Global Assets Liens & Foreclosures, LLC v. Area 29, LLC, et al

Case Number

24CV02376

Case Type

Hearing Date / Time

Wed, 02/05/2025 - 10:00

Nature of Proceedings

Plaintiff's Applications for Right to Attach Orders and for Issuance of Writs of Attachment against Defendants 1) Area 29, LLC; 2) Circle Muskrat, LLC; 3) Rainbowtrees536, LLC; 4) Bryant & Gilbert, LLC.; 5) OTC Van Nuys; and, 6) AEON West Hollywood, Inc.

Tentative Ruling

For Plaintiff Global Assets Liens & Foreclosures, LLC: Michael J. Muse-Fisher, Aaron M. Levine

For Defendants Area 29, LLC, Circle Muskrat, LLC, Rainbowtrees536, LLC, Bryant & Gilbert, LLC., OTC Van Nuys, and AEON West Hollywood, Inc.: Christine M. Monroe

                       

RULING

For the reasons set forth herein, Global Assets Liens & Foreclosures, LLC’s Applications for Right to Attach Orders and for Issuance of Writs of Attachment against Defendants (1) Area 29, LLC, (2) Circle Muskrat, LLC, (3) Rainbowtrees536, LLC, (4) Bryant & Gilbert, LLC., (5) OTC Van Nuys, and (6) AEON West Hollywood, Inc., are granted. The court will execute the right to attach order and order for issuance of writ of attachment after hearing, submitted by plaintiff as to each defendant. The writs of attachment will issue upon plaintiff filing its undertakings in the amount of $10,000.00 for each writ.

Background

This action commenced on April 26, 2024, by the filing of the complaint by plaintiff Global Assets Liens & Foreclosures, LLC (“Plaintiff”) against defendants Area 29, LLC, Circle Muskrat, LLC, Rainbowtrees536, LLC, Bryant & Gilbert, LLC., OTC Van Nuys, and AEON West Hollywood, Inc. (collectively “defendants”), for Breach of Contract, Account Stated, Open Account, and Goods Sold and Delivered.

As alleged in the complaint:

“Plaintiff is the assignee and owner of certain accounts receivable acquired through the East West Bank v. Herbl, Inc., receivership proceedings in the County of Santa Barbara, Case No. 23CV02629.” (Compl., ¶ 13 & Exh. A.)

Plaintiff seeks damages from defendants in the collective amount of $53,698.20, for unpaid invoices for the sale and delivery of various cannabis products. (Compl., ¶ 14 & Exhs. B-G.)

On November 8, 2024, defendants filed their answer to the complaint, setting forth a general denial and asserting 25 affirmative defenses.

Plaintiff now seeks Right to Attach Orders and for Issuance of Writs of Attachment against Defendants.

Defendants oppose the motion.

Analysis

            Defendants’ Objections to Evidence

Defendants object to many of the statements contained in the declaration of Chris Traina, as well as all of the attached invoices, on grounds of lack of personal knowledge and hearsay.

Traina is “a consultant for, and authorized agent of,” plaintiff. (Traina Decl., ¶ 1.) In that capacity, Traina is “one of the persons with possession, custody, and control of Plaintiff’s files, including the files that Plaintiff maintains in relation to this action.” (Id. at ¶ 2.) Trainer further declares the following: “I state that the records and documents referred to in this declaration constitute records and documents taken, made, or maintained in the regular and ordinary course of Plaintiff’s business by a person employed by Plaintiff who had/has a business duty to Plaintiff to accurately and completely take, make and/or maintain such records or documents.” (Ibid.)

Traina describes the process by which plaintiff obtained the rights to HERBL’s assets, from Distro Accounts Receivable, LLC, which previously had obtained the rights to the assets through a receivership action, including the accounts receivable at issue in this motion.

Traina then authenticates each attached invoice, for each of the defendants, and states that “the goods associated with this invoice were timely delivered without objection by the purchaser. I am further informed, based on my review of HERBL’s records, that [defendant] did not pay for the goods in questions, leaving an outstanding balance owed of [$ . . .].”

Also filed by plaintiff, and not objected to by defendants, is the declaration of Sidney Dunmore, the managing member of Distro Accounts Receivable, LLC. (Dunmore Decl., ¶ 1.) Dunmore describes how Distro obtained the rights to, among other things, HERBL’s accounts receivable, by entering into a written asset purchase agreement with HERBL, through a court-appointed receiver. Dunmore then describes the process of obtaining the digital business records and documents of HERBL, including the invoices. Distro provided access to the digital database to plaintiff when plaintiff purchased the rights from Distro.

“Evidence of a writing made as a record of an act, condition, or event is not made inadmissible by the hearsay rule when offered to prove the act, condition, or event if:

            “(a) The writing was made in the regular course of a business;

            “(b) The writing was made at or near the time of the act, condition, or event;

            “(c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and

            “(d) The sources of information and method and time of preparation were such as to indicate its trustworthiness.” (Evid. Code, § 1271.)

In conjunction with the Dunmore declaration, the court finds that Traina is a qualified witness that has provided testimony sufficient to establish that the invoices fall under the business records exception to the hearsay rule. Defendants’ objections are overruled.

            Attachment

“ ‘The basic purpose of the remedy of attachment . . . is to aid in the collection of a money demand by seizure of property in advance of trial and judgment, as security for eventual satisfaction of the judgment.’ ” [Citations.]” (Commercial & Farmers Nat. Bk. v. Hetrick (1976) 64 Cal.App.3d 158, 164.)

“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.)

“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.)

“(a) At the hearing, the court shall consider the showing made by the parties appearing and shall issue a right to attach order, which shall state the amount to be secured by the attachment determined by the court in accordance with Section 483.015 or 483.020, if it 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, subd. (a).)

“(a) 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.

“(b) An attachment may not be issued on a claim which is secured by any interest in real property arising from agreement, statute, or other rule of law (including any mortgage or deed of trust of realty and any statutory, common law, or equitable lien on real property, but excluding any security interest in fixtures subject to Division 9 (commencing with Section 9101) of the Commercial Code). However, an attachment may be issued where the claim was originally so secured but, without any act of the plaintiff or the person to whom the security was given, the security has become valueless or has decreased in value to less than the amount then owing on the claim, in which event the amount to be secured by the attachment shall not exceed the lesser of the amount of the decrease or the difference between the value of the security and the amount then owing on the claim.

“(c) 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. An attachment may not be issued on a claim against a defendant who is a natural person if the claim is based on the sale or lease of property, a license to use property, the furnishing of services, or the loan of money where the property sold or leased, or licensed for use, the services furnished, or the money loaned was used by the defendant primarily for personal, family, or household purposes.

“(d) An attachment may be issued pursuant to this section whether or not other forms of relief are demanded.” (Code Civ. Proc., § 483.010.)

“Under the Attachment Law, “ ‘[w]hether or not the defendant appears in opposition, the plaintiff has the burden of proving (1) that his claim is one upon which an attachment may be issued and (2) the probable validity of such claim.’ ” [Citation.]” (Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 271.)

“ ‘[A]ttachment is a harsh remedy at best in that an alleged debtor loses control of his property before the claim against him is adjudicated. This being so, the provisions relating thereto should be strictly construed.’ ” [Citation.]” (J.C. Peacock, Inc. v. Hasko (1961) 196 Cal.App.2d 363, 365.)

Plaintiff’s action is ultimately a breach of contract action. “To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. [Citation.]” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Other than the objections to evidence attached to the Traina declaration, discussed and rejected above, defendants’ only other argument appears to be that the action is barred by the statute of frauds because: “Plaintiff provides no evidence that . . . a contract exists.” (Opp., p. 2, ll. 12-17.) Contrary to this argument, plaintiff has provided very strong evidence of enforceable contracts with each of the defendants, and defendants fail to provide any evidence that the contracts do not exist.

“(1) Except as otherwise provided in this section, a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is a record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the party’s authorized agent or broker. A record is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subdivision beyond the quantity of goods shown in the record.

“(2) Between merchants if within a reasonable time a record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subdivision (1) against the party unless notice in a record of objection to its contents is given within 10 days after it is received.

“(3) A contract which does not satisfy the requirements of subdivision (1) but which is valid in other respects is enforceable:

            “(a) If the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement;

            “(b) If the party against whom enforcement is sought admits in its pleading, testimony, or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or

            “(c) With respect to goods for which payment has been made and accepted or which have been received and accepted (Section 2606).

“(4) Subdivision (1) of this section does not apply to a qualified financial contract as that term is defined in paragraph (2) of subdivision (b) of Section 1624 of the Civil Code if either (a) there is, as provided in paragraph (3) of subdivision (b) of Section 1624 of the Civil Code, sufficient evidence to indicate that a contract has been made or (b) the parties thereto, by means of a prior or subsequent written contract, have agreed to be bound by the terms of the qualified financial contract from the time they reach agreement (by telephone, by exchange of electronic messages, or otherwise) on those terms.” (Cal. U. Com. Code, § 2201; italics added.)

“(1) Acceptance of goods occurs when the buyer

            “(a) After a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their nonconformity; or

            “(b) Fails to make an effective rejection (subdivision (1) of Section 2602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or

            “(c) Does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.

“(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.” (Cal. U. Com. Code, § 2606.)

“[A] signed writing is not required to form a binding contract. Although the Statute of Frauds generally requires a signed writing to enforce a contract for the sale of goods for the price of $500 or more, a contract may nonetheless be enforced, even without a signed writing, with respect to goods which have been received and accepted.” (Andrew Smith Co. v. Paul’s Pak, Inc. (2010) 754 F.Supp.2d 1120, 1129.)

Plaintiff has provided admissible evidence that HERBL delivered goods to each of the defendants, that defendants accepted the goods, and that defendants did not pay for the goods. In opposition, the defendants do not deny any of those claims. As such, the statute of frauds is not available as a defense to the defendants.

Further, plaintiff provided uncontradicted evidence that HERBL and defendants contracted for the sale and purchase of goods, that HERBL performed its obligations under the contracts, that defendants each breached the contract, and that HERBL suffered financial damage. As plaintiff now owns HERBL’s rights to collect on those contracts, plaintiff has shown that it is more likely than not plaintiff will prevail in this action.

The motion for right to attach orders will be granted and writs of attachment will issue.

            Undertaking

“Before issuance of a writ of attachment, a temporary protective order, or an order under subdivision (b) of Section 491.415, the plaintiff shall file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action.” (Code Civ. Proc., § 489.210.)

“(a) Except as provided in subdivision (b), the amount of an undertaking filed pursuant to this article shall be ten thousand dollars ($10,000).

“(b) If, upon objection to the undertaking, the court determines that the probable recovery for wrongful attachment exceeds the amount of the undertaking, it shall order the amount of the undertaking increased to the amount it determines to be the probable recovery for wrongful attachment if it is ultimately determined that the attachment was wrongful.” (Code Civ. Proc., § 489.220.)

Plaintiff acknowledges the requirement of an undertaking and requests that it be ordered in the amount of $10,000.00. Defendants did not object to this amount or make any request that it be a higher amount. As such, that will be the amount ordered as to each writ of attachment.