Judge James C. Chalfant, Case Number: 24STCV10282, Date: 2024-06-11 Tentative Ruling

Sensoryeffects Cereal Systems, Inc. v. Caer, Inc.;

24STCV10282

Tentative decision on application for right to attach order: granted

Plaintiff Sensoryeffects Cereal Systems, Inc. (“SCSI”) applies for right to attach order against Defendant Caer, Inc. dba Yumi (“Caer”).

The court has read and considered the moving papers (no opposition was filed) and renders the following tentative decision.

Plaintiff SCSI commenced this action on April 24, 2024 against Defendant Caer, dba Yumi, alleging causes of action for: (1) breach of contract; (2) unjust enrichment; (3) breach of implied covenant of good faith and fair dealing; and (4) account stated. The verified Complaint alleges in pertinent part as follows.

Plaintiff SCSI entered into an agreement with Defendant Caer to manufacture and provide Defendant Caer with 50,000 pounds rice-free puffs in the flavors of strawberry basil, apple and broccoli, and berry and sweet pea. Compl., ¶¶2, 11-12. Defendant Caer subsequently revised its purchase order for 10,800 pounds rice-free puffs. Compl., ¶¶2, 11-12. Defendant Caer further requested that an extra 10,000 pounds of the strawberry basil and apple broccoli flavors included in the original order. Compl., ¶¶2, 11-12.

SCSI performed in accordance with the agreement. Compl., ¶¶2, 13-16; Exs. A-B. Caer has failed to remit payment on the invoices despite benefitting from the receipt of the rice-free puffs by selling the products for profit. Compl., ¶¶3, 14-16.

On March 1, 2024, SCSI sent Caer correspondence regarding Caer’s delinquent account and demanded immediate payment in the outstanding amount owed. Compl., ¶17, Ex. C. On March 12, 2024, Caer sent email correspondence acknowledging receipt of the March 1, 2024 email and demand letter and did not dispute the amount demanded by SCSI. Compl., ¶18, Ex. D.

Plaintiff SCSI seeks (1) $194,770.80 in unpaid invoices and statutory interest from the date of breach at the maximum lawful rate, (2) post-judgment interest at the maximum lawful rate, (3) reasonable attorney’s fees, (4) costs of suit, (5) pre-judgment interest, and (6) other and further relief the court deems just and proper. Compl., at 7:18-28; 8:1-18.

On April 30, 2024, this court denied SCSI’s ex parte application for right to attach order and ex parte application temporary protective order.

A proof of service on file shows that Plaintiff SCSI served the Summons, Complaint, and moving papers on Defendant Caer via personal service on Defendant Caer’s authorized agent in Delaware on May 15, 2024.

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 February 14, 2023, Caer placed a purchase with SCSI for 20,000 pounds of strawberry basil rice-free puffs, 20,000 pounds of apple and broccoli rice-free puffs, and 10,000 pounds of berry and sweet pea rice-free puffs. Dake Amended Decl., ¶3, Ex. A. SCSI accepted Defendant Caer’s purchase order. Dake Amended Decl., ¶3.

On or about July 27, 2023, Caer submitted a revised purchase order for production of 10,800 pounds of each flavor of strawberry basil, apple and broccoli, and berry and sweet pea rice-free puffs. Dake Amended Decl., ¶4, Ex. B. Caer further requested that the extra 10,000 pounds of the strawberry basil and apple broccoli flavors included in the original February 14, 2023 purchase order be manufactured eight weeks later. Dake Amended Decl., ¶4.

On or about September 5, 2023, SCSI shipped 10,460 pounds of organic strawberry basil rice-free puffs per Caer’s request and shipping instructions. Dake Amended Decl., ¶5. SCSI issued invoice number 5170 to Defendant Caer in the amount of $103,972.40 for the strawberry basil rice-free puffs manufactured and shipped with payment due on or before October 5, 2023. Dake Amended Decl., ¶5, Ex. C. Caer has failed to pay invoice number 5170 to date. Dake Amended Decl., ¶5.

On or about September 6, 2023, SCSI shipped 10,720 pounds of organic apple and broccoli rice-free puffs per Caer’s request and shipping instructions. Dake Amended Decl., ¶6. SCSI issued invoice number 5173 to Caer in the amount of $90,798.40 for the apple and broccoli rice-free puffs manufactured and shipped with payment due on or before October 6, 2023. Dake Amended Decl., ¶6, Ex. D. Caer has failed to pay invoice number 5173 to date. Dake Amended Decl., ¶6.

When Carr failed to pay the two invoices, SCSI sent an email to Caer requesting it pay the outstanding amounts owed on invoice numbers 5170 and 5173. Dake Amended Decl., ¶7, Ex. E.

On March 1, 2024, SCSI sent Caer a formal demand letter for payment of the outstanding invoices in full, which total $194,770.80, no later than March 6, 2024. Dake Amended Decl., ¶8, Ex. F. On March 12, 2024, Caer sent an email acknowledging receipt of the March 1, 2024 demand letter and did not dispute the demanded amount. Dake Amended Decl., ¶9. Caer did not send any further correspondence regarding the amount owed. Dake Amended Decl., ¶10.

Caer’s obligations under invoice numbers 5170 and 5173 are not secured by any interest in real property. Dake Amended Decl., ¶11. Upon information and belief, Defendant Caer has proceeds of a JPMorgan Chase Bank account subject to attachment or levy. Dake Amended Decl., ¶12. Plaintiff SCSI is not aware of any bankruptcy claims filed by Defendant Caer. Dake Amended Decl., ¶14.

SCSI has incurred $9,890 to date in attorney fees related to the prosecution of this case, including preparing and filing the complaint, drafting the ex parte application, preparing for and appearing at the hearing on the ex parte application, and drafting the instant motion. Jaswal Decl., ¶5. Additionally, SCSI’s counsel has expended $896.23 to date related in filing fees. Jaswal Decl., ¶5.

Plaintiff SCSI applies for a right to attach order against Caer for $205,557.03. No opposition is on file.

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 damages may be readily ascertained by reference to the contract and the basis of the calculation appears to be reasonable and definite. CIT, supra, 115 Cal.App.4th at 540-41. The fact that the damages are unliquidated is not determinative. Id. But the contract must furnish a standard by which the amount may be ascertained and there must be a basis by which the damages can be determined by proof. Id. (citations omitted).

SCSI provides evidence that, on or about September 5, 2023, it shipped 10,460 pounds of organic strawberry basil rice-free puffs per Caer’s purchase order and shipping instructions. Dake Amended Decl., ¶5. SCSI issued invoice number 5170 to Defendant Caer in the amount of $103,972.40 with payment due on or before October 5, 2023. Dake Amended Decl., ¶5, Ex. C. On or about September 6, 2023, SCSI shipped another 10,720 pounds of organic apple and broccoli rice-free puffs per Caer’s purchase order and shipping instructions. Dake Amended Decl., ¶6. SCSI issued invoice number 5173 to Caer in the amount of $90,798.40 with payment due on or before October 6, 2023. Dake Amended Decl., ¶6, Ex. D. Caer has failed to pay both invoices. Dake Amended Decl., ¶¶ 5-6.

The purchase orders and invoices form a contract on which a breach of contract claim may be based, and the amount owed of $194,770.80 is readily ascertainable from the contract.

Additionally, SCSI seeks $9,890 in attorney fees and $896.23 in costs incurred to date. Jaswal Decl., ¶5. Reasonable estimated attorney fees may be included in an attachment. CCP §482.110. The total readily ascertainable amount is $205,557.03.

A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. CCP §481.190. In determining this issue, the court must consider the relative merits of the positions of the respective parties. Kemp, supra, 146 Cal.App.4th at 1484. The court does not determine whether the claim is actually valid; that determination will be made at trial and is not affected by the decision on the application for the order. CCP §484.050(b).

When Carr failed to pay the two invoices, SCSI sent an email to Caer requesting it pay the outstanding amounts owed on invoice numbers 5170 and 5173. Dake Amended Decl., ¶7, Ex. E. On March 1, 2024, SCSI sent Caer a formal demand letter for payment of the outstanding invoices totaling $194,770.80, no later than March 6, 2024. Dake Amended Decl., ¶8, Ex. F. On March 12, 2024, Caer sent an email acknowledging receipt of the March 1, 2024 demand letter and did not dispute the demanded amount. Dake Amended Decl., ¶9.

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). SCSI has shown a proper purpose for its claim.

Plaintiff SCSI’s application for right to attach order against Defendant Caer in the amount of $205,557.03 is granted. No writ may issue until SCSI posts a $10,000 undertaking. SCSI has not filed a proposed right to attach order and must do so in the next two court days or it will be waived.