Judge James C. Chalfant, Case Number: 24STCV25331, Date: 2024-12-10 Tentative Ruling

Spirit Master Funding v. Look Cinemas II and Look Brands, 24STCV25331

Tentative decision on applications for right to attach orders: granted

Plaintiff Spirit Master Funding X, LLC (“Spirit”) applies for right to attach orders against Defendants Look Cinemas II, LLC (“Look Cinemas”) and Look Brands LLC (“Look Brands”) in the amount of $1,361,737.46.

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

Plaintiff filed the Complaint against Defendants Look Cinemas and Look Brands on September 30, 2024 alleging claims for breach of contract and breach of guaranty. The Complaint alleges in pertinent part as follows.

On or about May 11, 2021, Plaintiff Spirit, as landlord, and Look Cinemas, as tenant, entered into a written Master Lease Agreement (the “Lease”), for Look Cinemas’ use of certain commercial space located at: (i) 8200 3rd Street, Downey, California; (ii)408, 410 South Myrtle Avenue, Monrovia, California; and (iii) 340 Eureka Street, Redlands, California (collectively, the “Premises”).

Concurrently with Look Cinemas’ execution of the Lease, Guarantor Look Brands guaranteed the full, faithful, and timely payment of rent and performance of all the obligations that Look Cinemas owes Spirit under the Lease (the “Guaranty”).

Article 5 of the Lease provides for Base Monthly Rent due on or before the first day of each calendar month during the Lease term. Articles 3, 5 and 6 of the Lease provide for additional sums due as rent for the Premises, for common area operating costs, taxes and other expenses. All rent and charges payable by Look Cinemas to Plaintiff under the Lease for the three Premises listed above constitute a single monetary obligation (hereinafter, “Rental”).

Failure to pay Rental constitutes a default and material breach of the Lease pursuant to Article 14.1 subdivision (a) and entitles Plaintiff to monetary damages if Look Cinemas fails to cure the default within five (5) days of written notice.

Look Cinemas breached the Lease by failing to pay the full rent, including Base Monthly Rent for the months of January 2024 through May 2024 and September 2024, including late fees, currently totaling $1,154,374.44, as well as property taxes totaling approximately $935,744.37.

Proofs of service on file show that Defendants were served with the moving papers on October 23, 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., (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.

In May 2021, Spirit entered into the Lease with Look Cinemas, with a natural term expiration of June 30, 2036 for Look Cinemas’ use and occupancy of the Premises, which are certain retail sales space located at: (i) 8200 3rd Street, Downey, California; (ii) 408, 410 South Myrtle Avenue, Monrovia, California; and (iii) 340 Eureka Street, Redlands, California, where Look Cinemas would do business under the trade name “Look Cinemas.” Edwards Decl., ¶5, Ex. 1.

Pursuant to Section 14.8 of the Lease, Spirit is entitled to an award of attorneys' fees, costs and expenses should it prevail on the Complaint, in addition to the damages for unpaid Rent and accrued interest. Edwards Decl., ¶7, Ex. 1.

The Premises were delivered to Look Cinemas following execution of the Lease and possession of the Premises was delivered to Look Cinemas in or around May 2021. Edwards Decl., ¶8. After taking possession of the Premises, Look Cinemas was required, among other things, to pay all Rent through the end of the term of the Lease. Edwards Decl., ¶9, Ex. 1.

At or before the time Look Cinemas took possession of the Premises, Spirit began to and continued to perform all of its obligations pursuant to the Lease, except as excused by law or the conduct of Look Cinemas. Edwards Decl., ¶10.

Starting in and after January 2024, Look Cinemas failed to pay all Base Monthly Rent for the Premises as required by the Lease. Edwards Decl., ¶12. Spirit then turned this matter over to legal counsel. Edwards Decl., ¶13.

The Lease states that in the event Look Cinemas breaches the Lease and fails to timely cure, Spirit may terminate the Lease and recover damages from Look Cinemas, including past due Rent. Edwards Decl., ¶14, Ex. 1.

Based on a review of the Lease and accounting files, for January 2024 through March 2024, the Base Monthly Rent was $188,403.80 for each month. Edwards Decl., ¶15. For April 2024 and May 2024, the monthly Base Monthly Rent was $188,403.60 for each month. Edwards Decl., ¶15. Starting in September 1, 2024, the Base Monthly Rent was $191,229.65 for each month. Edwards Decl., ¶15. The total past due Base Monthly Rent owed by Look Cinemas is $1,324,477.90. Edwards Decl., ¶16. Look Cinemas is not presently entitled to any offsets against Spirit’s damages. Edwards Decl., ¶17.

In a contested case where the damages exclusive of costs are over $100,000, the attorney's fees should be $5,270 plus 2% of the excess over $100,000. Myers Decl., ¶3. The attorneys’ fees would be $5,270.00 plus 2% of $1,324,477.90, which is $26,489.56. Myers Decl., ¶3. The total sum of attorneys’ fees thus equals $31,759.56. Myers Decl., ¶3.

Additionally, Spirit may incur costs in the amount of $5,500 for filing, service fees, depositions, witness fees, and other costs in connection with prosecuting this matter to trial. Myers Decl., ¶4. Spirit is seeking to attach an additional sum of $37,259.56 for estimated attorney fees and costs. Myers Decl., ¶5.

Spirit has no security interest in any real property of Look Cinemas for any amounts due under the Lease by virtue of any agreement, statute or other rule of law. Edwards Decl., ¶11.

Plaintiff Spirit seeks right to attach orders against Defendants Look Cinemas and Look Brands in the amount of $1,361,737.46, which includes estimated fees and costs of $31,759.56. Defendants were properly served and no opposition has been filed.

Plaintiff’s claim is a claim for money based upon a debt arising out of express contract in the Lease and Guaranty and it 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., (“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).

Strict compliance is required with statutory requirements for affidavits for attachment (Anaheim National Bank v. Kraemer, (1932) 120 Cal.App. 63, 65), and the court must apply the same evidentiary standard to the declarations in an attachment hearing as to a case tried on oral testimony. VFS Financing, Inc. v. CHF Express, LLC, (2009) (C.D. Cal.) 620 F.Supp.2d 1092, 1096-97. The declarant must show personal knowledge of the relevant facts, and such evidence must be admissible and not objectionable. Id. For business records, evidence should be presented to establish that the record was made in the regular course of business, at or near the time of the act or event, and the custodian of records or other qualified witness must identify the record and its mode of preparation, as well as the sources of information and method and time of preparation. Id.

Spirit fails to provide a payment history or month-by-month calculation to support its conclusions of Base Monthly Rent owed. As Defendants fail to oppose, this defect is waived.

Spirit seeks estimated attorney fees and costs. It correctly notes, without referring to LASC 3.214(a), that in a contested case where the damages exclusive of costs are over $100,000, the attorney's fees should be $5,270 plus 2% of the excess over $100,000. Myers Decl., ¶3. The attorneys’ fees would be $5,270.00 plus 2% of $1,324,477.90, which is $26,489.56. Myers Decl., ¶3.

Spirit also seeks estimated costs in the amount of $5,500 for filing, service fees, depositions, witness fees, and other costs in connection with prosecuting this matter to trial. Myers Decl., ¶4. Spirit is seeking to attach an additional sum of $37,259.56 for estimated attorney fees and costs. Myers Decl., ¶5. The total sum of attorneys’ fees thus equals $31,759.56. Myers Decl., ¶3.

In May 2021, Spirit entered into the Lease with Look Cinemas, with a natural term expiration of June 30, 2036 for Look Cinemas’ use and occupancy of the Premises. Edwards Decl., ¶5, Ex. 1. Concurrently with Look Cinemas’ execution of the Lease, Guarantor Look Brands guaranteed the obligations that Look Cinemas owes Spirit under the Lease. Edwards Decl., ¶6, Ex. 2.

Article 5 of the Lease obligates Look Cinemas to pay Base Monthly Rent due on or before the first day of each calendar month during the Lease term. Edwards Decl., ¶7. Articles 3, 5, and 6 of the Lease provide for additional sums due as rent for the Premises, for common area operating costs, taxes and other expenses. Edwards Decl., ¶7. All rent and charges payable by Look Cinemas to Spirit under the Lease for the Premises constitute a single monetary obligation of Rent. Edwards Decl., ¶7, Ex. 1. Pursuant to Section 14.8 of the Lease, Spirit is entitled to an award of attorneys' fees, costs and expenses should it prevail on the Complaint, in addition to the damages for unpaid Rent and accrued interest. Edwards Decl., ¶7, Ex. 1.

The Premises were delivered to Look Cinemas following execution of the Lease and possession of the Premises was delivered to Look Cinemas in or around May 2021. Edwards Decl., ¶8. Starting in and after January 2024, Look Cinemas failed to pay all Base Monthly Rent for the Premises as required by the Lease. Edwards Decl., ¶12. Look Brands also failed to honor its Guaranty.

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). Spirit seeks attachment for a proper purpose.

Plaintiff Spirit’s applications for right to attach orders are granted in the amount of in the amount of $1,361,737.46. No writ shall issue against either Defendant until a $10,000 bond is posted for that Defendant.