Judge James C. Chalfant, Case Number: 25STCV09012, Date: 2025-06-10 Tentative Ruling

Chase the Lion, Inc. v. Biological Laboratory, Inc., 25STCV09012

Tentative decision on application for right to attach order: granted in large part

Plaintiff Chase the Lion, Inc. (“ Lion”) applies for a right to attach order against Defendant Biological Laboratory, Inc. (“Biolab”).

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

On March 27, 2025, Plaintiff Lion filed the Complaint against Defendant Biolab for breach of contract. The Complaint alleges in pertinent part as follows.

On March 4, 2024, Lion and Biolab entered a Revolving Note and Pledge Agreement (“Note”) wherein Lion loaned Biolab $1,000,000 due and payable on August 30, 2024. Compl., ¶12, Ex. 1. Interest on the unpaid principal amount accrued at 5% per annum. Compl., ¶13. Biolab waived all notices required by applicable law. Compl., ¶14.

In addition to the collateral established in the Note, Biolab granted Lion first-priority security interest in all of Biolab’s right, title, and interest, both legal and equitable. Compl., ¶15. All assets of Biolab collateralized the Note. Compl., ¶16. In the event of default, the Note entitled Lion to take possession of all collateral. Compl., ¶17.

On March 6, 2024, Lion obtained a UCC-1 Financing Statement for all Biolab’s assets. Compl., ¶19.

Biolab made four payments to Lion totaling $275,000, leaving a principal balance of $725,000 as well as accumulated interest. Compl., ¶18.

On March 11, 2025, Lion sent Biolab a demand letter for payment of the remaining balance of $725,000 plus interest of $46,301 -- a total repayment amount of $771,301 -- by March 26, 2025. Compl., ¶20. Biolab did not pay by March 26, 2025. Compl., ¶21.

Biolab has changed ownership or control and may be attempting to sell the collateral to avoid its obligations under the Note. Compl., ¶22.

Lion seeks actual and compensatory damages in an amount to be proven at trial, attorney fees and costs, prejudgment interest at the maximum legal rate, and such other and further relief as the court may deem just and proper. Compl. at 5.

Proofs of service on file show that Plaintiff Lion served Defendant Biolab served with the Summons and Complaint by substituted service on March 28, 2025.

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.

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.

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).

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.

On March 4, 2024, Lion and Biolab entered the Note in which Lion loaned Biolab $1,000,000 with an annual 5% interest rate, due and payable on August 30, 2024. Rhodes Decl., ¶2, Ex. A. Lion then transferred $1,000,000 to Biolab. Rhodes Decl., ¶2.

Under the Note, Biolab granted Lion a first-priority security interest in all of Biolab’s assets, including equipment, work-in-progress, and accounts receivable. Rhodes Decl., ¶3, Ex. A. On March 6, 2024, Lion perfected its security interest by filing a UCC Financing Statement with the California Secretary of State. Rhodes Decl., ¶4, Ex. B.

Biolab made four loan payments to Lion: (a) $50,000 on June 24, 2024, (b) $50,000 on July 26, 2024; (c) $50,000 on August 26, 2024; and (d) $75,000 on February 14, 2025. Rhodes Decl., ¶5. Biolab has made no further payments on the Note. Rhodes Decl., ¶5.

On August 30, 2024, the outstanding balance became due and payable. Rhodes Decl., ¶6. On March 11, 2025, Lion sent Biolab a demand letter indicating the Note was past due and noting a payoff amount of $771,301. Rhodes Decl., ¶7, Ex. C. Lion demanded payment in full by March 26, 2025. Rhodes Decl., ¶7, Ex. C. Biolab has made no further payments on the Note. Rhodes Decl., ¶8.

Lion seeks attachment of $771,301 for the purpose of satisfying the loan, and for no other purpose. Rhodes Decl., ¶9. Lion does not seek attachment against any exempt property. Rhodes Decl., ¶10.

In February of 2025, then Biolab Chief Executive Officer Jordan Wang (“Wang”) resigned. David Decl., ¶3. Then Chief Operating Officer Fannie David was appointed Chief Executive Officer to replace Wang. David Decl., ¶¶ 2-3.

After Wang’s resignation, Biolab discovered Wang appeared to enter business transactions that damaged Biolab. Wang sought contracts with entities owned by specific individuals, including James Rhodes (“Rhodes”) and his entities Lion, Medflow LLC (“Medflow”), and Safecamp LLC (“Safecamp”). David Decl., ¶5.

In or around December of 2023, Biolab and Medflow entered into a billing service agreement (“Medflow Agreement”), executed by Wang and Rhodes, David Decl., ¶6, Ex. A. The Medflow Agreement retained Medflow to handle billing services for Biolab. David Decl., ¶7. Biolab later terminated the Medflow Agreement. David Decl., ¶7. Subsequently, Biolab entered into an agreement with Lion, likewise owned by Rhodes. David Decl., ¶7.

Counsel for Biolab conducted a search on the State of California Secretary of State website and located the Statement of Information for Safecamp identifying Rhodes as manager and agent. Jung Decl., ¶3, Ex. A. Biolab Counsel also searched for and located the Statement of Information for Medflow, also identifying Rhodes as manager. Jung Decl., ¶4, Ex. B.

Wang’s dealings with Rhodes will be the basis for future litigation. David Decl., ¶8.

Biolab remains a viable business and has made no attempt to hide or conceal its assets. David Decl., ¶9.

Plaintiff Lion applies for a right to attach order against Defendant Biolab in the amount of $771,301. Biolab opposes.

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).

Lion argues the amount of the breach of contract claim is readily ascertainable based on the amounts loaned by Lion, the interest rates set forth in the Note, and the outstanding balance left on the Note. Mem. at 4.

Lion refers to the standard in the Note but presents only a conclusion that Biolab owes $771,301 without any supporting payment history or separate calculation of that amount. This is inadequate.

Strict compliance is required with statutory requirements for affidavits for attachment (Anaheim National Bank v. Kraemer, (1932) 120 Cal.App. 63, 65), and facts stated in affidavit must be set forth with particularity. CCP §482.040; Witchell v. Korne, (1986) 179 Cal.App.3d 965, 975. 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.

Lion loaned Biolab $1,000,000 with an annual 5% interest rate, due and payable on August 30, 2024. Rhodes Decl., ¶2, Ex. A. Biolab made four loan payments to Lion: (a) $50,000 on June 24, 2024, (b) $50,000 on July 26, 2024; (c) $50,000 on August 26, 2024; and (d) $75,000 on February 14, 2025. Rhodes Decl., ¶5. Biolab has made no further payments on the Note. Rhodes Decl., ¶5. The $775,000 amount of principal owed is adequately shown. However, the interest owed is not presented in a payment history or other calculation and is disallowed.

Lion has presented evidence that Biolab is in default on the Note and owes $775,000 in principal plus interest.

Biolab does not argue otherwise. Rather, Biolab argues that litigation and other issues relating to the relationship between Biolab and Lion are ongoing. Wang was the CEO of Biolab who abruptly resigned on February 25, 2025. Rhodes is the owner of Lion. Wang caused Biolab to enter into other agreements with Rhodes' other businesses. These entities include Safecamp and Medflow. Opp. at 3-4.

Wang caused Biolab to enter into a contract with Medflow, the purpose of which was to assist in the billing process for Biolab. Biolab had to terminate the contract and suffered damages as a result. Due to the existence of these relationships between Rhodes’ entities, Biolab is prepared to dispute the amount due to Lion. Opp. at 3-4.

Biolab raises an issue of offset. A defendant may raise a claim of offset for any indebtedness of the plaintiff to the defendant raised in a cross-complaint or affirmative defense in an answer. CCP §483.015(b)(2), (3). The defendant’s offset claim under CCP section 483.015(b)(2) or (3) must be supported by sufficient evidence to prove a prima facie case of attachment in its own right. Lydig Construction, Inc. v. Martinez Steel, (2015) 234 Cal.App.4th 937; Pos-A-Traction, Inc. v. Kelly Springfield, (C.D. Cal. 1999) 112 F.Supp.2d 1178, 1183. Biolab has not met this standard by generally arguing questions about the relationship between Wang and Rhodes.

Biolab also argues that it is a viable clinical laboratory business and is not concealing its assets. A right to attach order may not issue unless it appears that great or irreparable injury will result to the plaintiff if the matter were heard on notice. CCP section 485.010 defines irreparable injury and Lion fails to establish irreparable injury. Opp. at 4-5.

Biolab is relying on the test for ex parte issuance of a right to attach order, which requires a showing of great or irreparable injury. CCP §485.220. Lion has proceeded through noticed application for a right to attach order which requires no such showing. CCP §484.090.

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). Lion seeks attachment for a proper purpose.

Defendant Biolab argues that Lion has posted no undertaking. Opp. at 6. None is required until the court grants a right to attach order

Biolab also requests the court set the undertaking at $77,130.10, or ten percent of the total amount sought to be attached, pursuant to CCP section 489.220(b). Opp. at 7. Biolab fails to present any significant evidence of offset and therefore fails to show damages that would justify a bond greater than the standard $10,000.

Lion’s application for a right to attach order is granted against Biolab in the principal amount of $775,000. Lion is ordered to submit a right to attach order in two court days or it will be deemed waived. No writ shall issue until Lion posts a $10,000 bond.

[1] Biolab untimely filed the declarations in support of its opposition on June 5, 2025, but the court has considered them.