Judge James C. Chalfant, Case 23STCV02682 2023-03-23 Tentative Ruling

PNC Equipment Finance, LLC v. S. Armstrong Trucking, LLC, and Shalena Armstrong, 23STCV02682

Tentative decision on application for writ of possession: granted with undertaking

Plaintiff PNC Equipment Finance (“PNC”) seeks a writ of possession against Defendants S. Armstrong Trucking, LLC (“Trucking”) and Shalena Armstrong (“Shalena”) to recover (1) a 2019 Vanguard VXP Dry Van Trailer, S/N 5V8VC5320KT909877 (“VXP”); and (2) a 2019 Vanguard Maxcube Dry Van Trailer, S/N 5V8VC5326KT908318 (“Maxcube” (collectively, “Vehicles”).

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 Trucking and Shalenda on February 7, 2022, alleging (1) breach of contract, (2) claim and delivery, (3) conversion, (4) breach of guaranty, (5) breach of contract, (6) claim and delivery, (7) conversion, and (8) breach of guaranty. The Complaint alleges as follows.

On September 21, 2018, PNC and Trucking entered into a written Loan and Security Agreement for the purchase and financing of the VXP, which was collateral (“Agreement 157298”). Trucking agreed to pay 72 consecutive monthly payments of $615.31 beginning on November 1, 2018. To induce PNC’s entry into the Agreement, Shalena entered into a personal guaranty (“Guaranty 157298”) for the full amount owed by Trucking. PNC perfected its interest in the VXP with a UCC Financing Statement filed with the Secretary of State.

On October 5, 2018, PNC and Trucking entered into a written Loan and Security Agreement for the purchase and financing of the Maxcube, which was collateral (“Agreement 157807”). Trucking agreed to pay 72 consecutive monthly payments of $615.31 from November 15, 2018. To induce PNC’s entry into the Agreement, Shalena entered into a personal guaranty (“Guaranty 157807”) for the full amount owed by Trucking. PNC perfected its interest in the Maxcube with a UCC Financing Statement filed with the Secretary of State.

Trucking breached Agreement 157298 on August 1, 2022 by failing to make the monthly installment due. It has also failed to make further payments due. The accelerated principal balance now due and owing is $16,266.62. Trucking also owes interest, late charges, fees, and all other applicable charges. Agreement and Guaranty 157298 also entitle PNC to attorney’s fees associated with collection thereof.

Trucking breached Agreement 157807 on September 15, 2022 by failing to make the monthly installment due. It has also failed to make further payments due. The accelerated principal balance now due and owing is $16,266.62. Trucking also owes interest, late charges, fees, and all other applicable charges. Agreement and Guaranty 157807 also entitle PNC to attorney’s fees associated with collection thereof.

PNC seeks (1) the principal balance of $16,266.62 plus interest and other applicable charges for each Agreement, (2) late charges, site visit fees, insurance fees, and other fees and costs, (4) judgment for possession of the VXP and Maxcube or their reasonable value, and (5) attorney’s fees and costs.

On February 9, 2023, PNC personally served Trucking with the Complaint, Summons, and moving papers.

On February 11, 2023, PNC personally served Shalena with the Complaint, Summons, and moving papers.

On March 17, 2023, Department 74 (Hon. Colin Leis) denied PNC’s request for entry of default due to an incomplete signature.

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, (“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 September 21, 2018, PNC and Trucking entered into Agreement 157298 to finance the purchase of the VXP. McGinley Decl., ¶5, Ex. 1. Agreement 157298 required Trucking to make 72 monthly installments of $615.31, which began on November 1, 2018. McGinley Decl., ¶5, Exs. 1, 7. It also granted PNC a security interest in the VXP. McGinley Decl., ¶5, Ex. 1. PNC perfected that security interest by filing a UCC Financing Statement with the Secretary of State that listed it as a lienholder, with Trucking as the assignee. McGinley Decl., ¶5, Ex. 2.

On October 5, 2018, PNC and Trucking entered into Agreement 157807 to finance the purchase of the Maxcube. McGinley Decl., ¶6, Ex. 3. Agreement 157807 required Trucking to make 72 monthly installments of $615.31, which began on November 15, 2018. McGinley Decl., ¶6, Exs. 3, 8. It also granted PNC a security interest in the Maxcube. McGinley Decl., ¶6, Ex. 3. PNC perfected that security interest by filing a UCC Financing Statement with the Secretary of State that listed it as a lienholder, with Trucking as the assignee. McGinley Decl., ¶6, Ex. 4.

Shalena signed Guaranties for both Agreements. McGinley Decl., ¶¶ 8-9, Exs. 5-6.

The Agreements each provide that, if Trucking fails 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 for that Agreement. McGinley Decl., ¶¶ 5-6, Exs. 1, 3. 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., ¶¶ 5-6, Exs. 1, 3. PNC would also be entitled to any fees incurred in enforcing its rights, including attorney’s fees. McGinley Decl., ¶¶ 5-6, Exs. 1, 3.

Trucking breached Agreement 157298 for failure to pay any installments due after August 1, 2022. McGinley Decl., ¶13, Ex. 7.[2] Trucking breached Agreement 157807 for failure to pay any installments due after August 15, 2022. McGinley Decl., ¶14, Ex. 8. PNC accelerated the balance under both. McGinley Decl., ¶¶ 15-16. The Statements of Account (“Ledgers”) show that under each Agreement, Defendants owe a principal of $15,470.50 after a 3% discount on future payments, a $50 “NSF” Fee, a $500 site visit or repossession fee, and $246.12 in late charges, for a total of $16,266.62. McGinley Decl., ¶¶ 15-16, 20,[3] Exs. 7-8.

Because the Agreements do not grant a right of ownership until all payments are made, Trucking does not have an interest in the Vehicles. McGinley Decl., ¶23. Demands for their return have failed. McGinley Decl., ¶23.

The Vehicles are located either at (1) 13432 S. Vermont, #18, Gardena, CA 90247, the address on the Agreements and UCC Financing Statements or (2) Shalena’s residential address at 24460 Rimview Road, Moreno Valley, CA 92557. McGinley Decl., ¶21, Exs. 1-4.

Based on the experience of PNC Litigation and Recovery Vice-President Michael McGinley (“McGinley”), each Vehicle’s original price, its age, a forecast of current market values, and conversations with various equipment vendors, the market value of each Vehicle is estimated to be $25,000. McGinley Decl., ¶26.

Plaintiff PNC seeks writs of possession against Shalena and Trucking for both Vehicles.

Each Agreement provides that Trucking was to make 72 monthly installments of $615.31 from November 1, 2018 for the VXP and November 15, 2018 for the Maxcube. McGinley Decl., ¶¶ 5-6, Exs. 1, 3.

If Trucking and its guarantor Shalena failed to make a payment within ten days of the due date, the Agreements 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., ¶¶ 5-6, Exs. 1, 3. 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., ¶¶ 5-6, Exs. 1, 3. PNC would also be entitled to any fees incurred in enforcing its rights, including attorney’s fees. McGinley Decl., ¶¶ 5-6, Exs. 1, 3. PNC perfected its interest in each Vehicle by filing a UCC Financing Statement with the Secretary of State. McGinley Decl., ¶¶ 5-6, Exs. 2, 4.

The Ledgers provide sufficient evidence that Defendants breached for failure to make payments in or after September 2022. McGinley Decl., ¶¶ 15-16, 20, Exs. 7-8. PNC accelerated the balance owed. McGinley Decl., ¶¶ 15-16.

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).

PNC asserts that the amount owed under the Agreements is irrelevant because the Agreements did not grant Trucking ownership in the Vehicles until it made all payments owed. McGinley Decl., ¶23. PNC does not identify the provision of the Agreements that supports this argument. The UCC Financing Statement for each Vehicle lists PNC as a lienholder, with Trucking as the assignee. McGinley Decl., ¶¶ 5-6, Exs. 2, 4. These financing statements show that Trucking is the owner of each Vehicle. PNC must pay an undertaking equal to twice this interest.

As of September 2022, the cover sheet to PNC’s Ledgers states that the Remaining Loan Receivable Balance after applying the 3% discount to the 26 accelerated payments of $615.31, is $15,470.50 per Agreement. McGinley Decl., ¶¶ 15-16, 20, Exs. 7-8. After adding $500 in site visit and repossession fees, a $50 NSF Fee, and $246.12 in late charges, the total amount owed is $16,266.62. McGinley Decl., ¶¶ 15-16, 20, Exs. 7-8.

PNC estimates each Vehicle’s market value to be $25,000. McGinley Decl., ¶20. The difference between this value and the amount owed is $8,733.38 ($25,000 - $16,266.62). The undertaking required will be $8,733.38 x 2 = $17,466.76 per Vehicle, or $34,933.52 for both.

The Agreements show that the probable location of the Vehicle is 13432 S. Vermont, #18, Gardena, CA 90247. McGinley Decl., ¶¶ 5-6, Exs. 1, 3. PNC also asserts that the Vehicles may be at Shalena’s residential address at 24460 Rimview Road, Moreno Valley, CA 92557. McGinley Decl., ¶21. A writ may issue for entry into both locations.

The applications for writs of possession for the Vehicles is granted. PNC has submitted only a single proposed order for a writ of possession that does not identify the Defendant. PNC is ordered to submit a proposed writ of possession for each Defendant within two court days or they will be deemed waived. The levying officer may enter 13432 S. Vermont, #18, Gardena, CA 90247 and 24460 Rimview Road, Moreno Valley, CA 92557. The writ of possession shall not issue until PNC posts a $17,466.76 undertaking per Vehicle, or a $34,933.52 undertaking for both.

PNC asserts that should Defendants seek to prevent PNC from taking possession of the Vehicles, the redelivery bond should be $50,000 per Vehicle, a total of $100,000. Mem. at 5. PNC cites CCP section 515.020(b), which requires a defendant’s redelivery undertaking to state that if the plaintiff recovers judgment on the action, the defendant shall pay all costs awarded to the plaintiff and all damages that the plaintiff may sustain by reason of the loss of possession of the property. Mem. at 5. Because Defendants have interest in the Vehicles, the redelivery undertaking shall be equal to the amount of the plaintiff’s undertaking, which is $17,466.76 per Vehicle, or $34,933.52 for both. CCP §515.020(a).

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

[2] PNC asserts that Trucking failed to make the payment due on August 1, 2022. McGinley Decl., ¶13. The Statement of Account for Agreement 157298 (“VXP Ledger”) shows that Defendants made this payment. McGinley Decl., Ex. 7.

[3] The McGinley declaration misnumbers paragraphs 27-30 as a second set of paragraphs 20-23. For consistency, the court refers to the numbering used.