Judge James C. Chalfant, Case Number: 23STCV08033, Date: 2023-09-07 Tentative Ruling

Plaintiff Miss Avenue, Inc. (“Avenue”) applies for a right to attach order against Defendant Cornerstone Apparel, Inc., doing business as Papaya (“Cornerstone”), in the amount of $282,028.96.

The court has read and considered the moving papers (no opposition is on file)[1] and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiff Avenue filed the Complaint against Cornerstone on April 11, 2023, alleging (1) breach of contract, (2) account stated, (3) open book account, (4) goods rendered, and (5) declaratory relief. The Complaint alleged in pertinent part as follows.

On May 5, 2021 and various dates thereafter, Cornerstone ordered a total of 13,843 pieces of garments. Purchase orders and invoices show that their value totals $232,128. Cornerstone issued the purchase orders before Avenue issued invoices to confirm payment values. The invoices for each order specify that payment was due at the time of delivery, or Cash on Delivery (“COD”). Advance Shipment Notices with packing lists (collectively “ASN”) confirm that Avenue sent and Cornerstone received every article so ordered. Cornerstone has failed to pay any of the invoices at issue since May 5, 2021.

Avenue seeks declaratory judgment that Cornerstone breached the contracts for failure to pay the $232,128. It also seeks an order to compel payment of $232,128 plus special damages, any unjust enrichment from resale of Avenue goods, attorney’s fees and costs, and prejudgment interest.

2. Course of Proceedings

On April 20, 2023, Avenue served Cornerstone with the Complaint and Summons by substitute service, effective April 30, 2023.

On May 25, 2023, Cornerstone filed an Answer.

On July 6, 2023, this court denied Avenue’s ex parte application for a right to attach order against Cornerstone for failure to demonstrate a basis for emergent relief. The court ordered Avenue to comply with CCP section 1008(b) should it file any subsequent application for a right to attach order.

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.

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); see also CCP §483.010(b) (“an attachment may not be issued on a claim which is secured by any interest in real property arising from agreement, statute, or other rule of law…However, an attachment may be issued where the claim was originally so secured but, without any act of the plaintiff or the person to whom the security was given, the security has become valueless or has decreased in value to less than the amount then owing on the claim). 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.

Avenue is a wholesaler of garments. Youn Decl., ¶4. Between May 5 and July 27, 2021, Cornerstone issued 17 purchase orders to Avenue for a total of 13,843 garments. Youn Decl., ¶¶ 8-9, Ex. 1. Cornerstone occasionally made oral changes to these purchase orders as necessary. Youn Decl., ¶10.

Avenue manufactured the garments and issued corresponding invoices reflecting the information from the corresponding purchase order and oral modifications thereto. Youn Decl., ¶¶ 11-12, Ex. 2. Each invoice also confirmed that the payment term was COD. Youn Decl., ¶13, Ex. 2.

Cornerstone accepted each invoice, stamped it “Received” with the date, and signed it. Youn Decl., ¶14, Ex. 2. Most of these invoices have a Received date between August and October 2021. Youn Decl., ¶14, Ex. 2. Two invoices have a Received date in October 2022. Youn Decl., ¶15, n.1-2, Ex. 2.

Avenue submitted an ASN one day before each delivery. Youn Decl., ¶16, Ex. 3. Each ASN included a packing list confirming the items sent. Youn Decl., ¶16, Ex. 3. The ASNs for the invoices with a Received date in October 2022 show that the shipping date was in October 2021. Youn Decl., ¶15, n.1-2, Ex. 3.

The invoices require Cornerstone to make any claims or returns within ten days of receipt of goods. Youn Decl., ¶17, Ex. 2. Avenue would not accept returns after ten days. Youn Decl., ¶17, Ex. 2. Cornerstone never attempted to make any claims for the received garments within that ten-day period. Youn Decl., ¶18.

The amount owed under the invoices totals $232,128. Youn Decl., ¶15, Ex. 2. The log of Open Invoices from Avenue’s accounting software confirms this amount. Youn Decl., ¶¶ 5-6, 20, Ex. 4.

Despite Cornerstone’s failure to pay, Avenue continued to manufacture requested garments through October 2021 because it trusted that Cornerstone would follow through and honor the payment agreements. Youn Decl., ¶21. Attempts to resolve this dispute without litigation have failed. Youn Decl., ¶22.

On June 30, 2023, Avenue filed an ex parte application for a right to attach order and temporary protective order. Cheong Decl., ¶4. On July 5, 2023, Cornerstone filed an opposition. Cheong Decl., ¶4. At the July 6, 2023 hearing, this court denied the application for lack of exigent circumstances. Cheong Decl., ¶4. There was no evidence of emergency due to insolvency under CCP section 485.010(b). Cheong Decl., ¶4. The court allowed Avenue to file a noticed motion so long as it complied with CCP section 1008(b) if it did so, except that no showing of due diligence would be required. Cheong Decl., ¶4; Sohi Decl., ¶5.

Avenue’s counsel spent ten hours to prepare the ex parte application and expects to spend two more to review and respond to any opposition to this application. Cheong Decl., ¶¶ 5-6. Because counsel’s hourly rate is $300, the attorney’s fees for both filings total $3,600. Cheong Decl., ¶7. Counsel expects costs to total $5,000. Cheong Decl., ¶9.

Avenue seeks attachment of $282,028.96. Youn Decl., ¶24. This includes the $232,128 principal, $5,000 in costs, $3,600 in attorney’s fees, and $41,300.96 in pre-judgment interest. Youn Decl., ¶24.

All of Cornerstone’s vendors must comply with its Vendor Shipping Guide. Shon Ex Parte Decl., ¶5. It requires sample approval for all styles and colors before the vendor schedules delivery. Shon Ex Parte Decl., ¶5. If the merchandise is not the same as the pre-production sample, this will result in a charge back or cancellation of that order. Shon Ex Parte Decl., ¶5.

Avenue’s failure to comply with quality standards and delivery times compromised Cornerstone’s ability to sell the merchandise. Shon Ex Parte Decl., ¶6. It therefore cancelled various purchase orders. Shon Ex Parte Decl., ¶7.[2]

Plaintiff Avenue applies for a right to attach order against Cornerstone for $282,028.96, including $5,000 in costs and $3,600 in attorney’s fees.

A party who originally made an application for an order which was refused in whole or part, or granted conditionally or on terms, may make a subsequent application for the same order upon new or different facts, circumstances, or law. CCP §1008(b). The moving party must present an attorney declaration stating when the party previously appeared, who the judge was, how the judge ruled, and what new or different facts, circumstances, or law are claimed to be shown. §1008(b). The party must also provide a satisfactory explanation for failing to produce such evidence in the first application. Kalivas v. Barry Controls Corp., (1996), 49 Cal.App.4th at 1160-61. The requirement of satisfactory explanation for failing to provide the evidence earlier can only be described as a strict requirement of diligence. Garcia v. Hejmadi, (1997), 58 Cal.App.4th at 690.

Avenue submits declarations from its counsel explaining that this court previously denied an ex parte application for a right to attach order and temporary protective order. Cheong Decl., ¶4. There was no evidence of emergency due to insolvency under CCP section 485.010(b). Cheong Decl., ¶4. The court allowed Avenue to file a noticed motion so long as it complied with CCP section 1008(b), except that no showing of due diligence would be required. Sohi Decl., ¶5.

Avenue’s application is based on breach of contract based on the invoices for products that Avenue delivered. Youn Decl., ¶¶ 11-13, Ex. 2. Attachment may be based on this claim.

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., (“CIT”) (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).

Avenue seeks attachment of $282,028.96. Youn Decl., ¶24. This includes $232,128 in principal, $5,000 in costs, $3,600 in attorney’s fees, and $41,300.96 in pre-judgment interest. Youn Decl., ¶24.

Between August and October 2021, Avenue generated invoices for products delivered pursuant to Cornerstone’s purchase orders. Youn Decl., Exs. 1-2. The unpaid principal balance on the 17 invoices at issue totals $232,128. Youn Decl., ¶15, Exs. 2, 4. The principal is readily ascertainable.

A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day. Civil Code §3287(a). If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10% per annum after a breach. Civil Code §3289(b). Prejudgment interest is available on attachment and is owed from the time that the obligation to pay money begins. See Santa Clara Waste Water Company v. Allied World National Assurance Company, (2017) 18 Cal.App.5th 881, 890.

Because the invoices were all COD, payment was due upon delivery of the goods. Youn Decl., ¶13, Ex. 2. Based on the principal owed, Avenue states that Cornerstone owes $41,300.96 in statutory pre-judgment interest. Youn Decl., ¶24.

Strict compliance is required with statutory requirements for affidavits for attachment (Anaheim National Bank v. Kraemer, (1932) 120 Cal.App. 63, 65), and facts stated in affidavit must be set forth with particularity. CCP §482.040; Witchell v. Korne, (1986) 179 Cal.App.3d 965, 975. The court must apply 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. Avenue’s statement of the amount of pre-judgment interest is not supported by any calculation or spreadsheet. The calculation is questionable because the invoices became due at different dates. The pre-judgment interest is disallowed.

A plaintiff’s application for a right to attach order and a writ of attachment pursuant to this title may include an estimate of the costs and allowable attorney’s fees. CCP §482.110(a). Counsel has estimated that costs will total $5,000. Cheong Decl., ¶9. Counsel also estimates $3,600 in attorney’s fees based on a rate of $300 per hour for 12 hours. Cheong Decl., ¶¶ 5-7. While two of these hours were to reply to an opposition which Cornerstone has not filed, Avenue has not included any fees for appearing at the hearing. In any event, only estimated attorney’s fees are required; specific hours need not be identified. The attorney fees and costs are readily ascertainable.

Avenue’s readily ascertainable damages total $240,728 ($282,028.96 - $41,300.96 = $240,728).

Avenue’s purchase orders show that Cornerstone agreed to purchase certain clothing from Avenue and pay the listed amounts. Youn Decl., ¶¶ 8-9, Ex. 1. Avenue submitted ASNs one day before delivery of the ordered goods. Youn Decl., ¶16, Ex. 3.

When Avenue delivered the goods, Cornerstone signed the invoices and stamped them with a Received date. Youn Decl., ¶14, Ex. 2. The invoices were COD. Youn Decl., ¶13, Ex. 2. Most invoices have a stamped Received date between August and October 2021. Youn Decl., ¶14, Ex. 2. Two have a stamped Received date in October 2022, but the ASNs suggest that the actual delivery dates were in October 2021. Youn Decl., ¶15, n.1-2, Exs. 2-3. In any case, the log of Open Invoices from Avenue’s accounting software confirms that Cornerstone has not paid any of the invoices at issue. Youn Decl., ¶¶ 5-6, 20-21, Ex. 4.

In opposition to the ex parte application, Cornerstone asserted that it cancelled several orders because Avenue provided garments with quality issues. Mem. at 8. Assuming arguendo that the court should consider this earlier opposition, Avenue notes that the 17 purchase orders at issue are not in Cornerstone’s listed cancellations. Shon Ex Parte Decl., ¶¶ 7-8. Mem. at 8. The invoices also require Cornerstone to make any claims within ten days of receipt of goods. Youn Decl., ¶17, Ex. 2. Cornerstone never attempted to make any claims concerning the received garments at issue in this application within the ten-day period. Youn Decl., ¶18.

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). Avenue seeks attachment for a proper purpose.

The application for a right to attach order is granted in the amount of $240,728. No writ of attachment shall issue until Avenue files a $10,000 bond. See CCP §489.220(a).

[1] Avenue filed a notice of non-opposition asserting that the opposition was due on August 24, 2023, based on the nine court-day opposition deadline of CCP section 1005. However, the opposition was statutorily required to be filed and served five court days before the hearing. CCP §484.050(e).

[2] Although Cornerstone asserts that this includes the purchase orders and invoices at issue, the provided list does not include them. See Shon Ex Parte Decl., ¶¶ 7-8.