Judge: Jon R. Takasugi, Case: 19STCV12595, Date: 2022-10-11 Tentative Ruling

Case Number: 19STCV12595    Hearing Date: October 11, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

            Plaintiff’s application for a writ of attachment is GRANTED. 

            On 5/4/2018, Plaintiff California Department of Education (Plaintiff) filed suit against Golden Day Schools, Inc. and Clark Parker, alleging breach of contract and declaratory judgment.

            Now, Plaintiff applies for (1) a right to attach order and (2) an order for issuance of writ of attachment.

Discussion

            Plaintiff seeks a pre-judgment writ of attachment against Clark Parker and the Parkers’ living trust to ensure that it can collect its debt.

“Upon the filing of the complaint or at any time thereafter, the plaintiff may apply pursuant to this article for a right to attach order and a writ of attachment by filing an application for the order and writ with the court in which the action is brought.”  (CCP § 484.010.) 

The application shall be executed under oath and must include: (1) a statement showing that the attachment is sought to secure the recovery on a claim upon which an attachment may be issued; (2) a statement of the amount to be secured by the attachment; (3) a statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based; (4) a statement that the applicant has no information or belief that the claim is discharged or that the prosecution of the action is stayed in a proceeding under the Bankruptcy Act (11 U.S.C. section 101 et seq.); and (5) a description of the property to be attached under the writ of attachment and a statement that the plaintiff is informed and believes that such property is subject to attachment.  (CCP § 484.020.)  

“The application [for a writ of attachment] shall 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.)   

The Court shall issue a right to attach order if the Court finds all of the following: 

(1) The claim upon which the attachment is based is one upon which an attachment may be issued. 

(2) The plaintiff has established the probable validity of the claim upon which the attachment is based. 

(3) The attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based. 

(4) The amount to be secured by the attachment is greater than zero. 

CCP § 484.090. 

I.                   Type of Claim

Plaintiff argues that its claim is the type of claim for which attachment may issue.

            To be a type of claim for which attachment may issue, the claim must be (i) for money, (ii) based upon a contract, and (iii) for a fixed or readily ascertainable amount totaling not less than five hundred dollars. (§ 483.010, subd. (a).) The claim(s) must be unsecured. (§ 483.010, subd. (b).)

The claim is for a fixed or readily ascertainable amount of money and is based on contracts. The Department seeks money damages based on the NSP Contracts and the CSP Contracts, as set forth the Pierson Declaration. In addition, the claims are unsecured, as set forth in the application for writ of attachment.

Plaintiff further argue that the fact that the Department is asserting the amounts under the NSP Contracts and the CSP Contracts under an alter ego theory does not matter. If the “gravamen of the action . . . is . . . for the recovery of ... money upon a contract ... an attachment will issue regardless . . . of equitable powers ... incidentally involved.” (Bennet v. Superior Ct. (1933) 218 Cal. 153, 161.) California law allows writs of attachment to issue against an entity or individual who is not a party to a contract if that entity or individual is the alter ego of the party whose property is subject to attachment. (See, e.g., Meizlisch v. San Francisco Wool Sorting & Scouring Co. (1931) 213 Cal. 668, 670 [court could attach alter ego corporation’s assets]; Paul v. Palm Springs Homes, Inc. (1961) 192 Cal.App.2d 858, 862-863 [court issued pre-judgment attachment against corporation and its alter egos for contract debt].)

Finally, Plaintiff argues that the claim arises from the Parkers’ “conduct of a trade, business or profession.” The courts have interpreted the phrase “conduct of a trade, business or profession,” as used in section 483.010 of the Code of Civil Procedure, to include any activity carried on “for the purpose of livelihood or profit on a continuing basis.” (Security Pac. Nat’l Bank v. Matek (1985) 175 Cal.App.3d 1071, 1076.)

In opposition, Defendants argue that while the contracts “generally, although not precisely, specify the amount to be advanced to Golden Day by the CDE, they do not specify the particular amount, if any, to be recovered by the CDE in the event that Golden Day breaches the contract. That amount, if any, will only be determined by the verdict of the jury after a trial in phase two. The jury will need to resolve sharply disputed issues of fact, including but not limited to, how many children were actually cared for by Golden Day under each contract. They will also need to resolve mixed issues of law and fact, including but not limited to, how many of those children qualified to meet the contractual minimum number of children Golden Day was obligated to care for under each contract.” (Opp., 3: 4-13.) Defendants also contend that this claim does not arise from the Parkers’ trade, business, or profession, because Golden Day was a charity.

After consideration, the Court finds that the claim here is for a readily ascertainable amount of money and that the claim arises from the Parkers’ trade, business, or profession.

By Defendants’ own admission, the "'fixed or readily ascertainable amount requirement embodies a notice principle, that the defendant in the pending case and any other creditors are given notice of the maximum amount of the property so affected." It also ensures that the attachment request may be fairly and accurately determined in summary proceedings before trial.” (Royal v. Lu (2022) 81 Cal.App.5th 350-351.) Here, while the OAH proceedings are not preclusive as to whether or not Defendants, in fact, owe the disputed funds, the OAH findings are still admissible in support of Plaintiff’s contention that Defendant owe a specific amount of money. The OAH findings set forth specific and precise calculations of the amount allegedly owed. As such, Defendants and any creditors have notice of the maximum amount of property so affected should Plaintiff prevail on its claim.  There is nothing in the case cited by Plaintiff—Kemp Bros. Construction v. Titan Electric Corp. (2007) 146 Cal.App.4th 1474—which precludes this conclusion.

Moreover, given that the Parkers used Golden Day to carry on a business in which they were actively involved, the Court declines to conclude that this claim arises from the Parkers’ involvement in a charity, rather than the conduct of a trade, business, or profession. 

II.               Probable Validity

Plaintiff argues that its claim has “probable validity” of recovering on its claim.

“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 § 481.190.)

Here, Plaintiff argues:

The Declaration of Tami Pierson makes clear that the Department’s claims for breach of the CSP Contracts and the NSP Contracts, at the very least, have probable validity. Those contracts provide that Golden Day was only entitled to compensation for actual, necessary, and reasonable expenses. (Pierson Decl. ¶ 9.) If the reimbursed expenses are not actual, necessary, and reasonable, the Department “shall recoup” the amounts. (Ibid.) Those contracts provided an appeal process to Golden Day before the OAH to determine the amount of the expenses that were actual, necessary, and reasonable. (Ibid.) That process has run its course. The OAH has determined that Golden Day owes the Department millions of dollars. (Pierson Decl. ¶ 30; Exhibit 19.) Golden Day has not paid any of those amounts, a clear breach of the contracts. (Pierson Decl. ¶ 34.) At the very least, the Department’s claims have probable validity.

            (Memo. Of P&A, 19: 18-27.)

In opposition, Defendants argue that Plaintiff’s argument is misplaced because it relies on the OAH decision which do not have preclusive effect. However, the fact that the OAH decision does not have preclusive effect does not meant that it is inadmissible evidence in support of Plaintiff’s contention that Defendants owe Plaintiff money. Such evidence is admissible, and can speak to whether or not Plaintiff’s claims have probable validity, even though it does not have a preclusive effect on the question of whether or not, in fact, Defendants owe that money. Thus, unlike in Kemp, supra, 146 Cal.App.4th at p. 1481-1482, wherein the Court issued an attachment based “solely on an incorrect theory that Titan was collaterally estopped from challenging the adequacy of Kemp’s showing,” the Court’s conclusion here that Plaintiff’s claim has probable validity” is based on an assessment of the sufficiency of Defendants’ evidence weighed against Plaintiff’s evidence, of which the OAH decision is just one part.

III.            Purpose

Plaintiff argues that its attachment is sought for the proper purpose.

In order to receive an attachment order, the pre-judgment attachment must not be sought for a purpose other than recovery. (§ 484.090, subd. (a).) Here, the application for writ of attachment makes clear that “Attachment is not sought for a purpose other than the recovery on a claim upon which the attachment is based.” (Application, ¶ 4.)

IV.             Amount

In order to receive an attachment order, the attachment amount must be greater than zero. (§ 484.090, subd. (a).)

Here, the application for writ of attachment makes clear that the attachment is for more than $0. (Application, ¶ 8.)

            Based on the foregoing, Plaintiff’s application for a writ of attachment is granted. 

It is so ordered.

Dated:  October    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

            Due to Covid-19, the court is strongly discouraging in-person appearances.  Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk.  The court encourages the parties wishing to argue to appear via L.A. Court Connect.  For more information, please contact the court clerk at (213) 633-0517.  Your understanding during these difficult times is appreciated.