Judge James C. Chalfant, Case Number: 24STLC04522, Date: 2024-11-21 Tentative Ruling

Daimler Truck Financial Services USA v. Alex Truck Company and Alejandro Lopez, 24STLC04522

Tentative decision on application for writ of possession: granted

Plaintiff Daimler Truck Financial Services (“DTFS”) seeks a writ of possession against Defendants Alex Truck Company (“ATC”) and Alejandro Lopez (“Lopez”).

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

On June 24, 2024, Plaintiff DTFS filed the Complaint against Defendants ATC and Lopez alleging claims for breach of contract, claim and delivery, conversion, common count, and breach of guaranty.

On or about June 21, 2021, ATC, through its president, Lopez, and The Around The Clock Freightliner Group, LLC (“Seller”) entered into a written California Retail Installment Contract (“Agreement”) in the original principal amount of $37,161.88, for ATC to borrow funds to purchase a 2022 COMERCIALIZADORA NIM MKA SA DE CV DRY VAN TRAILER, Serial No. 3ELDTMS43N6000304 (“Trailer”). Pursuant to the Agreement, ATC agreed to pay 60 consecutive monthly payments of $862.65 commencing August 5, 2021, and monthly thereafter on the 5th day of each successive month until all unpaid principal and interest were paid in full. Default Interest was payable at the rate of 18.0% per annum.

To induce Plaintiff to extend credit to ATC, Defendant Lopez, for valuable consideration, on June 21, 2021, executed and delivered to Plaintiff, a written Continuing Personal Guaranty (“Guaranty”). Pursuant to the terms of the Guaranty, Lopez unconditionally guaranteed prompt and full payment of any and all indebtedness of ATC, including payment of attorneys’ fees and court costs incurred by Plaintiff to enforce payment under the Guaranty.

Plaintiff was thereafter received by assignment and perfected its lienholder interest in the Trailer by obtaining a lienholder interest from the Department of Motor Vehicles (“DMV”).

On November 30, 2021, Mercedes-Benz Financial Services USA LLC ("MBFS") and DTFS entered into a transaction (the “Transaction”) whereby MBFS sold to DTFS all of its rights and obligations with respect to all litigation or claims exclusively related to or arising in connection with MBFS’s financial services business in the United States related to the wholesale and retail financing of trucks and buses. As a result of the Transaction, DTFS is now the proper party in interest in this and other assigned contracts.

On or about May 5, 2023, ATC and Lopez defaulted under the terms and conditions of the Agreement and the Guaranty by failing to make the payment then due and owing.

Defendants were served with the Summons, Complaint, and moving papers by substituted service on September 9, 2024, with service effective on September 19, 2024.

A writ of possession is issued as a provisional remedy in a cause of action for claim and delivery, also known as replevin. See Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1288. As a provisional remedy, the right to possession is only temporary, and title and the right to possess are determined in the final judgment.

A writ of possession is available in any pending action. It also is available where an action has been stayed pending arbitration, so long as the arbitration award may be ineffectual without provisional relief. See CCP §1281.7.

Upon the filing of the complaint or at any time thereafter, a plaintiff may apply for an order for a writ of possession. Unlike attachment, where Judicial Council forms are optional, the parties must use the mandatory approved Judicial Council forms in a claim and delivery proceeding. (Judicial Council Forms CD-100 et seq.).

A plaintiff must make a written application for a writ of possession. CCP §512.010(a), (b); (Mandatory Form CD-100); CCP §512.010(a). A verified complaint alone is insufficient. 6 Witkin, California Procedure, (5th ed. 2008) §255, p.203. The application may be supported by declarations and/or a verified complaint. CCP §516.030. The declarations or complaint must set forth admissible evidence except where expressly permitted to be shown on information and belief. Id.

The application must be executed under oath and include: (1) A showing of the basis of the plaintiff's claim and that the plaintiff is entitled to possession of the property claimed. If the plaintiff's claim is based on a written instrument, a copy of it must be attached; (2) A showing that the property is wrongfully detained by the defendant, how the defendant came into possession of it, and, the reasons for the detention based on the plaintiff’s best knowledge, information, and belief; (3) A specific description of the property and statement of its value; (4) The location of the property according to the plaintiff’s best knowledge, information, and belief. If the property, or some part of it, is within a private place which may have to be entered to take possession, a showing of probable cause to believe that the property is located there; and (5) A statement that the property has not been taken for (a) a tax, assessment, or fine, pursuant to a statute, or (b) an execution against the plaintiff’s property. Alternatively, a statement that if the property was seized for one of these purposes, it is by statute exempt from such seizure. CCP §512.010(b).

Before noticing a hearing, the plaintiff must serve the defendant with all of the following: (1) A copy of the summons and complaint; (2) A Notice of Application and Hearing; and (3) A copy of the application and any supporting declaration. CCP §512.030(a). If the defendant has not appeared in the action, service must be made in the same manner as service of summons and complaint. CCP §512.030(b).

Each party shall file with the court and serve upon the other party any declarations and points and authorities intended to be relied upon at the hearing. CCP §512.050. At the hearing, the court decides the merits of the application based on the pleadings and declarations. Id. Upon a showing of good cause, the court may receive and consider additional evidence and authority presented at the hearing or may continue the hearing for the production of such additional evidence, oral or documentary, or the filing of other affidavits or points and authorities. Id.

The court may order issuance of a writ of possession if both of the following are found: (1) The plaintiff has established the probable validity of the plaintiff’s claim to possession of the property; and (2) The undertaking requirements of CCP section 515.010 are satisfied. CCP §512.060(a). “A claim has ‘probable validity’ where it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim.” CCP §511.090. This requires that the plaintiff establish a prima facie case; the writ shall not issue if the defendant shows a reasonable probability of a successful defense to the claim and delivery cause of action. Witkin, California Procedure, (5th ed. 2008) §261, p.208. A defendant’s claim of defect in the property is not a defense to the plaintiff’s right to possess it. RCA Service Co. v. Superior Court, (1982) 137 Cal.App.3d 1, 3.

No writ directing the levying officer to enter a private place to take possession of any property may be issued unless the plaintiff has established that there is probable cause to believe that the property is located there. CCP §512.060(b).

The successful plaintiff may obtain a preliminary injunction containing the same provisions as a TRO that remains in effect until the property is seized by the levying officer.[1] CCP §513.010(c).

The court may also issue a “turnover order” directing the defendant to transfer possession of the property to the plaintiff (See Mandatory Form CD-120). The order must notify the defendant that failure to comply may subject him or her to contempt of court. CCP §512.070. The turnover remedy is not issued in lieu of a writ, but in conjunction with it to provide the plaintiff with a less expensive means of obtaining possession. See Edwards v Superior Court, (“Edwards”) (1991) 230 Cal.App.3d 173, 178.

Generally, the court cannot issue an order for a writ of possession until the plaintiff has filed an undertaking with the court (Mandatory Form CD-140 for personal sureties). CCP §515.010(a). The undertaking shall provide that the sureties are bound to the defendant for the return of the property to the defendant, if return of the property is ordered, and for the payment to the defendant of any sum recovered against the plaintiff. Id. The undertaking shall be in an amount not less than twice the value of the defendant's interest in the property or in a greater amount. Id. The value of the defendant's interest in the property is determined by the market value of the property less the amount due and owing on any conditional sales contract or security agreement and all liens and encumbrances on the property, and any other factors necessary to determine the defendant’s interest in the property. Id.

However, where the defendant has no interest in the property, the court must waive the requirement of the plaintiff’s undertaking and include in the order for issuance of the writ the amount of the defendant’s undertaking sufficient to satisfy the requirements of CCP section 515.020(b). CCP §515.010(b).

Nathzolla V. Williams (“Williams”) is the Recovery Agency Attorney Supervisor and an authorized representative of Plaintiff at its offices located in Fort Worth, Texas. Williams Decl., ¶1. He is charged with the responsibility of supervising the collection of the obligation of Defendant ATC. Williams Decl., ¶3. Williams custody and control of the business records of ATC’s account(s). Williams Decl., ¶3. Additionally, he has personal knowledge of the manner in which all of Plaintiff's account records are compiled and has personally reviewed all business records related to the ATC account. Williams Decl., ¶3.

Once Plaintiff receives an assignment of a lease, retail installment contract, or Note and Security Agreement, it is input into Plaintiff’s computer database. Williams Decl., ¶6. When a payment is received, the payment is posted with an entry on the computer ledger for that loan or lease and a new balance due is calculated. Williams Decl., ¶6. In the normal course of the business, a computer-generated report for each account is available on a daily basis. Williams Decl., ¶6. The report includes a complete payment history, statement of account, and payoff quote. Williams Decl., ¶6.

Payment from leases are received directly in the Daimler Truck-Payment processing Center “Lock Box” and are processed by the accounting department. Williams Decl., ¶7. Upon receipt, the payments are input into the computer ledger generated report of the account within twenty- 24 hours of receipt of the payment. Williams Decl., ¶7.

From the initial contact attempt until the account becomes approximately 30 days past due, the collection assistant attempts to contact the customer by phone and if unsuccessful, by written correspondence. Williams Decl., ¶9. If the account becomes approximately 30 days past due, the account is sent to a Collection Representative who will attempt to contact the customer regarding the delinquent payment. Williams Decl., ¶9. Any account which becomes greater than 30 days past due is subject to repossession. Williams Decl., ¶9.

Wiliams’ training and duties also include supervision of the preparation and management of all payment information relating to this account. Williams Decl., ¶10.

On or about June 21, 2021, ATC, by its president, Lopez, and Seller entered into the Agreement, in the principal amount of $37,161.88, to borrow funds to purchase the Trailer. Williams Decl., ¶12; Williams Decl., Ex. 1. Pursuant to the Agreement, ATC agreed to pay 60 consecutive monthly payments of $862.65 each commencing August 5, 2021, and monthly thereafter on the 5th day of each successive month until all unpaid principal and interest were paid in full. Default Interest was payable at the rate of 18.0% per annum pursuant to the Agreement. Williams Decl., ¶13.

To induce MBFS to extend credit to ATC, Defendant Lopez, for valuable consideration, on June 21, 2021, executed and delivered a Guaranty. Williams Decl., ¶14; Williams Decl., Ex. 2. Pursuant to the terms of the Guaranty, Lopez absolutely and unconditionally guaranteed prompt and full payment of any and all indebtedness of ATC “which now and/or hereafter exists”, including payment of attorneys’ fees and court costs incurred by Plaintiff to enforce payment under the Guaranty. Williams Decl., ¶14; Williams Decl., Ex. 2.

MBFS received by assignment and perfected its lienholder interest in the Trailer by obtaining a lienholder interest from the DMV reflecting MBFS as the lienholder and ATC as the registered owner. Williams Decl., ¶15.

On November 30, 2021, MBFS and DTFS entered into the Transaction whereby MBFS sold to DTFS all of its rights and obligations with respect to all litigation or claims exclusively related to or arising in connection with MBFS’s financial services business in the United States related to the wholesale and retail financing of trucks and buses. Williams Decl., ¶16; Williams Decl., Ex. 4. As a result of the Transaction, DTFS is now the proper party in interest in this and other assigned contracts. Williams Decl., ¶16; Williams Decl., Ex. 4.

On or about May 5, 2023, ATC and Lopez defaulted under the terms and conditions of the Agreement and the Guaranty by failing to make the payment then due and owing. Williams Decl., ¶17. Plaintiff has performed all of the conditions, covenants and promises required under the terms of the Agreement. Williams Decl., ¶18.

Due to ATC and Lopez’s payment default, Plaintiff elected to declare all unpaid sums immediately due and payable. Williams Decl., ¶19. Plaintiff’s account records reflect that there is currently due and owing from ATC and Lopez the sum of $28,931.60, plus late charges and default interest of 18.0% per annum from and after February 20, 2024, plus all Plaintiff’s expenses for enforcing the Agreement, including expenses for repossession, transportation, storage, preparing for sale and/or sale of the Trailer. Williams Decl., ¶19, Ex. 5.

The Agreement states that at no time is the Trailer allowed to be transferred without the knowledge or consent of Plaintiff. Williams Decl., ¶20. The Agreements further states at that:

Should I default under this Agreement . . . I agree to turn over and deliver the Collateral to Seller at my expense, at the time and at the location Seller may demand of me. Alternatively, to the extent permitted by law, Seller may enter any premises or other place where the Collateral may be located, and take possession of the Collateral . . . Williams Decl., ¶21.

Before commencement of this action or by service of the complaint, Plaintiff demanded that Defendants return the Trailer. Defendants refused. Williams Decl., ¶22. Plaintiff is entitled to immediate possession of the Trailer. Williams Decl., ¶22.

Upon full review of Plaintiff’s records, credit file and computer screen account notes, Williams is informed and believes and thereon alleges that the Trailer is presently located at the address listed for ATC on the Agreement, and for Lopez on the Guaranty, of 458 ½ S. Eastern Ave., Los Angeles, CA 90022. Williams Decl., ¶24.

As of January 24, 2024, the approximate value of the Trailer is $30,325.00 according to the J.D. Power Commercial Trucks Guide. Williams Decl., ¶25, Ex. 6.

Since the balance owed is less than the value of Trailer, Defendants have equity in the Trailer. Williams Decl., ¶27. Therefore, Plaintiff will post a bond in the sum of twice the value of Defendants’ interest in the Trailer, a total bond amount of $3,000.00 ($30,325.00 -$28,931.60 $1,393.40 x 2 = $2,786.80). Williams Decl., ¶27.

Plaintiff DTFS seeks a writ of possession against Defendants for the Trailer. No opposition is on file.

Seller financed the purchase of the Trailer pursuant to the Agreement. On or about June 21, 2021, ATC, by its president, Lopez, and Seller entered into the Agreement, in the principal amount of $37,161.88, to borrow funds to purchase the Trailer. Williams Decl., ¶12; Williams Decl., Ex. 1. Pursuant to the Agreement, ATC agreed to pay 60 consecutive monthly payments of $862.65 each commencing August 5, 2021, and monthly thereafter on the 5th day of each successive month until all unpaid principal and interest were paid in full. Default Interest was payable at the rate of 18.0% per annum pursuant to the Agreement. Williams Decl., ¶13.

To induce MBFS to extend credit to ATC, Defendant Lopez, for valuable consideration, on June 21, 2021, executed and delivered a Guaranty. Williams Decl., ¶14, Ex. 2. Pursuant to the terms of the Guaranty, Lopez absolutely and unconditionally guaranteed prompt and full payment of any and all indebtedness of ATC “which now and/or hereafter exists”, including payment of attorneys’ fees and court costs incurred by Plaintiff to enforce payment under the Guaranty. Williams Decl., ¶14, Ex. 2.

On or about May 5, 2023, ATC and Lopez defaulted under the terms and conditions of the Agreement and the Guaranty by failing to make the payment then due and owing. Williams Decl., ¶17. Due to ATC and Lopez’s payment default, Plaintiff elected to declare all unpaid sums immediately due and payable. Williams Decl., ¶19. There is currently due and owing from ATC and Lopez the sum of $28,931.60. Williams Decl., ¶19, Ex. 5.

Plaintiff DTFS’ application suffers from two defects. First, Plaintiff shows that MBFS sold to DTFS its rights to a claim against Defendants but Plaintiff fails to show that Seller assigned its rights to BMFS. This is an issue of standing. As there is no opposition and as the Certificate of Title for the Trailer lists MBFS as a lienholder, the issue is waived.

Second, DTFS fails to support its calculation of damages by a ledger or other calculation. It provides only a “Payoff Quotation” to suppoor the $28,931.60 owed. The declaration supporting an application for a writ of possession must be set forth with particularity. CCP §516.030. This means that the plaintiff must show evidentiary facts rather than the ultimate facts commonly found in pleadings. A recitation of conclusions without a foundation of evidentiary facts is insufficient. See Rodes v. Shannon, (1961) 194 Cal.App.2d 743, 749 (declaration containing conclusions inadequate for summary judgment); Schessler v. Keck, (1956) 138 Cal.App.2d 663, 669 (same). The lack of opposition is a waiver of this issue.

DTFS has established the probable validity of its claim to possession of the Trailer. CCP §§ 511.090, 512.060(a).

The undertaking required by CCP section 515.010(a) is an amount not less than twice the value of the defendant's interest in the property or in a greater amount. Id. The value of the defendant's interest in the property is determined by the market value of the property less the amount due and owing on any conditional sales contract or security agreement and all liens and encumbrances on the property. Id.

As of January 24, 2024, the approximate value of the Trailer is $30,325.00 according to the J.D. Power Commercial Trucks Guide. Williams Decl., ¶25, Ex. 6. Since the balance owed is less than the value of Trailer, Defendants have equity in the Trailer. Williams Decl., ¶27. DTFS agrees to post a bond that is twice the value of Defendants’ interest in the Trailer, a total amount of $3,000.00 ($30,325.00 -$28,931.60 $1,393.40 x 2 = $2,786.80). Williams Decl., ¶27.

DTFS’ undertaking shall be $3000. The re-delivery bond also shall be $3000. CCP §515.020(a).

Based on the address listed in the Agreement and the Guaranty, the Trailer is currently located at 458 ½ S. Eastern Ave., Los Angeles, CA 90022. Williams Decl., ¶24. The levying officer may enter this location to recover the Trailer. CCP §512.060(b).

The applications for order for a writ of possession and turnover order against Defendants ATC and Lopez are granted. DTFS’ undertaking shall be $3000. The re-delivery bond also shall be $3000.

[1] If the court denies the plaintiff’s application for a writ of possession, any TRO must be dissolved. CCP §513.010(c).