Judge: Mitchell L. Beckloff, Case: 23STCV07315, Date: 2023-11-03 Tentative Ruling

Case Number: 23STCV07315    Hearing Date: April 5, 2024    Dept: 86

WESTLAKE FLOORING COMPANY, LLC v. LJT HOLDINGS, LLC

Case Number: 23STCV07315

Hearing Date: April 5, 2024

[Tentative]                     ORDER DENYING APPLICATION FOR WRIT OF ATTACHMENT

Plaintiff, Westlake Flooring Company, LLC, dba Westlake Floor dba Westlake Flooring Services, applies for a writ of possession against Defendants, LJT Holdings, LLC dba Infiniti of Mission Viejo (LJT) and John Anthony Thompson, in the amount of $2,683,264. Defendants oppose the application.

This is Plaintiff’s second attempt at securing an order authorizing an attachment.

The application is denied.

RELEVANT PROCEDURAL HISTORY

On April 3, 2023, Plaintiff filed a complaint against Defendants for breach of contract and related claims. On September 6, 2023, Defendants answered the complaint.  The answer states multiple affirmative defenses, including unclean hands.

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.” (Code Civ. Proc., § 484.010.)

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. (Id. at § 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.” (§ 481.190.)   

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

ANALYSIS 

There is no dispute Plaintiff and Defendant LJT entered into a financing agreement to facilitate LJT’s sale of automobiles. There is also no disagreement Defendant Thompson personally guaranteed the obligations of LJT under the financing agreement. The parties also do not dispute the financing agreement was secured by the vehicles offered for sale to consumers by LJT.

Further, Defendants do not dispute LJT owes money to Plaintiff. (Opposition 3:13-14.) Defendants believe “ballpark” “around $1.5 million” is due. (Opposition 5:27.) Defendants nonetheless challenge the amount owed to Plaintiff under the financing agreement.

Plaintiff’s moving papers are inadequate to establish Defendants’ obligation under the financing agreement and personal guaranty. Plaintiff asserts, through its Senior Vice President, as of December 1, 2023, LJT owed it “a deficiency balance of not less than $2,638,689.39.” (Zhan Decl., ¶ 8.) Plaintiff’s moving papers provide no explanation (foundation) for the deficiency balance claimed. That is, they provide no accounting and merely assert a $2,638,689.39 obligation—a conclusion—based upon a letter sent to Defendants that includes no accounting. (Zhan Decl., Exh. 4.)

Plaintiff’s moving papers thereafter claim $2,628,264 is due from LJT. (Zhan Decl., ¶ 9.) Plaintiff purports to explain the $10,425.39 difference through the sale of $151,648 of collateral. (Zhan Decl., ¶ 9.) If, however, LJT’s obligation is credited with $151,648, the balance due would be $2,487,041.39, not $2,628,264.

Moreover, it appears the value of collateral Plaintiff obtained after LJT defaulted on its obligations is $1,583,968.70. (See Zhan Decl., Exh. 6.) Plaintiff does not explain why it has not credited the value of the collateral against LJT’s obligation. It appears LJT may owe only $888,272.69 to Plaintiff, but the number is unclear because of Plaintiff’s conflicting information about the extent of the default and the credits made—$2,638,689.39 vs. $2,628,264 and credits of $151,648 and $1,583,968.70.

Plaintiff’s moving papers do not provide sufficient information or explanation of the obligation owed to it by LJT. While there is an admitted obligation, the amount of that obligation is in dispute, and Plaintiff’s moving papers with their internal contradictions preclude the court from issuing an attachment. Without regard to Defendants’ opposition, the court simply cannot determine on the evidence provided the appropriate amount of the attachment. The claimed beginning balance number is unsupported and credits have apparently not been properly applied.

Plaintiff’s reply papers further complicate the issues and heighten confusion. First, Zhan’s declaration at paragraph 10 attests Plaintiff has recovered 26 vehicles as collateral. Zhan attaches Exhibit 6 as a list of automobiles “Plaintiff has recovered.” (Zhan Decl., ¶ 10.)[1] In his supplemental declaration Zhan indicates 28 automobiles have been repossessed and attaches Exhibit 8 as those cars that have been repossessed. Exhibit 8, however, lists only 27 automobiles, not 28. Exhibit 8, according to Zhan, provides a listing of those automobiles repossessed and those not repossessed. (Supp. Zhan Decl., ¶ 2, Exh. 8.) Exhibit 8 makes no such notation.

Exhibit 6 and Exhibit 8 also provide different MMR valuations. If the repossessed automobiles were “liquidated in a commercially reasonable manner and the balances applied to Defendants’ balance with Plaintiff” (Supp. Zhan Decl., ¶ 2), it is unclear why Plaintiff is relying on MMR valuations instead of actual dollars obtained when the automobiles were liquidated.

Zhan’s statement LJT currently owes it $1,810,706.32 is insufficiently explained. Exhibit 9 is incomprehensible. Is Plaintiff suggesting the last column in the dealer balance summary should be totaled, and if totaled would reflect a balance of $1,810,706.32? If so, where are the credits for those automobiles “liquidated in a commercially reasonable manner”? (Supp. Zhan Decl., ¶ 2.) Further, it is unclear where, if at all, the credit of $274,803.75 is accounted for by Plaintiff. The “accounting” leaves blank any offsets to the obligation.

Plaintiff’s evidence simply does not establish the amount due to it by Defendants pursuant to the financing agreement and guaranty.

Based on the foregoing, Plaintiff’s application for a writ of attachment is DENIED without prejudice.

IT IS SO ORDERED. 

April 5, 2024                                                                                          

________________________________ 

Hon. Mitchell Beckloff  

Judge of the Superior Court