Judge James C. Chalfant, Case 22STLC08472 2023-03-21 Tentative Ruling

PNC Equipment Finance, LLC v. JSN General Contractor’s, Inc. and Jesus Sandoval, 22STLC08472

Tentative decision on application for writs of possession and turnover order: granted

Plaintiff PNC Equipment Finance (“PNC”) seeks a writ of possession against Defendants JSN General Contractor’s, Inc. (“JSN”) and Jesus Sandoval (“Sandoval”) to recover a 2022 Viking V7 Breaker, Serial Number V72158 (“Vehicle”). PNC also seeks a turnover order compelling Defendants to transfer possession of the Vehicle.

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

Plaintiff PNC filed the Complaint against Defendants on December 20, 2022, alleging causes of action for (1) breach of written agreement, (2) claim and delivery, (3) conversion, and (4) account stated. The Complaint alleges as follows.

On June 3, 2022, PNC and JSN entered into a written Loan and Security Agreement (“Agreement”) for the purchase and financing of the Vehicle, which was collateral. PNC perfected its interest in the Vehicle with a UCC Financing Statement filed with the Secretary of State.

JSN breached the Agreement on June 8, 2022 for failure to make the first monthly installment due. It has also failed to make further payments due, and PNC has exercised its right under the Agreement to accelerate the balance due. The balance now due and owing is $11,923.77.

PNC believes the Vehicle is at either 530 S. Lake Ave., Pasadena, CA 91101 (“S. Lake”), or 7015 Rosecrans Ave., Paramount, CA 90723 (“Rosecrans”).

PNC seeks (1) the principal balance of $11,923.77, an order for release of the Vehicle to PNC or recovery of the $6,000 fair market value if it cannot be had, and attorney’s fees and costs.

On January 9, 2023, PNC served JSN and Sandoval with the Complaint, Summons, and moving papers by substitute service, effective January 19, 2023.

On February 23, 2023, Department 25 (Hon. Katherine Clinton) entered the default of Defendants JSN and Sandoval.

On March 2, 2023, PNC requested entry of default judgment against JSN and Sandoval.

On March 3, 2023, PNC requested dismissal of the case against Does 1-100 without prejudice.

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.

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, (“Edwards”) (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 June 3, 2022, PNC and JSN entered into the Agreement to finance JSN’s purchase of the Vehicle. McGinley Decl., ¶4, Ex. 1. Sandoval signed the Agreement as JSN’s President. McGinley Decl., ¶4, Ex. 1. The Agreement required JSN to make 12 monthly installments of $933.83. McGinley Decl., ¶4, Ex. 1. It also required JSN to maintain comprehensive liability insurance and pay the premiums thereon. McGinley Decl., ¶4, Ex. 1.

The Agreement granted PNC a security interest in the Vehicle. McGinley Decl., ¶4, Ex. 1. PNC perfected that security interest by filing a UCC Financing Statement with the Secretary of State. McGinley Decl., ¶5, Ex. 2.

The Agreement provided that, if JSN failed to make a payment within ten days of the due date, PNC was entitled to (1) declare a default and accelerate all debts owed, discounting any amounts not yet due by 3%, and (2) exercise the right to repossess and sell or lease the Vehicle. McGinley Decl., ¶4, Ex. 1. Any late payment or non-payment of any past due amount would accrue (1) a late charge after ten days of the greater of $25 or 10% of the amount due, and (2) interest at a rate of 18% if permissible by law. McGinley Decl., ¶4, Ex. 1. PNC would also be entitled to any fees incurred in enforcing its rights, including attorney’s fees. McGinley Decl., ¶11, Ex. 1.

Defendants breached the Agreement on July 8, 2022 by failing to make the first monthly installment due. McGinley Decl., ¶7, Ex. 3.[2] Based on the default, PNC accelerated the balance owed. McGinley Decl., ¶8. As of December 7, 2022, the cover sheet to PNC’s Statement of Account (“Ledger”) shows that the Remaining Loan Receivable Balance after applying the 3% discount to the 12 accelerated payments of $933.83, is $11,025.97. McGinley Decl., ¶¶ 8, 20, Ex. 3. Upon applying $500 in site visit and repossession fees, $164.35 in insurance fees, and $233.45 in late charges, the total amount owed is $11,923.77. McGinley Decl., ¶¶ 10, 20, Ex. 3. This amount does not included the 18% annual contractual default interest. McGinley Decl., ¶10.

The Vehicle is located either at (1) 530 S. Lake Ave., Pasadena, CA 91101 (“S. Lake”), (2) 7015 Rosecrans Ave., Paramount, CA 90723 (“Rosecrans”), the address on the Agreement, or (3) such other address known to Defendants. McGinley Decl., ¶14, Ex. 1. Based on the experience of PNC Litigation and Recovery Vice-President Michael McGinley, the Vehicle’s original price, its age, a forecast of current market values, and conversations with various equipment vendors, the estimated market value of the Vehicle is $6,000. McGinley Decl., ¶19.

Plaintiff PNC seeks a writ of possession and turnover order against JSN and Sandoval for the Vehicle.

The Agreement provides that JSN agreed to make 12 monthly installments of $933.83 for the Vehicle. McGinley Decl., ¶4, Exs. 1, 3. If JSN failed to make a payment within ten days of the due date, the Agreement entitled PNC to (1) declare a default and accelerate all debts owed, discounting any amounts not yet due by 3%, and (2) exercise the right to repossess and sell or lease the Vehicle. McGinley Decl., ¶4, Ex. 1. Any late payment or non-payment of any past due amount would accrue (1) a late charge after ten days of the greater of $25 or 10% of the amount due, and (2) interest at a rate of 18% if permissible by law. McGinley Decl., ¶4, Ex. 1. PNC would also be entitled to any fees incurred in enforcing its rights, including attorney’s fees. McGinley Decl., ¶11, Ex. 1. PNC perfected its interest in the Vehicle by filing a UCC Financing Statement with the Secretary of State. McGinley Decl., ¶¶ 5, 12, Ex. 2.

The Ledger provides sufficient evidence that JSN breached for failure to make payments on or after June 15, 2022. McGinley Decl., ¶7, Ex. 3. PNC accelerated the balance owed. McGinley Decl., ¶8.

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).

As of December 7, 2022, the cover sheet to PNC’s Ledger shows that the Remaining Loan Receivable Balance after applying the 3% discount to the 12 accelerated payments of $933.83, is $11,025.97. McGinley Decl., ¶¶ 8, 20, Ex. 3. Upon applying $500 in site visit and repossession fees, $164.35 in insurance fees, and $233.45 in late charges, the total amount owed is $11,923.77. McGinley Decl., ¶¶ 10, 20, Ex. 3. This amount does not include the Agreement’s 18% annual default interest. McGinley Decl., ¶10.

PNC has not accurately calculated the amount owed. There were 12 payments of $933.83 left at the time of default in July 2022. McGinley Decl., ¶¶ 8, 20, Ex. 3. Application of the 3% discount on all payments due after PNC accelerated them yields a balance of $10,869.78 (12 x $933.83 =$11,205.96 x (.97) = $10,869.78).

Late charges are the greater of $25 or 10% of the amount due. McGinley Decl., ¶4, Ex. 1. The Ledger lists $233.45 in late fees, $500 in site visit and repossession fees, and unpaid premiums of $164.35. McGinley Decl., ¶¶ 10, 20, Exs. 1, 3.

The total ascertainable damages from the breach are $10,869.78 + $233.45 + $164.35 +$500 = $11,767,58. The Vehicle’s market value is estimated to be $6,000. McGinley Decl., ¶19. Because the amount owed is greater than the market value, no undertaking is required.

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 Agreement shows that the probable location of the Vehicle is the Rosecrans address. McGinley Decl., ¶14, Ex. 1. PNC presents no evidence to support its belief that the Vehicle may be at the S. Lake address. McGinley Decl., ¶14. PNC can obtain a writ to enter a private residence only at the Rosecrans address and may enter the S. Lake address only if it is not a private residence. The writ will not include the “any other address known” to Defendants as sought by the application.

PNC also requests a turnover order compelling Defendants to transfer possession of the Vehicle. Mem. at 3. The court may 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, supra, 230 Cal.App.3d at 178. The turnover order is granted.

The application for a writ of possession and turnover order for the Vehicle is granted. The levying officer may enter the Rosecrans address if it is a private residence, as well as any commercial or public address at the S. Lake address.

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

[2] Although the declaration of Michael McGinley (“McGinley”) asserts the first payment was due on June 8, 2022, the Statement of Account says the first payment date was July 8, 2022.