MUFG Union Bank v. Bernie Animal Health, Inc. at al, 23STCV12954

Tentative decision on applications for right to attach orders: denied

 

 

            Plaintiff MUFG Union Bank (“Bank”) applies for right to attach orders against Defendants Bernie Animal Health, Inc. (“Bernie”) and Joni Weinberg (“Weinberg”) in the amount of $258,936.64.

            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 Bank filed the Complaint against Bernie and Weinberg on June 5, 2023, alleging (1) breach of written agreement, (2) breach of personal guaranty, (3) foreclosure of security agreement, (4) money lent, and (5) account stated.  The Complaint alleges in pertinent part as follows.

            On October 15, 2021, Bernie filed a Small Business Credit Authorization and Application to request a business line of credit from the Bank.  The Bank approved the application for a $250,000 line of credit. 

On December 23, 2021, Bernie executed a Small Business Banking Agreement for the line of credit (“Line of Credit Agreement”).  Bernie was required to make monthly payments at the rate therein, with interest set at the prime rate plus 4.2%.  That interest rate would increase by 3% if payments were no longer automatically deducted. 

            The Line of Credit Agreement included a security agreement (“Security Agreement”) granting Bank a security interest in all accounts, chattel paper, deposit accounts, documents, equipment, general intangibles, goods, instruments, inventory, investment property, equipment and fixtures described therein (“Collateral”). 

To further induce entry into the Line of Credit Agreement, Weinberg signed a Continuing Guaranty (“Guaranty”) for all amounts owed thereunder. 

            Bernie breached the Line of Credit Agreement on February 28, 2023 for failure to pay the amount due.  The death of guarantor Steven Weinberg (“Steven”) on January 19, 2022 also was an event of default.

            Defendants now owe the $250,000 principal, $5,436.64 in interest accrued from February 15 to April 21, 2023, and interest thereafter at a rate of 4.25%.  Defendants also owe a 5% late charge on each payment past due.  Defendants must also reimburse Bank for all expenses it incurs in enforcement of the Line of Credit Agreement and Guaranty, including attorney’s fees and costs.  Bank seeks all these amounts against both Defendants, or alternatively $250,000 with 10% interest based on the causes of action for money lent and account stated.  Bank also seeks judgment for foreclosure of the Security Agreement and possession or sale and liquidation of the Collateral.

 

            2. Course of Proceedings

            No proof of service of the Complaint, Summons, or moving papers is on file for either Defendant.

 

            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.

            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.

            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.

            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.