Judge James C. Chalfant, Case Number: 24STCV17942, Date: 2024-09-26 Tentative Ruling

Alston & Bird LLP v. 5860 West Jefferson I, LLC, 5860 West Jefferson LLC, and Samitaur Constructs, 24STCV17942

Tentative decision on application for right to attach order: denied

Plaintiff Alston & Bird LLP (“Alston”) applies for a right to attach order against Defendant 5860 West Jefferson I, LLC (“5860 W. Jefferson I”).

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

Plaintiff Alston filed this lawsuit against Defendants 5860 W. Jefferson I, 5860 West Jefferson LLC (“5860 W. Jefferson”), and Samitaur Constructs (“Samitaur”) on July 18, 2024. The operative pleading is the First Amended Complaint (“FAC”), filed on July 30, 2024, against Defendants alleging claims for breach of implied contract, unjust enrichment, and account stated. The FAC, alleges in pertinent part as follows.

In or around August 2018, certain disputes arose between Nike USA, Inc. (“Nike”), and Defendants pertaining to a lease between Nike and Defendant 5860 W. Jefferson I, (the “Nike Lease”). FAC ¶12. 5860 W. Jefferson was the original Lessor under the Nike Lease. FAC, ¶12. 5860 W. Jefferson I succeeded to the interests of 5860 W. Jefferson as Lessor. FAC, ¶12. As of August 2018, no litigation had yet been filed between Defendants and Nike. FAC, ¶12.

As the agent of 5860 W. Jefferson I and 5860 W. Jefferson, Samitaur engaged Plaintiff Alston to provide legal assistance to Defendants. FAC, ¶12. After efforts to mediate the dispute with Nike were unsuccessful, on September 18, 2018, Nike filed a lawsuit against Defendants (the “Nike Lease Litigation”). FAC, ¶13. Plaintiff agreed to represent Defendants in the Nike Lease Litigation subject to Defendants’ respective duties to be honest with Plaintiff and to pay promptly Plaintiff’s invoices for fees and costs. FAC, ¶15.

Based upon that agreement, for more than five years Defendant 5860 W. Jefferson I, by and through Samitaur as an agent, paid Plaintiff to represent Defendants. FAC, ¶16. Plaintiff believes that all attorneys’ fees and costs previously paid to Plaintiff in connection with the Nike Lease Litigation were paid by Defendant 5860 W. Jefferson I through its agent Samitaur. FAC, ¶16. Additionally, Plaintiff is informed and believes that the accounting and bank account records of Defendant 5860 W. Jefferson I will reflect that it regularly transferred funds to Samitaur that it used to pay the fees and costs incurred in the Nike Lease Litigation. FAC, ¶16.

As such, Defendants and Plaintiff had an implied agreement that Defendant 5860 W. Jefferson I would pay Plaintiff for the services and costs incurred in connection with the Nike Lease Litigation. FAC, ¶16.

In the Nike Lease Litigation, Nike asserted cross-claims and supplemental claims against Defendants, and Defendant 5860 W. Jefferson I asserted certain cross-claims against Nike. FAC, ¶19. As a result of its complexity, the Nike Lease Litigation was hotly contested over a period of almost five years. FAC, ¶20. Because of Plaintiff’s work litigating this case, the trial court awarded Nike no relief in the Nike Lease Litigation. FAC, ¶29.

Throughout the Nike Lease Litigation, Plaintiff sent monthly bills to Defendants for legal services and costs. FAC, ¶31. From the inception of the representation until July 9, 2024, Defendants never complained about the amounts of the bills. FAC, ¶31. To the contrary, Defendants and their respective agents made numerous representations that they were “working” to get the bills paid and that the bills would be paid when a third-party investor made a major investment in Defendants. FAC, ¶31. It was not until July 9, 2024, that Defendants complained about the amount of the bills. FAC, ¶31. This complaint came after Plaintiff stated that they intended to file this action and to seek a writ of attachment. FAC, ¶31.

Plaintiff brings this action in order to avail itself of its right to seek a writ of attachment, and to thereby prevent the transfer of the subject properties until the debt claimed by Plaintiff has been resolved. FAC, ¶34.

On July 30, 2024, the court denied Plaintiff Alston’s ex parte application for right to attach orders against all three Defendants as procedurally defective.

On August 1, 2024, Alston filed renewed ex parte applications against each Defendant. The hearing was continued to August 6 to permit Defendants to adequately respond. On that date, the court granted the ex parte application against Samitaur, but denied the applications against 5860 W. Jefferson I and 5860 W. Jefferson. The court invited Alston to provide authority for its contention that, when an represents multiple affiliated clients and has a written agreement with only one to pay the attorneys' fees for all, an implied agreement arises for the other entities to pay those fees as well. Alston did not do so.

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., (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.

The California Supreme Court has held that a court cannot seal a record without first finding an "overriding interest" in support of sealing. NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, (“NBC Subsidiary”) (1999) 20 Cal.4th 1178, 1217-18. Under appropriate circumstances, such interests may include protection of minor victims of sex crimes from further trauma and embarrassment; privacy interests of a prospective juror during individual voir dire; protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify; of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose; safeguarding national security, ensuring the anonymity of juvenile offenders in juvenile court; and ensuring the fair administration of justice, and preservation of confidential investigative information. Id. at 1222, n. 46.

CRC 2.550 and 2.551 are derived from NBC Subsidiary and set forth the standards and procedures for sealing court records. Unless confidentiality is required by law, court records are presumed to be open. CRC 2.550(c). The Advisory Committee Comment to CRC 2.550 provides that the rules recognize the First Amendment right of access to documents used at trial or as a basis of adjudication, but do not apply to records that courts must keep confidential by law.

A court may order records sealed only if it expressly finds all of the following: (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. CRC 2.550(d).

The leading case for sealing orders is Universal City Studios, Inc. v. Superior Court, (“Universal City”) (2003) 110 Cal.App.4th 1273. To determine whether records should be sealed, the court must hold a hearing and expressly find that (i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest. Id. at 1279.

CRC 2.551(b)(3) provides the procedure for a party not intending to file a motion or application to seal records produced in discovery that are subject to a confidentiality agreement or protective order. The party must: (1) lodge the unredacted record subject to confidentiality agreement or protective order, (2) file copies of the documents that are redacted so that they do not disclose the confidential or protected information, and (3) give written notice to the party that produced the records that the lodged records will be placed in the public court file unless that party files a timely motion to seal. CRC 2.551(b)(3)(A).

If the party that produced the documents and was served with this notice fails to file an application or motion to seal within ten days or obtain a court ordered-extension, the clerk must promptly transfer all the conditionally sealed documents to the public file. If the party files a timely motion or application to seal, the documents shall remain conditionally sealed until the court rules on it. CRC 2.551(b)(3)(B).

Plaintiff Alston has conditionally sealed certain filed documents. On August 15, 2024, Plaintiff served a Notice of Conditional Lodging Under Seal. More than ten days have passed, and Defendants have not file an application or motion to seal or obtained a court ordered-extension. Therefore, the clerk is directed to promptly transfer all the conditionally sealed documents to the public file.

In July of 2018, certain disputes arose between Nike and Defendants pertaining to the Nike Lease between Nike and Defendant 5860 W. Jefferson. Evans Decl., ¶7. At that time, Nike asserted that the building constructed and leased to it by Defendant 5860 W. Jefferson was rife with construction defects, leaked water incessantly, and had mold on the interior of the property purportedly threatening the health of Nike employees. Evans Decl., ¶7.

5860 W. Jefferson was the original Lessor under the Nike Lease. However, the construction lender to 5860 W. Jefferson required the formation of a new entity to hold title to that property. Evans Decl., ¶7. Thus, 5860 W. Jefferson I succeeded to the interests of 5860 W. Jefferson as Lessor. Evans Decl., ¶7. As of August of 2018, no litigation had yet been filed between Defendants and Nike. Evans Decl., ¶7.

Peter Brown of Samitaur requested Plaintiff Alston’s advice and counsel. Evans Decl., ¶8. On September 6, 2018, Alston entered into an initial engagement letter agreement whereby it agreed to provide Samitaur with the requested advice and counsel. Evans Decl., ¶8. The written fee agreement limited Alston’s services “to providing [Samitaur] with advice and counsel with regard to the tenancy of Nike, Inc…” Evans Decl., ¶8. The engagement agreement with Samitaur was silent as to the representation of Defendants 5860 W. Jefferson I and 5860 W. Jefferson, and who would be responsible for the payment of their fees. Evans Decl., ¶8.

In or around September of 2018, Nike suggested that the parties mediate and Defendants agreed to do so. Evans Decl., ¶8. After initial efforts to mediate the dispute with Nike were unsuccessful, on September 18, 2018, Nike filed the Nike Lease Litigation against Defendants. Evans Decl., ¶8.

Shortly after Nike served Defendants with the Nike lawsuit, Laurie Smith, as owner and principal of each of the Defendants, requested that Alston represent Defendants in the Nike Lease Litigation. Evans Decl., ¶9. Implied in that request was the promise of each of those entities to pay for the services and costs provided by Alston in defending the Nike Lease Litigation. Evans Decl., ¶9. Although sued by Nike, Samitaur was not a party to the Nike Lease. Evans Decl., ¶9. The bulk of Nike’s claims were aimed at 5860 W. Jefferson I as the lessor of the property. Evans Decl., ¶9.

Alston agreed to represent Defendants in the Nike Lease Litigation subject to the implied promise of Defendants to be honest with the firm and to pay promptly its invoices for fees and costs. Evans Decl., ¶10. For more than four years after Nike filed the Nike Lease Litigation, Defendants paid Plaintiff’s invoices. Evans Decl., ¶10. Those payments are evidence of an implied agreement between Defendants and Alston for its services rendered. Evans Decl., ¶11.

Nike asserted cross-claims and supplemental claims against Defendants 5860 W. Jefferson I and Samitaur in the Nike Lease Litigation. Evans Decl., ¶13. At the request of 5860 W. Jefferson I, Plaintiff prepared certain cross-actions against Nike for breach of and arising out of the Nike lease. Evans Decl., ¶13.

The Nike Lease Litigation was hotly contested over a period of more than five years. Evans Decl., ¶14. In preparing the case for trial, the parties demanded from one another dozens of categories of documents and exchanged hundreds of thousands of pages of documents. Evans Decl., ¶15. The parties also subpoenaed documents from third parties which resulted in the production of tens of thousands of additional documents. Evans Decl., ¶15. The parties took more than 32 depositions. Evans Decl., ¶16.

During the litigation, Nike obtained a summary adjudication order requiring Defendants to return to Nike more than $6.6 million paid by Nike to 5860 W. Jefferson I for tenant improvements constructed by Samitaur. Evans Decl., ¶17. Nike asserted, and the trial court agreed, that each of the Defendants had unlawfully collected these monies as Samitaur was not licensed as a contractor. Evans Decl., ¶17.

Nike and Defendants participated in three private mediations, and four separate days of mandatory settlement conferences required by the court. Evans Decl., ¶19. Despite those efforts, the parties were unable to resolve the matter. Evans Decl., ¶19.

The trial was originally set for January 5, 2021. Evans Decl., ¶20. The trial date was continued numerous times. Evans Decl., ¶20. Due to the multiple continuances, Alston was required to prepare several times for a jury trial. Evans Decl., ¶22. Eventually, Nike and Defendants waived their respective rights to a jury trial and to try the case to the court. Evans Decl., ¶22. The trial commenced on February 8, 2024, and concluded on March 12, 2024. Evans Decl., ¶23. Nike sought more than $30,000,000 against Defendants in addition to the $6.6 million interim award made on summary adjudication. Evans Decl., ¶23. Due to Alston’s work, the court awarded Nike no damages on its breach of lease and breach of warranty claims. Evans Decl., ¶24.

Nike brought a motion for new trial to overturn the result. Evans Decl., ¶25. Even though Alston had not been paid for its bills sent between October 2023 and April 2024, it opposed the motion for new trial which was denied by the trial court. Evans Decl., ¶25.

Hackman Capital Group (“Hackman Group”) is a privately held real estate investment, operating and development company based in Los Angeles. Evans Decl., ¶34. In connection with Alston’s efforts to collect the amounts owed to it, it spoke and exchanged numerous emails with Myles Blau, Esq. (“Blau”), General Counsel of investor Hackman Group. Evans Decl., ¶34. Blau advised that Hackman Group anticipated making a sizeable investment in Defendants and their respective affiliates, and asked Alston to desist in its efforts to collect unpaid fees and costs from Defendants. Evans Decl., ¶34. Blau advised Alston that he had reviewed the financial statements of Defendants and its principal/owner, Laurie Smith, and that they had no money. Evans Decl., ¶34. Blau informed Alston that, without an investment from Hackman Group, Defendants will file bankruptcy. Evans Decl., ¶35. He further advised that Defendants have negotiated to take a $100 million investment from Hackman Group. Evans Decl., ¶35. If the transaction were to close, Hackman Group would take operational control over all of Defendants and their affiliates and their respective assets. Evans Decl., ¶35.

Following this exchange, Alston had numerous communications with Blau concerning the unpaid fees and costs. Evans Decl., ¶37. Even though the Hackman Group investment had not closed, Blau was brokering a resolution of the unpaid fees and costs and described himself and Hackman Group as Defendants’ “white knight.” Evans Decl., ¶37.

At the end of June 2024, Blau requested copies of Plaintiff’s unpaid invoices, suggesting that Hackman Group would pay them if approved. Evans Decl., ¶38. To Alston’s knowledge, Blau never reviewed the bills. Evans Decl., ¶38. Hackman Group has never negotiated the payment of Alston’s bills or made any offer on the amounts claimed. Evans Decl., ¶39.

For more than four years, Alston sent Defendants monthly invoices for legal services and costs incurred. Evans Decl., ¶26. Defendants never complained about the amounts or form of the invoices. Evans Decl., ¶26. To the contrary, Defendants’ owner and principal spoke glowingly of the work done by Alston’s lawyers. Evans Decl., ¶26. Not until Alston stated its intention to file this action and seek provisional relief did Defendants complain about the amounts of the bills. Evans Decl., ¶42.

On July 9, 2024, Defendants made a demand for fee arbitration under the Mandatory Fee Arbitration Act. Evans Decl., ¶46. In connection with that demand, insolvency counsel for Defendants asserted that Alston could not apply for a right to attach order or any other provisional relief while the fee arbitration is pending. Evans Decl., ¶42. Alston acknowledges that its claim for unpaid fees and costs is arbitrable under Business & Professions Code section 6200, but it has the lawful right to seek a right to attach order and other provisional relief notwithstanding the clients’ request to arbitrate. Evans Decl., ¶47.

The fee dispute at issue arises from Alston's representation of Defendants as litigation and trial counsel in connection with a breach of lease and construction dispute which ultimately resulted in the prosecution of the Nike Lease Litigation. Orig. Smith Decl., ¶2.

In the context of that dispute, on or around September 6, 2018, Alston entered into a written engagement agreement with Samitaur. Orig. Smith Decl., ¶3. Pursuant to the terms of that agreement, Alston was to provide "advice and legal counsel" to Samitaur in connection with the Nike Lease Litigation and would send Samitaur monthly billing statements for services rendered, which fee statements would be subject to arbitration in the event of a dispute. Orig. Smith Decl., Ex. A. Alston did not enter into a written engagement agreements with either 5860 W. Jefferson or 5860 W. Jefferson I. Orig. Smith Decl., ¶4.

In accordance with the terms of its written agreement with Samitaur, Alston only transmitted fee statements to Samitaur. Add'l. Smith Decl., ¶4. Contrary to Alston's contention, Defendants' principal, Laurie Smith, made no representations that 5860 W. Jefferson I would be responsible for any of Alston's invoices. Add'l. Smith Decl., ¶5. None of the funds used to pay Alston came from 5860 W. Jefferson I’s revenues; all originated exclusively with Samitaur. McIver Decl., ¶¶ 9–13.

At this time, the aggregate value of the collateral for the Deutsche Bank Loan -- i.e., the 5860 Jefferson Property and Wrapper Property -- is substantially less than the amount owed to Deutsche Bank by tens of millions of dollars. McIver Decl., ¶6. A restructuring of the DB Loan is one component of the prospective investment transaction with Hackman Capital. McIver Decl., ¶6.

At all relevant times, 5860 W. Jefferson I's revenue has been derived exclusively from the rents that it collected from Nike in connection with the Nike Lease. McIver Decl., ¶10. All of those rents were deposited into a bank account that were subject to routine "sweeps" by 5860 W. Jefferson I's lender, Deutsche Bank, to pay outstanding loan debt. McIver Decl., ¶10. Therefore, 5860 W. Jefferson I was never in a position to pay Alston's invoices, and any such payments originated exclusively with Samitaur. McIver Decl., ¶¶ 10–13.

5860 W. Jefferson I does disburse some funds to Samitaur that Samitaur then uses to pay for certain of 5860 W. Jefferson I's expenses, but those funds have never been used to pay Alston. McIver Decl., ¶11. Pursuant to the loan documents with Deutsche Bank, 5860 W. .Jefferson I provides Deutsche Bank with a budget for certain kinds of operating expenses sought to be paid to third parties that would protect the bank's collateral, including utilities, insurance, and maintenance costs, and, if approved by Deutsche Bank, the bank releases funds in the amount sought in the budget to Jefferson I. McIver Decl., ¶11. The amount of funds sought and released by Deutsche Bank has typically been between $30,000 to $80,000 a month. Once those funds are received by 5860 W. Jefferson I, they are disbursed to Samitaur, and Samitaur then uses the funds to pay the applicable vendor or supplier associated with the expense in the approved budget. McIver Decl., ¶11. At no point has 5860 W. Jefferson I ever requested, nor has Deutsche Bank ever approved, the payment of Alston's fees and expenses, and Samitaur has never used those released funds received from Jefferson I to pay Alston. McIver Decl., ¶11.

Over the course of its engagement as counsel in the Nike Lease Litigation, Alston incurred more than $5 million in attorney fees, approximately $3 million of which has been paid to Alston to date. Orig. Smith Decl., ¶5. Shortly before the commencement of this action, Alston commenced making threats regarding a potential writ of attachment. Orig. Smith Decl., ¶5. At that point, Defendants began a preliminary review of Alston’s monthly invoices and concluded that: (1) the invoices contained potentially duplicative entries; (2) there were entries reflecting unusually large amounts of time spent on apparently simple tasks; and (3) at the time, Alston had billed Samitaur thousands of dollars in fees for work not typically billed to a client. Orig. Smith Decl., ¶5. For example, Alston billed Samitaur thousands of dollars for drafting its motion to withdraw as counsel in the Nike Lease Litigation, and for preparing its complaint and application for a writ of attachment in this action. Orig. Smith Decl., ¶5, Ex. B.

While Defendants were still considering how to respond to Alston's outstanding demands for payment, on July 9, 2024, Alston transmitted an email to Defendants’ counsel advising that Alston was proceeding with "filing [a collections] lawsuit and application for writ of attachment." Orig. Zaro Decl., ¶2, Ex. A. In response, Defendants promptly transmitted to Alston a formal demand for arbitration pursuant to the Mandatory Fee Arbitration Act (“MFAA”), enclosing a completed Client Petition for Arbitration, signed by Defendants' principal, Laurie Smith. Orig. Zaro Decl., ¶3, Ex. B. The arbitration demand was emailed to Alston on July 9, 2024, at 1:28 p.m., PDT, less than an hour after Alston transmitted its litigation and attachment threat, and a formal service copy followed the next day. Orig. Zaro Decl., ¶3, Ex. B.

As of July 29, 2024, Defendants were engaged in negotiations with a prospective third-party investor, Hackman Group, regarding a substantial investment. Orig. Smith Decl., ¶6. If consummated, that investment could result in an infusion of cash in one or more of the Defendants’ entities. Orig. Smith Decl., ¶6. Nothing in the contemplated transaction would result in a "transfer of properties" as alleged in Alston's Complaint; a change in ownership of real property is not a contemplated component of the transaction. Orig. Smith Decl., ¶6. Samitaur, the only entity with whom Alston had a written agreement, does not own any real property that could even be implicated in the contemplated investment. Orig. Smith Decl., ¶6.

Plaintiff Alston seeks a right to attach order against Defendant 5860 W. Jefferson I in the amount of $2,303,234.63.

Alston argues that its claim is based upon an implied contract by Defendants that they would pay its bills. Such a contract "is one, the existence and terms of which are manifested by conduct". Civil Code §1621. “The distinction between express and implied in fact contracts relates only to the manifestation of assent; both types are based upon the expressed or apparent intention of the parties." Responsible Citizens v. Superior Court, (1993) 16 Cal.App.4th 1717, 1732-733. A formal retainer and fee agreement is not necessary to create an attorney-client relationship and such a relationship, with all its attendant duties, may be created by an implied contract. Rickley v. Goodfriend, 207 Cal.App.4th 1528, 1538 (2012). App. at 15.

Alston argues that Defendant 5860 West Jefferson I’s owner and principal, Laurie Smith, asked Alston to represent all three Defendants in the Nike Lease Litigation. Alston did so, and for almost five years Defendants paid Alston for that representation. This conduct demonstrates the implied contract between Alston and 5860 W. Jefferson I, thereby satisfying the “contract” requirement of the attachment statute. App. at 15.

Defendants respond that Alston provides no facts to show an implied contract with 5860 W. Jefferson I. Alston admits that an implied contract is based on conduct, but it points to nothing by 5860 W. Jefferson I that would support an implied contract. Alston cannot rely on a course of dealing by 5860 W. Jefferson I paying its bills because Samitaur paid all Alston invoices; 586 W. Jefferson I never paid any portion of the attorney bills. McIver Decl., ¶¶ 10–13.

Nor could 5860 W. Jefferson I have done so. Its revenue has been derived exclusively from the rents that it collected from Nike in connection with the Nike Lease. McIver Decl., ¶10. Those rents were deposited into a bank account that were subject to routine "sweeps" by 5860 W. Jefferson I's lender, Deutsche Bank, to pay its outstanding loan debt. McIver Decl., ¶10. 5860 W. Jefferson I did disburse some funds to Samitaur that Samitaur then used to pay for certain of 5860 W. Jefferson I's expenses, but those payments were approved by Deutsche Bank and no funds have ever been used to pay Alston. McIver Decl., ¶11.

Thus, Alston represented 5860 W. Jefferson I in the Nike Lease Litigation, but there is nothing from Laurie Smith’s representations or the parties’ course of dealing that would imply a contract between Alston and 5860 W. Jefferson I. If arguendo there had been an implied contract, it would be a contract 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., (“CIT”) (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).

Defendants correctly points out that Alston has only a written agreement with Samitaur. Even if Alston had an implied agreement with 5860 W. Jefferson I, Alston has not established all the material terms of that agreement, including (1) the portion of its fees and expenses that was the responsibility of each Defendant or (2) whether obligation to pay Alston’s fees and expenses was joint and several.

Alston argues that “[t]here is an implied agreement to pay the attorney the reasonable value of any services to a client. Mittleman v. Seifert, (1971) 17 Cal.App.3d 51, 67 (citing Trafton v. Youngblood, (1968) 69 Cal.2d 17, 26).” An attorney is entitled to recover the reasonable value of his services if there is no express employment contract providing for his compensation. Trafton v. Youngblood, (1968) 69 Cal.2d 17, 26. App. at 15.

This is true, but the reasonable value of attorney services is addressed by quantum meruit. Aside from the fact that the FAC does not plead a quantum meruit claim, the reasonable value of an attorney’s service is not a determination that is readily ascertainable from a contract. In other words, there is no contract for a quantum meruit claim which furnishes a standard by which the amount owed may be ascertained. The matter is a fact issue for trial.

The same analysis applies to probability of success as for a fixed and readily ascertainable amount of attachment. Assuming that Samitaur cannot or will not pay the remaining bills, Alston may have a claim of quantum meruit against 5860 W. Jefferson I on which it can show a probability of success. But it has not shown a probability of success on an implied contract claim.

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). Despite Defendants’ argument to the contrary (Opp. at 17), Alston seeks attachment for a proper purpose. It is sufficient that Alston seeks to protect its recovery from 5860 W. Jefferson I’s assets.

The application for a right to attach order against 5860 W. Jefferson I is denied. Alston has not shown an implied contract with 5860 W. Jefferson I and has not shown that any amount owed is readily ascertainable from that contract. If Alston has a right of recovery against 5860 W. Jefferson I, it probably lies in quantum meruit.