A A A 

Tentative Ruling
Judge Pauline Maxwell
Department 6 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION

MUFG Untion Bank NA vs Edward Bradbury

Case No: 17CV04977
Hearing Date: Wed Feb 14, 2018 9:30

Nature of Proceedings: Two Applications for Right to Attach Orders

TENTATIVE RULING:     Plaintiff’s applications for right to attach order and for writ of attachment against Corporation and Bradbury are granted. Plaintiff shall file an undertaking in the amount of $7,500.00 prior to issuance of the right to attach orders and writs of attachment.

 

BACKGROUND:

This is an action to collect on a business line of credit. According to the allegations, in September 2002, defendant Edward T. Bradbury, M.D., a Professional Corporation, (“Corporation”) applied for, accepted, and used a business line of credit issued by plaintiff MUFG Union Bank, N.A. (“MUFG”) in the amount of $50,000. Defendant Edward T. Bradbury (“Bradbury”), an individual, guaranteed the indebtedness. In June 2003, MUFG increased the line of credit to $100,000 at Corporation’s request. Bradbury guaranteed this indebtedness as well. On February 21, 2017, defendants breached the terms of the credit line agreement and personal guarantee by failing to pay the amount then due, including principal of $82,638.28, interest from February 21, 2017 to the present, late fees, and costs. On November 3, 2017, MUFG filed its complaint against defendants, alleging causes of action for (1) breach of contract – business line of credit agreement, (2) breach of contract – personal guarantee, (3) money lent, and (4) account stated. Corporation and Bradbury failed to respond to the complaint and on January 12, 2018, their defaults were taken.

MUFG now seeks a right to attach order and order for issuance of writ of attachment against defendants. The amount to be secured by the attachment is $90,673.90, including principal of $82,638.28, interest of $4,301.97 at the rate of 4.5% per annum, late fees of $440.89, attorney’s fees of $2,542.76, and estimated costs of $750.00. The property sought to be attached is all property of Corporation and, as to the individual defendant, Bradbury, the real properties located at 29043 Lillyglen Drive, Canyon Country, California 91387 and 15625 Index Street, Granada Hills, California 91344 and all other property subject to attachment under Code of Civil Procedure Section 487.010, including all deposit accounts in which defendant has an interest, all tangible personal property of defendant, all vehicles owned by defendant, and all accounts receivable in which defendant has an interest. Defendants oppose the applications.

ANALYSIS:

Upon the filing of a complaint or at any time thereafter, the plaintiff may apply to the court for a right to attach order and for a writ of attachment. Code Civ. Proc. §484.010. Under Code of Civil Procedure Section 484.090, subdivision (a), the court shall issue a right to attach order if it finds all of the following:

1. The claim is one upon which an attachment may be issued;

2. The plaintiff has established the probable validity of the claim;

3. The attachment is not sought for a purpose other than the recovery on the claim; and

4. The amount to be secured by the attachment is greater than zero.

A claim is “one upon which an attachment may be issued” if the claim is for money based upon a contract, the total amount of the claim is a fixed or readily ascertainable amount not less than $500, and the claim is not secured by an interest in real property. Code Civ. Proc. §483.010, subds. (a) and (b). A claim has “probable validity” if it is more likely than not that the plaintiff will obtain a judgment against the defendant on the claim. Code Civ. Proc. §481.190. 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.” Code Civ. Proc. §483.010, subd. (c). Where the action arises out of a natural person’s trade, business, or profession, the types of property subject to attachment include interests in real property, inventory and equipment, deposit accounts, and securities. Code Civ. Proc. §487.010, subds. (c)(1), (3), (5), (7), and (10).

If the defendant desires to oppose the issuance of the right to attach order sought by the plaintiff or objects to the amount sought to be secured by the attachment, the defendant shall file and serve upon the plaintiff no later than five court days prior to the date set for the hearing a notice of opposition. Code Civ. Proc. §484.060, subd. (a). The notice shall state the grounds on which the defendant opposes the issuance of the order or objects to the amount sought to be secured by the attachment and shall be accompanied by an affidavit supporting any factual issues raised and points and authorities supporting any legal issues raised. (Ibid.) If the defendant fails to file a notice of opposition within the time prescribed, the defendant shall not be permitted to oppose the issuance of the order. (Ibid.) If a defendant filing a notice of opposition desires to make any claim of exemption, the defendant may include the claim in the notice of opposition. Code Civ. Proc. §484.060, subd. (b).

In this case, MUFG’s claim meets all of the requirements for granting an attachment order and a writ of attachment against defendants. First, it is a claim upon which an attachment may be issued as it is a claim for money based upon a contract (i.e., a business line of credit), the claim is for a readily ascertainable amount ($90,673.90), and the claim is not secured by an interest in real property. (Boules Dec., ¶¶ 10, 13, 27.) Second, the claim has “probable validity” as the facts averred to in the moving papers establish a prima facie case for breach of contract and breach of the personal guarantee agreement. Specifically, MUFG alleges (1) the existence of the credit line agreement and personal guarantee, (2) defendants’ breach of the credit line agreement and personal guarantee by failing to pay the sums due, despite plaintiff’s demand for payment, and (3) resulting damage to plaintiff. (Boules Dec., ¶¶ 10, 13, 16, 20, 21, 22, Exs. 3-8.) Third, the sole purpose for which MUFG is seeking the attachment orders is to recover on its claim. (Boules Dec., ¶¶ 19, 23.) Finally, the amount to be secured by the attachment orders is greater than zero. (Boules Dec., ¶27.)

Attachment against an individual defendant is proper where the obligation arises from his or her conduct of a business. Code Civ. Proc. §483.010, subd. (c). The term “business” includes any activity engaged in for profit or gain. Advance Transformer Company v. Superior Court (1974) 44 Cal.App.3d 127, 134. When a guarantor personally guarantees the debt of his or her closely held corporation in order for the corporation to be extended credit, as in this case, the debt is presumed to be incurred in connection with a “trade, business, or profession.” Id., at 144. Here, Bradbury executed a personal guarantee of the subject loan. (Boules Dec., ¶20, Exs. 3, 6.) As part of the loan application process, Bradbury disclosed that he is the president and owner of Corporation and that he receives a salary from Corporation. (Boules Dec., Exs. 3, 6.) Thus, the extension of the line of credit to Corporation clearly benefited Bradbury in the conduct of his business and profession. As stated in Advance Transformer:

“[I]f the sum total of the circumstances justifies the conclusion that the guarantor occupied himself to a substantial degree and on a continuing basis in promoting his own profit through provision of credit or management to the primary obligor, a guarantee executed in the course of such activity may properly be considered an obligation arising out of the conduct of the guarantor’s business.” (Id., at 144.)

Defendants argue that MUFG may not seek attachment against Corporation because the initial business line of credit agreement for $50,000 contains an arbitration clause relating to any violation of the agreement and MUFG’s application failed to state whether plaintiff was reserving its right to arbitration. In support of their position, defendants point to Code of Civil Procedure Section 1281.8, but Section 1281.8 is inapplicable to this proceeding. Subdivision (b) of the statute reads:

“A party to an arbitration agreement may file in the court in the county in which an arbitration proceeding is pending, or if an arbitration proceeding has not commenced, in any proper court, an application for a provisional remedy in connection with an arbitrable controversy, but only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief. The application shall be accompanied by a complaint or by copies of the demand for arbitration and any response thereto. If accompanied by a complaint, the application shall also be accompanied by a statement stating whether the party is or is not reserving the party’s right to arbitration.”

The purpose of Section 1281.8 is allow a party to an arbitration proceeding to file in the superior court an application for a provisional remedy, such as a writ of attachment, where the party is concerned that a favorable decision by the arbitrator may be rendered meaningless without provisional relief. See, Davenport v. Blue Cross of California (1997) 52 Cal.App.4th 435, 453 (when an action is submitted to arbitration pursuant to the agreement of the parties, the trial court may grant provisional relief under Section 1281.8 if necessary to preserve the effectiveness of arbitration). Here, neither side has demanded arbitration of the initial credit agreement and, therefore, it is not necessary for MUFG’s application for a right to attach order and for writ of attachment to be to be accompanied by an affidavit or declaration that arbitration may be rendered ineffectual without provisional relief.

Defendants next argue that MUFG may not seek attachment against Corporation under the second credit line agreement for $100,000 because the copies of Corporation’s application to increase its business line of credit to $100,000, MUFG’s June 19, 2003 letter approving the increased credit limits, and the loan agreement itself, which are attached to the moving papers as Exhibits 6, 7, and 8, are illegible, making it impossible for MUFG to demonstrate the probable validity of its claim. The court disagrees. While portions of Corporation’s application are illegible, the contract itself (Exhibit 8) is legible and was properly authenticated by Ms. Boules, an Assistant Vice President of MUFG and the bank’s authorized custodian of records. (Boules Dec., ¶¶ 1, 13.) Accordingly, the terms of the unpaid business loan have been established.

Lastly, defendants argue that plaintiff may not seek attachment against Bradbury because the guarantor sections of each loan application are also illegible. (Boules Dec., Exs. 3, 6.) However, the court was able to read the guarantee agreements simply by enlarging the images of both exhibits on its word processor. Further, secondary evidence, including oral testimony, may be admissible to prove the content of a writing where the original writing has been lost or destroyed. Evid. Code §1523, subd. (b). In this case, Corporation’s original loan applications and Bradbury’s accompanying guarantees have apparently been lost or destroyed, so microfilm copies of the documents were submitted in place of the originals. (Boules Dec., ¶25.) The microfilm copies of both documents were authenticated by Ms. Boules. (Boules Dec., ¶3.) The authenticity of the loan agreements is further evidenced by the fact that defendants treated them as authentic and made payments on the loans for over four years. (Boules Dec., ¶5.) 

Based on the foregoing, the court will grant MUFG’s applications for right to attach order and for writ of attachment. Where the defendant is a corporation, all corporate property for which a method of levy is provided is subject to attachment. Code Civ. Proc. §487.010, subd. (a). Where the defendant is a natural person, the items subject to attachment include (1) interests in real property, (2) accounts receivable arising out of the defendant’s trade, business, or profession, (3) deposit accounts, (4) equipment, (5) motor vehicles, (6) inventory, (7) money judgments, (8) negotiable documents of title, and (9) securities. Code Civ. Proc. §487.010, subd. (c). Accordingly, the items subject to attachment include Bradbury’s real property located at 29043 Lillyglen Drive, Canyon Country, California 91387 and 15625 Index Street, Granada Hills, California 91344, as well as his deposit accounts and other items. Pursuant to Code of Civil Procedure Section 489.210, MUFG shall file an undertaking in the amount of $7,500.00 prior to issuance of the right to attach orders and writs of attachment.

 
© Superior Court of the County of Santa Barbara
Locations & Contact Info | Court Security | Human Resources | Privacy Policy | ADA