PNC Equipment Finance, LLC, et al v. California Fairs Financing Authority, et al

Filing 167

ORDER signed by Judge Garland E. Burrell, Jr on 11/6/12 DENYING 140 Application for a Right to Attach Order and a Writ of Attachment filed by PNC Equipment Finance, LLC. (Meuleman, A)

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IN THE UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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PNC EQUIPMENT FINANCE, LLC, a
Delaware limited liability
company, as successor to
NATIONAL CITY COMMERCIAL CAPITAL
CORPORATION,

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Plaintiff,
v.

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CALIFORNIA FAIRS FINANCING
AUTHORITY, a California joint
powers authority; 15TH DISTRICT
AGRICULTURAL ASSOCIATION, a
state institution of the State
of California; 18TH DISTRICT
AGRICULTURAL ASSOCIATION, a
state institution of the State
of California; 21ST DISTRICT
AGRICULTURAL ASSOCIATION, a
state institution of the State
of California; 26TH DISTRICT
AGRICULTURAL ASSOCIATION, a
state institution of the State
of California; 27TH DISTRICT
AGRICULTURAL ASSOCIATION, a
state institution of the State
of California; 30TH DISTRICT
AGRICULTURAL ASSOCIATION, a
state institution of the State
of California; EL DORADO COUNTY
FAIR ASSOCIATION, INC., a
California corporation; and
MADERA COUNTY LIVESTOCK
ASSOCIATION, a California
corporation,

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Defendants.
________________________________

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AND RELATED CROSS-CLAIMS AND
COUNTER-CLAIMS.
________________________________

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2:11-cv-02019-GEB-CKD
ORDER DENYING APPLICATION FOR
A RIGHT TO ATTACH ORDER AND A
WRIT OF ATTACHMENT

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Plaintiff

PNC

Equipment

Finance,

LLC

(“PNC”)

filed

an

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application for a right to attach order and a writ of attachment, which

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would authorize it to seize money in two bank accounts belonging to

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Defendant California Fairs Financing Authority (“CFFA”). (ECF No. 140.)

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PNC asserts said money could partially satisfy breach of contract

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damages CFFA owes it. CFFA opposes the application.

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I. FACTUAL BACKGROUND

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PNC asserts that the following contracts underlie its dispute

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with CFFA and entitle it to the writ of attachment it seeks: a Master

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Photovoltaic Equipment Lease-Purchase Agreement between PNC and CFFA

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(referred to by the parties as the “Financing Lease”), and numerous

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Photovoltaic Equipment Use Agreements (“Use Agreements”) between CFFA

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and Fair Entities (the sued entities comprising CFFA, El Dorado County

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Fair Association, Inc., Madera County Livestock Association, and the

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15th,

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Associations). (Decl. of Phyllis Bryan (“Bryan Decl.”), Exs. 1, 5–12;

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ECF No. 140.) PNC also asserts the Financing Lease provides that PNC

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shall have a “security interest in all of the Use Agreements, the User

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Fees and the Self-Generation Incentive Payments,” (Bryan Decl., Ex. 1 ¶

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4.7(a)), as well as a “first priority, exclusive security interest in

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any and all of the Equipment (now existing or hereafter acquired) under

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each Lease . . . .” (Id. ¶ 8.2.)

18th,

21st,

26th,

27th,

and

30th

District

Agricultural

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PNC alleges that CFFA “breached the Financing Lease by . . .

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failing and refusing to make the Rent Payments required thereunder for

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the months of March 2011 through July 2011.” (First Amended Complaint

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(“FAC”) ¶ 50; ECF No. 72.) PNC further alleges that CFFA “breached the

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Financing Lease . . . by failing to pay any installment of rent that has

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come due from and after March 1, 2011, and continuing to [December 15,
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2011].” (Id. ¶ 210.) PNC attaches the following averment in support of

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its application: “[a]s of August 1, 2012, the total amount owed and

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unpaid by CFFA to PNC on behalf of the Fair Entities is $1,004,173.38.”

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(Bryan Decl. ¶ 33.)

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II. LEGAL STANDARD

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Under Federal Rule of Civil Procedure 64, a federal court

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applies the attachment laws and procedures of the state in which it is

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located. California Code of Civil Procedure sections 481.010 et. seq.

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govern attachment procedures.1 “The court’s determinations [whether a

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writ of attachment issues] shall be made upon the basis of the pleadings

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and

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§

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§ 481.010 et seq.) are subject to strict construction because they are

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purely the creation of the Legislature.’” Jordan-Lyon Prods., Ltd. v.

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Cineplex Odeon Corp., 29 Cal. App. 4th 1459, 1466 (1994) (quoting

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Vershbow v. Reiner, 231 Cal. App. 3d 879, 882 (1991)); see also Hobbs v.

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Weiss, 73 Cal. App. 4th 76, 79 (1999) (“[T]he provisions regarding this

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purely statutory remedy are subject to strict construction.” (internal

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quotation marks omitted)); Epstein v. Abrams, 57 Cal. App. 4th 1159,

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1168

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construction . . . .”).

other

papers

484.090(d).

(1997)

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in

“‘[T]he

(“The

the

record

.

Attachment

Attachment

Law

.

Law

.

.”

Cal.

statutes

statutes

are

Civ.

(Code

Proc.
Civ.

subject

to

Code

Proc.,

strict

III. DISCUSSION

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A court may issue an attachment under California law, “only in

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an action on a claim or claims for money, each of which is based upon a

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contract, express or implied, where the total amount of the claim or

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claims is a fixed or readily ascertainable amount not less than five

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All further section references are to California Code of Civil
Procedure, unless otherwise stated.
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hundred dollars ($500) . . . .” Cal. Civ. Proc. Code § 483.010. The

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following findings must be made “in accordance with Section 483.015” to

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justify issuance of an attachment order:

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(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 purposes 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.

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Id. § 484.090(a). Further, Section 483.015 prescribes:
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(a) . . . [T]he amount to be secured by an
attachment is . . . [t]he amount of the defendant’s
indebtedness claimed by the plaintiff.
(b) The amount described in subdivision (a) shall
be reduced by . . . :
. . .
(4) The value of any security interest in the
property of the defendant held by the plaintiff to
secure the defendant’s indebtedness claimed by the
plaintiff, together with the amount by which the
value of the security interest has decreased due to
the act of the plaintiff or a prior holder of the
security interest.

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Id. § 483.015.
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“These sections provide that the amount that may be attached
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is limited to the amount of the debtor’s unsecured potential liability.”
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Intervest Mortg. Inv. Co. v. Skidmore, No. Civ. S-08-1543, 2008 WL
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5385880, at *6 (E.D. Cal. Dec. 19, 2008) (interpreting Cal. Civ. Proc.
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Code §§ 483.010 and 483.015(b)(4)); see also Dev. Specialists, Inc. v.
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R.E. Loans, LLC, No. C 10-0635, 2010 WL 4055570, at *5 (N.D. Cal. Oct.
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14, 2010) (“[T]he amount which a plaintiff can properly seek in a
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request for a [right to attach order] shall be reduced by ‘[t]he value
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of any security interest in the property of the defendant held by the
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plaintiff

to

secure

the

defendant’s

indebtedness

claimed

by

the

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plaintiff.’”

(quoting

Cal.

Civ.
4

Proc.

Code

§

483.015(b)(4))).

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“Attachment under California law is a remedy given only where the debt

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is unsecured . . . . [It] requires that . . . no security exists at the

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time of attachment (either because none did originally, or because the

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original security has become valueless) . . . .” Jue v. Bass, 299 F.2d

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374, 379 (9th Cir. 1962) (describing predecessor statute to Cal. Civ.

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Proc. Code § 483.010 et seq.).

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PNC “seeks to secure . . . $1,004,173.38, an amount that

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equals the total amount due but unpaid by CFFA to PNC as of August 1,

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2012.” (Pl.’s Mem. of Points and Auth. 9:20–21.) CFFA argues that if PNC

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“ha[s] a security interest there is no need for a writ of attachment.”

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(Def.’s Opp’n 3:2; ECF No. 160.) PNC has not addressed this issue.

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However, the Financing Lease indicates PNC has collateral securing its

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stated loss as follows:

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[a]s collateral security for [CFFA] Lessee’s
obligations to pay all Rent Payments and all other
amounts due and payable under each Lease and to
perform and observe all covenants, agreements and
conditions (direct or indirect, absolute or
contingent, due or to become due or existing or
hereafter arising) of Lessee under such Lease,
Lessee hereby grants to [PNC] Lessor a first
priority, exclusive security interest in any and
all of the Equipment (now existing or hereafter
acquired) under each Lease . . . .

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(Bryan

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collateralized security is “valueless” or without sufficient value to

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satisfy its stated loss, it has not shown entitlement to a writ of

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attachment. Jue, 299 F.2d at 379.

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//

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//

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//

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//

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//

Decl.,

Ex.

1

¶

8.2.)

Since

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PNC

has

not

shown

that

its

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IV. CONCLUSION

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For the stated reasons, Plaintiff’s application for a right to

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attach order and a writ of attachment is DENIED.

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Dated:

November 6, 2012

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GARLAND E. BURRELL, JR.
Senior United States District Judge

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