Judge Thomas Falls, Case 22PSCV00421 2023-03-22 Tentative Ruling

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RE: OAKS BY THE LAKE, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY vs GSC HOLDING GROUP, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, et al. (22PSCV00421)

(2) Plaintiff’s APPLICATION FOR RIGHT TO ATTACH ORDER AGAINST GSC HOLDING GROUP, LLC

(1) Plaintiff’s APPLICATION FOR RIGHT TO ATTACH ORDER AGAINST TERESA TSAI is GRANTED.

(2) Plaintiff’s APPLICATION FOR RIGHT TO ATTACH ORDER AGAINST GSC HOLDING GROUP, LLC is GRANTED.

This case arises from a commercial lease agreement. Plaintiff Oaks by the Lake, LLC alleges the following against Defendants GSC Holding Group, LLC (“GSC”) and Teresa Tsai (“Tsai”): On October 23, 2017, the parties entered into a lease. On May 1, 2018, Defendants breached the contract by failing to pay rent. Defendants owe nearly 4 million dollars in unpaid rent.

On July 6, 2022, default was entered against Defendants. That same day, Defendants filed their Answer.

On October 26, 2022, Plaintiff filed the instant applications for writ of attachment.

On December 28, 2022, Plaintiff filed a Motion for Judgment on the Pleading as to Defendants’ Defectively-Pled Affirmative Defenses.

On January 9, 2023, Defendants filed their Opposition to the application for writ of attachment.

On January 23, 2023, the court heard oral argument on the matter and continued the hearing for supplemental briefing.

At the oral argument, the only point of contention was the factor of the probable validity of prevailing on the breach of contract claim. Accordingly, this tentative will only address that issue.[1]

After considering the original papers, arguments during the hearing, and supplemental briefing, the court still determines that Defendants have (i) not made a showing that Plaintiff did not inform them of any hazardous substances and (ii) that the presence of hazardous substances impaired the purpose of the contract which was for marijuana cultivation and manufacturing. In fact, according to Defendants’ own submitted evidence, the ‘Fact Sheet: Environmental Investigation and Cleanup’ provides that the property has been a part of the city’s “investigation, cleanup and monitoring” efforts since the mid-1990s; thus, the issue is not new. Moreover, despite the City of El Monte’s (presumed) knowledge about the presence of contaminants at the project (based on the above report), the City approved a project to install, operate, and maintain soil vapor extraction system(s) at the property because the environmental analysis showed that the project would “not result in any significant adverse environmental impacts.”

To the extent that Defendants rely on email exchanges between water board officials (see supp. Opp. pp. 3-4), those merely discuss “overdue invoices” that resulted in stopping the work from Plaintiff’s non-payment. (emphasis added). They do not, however, evidence the inability to use the property. If anything, the email exchanges undermine Defendants’ contention that Plaintiff “simply ignored the waterboard’s mandate to cleanup the contamination” because the emails indicate that remediation efforts had started and had been paid for by Plaintiff.

Therefore, as Defendants have not provided evidence that they could not perform cannabis cultivation on the property such that they stopped paying for rent, the court finds Plaintiff’s breach of contract claim has ‘probable validity’ because it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim as Defendants defenses (frustration of contract, breach of contract) lack the evidentiary support. (Code Civ. Proc., § 481.190.)

Based on the foregoing, Plaintiff’s motion is GRANTED, but subject to the modification regarding Tsai’s property and inaccurate damages.[2]

[1] The court adheres to its original tentative regarding that Tsai’s certain property should be exempt. The property sought to be attached are not only generally used for personal, family, and household purposes, but used for basic living purposes. After all, one needs a home to live in; one needs a car for transportation (to work, school, etc); one needs an income to purchase necessary commodities (e.g., food); and one needs furniture to live decently. Therefore, the court determines that the corporation property sought to be attached is “attachable” not all the individual defendant Tsai’s property. The court requests that Plaintiff modify the proposed order.

[2] During the hearing, it was clarified that Defendants have paid for a part of the lease.