Judge: Stephen I. Goorvitch, Case: 23STCV30438, Date: 2024-10-30 Tentative Ruling

Case Number: 23STCV30438    Hearing Date: October 30, 2024    Dept: 82

Pampanga Master Grill, Inc.                                   Case No. 23STCV30438

v.                                                                     Hearing: October 30, 2024

                                                                        Location: Stanley Mosk Courthouse

                                                                                    Department: 82                                                  Core Value Advisors, LLC, et al.                                   Judge: Stephen I. Goorvitch

[Tentative] Order Granting Applications for Writs of Attachment

INTRODUCTION

            Plaintiff Pampanga Master Grill, Inc. (“PMG”) filed this action against SCG Bahay Apartments LLC (“SCG”).  PMG leased the premises—located at 330 North Westlake Avenue, Suite 200, Los Angeles, California (the “premises”)—from SCG’s predecessor, South Echo Apartments, LLC (“South Echo”) with plans to open a restaurant.  The lease contained a warranty that Suite 200 complied with the building codes and applicable laws, but that provision expressly stated that the warranty does not necessarily apply to Plaintiff’s intended use for the premises.  PMG alleges that South Echo promised to provide a kitchen exhaust shaft/hood, in contravention of the lease’s express term that PMG would lease the premises “as is.”  Due to unpermitted construction by the tenant in the neighboring unit, PMG was not able to construct its own duct system; could not open its restaurant; and stopped paying the rent.  SCG issued a three-day notice and terminated the lease.  Plaintiff filed its complaint for breach of contract, breach of the implied warranty of good faith and fair dealing, and negligence.  SCG filed a cross-complaint against PMG and Imelda Mallari, the guarantor asserting claims for breach of contract (lease) and breach of contract (guaranty), respectively.  Now, SCG seeks writs of attachment against both in the total amount of $365,637.65.  The writs are 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 Attachment Law statutes are subject to strict construction.” 

(Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.) 

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.)    

EVIDENTIARY ISSUES

            SCG’s request judicial notice of Exhibit 2, which is a recorded grant deed.  There is no opposition to the request.  The court grants the request under Evidence Code section 452(c).  SCG objects to the declaration of May Mallari.  The court largely sustains these objections because the declaration largely relies on hearsay, lacks foundation, and/or relies on emails that are not attached as exhibits.  The declaration also advances legal arguments and conclusions.  Specifically, the court sustains Objection Numbers 1 through 9, 12 through 20, and 24 through 26.  The court overrules Objection Numbers 10, 11, 21, 22, 23. 

DISCUSSION

A.        Notice – SCG gave proper notice of the applications.     

B.        Probable Validity of SCG’s Claims

The applications are based on SCG’s causes of action for breach of written contract (lease) and breach of contract (guaranty).  To establish a claim, 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.) 

SCG submits evidence that supports all elements of its causes of action for breach of contract and breach of guaranty.  Specifically, SCG submits evidence as follows:

·                 PMG, as tenant, executed a commercial lease (the “Lease”) for the premises with SCG’s predecessor, South Echo

·                 SCG succeeded to all rights and responsibilities of South Echo under the lease when it acquired the Building

·                 South Echo and SCG performed their obligations under the Lease

·                 PMG breached its obligations by failing to pay rent starting in early 2023

·                 PMG has since vacated the Premises

·                 SCG has suffered total damages of $365,637.65. 

(Lay Decl. ¶¶ 4-19, Exh. 1-5.)  SCG also submits evidence that:

·       Mallari executed a Guaranty of Lease (“Guaranty”)

·       SCG succeeded to all rights and responsibilities of South Echo under the Guaranty

·       South Echo and SCG performed their obligations under the Guaranty

·       Mallari has breached the Guaranty by failing to pay PMG’s obligations under the Lease

(Ibid.)  Cross-Defendants do not dispute these facts.  Instead, they argue that SCG will not prevail in this action because they have “viable” defenses against the cross-complaint or related contract claims in the first amended complaint.  The court is not persuaded that Cross-Defendants will prevail on their claims or defenses.  The lease expressly stated that the premises were not warrantied for any specific, intended purpose.  (Lay Decl., Exh. 1 at ¶ 2.3.)  The Addendum states:

The Premises are being leased in its current “AS IS” condition, without any expressed or implied warranties.  Any and all representations and warranties of Lessor set forth in the Lease are hereby deleted.  Lessee hereby represents that Lessee or Lessee’s agents have inspected the subject property to the full extent deemed appropriate and that Lessee is satisfied with its condition. Lessee acknowledges that as of the date of the Lease, the Premises are in good order, repair, and condition.

(Lay Decl. Exh. 2 at ¶ 50.) 

            Nor have Cross-Defendants articulated a lawful basis to withhold the rent.  To the contrary, the Lease provides that PMG must pay rent, fully and timely, “without offset or deduction (except as specifically permitted in this Lease).”  (Lay Decl. Exh. 1 at ¶ 4.3.)  The Lease also provides that “[n]either Lessor or its agents shall be liable for…any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project.”  (Id., Exh. 1 at ¶ 8.8.)  Cross-Defendants’ claims for damages—based on the neighboring tenant’s construction of tenant improvements—appear to fall within the scope of section 8.8.  Cross-Defendants have not developed an argument to the contrary.  Finally, “Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to performed by Lessor.”  (Id. Exh. 1 at 13.6.)  The notice must be in writing and shall give the lessor at least 30 days to cure the alleged breach.  (Ibid.; see also Id. ¶ 23.)  Although Cross-Defendants served a written notice on December 6, 2023, that alleged breach of the Lease, they filed the complaint on December 13, 2023, and therefore did not give the 30 days required by the Lease for SCG to cure.  (Mallari Decl. ¶ 21, Exh. A.)

Cross-Defendants argue anticipatory breach as a defense.  “In order to constitute an anticipatory breach the promisor must manifest such intention by a clear, positive and unequivocal refusal to perform.”  (Whitney Inv. Co. v. Westview Dev. Co. (1969) 273 Cal.App.2d 594, 602-603.)  In this case, the problems stemmed from the neighboring tenant’s unpermitted improvements in that unit.  Cross-Defendants do not show that SCG or its predecessor clearly, positively, or unequivocally manifested a refusal to perform.  The alleged “false representations” of SCG’s predecessor could not have been a basis for anticipatory breach as those statements were allegedly included in the Lease itself.   (Oppo. 12-13, citing ¶ 2.3 of the Lease.) 

            Cross-Defendants also argue fraud in the inducement (or modification of the contract), i.e., that South Echo promised to provide an exhaust shaft.  As discussed, Malari’s declaration is largely inadmissible.  In the absence of emails modifying the contract, South Echo’s alleged oral promises are not sufficient to find in favor of Cross-Defendants.   

Cross-Defendants challenge SCG’s calculation of damages.  (Oppo. 21-22.)  The court is not persuaded by these arguments.  Cross-Defendants cite no authority that the amount stated in the 3-day notice limited SCG’s damages in a contract action, and Cross-Defendants do not rebut the evidence that $70,104.28 in rent accrued for July 2022 through November 2023.  (Lay Decl. ¶ 18.a and Exh. 5.)  The holdover damages of $39,799.36 are calculated, per the Lease terms, for the period of December 2, 2023, through March 27, 2024.  (Id. ¶ 18.b and Exh. 5.)  SCG’s evidence supports that PMG retained possession, or “held over,” until March 27, 2024.  (Akopchikyan Decl. ¶¶ 5-6.)  Cross-Defendants do not rebut that evidence.  Although Cross-Defendants state that “PMG did not continue with its use and possession of Unit #200 after notice was made,” they do not cite supporting evidence or dispute that SCG filed an unlawful detainer in January 2024 to obtain possession. (See Oppo. 21:21-22; Mallari Decl. generally; and Akopchikyan Decl. ¶ 5.)  Finally, the burden is on Cross-Defendants, not on SCG, to prove that the $288,803.88 in damages for the remainder of the Lease term could have been mitigated.  (See Civ. Code § 1951.2 and Lease ¶ 13.2(a).) 

Based on the foregoing, SCG has proven a probably valid claim in the amount of $365,637.65.

C.        Basis for 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).)  “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(c); see Advance Transformer Co. v. Superior Court (1974) 44 Cal.App.3d 127, 143-144.)

Here, SCG’s applications for writs of attachment are based on contract claims for which the total amount allegedly due is in excess of $500.  The claims are not secured by real property.  SCG’s claim against Mallari arises from Mallari’s conduct of a trade or business.  (See Lay Decl. ¶ 6, Exh. 3; Mallari Decl. ¶ 1.)  SCG’s damages are fixed and readily ascertainable from the terms of the Lease and from SCG’s declarations. 

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

Code of Civil Procedure section 483.015(b) authorizes a reduction in the amount of attachment based on claims for offset pleaded against the moving party in an answer or other pleading.  Cross-Defendants have the initial burden of proof to satisfy the requirements of attachment for any offset claim.  (See Code Civ. Proc. § 483.015 and 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.)  “[T]he 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, supra, 73 Cal.App.4th at 80.)  The court denies an offset for the reasons discussed.    

F.         Exemptions – Cross-Defendants have not claimed any exemptions. 

G.        Subject Property

SCG requests attachments against Mallari, a natural person, of items listed in Code of Civil Procedure section 487.010(c) and (d), including real property.  (Application ¶ 9c.)  That request is proper.  (See Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal. App. 3d 260, 267-268 [“all-inclusive” application satisfies CCP section 484.020(e)].)

SCG requests attachment of any property of PMG, a corporation.  (Application ¶ 9c.)  That request is proper.  “[A]ll 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).) 

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 applications for writ of attachment are granted in the total amount of $365,637.65.  Although the court is issuing two separate writs, one against Pampanga Master Grill, Inc. and one against Imelda Mallari, they shall be construed jointly and severally, i.e., SCG Bahay Apartments LLC may not attach more $365,637.65 in total. 

            2.         SCG Bahay Apartments LLC shall post an undertaking of $10,000 for each of the Cross-Defendants. 

            3.         Counsel for SCG Bahay Apartments LLC shall provide notice and file proof of service with the court. 

IT IS SO ORDERED 

Dated: October 30, 2024                   

                                                                                    ______________________

                                                                                    Stephen I. Goorvitch

                                                                                    Superior Court Judge