Construction Laborers Trust Funds for Southern California Administrative Company v. George Andrew Dominguez et al

Filing 38

MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFFS APPLICATION FOR RIGHT TO ATTACH ORDER AND WRIT OF ATTACHMENT [Dkt. No. 13 ] by Magistrate Judge Suzanne H. Segal. Plaintiff has satisfied the criteria for the issuance of a writ of attachment. Def endant's attempted defenses are unpersuasive. Accordingly, Plaintiff's Application for a Right to Attach Order and Writ of Attachment, as amended by the reduction in the amount to be attached to $75,000, is GRANTED. Because the Court has not found any authority allowing it to exercise discretion regarding the posting of a bond, a bond is necessary here. If Plaintiff is aware of any contrary authority, Plaintiff may file a Notice of Authority within 7 days of the date of this Orde r, with a brief explanation in support of its contention that no bond is required. Defendant may file a response within 7 days of service of the Notice. If the Court is persuaded that a bond is not required, the Court may amend this Order. Plaintiff shall submit a proposed Right to Attach Order and Writ of Attachment reflecting the amended sum to be attached within seven days of the date of this Order. (See document for further details). (mr)

Download PDF
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 CONSTRUCTION LABORERS TRUST FUNDS FOR SOUTHERN CALIFORNIA ADMINISTRATIVE COMPANY, 11 12 CASE NO. CV 17-7164 AB (SSx) MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFF’S Plaintiff, 13 APPLICATION FOR RIGHT TO v. 14 ATTACH ORDER AND WRIT OF GEORGE ANDREW DOMINGUEZ, et al., 15 16 ATTACHMENT Defendants. [Dkt. No. 13] 17 18 19 I. 20 INTRODUCTION 21 22 On September 28, 2017, Plaintiff Construction Laborers Trust 23 Funds for Southern California Administrative Company (“CLTF” or 24 “Plaintiff”) filed a civil complaint against Defendants George 25 Andrew 26 (“Hudson”), 27 1 28 Dominguez and (“Dominguez”), Suretec Hudson Insurance Insurance Company Company (“Suretec”).1 “Defendant” in the singular shall refer to Dominguez only. “Defendants” in the plural shall refer to Dominguez, Hudson and Suretec collectively. 1 (“Complaint,” Dkt. No. 1). The Complaint asserts claims for 2 contributions to employee benefit plans, specific performance, 3 preliminary and permanent injunctive relief, breach of settlement 4 agreement, recovery against license bond, and recovery against 5 labor and material payment bonds. (Id. at 4-16). 6 7 Two weeks later after Plaintiff filed the Complaint, on 8 October 12, 2017, Plaintiff filed an Ex Parte Application for a 9 Right to Attach Order and Writ of Attachment, and for a Temporary 10 Protective Order.2 11 Application was supported by a Memorandum of Points and Authorities 12 (“Memo.”) and the declarations of Marsha M. Hamasaki (“Hamasaki 13 Decl.”) and Yvonne Higa (“Higa Decl.”). 14 an 15 declaration of George Andrew Dominguez (“Dominguez Decl.”). 16 No. 17). 17 issued an Order denying the Ex Parte Application without prejudice 18 on the procedural ground that Plaintiff had not shown that it would 19 suffer irreparable harm if the matter were heard as a regularly 20 noticed motion. 21 filed a Notice of Hearing setting the hearing on the merits of its 22 Application for November 7, 2017, (Dkt. No. 20), which the Court 23 continued to November 21, 2017. 24 \\ 25 \\ 26 27 28 Opposition on (“Application” or “Appl.,” Dkt. No. 13). October 16, 2017, (Id.). (“Opp.”), The Defendant filed including the (Dkt. That same day, the Court held a telephonic hearing and (Dkt. No. 19). On October 17, 2017, Plaintiff (Dkt. No. 33). This Order addresses only the request for a right to attach order and writ of attachment. Plaintiff’s request for a “temporary protective order” is not within the scope of the Magistrate Judge’s authority. 2 2 1 On October 27, 2017, Defendant filed a Supplemental 2 Opposition, (“Supp. Opp.”), including another declaration of George 3 Andrew 4 Plaintiff filed a Reply on November 3, 2017, (“Reply,” Dkt. No. 5 29), including additional declarations by Marsha M. Hamasaki, 6 (“Hamasaki Supp. Decl.,” Dkt. No. 30), and Yvonne Higa. 7 Suppl. Decl.,” Dkt. No. 31). 8 21, 2017. 9 Plaintiff’s Application for a Right to Attach Order and Writ of 10 Dominguez (“Dominguez Supp. Decl.”). (Dkt. No. 26). (“Higa The Court held a hearing on November For the reasons discussed below and at the hearing, Attachment is GRANTED. 11 12 II. 13 ALLEGATIONS OF THE COMPLAINT 14 15 Plaintiff is an administrator and agent for collection of 16 several employee benefit plans, and a fiduciary as to those plans. 17 (Complaint ¶ 3). 18 and qualify as “employee benefit plans” and “multi-employer plans” 19 within the meaning of the relevant provisions of the Employee 20 Retirement Income Security Act of 1974 (“ERISA”). The plans were created by written agreements, (Id.). 21 22 Defendant is an individual doing business as G.A. Dominguez. 23 (Id. at ¶ 4). Defendant is a party to written collective bargaining 24 agreements with Plaintiff and its affiliated local unions. 25 ¶ 11). 26 fringe benefit contributions for each hour worked by his employees 27 performing services covered by the agreements, and to deliver to 28 Plaintiff monthly contribution reports that identify the employees, (Id. Pursuant to these agreements, Defendant is required to pay 3 1 the hours worked 2 contributions due. 3 monthly. 4 contributions timely, he is liable for interest on the unpaid 5 amounts, plus liquidated damages in a sum equal to the greater of 6 $25.00 or 20% of the unpaid contributions. 7 agreements empower Plaintiff to audit Defendant’s payroll and 8 business records, with resulting costs charged to Defendant. 9 ¶ 18). (Id.). by each employee, (Id. ¶ 13). and the amount of the The contributions are to be paid In the event that Defendant fails to pay the (Id. ¶¶ 16-17). The (Id. 10 11 Plaintiff alleges that Defendant employed workers covered by 12 the agreements but failed to pay benefits for certain periods from 13 January 2014 through July 2017. 14 previously entered into a settlement agreement concerning amounts 15 owed for the period from March 2016 to September 2016, (id. ¶¶ 41- 16 42), but failed to make all the payments. 17 has also failed to permit Plaintiff to conduct a complete audit of 18 his payroll and business records. (Id. ¶¶ 19 & 23). (Id. ¶ 44). Defendant Defendant (Id. ¶¶ 20-21). 19 20 III. 21 THE ATTACHMENT APPLICATION AND THE PARTIES’ CONTENTIONS 22 23 By the instant Application, Plaintiff “seeks to attach funds 24 owed to [Defendant] by his prime contractor and by the public 25 agencies pending final judgment[,] which may partially secure 26 recovery of the funds owed by [Defendant,] and to record the writ 27 of attachment against [Defendant’s] business property prior to its 28 sale.” (Memo. at 2). Plaintiff calculated in its opening brief 4 1 that as of September 27, 2017, Defendant owed Plaintiff at least 2 $158,832.85. 3 only $130,000.00 of Defendant’s assets in light of the possibility 4 that it might prevail on its Sixth Claim for Relief against Suretec 5 for unpaid compensation guaranteed by a payment bond. 6 also 7 calculations in its Reply to reflect adjustments made after the 8 Application was filed. 9 amount (Id. at 10). Complaint owed by at 20-21). However, Plaintiff sought to attach Plaintiff further (Id.; see revised its Plaintiff determined that the revised total Defendant, including unpaid fringe benefits, 10 liquidated damages, audit fees, and interest as of October 27, 11 2017, was $139,576.26. 12 Plaintiff further conceded that the amount it is now seeking from 13 Suretec could reduce Defendant’s liability to $102,185.95. 14 at 11). 15 that amount in order to “free some $27,000.00 to [Defendant] for 16 the expenses and legal fees pending final judgment” of this matter. 17 (Id.). (Id.; see also Higa Supp. Decl. ¶ 9). (Reply Plaintiff presently seeks to attach only $75,000.00 of 18 19 20 The specific assets owned by Defendant which Plaintiff seeks to attach are: 21 22 A) 23 Lien against real property commonly known as 535 537 W. Grand Avenue, Escondido, CA 92025; 24 25 B) Proceeds of the sale of real property commonly 26 known as 535-537 W. Grand Avenue, Escondido, CA 27 92085 [sic]; 28 5 1 C) All contract earnings, right to payments, 2 retention, for work performed by Defendant for the 3 San Diego Unified School District; 4 5 D) All contract earnings, right to payments, retention 6 for work performed for the Whittier Union High 7 School District; 8 9 E) All Defendant’s accounts receivables, payments, 10 right to payments, owed by JTS Modular Inc., and 11 all funds payable thereto up to [$75,000.00] in JTS 12 Modular Inc.’s 13 including subcontract earnings for work performed 14 for JTS Modular Inc., for the Pomona Unified School 15 District 16 Defendant for JTS Modular, Inc. possession, custody and/or control, and/or any other subcontract work by 17 18 F) 19 Funds held in bank accounts with City National Bank. 20 21 (Appl., Exh. A at 6). 22 23 Plaintiff argues that it is entitled to attach Defendant’s 24 assets for at least three reasons. 25 Defendant evidently does not have the funds on hand to pay the 26 amounts owed, as demonstrated by his failure to pay monies due 27 under 28 “unpaid false reports as confirmed by the audit of payroll records, the settlement agreement First, Plaintiff contends that and 6 his alleged submission of 1 and certified payroll records on public works projects.” (Memo. 2 at 10). 3 not only to Plaintiff, but also to the IRS, as evidenced by tax 4 liens levied by the IRS. 5 3). 6 down his business because his commercial property is for sale by 7 owner. 8 Defendant’s potential imminent departure from the business is 9 suggested by Defendant’s failure to submit monthly contribution 10 reports since May 2017, even though other records confirm that he 11 has had employees on his payroll since that time, and by his failure 12 to pay the contributions due. 13 that 14 Plaintiff will recover nothing unless it obtains contributions from 15 Defendant’s 16 payment, or from the proceeds of the sale of his commercial 17 property. Plaintiff believes that Defendant owes “substantial debt” (Reply at 3; Hamasaki Decl. ¶ 8 & Exh. Second, Plaintiff is concerned that Defendant may be shutting (Memo. at 10). Defendant’s known Plaintiff argues that further evidence of (Id.). unwillingness projects to for Third, Plaintiff maintains communicate which indicates Defendant will that receive (Id. at 11). 18 19 Defendant does not challenge Plaintiff’s allegations that he 20 is delinquent in making required contributions, or even the amounts 21 that Plaintiff alleges that he owes.3 22 that the “scope” of the proposed attachment is “problematic” and 23 that there is no danger that funds will not be available if 24 Plaintiff prevails in this action. 25 asserts four challenges to the “scope” of the proposed attachment, 26 27 28 Instead, Defendant argues (Supp. Opp. at 1). Defendant Defendant does summarily assert, however, without citation to statutory or case law or further discussion, that Plaintiff’s liquidated damages claim is “arguably impermissible given the punitive nature of the damages.” (Supp. Opp. at 2, 8). 3 7 1 which he contends 2 Defendant notes first that “it could be argued” that Plaintiff is 3 seeking to attach assets held “in trust” by Defendant in which he 4 has no ownership interest. 5 rights of his bond issuers (and co-Defendants), Hudson and Suretec, 6 create a “trust relationship” in which payments by third parties 7 to Defendant for work covered by the bonds should be construed as 8 monies held “in trust” by Defendant for the benefit of Hudson and 9 Suretec. (Id.). impermissibly encompasses (Id.). exempt property. According to Defendant, the Second, Defendant claims that his assets are 10 community property, and that attachment would infringe the property 11 rights 12 maintains that as an individual, he is “entitled to assert certain 13 exemptions” under California Code of Civil Procedure §§ 703.010- 14 704.995, although he does not identify the specific exemptions that 15 he believes may apply.4 16 Plaintiff is not permitted under California Code of Civil Procedure 17 § 487.020(b) 18 Defendant 19 attorney’s fees so that Defendant may meaningfully defend the 20 instant action on the merits. 21 Dep’t, 5 Cal. 3d 536, 562 (1971)). of his non-debtor to and attach his spouse. (Id.). Third, Defendant Fourth, Defendant asserts that property family, (Id.). that including is necessary funds needed to to support pay for (Id.) (citing Randone v. Appellate 22 23 As to the contention that there is no risk that funds will 24 not be available to make Plaintiff whole should Plaintiff prevail 25 26 27 28 The Sections cited by Defendant in connection with this argument specifically concern exemptions that may be claimed in postjudgment proceedings. However, California Code of Civil Procedure Section 487.020 specifically provides that “[a]ll property exempt from enforcement of a money judgment” is also “exempt from [prejudgment] attachment.” Cal. Code Civ. Proc. § 487.020(a). 4 8 1 in this action, Defendant argues that “[t]he issuance of payment 2 and 3 [Plaintiff] has filed its lawsuit, as well as all other public 4 works projects, ensures that, should [Plaintiff] prevail, funds 5 will be available to satisfy [Plaintiff’s] claim.” 6 2). 7 of such bonds already secure[s] [Plaintiff’s] claim,” thereby 8 satisfying the purpose of prejudgment attachments. 9 Finally, Defendant states in his declaration that although he 10 listed real property for sale by owner with an asking price of 11 $585,000.00, he has received no reasonable offer in the year that 12 the property has been on the market, and he does not anticipate 13 that a sale will be finalized “in the near future.” 14 Supp. Decl. ¶ 10). performance bonds on each of the projects upon which (Supp. Opp. at According to Defendant, “[p]ractically speaking, the presence (Id. at 6). (Dominguez 15 16 Plaintiff refutes each of the defenses raised by Defendant. 17 With respect to Defendant’s challenges to the “scope” of the 18 proposed attachment, Plaintiff argues that sums owed by third 19 parties to Defendant are Defendant’s “accounts receivable” and are 20 not held “in trust” for the benefit of Defendant’s bond issuers. 21 (Reply at 5). 22 are subject to attachment. 23 Surety Co. v. Polisso, 139 Cal. App. 4th 922, 942 (2006), and 24 California Family Code § 910(a)). 25 entitled to any statutory exemptions from attachment, which he does 26 not identify, Plaintiff notes that the California Code of Civil 27 Procedure sets out procedures for claiming exemptions after levy. 28 (Reply at 7) (citing Cal. Code Civ. Proc. §§ 703.510 et seq.). Plaintiff further contends that community assets (Id.) (citing, inter alia, Century 9 To the extent that Defendant is 1 With respect to Defendant’s claim that the assets Plaintiff seeks 2 to attach are needed to support his family and his defense in this 3 litigation, Plaintiff states that such a claim requires a full 4 disclosure of Defendant’s assets. 5 contention that funds will be available through bond issuers Hudson 6 and Suretec, Plaintiff argues that it is not clear that the bond 7 amounts will be sufficient as “[p]ayment bonds on projects only 8 cover the contributions owed to the employees for their work on 9 the bonded project, and do not cover [Plaintiff’s] claim for (Reply at 7). As to Defendant’s 10 liquidated damages[] and audit fees.” 11 respect to Defendant’s claim that liquidated damages are “arguably 12 impermissible” given their punitive nature, Plaintiff emphasizes 13 that both the written agreements and ERISA, 29 U.S.C. § 1132(g)(2), 14 provide 15 “repeatedly held . . . are mandatory elements of any court award.” 16 (Reply at 2) (citing cases; emphasis in original). for liquidated damages, (Id. at 4). which the Ninth Finally, with Circuit has 17 18 IV. 19 DISCUSSION 20 21 22 A. California Law Applies To Plaintiff’s Application For Right To Attach Order And Writ Of Attachment 23 24 Plaintiffs in federal court may invoke whatever remedies are 25 provided under the law of the state in which the federal court is 26 located for “seizing a person or property to secure satisfaction 27 of the potential judgment.” 28 v. Marnatech Enters., Inc., 970 F.2d 552, 558 (9th Cir. 1992) Fed. R. Civ. P. 64; Reebok Int’l, Ltd. 10 1 (discussing Rule 64); NML Capital, Ltd. v. Spaceport Sys. Int’l, 2 L.P., 788 F. Supp. 2d 1111, 1116 (C.D. Cal. 2011). 3 may include a writ of attachment. 4 VFS Fin., Inc. v. CHF Express, LLC, 620 F. Supp. 2d 1092, 1094-95 5 (C.D. Cal. 2009) (Rule 64 “provides for prejudgment attachment[] 6 and other prejudgment remedies . . .” authorized under state law). 7 Because attachment is sought against Defendant in the state of 8 California, 9 conditions a writ of attachment may issue. California law These remedies Fed. R. Civ. P. 64; see also determines whether and under what In California, the 10 procedures and grounds for obtaining orders for prejudgment writs 11 of attachment are codified at California Code of Civil Procedure 12 §§ 481.010-493.060. 13 14 B. Overview Of California Law Governing Attachment 15 16 Attachment “is a remedy by which a Plaintiff with a 17 contractual claim to money (not a claim to a specific item of 18 property) may have various items of a defendant’s property seized 19 before judgment and held by a levying officer for execution after 20 judgment.” 21 1271 (1999) (emphasis omitted). 22 attachments under limited circumstances as “a provisional remedy 23 to aid in the collection of a money demand.” 24 Inc. v. Titan Elec. Corp., 146 Cal. App. 4th 1474, 1476 (2007). 25 It is “a harsh remedy because it causes the defendant to lose 26 control 27 adjudicated.” 28 Therefore, Waffer Int’l Corp. v. Khorsandi, 69 Cal. App. 4th 1261, of his property before California allows prejudgment the Kemp Bros. Constr. plaintiff’s claim is Martin v. Aboyan, 148 Cal. App. 3d 826, 831 (1983). the requirements for 11 the issuance of a writ of 1 attachment are strictly construed against the applicant. Pos-A- 2 Traction, Inc. v. Kelly-Springfield Tire Co., 112 F. Supp. 2d 1178, 3 1181 (C.D. Cal. 2000) (“Attachment is a purely statutory remedy, 4 which is subject to strict construction.”). 5 applicant to establish each element necessary for an attachment 6 order by a preponderance of the evidence. 7 Glen Music, Inc., 166 Cal. App. 3d 1110, 1116 (1985). The burden is on the Loeb & Loeb v. Beverly 8 9 A writ of attachment may be issued “only in an action on a 10 claim or claims for money, each of which is based upon a contract, 11 express or implied, where the total amount of the claim or claims 12 is a fixed or readily ascertainable amount not less than five 13 hundred dollars.” 14 added). 15 “must furnish a standard by which the amount due may be clearly 16 ascertained and there must exist a basis upon which the damages 17 can be determined by proof.” 18 v. Super DVD, Inc., 115 Cal. App. 4th 537, 540 (2004) (internal 19 quotation marks omitted); see also Pet Food Express, Ltd. v. Royal 20 Canin USA Inc., 2009 WL 2252108, at *5 (N.D. Cal. July 28, 2009) 21 (“lost profits” that plaintiff sought to attach were not “certain, 22 fixed, or even readily ascertainable” and thereby failed to “meet 23 the threshold requirement for this court to even consider issuing 24 a writ of attachment”). 25 claims or claims secured by personal property, but not on claims 26 secured by real property. 27 Attachment lies on any claim against a partnership or corporation 28 or on claims against individuals that arise out of the conduct by Cal. Code Civ. Proc. § 483.010(a) (emphasis For damages to be “readily ascertainable,” the contract CIT Group/Equipment Financing, Inc. Attachment is permitted on unsecured Cal. Code Civ. Proc. § 483.010(b). 12 1 the individual 2 of a trade, business, or profession. Id. § 483.010(c). 3 4 A court must find all of the following before an attachment 5 order may issue: (1) the claim upon which the attachment is based 6 is one upon which an attachment may be issued; (2) the plaintiff 7 has established the probable validity of the claim upon which the 8 attachment is based; (3) the attachment is not sought for a purpose 9 other than recovery of the claim upon which the attachment is 10 based; and (4) the amount to be secured by the attachment is greater 11 than zero. 12 component, the plaintiff must show that it is more likely than not 13 that 14 § 481.190; see also Pos-A-Traction, 112 F. Supp. 2d at 1182. 15 determining the probable validity of a claim where the defendant 16 makes an appearance, the court must consider the relative merits 17 of the positions of the respective parties and make a determination 18 of the probable outcome of the litigation.” 19 App. 3d at 1120. it Id. § 484.090(a). will obtain a To establish the “probable validity” judgment against the defendant. Id. “In Loeb & Loeb, 166 Cal. 20 21 California law restricts the availability of pre-judgment 22 attachments in part by providing the defendant with an opportunity, 23 prior to a ruling on an attachment application, to establish that 24 the property sought to be attached is exempt. 25 one California practice guide, As summarized in 26 27 The state cannot properly withdraw the essentials a 28 defendant needs to live, to work, to support a family, 13 1 or to litigate a pending action before an impartial 2 confirmation of the actual validity of the creditor’s 3 claim after a hearing on that issue. 4 Appellate Department, 5 Cal. 3d 536, 96 Cal. Rptr. 709, 5 488 P.2d 13 (1971)] [Randone v. Therefore, the Attachment Law: 6 7 (1) requires before levy either an opportunity for the 8 defendant to claim exemptions or a showing by the 9 plaintiff that the property sought to be attached 10 is not exempt 11 [Code Civ. Proc., § 484.070 (exemptions)]; 12 13 (2) generally, subjects only business property to levy 14 [Code Civ. Proc., § 487.010, subds. (a) and (b) 15 (corporate or partnership or association property 16 otherwise subject to levy)]; 17 18 (3) requires, when the defendant is a natural person, 19 that the plaintiff’s 20 defendant’s 21 profession, and not run to money or property used 22 primarily 23 [Nakasone v. Randall, 129 Cal. App. 3d 757, 181 24 Cal. Rptr. 324 (2d Dist. 1982)]; conduct for claim of family a arise trade, or out of business, household the or purposes 25 26 27 (4) provides a circumstances nonseizure [Code form Civ. 28 14 of levy Proc., § in many 488.315 1 (attachment 2 of real property by recordation of writ)]; 3 4 (5) authorizes the court 5 protective order 6 exceptional circumstances where a writ might be 7 issued ex parte [Code Civ. Proc., § 486.030]; in to issue lieu of a a temporary writ in the 8 9 (6) authorizes the court to review issuance of an ex 10 parte writ, if based on defendant’s alleged 11 insolvency, within 5 court days after plaintiff is 12 served with defendant’s request to do so [Code Civ. 13 Proc., § 485.010, subd. (c)]; 14 15 (7) permits defendant to apply to set aside a right to 16 attach order and quash a writ of attachment [Code 17 Civ. Proc., § 485.240]; 18 19 (8) permits defendant to substitute an undertaking for 20 the property seized [Code Civ. Proc., § 489.310]; 21 and 22 23 (9) requires that property of an individual sought to 24 be attached 25 property 26 § 484.020, subd. (e)]. can be be described so identified that [Code the Civ. specific Proc., 27 28 Moore & Thomas, Cal. Civ. Prac. Procedure § 16:4 (2017). 15 1 C. Plaintiff Is Entitled To A Writ Of Attachment 2 3 1. The Criteria For An Attachment Order Are Satisfied 4 5 a. The Claim Upon Which The Attachment Is Based Is One 6 Upon Which An Attachment May Issue And The Amount 7 To Be Attached Is Greater Than Zero 8 9 Defendant does not challenge that he is bound by contract to 10 submit fringe benefit contributions to Plaintiff for each hour 11 worked by his employees who perform work covered by the agreements. 12 (See Higa Decl. ¶¶ 7, 9, 11, 16 & Exh. 5 (Short Form Agreement 13 incorporating by reference Construction Master Labor Agreements)). 14 Accordingly, the claim is one upon which an attachment may be 15 issued -- it arises from a claim for money, based on contract, 16 arising “out of the conduct by [Defendant] of a trade, business, 17 or profession,” Cal. Code Civ. Proc. § 483.010(c), in an amount 18 that is fixed or ascertainable that is over five hundred dollars. 19 Id. § 483.010(a). 20 recovery of the claim is greater than zero. Furthermore, the amount to be attached to secure Id. § 484.090(a)(4). 21 22 b. Probable Validity Of The Claim Favors Plaintiff 23 24 To establish the “probable validity” component, Plaintiff must 25 show it is more likely than not that it will obtain a judgment 26 against the defendant. 27 Pos-A-Traction, 112 F. Supp. 2d at 1182. “In determining the 28 probable defendant validity of Cal. Code Civ. Proc. § 481.190; see also a claim where 16 the makes an 1 appearance, the court must consider the relative merits of the 2 positions of the respective parties and make a determination of 3 the probable outcome of the litigation.” 4 App. 3d at 1120. 5 out a prima facie case for breach of contract; rather, the plaintiff 6 must also show that the defenses raised are “less than fifty percent 7 likely to succeed.” 8 Inc., 2009 WL 2252108, at *5 (N.D. Cal. 2009). 9 fails to rebut a factually-supported defense that would defeat its Loeb & Loeb, 166 Cal. Thus, it is not enough for the plaintiff to make Pet Food Express, Ltd. v. Royal Canin USA If an applicant 10 claims, the applicant has not established probable validity. 11 Intervest Mortgage Inv. Co. v. Skidmore, 2008 WL 5385880, at *7 12 (E.D. Cal. Dec. 19, 2008) (“[Plaintiff] argues that it may not be 13 required to refute [defendant’s] defenses, i.e. that probable 14 validity on the prima facie case may be sufficient. 15 disagrees. Section 484.090 requires prediction of the probable 16 outcome the 17 counterclaims will potentially influence this outcome.”); Plata v. 18 Darbun Enters., Inc., 2009 WL 3153747, at *7 (S.D. Cal. Sept. 23, 19 2009) (denying right to attach order because an asserted defense 20 prevented the plaintiffs from establishing the probable validity 21 of their claim). of litigation, and the affirmative See The court defenses and 22 23 Here, Defendant does not even attempt to contest that he owes 24 benefit contributions under the contract to Plaintiff, or seriously 25 challenge 26 Application is based on documentary evidence, including written 27 contracts, monthly reports, and data strongly suggesting that 28 Defendant has underreported or entirely failed to report hours the validity of Plaintiff’s 17 claim. Plaintiff’s 1 worked. In contrast, the Supplemental Opposition is devoid of 2 evidence or 3 prevail on the merits at trial, either due to Plaintiff’s failure 4 of proof or to Defendant’s affirmative defenses.5 5 Court concludes that it is more likely than not that Plaintiff will 6 obtain a judgment against Defendant. 7 § 481.190. argument suggesting that Defendant might somehow Accordingly, the See Cal. Code Civ. Proc. 8 9 c. 10 Attachment Is Not Sought For A Purpose Other Than Recovery Of The Claim 11 12 There is no suggestion in the record before the Court that 13 Plaintiff is seeking attachment for any purpose other than securing 14 recovery of the claim. 15 agreement, demonstrating an unwillingness or inability to pay, and 16 Plaintiff persuasively contends that it has good reason to believe 17 18 19 20 21 22 23 24 25 26 27 28 Defendant has already breached a settlement Indeed, many of Defendant’s so-called “affirmative defenses” in his Answer to the Complaint are not affirmative defenses at all. (See Dkt. No. 28 at 8-13). An affirmative defense “plead[s] matters extraneous to the plaintiff’s prima facie case, which deny plaintiff’s right to recover, even if the allegations are true.” Federal Deposit Ins. Corp. v. Main Hurdman, 655 F. Supp. 259, 262 (E.D. Cal. 1987); see also In re Rawson Food Service, Inc., 846 F.2d 1343, 1349 (11th Cir. 1988) (“An affirmative defense raises matters extraneous to the plaintiff’s prima facie case; as such, they are derived from the common law plea of ‘confession and avoidance.’”) (internal quotation marks omitted). However, “[a] defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense.” Zivkovic v. Southern California Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002); see also In re Rawson Food Service, 846 F.2d at 349 (defenses which merely “negate an element of the plaintiff’s prima facie case . . . are excluded from the definition of affirmative defense in Fed. R. Civ. P. 8(c)”) (internal quotation marks omitted). Regardless, Defendant’s Supplemental Opposition does not argue that Defendant is likely to prevail at trial under any theory. 5 18 1 that Defendant has underreported, or entirely failed to report, 2 employee work hours for which he would be required to make benefit 3 payments. 4 documenting his employees’ hours suggests that Defendant may be 5 trying to evade his obligations to Plaintiff. 6 and in the absence of any other countervailing evidence, it does 7 not 8 impermissible purpose. 9 attachment are met. Defendant’s appear that failure Plaintiff is to produce seeking an monthly reports In this context, attachment for an As such, all of the criteria for a writ of 10 11 2. Defendant’s Challenges To The Proposed Attachment Fail 12 13 Defendant raises numerous challenges to the Application on 14 the grounds that the 15 alternatively, 16 contentions 17 briefly address each one. that are not property to attachment persuasive. is be attached is unnecessary. Nonetheless, exempt or, Defendant’s the Court will 18 19 a. 20 Defendant’s Accounts Receivable Are Not Held “In Trust” For His Bond Issuers 21 22 Defendant vaguely contends that “it could be argued” that the 23 funds Plaintiff seeks to attach are actually the property of 24 Defendant’s bond issuers, and that Defendant is holding or will 25 hold the funds only “in trust” for the benefit of the rightful 26 owners, Hudson and Suretec. 27 v. Mahoney, 62 Cal. App. 3d 604, 609 (1976)). 28 Defendant, (Supp. Opp. at 1, 6) (citing Richion 19 According to 1 [I]t is possible that a Court may find that the funds 2 held by Defendant are funds in which Defendant only holds 3 a partial, if any, equitable interest. 4 to 5 Defendant satisfies his obligations, any funds that 6 Defendant receives or has in his possession are funds 7 that would, effectively, be held in trust by Defendant 8 for the benefit of the bonding company or claimants. such a conclusion, it would If a Court came follow that until 9 10 (Supp. Opp. at 6). 11 San Diego and Whittier School Districts for Defendant’s work on 12 those 13 promised funds are simply accounts receivable. projects Plaintiff counters that the funds owed by the are owed directly to Defendant, for whom the (Reply at 5). 14 15 California law provides that “[a]n attaching creditor seeking 16 to subject the property of a debtor to payment of his debt obtains 17 a lien only upon the title or interest the debtor has and where no 18 actual 19 nothing. . . . [P]roperty held by the debtor in trust is not 20 subject to attachment for his debts.” 21 609 (internal citations omitted). 22 failed to show that under California law, a party owed money 23 pursuant to a contract with a third party for work insured by a 24 bond issuer holds the funds “in trust” for his bond 25 Defendant’s repeated use of phrases such as “it could be argued,” 26 “it is possible” and “if the Court came to such a conclusion,” 27 coupled with the complete lack of citations to relevant case law, 28 only interest confirm is that shown[,] the Defendant’s 20 attaching creditor gets Richion, 62 Cal. App. 3d at However, Defendant has utterly position is issuer. speculative and 1 unsupported. Defendant has not shown that his contract earnings 2 and accounts receivable are not subject to attachment. 3 defense fails. This 4 5 b. Community Property Is Attachable 6 7 Defendant also argues that the property Plaintiff seeks to 8 attach is community property subject to the rights of his non- 9 debtor spouse, who is not a party to this action. (Supp. Opp. at 10 2, 7) (citing Cal. Code Civ. Proc. § 487.020(b)). Plaintiff 11 counters that a community estate may be held liable for any debt 12 incurred by either spouse prior to or during the course of the 13 marriage. 14 Cal. App. 4th 922, 942 (2006)). (Reply at 5) (citing Century Surety Co. v. Polisso, 139 15 16 The gravamen of Defendant’s argument is unclear. However, to 17 the extent that Defendant is attempting to argue that community 18 property is exempt from attachment, in whole or in part, simply 19 because it is community property in which a non-debtor spouse holds 20 an interest, he is plainly wrong. 21 910(a) provides that “the community estate is liable for a debt 22 incurred by either spouse before or during marriage, regardless of 23 which spouse has the management and control of the property and 24 regardless of whether one or both spouses are parties to the debt 25 or to a judgment for the debt.” 26 United States v. McGrew, 2014 WL 7877053, at *5 (C.D. Cal. Dec. 27 19, 28 California law, the entire community is liable for the debts 2014), aff’d, 669 F. California Family Code Section Cal. Fam. Code § 910(a); see also App’x 21 831 (9th Cir. 2016) (“Under 1 incurred by one of the spouses during the marriage, if the debts 2 were incurred prior to separation.”) (citing Section 910(a)).6 3 California Supreme Court has further explained that “the liability 4 of community property is not limited to debts incurred for the 5 benefit of the community, but extends to debts incurred by one 6 spouse alone exclusively for his or her own personal benefit.” 7 Lezine v. Sec. Pac. Fin., 14 Cal. 4th 56, 64 (1996). 8 property 9 community property. is not exempt from attachment simply The Community because it is See, e.g., McKnight v. Superior Court, 170 10 Cal. App. 3d 291, 295 (1985) (noting without comment that plaintiff 11 had obtained a writ of attachment against real property owned by 12 defendant and his non-debtor spouse as community property). 13 defense fails. This 14 15 c. 16 Defendant Fails To Identify Any Applicable Statutory Exemptions 17 18 Defendant states that as an individual, he is entitled to the 19 protections against attachment provided by Cal. Code Civ. Proc. 20 §§ 703.010-704.995. (Supp. Opp. at 2; see also id. at 7 (“Defendant 21 would be entitled to carve out certain assets from a writ that were 22 part 23 Defendant, as an individual, would not be afforded to assert if a 24 corporation.”)). However, Defendant does not identify any specific 25 provision 26 27 28 of California’s or individual exemption to exemption which he is schemes allegedly . . . that entitled. Furthermore, California Code of Civil Procedure Section 695.020(a) explicitly provides that “[c]ommunity property is subject to enforcement of a money judgment as provided in the Family Code.” 6 22 1 Plaintiff contends that whatever the exemptions Defendant may 2 believe 3 Procedure sets forth procedures to claim exemptions after levy. 4 (Reply at 7) (citing, inter alia, Cal. Code Civ. Proc. § 703.520 5 (claim of exemption by judgment debtor is filed with the levying 6 officer), id. § 703.530 (judgment debtor may be required to submit 7 financial statement), id. § 703.570 (hearing is held to determine 8 judgment debtor’s right to claimed exemption)). However, Plaintiff 9 ignores California procedures expressly allowing a defendant to 10 he is entitled to assert, California Code of Civil claim an exemption before a pre-judgment attachment issues. 11 12 California Code of Civil Procedure section 484.020 requires 13 an application for a writ of attachment to include, among other 14 things, “[a] description of the property to be attached under the 15 writ of attachment and a statement that the plaintiff is informed 16 and believes that such property is subject to attachment. 17 Code Civ. Proc. § 484.020(e). 18 person, the description of property shall be reasonably adequate 19 to permit the defendant to identify the specific property to be 20 attached.” Id. 21 individual defendant to determine whether to claim an exemption 22 before the attachment order issues. 23 Nissan, Inc., 207 Cal. App. 3d 260, 268 (1989). 24 sets forth the procedure for claiming an exemption to pre-judgment 25 attachment. 26 \\ 27 \\ 28 \\ Cal. “Where the defendant is a natural The purpose of this requirement is to enable an See Bank of America v. Salinas It provides in relevant part: 23 Section 484.070 1 (a) If the defendant claims that the personal property 2 described in the plaintiff’s application, or a 3 portion 4 attachment, the defendant shall claim the exemption 5 as provided in this section. If the defendant fails 6 to make the claim or makes the claim but fails to 7 prove that the personal property is exempt, the 8 defendant may not later claim the exemption except 9 as provided in Section 482.100. of such property, is exempt from 10 11 . . . 12 13 (c) The claim of exemption shall: 14 (1) Describe the property claimed to be exempt. 15 (2) Specify the statute section supporting the 16 claim. 17 18 (d) The claim of exemption shall be accompanied by an 19 affidavit supporting any factual issues raised by 20 the claim and points and authorities supporting any 21 legal issues raised. 22 23 (e) The claim of exemption, together with any 24 supporting affidavit and points and authorities, 25 shall be filed and served on the plaintiff not less 26 than five court days before the date set for the 27 hearing. 28 24 1 (f) If the plaintiff desires to oppose the claim of 2 exemption, the plaintiff shall file and serve on 3 the defendant, not less than two days before the 4 date set for the hearing, a notice of opposition to 5 the claim of exemption, accompanied by an affidavit 6 supporting any factual issues raised and points and 7 authorities 8 raised. . . . supporting any legal issues 9 10 (g) If the plaintiff files and serves a notice of 11 opposition to the claim as provided in this 12 section, the defendant has the burden of proving 13 that the property is exempt from attachment. 14 15 Cal. Code Civ. Proc. § 484.070; see also Bank of Am., 207 Cal. App. 16 3d at 270 (“It could hardly be clearer that, just as the defendant 17 is required to make exemption claims before a noticed hearing on 18 an attachment application, so the plaintiff is required to oppose 19 any such claims. 20 claim of exemption for personal property. 21 lack of opposition concedes the propriety of timely exemption 22 claims.”). A defendant is deemed to have waived any untimely Similarly, a plaintiff’s 23 24 Here, Defendant’s attempt to assert a right to exemptions 25 under Sections 703.010-704.955 fails because Defendant does not 26 identify the specific property he claims to be exempt, or the 27 specific statute supporting the claim, as required by Section 28 484.070(c). Nor does Defendant’s Supplemental Declaration explain 25 1 why any of the property at issue is exempt under these statutes. 2 Because Defendant has failed to show an entitlement to exemptions 3 under Sections 703.010-704.955, such claims are waived for purposes 4 of the instant Application. This defense fails. 5 6 d. Defendant 7 Has Not Shown That The Funds To Be Attached Are Necessary To Support Him Or His Family 8 9 Defendant maintains that funds necessary to support him and 10 his family, including funds needed for legal fees incurred in his 11 defense in the instant action, are exempt from attachment. 12 Opp. 13 § 487.020(b); Randone v. Appellate Dep’t, 5 Cal. 3d 536, 562 14 (1971)). 15 exemption, Defendant must disclose all of his assets and sources 16 of income. at 2, 7) (citing, Plaintiff inter contends alia, that in Cal. Code order to (Supp. Civ. assert Proc. this (Reply at 7). 17 18 Defendant is correct as a general proposition that funds 19 necessary to support a defendant or his family are exempt from 20 prejudgment attachment. 21 that property is exempt “which is necessary for the support of a 22 defendant who is a natural person or the family of such defendant 23 supported in whole or in part by the defendant.” 24 Proc. § 487.020(b); see also Doyka v. Superior Court, 233 Cal. App. 25 3d 1134, 1137 (1991) (“[P]roperty necessary for the support of the 26 defendant or the defendant’s family is exempt from attachment.”). 27 \\ 28 \\ Section 487.020(b) explicitly provides 26 Cal. Code Civ. 1 However, “[a] claim that property is exempt because it is 2 necessary for the support of the defendant or his or her family 3 must include a financial statement detailing the earnings of all 4 family members and listing their assets and obligations.” 5 Judges Benchbook, Civ. Proc. Before Trial § 14.80. 6 not disclose in his declaration any evidence showing his, or his 7 family’s, income, assets and debts. 8 show that the assets Plaintiff is seeking to attach are necessary 9 for the support of him and his family.7 Cal. Defendant did Defendant therefore failed to This defense fails. 10 11 e. Defendant Has Not Shown That Payment And Performance 12 Bonds Will Adequately Protect Plaintiff 13 14 Defendant argues that “it is likely that [Plaintiff] is 15 adequately protected by the performance bonds” on certain projects, 16 whereas if a writ of attachment were to issue, it would “ground 17 all activity on all projects for Defendant and bring Defendant’s 18 business to a complete stop.” 19 argues 20 contributions owed to the employees for their work on the bonded 21 project, 22 damages and audit fees.” 23 notes 24 declaration that and that “[p]ayment do the “only not (Supp. Opp. at 2, 8). bonds cover on projects [Plaintiff’s] (Reply at 4). performance guarantees bond only claim for Plaintiff cover the liquidated Furthermore, Plaintiff attached [Defendant’s] to the Dominguez performance of its 25 26 27 28 Despite the lack of evidence from Defendant, Plaintiff voluntarily reduced the amount of the requested attachment to $75,000 -- some $27,000 less than the amount Plaintiff claims it is owed, at a minimum, under the contracts -- specifically in order to accommodate Defendant’s potential financial needs. 7 27 1 contract with the Whittier School District and [Plaintiff is] not 2 a beneficiary of the bond and cannot recover under the bond.” 3 at 4 n.4) (citing Dominguez Supp. Decl., Exh. B at 16). (Id. 4 5 The Court is not persuaded that Defendant’s bonds on will 6 necessarily fully protect Plaintiff should it eventually prevail 7 at 8 cooperated in the audit of his records, even if Plaintiff could 9 assert claims on the bonds, it is unclear whether Plaintiff would 10 be able to do so within the applicable statutes of limitation. 11 Similarly, it is not clear that the amounts of the bonds will be 12 sufficient to cover any additional claims Plaintiff may discover, 13 or 14 currently known projects. 15 has not cited to any case precluding a creditor from obtaining a 16 writ of attachment against a debtor’s property simply because 17 payment may be available indirectly from another source at the 18 conclusion of the action. trial. even As the Plaintiff liquidated contends, damages, because interest, (Reply at 4). Defendant and audit has fees not on Furthermore, Defendant This defense fails. 19 20 f. The 21 Attachment Amount Is Not Inflated Due To Plaintiff’s Entitlement To Liquidated Damages 22 23 Defendant summarily asserts, without citation to law or 24 further elaboration, that Plaintiff’s liquidated damages claim is 25 “arguably impermissible given the punitive nature of the damages.” 26 (Supp. Opp. at 2, 8). 27 agreements 28 liquidated damages, which the Ninth Circuit has “repeatedly held and Plaintiff emphasizes that both the written ERISA, 29 U.S.C. 28 § 1132(g)(2), provide for 1 . . . are mandatory elements of any court award.” 2 (Reply at 2) (citing cases; emphasis in original). 3 4 Section 1132(g)(2) provides: 5 6 In any action under this subchapter by a fiduciary for 7 or on behalf of a plan to enforce section 1145 of this 8 title in which a judgment in favor of the plan is 9 awarded, the court shall award the plan-- 10 11 (A) the unpaid contributions, 12 (B) interest on the unpaid contributions, 13 (C) an amount equal to the greater of-- 14 (i) interest on the unpaid contributions, or 15 (ii) liquidated damages provided for under the 16 plan 17 percent (or such higher percentage as may 18 be permitted under Federal or State law) of 19 the amount determined by the court under 20 subparagraph (A), 21 (D) 22 23 24 reasonable in an amount attorney’s not fees in and excess costs of of 20 the action, to be paid by the defendant, and (E) such other legal or equitable relief as the court deems appropriate. 25 26 29 U.S.C. § 1132(g)(2) (emphasis added); see also Nw. Adm’rs, Inc. 27 v. Albertson’s, Inc., 104 F.3d 253, 257 (9th Cir. 1996) (“Section 28 1132(g)(2) is ‘mandatory and not discretionary.’ 29 To be entitled 1 to a mandatory award under § 1132(g)(2), the following three 2 requirements must be satisfied: (1) the employer must be delinquent 3 at the time the action is filed; (2) the district court must enter 4 a judgment against the employer; and (3) the plan must provide for 5 such an award.”) (internal citation omitted). 6 7 It is undisputed that the agreements here provide (See, e.g., Higa Decl. ¶ 11.2). for 8 liquidated damages. Defendant’s 9 cursory and unsupported argument alleging that liquidated damages 10 are impermissible is flatly contradicted by the ERISA statute 11 specifically requiring the court (“the court shall award the plan”) 12 to assess such damages. This defense fails. 13 14 V. 15 CONCLUSION 16 17 Plaintiff has satisfied the criteria for the issuance of a 18 writ of attachment. Defendant’s attempted defenses are 19 unpersuasive. 20 Attach Order and Writ of Attachment, as amended by the reduction 21 in the amount to be attached to $75,000, is GRANTED. Accordingly, Plaintiff’s Application for a Right to 22 23 At the hearing, Plaintiff argued against the posting of a bond 24 as a condition of levying the writ of attachment on the ground that 25 Defendant was unlikely to prevail in this matter, rendering the 26 purpose of the bond -- to protect a defendant against a wrongful 27 attachment -- moot. 28 statutory requirement. However, this argument does not address the See Cal. Code Civ. Proc. §§ 489.21030 1 489.220. Because the Court has not found any authority allowing 2 it to exercise discretion regarding the posting of a bond, a bond 3 is necessary here. 4 883 (1991) (“Absent the prerequisite undertaking, the writ of 5 attachment issued by the clerk of the court was void ab initio 6 . . . .”). 7 Plaintiff may file a Notice of Authority within 7 days of the date 8 of this Order, with a brief explanation in support of its contention 9 that no bond is required. See Vershbow v. Reiner, 231 Cal. App. 3d 879, If Plaintiff is aware of any contrary authority, Defendant may file a response within 7 10 days of service of the Notice. If the Court is persuaded that a 11 bond is not required, the Court may amend this Order. 12 shall submit a proposed Right to Attach Order and Writ of Attachment 13 reflecting the amended sum to be attached within seven days of the 14 date of this Order. Plaintiff 15 16 DATED: November 21, 2017 /S/ __________ SUZANNE H. SEGAL UNITED STATES MAGISTRATE JUDGE 17 18 19 20 21 22 23 24 25 26 27 28 31

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?