3RD & CROFT PARTNERS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, ET AL. VS KREATION JUICERY, INC., A CALIFORNIA CORPORATION, ET AL.

Tentative Rulings

Case Number: *******9184 Hearing Date: July 13, 2021 Dept: 85

At the hearing, the court determines whether the plaintiff should receive a right to attach order and whether any property which the plaintiff seeks to attach is exempt from attachment. The defendant may appear the hearing. CCP ;484.050(h). The court generally will evaluate the attachment application based solely on the pleadings and supporting affidavits without taking additional evidence. Bank of America, supra, 207 Cal.App.3d at 273. A verified complaint may be used in lieu of or in addition to an affidavit if it states evidentiary facts. CCP ;482.040. The plaintiff has the burden of proof, and the court is not required to accept as true any affidavit even if it is undisputed. See Bank of America, supra, at 271, 273.

The court may issue a right to attach order (Optional Form AT-120) if the plaintiff shows all of the following: (1) the claim on which the attachment is based is one on which an attachment may be issued (CCP ;484.090(a)(1)); (2) the plaintiff has established the probable validity of the claim (CCP ;484.090(a)(2)); (3) attachment is sought for no purpose other than the recovery on the subject claim (CCP ;484.090(a)(3); and (4) the amount to be secured by the attachment is greater than zero (CCP ;484.090(a)(4)).

A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. CCP ;481.190. In determining this issue, the court must consider the relative merits of the positions of the respective parties. Kemp Bros. Construction, Inc. v. Titan Electric Corp., (2007) 146 Cal.App.4th 1474, 1484. The court does not determine whether the claim is actually valid; that determination will be made at trial and is not affected by the decision on the application for the order. CCP ;484.050(b).

Except in unlawful detainer actions, the amount to be secured by the attachment is the sum of (1) the amount of the defendant’s indebtedness claimed by the plaintiff, and (2) any additional amount included by the court for estimate of costs and any allowable attorneys’ fees under CCP section 482.110. CCP ;483.015(a); Goldstein v. Barak Construction, (2008) 164 Cal.App.4th 845, 852. This amount must be reduced by the sum of (1) the amount of indebtedness that the defendant has in a money judgment against plaintiff, (2) the amount claimed in a cross-complaint or affirmative defense and shown would be subject to attachment against the plaintiff, and (3) the value of any security interest held by the plaintiff in the defendant’s property, together with the amount by which the acts of the plaintiff (or a prior holder of the security interest) have decreased that security interest’s value. CCP ;483.015(b). A defendant claiming that the amount to be secured should be reduced because of a cross-claim or affirmative defense must make a prima facie showing that the claim would result in an attachment against the plaintiff.

Before the issuance of a writ of attachment, the plaintiff is required to file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action. CCP ;489.210. The undertaking ordinarily is $10,000. CCP ;489.220. If the defendant objects, the court may increase the amount of undertaking to the amount determined as the probable recovery for wrongful attachment. CCP ;489.220. The court also has inherent authority to increase the amount of the undertaking sua sponte. North Hollywood Marble Co. v. Superior Court, (1984) 157 Cal.App.3d 683, 691.

C. Statement of Facts

1. Plaintiff’s Evidence

Since December 2014, Defendant Kreation has been a tenant at both the 8426 and 8428 W. 3rd St. locations, operating a successful juice restaurant and cafe, respectively. Mizrahi Decl., ¶2, Exs. A, B. Although both locations have remained open throughout the pandemic and continued to do business and Kreation has received substantial PPP loans, Kreation has failed to pay any rent or related CAM charges on either location since March 2020. Id.

As of May 3, 2021, Kreation has an unpaid balance of $95,988.16 for unpaid rent and CAM charges for the 8426 W. 3rd St. location and $223,423.00 for the 8428 W. 3rd St. location, a total of $319,411.16. Mizrahi Decl., ¶3, Exs. C, D. It is anticipated that Kreation will continue to fail to pay rent and CAM charges for June and July 2021, and therefore at the time of the scheduled hearing there will be a total balance owed for both locations in the sum of $365,269.54. Id.

2. Defendant’s Evidence

Kreation paid both its rent and the Common Area Maintenance ("CAM") as it became due for both units from the inception of the lease until the start of the COVID-19 pandemic. Sarshar Decl., ¶5. Kreation faced severe financial difficulties as a result of the COVID-19 pandemic. Sarshar Decl., ¶6. The assets of Kreation are crucial to the payment of compensation to Kreation\'s employees who rely on Kreation for support of themselves and their families. Sarshar Decl., ¶7. Sarshar also relies on Kreation\'s earning for his support. Id.

D. Analysis

Plaintiff Croft applies for a right to attach order against Defendant Kreation in the amount of $386,269.54, which includes estimated costs of $1,000 and estimated attorneys’ fees of $20,000.

1. Procedural Issue

An application for a writ of attachment is a law and motion matter. CRC 3.1103(a). All law and motion matters, with inapplicable exceptions, must be accompanied by a memorandum of points and authorities. CRC 3.1113(a). Croft fails to comply with this requirement, and thereby fails to set forth the law of attachment and any analysis in support of its application. The application must be denied for this reason.

2. Merits

Assuming, arguendo, that Croft’s procedural failure is not fatal to its application, the following analysis applies.

a. A Claim Based on a Contract

Croft’s claim is based on the 8426 West 3rd Lease and the 8428 West 3rd Lease, pursuant to which Kreation leased the 8426 and 8428 Properties. Mizrahi Decl., Exs. A, B. Croft’s claim is based on a contract.

b. An Amount Due That is Fixed and Readily Ascertainable

A claim is “readily ascertainable” where the damages may be readily ascertained by reference to the contract and the basis of the calculation appears to be reasonable and definite. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41. The fact that the damages are unliquidated is not determinative. Id. But the contract must furnish a standard by which the amount may be ascertained and there must be a basis by which the damages can be determined by proof. Id. (citations omitted).

Croft provides the tenant ledgers for the 8426 West 3rd and 8428 West 3rd Leases, which show an amount due and owing of $95,988.16 for unpaid rent and CAM charges for the 8426 W. 3rd St. location and $223,423.00 for the 8428 W. 3rd St. location, for a total of $319,411.16 owed. Mizrahi Decl., Exs. C, D. Croft claims that Kreation’s continued failure to make rent payments will result in a total amount of $365,269.54 by the time of the hearing. Mizrahi Decl., ¶3. Croft fails to provide any calculations supporting this amount. Kreation does not dispute that it has failed to make rental payments in the amounts noted. Croft also claims entitlement to estimated costs in the amount of $1,000 and estimated attorneys’ fees in the amount of $20,000. Croft fails to support these amounts with an attorney declaration, and they are denied.

The amount due is fixed and readily ascertainable in the amount of $319,411.16.

c. Probability of Success

Croft has demonstrated a probability of success on its claim for breach of contract because it is undisputed that Kreation has failed to pay its rental obligations under the 8426 West 3rd Lease and the 8428 West 3rd Lease. Kreation does not dispute its failure to pay its obligations or Croft’s entitlement to payment, instead arguing that Croft’s application must be denied due to the effect of Los Angeles Municipal Code Article 14.6, entitled "Temporary Protection of Tenants During COVID-19 Pandemic," (“Moratorium”), which has been in effect in the City of Los Angeles since March 4, 2020. Opp. at 1-4. Kreation notes that the 8428 and 8426 Properties are commercial real properties that fall under the protections of the moratorium, preventing eviction of tenants from such properties for failure to pay rent. Id., Sarshar Decl., Ex. A.

Kreation’s argument is spurious. As Kreation cite shows, the Moratorium (LAMC ;49.99.3) prevents the eviction of certain commercial tenants during the “local emergency period”; it does not prevent actions for the collection of rent. The opposition’s quoted language that “[t]enants shall have up to three months following the expiration of the Local Emergency Period to repay any rent deferred during the Local Emergency Period” simply means that a tenant cannot be evicted for non-payment of rent during this three month period.

As Croft correctly notes (Reply at 2-3) Kreation fails to cite any authority supporting its claim that an application for a writ of attachment, which is part of a collection action and unrelated to the eviction process, is affected by the Moratorium. The Moratorium specifically states that: “Nothing in this article eliminates any obligation to pay lawfully charged rent.” Sarshar Decl., Ex. A. The Moratorium only prevents Croft from evicting Kreation for its failure to pay rent and nothing precludes Croft from seeking attachment.[2] Reply at 2-3.

Kreation also argues that Croft cannot seek attachment because Kreation’s assets constitute property necessary for the support of individual Defendant Sarshar. Opp. at 4. Croft seeks attachment against Kreation, which is a corporation and not a natural person. Croft does not seek attachment against Sarshar. The fact that an officer of employee of a corporation is dependent upon income from the corporation does not prevent attachment against the corporation. Sarshar also cannot create a corporate entity and then argue that it is really her alter ego. Kreation’s argument is also conclusory and unsupported of any evidence establishing Sarshar’s financial status.

Croft notes that Kreation fails to account for the $3.2 million it received in PPP loans and that Kreation’s own statements indicate it was not heavily affected by the pandemic. Berke Decl., Exs. A, B.

E. Conclusion

The application for a right to attach order is procedurally defective and is denied.