Judge James C. Chalfant, Case Number: 23STCV31283, Date: 2024-06-18 Tentative Ruling

H&H Retail Owner, LLC (“H&H” or “Landlord”) applies for right to attach orders against Bezel America In., doing business as Jinya Ramen Bar (“Tenant”), Dawen Gao (“Gao”) and Yaping Zhu (“Zhu”) for $536,877.76 which included estimated costs of $10,000 and estimated allowable attorney fees of $20,999.85.

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 H&H filed the Complaint on December 22, 2023 against Defendants Tenant, Gao, and Zhu for breach of lease and breach of guaranty. H&H is the landlord and Defendant Tenant is the tenant of real property located at 6801 Hollywood Boulevard, Suite 317, Hollywood, California, 90028 (“Premises”).

a. Lease History

On or about February 3, 2015, Landlord and Tenant entered into a written Lease (“Lease”) of the Premises for a term of approximately ten years. In connection with the execution of the Lease, Zhu and Gao (collectively, “Guarantors”) signed the Guaranty of the Lease.

The Lease was thereafter amended by the First Amendment to the Lease dated August 19, 2016 (“First Amendment”).

On or about December 3, 2020, the Lease was amended by the Second Amendment to the Lease (“Second Amendment”), extending the Lease to March 31, 2029. The Second Amendment also abated Minimum Annual Rent, Additional Rent, Percentage Rent and Marketing Assessment Charges for the months of April, May, and June 2020, as well as 50% of the charges for the months of November and December 2020. The foregoing abated charges were conditioned upon Tenant’s full, faithful and punctual performance of its obligations under the Lease and the Second Amendment.

b. Lease Terms

Section 4.2 of the Lease requires Tenant to pay Minimum Annual Rent of $45,000 (“MAR”) in 12 equal monthly installments.

Section 4.4 of the lease requires Tenant to pay “Additional Rent,” which refers to all sums of money required to be paid or reimbursed under the Lease with the exception of MAR pursuant to Exhibit B “Defined Terms.”

Section 2.7 of the Lease requires Tenant to pay “Storage Rent” in the amount of $35.30 per square foot of the approximately 170 additional space leased to Tenant (“Storage Space”). The Storage Rent increases by 3% of the previous year’s charge on the first day of each year during the Lease term.

Section 7.3(b) of the Lease requires Tenant to its share of “Common Area Expense” in the manner provided in Section 4.4.

Section 6.2 of the Lease requires Tenant to pay “Utilities Charges” and “Chilled Water Charges” in accordance with Section 4.4(a).

Section 8.2 of the Lease requires Tenant to pay Marketing Assessment in equal monthly installments, and the Marketing Assessment increases by 3% starting on the first January following the Rent Commencement Date, and on each January 1st thereafter.

The Second Amendment to the Lease abated MAR, Additional Rent, Percentage Rent and Marketing Assessment Charges for the months of April 2020, May 2020 and June 2020 (the “April to June Abated Charges”), as well as 50% of the Charges for the months of November 2020 and December 2020 (“Abated Charges”). The Abated Charges are “absolutely conditioned upon Tenant’s full, faithful and punctual performance of its obligations under the Lease and this Amendment” pursuant to section 3.3 of the Second Amendment.

Section 16.1 defines the failure to pay any MAR or Additional Rent as an event of default. Section 16.2 requires Landlord to provide three days’ written notice and demand to cure such default to Tenant. If Tenant then fails to do so, Landlord can terminate the Lease, repossess the Premises, and pursue any other rights or remedies under state law.

c. Default

Tenant has had an outstanding balance of amounts owed under the Lease since approximately April 1, 2020.

On or about October 3, 2023, Landlord’s counsel served on Tenant a Demand for Payment of Rent (“Demand Notice”) that advised Tenant that it owes an outstanding balance of $274,279.43 and requested that the same be paid within three days. The Demand Notice further informed Tenant that if Tenant does not cure the outstanding amount within 3 days, Landlord reserves all rights to pursue all of its legal remedies, including bringing an action against Tenant for all outstanding amounts of rent owed under the Lease, reclaiming the Abated Charges and accelerating the balance of the amortized rent from the First Amendment.

Defendants have failed and refused, and continues to fail and refuse, to comply with its obligations as outlined in the Lease and Guaranty

As to the first and second causes of action, Landlord seeks compensatory damages of rent owed to date according to proof but which Landlord estimates to exceed $457,144.33, together with interest at the maximum allowable legal rate and for compensatory damages consisting of future rent owed for the remainder of the lease term according to proof but which Landlord estimates to exceed $330,699.01, together with interest at the maximum allowable legal rate. On all causes of action, Landlord seeks reasonable attorneys’ fees, costs, and other relief as the court deems proper.

2. Course of Proceedings

On February 13, 2024, Tenant and Guarantor filed their joint Answer to the Complaint.

On May 9, 2024, pursuant to written stipulation, the court continued hearing on application for writ of attachment to June 18, 2024.

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.

On or about February 3, 2015, Landlord and Tenant entered into a written the Lease for a term of approximately ten years for the Premises. Gomez Decl., ¶2, Ex. A. In connection with the Lease, Guarantors signed the Guaranty of the Lease. Gomez Decl., ¶3, Ex. B. Tenant agreed to pay a MAR of $45,000 in 12 equal monthly installments due on the first of each month. Gomez Decl., ¶3, Ex. A, §§ 1.9, 4.2. It would also pay Storage Rent, Additional Rent, Common Area Expenses, Utility Charges and Chilled Water Charges, and Marketing Assessment Charges. Gomez Decl., ¶¶ 17-33, Ex. A, §§ 2.7, 4.4, 7.3(b), 6.2, 6.4, 8.2.

An event of default includes failure to pay any of the MAR or Additional Rent, as well as failure to fully and promptly perform any covenant or condition of the Lease. Gomez Decl., ¶12, Ex. A, §§ 16.1(a), (c). To enforce its rights following a tenant’s default for failure to pay amounts owed, Landlord needs to give written notice of the nature of the default and demand cure of such within three days. Gomez Decl., ¶3, Ex. A, §16.2(a). The period to cure a default based on section 16(c) must be reasonable and not exceed 30 days. Gomez Decl., ¶3, Ex. A, §16.2(c).

If the tenant failed to cure the default, Landlord can terminate the Lease, repossess the Premises, and continue to recover rent as it became due notwithstanding the repossession. Gomez Decl., ¶3, Ex. A, §§ 16.3(a)-(c). Landlord’s damages include (a) all unpaid rent at the time of termination, (b) the amount of unpaid rent that would have accrued at the time of an award to that effect, less any loss the tenant proves could have been reasonably avoided, (c) the worth, at the time of award, of unpaid rent that will accrue from the time of award to the end of the Lease, less any loss the tenant proves could have been reasonably avoided, and (d) any other amount necessary compensate Landlord for, inter alia, retaking the Premises and maintaining them after default, including attorney’s fees and costs. Gomez Decl., ¶3, Ex. A, §§ 16.4(a)-(d).

In August 2020, Landlord and Tenant entered into the First Amendment to the Lease. Gomez Decl., ¶4, Ex. C. The Lease Term was extended so that the Expiration Date became March 31, 2028, and Tenant agreed to pay Amortized Payments for Tenant’s Delay in the amount of $1,737.86 per month, commencing June 1, 2016 and continuing through March 31, 2027. Gomez Decl., ¶4, Ex. C.

On or about December 3, 2020, Landlord and Tenant entered into the Second Amendment to the Lease, extending it to March 31, 2029. Gomez Decl., ¶5, Ex. D. Conditioned on Tenant’s full, faithful and punctual performance of its obligations under the Lease and the Second Amendment, Landlord abated MAR, Additional Rent, Percentage Rent and Marketing Assessment Charges for the months of April, May, and June 2020, as well as 50% of the Charges for the months of November 2020 and December 2020. Gomez Decl., ¶5, Ex. D. If Tenant defaulted and failed to cure such default, its right to the Abated Charges would cease and damages would include Landlord’s recovery of any Abated Charges. Gomez Decl., ¶37, Ex. D, §3.3.

Tenant first failed to pay Minimum Rent or Additional Rent pursuant to the Lease on or about April 1, 2020 and nearly every month thereafter through present. Gomez Decl., ¶8.

On or about October 3, 2023, Landlord’s counsel served the Demand Notice advising Tenant and Guarantors that Tenant owes an outstanding balance of $274,279.43 and requested that the same be paid within three days. Goodkin Decl., ¶2, Ex. F. The Demand Notice further informed Defendants that if Tenant did not cure the outstanding amount within 3 days, Landlord reserves all rights to pursue all of its legal remedies, including bringing an action against Tenant and Guarantors for all outstanding amounts of rent owed under the Lease, reclaiming the Abated Charges and accelerating the balance of the amortized rent from the First Amendment. Gomez Decl., ¶2, Ex. F. More than three days elapsed after the service of the Demand Notice with Defendants failing to respond to Landlord and failing to pay the entire amounts set forth in the demand letter. Goodkin Decl., ¶3.

Defendants continue to fail to comply with their obligations as outlined in the Lease and Guaranty. Gomez Decl., ¶13; Goodkin Decl., ¶3. Landlord is the current owner of the Premises and holds all rights and title under the Lease. Gomez Decl., ¶6. Tenant is presently still in possession of the Premises. Gomez Decl., ¶7.

At the time of the filing of this Application, Landlord is owed $505,877.91 in past Rent due and Additional Rent for the months of and between April 2020 and February 2024. Gomez Decl., ¶¶ 11, 39-41; Ex. E.

The total amount owed was calculated by: (1) determining the monthly amount of Base Rent ($213,498.41), Storage Rent ($28,471.19), Chilled Water charges ($2,952.55), other Water charges ($20,510.86), Common Area Expenses ($345,423.25), Marketing Assessment Charges ($11,870.92), Tenant Delay Charges ($144,003.55) and Abated Charges ($33,508.68) owed between April 2020 and February 2024, (2) determining the amount of credits and payments made by Tenant between April 2020 and February 2024, (3) adding the total amount of Base Rent, Storage Rent, Chilled Water charges, other Water charges, Common Area Expenses, Marketing Assessment Charges, Tenant Delay Charges and Abated Charges owed between April 2020 and February 2024 in the total amount of $800,239.41, and (5) offsetting the $800,239.41 owed by credits and Tenant payments in the total amount of $294,361.50, for a total owed of $505,877.91. Gomez Decl., ¶¶ 39-41.

Section 24 of the Lease allows the prevailing party in any action based on a breach of the Lease to recover attorney’s fees and costs from the non-prevailing party. This includes any costs of collecting unpaid rent from the Tenant. Gomez Decl., ¶43. At the time of the filing of this Application, Landlord’s attorney’s fees totaled more than $20,999.85. Landlord’s counsel charges the following rates for such services: $450.00 per hour for partners, $325.00-365.00 per hour for associates, and $95.00 per hour for law clerks. Landlord is seeking to include $20,999.85 in attorney’s fees to the writ of attachment. Goodkin Decl., ¶¶ 6-7.

Plaintiff Landlord’s claim stems from Tenant’s and Guarantors’ non-payment of rent under the Lease and is for $536,877.76, which exceeds the $500 minimum claim amount for issuing an attachment. CCP §483.010(a). 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).

Landlord has calculated the amounts owed under the Lease and credited Tenant payments. Gomez Decl., ¶¶ 39-42, Ex. E. The amount owed of $505,877.91 is readily ascertainable.

Landlord also seeks estimated costs of $10,000 and estimated attorney’s fees of $20,999.85. The attorney’s fees are supported by declaration (Goodkin Decl., ¶¶ 6-7), but the costs are not, and they are disallowed. The readily ascertainable amount due is $526,877.76.

Landlord shows that Tenant entered into the Lease, as amended through the Second Amendment. Gomez Decl., ¶¶ 2, 4, 5, Exs. A, C, D. In connection with the Lease, Guarantors entered into the Guaranty of the Lease. Gomez Decl., ¶3, Ex. B. Tenant breached the Lease as amended by not paying rent beginning on or about April 1, 2020 and nearly every month thereafter through present. Gomez Decl., ¶8.

On or about October 3, 2023, Landlord’s counsel served the Demand Notice advising Tenant and Guarantors that they owe an outstanding balance of $274,279.43 and requested that the same be paid within three days. Goodkin Decl., ¶2, Ex. F. Defendants failed to respond or cure. Goodkin Decl., ¶3.

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 conduct of a trade, business, or profession is generally activity “which occupies the time, attention and effort. . . for the purpose of livelihood or profit on a continuing basis.” Nakasone v. Randall, (1982) 129 Cal.App.3d 757, 764 (quoting Advance Transformer Co. v. Superior Court, (1974) 44 Cal.App.3d 127, 134). “The term ‘business,’ therefore, embraces any activity engaged in for profit or for gain. The phrase ‘engaged in business,’ however, generally is held to imply business activity of a frequent or continuous nature.” Id. There is a distinction between one who spends his time and effort in carrying on an activity for livelihood or profit on a continuing basis and one who merely conserves his personal investments. Id.

The Guaranty states that Guarantors have a financial interest in Tenant. Ex. B. Gao is Tenant’s CEO and Zhu is Tenant’s Vice-President. Ex. A. Landlord’s claim against Guarantors on their Guaranty arises out of their conduct of a business and is a commercial claim.

Attachment must not be sought for a purpose other than the recovery for the claims upon which attachment is based. CCP §484.090(a)(3). Landlord 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.

The applications against Guarantors state that Landlord seeks to attach all property subject to attachment under CCP section 487.010(c). Although it may be objectionable to simply refer to a statute, Guarantors fail to do so.

The application for a right to attach order is granted against each Defendant in the amount of $526,877.76. No writ shall issue for any Defendant until Landlord posts a $10,000 undertaking for that Defendant.