Judge Mitchell L. Beckloff, Case Number: 21STCV20925, Date: 2023-11-03 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 21STCV20925, Date: 2023-11-03 Tentative Ruling

[Plaintiff is reminded of the court’s First Amended General Order filed May 3, 2019 requiring printed courtesy copies for any pleadings and motions that include points and authorities or consist of more than 26 pages. Courtesy copies were required here based on the size of Plaintiff’s filings.]

Plaintiff, Marvin Engineering Co., Inc., seeks a writ of attachment against Defendant, American Valley Aviation, Inc., in the amount of $441,000. Defendant opposes the application.

The following objections are sustained in part: 4 (as to “the Navy . . . that”), 7 (as to “the contracts with . . . contracts”) and 10 (as to “outlining the . . . non-performance”, “In that same . . . Marvin would suffer”). As to Objection 7, there is no Exhibit 1 to the Cross-Complaint either in the copy provided to the court or the electronically filed copy. Exhibits A and B to the Cross-Complaint are those purchase orders introduced into evidence by Plaintiff.

“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.” (Code Civ. Proc., § 484.010.)

(1) a statement showing that the attachment is sought to secure the recovery on a claim upon which an attachment may be issued;

(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.

“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.” (Id., § 484.030.) Statutory attachment procedures are purely creations of the legislature and as such “are subject to ‘strict construction.’ ” (Hobbs v. Weiss (1999) 73 Cal.App.4th 76, 79.) A judge does not have authority to order any attachment that is not provided for by the attachment statutes. (Jordan-Lyon Productions, Ltd. v. Cineplex Odeon Corp. (1994) 29 Cal.App.4th 1459, 1466.) “The declarations in the moving papers must contain evidentiary facts, stated ‘with particularity,’ and based on actual personal knowledge with all documentary evidence properly identified and authenticated.” (Hobbs v. Weiss, supra, 73 Cal.App.4th at 79-80.) “In contested applications, 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.” (Id. at 80 [cleaned up].)

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.

Plaintiff’s complaint alleges 4 causes of action, including breach of contract, account stated services rendered, and quantum meruit. Plaintiff alleges Defendant failed to pay amounts due to Plaintiff.

“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.” (Code Civ. Proc., § 481.190.)

Defendant entered into two contracts with the United States Navy. (Cross-Complaint ¶ 10.) To fulfill the contracts, Defendant entered into subcontracts with Plaintiff. (Ibid.) The United States Navy approved only Plaintiff to supply certain parts under the contract. (Id. at 12.) That is Plaintiff was the sole source vendor for its goods required for the contract. (Memo 7:10.)

On September 25, 2012, Defendant issued a purchase order (PO 28211) to Plaintiff. (Deblois Decl., Exh. 1.) The purchase order indicated terms of “NET 30.” (Ibid.) “As [Plaintiff] delivered various parts pursuant to PO 28211, it issued invoices for payment. [Defendant] delayed payment to [Plaintiff] on virtually every invoice, claiming it could not invoice the Navy until it delivered complete ‘ships’ or ‘ship sets’, which comprised of a certain number of each of the [] parts ordered from [Plaintiff.]” (Id., ¶ 7.)

By July 2015, Defendant owed Plaintiff $1,009,450. (Id., ¶ 9.) Defendant acknowledged the outstanding debt on July 13, 2015. (Id., Exh. 4.) Defendant advised Plaintiff payment “will be made as a wire transfer as soon as the government pays for [Defendant’s] submitted invoices as of today.” (Ibid.)

Over the years, Plaintiff provided goods to Defendant. (Id., ¶¶ 7, 11.) Defendant does not dispute it received goods from Plaintiff. (St. Pierre Decl., ¶ 3.) Defendant made some payments for the goods and against its growing obligation to Plaintiff. (Deblois Decl., Exh. 6 [page 334], Exh. 12 [page 060].)

On May 11, 2016, Plaintiff advised Defendant it would not deliver additional products to Defendant “without an acceptable plan that brings [Defendant’s] payables current.” (Id., Exh. 8 [page 227].) Defendant understood Plaintiff’s position that it would ship no additional product. (Ibid.)

More than a year later, as of September 19, 2017, Defendant acknowledged it owed Plaintiff $441,000. (Id., Exh. 13.) Defendant again acknowledged owing Plaintiff $441,000 on June 27, 2019. (Choi Decl., Exh. 22 [page 2747].) On February 11, 2020, Defendant indicated to Plaintiff it would “start paying back what we owe [Plaintiff] ([Defendant’s] largest vender debt showing on [its] AP).” (Choi Decl., Exh. 22 [page 2746].)

Absent evidence to rebut Plaintiff’s breach of contract claim, Plaintiff has established the probable validity of its claim against Defendant.

Defendant contends it is excused from performance under its contract with Plaintiff: “the reason why [Defendant] did not pay that money is that the equipment that [Plaintiff] was required to provide under those subcontracts was delivered years late and it was noncompliant, or it was not delivered at all.” (Memo 2:15-17; St. Pierre Decl., ¶ 4.) Defendant explains “noncompliant parts failed inspections” and Defendant “did not accept non-conforming parts and made that very clear” to Plaintiff. (St. Pierre Decl., ¶ 4.) Defendant also states Plaintiff’s “unsatisfactory performance . . . preceded the payment issues . . .” suggesting Plaintiff failed to perform under its contract with Defendant. (Ibid.)[2]

Defendant submits evidence William Pearce, then Defendant’s Chief Executive Officer, attended a meeting in the Spring of 2015 at an air force base to discuss Defendant’s contract with the United States Navy. (Pearce Decl., ¶ 3.) Plaintiff attended the meeting (through Bryan DeBlois and Bryan Moore) with Defendant (through Andrew Moser) and two government contract officers. (Ibid.) The meeting resulted from concern related to delays in Defendant’s shipments on the contract. (Id., ¶ 4.) According to Pearce, Plaintiff attended the meeting based on Defendant’s “assertion that the delays were caused by [Plaintiff’s] failure to timely deliver conforming parts to [Defendant] pursuant to the subcontracts with [Plaintiff].” (Ibid.)

At the meeting, “Bryan DeBlois from [Plaintiff] stated that the delays were 100% [Plaintiff’s] fault and that [Defendant] had done everything possible to ensure timely deliveries to the Navy.” (Id., ¶ 5.) That evidence is unrebutted.

Based on Plaintiff’s performance, Defendant contends Plaintiff has no “valid defense” to Defendant’s counterclaims . . . .” (Memo 2:9-10.)

Defendant does not explain, however, why its ongoing acceptance of goods from Plaintiff—allegedly in breach of the parties’ agreement—did not operate as a waiver of any claim of nonperformance by Plaintiff.[3] The evidence supports a finding Defendant continuously accepted goods from Plaintiff—that is, affirmed the contract—and elected not to cancel the contract in the face of Plaintiff’s alleged breaches. In fact, it appears Plaintiff did not stop shipping goods to Defendant until well after Defendant breached the parties’ agreement by nonpayment. Moreover, Defendant repeatedly acknowledged the $441,000 obligation it owed to Plaintiff even years after Plaintiff stopped shipping goods to Defendant.[4]

Defendant also contends Plaintiff has not reduced the amount of the indebtedness it is claims Defendant owes it by “the amount of any indebtedness of the plaintiff that 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.” (Memo 6:2-6 [quoting Code Civ. Proc., § 483.015, subd. (b)(2)].) That it has asserted the claim, according to Defendant, “is all that the statute requires in order to prevent a pre-judgment attachment.” (Memo 7:6-7.) Defendant contends “the requirement is merely that [Defendant] ‘claim’ such amounts in a Cross-Complaint.” (Memo 6, fn. 5.)

Defendant is mistaken. “[I]n order to obtain the offset permitted by section 483.015, [Defendant is] required to establish the probable validity of its offsetting claims against [Plaintiff].” (Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, 945. See also Pos-A-Traction, Inc. v. Kelly-Springfield Tire Co., Div. of Goodyear Tire & Rubber Co. (C.D. Cal. 2000) 112 F.Supp.2d 1178, 1183.)

Defendant’s cross-complaint is not verified.[5] Accordingly, whether Defendant has demonstrated the probable validity of its claim depends on the evidence within the Declaration of William Pearce and the Declaration of Rene St. Pierre. To demonstrate the probable validity of a claim, “[t]he declarations in the moving papers must contain evidentiary facts, stated ‘with particularity,’ and based on actual personal knowledge with all documentary evidence properly identified and authenticated.” (Hobbs v. Weiss, supra, 73 Cal.App.4th at 79-80.)

The evidence provided by Defendant in support of its claim is extremely generalized. (See St. Pierre Decl., ¶¶ 4 [equipment “delivered years late”, “noncompliant parts failed inspections”, and “unsatisfactory performance . . . preceded the payment issues”], 6 [“only rejections under the prime contracts were rejections of [Plaintiff’s] equipment”].)

Similarly, Defendant’s evidence of damages sustained as a result of Plaintiff’s alleged breach of contract is non-specific and generalized. Defendant reports it did not receive certain payments from the United States Navy—$448,647, $712,099 and $1,529,352. (Ibid.) Defendant assigns responsibility to Plaintiff for amounts Defendant did not receive from the United States Navy. (Id., ¶ 12.) Defendant concludes “had [Plaintiff] performed, [Defendant] would have received these amounts.” (Ibid.) Defendant contends it would have “netted over $2 Million had [Plaintiff] fully performed.” (Ibid.)

Defendant’s generalized and conclusory evidence is repeated in its cross-complaint. (See, e.g., ¶¶ 20, 27, 30, 37.)

The court cannot find based on the evidence submitted by Defendant that Defendant’s claim for offset is probably valid.

The court shall issue a right to attach order if the claim upon which the attachment is based is one upon which an attachment may be issued. (Code Civ. Proc., § 484.090.) “[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.” (Code Civ. Proc., § 483.010, subd. (a).) “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.” (Code Civ. Proc., § 483.010, subd. (c).)

Plaintiff’s claim is based on a contract and is in excess of five hundred dollars. Accordingly, the court finds Plaintiff’s claim is a proper basis for 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.”

Here, Plaintiff’s Vice President of Program Management attests on Judicial Council Form AT-105 that Plaintiff’s application for a writ of attachment is not sought for a purpose other than the recovery on a claim upon which the attachment is based. (Judicial Council Form AT-105.) Accordingly, the court finds Plaintiff has complied with Code of Civil Procedure sections 484.020 and 484.090.

Code Civil Procedure section 487.010, subdivision (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.

Code of Civil Procedure section 489.210 requires Plaintiff to file an undertaking before issuance of a writ of attachment. Code of Civil Procedure section 489.220 provides unless an objection has been made, “the amount of an undertaking filed pursuant to this article shall be ten thousand dollars ($10,000).”

As Plaintiff has not filed an undertaking, it must do so—in the amount of $10,000—prior to a writ issuing.

[1] Defendant argues in its opposition much of the evidence relied upon by Plaintiff to support its claim is hearsay. (See Opposition 8:2-19.) Defendant did not specifically object to the evidence. Without specific objections, the court cannot effectively address Defendant’s evidentiary claims.

[2] It appears Defendant did not pay Plaintiff at the time “claiming it could not invoice the Navy until it delivered complete ‘ships’ or ‘ship sets’, which comprised of a certain number of each of the four parts ordered from [Plaintiff].” (Id., ¶ 7, Ex. 3.) Defendant’s 2014 communication indicates it would not pay Plaintiff until it had complete “ship sets.” (Ibid.) Defendant does not explain its authority to delay payment under the parties’ agreement.

[3] Defendant does not explain its ongoing acceptance of and payment for goods delivered to it by Plaintiff.

[4] Defendant acknowledged the obligation just days before the United States Navy terminated its contracts with Defendant. (See St. Pierre Decl. ¶ 9; Choi Decl. ¶ 9.) Defendant last acknowledged the obligation well after the United States Navy terminated the contracts. (Choi Decl., Exh. 22 [page 2746] [February 11, 2020 – Defendant would “start paying back what we owe [Plaintiff] ([Defendant’s] largest vender debt showing on [its] AP).”)

[5] St. Pierre does attest the allegations in the cross-complaint are true. (St. Pierre Decl., ¶ 2.)