Judge: Stephen I. Goorvitch, Case: 24STCV27828, Date: 2025-05-15 Tentative Ruling

Case Number: 24STCV27828    Hearing Date: May 15, 2025    Dept: 82

Cookies Retail Products, LLC                                 Case No. 24STCV27828

v.                                                                     Hearing: May 15, 2025

                                                                        Location: Stanley Mosk Courthouse

Cookies Creative Consulting &                               Department: 82                                                  Promotions, Inc., et al.                                         Judge: Stephen I. Goorvitch

[Tentative] Orders Denying Plaintiff’s Applications for Writs of Attachment

INTRODUCTION

            Plaintiff Cookies Retail Products, LLC (“Plaintiff” or “CRP”) moves for writs of attachment against Defendants Cookies Creative Consulting & Promotions, Inc. (“CCCP”) and PTB Investment Holdings, LLC dba GVB Biopharma (“GVB”) (collectively “Defendants”) in the amounts of $3,800,000 and $3,070,417.59, respectively.  CCCP and GVB both oppose the applications, which are denied.

BACKGROUND

            In or about December 2021, Plaintiff entered into a license and distribution agreement (the “License Agreement”) with CCCP pursuant to which Plaintiff was licensed certain trademark, manufacturing, and distribution rights related to non-federally regulated cannabinoid products that are marketed under the brand name “Cookies.”  (Rock Decl. Exh. 1, recitals.)  On January 9, 2023, Plaintiff filed a lawsuit against CCCP, among others, arising out of the License Agreement.  (Rock Decl. ¶ 2.)  To resolve the lawsuit, the parties entered into a settlement agreement dated April 4, 2023 (the “Settlement Agreement”) and an inventory purchase agreement (the “Inventory Purchase Agreement” or the “IPA”).  (Id. Exh. 1, 2.)  The Settlement Agreement included the following terms, among others:

·       The License Agreement was terminated upon full execution of the Settlement Agreement.   (Id. Exh. 1, ¶ 1(a).)

·       Plaintiff agreed to sell to PTB Investment Holdings, LLC d/b/a GVB Biopharma (“PTB” or “GVB”), pursuant to the terms of the IPA, certain Cookies-branded cannabinoid products within Plaintiff’s possession or control.  (Id. Exh.1 ¶ 1(d) and Exh. 2.)

·       Subject to Plaintiff’s compliance with the terms of the Settlement Agreement and the IPA, Defendant agreed to pay Plaintiff $4,750,000 in ten monthly installments of $475,000 on the first of the month beginning on July 1, 2023, and ending on April 1, 2024.  (Id. Exh. 1 ¶ 2.)

·       Plaintiff agreed not to use the entity name “Cookies Retail Products, LLC” to market or sell any product and agreed “to take all necessary steps to change its corporate name to a new name that does not include the word COOKIES or any confusingly similar word.”   (Id. Exh. 1 ¶ 3.)

In its applications for writ of attachment, Plaintiff contends that CCCP breached the Settlement Agreement by failing to make all payments due and that GVB breached the IPA by failing to arrange for the transportation and purchase of the product from Plaintiff.  CCCP and GVB dispute these contentions and contend that Plaintiff failed to perform its obligations under the Settlement Agreement and IPA. 

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.) 

EVIDENTIARY ISSUES

            A.        Objections

            The court rules as follows on GVB’s evidentiary objections to the declaration of Paul Rock:

            Objections 1 through 7 – Sustained

            Objections 8 through 11 – Overruled

            Objection 12 – The court sustains the objection to the first sentence in Paragraph 20 of his declaration.  The court overrules the objection to the remaining sentences in Paragraph 20.

            Objections 13 through 15 – Overruled. 

            Objections 16 through 28 – Sustained. 

            Objection 29 – The court sustains the objections to Rock’s assessment of GVB’s obligations to purchase certain inventory in Paragraph 37 of his declaration.

            Objections 30 and 31 – Overruled

            Objections 32 through 34 – Sustained

            B.        Defendants’ Request for Judicial Notice

            Defendants request judicial notice of the home court’s orders on Defendants’ special motions to dismiss under Code of Civil Procedure section 425.16.  The court denies the request because the court need not consider these orders in order to rule on the pending motions.  (See Code Civ. Proc. § 437c(q).) 

DISCUSSION

            A.        Plaintiff Does Not Establish Probable Validity of its Claim

The applications are based on Plaintiff’s causes of action for breach of contract.  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.) 

Plaintiff contends that CCCP breached the Settlement Agreement by failing to pay $3,800,000 of the $4,750,000 settlement payment.  (Application for Writ of Attachment Against CCCP (“CCCP Appl.”) 4-8.)  Plaintiff contends that GVB breached the IPA by failing to arrange for the transportation and purchase of the product from Plaintiff and by refusing to pay any of the sums due to Plaintiff, including for those products that were in GVB’s possession at the time the IPA was signed.  (Application for Writ of Attachment Against GVB (“GVB Appl.”) 8-18.) CCCP does not dispute that it failed to pay $3,800,000 under the Settlement Agreement.  Rather, CCCP and GVB both contend that Plaintiff materially breached or failed to perform the terms of the Settlement Agreement and the IPA.  (CCCP Oppo. 6-10; GVB Oppo. 2-12.)  Paragraph 2(a) of the Settlement Agreement provides, in relevant part:

Subject to CRP’s compliance in all material respects with the terms of this Agreement and the Inventory Purchase Agreement after the Effective Date, and provided that CRP has provided CCC&P with a correctly completed IRS Form W-9, CCC&P agrees to pay to CRP an indefeasible amount of $4,750,000.

(Rock Decl. Exh. 1 at ¶ 2(a) [emphasis added].) 

It is elementary a plaintiff suing for breach of contract must prove it has performed all conditions on its part or that it was excused from performance. Similarly, where defendant’s duty to perform under the contract is conditioned on the happening of some event, the plaintiff must prove the event transpired.

(Consolidated World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 380, citations omitted.)  Plaintiff does not prove that it complied with its obligations under the Inventory Purchase Agreement. 

1.         Plaintiff’s declarations lack particularity

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.

(Code Civ. Proc. § 482.040.)  Plaintiff relies on the declarations of Paul Rock to support its applications.  For the application for attachment against GVB, many parts of Rock’s declaration are inadmissible as shown in the court’s ruling on GVB’s evidentiary objections.  Moreover, many parts of Rock’s declarations lack sufficient particularity to prove that Plaintiff materially performed its obligations under the IPA.  Specifically, as argued by GVB, Paragraphs 2 through 12 and Paragraph 23 of Rock’s declaration consist of background information about the Settlement Agreement and vague allegations of fraud that have nothing to do with Plaintiff’s performance of its obligations under the IPA.  (GVB Oppo. 8:26-9:2.)  Further, as GVB argues, Paragraphs 27 through 31, 33 through 36, and 41 through 42 of Rock’s declaration contain factual and legal conclusions without supporting documentary evidence.  (GVB Oppo. 9:3-7.)  The Rock declaration in support of the application for attachment against CCCP, which is much shorter, similarly lacks particularity with respect to Plaintiff’s performance of its obligations under the IPA.  This evidence lacks sufficient particularly and does not prove Plaintiff’s performance of its obligations under the IPA.

                        2.         The remaining evidence is insufficient

            The remaining evidence gives rise to questions whether Plaintiff satisfied its obligations under the Inventory Purchase Agreement.  The IPA required Plaintiff to deliver to GVB “a spread sheet of all payments made by [Plaintiff] to manufacturers of Products that require manufacturers to deliver Products to [Plaintiff]” within 10 business days of the effective date of the IPA, which was April 4, 2023.  (Rock Decl. Exh. B.)  Plaintiff has not submitted any evidence that it complied with this obligation.  (See id. ¶¶ 17-18, Exh. G-H.)  To the contrary, GVB submits evidence that Plaintiff did not comply with this obligation.  (Eberhard Decl. ¶ 7.)  For this reason alone, Plaintiff’s applications must be denied.

Furthermore, the IPA conditioned GVB’s obligation to purchase products on Plaintiff first “convey[ing] good and valid title, free and clear of all Encumbrances (‘Clean Title’).”  (Rock Decl. Exh. B at ¶ 2(a).)  Similarly, the IPA obligated GVB to only purchase “Deposits … to the extent the Deposits entitle GVB to obtain Clean Title to Products based on the COGS (defined below).”  (Id. at ¶ 6(b).)  The IPA also provides, in relevant part:

6.  Purchase of Products and Deposits.

….¶

c. Purchase Price. The purchase price of each such Product (the “Purchase Price”) shall be the verified cost of goods sold (“COGS”) for that Product. The verification requires that CRP deliver to GVB verifiable invoices for the Products and for shipping and other allowable costs set forth below….

d. Verification of COGS. CRP shall provide all commercially reasonable backup information, including original source documentation, requested by GVB to validate the COGS for each Product and Deposit. GVB shall only be obligated to purchase Products and Deposits for which GVB has determined, in its sole discretion, the COGS have been verified and that are not Nonconforming Products.

(Id. ¶ 6.)  The IPA defines “Nonconforming Products” as “any Products that: (a) do not meet the Quality Standards (defined below), including a shelf life of 75 percent of the industry comparable shelf life; or (b) were not manufactured according to the CRP Licensing Agreement, including all quality-related standards.”  (Id. ¶ 4.)

            Initially, in April 2023, Plaintiff sought to shift the obligation to establish clean title to GVB.  As an example, Rock wrote the following to GVB on April 26, 2023:

Since many of the suppliers themselves were a bit spread out and chaotic (and not as buttoned up as you folks); the easiest path to verify is to verify directly from or with the only folks who could cloud the title…. The Mfg and Supplier.

(Eberhard Decl. ¶ 3, Exh. G.)  A day later, after GVB requested “wire confirmations and other

proofs of payment,” Rock asserted:

I’d love to do that, but it would be a bit of a nightmare after we’ve lost our old quick books, series of bank account shuffles and after closing down most of the operations. Our accounting team has been let go and most are unresponsive and on to other jobs and I've been left with a pile of records. I can try to pour through it but most of these payments were made in partials and pay downs over a period of time from multiple accounts (and the suppliers weren’t as buttoned up as you and would issue some to us, some to cookies, etc etc).

If that’s all that will suffice, then I suggest you take the goods and then let us piece that together while you inspect it and before you pay us.

(Id. ¶ 15, Exh. I.)  These emails strongly suggest that Plaintiff lacked the ability to prove it had clean title to the products at issue. 

In his declaration, Rock asserts that Plaintiff provided proof of clean title for all the products at issue to GVB in emails dated June 5, 2023, and July 3, 2023.  (Rock Decl. ¶¶ 24-25, Exh. M, N.)  However, a review of those emails does not show any source or reference documentation.  Plaintiff fails to explain how these emails establish proof of clean title.  In opposition, GVB has submitted detailed evidence showing that Plaintiff was unable to provide proof of clean title to GVB, notwithstanding GVB’s repeated requests to procure the same. (Eberhard Decl., ¶¶ 4-25; Exh. A-P.)  For example, in response to Rock’s email of June 5, 2023, Eberhard wrote in relevant part:

Paul, we’ve been working through the information forwarded to us in order to verify proof of payment.  Once I get the OK from legal on your resolution with Inspire, and pending our confirmation of the proof of payments, we should be able to start moving forward.  We have all the information for H-Hemp in connection with payment.  However, we are still missing verifications (similar to the H-Hemp verification) from the other vendors including Old Republic aka Mabel, Apollo, Covered and FlyFresh.  Are you planning on sending those over?  Separately, we need verification that the packaging shipped from China was in the United States on or before April 4, 2023.  Also, verifying proof of payment, and COGS, among other items has been problematic despite significant time spent by our accounting department. . . .

(Id. Exh. M.)  Similarly, in response to Rock’s email of July 3, 2023, Eberhard wrote in relevant part:

We’ve been working through the large volume of spreadsheets, purchase orders and other documents and emails in an effort to identify the total list of products and match payments to ensure those products have clean title.  The nature of the document production has been piecemeal, and there is no simple way for us to confidently identify each product and confirm that its been paid for.  The only third party document you’ve produced is the PDF screen shot from Wells Fargo.  Otherwise, you’ve produced spreadsheets that were prepared by your tema.  I’m sure you can appreciate that in order for GVB to feel comfortable with title on these products, we need information provided by a third party.  The “duty” is not on the buyer to reconcile the various documents and spreadsheets, but rather the duty is on the seller to prove clean title before we can legally assume ownership. . . .

(Id. Exh. P.)  Plaintiff’s lack of evidence and Defendants’ correspondence gives rise to a genuine question whether Plaintiff complied with the IPA. 

In addition to lack of clean title, GVB submits evidence that Plaintiff failed to fulfill other contractual provisions that were prerequisites to triggering any payment obligations on the part of GVB.  (GVB Oppo. 11-13; Eberhard Decl. ¶¶ 29-42.)  As an example, Plaintiff asserts that GVB was obligated to purchase Excluded Products under the IPA in the amount of $810,850.44, which Plaintiff contends is established by Exhibit “O” attached to Rock’s declaration.  (See Rock Decl., ¶ 40(b)(i)-(iii).)  GVB was only obligated to purchase Excluded Products after 75 days if those products met all other requirements of the IPA, including verification of Clean Title, product COGS, and Quality Standards. (See IPA, ¶ 3.b.(iii) [“GVB shall purchase from CRP any Excluded Products … only if they comply with the requirements of this Inventory Purchase Agreement”].)  GVB submits evidence that none of the Excluded Products met all these requirements under the IPA. (Eberhard Decl. ¶¶ 35-36.)  Further, Exhibit “O” to Rock’s declaration is a “Notice of Dispute and Default” that lacks sufficient documentation to establish any obligation of GVB to purchase Excluded Products.

            The court has considered the parties’ remaining arguments and evidence regarding the probable validity of Plaintiff’s claims.  On this record, the court is not persuaded that Plaintiff has shown a probably valid claim against CCCP or GVB.  In short, the court cannot determine on this record which specific products GVB was obligated to transport or purchase, if any.  Since Plaintiff has not shown it materially performed all obligations under the IPA, it follows that Plaintiff also has not proven CCCP’s breach of the Settlement Agreement.          

B.        The Damages Are Not Fixed and Readily Attainable  

Plaintiff also does not show that its damages against GVB are fixed and readily ascertainable.   “[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.)  Here, given the lack of specificity and documentary support for Plaintiff’s claims that it performed its obligations in the IPA, the court cannot determine whether Plaintiff’s computation of damages is reasonable and definite and can be ascertained by reference to the IPA. 

CONCLUSION AND ORDER

            Based upon the foregoing, Plaintiff’s applications for writs of attachment against Cookies Creative Consulting & Promotions, Inc. and PTB Investment Holdings, LLC dba GVB Biopharma (“GVB”) are denied.  Plaintiff shall provide notice and file proof of service with the court.

IT IS SO ORDERED 

Dated: May 14, 2025                                                  ______________________

                                                                                    Stephen I. Goorvitch

                                                                                    Superior Court Judge