Judge: Mary H. Strobel, Case: 21STCV46838, Date: 2022-10-18 Tentative Ruling

Case Number: 21STCV46838    Hearing Date: October 18, 2022    Dept: 82

            Plaintiff KIR Torrance, L.P. (“Plaintiff”) moves for writs of attachment against Defendants Liem S. Quach, Oanh K. Le, Tuyyetoanh T. Quach, Anthony Tran, and Allbo Corporation (“Defendants”) in the amount of $424,113.63.

Relevant Procedural History

            On December 23, 2021, Plaintiff filed a complaint against Defendants for breach of lease.

            On February 24, 2022, all Defendants answered the complaint. 

            On September 1, 2022, Plaintiff filed and served its applications for writ of attachment on counsel for all Defendants.

            On October 11, 2022, Defendant Allbo Corporation (“Allbo”) filed and served an opposition to the application for writ of attachment and notice of opposition.  No opposition has been received from the Individual Defendants Liem S. Quach, Oanh K. Le, Tuyyetoanh T. Quach, and Anthony Tran (“Individual Defendants”), who are apparently represented by the same counsel as Allbo. 

            On October 14, 2022, Plaintiff filed a reply. 

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.) 

Analysis 

1.    Probably 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 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.) 

Plaintiff’s Evidence

Plaintiff submits evidence of the following.  On March 29, 2013, Plaintiff leased to the Individual Defendants a specified portion of premises located at 19800 Hawthorne Blvd., Suite 238, Torrance CA (“Premises”) under a written lease with a term of approximately 10 years (“Lease”).  (Vega Decl. ¶ 3, Exh. 1.)  On or about October 9, 2013, the Individual Defendants assigned their rights, title, and interest to the Premises under the Lease to Allbo (“Assignment”).  (Id. ¶¶ 4-5, Exh. 2.)  Pursuant to the terms of the Assignment, Individual Defendants were not released or relieved from their obligations under the Lease.  (Ibid.)  Defendants entered possession of the Premises and began operating a “Massage Envy” business.  (Id. ¶ 6.)  Plaintiff has performed all of its obligations under the Lease.  (Id. ¶ 10.)

Commencing in September 2019, Defendants failed to pay rent and related charges due under the Lease.  (Id. ¶ 7.)  In or about February 2021, Defendants vacated the Premises, resulting in termination of the Lease pursuant to Civil Code section 1951.2(a).  (Id. ¶ 9.)  The amount due and unpaid from Defendants to Plaintiff as of the date Defendant Allbo vacated the Premises, or the time of termination, was the sum of no less than $113,309.54.  After application and credit of the security deposit ($10,062.11), this amount was reduced to $103,247.43. (Id. ¶¶ 9-17, Exh. 4.)  In opposition, Defendant has not disputed this calculation of unpaid rent through February 2021. 

In the event of the lessee’s default, the Lease also authorizes Plaintiff to recover as damages (1) the amount of unpaid rent that would have been earned after termination until the time of the award, less the rental loss that the tenant proves could have been reasonably avoided; and (2) the amount of unpaid rent that would have been earned for the balance of the term after the time of the award, less the rental loss that the tenant proves could have been reasonably avoided.  (Id. Exh. 1, ¶ 18.)  Plaintiff submits detailed calculations showing that these amounts total $222,743.20 and $214,793.48.  (Id. ¶¶ 9-17, Exh. 4.) In opposition, Defendant has not disputed this calculation of unpaid rent through the balance of the Lease term. 

Plaintiff acknowledges that it leased the Premises to a new lessor with a rent commencement date of November 2, 2022, and that the gross monthly rent of the replacement lease will total $15,087.92. (Mot. 4; Vega Decl. ¶¶ 15-16.)  The term of the Lease with Defendants would have ended on May 31, 2024.  (Vega Decl. ¶ 13.)  There are 19 months between November 2, 2022, and May 31, 2024.  (Id. ¶ 17.E.)  Accordingly, at present time, Plaintiff admits that it can reasonably avoid $286,670.48 in unpaid rent under the Lease (19 x $15,087.92.).  (See Reply 7.)  In opposition, Defendant has not submitted any evidence that Plaintiff could have reasonably re-let the Premises earlier or for a greater amount of rent. 

Plaintiff contends that it “incurred $150,000.00 tenant improvements, broker fees, and other lease acquisition costs in connection with the replacement tenant.”  (Vega Decl. ¶ 16.)  Plaintiff seeks to reduce the mitigated rent it will receive from the new tenant by that amount.  (Id. ¶ 17.E.)  Plaintiff does not specify the lease provision under which Plaintiff requests such damages or reduction of the mitigated rent.  In effect, Plaintiff contends that it is entitled to $150,000 in consequential damages, which reduce the offset of unpaid rent to which Defendant is entitled under paragraph 18 of the Lease.  Assuming arguendo paragraph 18 of the Lease authorizes recovery of such consequential damages, Plaintiff has not submitted sufficiently detailed evidence in support of this $150,000 claim.  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.)  Plaintiff does not quantity the amount of tenant improvement costs, broker fees, or “other lease acquisition costs.”  Nor does Plaintiff submit receipts or billing records in support.  The evidence for this claim for damages is insufficient. 

Based on the foregoing, Plaintiff shows a probably valid claim for principal damages against all Defendants in the amount of $254,113.63 ($103,247.43 + $222,743.20 + $214,793.48 - $286,670.48).  Plaintiff also reasonable estimates attorney’s fees and costs, pursuant to a contractual provision, in the amount of $20,000.  (See Kachman Decl. ¶¶ 2-4.)

Impossibility, Frustration of Purpose, and Related Defenses

In opposition, Allbo contends that it is excused from all unpaid rent that accrued “following” the Covid-19 pandemic.  Allbo relies on doctrines of impossibility and frustration of purpose, as well as related statutory provisions.  (Oppo. 3-7, citing Indus. Dev. & Land Co. v. Goldschmidt (1922) 56 Cal. App. 507, 509 and Civil Code §§ 1511(2) and 1997.040.)

“‘A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.’ [Citation.]’ This does not mean that a party can avoid performance simply because it is more costly than anticipated or results in a loss. Impracticability does not require literal impossibility but applies when performance would require excessive and unreasonable expense.  Similarly, where performance remains possible, but the reason the parties entered the agreement has been frustrated by a supervening circumstance that was not anticipated, such that the value of performance by the party standing on the contract is substantially destroyed, the doctrine of commercial frustration applies to excuse performance.”  (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1336; see also Civil Code § 1511(2).) 

Thus, as an example of commercial frustration, “a lease restrictive in its terms as to the business permitted to be done upon the premises becomes inoperative upon the event that the law shall prohibit the doing of that business.”  (Indus. Dev. & Land Co. v. Goldschmidt (1922) 56 Cal. App. 507, 509 [holding that a lease that provided for exclusive purpose of conducting a winery or retail liquor business became inoperative as a result of national prohibition law]; see also Civil Code § 1997.040 and Miller & Starr, Cal. Real Estate 4th, § 34:166.) 

Here, to prove the defense for impossibility or frustration of purpose, Defendant submits the declaration of Tina Quach, an officer of Allbo who is “very familiar with the massage business industry in general.”  Quach declares, in relevant part, as follows:

2.    …On March 4, 2020 Los Angeles County declared a state of emergency due to the COVID-19 pandemic. (the “Pandemic”). This hit the massage industry extremely hard. Allbo was hit especially hard even before the government shutdowns that followed, simply because people stopped patronizing places that required personal or close contact when the government began issuing advisories telling people to shelter in place and avoid close contact with other people. The eventual shutdowns that prohibited massage businesses from operating at all was the death knell for Allbo’s business. The business simply did not have the assets to continue operating.

3.    Unlike some businesses that could operate at a reduced scale or offer alternatives such as restaurants with take-out service, or retail businesses deemed essential, the massage industry was completely shut down for a significant period of time with no ability to operate whatsoever. During this time, we tried to basically give our franchise away for free but for obvious reasons were unable to find anyone willing to take over a business that was not even allowed to operate.

Defendant also points out that the Lease states that the Premises are to be used exclusively for “[t]he operation of a typical Massage Envy spa offering neuromuscular and therapeutic massages, membership sales, ancillary facial services and incidental retail sales of related products and for no other use or purpose.”  (Oppo. 4; see Vega Decl. Exh. 1, ¶ 1.M and Lease Rider A, Art. 8.) 

“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.)

Here, Defendant has not provided sufficient detail about the dates during which its business was impacted by the Covid-19 pandemic, or specific evidence that the Covid-19 pandemic made it impossible for Defendant to perform the Lease, as opposed to less profitable.  Defendant has not disputed that it stopped paying rent in September 2019, before the Covid-19 pandemic, which raises questions about whether the pandemic actually caused Defendant to fail to pay rent.  Quach declares that Los Angeles County declared a state of emergency in March 2020 and that “[t]he eventual shutdowns that prohibited massage businesses from operating at all was the death knell for Allbo’s business.”  (Quach Decl. ¶ 2.)  This evidence is too conclusory to support a defense in Defendant’s favor for unpaid rent starting March 2020. Defendant has not provided information regarding the time period in which the massage business was prohibited entirely from operating; or supported its theory that a temporary shutdown excuses all future rent.   Defendant is not precluded from further developing this defense in subsequent proceedings. 

Defendant also contends that “the parties did not expressly agree to the contrary (i.e., to pay rent) as required under section 1511(2).”  (Oppo. 6.)  Article 23 of the Lease, concerning delays caused by Act of God and similar causes, states that “[t]he provisions of this Article shall not be applicable at all to excuse or permit delay of the time for Tenant to pay Rent or other money.”  (Ibid.)  Accordingly, Article 23 provides no defense or excuse to Defendants’ obligation to pay rent. 

In reply, Plaintiff argues that Article 23 “make[s] clear that Defendants assumed the risk of a frustrating event as it pertains to the payment of rent.”  (Reply 8.)  While Article 23 does not support Defendant’s opposition to the attachment, the court otherwise does not decide Plaintiff’s argument because it was first raised in reply and is unnecessary to the court’s ruling.

Based on the foregoing, Plaintiff shows a probably valid claim for damages against all Defendants in the amount of $274,113.63 ($254,113.63 + $20,000.) 

4.    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).)  “If the action is against a defendant who is a natural person, an attachment may be issued only on a claim which arises out of the conduct by the defendant of a trade, business, or profession.”  (§ 483.010(c); see Advance Transformer co. v. Sup.Ct. (1974) 44 Cal.App.3d 127, 143-144.)

Here, Plaintiff’s applications for writ of attachment are based on a contract where the total amount allegedly due is in excess of $500.  The contract claim is not secured by real property.   The contract claim arises from the individual Defendants’ conduct of a trade, business, or profession.  Specifically, all individual Defendants are parties to the lease, the purpose of which was the operation of a Message Envy spa.  (Vega Decl. ¶¶ 3-6, Exh. 1-2.)

For the most part, Plaintiff’s damages are fixed and readily ascertainable from the lease and Plaintiff’s declaration.  Specifically, paragraph 18 of the lease, including the last, unnumbered paragraph after paragraph (B)(6), sets forth a basis for computation of damages that is reasonable and definite and can be determined by proof.  (See Vega Decl. Exh. 1; see CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App. 4th 537, 541.)   Thus, in this case, Plaintiff’s damages for lost rent are fixed and readily ascertainable from the lease and the Vega declaration.  Defendant has made no argument to the contrary. 

However, on this evidentiary record, Plaintiff’s claim for $150,000 in tenant improvements, broker fees, and other lease acquisition costs is not fixed and readily ascertainable.  As discussed above, Plaintiff does not quantity the amount of tenant improvement costs, broker fees, or “other lease acquisition costs.”  Nor does Plaintiff submit receipts or billing records in support.  On this evidentiary record, the court cannot determine whether any specific amount of the $150,000 falls within the standard of damages set forth in paragraph 18 of the Lease.  Accordingly, for this additional reason, Plaintiff does not show it is entitled to attachment for this $150,000 in alleged damages.

5.    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, and the court finds, 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.

6.    Reduction of Amount to be Secured

Defendants do not argue or show that the amount of attachment should be reduced by an attachable cross-claim or affirmative defense.  (See CCP § 483.015 and Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, 945.)  

7.    Subject Property

Plaintiff requests attachment against the individual Defendants, natural persons, of items listed in CCP § 487.010(c) and (d).  (Application ¶ 9c.)  That request is proper. 

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, a request for attachment of all of Allbo Corporation’s property is appropriate. 

8.    Exemptions

Defendants have not claimed any exemptions. 

9.    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.  Neither party argues for a different amount of undertaking.

Conclusion

The applications are GRANTED in the reduced amount of $274,113.63.  Plaintiff to post an undertaking of $10,000 for each Defendant.