Judge James C. Chalfant, Case Number: 24STCV08231, Date: 2025-05-20 Tentative Ruling

Plaintiff Alameda Studio Owner, LLC (“Alameda”) applies for right to attach orders against Defendants K & C Specialties, Incorporated (“KCSI”), David Arreola (“David”), Jose S. Arreola-Vargas (“Jose”), and Celerina Alejandre de Arreola (“Celerina”).

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

A. Statement of the Case

1. The Complaint

On April 2, 2024, Plaintiff Alameda filed the Complaint against Defendants KCSI, David, Jose, and Celerina, alleging claims for (1) breach of written lease (2) account stated, (3) money had and received, (4) actual fraudulent transfer, (5) constructive fraudulent transfer, (6) cancellation of instrument, (7) actual fraudulent transfer, (8) constructive fraudulent transfer, (9) cancellation of instrument, (10) actual fraudulent transfer, (11) constructive fraudulent transfer, (12) cancellation of instrument, and (13) declaratory relief. The Complaint alleges in pertinent part as follows:

David is the Chief executive officer, Secretary, and Chief Financial Officer of KCSI. Compl., ¶4. Jose and Celerina are married and are David’s parents. Compl., ¶7.

On or about September 16, 2005, a company known as Lowe 6th Street Properties, LLC (“Original Landlord”) entered into a Standard Industrial Lease Agreement (“Original Lease”) with KCSI and David. (“Lessees”). Compl., ¶15, Ex. 1. The Original Lease was amended by (1) a Reinstatement of And First Amendment to Lease dated April 21, 2016 (“First Amendment”); (2) a Second Amendment to Lease dated December 4, 2017 (“Second Amendment”); (3) a Third Amendment to Lease dated June 29, 2018; (“Third Amendment”) (4) a Fourth Amendment to Lease dated May 17, 2019 (“Fourth Amendment”); (5) a Fifth Amendment to Lease dated November 19, 2019 (“Fifth Amendment”); and (6) a Sixth Amendment to Lease dated “June __, 2022 (“Sixth Amendment”) (collectively, “Amendments”). Compl., ¶15, Exs. 1-7.

Beginning with the First Amendment, Lessees executed the Amendments with Sixth and Alameda, LLC (“Intermediate Landlord”) as successor-in-interest to the Original Landlord. Compl., ¶¶ 15-16. Lessees executed the Sixth Amendment with Plaintiff Alameda, successor-in-interest to the Intermediate Landlord and the Original Landlord. Compl., ¶¶ 15-16. The Original Lease and the Amendments (collectively, “Lease”) concern 1311 East Wholesale St, Los Angeles, California 90021 (“Property”). Compl., ¶¶ 11, 16. Under the Lease, Lessees agreed to pay Alameda rent at a base rate (with the term “rent” including additional specified charges) with increases. Compl., ¶ ¶17-18.

Alameda performed all its obligations under the Lease. Compl., ¶19. The Lessees have defaulted by failing to pay rent. Compl., ¶19. As of June 1, 2022, the rent was $23,400 per month. Compl., ¶21. As of June 1, 2023, the rent increased to $24,336 per month. Compl., ¶21.

In December of 2023, Alameda served Lessees with a three-day notice to pay rent or quit for $146,952 in unpaid rent. Lessees vacated. Compl., ¶23.

The Lease term expired on May 31, 2024. Compl., ¶24. As a result of their breach, Lessees owe Alameda not less than $400,000 including rent, commissions to brokers (if any), physical damage to the Property, and related charges and the unpaid balance of the Lease, less any credits for the replacement tenant (if any). Compl., ¶25. The Lease provides for reasonable attorney fees to enforce Alameda’s rights. Compl., ¶26. Alameda has retained counsel and has and will incur attorney fees and costs. Compl., ¶26.

Before February 27, 2024, KCSI owned 15034 Proctor Ave, City of Industry, California 91746 (“Proctor Property”), APN 8208-014-026. Compl., ¶34. KCSI acquired the Proctor Property in 2020, secured by a deed of trust listing KCSI as the trustor. Compl., ¶35.

On March 4, 2024, KCSI transferred its interest in the Proctor Property to Jose and Celerina as “a Bonafide gift and the grantor received nothing in return, R & T 11911” (“Proctor Transfer”) in apparent reference to Revenue & Taxation (“R&T”) Code section 11925(d). Compl., ¶37. David signed the grant deed (“Proctor Transfer Deed”) recorded as instrument number 20240140518 on March 4, 2024. Compl., ¶38, Ex. 8. The Proctor Transfer was made to hinder, delay, and defraud creditors, including Alameda. Compl., ¶¶ 39-41.

Before February 27, 2024, KCSI owned 9226 Charlesworth Road, Pico Rivera, California 90660 (the "Charlesworth Property"), APN 6837-013-006. Compl., ¶55. David acquired the Charlesworth Property in 2004, secured by a deed of trust listing David as the trustor. Compl., ¶56. On March 4, 2024, David transferred his interest in the Charlesworth Property to Jose and Celerina as “a Bonafide gift and the grantor received nothing in return, R & T 11911” (“Charlesworth Transfer”). Compl., ¶58. David signed the grant deed (“Charlesworth Transfer Deed”) recorded as instrument number 20240140517 on March 4, 2024. Compl., ¶59, Ex. 9. The Charlesworth Transfer was made to hinder, delay, and defraud creditors, including Alameda. Compl., ¶¶ 60-62.

Before February 27, 2024, David owned 516 S. 3rd Avenue, La Puente, California 91746 (the "3rd Avenue Property"), APN 8206-004-045. Compl., ¶76. David acquired the 3rd Avenue Property in 2010, secured by a deed of trust listing David as the trustor. Compl., ¶77. On March 4, 2024, David transferred his interest in the 3rd Avenue Property to Jose and Celerina as “a Bonafide gift and the grantor received nothing in return, R & T 11911”. Compl., ¶79. David signed the grant deed (“3rd Avenue Transfer Deed”) recorded as instrument number 20240153208 on March 7, 2024. Compl., ¶80, Ex. 10. The 3rd Avenue Transfer was made to hinder, delay, and defraud creditors, including Alameda. Compl., ¶¶ 81-83.

Alameda prays for the following: (1) damages in an amount not less than $400,000 according to proof, plus interest. Prayer, ¶1; (2) attorney fees. Prayer, ¶2; (3) avoidance and recovery of the Proctor Transfer, the Charlesworth Transfer, and the 3rd Avenue Transfer, or their value. Prayer, ¶¶ 3, 9, 15; (4) an injunction restraining Defendants from further encumbering or disposing of the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property. Prayer, ¶¶ 6, 12, 18; (5) appointment of a receiver for the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property. Prayer, ¶¶ 7, 13, 19; (6) orders declaring as void the Proctor Transfer and Proctor Transfer Deed, the Charlesworth Transfer and Charlesworth Transfer Deed, and the 3rd Avenue Transfer and 3rd Avenue Transfer Deed. Prayer, ¶¶ 8, 14, 20; (7) a declaration of the ownership interests of all parties in the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property. Prayer, ¶21; (8) punitive damages. Prayer, ¶¶ 5, 11, 17; and (9) interest, costs of suit, and such other and further relief as the court may deem just and proper. Prayer, ¶¶ 22-24.

2. Course of Proceedings

On April 9, 2024, Alameda filed notices of pendency of action for the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property.

Proofs of service on file show that KCSI was served on May 6, 2024 by substituted service, and that David, Jose, and Celerina were served by substituted service on May 9, 2024.

On October 28, 2024, the court granted judgment after entry of default against Defendants.

On March 6, 2025, the parties filed a stipulation to set aside defaults and default judgments, which the court ordered the same day.

Defendants jointly answered on March 12, 2025.

On April 10, 2025, Alameda filed and served its applications for right to attach orders and orders for issuance of writs of attachment after hearing.

Defendants’ opposition was filed and served on May 13, 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.

Alameda owns the Property. Nerenhausen Decl., ¶2; RJN Ex. 1. This case involves a breach of the Lease by KCSI and David. Nerenhausen Decl., ¶3. The case further involves cancellation of fraudulent real property conveyances from KCSI and David to Jose and Celerina. Nerenhausen Decl., ¶3. David is the Chief Executive Officer, Secretary, and Chief Financial Officer of KCSI. Nerenhausen Decl., ¶4.

This case involves a lease breach by KCSI and David. Rosenbaum Decl., ¶2. The case further involves cancellation of fraudulent real property conveyances from KCSI and David to Jose and Celerina. Rosenbaum Decl., ¶2. David is the Chief Executive Officer, Secretary, and Chief Financial Officer of KCSI. Rosenbaum Decl., ¶22; RJN Ex. 27. Jose and Celerina are David’s parents. Rosenbaum Decl., ¶2.

On or about September 16, 2022, the Original Landlord and Lessees entered into the Original Lease, as amended by the Amendments dated April 21, 2016, December 4, 2017, June 29, 2018, May 17, 2019, November 19, 2019, and June __, 2022. Nerenhausen Decl., ¶6, Exs. 2-8.

The Intermediate Landlord succeeded the Original Landlord, executing the Amendments beginning with the First Amendment and ending with the Fifth Amendment. Nerenhausen Decl., ¶6. Alameda succeeded the Intermediate Landlord and executed the Sixth Amendment. Nerenhausen Decl., ¶¶ 6-7.

In consideration for use of the Property, Lessees agreed to pay Alameda rent starting at a base monthly rate and subject to increases. Nerenhausen Decl., ¶8. At all times, Alameda performed its obligations under the Lease. Nerenhausen Decl., ¶9.

The Lessees have failed to pay rent and have defaulted under the Lease. Nerenhausen Decl., ¶10.

Section 2.1 of the Sixth Amendment provides that rent as of June 1, 2022 was $22,400 monthly and as of June 1, 2023 was $24,336 monthly. Nerenhausen Decl., ¶11. Section 2.1 further provides that rent is due on the first business day of each month, and that rent includes all monetary obligations under the Lease Agreement. Nerenhausen Decl., ¶12. Section 2.6 provides for recovery of a late charge of 10% if the rent is not paid within five days of the due date. Nerenhausen Decl., ¶12. Section 22.3 of the Original Lease provides for recovery of interest on unpaid amounts, presumed to be 10%. Nerenhausen Decl., ¶12. Section 18.1 provides that failure to pay rent when due is a default. Nerenhausen Decl., ¶13.

In December 2023, Alameda served Lessees with a three-day notice to pay rent or quit for $146,952 in unpaid rent, and Lessees vacated. Nerenhausen Decl., ¶¶ 14-15.

Under sections 19.2 and 19.3 of the Original Lease as well as Civil Code section 1951.2, Alameda is entitled to recover for the balance of the lease term, and Section 19.6 provides that all remedies under the Lease are cumulative. Nerenhausen Decl., ¶¶ 19-21. The balance due is $423,711.60. Nerenhausen Decl., ¶23, Ex. 9.

Sections 19.5 and 22.2.5 of the Lease allow for the recovery of reasonable attorney fees and costs. Nerenhausen Decl., ¶25. Mark J. Rosenbaum, Esq. (“Rosenbaum”) is an attorney partner at Wolf, Rifkin, Shapiro, Shulman & Rabkin, LLP, attorneys of record for Alameda. Rosenbaum Decl., ¶1. Rosenbaum charges $750 per hour. Rosenbaum Decl., ¶24. Rosenbaum anticipates Alameda will incur $125,000 in attorney fees prosecuting this case including the instant applications, as well as costs of at least $25,000 from, inter alia, file fees, service of process, and bond fees, at least three anticipated deposition transcripts, and a court reporter. Rosenbaum Decl., ¶25. Rosenbaum anticipates at least $99,000 will be incurred through trial. Rosenbaum Decl., ¶27. Because Alameda has already incurred over $10,000 in fees, and because at least $99,000 will be incurred, Alameda’s request for $125,000 in attorney fees is reasonable. Rosenbaum Decl., ¶29.

On May 8, 2020, KCSI was deeded the Proctor Property. RJN Ex. 15. DCSI signed a DOT for the Proctor Property as security for a loan in the amount of $1.5 million. RJN Ex. 16. On February 10, 2022, KCSI signed a second DOT for the Procter Property as security for a loan in the amount of $300,000. RJN Ex. 17.

On or about March 4, 2024, KCSI transferred its interest in the Proctor Property to Jose and Celerina through the Proctor Transfer, receiving no consideration and referencing Revenue and Taxation Code section 11925(d). RJN Ex. 10. On behalf of KCSI, David signed the Proctor Transfer Deed dated February 27, 2024, notarized on March 1, 2024, and recorded on March 4, 2024. RJN Ex. 10.

The Proctor Transfer occurred when Lessees owed more than $290,000 in due unpaid rent. Nerenhausen Decl., Ex. 9; RJN Ex. 10.

On April 8, 2024, Alameda filed a notice of pendency of action for the Proctor Property. Rosenbaum Decl., ¶9; RJN Ex. 19.

On or about March 4, 2024, David transferred his interest in the Charlesworth Property to Jose and Celerina through the Charlesworth Transfer, receiving no consideration and referencing Revenue and Taxation Code section 11925(d). RJN Ex. 11. David signed the Charlesworth Transfer Deed dated February 27, 2024, notarized on March 1, 2024, and recorded on March 4, 2024. RJN Ex. 11.

The Charlesworth Transfer occurred when Lessees owed more than $290,000 in due unpaid rent. Nerenhausen Decl., Ex. 9; RJN Ex. 11.

Zillow values the Charlesworth Property at $1,084,100. Rosenbaum Decl., ¶14, Ex. 21.

On April 8, 2024, Alameda filed a notice of pendency of action for the Charlesworth Property. Rosenbaum Decl., ¶15; RJN Ex. 22.

On July 16, 2010, David was deeded the 3rd Avenue Property. Nerenhausen Decl., ¶48. David acquired the 3rd Avenue Property in 2010 for $424,000 outright. Nerenhausen Decl., ¶49.

On or about March 4, 2024, David transferred his interest in the 3rd Avenue Property to Jose and Celerina through the 3rd Avenue Transfer, receiving no consideration and referencing Revenue and Taxation Code section 11925(d). RJN Ex. 13. David signed the 3rd Avenue Transfer Deed dated February 27, 2024, notarized on March 7, 2024, and recorded on March 7, 2024. RJN Ex. 13. This deed corrected a previous transfer deed dated February 27, 2024, notarized on March 1, 2024, and recorded on March 4, 2024. RJN Ex. 12.

The 3rd Avenue Transfer occurred when Lessees owed more than $290,000 in due unpaid rent. Nerenhausen Decl., ¶57, Ex. 9; RJN Ex. 12.

On April 8, 2024, Alameda filed a notice of pendency of action for the 3rd Avenue Property. Rosenbaum Decl., ¶21; RJN Ex. 26.

Alameda’s claims are not secured by any real property. Nerenhausen Decl., ¶59. Alameda does not claim attachment for any improper purpose. Nerenhausen Decl., ¶59. Alameda’s claims have not been discharged or stayed by any bankruptcy proceeding. Nerenhausen Decl., ¶59.

David was the sole owner of KCSI during its period of operation. David Decl., ¶2. KCSI acquired and managed real estate properties, including the Proctor Property. David Decl., ¶2. Separately, David personally held title to the Charlesworth Property and the 3rd Avenue Property. David Decl., ¶3.

In early 2024, David decided to transfer the ownership of all three properties to his parents based on various personal, financial, and practical concerns including long-term estate and succession planning goals, consolidation of family property management, and the need to align legal title with actual control and responsibility. David Decl., ¶¶ 4, 16.

Before the transfers, David’s parents had made regular mortgage payments on the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property since approximately October 2023. David Decl., ¶5. They also contributed a combined $320,000 for renovations of the three properties in 2023 and made substantial other contributions to preserving their value. David Decl., ¶5.

The transfers of the properties were lawfully executed and publicly recorded, and at no time concealed from the public. David Decl., ¶6. The transfers were made before any ligation occurred. David Decl., ¶8. David had not been sued or threatened with suit, and he did not make the transfers in response to any claims, threats of litigation, or enforcement actions, or with intent to avoid any creditor. David Decl., ¶¶ 8, 11.

After the transfers, David relinquished all legal and beneficial interest in the properties and his parents have assumed full financial, administrative, and managerial responsibility. David Decl., ¶7.

Around the time of the transfers, David was not engaged in any transactions for which his remaining assets were unreasonably small. Nor did he intend to engage in such transactions thereafter. David Decl., ¶9. David did not subsequently incur any debts he could not pay as they became due. David Decl., ¶9. David was not insolvent at the time of the transfers and did not become insolvent because of them. David Decl., ¶13. The transferred properties did not constitute all of David’s assets at the time of the transfer. David Decl., ¶10.

David has actively participated in the litigation since he became aware of it. David Decl., ¶12.

Jose and Celerina are David’s parents and are married. Jose Decl., ¶2; Celerina Decl., ¶2. Jose and David made a mutual decision that they would assume title to certain properties held by David or KCSI pursuant to long-term family planning and asset consolidation. Jose Decl., ¶2; Celerina Decl., ¶2.

In March 2024, Jose and Celerina received title to the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property. Jose Decl., ¶3; Celerina Decl., ¶3. These transfers were conducted properly and publicly and were not concealed. Jose Decl., ¶4; Celerina Decl., ¶4. The transfers were made for legitimate business and personal considerations, including simplifying intra-family property management, preserving and responsibly overseeing valuable real estate assets, and advancing succession planning goals. Jose Decl., ¶5; Celerina Decl., ¶5.

Before the transfer of title, Jose had made significant personal financial investments in the properties, including contributing $120,000 toward renovations of the Proctor Property, $100,000 towards renovations of the 3rd Avenue Property, and paying the mortgages for the Proctor Property and 3rd Avenue Property since about October of 2023. Jose Decl., ¶6. These payments were made without expectation of reimbursement, reflecting Jose’s commitment to preserving and enhancing the value of the properties for the benefit of his family. Decl., ¶6.

The March 2024 transfers did not change the underlying economic reality, but rather formalized Jose’s financial and managerial stake in the properties. Jose Decl., ¶7. Jose had been actively involved in managing and maintaining the properties when the transfers occurred. Jose Decl., ¶7.

Since the transfers, David has relinquished all beneficial interest in them. Jose Decl., ¶8. Jose has assumed exclusive responsibility for the properties, including payment of expenses, upkeep, and decision-making. Jose Decl., ¶8. The arrangement also supported David’s efforts to reduce his management obligations and focus on new business ventures. Jose Decl., ¶9.

Neither Jose nor Celerina have had any business dealings with Alameda. Jose Decl., ¶10; Celerina Decl., ¶7.

Alameda seeks to attach the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property to secure its claim in the amount of $423,711.60. Jose Decl., ¶ 11. The combined equity of the properties also greatly exceeds the amount of the claims. Jose Decl., ¶12.

Jose and Celerina have lived continuously at the Charlesworth Property since June of 2022, contributed $100,000 toward its renovation, and have been paying the mortgage since October 2023. Jose Decl., ¶13; Celerina Decl., ¶7. The Charlesworth Property is Jose and Celerina’s primary residence, and they are entitled to the automatic homestead exemption. Jose Decl., ¶14; Celerina Decl., ¶7.

Plaintiff Alameda applies for right to attach orders against Defendants KCSI, David, Jose, and Celerina in the amount of $573,711.60, inclusive of $125,000 in estimated attorney fees and $25,000 in estimated costs. In reply, Alameda reduces the amount to $540,632.78.

Alameda’s breach of contract claim is based on the Lease and a Ledger of Rent. The $423,711.60 sought exceeds $500.

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).

Alameda states that the $423,711.60 amount owed is directly calculable from the Lease and Ledger of Rent. Mem. at 6, 9.

Defendants argue that Alameda has impermissibly imposed late charges and interest on unpaid rent in violation of the County’s January 24, 2023 COVID-19 Resolution. RJN Ex. A. Alameda’s Exhibit 9 shows that it began overcharging Lessees on June 1, 2022 by adding 20% in late charges and interest in violation of the Resolution. This breach by Alameda excused Lessee’s performance, or at least that is a question of fact for trial. Opp. at 11-13.

The Resolution applies to incorporated cities within the County and is intended to provide uniform, minimum standards protecting tenants. RJN Ex. A, §V(B)(2). The Resolution covers the Protections Period of March 4, 2020 through March 31, 2023 (“Protected Time Period”). RJN Ex. A, §IV(L). The Resolution applies to non-payment eviction notices, no-fault eviction notices, rent increase notices, unlawful detainer actions, and other civil actions, including, but not limited to, actions for repayment of rental debt accrued on or after March 4, 2020. Ex. A, §V.

The Resolution provides protection from eviction for tenants impacted by the COVID-19 crisis. Ex. A, §VI. Commercial tenants with fewer than ten employees can self-certify their inability to pay, provided that the inability to pay stems from financial hardship related to COVID-19. RJN Ex. A, §VI(A)(1), (B)(2)(a). Commercial tenants with ten or more employees must provide written documentation of financial hardship. RJN Ex. A, §VI(B)(2)(b). The tenant must give notice of its inability to pay within seven days of the rent due date. RJN Ex. A, §VI(A)(1). The commercial tenant has until January 31, 2023 to repay unpaid rent incurring during the Protected Time Period. RJN Ex. A, §VI(C)(2)(a).

Commercial tenants with fewer than ten employees have until July 31, 2023 to repay the unpaid rent incurred during the Protected Time Period. RJN Ex. A, §VI(C)(2)(a). Commercial tenants with ten or more, but fewer than 100, employees have until July 31, 2022 to repay unpaid rent in equal installments unless the landlord and tenant agree on an alternate payment arrangement. RJN Ex. A, §VI(C)(2)(b).

A landlord must inform such a commercial tenant of its rights under the Resolution and cannot enforce a Personal Guarantee for rent incurred by a commercial tenant during the Protected Time Period. RJN Ex. A. §VI(D).

Landlords shall not impose any late fees or interest on unpaid rent during the Protected Time Period. RJN Ex. A, §VIII.

Defendants do not show that they are protected from late fees and interest. The Resolution only provides protection for tenants impacted by the COVID-19 crisis during the Protected Time Period. Ex. 1, §VI. Defendants fail to explain how the business restrictions that began from COVID-19 in March 2020 had a negative impact on them. Defendants also provide no evidence of Lessees compliance with Resolution section VI(A)(1) by giving Alameda notice of their inability to pay within seven days of the rent due date. Alameda was required to provide notice to Lessees of their rights under the Resolution but Defendants do not show that Alameda failed to provide this notice. As a result, Defendants fail to demonstrate that the Resolution excuses Lessees from late charges for the Protected Time Period.[4]

The $423,711.60 amount owed is directly calculable from the Lease and Ledger of Rent. Although Lessees have not met their burden, Alameda voluntarily reduces the amount sought to eliminate late charges and interest prior to March 31, 2023. The reduced amount is $390,632.78. Reply at 9.

Alameda also presents evidence of estimated attorney fees of $125,000 and estimated costs of $25,000. Rosenbaum Decl., ¶¶ 25, 27, 29. The attorney fees and cost estimates are reasonable. The total fixed and readily ascertainable amount is $540,632.78.

A prima facie case for breach of contract is: (1) the existence of a contract; (2) plaintiff's performance or excuse for non-performance; (3) defendant’s breach; and (4) damage to plaintiff there from. Smith v. Roval Manufacturing Co. (1960) 185 Cal.App.2d 315, 325.

Alameda presents evidence in pertinent part as follows. On or about September 16, 2022, the Original Landlord and Lessees entered into the Original Lease, as amended by the Amendments on April 21, 2016, December 4, 2017, June 29, 2018, May 17, 2019, November 19, 2019, and June 2022. Nerenhausen Decl., ¶6, Exs. 2-8. The Intermediate Landlord succeeded the Original Landlord, executing the Amendments beginning with the First Amendment and ending with the Fifth Amendment. Nerenhausen Decl., ¶6. Alameda succeeded the Intermediate Landlord and executed the Sixth Amendment. Nerenhausen Decl., ¶¶ 6-7.

In consideration of the Lease, Lessees agreed to pay Alameda rent starting at a base monthly rate and subject to increases. Nerenhausen Decl., ¶8. Alameda performed its obligations under the Lease Agreement. Nerenhausen Decl., ¶9. The Lessees have failed to pay plaintiff rent and so have defaulted under the Lease. Nerenhausen Decl., ¶10.

The term of the Lease expired on May 31, 2024. Nerenhausen Decl., ¶16. The Lessees failed to pay and have been in breach beginning on June 1, 2022. Nerenhausen Decl., ¶17. Lessees have made no payments since at least July of 2023. Nerenhausen Decl., ¶18. Under sections 19.2 and 19.3 of the Original Lease as well as Civil Code section 1951.2, Alameda is entitled to recover for the balance of the Lease term. Nerenhausen Decl., ¶¶ 19-21. The balance due is $423,711.60. Nerenhausen Decl., ¶23, Ex. 9. Defendants do not oppose Alameda’s evidence on this issue.

David is the Chief Executive Officer, Secretary, and Chief Financial Officer of KCSI. Nerenhausen Decl., ¶4. David also was the sole owner of KCSI during its period of operation. David Decl., ¶2. KCSI acquired and managed real estate properties. David Decl., ¶2. The Lease is a commercial claim arising out of David’s conduct of a 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.

Alameda provides a detailed list of categories of David’s property it seeks to attach. App. Ex. 1. The list is sufficient.

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). Alameda seeks attachment for a proper purpose.

Alameda seeks to attach the assets of Jose and Celerina based on the fraudulent transfer to them of three properties by David/KCSI in March 2024: the Proctor Property, the Charlesworth Property, and the 3rd Avenue Property.

Attachment is a statutorily proscribed remedy for voidable transfer under the Uniform Fraudulent Transactions Act (“UFTA”). Whether made before or after the creditor’s claim arose, a transfer is voidable if it was made (1) with actual intent to “hinder, delay or defraud” a creditor (Civil Code §3439.04(a)(1)) or (2) without receiving reasonably equivalent value and the debtor either (a) was engaged in a business for which the debtor’s remaining assets were unreasonably small in relation to the business or transaction, or (b) intended to incur or reasonably should have believed that the debtor would incur debts beyond his or her ability to pay as they became due. Civil Code §3439.04(a)(2).

In determining whether a transfer was made “with actual intent to hinder, delay, or defraud any creditor” the court may consider: (1) whether the transfer or obligation was to an insider; (2) whether the debtor retained possession or control of the property transferred after the transfer; (3) whether the transfer or obligation was disclosed or concealed; (4) whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5) whether the transfer was of substantially all the debtor’s assets; (6) whether the debtor absconded; (7) whether the debtor removed or concealed assets; (8) whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10) whether the transfer occurred shortly before or shortly after a substantial debt was incurred; and (11) whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor. Civil Code §3439.04(b).

The evidence shows that Lessees failed to pay and have been in breach beginning on June 1, 2022. Nerenhausen Decl., ¶17. Lessees have made no payments since at least July of 2023. Nerenhausen Decl., ¶18. On August 2, 2023, Alameda filed a UD complaint against Lessees, which Alameda subsequently dismissed on December 7, 2023 for alleged defects in its notice to pay rent or quit. SRJN Exs. 28-33. In December 2023, Alameda served Lessees with a new three-day notice to pay rent or quit for $146,952 in unpaid rent, and Lessees vacated. Nerenhausen Decl., ¶¶ 14-15. The term of the Lease expired on May 31, 2024. Nerenhausen Decl., ¶16. The three properties were transferred to Jose and on March 4, 2024.

Applying the above factors, (1) The March 2024 transfers were to insiders Jose and Celerina; (2) David/KCSI did not retain possession or control of the properties after the transfers; (3) the transfers were recorded and not concealed (4) Lessees had been sued before the transfer, and they were forced to quit the Lease premises in December 2023; (5) there is no evidence that the transfers were substantially all of David’s or KCSI’s assets; (6) neither David nor KCSI absconded; (7) there is no evidence that David or KCSI removed or concealed assets; (8) courts ascertain reasonably equivalent value from the standpoint of creditors by comparing what the debtor surrendered and what the debtor received. In re Prejean, (9th Cir. 1993) 994 F.2d 706, 708[5]; Wyle v. C.H. Rider & Family, Inc., (9th Cir. 1991) 944 F.2d 589, 597. All three transfers were made to Jose and Celerina on March 4, 2024 for no consideration and David/KCSI received no value; (9) Alameda presents insufficient evidence that David/KCSI were insolvent or became insolvent shortly after the transfer was made; (10) the March 2024 transfers occurred after Lessees vacated the premises after a December 2023 three-day notice and shortly before the May 2024 Lease term ended; and (11) David/KCSI did not transfer the essential assets of the business to a lienor that transferred the assets to an insider of the debtor. Civil Code §3439.04(b).

Factors (1), (4), (8), and (10) support an intent to hinder, delay, or defraud. The issue is reasonably close, but the court will err on the side of the transferees. This is particularly true as the court has no evidence of the properties’ value or their equity. Alameda will have to present additional evidence of fraudulent transfer at trial.

A transfer made after the creditor’s claim arose is voidable if it was made without receiving a reasonably equivalent value and the debtor was insolvent at the time or became insolvent as a result of the transfer. Civil Code §3439.05(a). In an action for relief against a transfer, a creditor may obtain an attachment or other provisional remedy against the asset transferred. Civil Code §3439.07(a)(2); Whitehouse v. Six Corporation, (1995) 40 Cal.App.4th 527, 533.

A transfer made after the creditor’s claim arose is voidable if it was made without receiving a reasonably equivalent value and the debtor was insolvent at the time or became insolvent as a result of the transfer. Civil Code §3439.05(a); Bankruptcy Code §548(a)(1)(B)(i). The debt must have preceded the transfer. Warsco v. Preferred Technical Group, (7th Cir. 2001) 258 F.3d 557, 569; see also, In re Imperial Corp. of America, (Bankr. S.D. Cal. 1992) 144 B.R. 115, 120. David’s debt to Landlord occurred prior to his transfers of the three Properties.

A transfer made after the creditor’s claim arose is voidable only if the debtor was insolvent at the time or became insolvent as a result of the transfer. Civil Code §3439.05(a); Bankruptcy Code §548(a)(1)(B)(ii)(I). A debtor is insolvent if, at fair valuations, the sum of the debtor's debts is greater than all of the debtor's assets. Civil Code §3439.02(a); Bankruptcy Code §101(32)(A); In re Pierce, (Bankr. D. Idaho 2010) 428 B.R. 524, 530; Slater v. Bielsky, (1960) 183 Cal.App.2d 523, 526.

Under both the UVTA and its predecessor the Uniform Fraudulent Conveyance Act, the burden of proving insolvency has always been on the creditor. Neumeyer v. Crown Funding Corp, (“Neumeyer”) (1976) 56 Cal.App.3d 178, 186; Stearns v. Los Angeles City School Dist. (1966) 244 Cal.App.2d 696, 737 (ordinarily the burden of proving insolvency is on the creditors, and, as a general rule, solvency and not insolvency is presumed). To overcome the presumption of solvency, some basis in evidence is required for determining that the amount of the debtor's obligations exceed the fair value of his non-exempt assets. Neumeyer, supra, 56 Cal.App.3d at 186. A debtor that is generally not paying the debtor's debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the party against which the presumption is directed the burden of proving that the nonexistence of insolvency is more probable than its existence. Civil Code §3439.02(b).

The transfers to Jose and Celerina were made without receiving reasonably equivalent value but Alameda has not presented sufficient evidence to overcome the presumption of solvency for David and KSFI at the time of transfer.

The applications are granted against David and KSFI in the amount of $540,632.78 and denied against Jose and Celerina. No writ shall issue against a Lessee until Alameda posts a $10,000 bond for that Lessee. See CCP §489.220.

[1] The court has ruled on the parties’ evidentiary objections. The clerk is directed to scan and electronically file the court’s rulings.

[2] Alameda requests judicial notice of the following documents: (1) a May 12, 2022 grant deed for the Property (RJN Ex. 1); (2) a March 4, 2024 Proctor Transfer Deed (RJN Ex. 10); (3) a March 4, 2024 Charlesworth Transfer Deed (RJN Ex. 11); (4) a March 4, 2024 deed signed by David transferring the 3rd Avenue Property (RJN Ex. 12); (5) a March 7, 2024 3rd Avenue Transfer Deed (RJN Ex. 13); (6) a July 2, 2022 grant deed for the Proctor Property (RJN Ex. 15); (7) a July 2, 2020 trust deed for the Proctor Property (RJN Ex. 16); (8) a February 18, 2022 trust deed for the Proctor Property (RJN Ex. 17); (9) an April 8, 2024 notice of pendency of action for the Proctor Property (RJN Ex. 18); (10) an August 27, 20224 grant deed for the Charlesworth Property (RJN Ex. 20); (11) an April 8, 2024 notice of pendency of action for the Charlesworth Property (RJN Ex. 22); (12) a July 16, 010 grant deed for the 3rd Avenue Property (RJN Ex. 24); (13) an April 8, 2024 notice of pendency of action for the 3rd Avenue Property; (RJN Ex. 26) and (14) a September 17 2024 Statement of Information from the California Secretary of State website for KCSI (RJN Ex. 27).

Defendants oppose, relying on Herrera v. Deutsche Bank, (“Herrera”) (2011) 196 Cal.App.4^th 1366,1375, which held that judicial notice of documents recorded with the county recorder’s office was proper, but only for the fact of their recording and not for the truth of who the substituted trustee and assignee were. The court also rejected the argument that the recorded documents were business records because they lacked the evidentiary foundation. Id. at 1376-77.

Herrera was distinguished in Fontenot v. Wells Fargo Bank, N.A., (“Fontenot”) (2011) 198 Cal.App.4th 256, 266, which held that a court may properly judicially notice both recorded documents and the facts arising from the legal effect of those documents, including the facts that a party is an assignee or trustee. The Fontenot court distinguished Herrera as rejecting judicial notice of recited facts – e.g., that a particular party “is the present beneficiary” rather than just a beneficiary – which could not be judicially noticed because the entire chain of title was not part of the record. Id. at 267, n.7. See also JPMorgan Chase Bank, N.A., (2013) 214 Cal.App.4th 743, 755 (“…court may take judicial notice of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.”). The requests are granted. Evid. Code §452(c).

In reply, Alameda presents eight requests for judicial notice. The court judicially notices (1) the UD complaint against Lessees dated August 2, 2023 (SRJN Ex. 28), (2) the November 21, 2023 summary judgment motion in the UD action (SRJN Ex. 29), (3) the supporting exhibits for the summary judgment motion (SRJN Ex. 30), (4) the Lessees’ opposition to the summary judgment motion (SRJN Ex. 31), (5) a December 12, 2024 notice of dismissal of the UD action (SRJN Ex. 32). There is no need to judicially notice appellate caselaw (SRJN Ex. 33). The remaining requests should have been presented with Alameda’s moving papers and have not been judicially noticed. See Regency Outdoor Advertising v. Carolina Lances, Inc., (1995) 31 Cal.App.4th 1323, 1333 (new evidence/issues raised for the first time in a reply brief are not properly presented to a trial court and may be disregarded).

[3] Defendants request judicial notice of the Resolution of the Board of Supervisors of the County of Los Angeles Further Amending and Restating the County of Los Angeles COVID-19 Tenant Protection Resolution, dated January 24, 2023 (“Resolution”) (RJN Ex. A). The request is granted. Evid. Code §452(b).

[4] The court need not address Lessees’ claim of offset based on the Resolution.

[5] Federal bankruptcy law applies by analogy.