Judge James C. Chalfant, Case 23STCV00513 2023-04-06 Tentative Ruling

BMO Harris Bank N. A. v. Shalena Armstrong, individual and dba S. Armstrong Trucking, LLC, 23STCV00513

Tentative decision on applications for writ of possession: denied

Plaintiff BMO Harris Bank N. A. (“BMO”) seeks a writ of possession against Defendant Shalena Armstrong, individually and doing business as S. Armstrong Trucking, LLC (collectively, “Armstrong”) to recover five Hyundai Dry Vans (“Vehicles”).

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 January 10, 2023, alleging breach of written agreement, claim and delivery, and conversion. The Complaint alleges as follows.

BMO and Armstrong entered into Loan and Security Agreements for the purchase of collateral on September 27, 2018 (“Agreement 15001”), October 26, 2018 (“Agreement 65001”), December 3, 2018 (“Agreement 80001”), January 31, 2019 (“Agreement 06002”), and February 22, 2019 (“Agreement 01001”). BMO perfected its interest in all Vehicles via certificates of title.

Armstrong defaulted on all five Agreements in September 2022. Prior to December 22, 2022, Armstrong owed (1) a principal balance of $17,749.06 on Agreement 15001 with interest of 9.58%, (2) a principal balance of $18,560.02 on Agreement 65001 with interest of 9.71%, (3) a principal balance of $20,192.33 on Agreement 80001 with interest of 9.61%, (4) a principal balance of $19,589.84 on Agreement 06002 with interest of 9.74%, and (5) a principal balance of $20,604.04 on Agreement 01001 with interest of 10.87%. On December 22, 2022, BMO accelerated the amounts due and imposed the default interest rate of 18% for each Agreement.

BMO obtained the right to recover the Vehicles, which it believes are at 13432 Vermont Avenue, Gardena, CA 90247.

As to the breach of each Agreement, BMO seeks repayment of the principal, interest that accrued at the normal rate under each Agreement until BMO declared default on December 22, 2022, interest at a rate of 18% thereafter, late charges, repossession costs, and reasonable attorney’s fees. BMO seeks an order requiring Armstrong to release the Vehicles to BMO and to pay the fair market value of any Vehicle that cannot be returned.

On January 30, 2023, BMO served Armstrong with the Complaint, Summons, and moving papers by substitute service, effective February 9, 2023.

On March 15, 2022, Department 47 (Hon. Theresa Taber) entered default against Armstrong.

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 September 27, 2018, BMO and Armstrong entered Agreement 15001 for the financing of a 2019 Hyundai Dry Vans, S/N 3H3V532C5KR318136 (“15001 Vehicle”). Oliver Decl., ¶6, Ex. 1. Agreement 15001 required Armstrong to make 72 monthly payments of $637.61, based on an interest rate of 9.2%. Oliver Decl., ¶6, Ex. 1. A letter dated May 27, 2020 modified this schedule to three months without a payment, 53 payments of $637.61, and one payment of $1,652.83. Oliver Decl., ¶6, Ex. 1.

On October 26, 2018, BMO and Armstrong entered Agreement 65001 for the financing of a 2019 Hyundai Dry Vans, S/N 3H3V532C3KR318183 (“65001 Vehicle”). Oliver Decl., ¶13, Ex. 2. Agreement 65001 required Armstrong to make 72 monthly payments of $667.38, based on an interest rate of 9.34%. Oliver Decl., ¶13, Ex. 2. The May 27, 2020 letter modified this schedule to three months without a payment, 53 payments of $667.36, and one payment of $1,747.44. Oliver Decl., ¶13, Ex. 2.

On December 3, 2018, BMO and Armstrong entered Agreement 80001 for the financing of a 2019 Hyundai Dry Vans, S/N 3H3V532C4KR317088 (“80001 Vehicle”). Oliver Decl., ¶20, Ex. 3. Agreement 80001 required Armstrong to make 72 monthly payments of $686.25, based on an interest rate of 9.61%. Oliver Decl., ¶20, Ex. 3. The May 27, 2020 letter modified this schedule to three months without a payment, 53 payments of $686.25, and one payment of $1,832.47. Oliver Decl., ¶20, Ex. 3.

On January 31, 2019, BMO and Armstrong entered Agreement 06002 for the financing of a 2019 Hyundai Dry Vans, S/N 3H3V532CXKT749056 (“06002 Vehicle”). Oliver Decl., ¶27, Ex. 4. Agreement 06002 required Armstrong to make 72 monthly payments of $632.84, based on an interest rate of 9.74%. Oliver Decl., ¶27, Ex. 4. The May 27, 2020 letter modified this schedule to three months without a payment, 53 payments of $632.84, and one payment of $1,755.12. Oliver Decl., ¶27, Ex. 4.

On February 22, 2019, BMO and Armstrong entered Agreement 01001 for the financing of a 2020 Hyundai Dry Vans, S/N 3H3V532C0LT381018 (“01001 Vehicle”). Oliver Decl., ¶34, Ex. 5. Agreement 01001 required Armstrong to make 72 monthly payments of $672.34, based on an interest rate of 10.50%. Oliver Decl., ¶34, Ex. 5. The May 27, 2020 letter modified this schedule to three months without a payment, 53 payments of $672.34, and one payment of $2,039.56. Oliver Decl., ¶34, Ex. 5.

Each Agreement also charges a 5% penalty for any late payment. Oliver Decl., ¶¶ 6, 13, 20, 27, 34, Exs. 1-5. Once BMO declares a default, it may accelerate the amount owed under that Agreement, demand delivery of the Vehicle for that Agreement, and impose an interest rate of 1.5% per month, or 18% per year. Oliver Decl., ¶¶ 6, 13, 20, 27, 34, Exs. 1-5.

BMO perfected its interest in each Vehicle through the certificates of title on file with the Department of Motor Vehicles. Oliver Decl., ¶41, Ex. 6.

Armstrong defaulted on all five Agreements by failing to make payments due from September 2022 thereafter. Oliver Decl., ¶¶ 8, 15, 22, 29, 36.

For Agreement 15001, Armstrong owes a principal of $17,749.06, combined interest before and after default of $880.29, and late charges of $31.88. Oliver Decl., ¶¶ 9, 11.

For Agreement 65001, Armstrong owes a principal of $18,560.02, combined interest before and after default of $884.71, and late charges of $33.37. Oliver Decl., ¶¶ 16, 18.

For Agreement 80001, Armstrong owes a principal of $20,192.33, combined interest before and after default of $992.93, and late charges of $34.31. Oliver Decl., ¶¶ 23, 25.

For Agreement 06002, Armstrong owes a principal of $19,589.84, combined interest before and after default of $957.58, and late charges of $31.64. Oliver Decl., ¶¶ 30, 32.

For Agreement 01001, Armstrong owes a principal of $20,604.04, combined interest before and after default of $1,083.94, and late charges of $33.62. Oliver Decl., ¶¶ 37, 39.

For each Agreement, Armstrong also owes repossession costs, other fees, and reasonable attorney's fees. Oliver Decl., ¶¶ 11-12, 18-19, 25-26, 32-33, 39-40.

The Black Book lists the values of the Vehicles as $50,000 for the 01001 Vehicle and $45,000 for the others. Oliver Decl., ¶49, Ex. 7. The Vehicles are located either at 13432 Vermont Avenue, Gardena, CA 90247, the address to which BMO sent the May 27, 2020 letter, or another address known to Armstrong. Oliver Decl., ¶44, Exs. 1-5.

Plaintiff BMO seeks writs of possession against Defendant Armstrong for the Vehicles identified as collateral for Agreements 15001, 65001, 80001, 06002, and 01001.

BMO presents evidence that Armstrong signed all five Agreements for the purchase of the Vehicles, each with its own monthly installment amount and interest rate, with the Vehicles as collateral. Oliver Decl., Exs. 1-5. A May 27, 2020 letter modified the payment schedule for all five Agreements, and each still provided that upon default, BMO may accelerate the amount owed under that Agreement, demand delivery of the Vehicle for that Agreement, and impose a default interest rate of 18% per year. Oliver Decl., ¶¶ 6, 13, 20, 27, 34, Exs. 1-5. Each Agreement also permits BMO to charge a 5% penalty for any late payment. Oliver Decl., ¶¶ 6, 13, 20, 27, 34, Exs. 1-5.

BMO demonstrates that it perfected its interest in the collateral via the certificates of title. Oliver Decl., ¶41, Ex. 6. BMO cites to the Black Book as evidence of each Vehicle’s value, $45,000 for four of the Vehicles and $50,000 for the fifth. Oliver Decl., ¶49, Ex. 7.

BMO alleges that Armstrong defaulted on all Agreements for failure to make payments due from September 2022 thereafter. Oliver Decl., ¶¶ 8, 15, 22, 29, 36. For Agreement 15001, Armstrong owes a principal of $17,749.06, combined interest before and after default of $880.29, and late charges of $31.88. Oliver Decl., ¶¶ 9, 11. For Agreement 65001, Armstrong owes a principal of $18,560.02, combined interest before and after default of $884.71, and late charges of $33.37. Oliver Decl., ¶¶ 16, 18. For Agreement 80001, Armstrong owes a principal of $20,192.33, combined interest before and after default of $992.93, and late charges of $34.31. Oliver Decl., ¶¶ 23, 25. For Agreement 06002, Armstrong owes a principal of $19,589.84, combined interest before and after default of $957.58, and late charges of $31.64. Oliver Decl., ¶¶ 30, 32. For Agreement 01001, Armstrong owes a principal of $20,604.04, combined interest before and after default of $1,083.94, and late charges of $33.62. Oliver Decl., ¶¶ 37, 39.

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 is inadequate because it fails to provide a payment history, ledger, or other evidence supporting the conclusions that Armstrong owes these amounts. 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). BMO admits that there should be an undertaking insofar as it alleges amounts owed that are less than the Black Book value of each Vehicle. Oliver Decl., ¶¶ 9, 11, 16, 18, 23, 25, 30, 32, 37, 39, 49, Ex. 7. Without evidence of the amount owed for each breach, the court cannot calculate the undertaking.

Assuming arguendo that the evidence of a breach and amount owed is sufficient, 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 May 27, 2020 letter lists 13432 Vermont Avenue, Gardena, CA 90247 as Armstrong’s address. Oliver Decl., ¶44, Exs. 1-5. This is the only address for which BMO has established probable cause that the Vehicles are located there. The levying officer would be able to enter this address, but not any other private address.

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