Judge James C. Chalfant, Case Number: 23STCV17883, Date: 2024-06-27 Tentative Ruling

Plaintiff Monrovia-Myrtle, LLC (“Monrovia”) applies for right to attach order against Defendants George Khoury (“Khoury”).

The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

A. Statement of the Case

1. Complaint

On July 31, 2023, Plaintiff Monrovia filed a Complaint against Defendant Khoury, doing business as Stix Ride Shop (“Stix”), alleging causes of action for: (1) breach of written lease; (2) account stated; and (3) money had and received. The Complaint alleges in pertinent part as follows.

Monrovia is the owner of 421 S. Myrtle Avenue, Monrovia, CA 91016 (“Property”). Compl., ¶5. On or about December 20, 2019, Monrovia and Khoury entered into a commercial lease agreement for the Property (“Lease Agreement”) for a term of five years commencing January 1, 2020 through December 31, 2024. Compl., ¶8, Ex. 1. In consideration for the use of the Property, Khoury agreed to pay Monrovia base rent as of April 1, 2020 of $3,294.00 per month, with rent to increase in accordance with the Lease Agreement. Compl., ¶9. Khoury also agreed to pay Monrovia for utilities, a share of the property taxes, and insurance (“Common Area Maintenance Expenses”). Compl., ¶10.

Monrovia performed all terms, conditions and covenants of the Lease Agreement except as excused by Khoury’s conduct. Compl., ¶12. Khoury materially breached the Lease Agreement in that they failed to pay Monrovia rent for April 2020. Compl., ¶¶12-13. In April 2023, Monrovia served Khoury with notices to pay/perform or quit, but he failed to perform as required by the notices. Compl., ¶14. On April 26, 2023, Monrovia filed a complaint for unlawful detainer based upon the notices. Compl., ¶14.

On or about July 12, 2023, Khoury vacated the Property. Compl., ¶15. As a result of Khoury’s breach of the Lease Agreement, there is due, owing and unpaid an amount not less than $130,000, including the rent, commissions to brokers (if any), attorney’s fees incurred due to prior breaches related to construction to the Property, physical damage to the Property, and related charges and the unpaid balance of the term of the Lease Agreement, plus interest at the maximum rate allowed by law. Compl., ¶16.

Monrovia seeks (1) attorney’s fees on the first cause of action pursuant to the terms of the Lease Agreement; (2) damages in an amount not less than $130,000 on the first, second, and third causes of action; (3) interest at maximum rate allowable by law; (4) costs of suit incurred herein; and (5) other and further relief as the court may deem just and proper. Compl., p. 5.

2. Course of Proceedings

On August 16, 2023, Plaintiff Monrovia filed proof of service of the Summons and Complaint via personal service on Defendant Khoury, effective August 15, 2023.

On September 11, 2023, Defendant Khoury filed his Answer.

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.

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). 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.

Monrovia is the owner and landlord of the Property. Fox Decl., ¶3. On or about December 20, 2019, Monrovia and Khoury signed the Lease Agreement. Fox Decl., ¶1, Ex. 1. The Lease Agreement was fully negotiated between Monrovia and Khoury, and the terms agreed to and negotiated were incorporated into the Lease Agreement. Fox Decl., ¶2.

Khoury took possession of the Property in January 2020 and had possession until at least July 2023. Fox Decl., ¶4. The “use” provided under the Lease Agreement is a skate shop. Khoury told Fox that that this was his usual business, that he would operate a skate shop at the Property, and that he had in the past and currently operated and managed other skate shops under the name “Stix,” including locations at 119 E. Lime Avenue, Monrovia, California 91016, 1011 Mission Street, South Pasadena, California 91030 and 456 West 1^st Street, Claremont, California 91711. Fox Decl., ¶5, Ex. 2.

The rent is due on the first day of each month under the Lease Agreement. Fox Decl., ¶8. Starting January 1, 2020, the rent was $3,294 per month. Fox Decl., ¶6. Khoury paid the January 2020 rent along with the security deposit. Fox Decl., ¶7. In addition to the base rent, Khoury was to pay $841.80 per month for taxes, insurance and common areas maintenance expenses (“CAM Charges”). Fox Decl., ¶9. All monies due under the Lease Agreement including the CAM Charges are considered rent. Fox Decl., ¶10.

The rent was to increase in accordance with the terms of the Lease Agreement each year until the end of the Lease Agreement terms. Fox Decl., ¶11.

On April 1, 2020, Khoury failed to pay the rent due. Fox Decl., ¶12. On April 5 and 20, 2023, Monrovia served a three-day notice to pay rent or quit for Khoury’s failure to pay rent of $12,508.65. Fox Decl., ¶13, Ex. 3. Payment was required within three days of service of the notice. Fox Decl., ¶13. On April 8, 2023, the period in the notice expired and Khoury failed to comply. Fox Decl., ¶14.

On April 26, 2023, Monrovia filed an unlawful detainer complaint against Khoury for recovery of possession of the Property in LASC Case No. 23AHCV00914 (“UD Action”). Fox Decl., ¶15.

On May 25, 2023, Monrovia and Khoury entered into a Moveout Agreement. Fox Decl., ¶16, Ex. 4. Despite Khoury’s contention that the Moveout Agreement prevents Monrovia from suing him for monies due for the balance of the term of the Lease Agreement, Section 3 and 4 of the Moveout Agreement do not apply to Monrovia. Fox Decl., ¶17. Furthermore, Section 2.7 of the Moveout Agreement expressly states that Monrovia does not waive its claims for back rent, future rent through the end of the Lease term, or other damages due under the Lease Agreement. Fox Decl., ¶17.

On July 12, 2023, Khoury vacated the Property in accordance with the Moveout Agreement. Fox Decl., ¶18.

Since at least August 2023, Monrovia has marketed the Property retained a commercial real estate agent and listed the Property on commercial websites. Fox Decl., ¶19. Monrovia has obtained a new tenant for the Property with a commencement date of December 1, 2023, and rent to commence April 1, 2024 (Common Area Expenses are to be paid by the replacement tenant as of December 1, 2023). Fox Decl., ¶20, Ex. 5.

The Lease Agreement provides for the recovery of the real estate broker commission for the replacement lease. Fox Decl., ¶21. Monrovia owes a real estate broker commission of $2,141.10 for procuring the replacement tenant, which is at least 4% of the base rent for the replacement tenant, i.e., $4,117.50 per month times 0.4 times 13 months equaling $164.70 per month. Fox Decl., ¶21, Ex. 6.

The Lease Agreement provides for recovery of attorney’s fees and costs. Fox Decl., ¶¶22, 31, Ex. 1. Monrovia incurred $5,231.75 in attorney’s fees and costs drafting the lease for the replacement tenant. Fox Decl., ¶22. Monrovia seeks to recover 32.50% of this amount, which is $1,700.31 ($5,231.75 times 32.50%; the lease with the replacement tenant is 40 months and the overlap is 13 months from December 1, 2023 through December 1, 2024). Fox Decl., ¶22.

As a result of Khoury’s breach of the Lease Agreement, $37,449.35 is unpaid from Khoury to Monrovia, which includes the base rent and Common Area Expenses. Fox Decl., ¶¶ 24-29. Monrovia is entitled to recover the balance of the term of the Lease Agreement pursuant to Civil Code Section 1951.2 and the provisions of the Lease Agreement. Fox Decl., ¶¶ 25-29, Ex. 7. Neither Khoury nor any third party has paid any of the $37,449.35 owed to Monrovia. Fox Decl., ¶30.

Monrovia’s claim for money against Khoury is not secured by any real property. Fox Decl., ¶32. This application for a right to attach order is not sought for any purpose other than the recovery of monies owed to Monrovia. Fox Decl., ¶32. Monrovia has no information or belief that its claims against Khoury are discharged or that the prosecution of Khoury is stayed in any Bankruptcy proceeding under Title 11 of the United States Bankruptcy Code. Fox Decl., ¶32.

The Lease Agreement entitles Monrovia to recover all costs and expenses of enforcement, including attorney fees. Fox Decl., ¶31. Monrovia has incurred $19,107 in attorney fees to date. Rosenbaum Decl., ¶¶ 12-14, 17, Ex. 8. Monrovia’s counsel expects that Monrovia will incur at least another $50,000 in fees, a total of $64,650. Rosenbaum Decl., ¶¶ 15, 17. Monrovia’s counsel anticipates costs of at least $10,000, including at least two depositions. Rosenbaum Decl., ¶16.

Plaintiff Monrovia applies for a right to attach order against Defendant Khoury in the amount of $97,449.35, which includes estimated attorney fees of $50,000 and estimated costs of $10,000.

Monrovia’s claim is based on the Lease Agreement. It has a claim on which to base attachment.

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., (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).

Monrovia seeks unpaid base rent and Common Area expenses as well as the balance of the term of the Lease pursuant to Civil Code section 1951.2. Monrovia has calculated the unpaid base rent and CAM Charges from April 1, 2020 through December 1, 2024, charge for real estate commission and attorney fees for a replacement lease, and a credit for security deposit, yielding a total owed rent of $37,449.35. Fox Decl., Ex. 7.

Monrovia also estimates its attorney fees and costs in this lawsuit at $64,650 and $10,000, respectively. Rosenbaum Decl., ¶¶ 15, 17. Monrovia only includes an estimated $50,000 in attorney fees in this application.

The estimated total rent of $37,449.35 and estimated $50,000 in attorney fees and estimated $10,000 in costs total $97,449.35. This amount is readily ascertainable from the Lease Agreement.

Monrovia provides evidence that it is the owner and landlord of the Property. Fox Decl., ¶3. On or about December 20, 2019, Monrovia and Khoury signed the Lease Agreement. Fox Decl., ¶1, Ex. 1. Khoury took possession of the Property in January 2020 and had possession until at least July 2023. Fox Decl., ¶4.

The rent was due on the first day of each month under the Lease Agreement. Fox Decl., ¶8. Starting January 1, 2020, the rent was $3,294 per month. Fox Decl., ¶6. Khoury paid the January 2020 rent along with the security deposit. Fox Decl., ¶7. In addition to the base rent, Khoury was to pay $841.80 per month for CAM Charges. Fox Decl., ¶9. All monies due under the Lease Agreement including the CAM Charges are considered rent. Fox Decl., ¶10. The rent was to increase in accordance with the terms of the Lease Agreement each year until the end of the Lease Agreement terms. Fox Decl., ¶11.

On April 1, 2020, Khoury failed to pay the rent due. Fox Decl., ¶12. As a result of Khoury’s breach of the Lease Agreement, $37,449.35 is unpaid. Fox Decl., ¶¶ 24-29.

Khoury opposes on three grounds. First, he argues that he signed the Lease Agreement, which is only the most recent lease between the parties, because it in part entitled him to modify the premises and operate a tattoo parlor. Yet, Monrovia’s principal, Ted Fox, unreasonably withheld approval for the operation of a tattoo parlor, resulting in lost income. Opp. at 2-3. As Monrovia replies, Khoury provides no evidence supporting this argument. Reply at 2.

Second, Khoury argues that attachment will cause him irreversible harm. Opp. at 3. That also is unsupported, but it is irrelevant. A seizure of assets through attachment can harm a defendant, but that does not make it unlawful.

Third, Khoury contends that the Moveout Agreement, which included a partial payment of unpaid rent, provides that the Lease Agreement is terminated and forfeited. As such, Monrovia waived any right to additional rent, back or future. Opp. at 3-4.

This argument is not fleshed out or supported by case law. Khoury argues that the Moveout Agreement’s termination of the Lease Agreement waived Monrovia’s right to collect damages. Monrovia relies on the fact, however, that the Moveout Agreement expressly provides that Monrovia is not waiving any claim for back rent, future rent, or other damages. App. at 14; Reply at 4 (citing Ex. 1, §2.7). For this purpose, the Moveout Agreement released claims against Monrovia but not claims against Khoury. Ex. 1, §3. At this stage, Monrovia has shown a probability of success that it may continue to collect unpaid past and future rent.

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, (“Kadison”) (1987) 197 Cal.App.3d 1, 4 (action involving trust property was a commercial, not a consumer, transaction).

The “use” provided under the Lease Agreement is a skate shop. Khoury told Fox that that this was his usual business, that he would operate a skate shop at the Property, and that he had in the past and currently operated and managed other skate shops under the name “Stix”. Fox Decl., ¶5, Ex. 2. Monrovia’s action against Khoury arises out of his conduct of a business.

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). Monrovia seeks attachment for a proper purpose.

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. The requirement of specificity avoids unnecessary hearings where an individual defendant is willing to concede that the described property is subject to attachment. Ibid. A general list of categories - e.g., “real property, personal property, equipment, motor vehicles, chattel paper, negotiable and other instruments, securities, deposit accounts, safe-deposit boxes, accounts receivable, general intangibles, property subject to pending actions, final money judgments, and personal property in decedents’ estates” – is sufficient. Ibid.

Monrovia seeks to attach interests in real property except leasehold estates with unexpired terms of less than one year; accounts receivable; chattel paper; equipment; farm products; inventory; general intangibles and final money judgments arising out of the conduct by the defendant of a trade, business, or profession; money on the premises where a trade, business, or profession is conducted and elsewhere; deposit accounts; negotiable documents of title; instruments; securities; minerals or the like to be extracted; and any community property that would be subject to enforcement of judgment obtained in this case. The description of attachable property is adequate.

The application for a right to attach order against Defendant Khoury is granted the amount of $97,449.35. Monrovia has not submitted a proposed right to attach order and must do so in two court days or it will be waived. No writ shall issue until Monrovia posts a $10,000 undertaking.