Judge: Stephen I. Goorvitch, Case: 23STCV28695, Date: 2024-05-08 Tentative Ruling

Case Number: 23STCV28695    Hearing Date: May 8, 2024    Dept: 82

Ezzy Homecare and Staffing Agency, LLC v. Miracle Mile Healthcare Center, LLC

Case No. 23STCV28695

[Tentative] Order on Application for Writ of Attachment

INTRODUCTION

            Plaintiff Ezzy Homecare and Staffing Agency, LLC (“Plaintiff”) moves for a writ of attachment in the amount of $859,258.50, including $50,000 in attorney’s fees, against Defendant Miracle Mile Healthcare Center, LLC (“Defendant”).  The writ of attachment is granted.    

PROCEDURAL HISTORY

            On December 12, 2023, Plaintiff filed the operative, first amended complaint (“FAC”) against Defendant for breach of service contract and common counts.  Defendant has answered the FAC and also filed a cross-complaint for breach of contract.  On January 25, 2024, Plaintiff filed the instant application for writ of attachment, and on May 2, 2024, Defendant filed its opposition. 

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.)  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.)    “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 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.)  Code of Civil Procedure section 482.040 states in pertinent part: “The facts stated in each affidavit filed pursuant to this title shall be set forth with particularity. Except where matters are specifically permitted by this title to be shown by information and belief, each affidavit shall show affirmatively that the affiant, if sworn as a witness, can testify competently to the facts stated therein. As to matters shown by information and belief, the affidavit shall state the facts on which the affiant’s belief is based, showing the nature of his information and the reliability of his informant. The affiant may be any person, whether or not a party to the action, who has knowledge of the facts.”  “The Attachment Law statutes are subject to strict construction.” (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.) 

DISCUSSION

            A.        Probable Validity of Plaintiff’s Claim

The application is based on Plaintiff’s cause of action for breach of contract.  To establish a claim for breach of contract, a plaintiff must prove: (1) 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.)  Plaintiff contends that Defendant has breached the parties’ written services agreement dated April 5, 2022 (“Services Agreement”), causing Plaintiff damages in the principal amount of $809,258.50.  Plaintiff also contends that it is entitled to attachment for $50,000 in attorney’s fees pursuant to an attorney’s fees provision in the Services Agreement. 

On April 5, 2022, Plaintiff and Defendant executed the Services Agreement, under which Plaintiff agreed to provide medical staffing to Defendant, a skilled nursing facility, upon request.  (Udengwu Decl. ¶ 3, Exh. 1.)  Plaintiff agreed to invoice Defendant biweekly for the services provided.  (Id. ¶ 5.1.)  In paragraph 5.2, Defendant agreed to pay Plaintiff’s invoices within 30 days of the date of the invoice and also to pay reasonable attorney’s fees for the cost of collection.  (Id. ¶ 5.2.)

Plaintiff submits evidence, including invoices, showing that Defendant has failed to make payments in the amount of $809,258.50 for nursing and staffing services provided under the Services Agreement from March 16, 2023, through November 15, 2023.  (Udengwu Decl. ¶¶ 2-11 and Exh. 2.)  Plaintiff’s attorney reasonably estimates that Plaintiff will incur at least $50,000 in attorney’s fees prosecuting this action through trial.  (Cohen Decl. ¶¶ 2-3; see also CCP § 482.110(b) [“the amount to be secured by the attachment may include an estimated amount for costs and allowable attorney's fees”].) 

In opposition, Defendant does not dispute that it has failed to pay $809,258.50 for staffing services that were provided and invoiced by Plaintiff for the period of March 16, 2023, through November 15, 2023.  Defendant does not dispute that the invoices were not paid within 30 days and are considered past due pursuant to paragraph 5.2 of the Services Agreement.  Defendant also does not challenge Plaintiff’s estimate of attorney’s fees for this action in the amount of $50,000. 

Rather, Defendant contends that Plaintiff has breached the Services Agreement by placing two staff members with Defendant, Sharonda Head, LVN and Sylvester Samuel, “without proper training or proper qualifications.”  (Cross-Compl. ¶ 21.)  Although Defendant contends that Plaintiff’s “breach was material and resulted in substantial damages to Defendant” (Oppo. 9), Defendant does not show that Plaintiff’s alleged breach excused Defendant from paying for the services that were rendered by contractors other than Head or Samuel.  (See generally Brown v. Grimes (2011) 192 Cal.App.4th 265, 278 [“Whether a partial breach of a contract is material depends on ‘the importance or seriousness thereof and the probability of the injured party getting substantial performance.’”].) 

Notably, the unpaid invoices at issue were for staffing services provided under the Services Agreement from March 16, 2023, through November 15, 2023.  (Udengwu Decl. ¶¶ 2-11 and Exh. 2.)  Thus, the evidence shows that Defendant continued to request staffing services from Plaintiff after the alleged incident concerning LVN Head, which occurred in or around January and February 2023, and which Defendant states was the “most serious” of the complaints.  (See Udengwu Decl. ¶ 17 and Gardenas Decl. ¶¶ 7, 12 and Exh. B-D.)  Further, the billing invoices submitted by Plaintiff do not appear to show work performed by Head or Samuel and show that Plaintiff’s alleged damages are based on work performed by many other contractors supplied by Plaintiff.  (Udengwu Decl. Exh. 2.)  Indeed, Defendant acknowledges that Head was not permitted to perform additional work at Defendant’s facility after the incident, discussed below.  (Gardenas Decl. ¶ 12; see Oppo. Exh. B-D.) 

Because Defendant continued to request and accept staffing services from Plaintiff, and because Plaintiff received such services from many medical contractors other than Head and Samuel, Defendant has not shown a failure of performance by Plaintiff that would negate Plaintiff’s damages for the billing invoices at issue.  Rather, Defendant’s raises an issue concerning a potential reduction of the amount of Plaintiff’s attachment based on alleged partial breach of the Services Agreement with respect to services provided by Head and Samuel.  (See Code Civ. Proc. § 483.015(b).)  The court will address that issue separately.    

            B.        Basis of Attachment

            “[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(a).)  “An attachment may not be issued on a claim which is secured by any interest in real property arising from agreement ….”  (Code Civ. Proc. § 483.010(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.  The fact that the damages are unliquidated is not determinative.  But the contract sued on must furnish a standard by which the amount due may be clearly ascertained and there must exist a basis upon which the damages can be determined by proof.” (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App. 4th 537, 541, citations and internal quotations omitted.)

Here, Plaintiff’s application for writ of attachment is based on an agreement where the total amount allegedly due is in excess of $500.  The agreement is not secured by real property. The Services Agreement furnishes a standard by which the amount due may be clearly ascertained, specifically by reference to Plaintiff’s unpaid invoices.  (See Udengwu Decl. ¶ 3, Exh. 1, ¶¶ 5.1 and 5.2.)  Accordingly, Plaintiff’s damages are fixed and readily ascertainable from the terms of the Services Agreement and from Plaintiff’s declaration and exhibits, including the invoices submitted as Exhibit 2 to the Udengwu declaration.  (Id. Exh. 2.)  To the extent Defendant argues to the contrary (see Notice of Opposition ¶ 4.b), the argument is not persuasive. 

C.        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.”  Plaintiff declares, and the court finds, that attachment is not sought for a purpose other than the recovery on Plaintiff’s contract claim.  (Appl. ¶ 4.)  The amount to be secured is greater than zero.

D.        Reduction of Amount to be Secured by Attachment

Code of Civil Procedure section 483.015(b) provides that the amount to be secured by the attachment shall be reduced by, inter alia: “The amount of any indebtedness of the plaintiff that the 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.”  Contrary to Defendant’s suggestion (see Oppo. 8:3-21), Defendant has the initial burden of proof to satisfy the requirements of attachment for any offset claim.  (See Code Civ. Proc. § 483.015; see also Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, 945.)  Among other requirements, “the contract sued on must furnish a standard by which the amount due may be clearly ascertained and there must exist a basis upon which the damages can be determined by proof.’” (See CIT Group/Equipment Financing, Inc., supra, 115 Cal.App.4th at 541.)  However, while Defendant has the initial burden of proof on the claim for offset, “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.) 

As noted above, Defendant contends in the cross-complaint that Plaintiff has breached the Services Agreement by placing two staff members with Defendant, Sharonda Head, LVN and Sylvester Samuel, “without proper training or proper qualifications.”  (Cross-Compl. ¶ 21.)  Similarly, Defendant alleges that Plaintiff breached the Services Agreement “by providing employees not properly trained and/or not properly qualified to perform duties as required by the Staffing Agreement.”  (Cross-Compl. ¶ 20.)  In support of these allegations, Defendant submits evidence that, in early 2023, a complaint was filed against LVN Head by the family ombudsman for patient abuse related to Head’s alleged failure to provide medication to the patient while working at Defendant’s skilled nursing facility.  (Musolino Decl. ¶ 8, Exh. B, C.)  Defendant also submits evidence that a complaint was made against medical staffer Samuel for deficient care.  (Id. ¶ 8.)  The California Department of Public Health (“CDPH”) investigated the complaints and found that deficient care was provided at Defendant’s facility.  As a result of the investigation, Defendant received citations from the Los Angeles County Department of Public Health and the federal Center for Medicare and Medicaid Services, including severe level “G” citations.  Defendant was also placed in a status known as Denial of New Patient Admissions (“DNPA”) for April 10, 2023, to May 10, 2023.  According to Defendant’s representatives, DNPA status meant that Defendant would not be paid by Medicare for newly admitted patients for the period of April 10, 2023, to May 10, 2023.  (Musolino Decl. ¶¶ 8-9; Cardenas Decl. ¶¶ 7-9; and Exh. B-J.)  The level “G” citations, which totaled $127,500, are currently on appeal and are not final.  (Musolino Decl. ¶ 10.)  Two lesser level “B” citations, totaling $6,000, were also imposed on Defendant.  (See Id. ¶ 9.)  Defendant also claims various consequential damages as a result of the allegedly deficient care of Head and Samuel, as discussed further below.  (Oppo. 6; Musolino Decl. ¶ 14; Gardenas Decl. ¶¶ 6-12; Petterson Decl. ¶¶ 4-10.) 

Nevertheless, Defendant does not demonstrate probable validity of its contract claim against Plaintiff because Defendant’s counsel does not discuss the relevant terms of the contract or explain how Plaintiff breached any contract term by its acts or omissions.  Defendant suggests that the complaints made against Head and Samuel prove that Plaintiff breached an unspecified term of the Services Agreement, but Defendant never develops that argument with discussion of the contract terms or relevant evidence.  Further, Defendant does not explain why complaints filed against two medical staffers, out of numerous others, necessarily proves that Plaintiff itself breached any contract duties.  As noted, Defendant continued to request and receive staffing services from Plaintiff after the incident involving LVN Head, which undermines Defendant’s argument that there was a material breach by Plaintiff.  While not discussed in the briefs, paragraph 4.12 of the Services Agreement states that Defendant may require a person assigned by Plaintiff to “leave its premises” if such person is “incompetent,” “negligent,” or has engaged in misconduct.  However, paragraph 4.12 also states that Defendant retains the obligation to pay Plaintiff for “the hours actually worked by such a person.” 

Defendant appears to rely on an indemnification provision of the Services Agreement, which provides as follows:

6.2. Each party agrees to indemnify and hold the other, including directors, officers, agents and workers, harmless from all claims, suits, judgments, demand arising from the indemnifying. [sic]  Party’s negligence and/or intentional acts and omissions in performance of the duties prescribed by this Agreement. Each party shall give the other immediate written notice of any claim, suit or demand which may be subject to this provision. This provision shall provide the termination of this Agreement.

(Udengwu Decl. Exh. 1.)  Although Defendant quotes paragraph 6.2 of the Services Agreement, Defendant never develops an argument that Plaintiff breached this paragraph or is liable for damages in any specific amount for breach of paragraph 6.2.  (Nelson v. Avondale HOA (2009) 172 Cal.App.4th 857, 862-863 [“When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived”].)  The court also notes that the cross-complaint does not mention paragraph 6.2 of the Services Agreement or allege that Plaintiff breached paragraph 6.2 by failing to indemnify Defendant for any alleged “negligence and/or intentional acts and omissions in performance of the duties prescribed by this Agreement.”  Paragraph 6.2 also requires that “each party shall give the other immediate written notice of any claim, suit or demand which may be subject to this provision.”  (bold italics added.)  Defendant does not show that it complied with this notice provision.

Regardless, Defendant does not satisfy the “fixed or readily ascertainable” requirement for a prejudgment writ of attachment.  Specifically, “the contract sued on must furnish a standard by which the amount due may be clearly ascertained and there must exist a basis upon which the damages can be determined by proof.’” (See CIT Group/Equipment Financing, Inc., supra, 115 Cal.App.4th at 541.)  Defendant fails to satisfy this standard because none of its alleged damages are fixed or readily ascertainable from the Services Agreement itself.  Nor does Defendant identify any contractual terms in the Services Agreement authorizing Defendant to recover damages for citations caused by acts or omissions of Plaintiff or its medical staffer.  At best, the citations appear to be consequential damages, and they are currently on appeal, which adds further uncertainty. 

            Defendant also claims various consequential damages as a result of the allegedly deficient care of Head and Samuel, specifically: (1) $5,580 paid to plan of correction (“POC”) consultants related to a POC that Defendant needed to submit to CDPH to demonstrate remedial steps it had undertaken to address issues related to the misconduct and deficient care of Head and Samuel; (2) deductions against future payments in the amount of $115,126 for the DNPA from April 10, 2023, to May 10, 2023; (4) loss of new patient admissions from April 10, 2023, to May 10, 2023, valued at $115,513; and (5) outside attorney’s fees for the appeal of the level “G” citations in the amount of $35,000.  (Oppo. 6; Musolino Decl. ¶ 14; Gardenas Decl. ¶¶ 6-12; Petterson Decl. ¶¶ 4-10.)  Although not stated in its opposition brief, Defendant also apparently claims loss of income in excess of $1,200,000 as a result of the DNPA in April and May 2023.  (Petterson Decl. ¶¶ 4-10.)  As with the citations, Defendant has not argued or demonstrated that these consequential damages are fixed or readily ascertainable from the Services Agreement.  Specifically, Defendant does not show that the contract furnishes a standard by which such consequential damages could be “clearly ascertained” and “a basis upon which the damages can be determined by proof.”    

            Based on the foregoing, Defendant has not shown that the requirements for pre-judgment attachment are satisfied for its cross-claims.  Accordingly, no reduction in Plaintiff’s writ of attachment is justified.

            E.         Subject Property and Exemptions

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.  (Code Civ. Proc.a § 487.010(a).)  Plaintiff’s request for attachment of all of Defendant’s property is proper.  (Appl. ¶ 9c.)  Defendant has not claimed any exemptions.

F.         Undertaking

Code of Civil Procedure section 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment.  Code of Civil Procedure section 489.220 provides, with exceptions, for an undertaking in the amount of $10,000. 

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 $859,258.50. 

2.         Plaintiff to post an undertaking of $10,000.

            3.         Plaintiff shall provide notice and file proof of service with the court.