Judge Kenneth J. Medel, Case Number: 37-2022-00019279-CU-BC-CTL, Date: 2024-04-05 Tentative Ruling

Judge: Kenneth J. Medel, Case: 37-2022-00019279-CU-BC-CTL, Date: 2024-04-05 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 04, 2024

04/05/2024 09:30:00 AM C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

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Civil - Unlimited Breach of Contract/Warranty Motion Hearing (Civil) 37-2022-00019279-CU-BC-CTL ALUMICRAFT LLC VS ALUMI CRAFT INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 02/26/2024

Cross-Defendant Alumicraft LLC's Motion to Set Aside the Writ of Attachment issued by this Court on or about 12/15/2023 is DENIED. Mr. Cooley, and Grindle L. Cooley sought a Writ of Attachment for the remainder of the sales price for the agreed upon purchase of Alumicraft Inc. After an extensive briefing and hearing, the Court GRANTED the motion. CA LLC moves for the Court to set aside the writ of attachment pursuant to CCP 485.240.

Procedurally, there is no authority authorizing a motion to set aside a right to attach order granted after a noticed motion. Code of Civil Procedure § 485.240, upon which the Motion relies, only applies to ex parte applications. The right to attach order issued on January 19, 2024, after a noticed motion, is not the proper subject of a § 485.240 motion. (Western Steel & Ship Repair, Inc. v. RMI, Inc. (1986) 176 Cal.App.3d 1108, 1112-17. Though it had the right to appeal, ALUMICRAFT LLC failed to file an appeal.

(Code Civ. Proc. § 904.1(a)(5).) Interpreting the motion as a motion for reconsideration, a court can only reconsider a motion when the reconsideration is based upon 'new or different facts, circumstances, or law.' A party filing a motion pursuant to Code of Civil Procedure § 1008 must submit an affidavit showing 'what new or different facts, circumstances, or law are claimed to be shown.' (Code Civ. Proc. § 1008(a).) ALUMICRAFT LLC does not demonstrate any new or different facts, circumstances, or law that would justify reconsideration. (See Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 690.) 'It has long been settled that the court will refuse to consider a new motion supported by substantially the same showing as the one denied.' (Glade v. Glade (1995) 38 Cal.App.4th 1411, 1457 ['The party seeking reconsideration must provide not just new evidence or different facts, but a satisfactory explanation for the failure to produce it at an earlier time.']) The Court finds that it properly issued the writ of attachment based on the information provided at the time of the application.

An order of attachment 'may be issued only in an action for a claim of money that is based upon an express or implied contract where the total amount of such claim is a fixed or 'readily ascertainable' amount not less than $500.' (Lydig Const., Inc. v. Martinez Steel Corp. (2015) 234 Cal. App. 4th 937, 943-44; CCP § 483.090.) The amount owing is fixed - $475,000.

The Cross-Complaint alleges in part that '36. Pursuant to the terms of the Purchase Agreement, on or around May 21, 2021, CrossDefendants made an initial payment to ALUMI CRAFT INC. in the amount of four hundred seventy-five thousand dollars ($475,000.00) 37. The terms of the Purchase Agreement require Cross-Defendants to pay an additional four hundred seventy-five thousand dollars ($475,000.00) within five years of the Initial Payment, with annual payments of ninety-five thousand dollars ($95,000) due on May 21 for the years 2022, 2023, 2024, 2025, and 2026' The claim is for money, based on a contract that is fixed or readily ascertainable and not less that $500.

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3095778 33 CASE NUMBER: CASE TITLE: ALUMICRAFT LLC VS ALUMI CRAFT INC [IMAGED] 37-2022-00019279-CU-BC-CTL (CCP 483.010) The burden is on the moving party to establish grounds for an order of attachment. (Loeb and Loeb v. Beverly Glen Music, Inc. (1985) 166 Cal. App. 3d 1110, 1116; See Legislative Committee Comment to 1974 Addition to Code of Civil procedure Section 484.090 [the 'plaintiff has the burden of proving (1) that his claim is one upon which an attachment may be issued, and (2) the probable validity of such claim.']) In order to establish the probable validity prong of the attachment statute, the applicant must show that it is more likely than not it will obtain a judgement against the defendant on its claim. (CCP § 481.190.) The Court finds that INC. has made a showing that it is more likely than not that INC. will prevail. There was a contract for the purchase that has not been paid. The Purchase Agreement is an installation contract requiring payments to INC. of $95,000 per year, totaling $475,000 over five years.

At the time of the hearing, LLC argued that because the Purchase Agreement is an installation contract requiring payments to INC. of $95,000 per year, totaling $475,000 over five years, INC. is seeking amendment of the Agreement. (Opp., at p. 7:22-26.) However, Inc. successfully makes the case that ALUMICRAFT LLC has consistently claimed in all pleadings that they should be absolved of all future payments to INC. under the Purchase Agreement and has repudiated all future payments.

All that is required for a writ of attachment to issue is that contract damages are capable of being made certain. The amount remaining of $475,000 is readily ascertainable.

At the time of the hearing, LLC also argued that an unfulfilled indemnification issue related to litigation in Oregon renders contractual damages uncertain such that a writ cannot issue. On the merits, Inc.

disputes whether indemnification is required. The Court ruled that whether indemnification is required or not is a separate issue from whether LLC has honored its underlying contractual obligations for the purchase.

As for defenses to the contract itself, LLC has not met its burden to show defenses to enforcement of the purchase sale contract.

The basis for the reconsideration is the 'lack of probable validity' based upon defenses to the contract.

However, in the previous ruling, the Court ruled that ALUMICRAFT LLC failed to meet its burden to 'show defenses to enforcement of the purchase sale contract.' (Exhibit 4, at p. 9.) (2) Defendant/Cross-Complainant ALUMI CRAFT INC.'s Motion to Compel Further Responses and Production of Documents is GRANTED, in part, and DENIED, in part.

Based on the Opposition, Alumicraft LLC has agreed to supplement specific requests and amend the prior privilege log. However, it is not clear what specific documents are being produced and what further responses are being provided. The Court orders further responses and production.

With respect to tax documents, the Court overrules the claim of financial privilege. California courts interpreted state taxation statutes as creating a statutory privilege against disclosing tax returns.

(Schnabel v. Superior Court (1993) 5 Cal.4th 704, 718–721; Webb v. Standard Oil Co. (1957) 49 Cal.2d 509, 513.) The purpose of the privilege is to encourage voluntary filing of tax returns and truthful reporting of income, and thus to facilitate tax collection. (Webb v. Standard Oil, supra, 49 Cal.2d at p. 513.) Weingarten v. Superior Ct., 102 Cal. App. 4th 268, 274–75 (2002).

But this statutory tax return privilege is not absolute. The privilege will not be upheld when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. (Schnabel v. Superior Court, supra, 5 Cal.4th at p. 721, 21 Cal.Rptr.2d 200, 854 P.2d 1117.) This latter exception is narrow and applies only 'when warranted by a legislatively declared public policy.' (Ibid.) A trial court has broad discretion in determining the applicability of a statutory privilege.

(National Football League Properties, Inc. v. Superior Court (1998) 65 Cal.App.4th 100, 106–107.) Waiver of a right occurs when a party's actions are 'so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.' (Crest Catering Co. v. Super. Ct.

(1965) 62 Cal.2d 274, 278.) Among other things, California courts have allowed discovery into tax returns for punitive damages analysis, in judgment debtor examinations, and to prevent fraud against creditors and the court. (Weingarten v. Super. Ct. (2002) 102 Cal.App.4th 266, 276 ['Weingarten']; Li v. Yan (2016) 247 Cal.App.4th 56, 66-68.) Trial courts have broad discretion in determining the applicability of a privilege. (Weingarten, supra, 102 Cal.App.4th at p. 274.) The Court agrees with Inc. that CA LLC put its financial condition and profits at issue by claiming the COOLEYS' actions following the sale diminished the value of the business by at least $475,000.00. (Ex.

D, at ¶¶ 16-17, 20, 28-36, 35-43, 53-54, 59-60, Prayer.) 'CA LLC cannot simultaneously assert financial Calendar No.: Event ID: TENTATIVE RULINGS

3095778 33 CASE NUMBER: CASE TITLE: ALUMICRAFT LLC VS ALUMI CRAFT INC [IMAGED] 37-2022-00019279-CU-BC-CTL privacy objections while also claiming lost profits or diminished value of the business. Reviewing the company tax returns may be the only reliable way to determine what profits were made since the sale, by whom, and, to what extent lost profits are attributable to Defendant.' CA LLC is agreeing to provide an amended privilege log. Other than the tax issue raised above, to the extent that any documents are withheld on any privilege, they are to be identified in a privilege log.

The Court DENIES sanctions. The Court agrees that there could have been more fruitful meet and confer efforts to avoid the hearing on this motion. It appears that the vast majority of the issues could have been resolved absent a hearing.

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