Judge James C. Chalfant, Case Number: 23STCV14803, Date: 2024-01-25 Tentative Ruling

Plaintiff Gyahn Corporation (“Gyahn”) applies for a right to attach order against Cornerstone Apparel, Inc., dba Papaya Clothing (“Cornerstone”), for $455,151.54, including $3,904.54 in costs.

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 Gyahn filed the Complaint on June 26, 2023 against Defendant Cornerstone alleging (1) breach of contract, (2) open book account, (3) account stated, (4) goods and services rendered, and (5) false promise. The Complaint alleges in pertinent part as follows.

Since April 4, 2022, Gyahn has sold Cornerstone clothing goods and invoiced Cornerstone eight times. Cornerstone has only partially paid for these products. Gyahn’s Customer Open Balance for Cornerstone shows an outstanding balance of $383,483.30.

On June 12, 2023, Cornerstone had Gyahn pick up a partial payment check for $25,000. Cornerstone did this to induce Gyahn to deliver a shipment of women’s clothing the next day, which it did. Gyahn’s bank later told Gyahn that the check bounced for insufficient funds.

Gyahn seeks $383,483.30 in compensatory damages for every cause of action except false promise, $25,000 in compensatory damages for the false promise claim, pre-judgment interest, punitive damages, and attorney’s fees and costs.

2. Course of Proceedings

On June 30, 2023, Gyahn served Cornerstone with the Complaint and Summons by substitute service, effective July 10, 2023.

On August 11, 2023, Department 19 (Hon. Stephanie M. Bowick) rejected Gyahn’s request for entry of default against Cornerstone.

On August 31, 2023, Cornerstone filed an Answer.

On September 12, 2023, Department 19 again rejected Gyahn’s request for entry of default against Cornerstone.

A jury trial is currently set for April 1, 2025.

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., (“CIT”) (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., (“Kemp”) (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.

Gyahn is a manufacturer and supplier of textiles, and Cornerstone is a retailer of women’s clothing. Oh Decl., ¶4.

From April 4, 2022 through June 19, 2023, Cornerstone sent Gyahn purchase orders for various items of women’s clothing. Oh Decl., ¶5, Ex. A. Gyahn accepted and filled all orders. Oh Decl., ¶5. Gyahn shipped all requested items with packing lists and invoices. Oh Decl., ¶5, Ex. A.

Gyahn kept a Customer Open Balance sheet for Cornerstone. Oh Decl., ¶6, Ex. B. It shows that of the $406,701.15 in invoiced product purchased by Cornerstone, $383,483.30 remained unpaid. Oh Decl., ¶6, Ex. B. Gyahn has performed all its duties by delivering the clothing at issue. Oh Decl., ¶7. The due date for payment of the final invoices on the Customer Open Balance sheet was July 13, 2023. Oh Decl., ¶6, Ex. B.

Interest on the $383,483.30 balance accrues at a 10% annual rate, or $105.06 per day ($383,483.30/365 = $105.06). Gwynn Decl., ¶¶ 4-5. Judgment likely will not be entered until April 1, 2025. Gwynn Decl., ¶6. That April 1, 2025 date is 645 days after June 26, 2023, the due date listed in the Customer Open Balance sheet for the last invoice at issue. Gwynn Decl., ¶6. Thus, $67,763.70 (645 x $105.06) in pre-judgment interest will have accrued before Gyahn obtains a judgment. Gwynn Decl., ¶6.

Counsel for Gyahn estimate its costs will include $435 for the first appearance fee, $372.04 for service of process fees, $40 for the issuance of this right to attach order, $40 in bank levy or garnishment fees, $150 in jury fees, $2,000 in estimated deposition costs, $180 in estimated motion fees based on three motions, a $500 fee for filing a motion for summary judgment, and $187.50 in estimated electronic filing and service fees for fifteen motions. Gwynn Decl., ¶3. These costs total $3,904.54. Gwynn Decl., ¶3.

Plaintiff Gyahn applies for a right to attach order against Defendant Cornerstone for $455,151.54, including $3,904.54 in costs.

Gyahn’s claim is for breach of contract based on a series of invoices that have become past due. Oh Decl., Ex. A. The principal due on these invoices exceeds $383,483.30. Oh Decl., Ex. B. Attachment may be based on this contract 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, supra, 115 Cal.App.4th at 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).

The Customer Open Balance sheet shows that the unpaid principal on all invoices totals $383,483.30. Oh Decl., ¶6, Ex. B. Gyahn does not cite any invoice or purchase order to demonstrate the interest rate for amounts owed thereunder. Oh Decl., Ex. A. If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at an annual rate of 10% after a breach. Civil Code §3289(b).

Gyahn calculates the daily interest rate as $105.06. Gwynn Decl., ¶¶ 4-5. Gyahn argues the pre-judgment interest started on June 26, 2023 and will accrue until April 1, 2025, which is the trial date and therefore the earliest date that the I/C court will render judgment. Gwynn Decl., ¶6. There are 645 days between June 26, 2023, and April 1, 2025. Gwynn Decl., ¶6. Ghayn then asserts that its total pre-judgment interest is $67,763.70 (645 x $105.06). Gwynn Decl., ¶6.

Gyahn offers two explanations why the pre-judgment interest started to accrue on June 26, 2023. First, its counsel states this is the due date for the last invoice listed in the Customer Open Balance sheet. Gwynn Decl., ¶6. However, the due date for the last several invoices is July 13, 2023. Oh Decl., ¶6, Ex. B. Second, Gyahn’s moving papers identify June 26, 2023 as the day after the Complaint was filed. Mem. at 7. Since the due date for some invoices had not passed when the Complaint was filed, this date is irrelevant.

Nonetheless, Cornerstone has not opposed and any defects in the prejudgment interest calculation are immaterial. Ascertainable damages include a principal of $383,483.30 and interest of $67,763.70.

The invoices and purchase orders do not entitle Gyahn to attorney fees. Oh Decl., Ex. A. It would be entitled to costs as a prevailing party. CCP 1032(b). Gyahn’s counsel has estimated its costs wo;; total $3,904.54. Gwynn Decl., ¶3. These damages are ascertainable.

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, supra, 146 Cal.App.4th at 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).

Gyahn presents evidence that Cornerstone ordered various items of women’s clothing between April 2022 and June 2023. Oh Decl., ¶5, Ex. A. Gyahn shipped all requested items with packing lists and invoices. Oh Decl., ¶5, Ex. A. The Customer Open Balance sheet shows Cornerstone has not paid $383,483.30 of the $406,701.15 charged for the shipped goods. Oh Decl., ¶6, Ex. B.

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). Gyahn seeks attachment for a proper purpose.

The application for a right to attach orders against Cornerstone is granted in the amount of $455,151.54. No writ shall issue until Gyahn files a $10,000 undertaking.