Judge Stephen P. Pfahler, Case 21CHCV00339 2022-10-18 Tentative Ruling

Between March 2019 and April 2021, Plaintiff Laysion, LLC alleges Defendants Guillermo Macias and Colt International Clothing, Inc. ordered one million dollars ($1,000,000) in certain lighting equipment. Defendants paid $210,000, and presented another $800,000 in checks, which were rejected for insufficient funds. Plaintiff alleges an outstanding balance of $790,000.

On April 30, 2021, Plaintiff filed its complaint for Breach of Contract, Common Counts, and Fraud. On August 19, 2021, Plaintiff filed a first amended complaint for Fraud – Civil Code section 1719, Fraud Civil Code section 1572(3), Conversion – Civil Code section 3336, Breach of Written Contract, Breach of Oral Contract, Account Stated –Sale and Delivery, Quantum Meruit, and Declaratory Relief – Constructive Trust.

On December 1, 2021, the court sustained the demurrer to the second and third causes of action for Fraud Civil Code section 1572(3), Conversion, and overruled the demurrer to the seventh cause of action for Quantum Meruit. The court found the motion to strike moot in part, and denied the remainder. Defendants answered the complaint on January 18, 2022.

On February 4, 2022, the court denied Defendants’ motion to disqualify Plaintiff’s counsel. Defendants filed a notice of appeal on March 16, 2022.[1] On July 21, 2022, the court granted Defendants leave to file an amended answer to the complaint.

Plaintiff, Laysion, LLC moves for a writ of attachment for $1,000,000, due to the nonpayment for the equipment. The amount represents the alleged 4790,000 outstanding principal balance, plus $210,000 in “statutory interest.” Nothing in the application seeks attorney fees or costs. The court electronic filing system shows no opposition or reply at the time of the tentative ruling publication cutoff.

No order or writ shall be issued under this article except after a hearing. At the times prescribed by subdivision (b) of Section 1005, the defendant shall be served with all of the following:

On August 31, 2022, the court granted the motion to quash service of the summons and complaint on defendant Colt LED. The court docket shows no new timely service of the summons, complaint and writ of attachment following the order granting the motion to quash. The writ of attachment is therefore denied and taken off-calendar for lack of service.

Motion for summary adjudication remains set for November 4, 2022. February 6, 2023, trial date to stand. The court reserves the right to continue any and all dates, due to court congestion, caused in part by continuous requests for relief from the court due to the continuing economic attrition tactics undertaken by the parties.

[1]The court electronic filing system shows no request for a stay or order for stay.

Plaintiff, Laysion, LLC moves for a writ of attachment for $1,000,000, due to the nonpayment for the equipment. The amount represents the alleged 4790,000 outstanding principal balance, plus $210,000 in “statutory interest.” Nothing in the application seeks attorney fees or costs. While the court separately considered the Colt LED application on different grounds, the court finds the application against both Colt International Clothing, Inc. and Macias similarly situated, and therefore consolidates the ruling.

Defendants Colt International Clothing, Inc. and Macias filed separate but “coordinated” oppositions to the motion, as well as mutual joinders to each others oppositions. The court considers all oppositions as well in this single ruling. Defendants collectively challenge the propriety of the motion beyond any contract based claims, and any showing of probable validity of the contract based claims due to the lack of sufficient evidence. Macias specifically challenges the lack of any evidence of alter ego, thereby supporting a basis of liability.

Plaintiff in reply reiterates the reiterates the basis of the writ application via the first, fourth, and sixth causes of action. Plaintiff also challenges the Fisher declaration in that Defendants improperly rely on deposition testimony obtained prior to the filing of the writs. Plaintiff also characterizes the Sampson declaration as suspicious. Plaintiff then cites to deposition testimony of Xiang Zhang. Finally, Plaintiff opposes the claims of exemption.

Code Civil Procedure Section 483.010 subdivision (a) states: “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.” The court may issue a right to attach order if it finds all of the following:

(1) The claim the attachment is based on is a claim in which an attachment may be issued.

(3) The attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based.

“The general requirements for prejudgment attachments include the following: The action must seek money, be based on a contract, where the total claim is fixed or readily ascertainable and not less than $ 500 [citation]; that the claim be unsecured ([citation]; and that the plaintiffs make a showing that they ‘on the facts presented would be entitled to a judgment on the claim upon which the attachment is based.’ [Citation.]” (Hobbs v. Weiss (1999) 73 Cal.App.4th 76, 80.) “‘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.’ [Citation.]” (Goldstein v. Barak Construction (2008) 164 Cal.App.4th 845, 852.) The contract must also be commercial in nature. (Ibid.) “Although damages need not be liquidated, they must be measurable by reference to the contract sued upon, and their basis must be reasonable and certain.” (Kemp Bros. Construction, Inc. v. Titan Electric Corp. (2007) 146 Cal.App.4th 1474, 1481, fn. 5.; citing CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App.4th 537, 540.)

Code of Civil Procedure section 483.015(a) states that the total sum of the attachment includes: “(1) The amount of the defendant's indebtedness claimed by the plaintiff. (2) Any additional amount included by the court under Section 482.110.” “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.” (Code Civ. Proc., § 482.110(a).)

If the defendant is a corporation, “all corporate property” is subject to attachment under Code of Civil Procedure section 487.010(a) and a description referencing “all corporate property which is subject to attachment” pursuant to section 487.010 is sufficient to satisfy section 484.020. “Corporations and partnerships generally have no exempt property.” (Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 268.) For purposes of the subject motion, the court assumes Defendant Colt International Clothing, Inc. operates as corporate entity regardless of any potential alter ego claims. Nevertheless, the court finds the application lacking in legal or factual support for any alter ego claims as to Macias for purposes of the writ. [Atkin Decl., ¶¶ 2-4.] The court also declines to consider any claims based on the Yujan Zhang declaration, as addressed below.

Plaintiff moves for attachment based on the order, acceptance of equipment, and alleged failure to pay the outstanding balance due in part to the tender of checks with insufficient funds. The claimed unpaid sums exceed $500, and the agreement for payment is not secured by any personal property. The application facially complies with all procedural requirements against the corporate entity. The court concurs that Plaintiff may proceed on the contract claim, and declines to consider the fraud based claims for purposes of determining the validity of the writs.

Defendants challenge the evidentiary showing. In discovery, Plaintiff was only able to produce an invoice for 500 lighting units for a bill of $387,599, yet, plaintiff now seeks a balance of $1 million, which equals at 260% mark up. [Declaration of David Fisher, Ex. B.]

The application includes and exclusively depends on a declaration from “statutory manager” of Plaintiff, Yajun Zhang. In a prior motion to compel deposition of Zhang, the court denied the motion on grounds at least in part that Zhang was not subject to court jurisdiction due to residency in the Peoples Republic of China. Zhang remains identified as the person most qualified (PMQ) for Laysion, LLC. Defendants deny any deposition of Yajun Zhang has occurred, and Plaintiff has only offered unqualified deponents or deponents without actual knowledge of the underlying transaction. [Fisher Decl., 6-22, Ex. F-G.][2] The court also declines to consider the deposition testimony of Xiang Zhang, as it was not presented with the application, and improperly presented in the reply.

The court previously addressed the possibility of Defendants’ right to examine Yujan Zhang or the alternative possibilities of evidentiary exclusion should a deposition never take place prior to trial, yet Plaintiff persists with the three writs of attachment notwithstanding the known lack of availability of the witness. The court in its discretion declines to consider the as yet unchallenged declaration of Yujan Zhang for purposes of determining a probably validity of the claim on the balance due. The court therefore finds that Plaintiff fails to establish a probable validity on the claim for the entire balance due against the corporate entity. (Loeb & Loeb v. Beverly Glen Music, Inc. (1985) 166 Cal.App.3d 1110, 1120.) In determining the evidence lacks veracity, the court is not making any finding of evidentiary exclusion in the form of evidentiary or issue sanctions, as no such request has been presented to the court and/or applicable to the instant motion. (See Code Civ. Proc.§, 2023.030; Pate v. Channel Lumber Co. (1997) 51 Cal.App.4th 1447, 1454.)

Even if the court considered the declaration of Yujan Zhang, the court finds the declaration of Macias regarding the balance due, and failure to honor the warranty after noted low quality/high failure rate of the delivered equipment, also bars any finding of a right to the entire sought after balance. [Declaration of Guillermo Macias.] Nothing in the motion accounts for this defense.

Finally, on the claim of exemption for Macias, the court finds no basis for considering the claim.

Except as provided in paragraph (2) of subdivision (a) of Section 3439.07 of the Civil Code, the following property is exempt from attachment:

(b) Property which is necessary for the support of a defendant who is a natural person or the family of such defendant supported in whole or in part by the defendant.

(a) At any time prior to the entry of judgment in the action, the defendant may claim any exemption provided by subdivision (a) of Section 487.020 with respect to real property by following the procedure set forth in Article 2 (commencing with Section 703.510) of Chapter 4 of Division 2 of Title 9. A claim of exemption under this subdivision shall be denied if the claim has been denied earlier in the action.

(b) At any time prior to the entry of judgment in the action, the defendant may claim the exemption provided by subdivision (b) of Section 487.020 with respect to real property either (1) by following the procedure set forth in Article 2 (commencing with Section 703.510) of Chapter 4 of Division 2 of Title 9 or (2) by following the procedure set forth in subdivision (c) of Section 482.100 except that the requirement of showing changed circumstances under subdivision (a) of Section 482.100 does not apply. A claim of exemption under this subdivision shall be denied if the claim has been denied earlier in the action and there is no change in circumstances affecting the claim.

The court docket shows no JUDGMENT entered and therefore no need for a claim for exemption hearing.

The application for the writ of attachment is therefore denied for all of the reasons stated.

Motion for summary adjudication remains set for November 4, 2022. February 6, 2023 trial date to stand. The court reserves the right to continue any and all dates, due to court congestion, caused in part by continuous requests for relief from the court due to the continuing economic attrition tactics undertaken by the parties, including impacts caused by work undertaken on scheduled motions, and subsequently taken off-calendar by the moving parties without prior, timely notice to the court.

[1]The court electronic filing system shows no request for a stay or order for stay.

[2]The court notes that while the alternative witnesses lack specific information, said deposition testimony was not presented in support of the motion.