Judge: Mary H. Strobel, Case: 22STCV35939, Date: 2023-03-23 Tentative Ruling

Hon. Mary H. Strobel The clerk for Department 82 may be reached at (213) 893-0530.

Case Number: 22STCV35939    Hearing Date: March 23, 2023    Dept: 82

            Plaintiff North Star Lending, LLC (“Plaintiff”) moves for writs of attachment against Defendants Payam Ebrahimian aka Paul Ebrahimian (“Paul E.”); and defendant Lida Ebrahimian aka Lida Haghany aka Lida Haghany Ebrahimian, individually (“Lida E.”; collectively with Paul E. “Individual Defendants”) and as Trustee of The Manouchehr & Lida Ebrahimian Family Trust dated August 9, 2001 (“Family Trust”); The Ebrahimian Marital Deduction Trust dated April 11, 2017 (“MD Trust”); and The Manouchehr Ebrahimian Unified Credit Trust dated April 11, 2017 (“UC Trust”; collectively “Trusts”) in the amount of $1,680,956.39. 

Plaintiff’s Evidentiary Objections

Declaration of Payam Ebrahimian

(1)  Overruled. 

(2)  Overruled. 

(3)  Overruled. 

(4)  Sustained. 

Declaration of Dale Donerkiel

(1)  Overruled. 

Judicial Notice

Plaintiff’s Request for Judicial Notice (“RJN”) Exhibits A, B, 10, and 11 – Granted. 

Relevant Procedural History

             On November 14, 2022, Plaintiff filed the original complaint for breach of continuing guaranty.  On November 30, 2022, Plaintiff filed the first amended complaint (“FAC”) for breach of continuing guaranty and violation of the Uniform Voidable Transactions Act.

            On January 4, 2023, Payman Ebrahimian filed an answer to the FAC.

            On January 18, 2023, Paul E., Lida E., and Trusts filed an answer to the FAC.

            The trial court (Judge Kristin Escalante) held a hearing on a motion to ex punge lis pendens on February 7, 2023.  The court continued the hearing to March 23, 2023, and permitted further briefing. 

            On February 28, 2023, Plaintiff filed these five applications for writ of attachment. 

            On March 6, 2023, Payman Ebrahimian filed a first amended answer. 

            On March 16, 2023, Defendants filed oppositions to the applications for writ of attachment.

On March 20, 2023, 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 facts stated in each affidavit filed pursuant to this title shall be set forth with particularity. Except where matters are specifically permitted by this title to be shown by information and belief, each affidavit shall show affirmatively that the affiant, if sworn as a witness, can testify competently to the facts stated therein. As to matters shown by information and belief, the affidavit shall state the facts on which the affiant's belief is based, showing the nature of his information and the reliability of his informant. The affiant may be any person, whether or not a party to the action, who has knowledge of the facts. A verified complaint that satisfies the requirements of this section may be used in lieu of or in addition to an affidavit.”  (§ 482.040.)

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.) 

“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 Claims

The application is based on Plaintiff’s cause of action for breach of guaranty.  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 submits evidence of the following.  Plaintiff is a commercial real estate lender, licensed under the California Finance Lender Law.  Plaintiff only makes loans to borrowers for commercial or investment use of proceeds.  (Benjy Decl. ¶¶ 7-8.)  In September 2021, Plaintiff extended a $1,560,000 commercial bridge loan to 152 West Pico, LLC, a California limited liability company (“Borrower”).  The loan is evidenced by a promissory note (“Note”) and secured by a junior deed of trust against commercial real property commonly known as 152 – 154 W. Pico Blvd., Los Angeles, California 90015 (“Property”).  The loan matured in October 2022.  (Id. ¶¶ 10-21.)  Plaintiff’s security interest in the Property is junior to a larger, senior lien in favor of Pacific City Bank, later sold to APSEC, in the original principal amount of $3.5 million.  (Id. ¶ 22.)

Individual Defendants are the managers of the Borrower, which is in the business of ownership of real property.  (Id. ¶¶ 23, 25.)  Lida E. is the trustee of the Trusts.  (Id. ¶ 3.)  In September 2021, to induce Plaintiff to extend the bridge loan to Borrower, Individual Defendants and Trusts executed a continuing guaranty (“Guaranty”) in which  they agreed to pay, on demand following the occurrence of an event of default under the Note, “an amount equal of the Credit,” as defined.  The Guaranty broadly defines “Credit” to include all loans and debts of Borrower arising from the $1,560,000 loan by Plaintiff to Borrower.  Defendants also agreed to payment of attorney’s fees for enforcement of the Guaranty.  (Id. ¶¶ 18, Exh. 6.)  The Guaranty is unsecured and includes multiple waivers, as further discussed below.  (Id. ¶ 19, Exh. 6 ¶ 38.) 

Borrower defaulted under the terms of the Note and loan documents by, among other things: (a) failing to pay Plaintiff any portion of the outstanding $1,560,000 in principal on or before the maturity date; and (b) defaulting on the senior loan on the Property, allowing that senior secured lender (“APSEC”) to commence non-judicial foreclosure proceedings.  (Id. ¶¶ 29-35, Exh. 10-11; see also Exh. 1 at sec. 13.)  Plaintiff provides calculations, which Defendants do not challenge, showing that as of February 1, 2023, the following sums are due to Plaintiff under the Borrower’s Note and the Guaranty: (a) principal in the amount of $1,560,000; and (b) accrued, unpaid non-default plus default interest in the amount of total amount of $99,471.67, for a total of $1,659,471.67.  Despite demand, Borrower and Defendants have not paid the amount due.  The Note and Guaranty entitle Plaintiff to legal fees and cost in an enforcement action.  Plaintiff estimates that it will incur legal costs of $3,000 and it calculates attorney’s fees pursuant to Local Rule 3.214(a) in the amount of $18,484.72.  (Id. ¶¶ 49-56, Exh. 12-14.)  The court finds this estimate of fees and costs to be reasonable for this type of contract action and the amount of damages at issue. 

Based on the foregoing, Plaintiff submits evidence to support all elements of its contract claim against Defendants.  Specifically, Plaintiff shows the existence of the Guaranty and underlying Note; Plaintiff’s performance by funding the bridge loan; Defendants’ breach by failing to pay the amount due upon default and demand; and damages in the total amount of $1,680,956.39.

In opposition, Defendants do not dispute most elements of Plaintiff’s contract claim, including the existence of the Guaranty, Plaintiff’s performance, the default and breach, or Plaintiff’s numerical calculation of damages pursuant to the terms of the Note and Guaranty. 

Defendants do argue that Plaintiff’s damages are “premature” and “uncertain” because a foreclosure sale was scheduled for March 17, 2023, and the Property was appraised for more than $8.5 million.  Given this appraisal, Defendants contend that the foreclosure sale was likely to net sufficient proceeds to pay off the debts owed both to the senior lienholder and to Plaintiff.  (Oppo. 3-5; see Paul E. Decl. ¶¶ 4-6; Donerkiel Decl. ¶ 1 and Exh.)  Defendants cite Civil Code section 3301 and argue that Plaintiff does not prove a probably valid claim because its damages are “not clearly ascertainable.”  (Oppo. 5.) 

Civil Code section 3301 is not the pertinent standard.  Code of Civil Procedure section 483.010(a) provides that to establish a right to attach, the claim or claim must be “fixed or readily ascertainable.”  Whether that standard is met is discussed below.  While Defendants’ arguments regarding the foreclosure sale may relate to the “fixed or readily ascertainable” requirement, they do not undermine the probable validity of Plaintiff’s claims. 

2.    Fixed and Ascertainable Damages

“[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).) 

As stated above, Defendants contend that the foreclosure sale set for March 17, 2023 was likely to net sufficient proceeds to pay off the debts owed both to the senior lender and to Plaintiff. If the foreclosure sale date was scheduled for some future date, after the hearing on the application, then the possibility that the sale would recover enough proceeds to satisfy Plaintiff’s claim would not make Plaintiff’s damages uncertain or unascertainable.  Until a foreclosure sale is actually held and sale proceeds obtained, Plaintiff’s damages, as set forth above, are reasonably certain.  Furthermore, Defendants “waive[d] all rights and defenses that Guarantors may have because the Borrower’s debt is secured by real property.  This means … Lender may collect from Guarantor without first foreclosing on any real … property collateral.”  (Benjy Decl. Exh. 6 at ¶ 7.)  Defendants also waived the right “to require Lender to proceed against Borrower” or “to have any security for the Credit first applied to satisfy or discharge the Credit.”  (Id. ¶ 6.)  Thus, if a foreclosure has not occurred, then Plaintiff may attach all of its damages even if a foreclosure sale is pending.

However, Defendants submit undisputed evidence that the foreclosure sale was scheduled for March 17, 2023, prior to the hearing on this application.  (Paul E. Decl. ¶ 4.)  In the reply filed March 20, 2023 Plaintiff stated: “if the applications are granted and it later turns out that the Pico Property is sold and results in a partial paydown or full payoff in favor of Plaintiff, at that time Plaintiff will credit such payments towards reduction of Guarantors’ obligations.”  (Reply 4:25-28.)  Plaintiff did not, however,  provide any information regarding whether the sale took place or its results.  Counsel should address this issue at the hearing and provide an update on the status of the foreclosure sale. 

Defendants submit evidence that the Property has been appraised for approximately $8.5 million, more than the combined value of the junior and senior loans.  (See Donerkeil Decl.)  Plaintiff specifically declined to submit an appraisal rebutting Donerkeil’s appraisal.  (See Reply 5, fn. 2.)  The court overrules Plaintiff’s objections to Defendants’ appraisal evidence.  Contrary to Plaintiff’s assertion, the appraisal is relevant to Defendants’ argument that Plaintiff’s damages must be reduced if the obligation of Borrower on the Note is reduced by a foreclosure.  Indeed, as noted above, Plaintiff concedes that if the Property is sold and “results in a partial paydown or full payoff in favor of Plaintiff” on the Note, then Plaintiff’s damages against Defendants on the Guaranty would also be reduced.  (Reply 4:25-28.) 

“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.)

Plaintiff’s damages prior to a foreclosure sale are fixed and readily ascertainable from the terms of the Guaranty and Plaintiff’s declaration.   However, as discussed, Defendants submit evidence that a foreclosure sale was scheduled for March 17, 2023, and the Property has been appraised for an amount that could satisfy both the senior and junior liens.  In reply, Plaintiff did not submit competent evidence rebutting Defendants’ contentions.  If the sale was not held on March 17, 2023, then Plaintiff’s damages are fixed and readily ascertainable.  If the sale was held, further information is required about the sales proceeds and whether Borrower’s and Defendants’ obligations under the Note and Guaranty were reduced or eliminated. 

3.    Debt Not Secured by Real Property.

The Guaranty is not secured by real property.  (See Benjy Decl. ¶ 19, Exh. 6 at ¶ 38 [“The Guaranty is not secured by any real property”].) 

Defendants argue that since the Borrower’s loan is secured by real property, Plaintiff “is statutorily disqualified from a right to attach order” against the guarantors.  (Oppo. 1 and 3-4.)  Defendants cite no authority that supports their position.  “A guaranty is a separate and independent obligation from that of the principal debt.”  (United Central Bank v. Sup.Ct. (2009) 179 Cal.App.4th 212, 215.)  “Case law holds that a writ of attachment may issue on a guaranty, regardless of whether the principal loan is secured, so long as the guarantor has waived the right to require the creditor to proceed first against the security given for the primary obligation.”  (Ibid.)  “[W]here [the] guarantor waives rights arising from existence of security given by debtor, guarantor's obligation is unsecured and creditor can obtain attachment order against guarantor.”  (Ibid., citing Engelman v. Bookasta (1968) 264 Cal.App.2d 915, 917-918.) 

As noted, Defendants “waive[d] all rights and defenses that Guarantors may have because the Borrower’s debt is secured by real property.  This means … Lender may collect from Guarantor without first foreclosing on any real … property collateral.”  (Benjy Decl. Exh. 6 at ¶ 7.)  Defendants also waived the right “to require Lender to proceed against Borrower” or “to have any security for the Credit first applied to satisfy or discharge the Credit.”  (Id. ¶ 6.)  The waivers included in the Guaranty fall squarely within these well-established rules.  While Plaintiff may be required to reduce the attachment by any proceeds from a foreclosure that reduce the “Credit” owed by Borrower, Plaintiff may seek a pre-judgment writ of attachment with respect to the Guaranty even though Borrower’s obligation is (or was) secured by real property. 

4.    Trade, Business, or Profession.

“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.)

Individual Defendants executed the Guaranty as part of their trade, business, or profession.  (See Benjy Decl. ¶¶ 23-28, Exh. 9.)  Defendants do not argue otherwise.  Because Trusts are not natural persons, section 483.010(c) does not apply to Trusts.  (Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson (1987) 197 Cal. App. 3d 1, 4.) 

5.    Purpose 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.) 

            Defendants contend that Plaintiff seeks attachment for an improper purpose because “Plaintiff is very likely to be made whole at the trustee sale.”  Defendants also argue that “Plaintiff is represented in this case by Mr. Bob Benjy who is the Manager, President and Sole Member of Plaintiff.” (Oppo. 1:28 and 5-6.)  While the pending foreclosure may affect the amount of Plaintiff’s damages, it does not show that Plaintiff filed the application for a purpose other than to recover on its claim.  Nor does Benjy’s role as attorney and member of Plaintiff show an improper purpose.  Defendants cite no authority that supports a conclusion to the contrary. 

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

Code of Civil Procedure section 483.015(b) provides that the amount to be secured by the attachment shall be reduced by, inter alia:  “(2) The amount of any indebtedness of the plaintiff that the defendant has claimed in a cross-complaint filed in the action if the defendant’s claim is one upon which an attachment could be issued.”  Defendant has the burden of proof to satisfy the requirements of attachment for any offset claim.  (See CCP § 483.015 and Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, 945.)  

Defendants have not proven that the attachment should be reduced by an attachable claim for offset or an affirmative defense. 

7.    Subject Property

Plaintiff requests attachment against Individual Defendants, natural persons, of items listed in CCP section 487.010(c) and (d).  Plaintiff requests attachment against Trusts, which are not natural persons, of any property of a defendant who is not a natural person.  (Applications ¶ 9c.)  Those requests are proper. 

However, as to Individual Defendants, Plaintiff also requests attachments of certain items not listed in CCP section 487.010(c) and (d) for attachment against natural persons, including safe deposit boxes.  Should the court grant the applications, the court will limit attachment against Individual Defendants to items specifically listed in CCP section 487.010(c) and (d).

8.    Exemptions

Defendants do not claim 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 court requires further argument from the parties regarding the foreclosure sale scheduled for March 17, 2023.  The court’s ruling is dependent on whether a sale occurred and whether the sale proceeds reduced Borrower’s obligation on the Note, as outlined above.  The parties should address this at the hearing.