Judge Peter A. Hernandez, Case 21PSCV00036 2022-09-19 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling.

Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

1. Plaintiff Pacific Western Bank’s Application for Right to Attach Order and Order for Issuance of Writ of Attachment Against Defendant Howard Gordon Schlick aka Howard Schlick d/b/a Ricky Schlick Racing is GRANTED. The court will issue a writ for $262,490.77 and order an undertaking of $10,000.00.

2. Plaintiff Pacific Western Bank’s Application for Right to Attach Order and Order for Issuance of Writ of Attachment Against Defendant William Schlick and Howard Schlick, Trustees of the 2003 Jeanne M. Schlick Irrevocable Trust U/D/T March 13, 2003 is GRANTED. The court will issue a writ for $262,490.77 and order an undertaking of $10,000.00.

Plaintiff Pacific Western Bank (“Plaintiff”) alleges as follows:

On or about April 19, 2016, Howard Gordon Schlick aka Howard Schlick d/b/a Ricky Schlick Racing (“Howard”) executed a promissory note (“Note”) in favor of Plaintiff, in the principal amount of $22,000.00; that day, Howard also executed a Business Loan Agreement (“BLA”) with Plaintiff as well as a Disbursement Request and Authorization (“2016 DRA”). The Note was thereafter modified numerous times by written agreement between Plaintiff and Howard, such that the loan amount was amended to the principal amount of $200,000.00, the repayment maturity date was extended to July 19, 2019 and William Schlick and Howard Schlick, Trustees of the 2003 Jeanne M. Schlick Irrevocable Trust U/D/T Dated March 13, 2003 (“Trustees”) were added as co-borrowers on the Note. Howard and Trustees failed to make payment in full on July 19, 2019 or thereafter.

On January 14, 2021, Plaintiff filed a complaint, asserting causes of action against Howard, Trustees and Does 1-100 for:

The Final Status Conference is set for January 10, 2023. Trial is set for January 24, 2023.

1. Writ of Attachment Re: Defendant Howard Gordon Schlick aka Howard Schlick d/b/a Ricky Schlick Racing

Plaintiff applies for a right to attach order and writ of attachment against Howard. The amount to be secured by the attachment is $262,490.77, which includes $2,575.00 in estimated costs and $26,125.00 in estimated allowable attorney fees.

The court rules on Plaintiff’s Request for Judicial Notice (“RJN”) as follows: Grant as to Exhibit 1 (i.e., quitclaim deed for the property commonly known as 1497 W. 2^nd St., Pomona, CA 91766 recorded June 10, 2003); Grant as to Exhibit 2 (i.e., quitclaim deed for the property commonly commonly known as 1503 W. 2^nd St., Pomona, CA 91766 recorded June 10, 2003) and Granted as to Exhibit 3 (i.e., deed of trust recorded April 25, 2016).

“Attachment is a prejudgment remedy which requires a court to make a preliminary determination of the merits of a dispute. It allows a creditor who has applied for an attachment following the statutory guidelines and established a prima facie claim to have a debtor's assets seized and held until final adjudication at trial.” (Lorber Industries, Inc. v. Turbulence, Inc. (1985) 175 Cal.App.3d 532, 535.) “A purpose of the attachment statutes is to confine attachments to commercial situations and to prohibit them in consumer transactions. The language, ‘trade, business or profession,’ in section 483.010, subdivision (c) fulfills that purpose by limiting the use of attachments to ‘commercial transactions’ and precluding them in ‘consumer transactions.’” (Kadison, Phaelzer, Woodard, Quinn & Rossi v. Wilson (1987) 197 Cal.App.3d 1, 4 [citation omitted].)

Attachment is governed by Attachment Law, Title 6.5 of the Code of Civil Procedure, sections 481.010-493.060. “[A]ttachment procedures are solely creatures of statute and . . . such statutes must be strictly construed.” (Arcata Publications Group v. Beverly Hills Publishing Co. (1984) 154 Cal.App.3d 276, 279.)

On February 3, 2021, Plaintiff filed a proof of service, which reflected that Howard had been substitute-served with the summons and complaint on January 21, 2021. On March 18, 2021, Howard filed an answer. On April 22, 2022, the instant application and supporting documents were filed. On June 21, 2022, Plaintiff filed a proof of service, which reflected that Howard’s counsel had been mail-served that day with the instant application and supporting documents.

Substantive Considerations: “At the hearing, the court shall consider the showing made by the parties appearing and shall issue a right to attach order, which shall state the amount to be secured by the attachment determined by the court in accordance with Section 483.015 or 483.020, if it 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.” (Code Civ. Proc., § 484.090, subd. (a).)

“The court's determinations shall be made upon the basis of 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, subd. (d).) “The court has the power to determine disputed facts on the basis of a preponderance of the evidence as disclosed in the affidavits and declarations… [Hobbs v. Weiss (1999) 73 Cal.App.4^th 76, 80…].” (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2022) ¶ 9:948 (emphasis theirs).)

“The following property of the defendant is subject to attachment: (a) Where the defendant is a corporation, all corporate property for which a method of levy is provided by Article 2 (commencing with Section 488.300) of Chapter 8. (b) Where the defendant is a partnership or other unincorporated association, all partnership or association property for which a method of levy is provided by Article 2 (commencing with Section 488.300) of Chapter 8. . .” (Code Civ. Proc., § 487.010.)

Plaintiff must provide a statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based, 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). (Code Civ. Proc., § 484.020, subds. (c) and (d).) Plaintiff has complied with these requirements.

Plaintiff must also provide 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. (Code Civ. Proc., § 484.020, subd. (e).) “Where the defendant is a corporation, a reference to ‘all corporate property which is subject to attachment pursuant to subdivision (a) of Code of Civil Procedure Section 487.010’ satisfies the requirements of this subdivision. Where the defendant is a partnership or other unincorporated association, a reference to ‘all property of the partnership or other unincorporated association which is subject to attachment pursuant to subdivision (b) of Code of Civil Procedure Section 487.010’ satisfies the requirements of this subdivision. Where the defendant is a natural person, the description of the property shall be reasonably adequate to permit the defendant to identify the specific property sought to be attached.” (Id.) Plaintiff has complied with this requirement via Attachment 9(c).

“[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) [emphasis added].)

“An attachment may not be issued on a claim which is secured by any interest in real property arising from agreement, statute, or other rule or law . . . [h]owever, an attachment may be issued where the claim was originally so secured but, without any act of the plaintiff or the person to whom the security was given, the security has become valueless or has decreased in value to less than the amount then owing on the claim . . .” (Code Civ. Proc., § 483.010, subd. (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.” (Code Civ. Proc., § 483.010, subd. (c).)

The claim is proper, inasmuch as there is an express contract on which the claimed amount is based between the parties where the amount at issue is ascertainable and in excess of $500.00. The claim is not secured by any interest in personal or real property and the money loaned was to be used for business purposes. (Parrish Decl., ¶ 14, Exh. 3.)

“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.)

Kelly Parrish (“Parrish”), a Vice President, Special Assets, of Plaintiff, represents as follows: On or about April 19, 2016, Howard executed a Promissory Note in favor of Plaintiff, evidencing a term loan in the principal amount of $22,000.00, and Howard agreed to repay such monies on the terms stated therein, by the stated maturity date of April19, 2017 (the "Note"). (Parrish Decl., ¶ 14, Exh. 1.) The Note was supported by a Business Loan Agreement (“BLA”), evidencing additional terms and conditions of the credit relationship, and a Disbursement Request and Authorization (“2016 DRA”), which confirmed that the money would be used for business purposes. (Id., ¶ 14, Exhs. 2 and 3.) The Note was not secured by any interest in personal or real property. (Id., ¶ 14.) Plaintiff fully funded the Note. (Id.)

The Note was thereafter modified multiple times by written agreement between Howard, Trustees and Plaintiff. (Id., ¶ 15.) The main effect of the Note modification was to amend the loan amount to the principal amount of $200,000.00, to extend the repayment date of the Note, from the original maturity date of April19, 2017, to a final maturity date of July 19,2019, and to add Trustees as co-borrower on the Note. (Id.) These Note modifications were documented in the form of a series of "Change in Terms Agreements,” successively dated as of April 14,2017, January 29, 2018, and May 23, 2019 (“CITAs”), each signed by Howard and Trustees. (Id., Exh. 4.) Howard and Trustees also signed additional Business Loan Agreements, dated as of April 14, 2017, and January 29, 2018, concurrent with the Exhibit 4 CITAs ("Additional BLAs"). (Id., Exh. 5). The CITAs were also accompanied by fresh Disbursement Requests and Authorizations (substantially the same form as the 2016 DRA) ("new DRAs"). (Id., Exh. 6.) The Note, the various BLAs, DRAs and CITAs are referred to collectively ss “the Loan Documents.” (Id., ¶ 15.)

Howard and Trustees are presently in default under the Loan Documents by failing to make payment in full upon maturity of the Loan Documents. (Id., ¶ 16.) The Loan Documents became due and payable in full on July 19, 2019, but payment in full was not made on that date or thereafter. (Id.) By letter dated August 9, 2019, Plaintiff advised Howard and Trustees that the Loan Documents were in default based on the foregoing violation, and Plaintiff provided them until August 23, 2019 to cure the default and pay the Loan in full. (Id., ¶ 17, Exh. 7.) Despite said demand, no payment was received. (Id., ¶ 17.) To date, has not received any payment from Defendants since their above-referenced defaults. (Id.) Bank (via counsel) sent a second letter, dated October 29,2020, again advising Defendants that the Loan Documents were in default. (Id.; Khatchadourian Decl., ¶ 6, Exh. 1.) Plaintiff required payment in full no later than November 9, 2020. (Parrish Decl., ¶ 17.)

Bank's records reflect the amount due, owing and unpaid on the Note as of April 8, 2022 is $233,790.77 (i.e., $199,891.17 in principal and $33,899.60 in interest). (Id., ¶ 18, Exh. 8.) Plaintiff also expects to incur litigation costs of $28,700.00 through summary judgment, including attorneys' fees of $26,125.00, and recoverable litigation costs of $2,575.00. (Id.; Khatchadourian Decl., ¶¶ 3-5.)[2]

“Before issuance of a writ of attachment, . . . the plaintiff shall file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action.” (Code Civ. Proc., § 489.210.)

If a writ is ultimately issued by the court, a plaintiff must file an undertaking, or bond, in the amount of $10,000.00 in a case of unlimited jurisdiction. (Code Civ. Proc., § 489.220, subd. (a).)

Accordingly, the application is granted. The court will issue a writ for $262,490.77 and order an undertaking of $10,000.00.

2. Writ of Attachment Re: Defendant William Schlick and Howard Schlick, Trustees of the 2003 Jeanne M. Schlick Irrevocable Trust u/d/t Dated March 13, 2003

Plaintiff applies for a right to attach order and writ of attachment against Trustees. The amount to be secured by the attachment is $262,490.77, which includes $2,575.00 in estimated costs and $26,125.00 in estimated allowable attorney fees.

The application is granted, for the reasons set forth above. The court will issue a writ for $262,490.77 and order an undertaking of $10,000.00.

[1] Applications #1 and #2 were filed on April 22, 2022 and set for hearing on September 15, 2022 and September 19, 2022, respectively. On June 21, 2022, Plaintiff filed a “Proof of Service of Applications for Right to Attach Orders and Orders for Issuance of Writs of Attachment and Supporting Pleadings,” which reflected that Applications #1 and #2 had both been mail-served that day. On August 12, 2022, a “Notice Re: Continuance of Hearing and Order” was filed, wherein the September 15, 2022 hearing for Application #1 was continued to September 19, 2022; notice was given to all counsel.

[2] Code of Civil Procedure § 482.110 provides as follows: “The plaintiff's application for a right to attach order and a writ of attachment pursuant to this title may include an estimate of the costs and allowable attorney's fees. (b) In the discretion of the court, the amount to be secured by the attachment may include an estimated amount for costs and allowable attorney's fees.”