Judge Mary H. Strobel, Case 21STCV41814 2023-01-19 Tentative Ruling

Judge: Mary H. Strobel, Case: 21STCV41814, Date: 2023-01-19 Tentative Ruling

Case Number: 21STCV41814 Hearing Date: January 19, 2023 Dept: 82

St. John Armenian Apostolic Church Hollywood, CA v. Divine Food and Catering, LLC, Judge Mary Strobel Hearing: January 19, 2023

21STCV41814

Tentative Decision on Application for Writ of Attachment

Plaintiff St. John Armenian Apostolic Church Hollywood, California (“Plaintiff”) moves for a writ of attachment against Defendant Divine Food and Catering, LLC (“Defendant”) in the amount of $690,000. Plaintiff also seeks a temporary protective order (“TPO”).

Defendant’s Evidentiary Objections

Declaration of Manoug Markarian

(1) Overruled.

(2) Overruled.

(3) Overruled.

(4) Overruled.

Declaration of Barret T. Alexander

(5) Overruled.

(6) Sustained.

(7) Sustained.

(8) Sustained.

Reply Declaration of Barret T. Alexander

(1) Overruled.

(2) Sustained.

(3) Sustained.

(4) Overruled.

(5) Overruled.

(6) Sustained.

Relevant Procedural History

On November 12, 2021, Plaintiff filed a complaint against Defendant for breach of lease and account stated. On June 28, 2022, Plaintiff filed the operative first amended complaint for the same causes of action.

On November 15, 2022, Plaintiff filed the instant application for writ of attachment. On December 8, 2022, Defendant filed an opposition.

On December 12, 2022, Judge Chalfant recused himself, and the application for writ of attachment was reassigned to Dept. 82. The hearing was continued to January 19, 2023.

On January 11, 2023, Defendant filed and served a supplemental declaration of Gary Taglyan.

On January 17, 2023, Plaintiff filed a reply and more than 1,000 pages of reply evidence.

Summary of Applicable Law

“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.

“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.) “In determining the probable validity of a claim where the defendant makes an appearance, the court must consider the relative merits of the positions of the respective parties and make a determination of the probable outcome of the litigation.” (See Loeb & Loeb v. Beverly Glen Music, Inc. (1985) 166 Cal.App.3d 1110, 1120.)

“The Attachment Law statutes are subject to strict construction.” (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.)

“The court’s determinations [for an application for writ of attachment] shall have no effect on the determination of any issues in the action other than issues relevant to proceedings [for attachment]. The court’s determinations under this chapter shall not be given in evidence nor referred to at the trial of any such action.” (CCP § 484.100.)

Analysis

1. Probable Validity of Plaintiff’s Claim

The application is based on Plaintiff’s cause of action for breach of lease. To establish a claim for breach of contract, a plaintiff must generally prove: (1) existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach of the contract; and (4) damages incurred by plaintiff as a result of the breach. (Durell v. Sharp Healthcare, (2010) 183 Cal.App.4th 1350, 1367.)

Factual Background

Plaintiff is a church that owns real property located at 1219 North Vine Street, Los Angeles, CA (“Property”). Since 2009, Defendant has operated a business from the banquet hall at the Property. In October 2018, Plaintiff filed an unlawful detainer action to oust Defendant from the Property, and asserted the tenancy was subject to an oral month-to-month lease. Defendant asserted the tenancy was subject to a written lease, which Plaintiff denied. After hearing testimony and taking other evidence, the trial court (Judge Randolph Hammock) found that the parties executed a written lease in 2015, which was backdated to 2009 (“2009 Lease”). The 2009 Lease extended Defendant’s lease term to 2039 and increased the monthly rent to $15,000 a month. After the trial court entered judgment for Defendant, Plaintiff appealed. The Court of Appeal affirmed the judgment in July 2021. (See Alexander Decl. Exh. E; Gary Taglyan Decl. ¶¶ 15-16.) Plaintiff now seeks to enforce the 2009 Lease and attach $690,000 in rent that allegedly is unpaid for the period of November 12, 2017, to the present.

To proves is damages, Plaintiff relies primarily on the declaration of Manoug Markarian, archpriest of the church. Markarian declares: “Defendant has failed to timely pay rent as required by the 2009 Lease, and has not paid any rent from June 1, 2009 to May 31, 2021. [¶] To date, Defendant has paid a total of $210,000 for the months of

June 1, 2021 through July 31, 2022. Defendant has not paid any other arrearages or rents due under the 2009 Lease.” (Markarian Decl. ¶¶ 7-8.) The court overrules Defendant’s objections to this evidence.

However, Attorney Alexander fails to show personal knowledge to authenticate “the only two rent checks Defendant has issued pursuant to the 2009 Lease,” and the December 3, 2021, offer of compromise from attorney Yu cannot be submitted to prove Defendant’s liability on the Lease. (See Barret Decl. ¶¶ 8, 11; Evid. Code § 1152.) The court sustains Plaintiff’s evidentiary objections to that evidence.

In opposition, Defendant submits evidence supporting a claim that it has paid all rent due under the 2009 Lease. (See Gary Taglyan Decl. ¶ 22.) Specifically, in his sworn declaration, Gary Taglyan declares: “On behalf of Divine, I paid all rent due under the 2007 Lease in full. I personally gave these rent checks to Archpriest Markarian, who deposited them into an account in the Church’s name at Citibank (the ‘Citibank Account)…. Also, I, on behalf of Divine, paid all rent due under the 2009 Lease from March 2015 when the lease was signed until October 2018 when the UD Action was filed. Archpriest Markarian deposited these checks into the Citibank Account until late 2016 or early 2017. Thereafter, he gave me a deposit stamp and instructed me to stamp the checks and deposit them myself into the Citibank Account. I followed his instructions and deposited Divine’s rent check’s into the Citibank Account until October 2018 when the UD Action was filed…. Divine is a catering company and it experienced high variance in its cash flow during the 2014 – 2018 time period. As a result, the amount that Divine was able to pay to the Church each month for rent fluctuated. Some months Divine would pay more than what was required; other months, it would be less. The overall amount paid by Divine to the Church was equal to or greater than what was owed under the 2007 and 2009 Leases.” (Id. ¶¶ 7-8.)

Defendant also submits evidence of payments made in 2022, including some it characterizes as back rent. (Id. ¶¶ 17-21.) Gary Taglyan explains: “Because the appeal kept alive the UD Action on the merits, Divine did not make any rent payments to the Church during the pendency of the appeal…. Following the denial of its appeal, the Church waited a few months and then filed its Complaint against Divine in the instant action on November 12, 2021, seeking payment of all rent allegedly due.” (Id. ¶¶ 16-17.)

Gary Taglyan describes all rent payments made from 2017 to 2022; attaches check images (front and back) of all checks issued by Defendant from 2017 to present, and which have endorsement stamps on the back showing they were deposited in Plaintiff’s name; and submits Defendant’s redacted tax returns that show write-offs for payment of rent. (Id. ¶¶ 10-21, Exh. C-L; Suppl. Gary Taglyan Decl. ¶ 2, Exh. M.) In all, Defendant submits evidence of payment of $1,080,000 from 2017 to December 2022. Defendant’s evidence shows it did not pay $526,000 in rent, including rent due from November 2018, until December 6, 2022, after the application for writ of attachment was filed. (Gary Taglyan Decl. ¶ 21.) Defendant also did not make other substantial payments of rent due for June 2021-May 2022 until June 6, 2022, well after the Court of

Appeal affirmed the judgment in the UD action in July 2021 and after the remittitur was filed in October 2021. (Id. ¶ 19.)

In reply, Plaintiff submits the declaration of Barret Alexander (Plaintiff’s counsel) and more than 1,000 pages of evidence. Defendant objects that the new reply evidence is improper. “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) For an attachment proceeding in which the reply is filed just two days before the hearing, it is questionable whether Plaintiff has made a showing of good cause for such a voluminous amount of reply evidence. It is clear from the opposition and reply that the business and landlord-tenant relationship between Plaintiff and Defendant is substantially more complex than that reflected in Plaintiff’s moving papers. Arguably, Plaintiff should have presented all relevant evidence about Defendant’s alleged non-payment of rent with the moving papers. Nonetheless, Plaintiff’s new evidence responds to evidence first submitted in opposition. The court overrules Defendant’s objection that the new evidence was improperly submitted in reply. The court has, however, sustained objections to some of the evidence on specific evidentiary bases. Where relevant, Plaintiff’s reply evidence is discussed below.

Existence of Contract and Plaintiff’s Performance

Based on Judge Hammock’s findings in the UD action concerning the authenticity of the 2009 Lease, and the undisputed evidence that Defendant remains in possession of the Property, Plaintiff has shown the existence of a lease, the terms therefore, and its performance.

Breach and Damages

Defendant argues that Plaintiff’s evidence of damages is “conclusory” and insufficient to prove its claim under the probable validity standard. (Oppo. 8.) To obtain a pre-judgment writ of attachment, Plaintiff must submit a declaration that sets forth “with particularity” the facts that would support a judgment in favor of Plaintiff on its contract claim. (CCP §§ 482.040; 484.030.) While Markarian’s declaration is terse, Defendant also concedes in opposition that it did not pay $526,000 in rent until after the application was filed. Also, the relevant lease terms appear straight forward – Defendant owed $15,000 a month. In that context, on an initial showing without considering Defendant’s evidence, the court finds Markarian’s moving declaration to be sufficient to support a claim under the probable validity standard.

The court has considered Defendant’s contention that Markarian is a “proven liar” and has “zero credibility.” (Oppo. 1.) In the UD action Judge Hammock strongly rejected Markarian’s testimony that he never signed the 2009 Lease; found “beyond a reasonable doubt” that Markarian executed the Lease, that the evidence in favor of Defendant was “overwhelming”; and awarded sanctions against Plaintiff for denying the authenticity of the 2009 Lease in responses to requests for admissions. (See Alexander

Decl. Exh. E; Oppo. 6-7; and Yu Decl. Exh. H at 134.) Inherent in Judge Hammock’s decision was a determination that Markarian’s testimony, in that case, lacked credibility. However, those rulings about the authenticity of the lease and Markarian’s credibility with respect to that issue are not directly relevant in this action, which concerns Defendant’s alleged breach and Plaintiff’s damages. Furthermore, Defendant’s payment of substantial past due rent in December 2022 corroborates Markarian’s declaration.

The application sought attachment of $690,000 representing past due rent. (Appl. ¶ 8.) Plaintiff limited its request for attachment to the period of November 12, 2017, to the present. (Mot. 4.) Based on the opposition and reply, it is undisputed that Defendant has paid $526,000 of the $690,000 in rent that Plaintiff claims is due. (Reply 3:23-26; Gary Taglyan ¶¶ 10-21, Exh. C-L; Suppl. Gary Taglyan Decl. ¶ 2, Exh. M.) Defendant contends that the $526,000 represents payment of rent for December 2018-May 2021 and August 2022-December 2022. (Gary Taglyan Decl. ¶ 21.) Plaintiff concedes payment of $210,000 in rent for June 1, 2021 through July 31, 2022. (Markarian Decl. ¶ 8.) Given this evidence, there remains a claim for $164,000 for rent owed prior to December 2018. (Reply 3.)

“In determining the probable validity of a claim where the defendant makes an appearance, the court must consider the relative merits of the positions of the respective parties and make a determination of the probable outcome of the litigation.” (See Loeb & Loeb v. Beverly Glen Music, Inc. (1985) 166 Cal.App.3d 1110, 1120.) Defendant has opposed the application with detailed evidence of payments, as summarized above. (Gary Taglyan ¶¶ 10-21, Exh. C-L; Suppl. Gary Taglyan Decl. ¶ 2, Exh. M.) In essence, Defendant claims it paid rent checks either directly to Father Markarian, or with his approval and use of Plaintiff’s deposit stamp, directly into the CitiBank account. In reply, Plaintiff argues that the checks deposited into the Citibank account were not “rent,” and the account was effectively controlled by Defendant. Plaintiff argues Defendant used money from that account for its own benefit. Finally, Plaintiff contends the 2015-2018 checks Defendant claim constitute rent do not correspond to the $15,000/month in rent that was due. (Reply 3-10.)

Citing testimony of Petros Taglyan from the UD action, Plaintiff presents evidence the Citibank account was used for construction costs related to the banquet hall and other upgrades. (Reply 7.) Plaintiff also argues that Defendant exercised exclusive control over the Citibank account and that priest Markarian never deposited funds into the account. Plaintiff asserts that Petros Tagylan admitted that “all of the money” in the account belonged to him. (Reply 8-9, citing Reply Alexander Decl. Exh. A.) However, Plaintiff does not provide full context for Petros Tagylan’s testimony in the UD action about the complex nature of the business relationship between the church, Petros Tagylan, and Defendant.

For example, Plaintiff partially quotes the UD transcript to argue that Petros Tagylan claimed all of the money in the Citibank account was his. (Reply 9, citing 129 of transcript.) However, in context, Petros Tagylan testified that before Defendant made

a profit in 2014, all of the money “put in” the account came from him. He testified that that in “2014, when Divine start making money, he start paying the rent. The rent was going into that account.” (Reply Alexander Decl. Exh. A at 130 [bold italics added].) There is a difference between Petros Tagylan being the source of all funds paid into the Citibank account until 2014, and the legal or beneficial owner of the account.

Significantly, Plaintiff did not present a declaration of Father Markarian or other evidence with its reply to rebut the evidence that the Citibank account was legally in the name of the church or that archpriest Markarian gave Plaintiff a deposit stamp for the account. (Gary Taglyan Decl. ¶ 8.) Plaintiff does not explain why Markarian would give Plaintiff a deposit stamp, or why the account would be in the church’s name, if the church did not receive some benefit from the account. Nor does Plaintiff cite evidence that the church ever objected to Defendant’s alleged use or control of the account. A reasonable inference may be made that the church and Markarian authorized the use of the account by Petros Taglyan and Defendant.

Plaintiff also argues that the checks presented by Defendant were not for the amount of rent, $15,000 and did not contain the word “rent” on the memo line. Plaintiff has not disputed that Defendant deposited checks totaling $220,000 in 2017 and $124,000 in 2018, as discussed in Gary Taglyan’s declaration. (Id. ¶¶ 10-12, Exh. C, E.) Many of the payments were for $15,000 a month. (Id. Exh. C and E.) While some payments were for more or less than $15,000, Gary Taglyan gave some explanation of the fluctuations. Specifically, he declared that “Divine is a catering company and it experienced high variance in its cash flow during the 2014 – 2018 time period. As a result, the amount that Divine was able to pay to the Church each month for rent fluctuated. Some months Divine would pay more than what was required; other months, it would be less. The overall amount paid by Divine to the Church was equal to or greater than what was owed under the 2007 and 2009 Leases.” (Id. ¶¶ 7-8.)

Plaintiff argues that Defendant’s rent payments for 2017 and 2018 are not consistent with its tax returns. (Reply 2.) The 2017 tax return shows rent of $220,000, which is the amount Defendant states that it paid. (Gary Taglyan Decl. ¶¶ 10-11.) The 2018 tax return shows rent of $210,926, which is more than the $124,000 Defendant claims it paid the church in rent. (Id. ¶¶ 12-13.) While the additional rent claimed in the 2018 tax return is not explained by Defendant, the tax returns are consistent with Defendant’s evidence of payment of total rent of at least $344,000 for 2017 and 2018, more than Plaintiff seeks in this application. On the whole, neither Plaintiff nor Defendant’s position or evidence on this issue is particularly persuasive.

Plaintiff argues that overpayment by Defendant support its claim the checks do not constitute rent payments. (Reply 4-6.) While a plausible argument, it is not sufficiently supported by competent evidence in the record. For example, Plaintiff asserts that “for 2016, Defendant produced 14 checks totaling $273,000 resulting in a steep overpayment of nearly $100,000.” (Reply 6:7-8.) Plaintiff does not cite to the record and the court has not found such evidence of 14 checks from 2016. Plaintiff also

states that “in a verified second amended response, Defendant identified 40 checks from October 1, 2015 – September 21, 2018 as well as two checks issued in June and July 2022.” (Reply 5.) Except for several checks in the amount of $15,000 in 2015 (see Exhibit F at pp. 1114-1118 of Alexander reply decl.), the court has not found this evidence in the record. The payments of $15,000/month are consistent with the 2009 Lease.

Plaintiff provides an “analysis” of Citibank spending between 2015-2018 and argues that “$893,246.58 was spent on running the catering business for the exclusive benefit of Defendant, Gary Taglyan and Petros Taglyan.” (Reply 10.) This evidence is hearsay, and Plaintiff does not show an exception. Even if admitted, given the complicated business relationship between Petros Taglyan, the church, and Defendant, payments from the Citibank account, in themselves, do not prove a breach of the lease. For instance, if those payments were expressly or impliedly authorized by the church, then they would not be evidence of non-payment of rent.

Based on the above, the court views the evidence whether $164,000 in rent remains due as relatively close. Significantly, Defendant has submitted some evidence of payment of all rent for 2017-2022; and Defendant’s evidence is not inconsistent with the complex nature of the business relationship at issue between Petros Taglyan, archpriest Markarian, the church, and Divine. On the other hand, Plaintiff has presented some evidence and argument that the checks Defendant claims were for rent were not in fact rent payments. Plaintiff has the burden to show the probable validity of its claim in this application for writ of attachment. Plaintiff did not sufficiently address the complex business relationship between the parties or sufficiently rebut Defendant’s evidence with competent evidence in reply.

Plaintiff may well be able to develop its argument in future proceedings that some or none of the rent was paid. However, as the evidence was presented for this motion, the court does not find Plaintiff’s evidence to preponderate. Plaintiff has not met its burden to show the probable validity of its claim for contract damages in a specific amount.

2. Basis of Attachment

“[A]n 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) exclusive of costs, interest, and attorney's fees.” (CCP § 483.010(a).) “An attachment may not be issued on a claim which is secured by any interest in real property arising from agreement ….” (CCP § 483.010(b).)

Here, Plaintiff’s application for writ of attachment is based on a lease where the total amount allegedly due is in excess of $500. The lease is not secured by real property. The lease provides a standard under which Plaintiff’s damages may be calculated and ascertained with proof.

3. Purpose and Amount of Attachment

Code of Civil Procedure section 484.090 states that the Court shall issue a right to attach order if “the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based . . . [and] the amount to be secured by the attachment is greater than zero.”

Plaintiff declares that attachment is not sought for a purpose other than the recovery on Plaintiff’s claim. (Appl. ¶ 4.) The amount to be secured is greater than zero.

4. Reduction of Amount to be Secured Based on Offset Claims or Affirmative Defenses

Defendant does not assert that attachment should be reduced by any claims for offset or affirmative defenses. (CCP § 483.015(b).)

5. Subject Property

Code of Civil Procedure section 487.010(a) provides that “[w]here the defendant is a corporation, all corporate property for which a method of levy is provided” is subject to attachment. Thus, the request for attachment of all of Defendant’s property is appropriate. (Application ¶ 9.)

6. Exemptions

Defendant does not claim any exemptions.

7. Undertaking

Code of Civil Procedure section 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment. Code of Civil Procedure section 489.220 provides, with exceptions, for an undertaking in the amount of $10,000. Since the court denies the application, the court need not determine the appropriate amount of undertaking.

8. Temporary Protective Order

To obtain a TPO, Plaintiff must show that it will suffer great or irreparable injury if the TPO is not issued. (CCP § 486.020(d); see also § 485.010.) Plaintiff must also prove the elements of attachment. (See CCP § 486.020, § 485.220.) Plaintiff does not show that it will suffer great or irreparable injury if the TPO is not issued. Also, Plaintiff does not prove all elements of attachment, as analyzed above. The request for a TPO is denied.

Conclusion. The application for a writ of attachment is DENIED. The request for a TPO is DENIED.