Judge: Michael Shultz, Case: 23CMCV00621, Date: 2023-10-24 Tentative Ruling
Case Number: 23CMCV00621 Hearing Date: October 24, 2023 Dept: A
[TENTATIVE] ORDER
[TENTATIVE] ORDER
The complaint
alleges that Plaintiff’s predecessor in interest leased commercial real
property to Defendants pursuant to a written contract. Defendants defaulted on
the lease by failing to pay rent. Plaintiff alleges one cause of action for
breach of contract for damagers of $267,648.89.
Plaintiff
requests an order to attach the property of the tenant, Khaled Azzam dba Metro
Fusion (“Azzam” or “tenant”). Tenant is operating a business on the leased
premises as Metro Fusion, Inc. (“Fusion” or “the Company”). Plaintiff also
seeks to attach the assets of the company as described in the application.
In
opposition, Defendants argue that this is the second application that Plaintiff
filed but subsequently withdrew because the application was defective.
Defendants contend that Plaintiff did not cure any of the defects except for
service of the application. Fusion is not a party to the lease nor did Azzam
assign the lease to Fusion. Therefore, Fusion’s assets are not subject to
attachment. Plaintiff has not established by a preponderance that liability
arises out of Azzam’s trade, business, or profession. Damages are not readily ascertainable.
An undertaking should be set at $100,000.
In
reply, Plaintiff argues that Fusion is deemed an assignee under the lease.
Fusion admitted in discovery that it remains in possession of the premises. Fusion
was also paying rent. Azzam is liable for the rent since he is a signatory to
the lease.
Attachment
is a prejudgment remedy providing for the seizure of one or more of the
defendant’s assets to aid in the collection of a money demand pending the
outcome of the trial of the action. (Randone
v. Appellate Department (1971) 5 Cal.3d 536; Code
Civ. Proc., § 483.010.) Pursuant to the statutory scheme, a writ of
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). (Code Civ.
Proc., §483.010(a).)
In
considering whether a writ should issue, the court must find the following by a
preponderance of evidence: “(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; and (4) the amount to be secured by the
attachment is greater than zero.” (Code
Civ. Proc., § 484.090 (a).)
“Probable
validity” is established if “it is more likely than not that the plaintiff will
obtain a judgment against the defendant on that claim.” (Code
Civ. Proc., § 481.190.) The court “must consider the relative merits of the
positions of the respective parties." (Kemp
Bros. Construction, Inc. v. Titan Electric Corp. (2007) 146 Cal.App.4th
1474, 1484.)
The
court makes its determination based upon “the pleadings and other papers in the
record; but, upon good cause shown, the court may receive and consider at the
hearing additional evidence, oral or documentary, and additional points and
authorities, or it may continue the hearing for the production of the
additional evidence or points and authorities." (Code Civ. Proc., § 484.090
(d).)
Plaintiff
has established that a writ of attachment may issue as the complaint is one for
contract damages. The amount to be secured is greater than zero, and the amount
of the claim is fixed or ascertainable. Plaintiff has established that it is
the successor of the Landlord that leased the premises to Defendants, and
Plaintiff was assigned the right to recover all delinquent rents. (Plaintiff’s
Lodged Documents, Exhibit A ¶ 2.7; Exhibit B, ¶ 6.)
Both the
lease agreement and the amendment to the lease identifies the tenant as Khaled I.
Azzam doing business as Metro Fusion. (App.,
Ex. D, .pdf page 45; Ex. E, .pdf page 117.) The Court grants Defendants’ request
for judicial notice of the Secretary of State’s Certificate of Status showing
that Metro Fusion, Inc. is a registered California corporation. (Hussam Azzam
Decl. Ex. 1). The Company is not a signatory to the lease.
Plaintiff
argues that the new entity, the Company, is liable for the rent if it takes
possession of the premises even without an assignment from the original tenant
and they are liable for the rent as the obligation runs with the land. The
lease agreement, however, restricts the transfer, assignment, or subletting of
the leased premises “without first procuring the written consent of Landlord.” (App.,
Ex. D, ¶ 14.1, .pdf p. 71.) Moreover, any attempted or purported transfer
without prior written consent “shall be void and of no force or effect and shall
not confer any estate or benefit on anyone.” (Id.)
Plaintiff’s case authority states that "where the new tenant comes in
without even a written assignment but takes over the possession of the old
lessee with the consent of the lessor, he is liable for rent. " (Ellingson
v. Walsh, O'Connor & Barneson (1940) 15 Cal.2d 673, 676.) Plaintiff argues that since the Company
disclosed in discovery responses that it is in possession of the premises, and
since the Company issued checks in payment for the Tenant’s rent, the Company
is separately liable for the rent.
There
is no evidence that the Company took over possession from the Tenant or that
Plaintiff consented to the Company’s occupation of the premises. Plaintiff’s
reliance on the Civil Code is misplaced because there is no evidence that the
tenant transferred his interests in the lease to the Company. (Civ. Code, §.
Code § 1995.320.) Plaintiff’s contention that the tenant transferred or
assigned his interests to the Company, is based on information and belief.
(Decl. of Jenni Harris, ¶ 13.) Accordingly, Plaintiff has not met its burden of
showing a probability of prevailing on the contract claim against the Company
who was not a signatory to the lease agreement.
Plaintiff
has established that the Tenant breached the lease agreement by failing to pay rent
from April 2020 through April 2022 despite a written demand by Plaintiff. (Id.,
¶17-18.) Azzam disclosed in discovery that he remains in possession of the
premises. (Goodkin Decl., Ex. C.) Defendant’s argument that Plaintiff is
required to establish that his liability arises out of his trade, business, or
profession is without merit. (Opp. 6:5-9.)
Attachment
may be issued against a defendant who is a natural person “only on a claim
which arises out of the conduct by the defendant of a trade, business, or
profession. An attachment may not be issued on a claim against a defendant who
is a natural person if the claim is based on the sale or lease of property, a
license to use property, the furnishing of services, or the loan of money where
the property sold or leased, or licensed for use, the services furnished, or
the money loaned was used by the defendant primarily for personal, family, or
household purposes.” (Code
Civ. Proc., § 483.010.) Azzam contends that he is an employee and CFO of
non-tenant Metro Fusion, Inc., which is not his business but is the
corporation’s business. (Opp. 6:13-14.)
This
argument is internally contradictory; on the one hand, Azzam contends that
while he was an employee of the company, the company is not his “business,
trade, or profession.” (Code
Civ. Proc., § 483.010 (c).) However, the Company was not a tenant or
signator of the lease agreement. Defendant contends he does not manage the
business from the leased premises and the only leased obligor is Khaled himself,
and in any event, he is rarely at the store. (Opp. 6:17-23.). The case on which
Azzam relies for this proposition is distinguishable. There a writ of
attachment was sought against an individual, personally, as a “guarantor” of a
corporate promissory note. (Advance
Transformer Co. v. Superior Court (1974) 44 Cal.App.3d 127, 132.) The
lease agreement identifies Azzam as a tenant, not an individual guarantor;
Azzam admits he was the primary obligor.
Plaintiff
has established that damages are in a fixed or readily ascertainable amount totaling
$267,648.89 based on the terms of the lease agreement from which the amount of
default can be readily ascertained. (Decl. of Harris, Exhibits D and E.) Defendant’s attempt to recalculate the debt
owed establishes that the debt can be ascertained even if Defendant believes
Plaintiff miscalculated it.
Defendant
argues it has triable defenses that would further reduce the obligation.
However, the standard is the probability of Plaintiff prevailing on the merits
by a preponderance. Regardless, there is no evidence or persuasive authority
that Defendant’s purpose for the lease was frustrated by the onset of COVID-19
or that Defendant was denied the right to quiet enjoyment because the premises
were on “lock-down.”
A
flat amount for an undertaking of $10,000 is provided by statute. (Code
Civ. Proc., § 489.220.) Defendant has not provided any
evidence that the amount of undertaking should be increased to $100,000 because
of “severe harm.”
Accordingly,
the Application for a Writ of Attachment against Metro Fusion, Inc. is DENIED.
The Application against Defendant, Assam Khaled is GRANTED. Plaintiff is
ordered to post an undertaking of $10,000 within