he also signed the Lease on Ramco’s behalf. Gonzales Decl., ¶¶ 4, 6, Ex. 1. This suggests that he is a corporate officer of Ramco, if not its owner, and therefore signed the Guaranty as part of his business. Mem. at 7. 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 Ramirez, the application asks for attachment of (1) property, including equipment and inventory, of a going business pursuant to CCP Sections 488; (2) all vehicles of a going business pursuant to CCP section 488.385; (3) deposit accounts thereof pursuant to CCP section 488.455; and (4) any accounts receivable or general intangibles pursuant to CCP section 488. This description of property to attach is sufficient.

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

Plaintiff Financial Pacific seeks a writ of possession for the Tractor. 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.). Plaintiff has failed to use the Judicial Council forms and the application for a writ of possession order is denied.

Plaintiff’s applications for right to attach orders and writ of possession are denied.