Judge: Mary H. Strobel, Case: 22STCV39448, Date: 2023-04-27 Tentative Ruling

Case Number: 22STCV39448    Hearing Date: April 27, 2023    Dept: 82

            Plaintiffs Annette Clovis and Anna Levinson (“Plaintiffs”) move for a writ of attachment against Defendant Gracious Ridge LLC (“Defendant”) in the amount of $113,500.

Judicial Notice

Plaintiffs’ Request for Judicial Notice (“RJN”) Exhibits 7 and 9-14 – Granted. 

Procedural History

            On December 20, 2022, Plaintiffs filed a complaint against Defendant for breach of written contract.

            On December 23, 2022 the court (Judge Michelle Williams Court) denied Petitioner’s ex parte application for a writ of attachment.

On December 30, 2022, Plaintiffs filed their first noticed application for writ of attachment.  On January 24, 2023, Defendant untimely filed and served an opposition.

            On January 26, 2023, the court denied without prejudice Plaintiffs’ first noticed application for writ of attachment because the notice did not comply with CCP section 484.050.  The court denied Plaintiffs’ application for a temporary protective order.

            On January 27, 2023, Defendant filed a motion to compel arbitration, which is scheduled for hearing on August 23, 2023.

            On April 3, 2023, Plaintiff filed and served by email this application for writ of attachment.  They served a notice of hearing and application on form AT-155 and complied with CCP section 484.050.  No opposition to the application has been received.  The opposition was due April 20, 2023.  On April 20, 2023, Plaintiff filed and served a notice of non-receipt of opposition. 

            On April 20, 2023, Defendant’s attorney, Matthew Abbasi, filed a motion to be relieved as counsel.  The motion is noticed for hearing on May 22, 2023.

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.

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

Analysis 

1.    Notice

Notice appears proper, as stated above. 

2.    Verified Application

CCP section 484.020 requires the application to be executed under oath and include certain information, including: “(c) A statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based.

[and] (d) A statement that the applicant has no information or belief that the claim is discharged in a proceeding under Title 11 of the United States Code (Bankruptcy) or that the prosecution of the action is stayed in a proceeding under Title 11 of the United States Code (Bankruptcy).”

            Plaintiffs’ application on form AT-105 is not executed under oath either by counsel or Plaintiffs.  However, the information required by CCP section 484.020(c) is included in the verified declarations of Plaintiffs.  (Clovis Decl. ¶ 9; Levinson Decl. ¶ 9.)  Other information required by section 484.020, such as a description of the property to be attached, is sufficiently presented in Plaintiffs’ papers and application.  (See e.g. Appl. ¶¶ 5, 9.)  The absence of a verification does not appear prejudicial. 

However, Plaintiffs’ attorney should confirm at the hearing that he has “no information or belief that the claim is discharged in a proceeding under Title 11 of the United States Code (Bankruptcy) or that the prosecution of the action is stayed in a proceeding under Title 11 of the United States Code (Bankruptcy).”  (CCP § 484.020(d).)  Subject to confirmation of that issue, the court finds the application complies with section 484.020. 

3.    Probable Validity of Plaintiffs’ Claim

The application is based on Plaintiffs’ cause of action for breach of contract.  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.) 

Plaintiffs submit evidence that they executed an Investment Agreement (“Agreement”) with Defendant in which Plaintiffs agreed to lend $50,000 to Defendant to be used for a real estate development project located at 12210 Malone St., Los Angeles, CA 90066.  Each of the Plaintiffs is named as an “investor” in the Agreement.  Defendant agreed to repay the “investors” the $50,000 plus “a return of US $10,000 (20%)” on or before September 8, 2021.  The Agreement provides for a “late fee” of $3,000.00 in the event Defendant failed to make payment in full on or before September 13, 2021.  The Agreement also provides for an additional late fee of $100.00 per day in the event payment is more than 60 days late (i.e., starting November 14, 2021).  (Clovis Decl. ¶¶ 2-3, Exh. 1.)

In March 2021, Plaintiffs lent the $50,000 to Defendant as agreed.  (Clovis Decl. ¶ 4, Exh. 3 [$15,000 check from Clovis]; Levinson ¶ 4, Exh. 6 [$35,000 check from Levinson].) 

Plaintiffs submit evidence that Defendant failed to repay the loan by the deadline.  Accordingly, Plaintiffs submit evidence that Defendant owes the $60,000 principal balance; the $3,000 late fee for failure to make payment by September 13, 2021; and a daily late fee of $100 per day from November 14, 2021, to April 3, 2023, the date of Plaintiffs’ declarations.  (Clovis Decl. ¶¶ 5-7; Levinson Decl. ¶¶ 5-7.)  These amounts total $113,500.  Defendant has not opposed the application and has not rebutted this evidence or Plaintiffs’ calculation of damages.  Based on the foregoing evidence, Plaintiffs show the probable validity of all elements of their contract claim and damages in the amount of $113,500.

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 application for writ of attachment is based on an agreement where the total amount allegedly due is in excess of $500.  The agreement is not secured by real property. Plaintiff’s damages are fixed and readily ascertainable from the terms of the agreement and Plaintiffs’ declarations.

5.    Arbitration Writ

The Agreement includes an arbitration provision and Plaintiffs must comply with CCP section 1281.8(b), which states in pertinent part:

A party to an arbitration agreement may file in the court in the county in which an arbitration proceeding is pending, or if an arbitration proceeding has not commenced, in any proper court, an application for a provisional remedy in connection with an arbitrable controversy, but only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief.   (emphasis added.)

The court cannot grant an attachment if this showing has not been made.  (See also California Retail Portfolio Fund GMBH & Co. KG v. Hopkins Real Estate Group (2011) 193 Cal.App.4th 849, 856-857.)

In California Retail Portfolio Fund, supra at 857, the Court of Appeal held “the apparent insolvency of a party to an arbitration agreement, or other evidence showing that the party was experiencing severe financial difficulties, is sufficient to satisfy the ineffectual relief requirement.”

As discussed, Plaintiffs submit evidence that Defendant defaulted on the Agreement, has failed to repay the balance due since September 2021, and is accruing a late fee of $100 per day.  Plaintiffs also submit evidence that Defendant owns title to three properties: 12210 Malone Street, Los Angeles, CA 90066 (the “Malone Property”); 3208 Oakley Drive, Hollywood, CA 90068 (the “Oakley Property”); and 2207 Kerwood Avenue, Los Angeles, CA 90064 (the “Kerwood Property”).  (Sadat Decl. ¶ 6.)  The Malone Property is the project for which Plaintiffs loaned money in the Agreement.  Plaintiffs submit evidence that Defendant defaulted on the secured loans for all three properties and that notices of default have been recorded.  Specifically, notices of default were recorded on February 14, 2023, as to the Malone Property; January 20, 2022, as to the Oakley Property; and February 9, 2023, as to the Kerwood Property.  (Id. ¶¶ 6-10.)  Given that two of the notices of default were recorded in February 2023, and that Defendant has also defaulted on the Agreement, there is a reasonable inference that Defendant is “experiencing severe financial difficulties.” 

In addition, Plaintiffs submit evidence that Defendant’s attorney, Abassi, has stated that Defendant would not participate in the arbitrator selection process unless Plaintiffs abandon their application for a writ of attachment.  He stated that otherwise, “we will have to wait until our motion [to compel arbitration] is heard” in August 2023.  (Id. ¶¶ 13-18.)  Defendant’s attorney did not respond to Plaintiffs’ assertion that CCP section 1281.8 authorized Plaintiffs to pursue pre-judgment attachment despite the arbitration agreement.  (Ibid. and Exh. 15, 17.)  The court also notes that Abassi recently filed a motion to be relieved as counsel, which is scheduled for a hearing in May 2022.  In conjunction with the evidence of severe financial difficulties, Defendants’ refusal to select an arbitrator, thereby delaying the arbitration hearing, supports an inference that an arbitration award may be rendered ineffectual without provisional relief.

Further, Plaintiffs submit evidence that the three properties specified above are Defendant’s only real properties in California for which it holds “sole title.”  (Id. ¶ 7.)  Given the notices of default, the delay in arbitration could prevent Plaintiffs from attaching and recovering against the California real property owned by Defendant. 

Plaintiffs satisfy the requirements of CCP section 1281.8.

6.    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.”

Plaintiffs declare, and the court finds, that attachment is not sought for a purpose other than the recovery on Plaintiffs’ claims.  (Clovis Decl. ¶ 9; Levinson Decl. ¶ 9.)  The amount to be secured is greater than zero.

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

Defendant has not argued or proven that the attachment should be reduced by an attachable claim for offset or an affirmative defense.  (CCP § 483.015(b).)

8.    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 ¶ 9c.) 

9.    Exemptions

Defendant does not claim any exemptions. 

10. 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. 

11. Turnover Order  

Plaintiffs seek a turnover order.  (See Proposed Order ¶ 3.d.)  “If a writ of attachment is issued, the court may also issue an order directing the defendant to transfer to the levying officer either or both of the following: [¶] (1) Possession of the property to be attached if the property is sought to be attached by taking it into custody. [¶] (2) Possession of documentary evidence of title to property of or a debt owed to the defendant that is sought to be attached.”  (CCP § 482.080 [emphasis added].) 

            Plaintiffs have not shown the applicability of this section to their attachment request or briefed the necessity of this additional remedy. The request for a turnover order is denied.

Conclusion

            The application is granted.

Plaintiffs to post an undertaking of $10,000.

The request for a turnover order is denied.