Judge James C. Chalfant, Case Number: 23STCV31072, Date: 2024-08-29 Tentative Ruling

Hearthstone Properties Pomona, LLC v. SFO Merchandise, Inc., et al.

23STCV31072

Tentative decision on application for right to attach order: granted

Plaintiff Hearthstone Properties Pomona, LLC (“Hearthstone”) applies for right to attach order against Defendants SFO Merchandise, Inc. (“SFO”) and Bingze Li (“Li”).

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

On December 20, 2023, Plaintiff Hearthstone filed the Complaint against Defendants SFO and Li, alleging causes of action for (1) breach of contract, and (2) breach of guaranty. The Complaint alleges in pertinent part as follows.

Hearthstone is and has been the owner of the real property located at 2318 Pomona Avenue, Pomona, CA 91768 (“Premises”). Compl., ¶1.

On or about June 8, 2022, Hearthstone and SFO entered into an AIR Commercial Real Estate Association Standard Industrial/Commercial Single-Tenant Lease—Gross (“Lease”) for the Premises. Compl., ¶7, Ex. A. Li signed the Lease as the President of SFO. Compl., ¶7. Li also executed a Guaranty of Lease (“Guaranty”), wherein he guaranteed timely payments of all amounts SFO may at any time owe Hearthstone under the Lease or any modifications of the Lease. Compl., ¶11, Ex. B.

The Lease has a fixed term of five years from August 1, 2022 through July 31, 2027. Compl., ¶8. SFO agreed to pay Hearthstone a “Base Rent” of $60,000 on the first day of each month commencing on August 1, 2022 and continuing on the first day of each month thereafter for the term of the Lease. Compl., ¶8. Each year, commencing the second year of the Lease, the Base Rent increases as set forth in Paragraph III of the Rent Adjustment(s) Standard Lease Addendum. Compl., ¶8.

The Lease requires SFO to obtain a conditional use permit (“CUP”) to operate at the Premises. Compl., ¶9. Prior to entering into the Lease, SFO, by and through Li, acknowledged and agreed that the City of Pomona (“City”) would not allow SFO to operate a truck, trailer and shipping container facility (“Trucking Operations) at the Premises unless SFO obtained a permit or license including a new CUP expressly allowing it to do so. Compl., ¶15. SFO expressly agreed in the Lease to promptly apply for a CUP upon execution of the Lease and to retain a zoning expediter to assist SFO in connection with obtaining the CUP. Compl., ¶15. SFO never applied for the CUP and never retained a zoning expediter. Compl., ¶16.

The Lease allows Hearthstone to terminate the Lease in the event SFO is unable secure the CUP. Compl., ¶9. The Lease further provides that the prevailing party in any litigation involving the Premises or Lease may recover its reasonable attorneys’ fees and costs. Compl., ¶10.

The Guaranty provides that the obligations of Li under the Guaranty are independent of, and may exceed, the obligations of SFO, and that Hearthstone may pursue claims against Li whether or not it pursues its claims against SFO. Compl., ¶12. The Guaranty also provides that Li shall pay Hearthstone’s reasonable attorneys’ fees and all other costs and expenses incurred by Hearthstone in enforcing the Guaranty. Compl., ¶13.

SFO took possession and control of the Premises as the tenant under the Lease on or before August 1, 2022. Compl., ¶14.

On or about October 1, 2023, the City issued a Notice of Violation to Hearthstone and SFO based on the fact that SFO was “conducting business without a City of Pomona business license”. The Notice of Violation informed Hearthstone and SFO that the City would issue an administrative citation and impose administrative fines up to $600 per day for each day the violation continues after October 20, 2023. Compl., ¶17. At or about the time that SFO received the Notice of Violation, SFO stopped paying the Base Rents under the Lease. Compl., ¶17.

On or about October 4, 2023, and multiple times thereafter, Hearthstone notified SFO of the Notice of Violation and that SFO must resolve the Notice of Violation by either (i) immediately ceasing Trucking Operations on or before October 20, 2023 and not resuming them until SFO obtains a new CUP; or (ii) obtaining the new CUP on or before October 20, 2023. Compl., ¶18. SFO has continued to illegally conduct its Trucking Operations on the Premises without the required CUP. Compl., ¶¶18, 21.

On or about October 19, 2023, Hearthstone personally served Li, as the agent for service of process for SFO (a) a three-day notice of pay rent or quit; and (b) a ten-day notice to cure or quit. Compl., ¶¶19, 24 Exs. C-D. SFO did not pay its past due Base Rent or cure the Notice of Violation. Compl., ¶19.

On November 30, 2023, Hearthstone sent SFO a further Notice of Default based on both SFO’s failure to pay the Base Rents (and Late Fees) in October and November 2023, and the Notice of Violation. Compl., ¶¶20, 25. SFO still has not (i) paid any Base Rent since September 2023, (ii) cured the Notice of Violation, or (iii) ever retained the zoning expediter. Compl., ¶20. Li has not performed under the Guaranty. Compl., ¶25.

As of the filing date of the Complaint, SFO owes Hearthstone $187,200 for past due monthly Base Rents. Compl., ¶22. Hearthstone has elected to continue the Lease and SFO’s right to possession and recover the rent as it becomes due. Compl., ¶23.

Hearthstone seeks (1) compensatory damages and interest, (2) injunctive relief enjoining SFO and Li from conducting or engaging in the Trucking Operations at the Premises, (3) reasonable attorneys’ fees, (4) costs of suit, and (5) other and further relief as the court may deem just and proper. Compl., at Prayer.

Proofs of service on file show that SFO and Li have been served with summons and complaint on January 5 and January 10, 2024, respectively.

On February 13, 2024, the court denied Hearthstone’s ex parte application for a temporary restraining order (“TRO”) and order to show cause (“OSC”) for a preliminary injunction.

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.

On or about June 8, 2022, Hearthstone and SFO entered into the Lease for the Premises. Robins Decl., ¶4, Ex. A. Li signed the Lease as the President of SFO. Robins Decl., ¶4. Matthew Fishburn, CPA (“Fishburn”) and Richard D. Robins (“Robins”), co-managers of Hearthstone signed the Lease on Hearthstone’s behalf. Robins Decl., ¶4.

On or about June 24, 2022, Hearthstone and SFO entered into an Amendment of Lease to correct the address of the Premises (the Lease had erroneously stated the address of the Premises as 2318 Pomona Avenue instead of 2318 Pomona Boulevard). Robins Decl., ¶4, Ex. B.

As a condition to Hearthstone entering into the Lease, Li executed the Guaranty on or about June 8, 2022,. Robins Decl., ¶5, Ex. C.

SFO took possession and control of the Premises as the tenant under the Lease on or before August 1, 2022. Robins Decl., ¶6.

On or about October 19, 2023, Hearthstone personally served Li, as the agent for service of process for SFO (a) a three-day notice of pay rent or quit; and (b) a ten-day notice to cure or quit. Cheney Decl., ¶2, Exs. F-G. SFO did not pay its past due Base Rent or cure the Notice of Violation. Cheney Decl., ¶2.

On November 30, 2023, Hearthstone sent SFO further Notice of Default based on SFO’s failure to pay the Base Rents (and Late Fees) in October and November 2023, and sent Li a Notice of Default of the Guaranty. Cheney Decl., ¶¶3-4, Exs. H-I. SFO and Li not have responded to the additional Notices of Default. Cheney Decl., ¶5. Li also has not performed under the Guaranty. Cheney Decl., ¶5.

Hearthstone’s first appearance filing fee when it filed the Complaint was $435, court fee for its application was $60, and will have to pay another $25 per writ of attachment issued. Cheney Decl., ¶6. As a result, Hearthstone’s recoverable fees in this lawsuit, not including recoverable attorneys’ fees, will well exceed the $500 requested in the application. Cheney Decl., ¶6.

On January 18, 2024, Hearthstone conducted a business search for SFO on the California Secretary of State webpage. Cheney Decl., ¶7, Ex. J.

In late-February 2024, Hearthstone searched the California Secretary of State records for UCC-1 Financing Statements filed against SFO’s property. Cheney Decl., ¶8. The search showed that, o or about July 7, 2022, Cathay Bank filed a security interest on virtually all of SFO’s personal property. Cheney Decl., ¶8, Ex. K. Based on this search, Hearthstone never perfected its security interest by filing a UCC-1 Financing with the California Secretary of State and cannot obtain a first position security interest. Cheney Decl., ¶8, Ex. K.

On or about April 2, 2024, Pacific Terminal Service Company, LLC sued SFO for breach of contract in Los Angeles Superior Court. Cheney Decl., ¶9, Ex. L.

On or about April 23, 2024, Hearthstone filed an unlawful detainer action against SFO in Los Angeles Superior Court Case No. 24PSCV01315 (“UD Action”). Cheney Decl., ¶10, Ex. M. As of the filing of this Application for Writ of Attachment, the trial has not been yet set in the UD Action. Cheney Decl., ¶10.

On February 26, 2024, Eric Major, CPA (“Major”) and partner of The Brentwood Management Group and Gordon, Fishburn & Major LLP, caused SFO’s $180,000 security deposit to be applied against its past due monthly rents. Major Decl., ¶7.

On March 7, 2024, Fishburn sent a letter to SFO demanding that SFO replenish its entire $180,000 security deposit no later than March 17, 2024. Major Decl., ¶7, Ex. D.

On or about June 14, 2024, Major created a summary based on the ledger report for the rental income account for Hearthstone for the dates of September 1, 2022 through April 8, 2024 to be printed (“Summary”). Major Decl., ¶8, Ex. E. The Summary shows all rents received from SFO for the Premises, and sets forth all late fees and interests owed by SFO pursuant to the terms and conditions of the Lease through April 8, 2024. Major Decl., ¶8.

From August 1, 2022 through September 1, 2023, SFO generally paid its Base Rent in a timely manner, but never paid the additional rent of $600 per month for water and electricity as required by section 11.1 of the Lease. Major Decl., ¶9a. In accordance with section 13.4 of the Lease, Hearthstone has charged SFO the minimum late fee of at least $100 per month as a result of SFO’s failures to pay its Additional Rents during 12 of those 14 months, as well as the 10% late fee on the entire Rent for the months of April 2023 and September 2023. Major Decl., ¶9a.

SFO failed to pay anything toward its October 2023 through July 2024 Base Rent or Additional Rent. Major Decl., ¶9b-k. Hearthstone charged SFO a 10% late fee for October 2023 through March 2024 missed rents plus interest at 10% per annum the Base Rent from November 1, 2023 to present, December 2, 2023 to present, January 1, 2024 to present, February 1, 2024 to present, March 4, 2024 to present, and April 1, 2024. Major Decl., ¶9b-h. Hearthstone will start to charge SFO at 10% per annum on the April 2024 missed Base Rent or Additional Rent commencing on May 2, 2024, May 2024 missed Base Rent or Additional Rent commencing on June 1, 2024, and June 2024 missed Base Rent or Additional Rent commencing on July 2, 2024. Major Decl., ¶9i-k.

As of June 14, 2024, SFO owes Hearthstone $476,238.94, which increases by $105.93 per day for interests commencing on June 15, 2024, and daily interest will increase to $123.57 effective July 2, 2024. Major Decl., ¶10.

Li is the President and principal manager of SFO. Li Decl., ¶2. Upon the demand of Hearthstone, Li became the personal guarantor of the Lease. Li Decl., ¶2.

On or about July 18, 2022, the City Council adopted Urgency Ordinance No. 4319, which placed a 45-day moratorium on warehouse and related industrial uses citywide until September 1, 2022. Li Decl., ¶3.

On August 15, 2022, the City Council adopted Urgency Ordinance No. 4321, extending the Moratorium for an additional ten months and 15 days until July 16, 2023. Li Decl., ¶3.

On May 5, 2023, the City Council adopted Urgency Ordinance No. 4332, extending the Moratorium for an additional 169 days until December 31, 2023. Li Decl., ¶3.

The purpose of the Lease had been frustrated by reasons beyond SFO’s control. Li Decl., ¶4. SFO could not operate or conduct business without the new CUP and could not obtain the new CUP even if it wanted. Li Decl., ¶4. Despite this predicament and not being able to enjoy the benefits of the Lease, SFO continued to pay the rent under the Lease for a period of over a year. Li Decl., ¶5.

Once the Mortarium was lifted, SFO immediately began its efforts to obtain the new CUP. Li Decl., ¶7. The City requires the owner of the Premises to execute certain documents before issuing the CUP, Hearthstone was asked to assist and cooperate. Li Decl., ¶7. SFO’s efforts were frustrated by Hearthstone’s refusal to cooperate in obtaining the CUP. Li Decl., ¶7.

Li is not in the business of guaranteeing lease agreements and did not receive any consideration or profit for the Guaranty he signed at issue in this case. Li Decl., ¶11.

Plaintiff Hearthstone applies for right to attach orders against Defendants SFO and Li in the amount of $485,830.38. Defendants oppose.[2]

Hearthstone seeks $485,830.38 in unpaid Base Rent, Additional Rent, late fees, and interest pursuant to the Lease. This is a claim on which attachment may be based.

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).

Hearthstone has created the Summary based on the ledger report for the rental income account for Hearthstone for the dates of September 1, 2022 through April 8, 2024. Major Decl., ¶8, Ex. E. The Summary shows all rents received from SFO for the Premises, and sets forth all late fees and interests owed by SFO pursuant to the terms and conditions of the Lease through April 8, 2024. Major Decl., ¶8. As of June 14, 2024, SFO owes Hearthstone $476,238.94. Major Decl., ¶10. As of June 14, 2024, SFO owes Hearthstone $476,238.94, which increases by $105.93 per day for interests commencing on June 15, 2024, and daily interest will increase to $123.57 effective July 2, 2024. Major Decl., ¶10.

Hearthstone’s application is for $485,330.38, which is based on the daily interest between June 14 and the date of the instant hearing, plus $500 in costs which are supported by attorney declaration. Cheney Decl., ¶6. This amount is readily ascertainable from the Lease.

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).

Hearthstone’s evidence shows that, on or about June 8, 2022, Hearthstone and SFO entered into the Lease for the Premises. Robins Decl., ¶4, Ex. A. As a condition to Hearthstone entering into the Lease, Li executed the Guaranty on or about June 8, 2022. Robins Decl., ¶5, Ex. C.

On or about June 24, 2022, Hearthstone and SFO entered into an Amendment of Lease to correct the address of the Premises. Robins Decl., ¶4, Ex. B.

SFO took possession and control of the Premises as the tenant under the Lease on or before August 1, 2022. Robins Decl., ¶6. SFO failed to pay its October 2023 Base Rent. On or about October 19, 2023, Hearthstone SFO (a) a three-day notice of pay rent or quit; and (b) a ten-day notice to cure or quit. Cheney Decl., ¶2, Exs. F-G. SFO did not pay its past due Base Rent or cure the Notice of Violation. Cheney Decl., ¶2. On November 30, 2023, Hearthstone sent SFO further Notice of Default based on SFO’s failure to pay the Base Rents (and Late Fees) in October and November 2023, and sent Li a Notice of Default of the Guaranty. Cheney Decl., ¶¶3-4, Exs. H-I. SFO and Li not have responded to the additional Notices of Default. Cheney Decl., ¶5. Li also has not performed under the Guaranty. Cheney Decl., ¶5. As stated, the amount of unpaid rent plus interest and court costs is $485,330.38.

Defendants argue that Hearthstone has not shown a necessity for attachment, has not shown that the property to be attached is not exempt, and fails to show great or irreparable injury, citing CCP section 485.220(a) and 485.010. Opp. at 3-4.

Defendants are relying on provisions for ex parte attachment that have no bearing on a noticed hearing. Defendants have the affirmative burden to show exempt property (CCP §§ 484.060, 484.070) and the moving party need not show irreparable injury. The court may issue a right to attach order 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)). See Reply at 4, 5.

Defendants further argue frustration of the Lease’s purpose. Opp. at 6-7. Shortly after the Lease was executed, on or about July 18, 2022, the City Council adopted Urgency Ordinance No. 4319, which placed a 45-day moratorium on warehouse and related industrial uses citywide until September 1, 2022. Li Decl., ¶3. The Moratorium remained in effect until December 31, 2023. Li Decl., ¶3. The purpose of the Lease had been frustrated by reasons beyond SFO’s control. Li Decl., ¶4. SFO could not operate or conduct business without the new CUP and could not obtain the new CUP even if it wanted. Li Decl., ¶4. Despite this predicament and not being able to enjoy the benefits of the Lease, SFO continued to pay the rent under the Lease for a period of over a year. Li Decl., ¶5.

Defendants believe that Hearthstone was aware of the imminency of the Mortarium. Once the Mortarium was lifted, SFO immediately began its efforts to obtain the new CUP. Li Decl., ¶7. SFO’s efforts were frustrated by Hearthstone’s refusal to cooperate in obtaining the CUP. Li Decl., ¶7.

Hearthstone presents evidence that the Lease expressly contemplates that SFO was solely obligated to secure any necessary CUP; Hearthstone had no obligation to do so. Robins Decl., Ex. A, ¶52. In the event that SFO was unable to do so, the Lease permitted SFO to use the premises for any permitted purpose until it obtains a CUP. Ex. A, ¶52(b). Hearthstone was unaware of the imminence of the Moratorium when the parties entered into the Lease. Robins Reply Decl., 5. Hearthstone offered to cooperate with SFO to address the CUP issues with the City on several occasions. Robins Reply Decl., ¶¶ 6-7. Hearthstone negotiated with the City to allow tractor-trailers to be stored at the property based on Hearthstone’s existing CUP. Robins Decl., ¶7.

Defendants appear to be raising a frustration of purpose or impossibility defense. The courts have held that a frustration of purpose defense does not apply when government laws have only restricted and not completely destroyed use of the premises. See Grace v. Croninger, (“Grace”) (1936) 12 Cal. App. 2d 603 (lease for use as a saloon and cigar store was not frustrated when prohibition laws prohibited the sale of liquor). California law also provides for impossibility as an excuse for non-performance of a contract where it is strictly impossible or only possible because of extreme and unreasonable difficulty. Autry v. Republic Productions, (1947) 30 Cal.2d 144, 148-49. Where the reason the parties entered the agreement has been frustrated by a supervening circumstance that was not anticipated, such that the value of performance by the party standing on the contract is substantially destroyed, the doctrine of commercial frustration applies to excuse performance. See, e.g. Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga, (2009) 175 Cal.App.4th 1306, 1336. “A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.” Id. at 1336.

These defenses are difficult to show, and Defendants have not met their burden. They do not show that the Lease requires a use of the Premises that is barred by the Moratorium, and Hearthstone’s evidence is to the contrary. Therefore, Defendants do not show impossibility. Nor did the City’s Moratorium completely destroy any use of the Premises and therefore have not shown frustration of purpose. Finally, Defendants have not shown that Hearthstone has acted in bad faith by not cooperating in issuance of a new CUP.

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).

Li is the President and principal manager for SFO. As such, the breach of guaranty claim against him is commercial in nature. Li argues that he is not in the business of guaranteeing leases (Li Decl., ¶11), but it is the commercial nature of the underlying Lease that is at issue. The Lease, and the Guaranty required for the Lease, arise out of Li’s conduct of SFO’s business.

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.

Defendants argue that Hearthstone fails to properly identify the property to be attached. Opp. at 2-3. This is incorrect. There is no requirement of specificity for SFO. 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). For Li, the application does specify the property to be attached as deposit accounts in excess of $1000, real property interests, money located at a particular business address, negotiable instruments and securities, and minerals. This description suffices.

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). Hearthstone seeks attachment for a proper purpose.

Defendants argue that the bond should be greater than the standard $10,000 because it would interfere with SFO’s business operations. They ask for an undertaking in the amount attached.

Hearthstone argues that Defendants’ objection to the bond must be made by noticed motion under CCP sections 489.010 and 995.930. Reply at 7. These provisions apply to a modification of the bond, not the initial bond setting. Defendants can seek a bond greater than $10,000 at the initial setting.

Defendants fail to explain why the undertaking should be the $485,830.38 amount sought for attachment. The damages sustained from wrongful attachment generally are the lost use of the property attached plus the attorney fees that will be necessary to set the attachment aside. Additionally, the stronger the moving party’s showing is for a probability of success, the less the undertaking needs to be. The court will discuss the issue with counsel at hearing.

Hearthstone’s applications for a right to attach order against Defendants SFO and Li are granted in the amount of $485,830.38. The undertaking will be set after discussion with counsel. No writ shall issue against a Defendant until the undertaking for that Defendant is posted.

[1] The court sustained both of Hearthstone’s written evidentiary objections to paragraph six of the the Li declaration.

[2] Defendants’ counsel states that he has moved to be relieved as counsel and was unable to obtain a hearing in the I/C court until October 29, 2024. Kazachki Decl., ¶11. He repeats a request made to the I/C court to continue the hearing on Hearthstone’s applications until after the October 29 hearing to be relieved. Kazachki Decl., ¶15. Such a continuance would defeat Hearthstone’s right to a timely hearing on its applications and the request is denied.