Judge: Stephen I. Goorvitch, Case: 22STCV38450, Date: 2024-08-16 Tentative Ruling

Case Number: 22STCV38450    Hearing Date: August 16, 2024    Dept: 82

Stanford Court Properties, LLC,                            Case No. 22STCV38450

v.                                                                     Hearing: August 16, 2024

                                                                        Location: Stanley Mosk Courthouse

                                                                                    Department: 82                                                  Vert Westside, LLC, et al.                                              Judge: Stephen I. Goorvitch

[Tentative] Order Granting Plaintiff’s Application for Writ of Attachment  

INTRODUCTION

Plaintiff Stanford Court Properties, LLC (“Stanford” or “Plaintiff”) filed this action against Defendant Vert Westside, LLC (“Vert” or “Defendant”), among others.  Plaintiff owns the property located at 3011 Wilshire Boulevard in Santa Monica, California (the “property”), which Defendant leases.  Plaintiff alleges that Defendant breached the lease by failing to pay the rent and then fraudulently transferred asserts to the other defendants, Vert Sports LLC and Vert Sports LA LP.  Now, Plaintiff seeks a writ of attachment against Defendant in the amount of $955,760.53.  The application is granted. 

LEGAL STANDARD

“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.)  “Except as otherwise provided by statute, an 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.) 

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.  

(Code Civ. Proc. § 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.”  (Code Civ. Proc. § 481.190.)  “The application 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.”¿ (Code Civ. Proc. § 484.030.)¿ “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.”¿  (Hobbs v. Weiss (1999) 73 Cal.App.4th 76, 80.)  “The Attachment Law statutes are subject to strict construction.”  (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.) 

EVIDENTIARY ISSUES

            Defendant objects to portions of the declaration of Jonathan Moss.  The court need not rule on these objections, because the challenged portions of this declaration are not relevant to the court’s decision.  (See Code Civ. Proc. § 437c(q).)  The court rules as follows on Defendant’s objections to the declaration of Ian DeLaat:

            Paragraphs 1 through 26 – Overruled

            Paragraphs 27 through 39 – The court need not rule on these objections because they are not relevant to the court’s decision on this application.  (See Code Civ. Proc. § 437c(q).) 

DISCUSSION

            A.        Unverified Application on Form AT-105

Plaintiff’s application on form AT-105 is signed by Plaintiff’s attorney but is not executed under oath.  This is an issue because an application for writ of attachment “shall be executed under oath and shall include all of the following: … (c) A statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based.  (d) 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.)

Plaintiff has satisfied the requirement of subsection (c) by virtue of the sworn declaration of Ian DeLaat.  (See DeLaat Decl. ¶ 24.)  However, Plaintiff has not provided a verified statement verifying that the claim has not been discharged in bankruptcy and that this case is not stayed by virtue of a bankruptcy proceeding.  Therefore, the court’s ruling is conditioned on Plaintiff filing a declaration that satisfies this requirement. 

B.        Basis of Attachment

            Plaintiff asserts a proper basis for attachment.  A writ of attachment may be issued based upon a claim for readily ascertainable monetary damages in excess of $500 (exclusive of costs, interest, and attorneys’ fees) stemming from a breach of contract provided that the claim is not secured by any interest in real property arising from the agreement.  (See Code Civ. Proc. § 483.010(a) & (b).)  “[A]n attachment will lie upon a cause of action for damages for a breach of contract where the damages are readily ascertainable by reference to the contract and the basis of the computation of damages appears to be reasonable and definite.” (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App. 4th 537, 541.)  In this case, Plaintiff seeks a writ of attachment based upon the breach of a lease not secured by real property.  Plaintiff’s damages are fixed and readily ascertainable from the terms of the lease and Plaintiff’s declarations. 

            C.        Probable Validity of Plaintiff’s Claim

The application is based on Plaintiff’s cause of action for breach of lease.  To establish a claim for breach of contract, a plaintiff must prove: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach of the contract; and

(4) damages incurred by plaintiff as a result of the breach.  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367.) 

1.         Existence of the Lease

In September 2004, Plaintiff’s predecessor, Stanford Court Properties, a general partnership, and Defendant’s predecessor, Vert Center of Santa Monica, Inc., entered into a commercial lease whereby Defendant’s predecessor leased the property.  (See DeLaat Decl. Exh. 3-4; Turner Decl. ¶7, Exh. X, RFA No. 1.)  In August 2008, Defendant’s predecessor assigned its interest in the Lease to Defendant.  (See DeLaat Decl., ¶ 4, Exhibit B; Turner Decl., ¶ 8, Exh. X, RFA No. 2.)  The terms of the Lease were subsequently amended by a First Amendment, a Second Amendment, and a Third Amendment (“amendments”).   (DeLaat Decl. ¶¶ 5-7, Exh. C-E; Turner Decl. ¶¶ 9-11, Exh. X, RFA Nos. 3-5.) 

Defendant contends that the application “is not supported by the Declaration of any person who claims to have personal knowledge of any party entering into the Lease in 2004, or any subsequent amendment or assignment of the Lease.”  (Oppo. 6:21-23.)  This argument is unpersuasive.  Plaintiff submits a declaration of Ian DeLaat, a portfolio manager for Kennedy Wilson Properties, Ltd., the property manager for Plaintiff.  DeLaat declares that he has personal knowledge of the facts stated in his declaration; that he is “responsible for the day-to-day management of the Building, as well as managing tenants’ payments of rent and ensuring tenants’ compliance with leases”; and that he is familiar with the Lease and the amendments.  (DeLaat Decl. ¶¶ 1-2.)  Given his responsibility for management of the Premises, DeLaat shows personal knowledge to authenticate the Lease and amendments.  Furthermore, Defendant admitted the authenticity of the Lease and amendments in its responses to requests for admissions served by Plaintiff in this action.  (Turner Decl. ¶¶ 7-11, Exh. X, RFAs Nos. 1-5.)

Defendant also contends that Plaintiff does not “sets forth competent evidence as to how Plaintiff (Stanford LLC) obtained its purported interest in the Lease, as it was not the original lessor.”  (Oppo. 5:19-20.)  DeLaat declares that Plaintiff “holds all the rights, title, and interest of the Landlord under the Lease.”  (DeLaat Decl. ¶ 8.)  Further, in the Third Amendment dated July 3, 2019, which was signed by Defendant, Plaintiff was the named “landlord” as the successor to Stanford Court Properties, a general partnership.  (See DeLaat and Turner Decls. Exh. E.)  Finally, and perhaps most important, Defendant also made payments to Plaintiff after the Third Amendment was executed.  (DeLaat Decl. Exh. M.)  Defendant does not rebut this evidence, which is sufficient to support Plaintiff’s claim that it is the landlord under the Lease. 

            2.         Plaintiff’s Performance, Defendant’s Breach, and Plaintiff’s Damages

Plaintiff submits evidence that it performed its obligations under the Lease, including by delivering possession of the Premises to Defendant and its predecessor.  (DeLaat Decl. ¶ 9.)  The amendments prove that the Premises were delivered to Defendant.  (Id. Exh. C-E.)  Further, Defendant made payments on the Lease until at least January 2020, and thereby acknowledged Plaintiff’s delivery of the Premises.  (Id. ¶ 15.)

Plaintiff submits evidence that Defendant breached the Lease by failing to make payments due starting in or around January 2020, and that Plaintiff has suffered damages of $909,760.53.  Specifically, pursuant to the Lease and amendments, Defendant is required to pay (1) “Fixed Minimum Monthly Rent,” as defined in the Lease; (2) a “pro-rata share of all costs and expenses incurred by Landlord in operating and maintaining the Shopping Center (‘Common Area Maintenance Charges’)”; (3) a share of annual taxes and assessments; (4) a pro-rata share of insurance premiums for the shopping center; (5) late charges in the amount of 10% for unpaid rent or other amounts due under the Lease; and (6) interest on past due amounts, as defined in the Lease.  (See Plaintiff’s Memorandum 5-8; DeLaat and Turner Decls. Exh. A-E.) 

DeLaat, the property manager, declares that “beginning in or around January 2020, Tenant began failing to pay Rent in full and has carried an unpaid balance since that time, which has continually increased. Particularly, Tenant has failed to pay Fixed Minimum, Monthly Rent Common Area Maintenance (‘CAM’) Charges and administrative costs, pro-rata share of Taxes, and pro-rata share of insurance premiums, and amounts owed for reconciliations.”  (DeLaat Decl. ¶ 15.)  DeLaat authenticates a Lease Ledger, “made and updated by Landlord as a record of instalments of Rent becoming due, and of Tenant’s payment or non-payment of the same.”  (Id. ¶ 17.)  DeLaat also states that “in accordance with the terms more fully set forth in the Lease, at the beginning of the year, Landlord provided Tenant with a statement showing the estimated charges for CAM, Insurance, Administrative Fees, and Taxes for the year, and Tenant was obligated to pay 1/12 of Tenant’s Share of said estimated annual charges, with Tenant’s Share calculated based on the Floor Area of the Premises as compared to the Floor Area of the Shopping Center. The monthly amounts determined and charge to Tenant are reflected on Exhibit M, the Lease Ledger.”  (Id. ¶ 18.)  DeLaat declares that “Tenant has not disputed the calculations or the amounts owed. However, Tenant has failed to pay these amounts in full since early 2020, as reflected on the Lease Ledger.”  (Ibid.)  DeLaat’s declaration and the Lease Ledger show a total amount due on the Lease of $555,218.09 as of December 2022, when the complaint was filed.  (Id. Exh. M.)  Plaintiff acknowledges an offset of $2,400, resulting in $552,818.09 in past due rent and other charges as of the filing of the complaint on December 9, 2022.  (Id. ¶ 23.) 

Plaintiff also submits evidence that the Lease was set to expire on July 31, 2024, and Defendant vacated the Premises on or about August 23, 2022.  Pursuant to section 19(b)(3) of the Lease, Plaintiff is entitled to “[t]he difference, if any, between (a) all rents and other charges for the balance of the Term of this Lease, less (b) any rents and other charges that Tenant proves: (a) Landlord will receive by reason of the reletting of the demised premises; or (b) Landlord could obtain in reletting the demised premises by acting reasonably in the circumstances then prevailing….” (DeLaat Decl. Exh. A [bold italics added].)  Plaintiff submits calculations, totaling $356,942.44, of the amount of rent due under section 19(b)(3) “from the filing of the Complaint on December 9, 2022 through the July 31, 2024 Expiration Date of the Lease.”   (Id. ¶ 22 and Exh. N.)  Accordingly, Plaintiff submits evidence that it has suffered principal damages of $909,760.53 ($552,818.09+$356,942.44). 

Finally, pursuant to Code of Civil Procedure section 482.110(b), “the amount to be secured by the attachment may include an estimated amount for costs and allowable attorney’s fees.”  (bold italics added.)  Pursuant to section 19 of the Lease, Plaintiff is entitled to reasonable attorney’s fees and costs incurred by Defendant’s breach of the Lease.  Plaintiff’s attorney estimates that Plaintiff will incur at least $45,000 in fees and $1,000 in costs prosecuting this action through trial.  (See Turner Decl. ¶ 4; DeLaat Decl. ¶ 23.)  Considering the fees and costs associated with this attachment proceeding, the discovery in which the parties are engaged, other motion practice that may be necessary, and a trial, the court finds these estimates to be reasonable (and probably too low).  

In opposition, Defendant has not submitted declarations or other evidence disputing Plaintiff’s evidence that: (1) Defendant failed to pay rent and other charges starting in December 2020; (2) Defendant vacated the Premises in August 2022, before the Lease expired; and

(3) Defendant owes $909,760.53 in rent, other charges, and interest due through the expiration of the lease.  Instead, Defendant raises a series of legal arguments which the court has considered.

                                    a.         Evidentiary objections to the lease ledger

Defendant contends that DeLaat “presents no foundation that he or KWP is a custodian of the Lease Ledger, or that he is a qualified witness as to the identity and the mode of the preparation of the Lease Ledger.”  (Oppo. 6-7.)  DeLaat is the property manager for the Premises and is “responsible for the day-to-day management of the Building, as well as managing tenants’ payments of rent and ensuring tenants’ compliance with leases.” (DeLaat Decl. ¶¶ 1-2.)  He shows personal knowledge for his testimony that Defendant began failing to pay rent in January 2020.  (Id. ¶ 15.)  Much of Plaintiff’s damages may be calculated by reference to the number of months of non-payment and the monthly rent, as specified in the Lease and amendments.  The ledger submitted as Exhibit M, and the calculations of future rent submitted as Exhibit N, provide such calculations.  

Further, on this record, the court concludes that DeLaat provides sufficient foundation to admit Exhibit M as a business record.  (See DeLaat Decl. ¶ 17; Evid. Code § 1271.)   Evidence Code section 1271 permits admission of a business record to establish the truth of the matters stated therein if: (a) The writing was made in the regular course of a business; (b) The writing was made at or near the time of the act, condition, or event; (c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and (d) The sources of

information and method and time of preparation were such as to indicate its trustworthiness.  The court has broad discretion: 

A trial court has wide discretion in determining whether a qualified witness possesses sufficient personal knowledge of the identity and mode of preparation of documents for purposes of the business records exception.  Indeed, any qualified witness who is knowledgeable about the documents may lay the foundation for introduction of business records—the witness need not be the custodian or the person who created the record.  Thus, a qualified witness need not be the custodian, the person who created the record, or one with personal knowledge in order for a business record to be admissible under the hearsay exception. 

(Estate of O’Connor (2017) 16 Cal.App.5th 159, 170, internal citations and quotations omitted.)

Plaintiff has provided sufficient evidence to satisfy the court.  In relevant part, DeLaat declares:

I am responsible for the day-to-day management of the Building, as well as managing tenants’ payments of rent and ensuring tenants’ compliance with leases…. [¶¶] I am the custodian for the Lease Ledger submitted Exhibit M, and I am the most qualified to testify as to its identity and contents. The Lease Ledger is a business record, made and updated by Landlord as a record of instalments of Rent becoming due, and of Tenant’s payment or non-payment of the same. It is made in the ordinary course of business and each entry is made at or near the time of the event it reflects. Specifically, the Lease Ledger is a computer-generated document, which is automatically updated and maintained by Landlord’s accounting software, Yardi. For example, on the first of the month when a payment becomes due, the program automatically updates the Lease Ledger to show the payment being owed in the ‘Charges’ column. If and when payment is received, it is reflected in the ‘payments’ column, and the ‘Balance’ running total is reduced by the corresponding amount. Accordingly, the ‘Balance’ column for any given date shows the total amount owed on such date, taking into account all charges due, and all payments received as of such date. As a business practice, all payments received are recorded in Yardi, and Landlord’s personnel also review the Lease Ledger to approve the billings and confirm the receipt of payments each month. The total amount of unpaid Rent is calculated by simply adding up each unpaid amount shown on the Lease Ledger.

 (DeLaat Decl. ¶¶ 2, 17 [bold italics added].)  Considering DeLaat’s role as Plaintiff’s property manager responsible for “tenants’ payments of rent and ensuring tenants’ compliance with leases,” the court concludes that DeLaat has adequately authenticated the Lease Ledger and provided evidence supporting all elements of its admission as a business record under section 1271, including evidence that “the sources of information and method and time of preparation were such as to indicate its trustworthiness.”  Notably, Defendant has not provided any evidence calling into question DeLaat’s description of the process by which the ledger is created.  “[I]t is not necessary that the witness called to present foundational facts have personal knowledge of every transaction; he need only be familiar with the procedures followed.”  (Conservatorship of S.A. (2018) 25 Cal.App.5th 438, 448.)  Defendant’s objections to the Lease Ledger are overruled.

b.         Defendant’s Failure to Mitigate Defense

Defendant acknowledges that “Landlord has not leased out the Wilshire Blvd. Property and it presently sits vacant.”  (Oppo. 12:8-9.)  Nonetheless, Defendant contends that Plaintiff has not shown that its damages for unpaid rent from August 23, 2022, after Defendant vacated the Premises, until the expiration of the Lease are fixed and readily ascertainable because Plaintiff did not provide substantive responses to “[d]iscovery which might shed light on their mitigation efforts.”  (Oppo. 13:20.)  On this record, Defendant’s failure-to-mitigate arguments lack merit.  Pursuant to section 19(b)(3) of the Lease and Civil Code section 1951.2, Defendant has the burden to prove that Plaintiff failed to take reasonable steps to mitigate damages.  (See Lu v. Grewal (2005) 130 Cal.App.4th 841, 849-850.)  Defendant does not submit any evidence that Plaintiff could have, with reasonable efforts, relet the Premises prior to the expiration date.  Defendant’s contention that Plaintiff served objections to discovery served on May 24, 2024, is not evidence of a failure to mitigate damages.  (See Shern Decl. ¶¶ 3-4.)

c.         Estimated Attorney’s Fees and Costs

Defendant contends that Plaintiff’s counsel’s estimate of fees and costs in the amount of $46,000 lacks “definiteness.”  (Oppo. 13-14.)  Code of Civil Procedure section 482.110(b) expressly authorizes the court to include in the attachment “an estimated amount for costs and allowable attorney’s fees.”  (bold italics added.)  Defendant could have provided a declaration of its attorney or other evidence disputing the reasonableness of Plaintiff’s estimate.  Defendant failed to do so.  In assessing the reasonableness of hourly billing rates, “the court may rely on its own knowledge and familiarity with the legal market,” as well as “the difficult or complexity of the litigation.”   (569 East County Boulevard LLC v. Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 437.)  Plaintiff’s estimate of $45,000 in attorneys’ fees and $1,000 in costs is imminently reasonable (and is relatively low). 

D.        Purpose and Amount of 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.”  The court finds that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachments is based and the amount to be secured by the attachment is greater than zero. 

            E.         Reduction of Amount to be Secured by Attachment; and Exemptions

Defendant does not argue, or show, that the amounts of attachment should be reduced pursuant to Code of  Civil Procedure section 483.015(b).   Defendant also has not claimed any exemptions. 

            F.         Subject Property

Defendant is a limited liability corporation and not a natural person.  Accordingly, “all corporate property for which a method of levy is provided by Article 2 (commencing with Section 488.300) of Chapter 8” may be attached.  (CCP § 487.010(a).) 

G.        The Application is Directed Only at Defendant Vert Westside, LLC

Defendant contends that the “Plaintiff’s Memorandum … is muddled and confusing, with portions of the points and authorities … indicating that Plaintiff seeks the RTAO against other named Defendants as well.”  (Oppo. 2:18-22.)  The application itself, on form AT-105, only seeks a writ of attachment against Defendant Vert Westside, LLC.  To the extent Plaintiff’s memorandum refers to claims against other named defendants or suggests that Plaintiff was seeking attachment against all defendants, Defendant Vert Westside, LLC does not show any prejudice because the opposition brief responds to the merits of the specific claim made against Vert Westside, LLC.  In this ruling, the court only analyzes the claims and arguments relevant to the application for attachment against Defendant Vert Westside, LLC.

            H.        Undertaking

Code of Civil Procedure section 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment.  Section 489.220 provides, with exceptions, for an undertaking in the amount of $10,000.  Neither party has argued for a different amount of undertaking.

CONCLUSION AND ORDER

            Based upon the foregoing, the court orders as follows:

            1.         The application for writ of attachment is GRANTED in the amount requested of $955,760.53. 

            2.         This order is stayed until further order of the court. 

            3.         The court will not issue the writ, until Plaintiff provides a declaration under penalty of perjury by someone with sufficient knowledge (who is not litigation counsel) stating: “[T]he 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),” as required by Code of Civil Procedure section 484.020.

            3.         The court issues an Order to Show Cause why the stay of this order should not be lifted, and why the writ of attachment should not be issued, for Tuesday, August 20, 2024, at 9:30 a.m. 

            4.         Plaintiff’s counsel shall provide notice and file proof of service with the court. 

IT IS SO ORDERED. 

Dated: August 16, 2024                                              ______________________

                                                                                    Stephen I. Goorvitch

                                                                                    Superior Court Judge