Judge: Melvin D. Sandvig, Case: 23CHCV00288, Date: 2023-08-14 Tentative Ruling

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Case Number: 23CHCV00288    Hearing Date: December 13, 2023    Dept: F47

Dept. F47

Date: 12/13/23

Case #23CHCV00288

WRIT OF ATTACHMENT

Application filed on 7/24/23.

MOVING PARTY: Plaintiff Southern California Real Estate Management, Inc.

RESPONDING PARTY: Defendant Team House Real Estate, Inc.

NOTICE: ok

RELIEF REQUESTED: A right to attach order and writ of attachment with $2,160,000.00 as the amount to be secured by the attachment which includes $5,000.00 in estimated costs and $50,000.00 in estimated allowable attorney fees.  The application seeks to attach any property of Team House.  Alternatively, Plaintiffs request a temporary protective order barring the transfer or encumbrance of the Property.*

*The memorandum of points and authorities filed in support of the application indicates that alternatively, SCREM seeks a temporary protective order.  (See SCREM’s Ps&As, p.10:1-19).  However, the application fails to indicate that a temporary protective order is being sought.  (See Application, p.1, no.1.c).

RULING: The application is denied in its entirety. 

SUMMARY OF FACTS & PROCEDURAL HISTORY

This action arises out of Plaintiffs Steffanie Stelnick, Todd Stelnick, and Southern California Real Estate Management, Inc.’s (SCREM) (collectively, Plaintiffs) claim that Defendants Ryan House and Tamar House (collectively, the Houses) have breached a Settlement Agreement that ended a prior lawsuit.  Plaintiffs contend that the Houses have repeatedly breached the Settlement Agreement by engaging in competing activity in violation of a non-compete clauses in the Settlement Agreement.  The Settlement Agreement provides that the Houses will owe liquidated damages of $54,000 per violation.   

On 2/1/23, Plaintiffs filed this action against the Houses and Southern California Property Management Company, Inc. (SCPMC) for: (1) Breach of Contract and (2) Trademark Infringement (15 U.S.C. 1114(1)).  The operative Second Amended Complaint, which includes the same two causes of action, also names Team House Real Estate, Inc.  (Team House) and Cornerstone Realty Advisors, Inc. (Cornerstone) as defendants. 

On 2/24/23, Steffanie Stelnick’s prior application for writ of attachment against the Houses was denied.  (See 2/24/23 Minute Order).  On 7/24/23, SCREM filed the subject application for right to attach order and writ of attachment against Team House with $2,160,000.00 as the amount to be secured by the attachment which includes $5,000.00 in estimated costs and $50,000.00 in estimated allowable attorney fees.  The application seeks to attach any property of Team House.  Alternatively, Plaintiffs request a temporary protective order barring the transfer or encumbrance of the Property.  The Court notes that the memorandum of points and authorities filed in support of the application indicates that alternatively, SCREM seeks a temporary protective order preventing Team House from transferring, disposing of, encumbering, or otherwise making available to levy, any of its property.  (See SCREM’s Ps&As, p.10:1-19).  However, the application fails to indicate that a temporary protective order is being sought.  (See Application, p.1, no.1.c).

Team House has opposed the application and SCREM has filed a reply to the opposition. 

ANALYSIS

Team House’s objections, numbers 1, 3, 11, 12, 14 and 15, to the declaration of Rick Snyder are overruled.  Team House’s objections, numbers 2, 4-10 and 13, to the declaration of Rick Snyder are sustained. 

Team House’s objection, number 16, to the declaration of Todd Stelnick is sustained. 

CCP 483.010(a) provides that an attachment may be issued in an action on a claim or claims for money, each of which is based on a contract where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than $500, exclusive of costs, interest and attorney’s fees. 

CCP 484.090(a) provides that the Court shall issue a right to attach order if it finds all of the following:

“(1) The claim upon which the attachment is based is one upon which 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.”

SCREM has not shown that the breach of contract cause of action, the claim on which this application is based, has probable validity.  See CCP 483.010(a); CCP 484.090(a)(1), (2), (3). 

First, Team House is not a party to the Settlement Agreement.  (Todd Stelnick Decl., Ex.1).  Generally, only signatories to a contract may be liable for any breach.  Tri-Continent International Corp. (1993) 12 CA4th 1354, 1359.  The basis under which SCREM contends Team House may be held liable for the purported breach of a contract to which it was not a party  is not clear from the application.  To the extent SCREM relies on an alter ego theory of liability, as set forth in the  opposition, SCREM has failed to establish same.  (See Application Memorandum of Points & Authorities, p.7:13-25; Opposition, p.11:5-p.12:23).  In the reply, SCREM does not seem to refute its failure to establish alter ego liability in the moving papers.  (See Reply, p.4:8-18).  Instead, SCREM argues that it does not need to establish that Team House is the alter ego of the Houses because Team House is owned, at least in part, by the Houses and, therefore, its assets may be needed to satisfy the judgment.  SCREM provides no authority or evidence to support this argument.  Id.

Even if SCREM could establish that Team House is the alter ego of the Houses, it has not established the probable validity of its breach of contract cause of action against them.   

To support its claim that the Houses breached the Settlement Agreement, SCREM relies on the non-compete clause therein which provides:

“Plaintiffs agree not to compete with Defendants in the business of residential property management for two (2) years in the Santa Clarita Valley, the San Fernando Valley, the Antelope Valley, Agua Dolce, and Acton. Commercial property management and residential and commercial leasing are specifically excluded from this agreement not to compete with Defendants. In the event Plaintiffs breach their obligation of non-competing, Plaintiffs agree to pay to Defendants, as liquidated damages, the sum of $54,000 for each breach. The Parties acknowledge that this provision for liquidated damages does not constitute a penalty or forfeiture within the meaning of Civil Code §§3275 or 3369 or any other provision of California law. The Parties further acknowledge that the payment of damages pursuant to this provision does not abrogate or affect in any way the terms of this Agreement.”

(See Todd Stelnick Declaration ¶2, Ex.1 ¶1.f).

SCREM contends that Tamar House’s responses to Requests for Admissions, documents provided by Tamar House during discovery and the opinion of its real estate expert, Richard A. Snyder (Snyder), establish that the Houses breached the non-compete clause in the Settlement Agreement on at least 40 occasions. 

The specific Request for Admission relied upon by SCREM asked Tamar House to:

“Admit that, on or about [one of 40 dates specified in the RFAs], YOU publicly offered for rent a property, on behalf of said property’s owner, that was located in the geographic area specified in the AGREEMENT’S non-complete clauses.”

Tamar House denied the request and stated that “Team House Real Estate, Inc. offered this property.”  (See Todd Stelnick Decl., Ex.2 – Responses to RFAs 14-53).  SCREM also notes that in discovery Tamar House also produced eight Lease Listing Agreements in which Team House undertakes to find tenants for a property owner in the geographic area and time frame set forth in the Settlement Agreement.  (Todd Stelnick Decl., Ex.3). 

Even if the Court needed an expert opinion to interpret a contract, the Snyder declaration contradicts the express terms of the Settlement Agreement and is, therefore, unreliable.  Snyder states that “[t]raditional property management activities for properties include the management of the subject property, either residential or commercial, and connected with that property management, the offering to lease properties for rent on behalf of landlords or owners to tenants.”  (Snyder Decl. ¶7).  He goes to claim that “[t]he Settlement Agreement barred any type of leasing or property management activities on behalf of landlord/owners.”  (Id. ¶8).  However, as noted above and in Snyder’s declaration, the non-compete clause applies to residential property management and expressly excludes commercial property management.  (See Todd Stelnick Decl., Ex.1, ¶1.f; Snyder Decl. ¶4). 

Even accepting Snyder’s opinion of what constitutes traditional property management activities, the definition does not establish that the express exclusion of commercial property management and residential and commercial leasing from the non-compete clause did not allow the Houses to engage in all traditional property management activities with regard to commercial property and the limited property management activity of leasing residential property, whether that be on behalf of landlords/owners or tenants. 

Further, Snyder’s reliance on Plaintiffs allegations in the Second Amended Complaint to support his conclusion that “[t]he Defendants were permitted a ‘sole exception’ to act ‘as a tenant representative to enter into residential [or commercial] leases” is unavailing.  (Snyder Decl. ¶¶11 fn.8, 19).  The allegations in the Second Amended Complaint have not been established and it seems clear that in contrast to such allegations, the Houses did not understand/agree that the Settlement Agreement barred the Houses from any work with residential landlords “with the sole exception of acting as a tenant representative to enter into residential leases.”  (See SAC ¶23).  If the parties to the Settlement Agreement had intended to more narrowly limit the activities permitted under the non-complete clause, the agreement could have specified such.  Snyder has failed to support his conclusion that the Settlement Agreement barred the Houses from acting as a representative of a landlord in leasing residential property.  (Snyder Decl. ¶14).  Snyder again claims that the Settlement Agreement prohibited activity that is clearly permitted by the exclusions in the non-compete clause (i.e., all management and leasing aspects of commercial property which even the Second Amended Complaint concedes is permitted).  (See Snyder Decl. ¶¶12, 14); SAC ¶23). 

The Settlement Agreement provides that it was “drafted with the collective participation of the Parties hereto and shall be construed neither against nor in favor of any party hereto in accordance with the fair meaning thereof.”  (Todd Stelnick Decl., Ex.1 ¶10).  As such, the  ambiguities in the contract (i.e., whether the Houses were permitted to engage in residential leasing activities on behalf of landlords) cannot be resolved in favor of or against either party. 

Based on the foregoing, SCREM has failed to establish that it more likely than not that it will obtain a judgment against any defendant, much less Team House, on the breach of contract claim.  See CCP 481.190.  SCREM has also failed to establish that it will suffer great or irreparable harm if the alternative request for a protective order is not granted.  See CCP 486.020(d). 

CONCLUSION