2017-00218137-CU-BC

Edwin L. Hobbs vs. Daniel L. Hobbs

Nature of Proceeding: Writ of Attachment

Filed By: Healy, Brian S.

Plaintiff Edwin L. Hobbs’ (“Plaintiff”) Application for Right to Attachment Order and Order for Issuance of Writ of Attachment as against property of Defendants Daniel L. Hobbs and Lisa A. Miller-Hobbs (“Defendants”) is unopposed, but is DENIED.

Background

In this action, Plaintiff sues his son and his daughter-in-law for breach of contract (promissory note), as well as common counts for account stated and book account. ( See generally, Complaint (Register of Actions (“ROA”) 1.) The allegedly-breached Promissory Note is attached as Exhibit A to the Complaint. The Promissory Note is dated September 5, 2012, and reflects in part that for “value received,” Plaintiff loaned Defendants a lump sum of $145,000.00, to be “repaid in 144 consecutive monthly installments of interest only on the first day of each month” starting on November 1, 2012. (Exh. A to Compl.)

The Promissory Note indicates that in the event of borrower default, Plaintiff “may declare the principal amount owing and interest due under this Note at that time to be immediately due and payable.” (Exh. A to Compl.)

The Promissory Note also provides, “Borrower using $145000 to purchase residential home in Dayton Nevada (610 Champions Drive Dayton, Nevada 89403). Borrower to pay balloon payment of $145000 at end of term (12) years. Should borrower encumber property then balloon payment will be due ($145000). Should said property be sold before end of term then balloon payment of $145000 will be due.” (Exh. A to Compl.)

Finally, the Promissory Note provides, “Should both borrowers become deceased prior to loan term expiration then lender will be sole beneficiary to said property.” (Exh. A to Compl.) It would appear the property is not secured [no deed of trust].

Legal Standards

At the outset, the Court would note that the Plaintiff has the burden of proof in establishing the right to a right-to-attach-order (RTAO). Since the Court must make an affirmative finding of “probable validity,” the mere absence of opposition does not cure a plaintiff’s deficient showing.

In general, an attachment may be issued only in an action on a claim for money, 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 $ 500, exclusive of costs, interest, and attorney’s fees, which arises out of the conduct by the defendant of a trade, business, or profession. (Code Civ. Proc. § 483.010.)

Pertinent here, Code of Civil Procedure § 483.010(c) specifically provides: “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.” (Code Civ. Proc. § 483.010(c) (emphasis added).

Indeed, a purpose of the attachment statutes is to confine attachments to commercial situations and to prohibit them in consumer transactions. The language, “trade, business or profession,” in Code of Civil Procedure § 483.010(c) fulfills that purpose by limiting the use of attachments to commercial transactions and precluding them in consumer transactions. (Kadison, Phaelzer, Woodard, Quinn & Rossi v. Wilson (1987) 197 Cal.App.3d 1.) Not only must “the individual against whom attachment is sought .

. . be engaged in a trade or business, but that the obligation underlying the action must arise directly out of the conduct of the trade or business.” (Great American Ins. Co. v. National Health Services, Inc. (1976) 62 Cal.App.3d 785, 794 (emphasis added), citing Shaw, Hooker & Co. v. Haisman (1976) 59 Cal.App.3d 262 and Advance Transformer Co. v. Superior Court (1974) 44 Cal.App.3d 127.) To be clear, then, attachment is not available when a claim against a natural person is based on the sale or lease of property, a license to use property, the furnishing of services, or the loan of money, if the property, services, or money was used by the defendant primarily for personal, family, or household purposes [Code Civ. Proc. § 483.010(c)]. This reflects the intent of the Legislature that attachment be available only for commercial obligations, and not consumer debts

It is Plaintiff’s burden to show that the claim sued upon arose out of Defendant’s conduct of a trade, business or profession. (See Nakasone v. Randall (1982) 129 Cal.App.3d 757, 764-65.) As stated above, an attachment may be issued only on a claim that arises out of the defendant’s conduct of a trade, business, or profession.

Discussion

Here, Plaintiff’s Complaint alleges a cause of action for breach of contract based upon alleged breach of a Promissory Note. Defendants are alleged to have failed to pay the amounts due under the Note. Plaintiff alleges damages in the amount of $145,000.00, plus interest at 5% per annum, plus attorneys’ fees and costs.

Plaintiff supports the instant motion not with his own declaration, but with that of Karen L. Shaver. (Declaration of Karen L. Shaver (“Shaver Decl.”) ¶ 1.) Karen Shaver declares that she is the “agent” of Plaintiff “pursuant to a Durable Power of Attorney that plaintiff executed on June 17, 2016.” (Shaver Decl. ¶ 1; Exh. A to Shaver Decl.)

Karen Shaver also declares, in pertinent part, “I have possession of Edwin L. Hobbs’

complete file regarding the matters at issue in this litigation and have thoroughly reviewed all of the documents therein. In addition, Edwin Hobbs told me about the matters set forth herein prior to appointing me as his Durable Power of Attorney.” (Shaver Decl. ¶ 1.) Finally, Karen Shaver declares that the subject “Promissory Note was given in exchange for a loan Edwin L. Hobbs made to [Defendants], at their request, in the amount of $145,000.00. I am informed and believe that defendants have purchased several pieces of investment property and that the funds were used to acquire investment property commonly known as 601 Champions Dr., Dayton, Nevada 84903.” (Shaver Decl. ¶ 5.)

(The Court notes that the Promissory Note gives the address as “610 Champions” and Shaver’s Declaration gives the address as “601 Champions.” (Compare Exh. A to Complaint with Shaver Decl. ¶ 5.) Because the Court denies the motion for the reasons stated herein, however, the Court need not resolve the apparent discrepancy.)

Aside from Karen Shaver’s declaration, there is no further evidence as to any details of how the $145,000.00 loan from father to son was conferred as part of the son’s “trade, business, or profession.” Plaintiff has offered no evidence as to Defendants’ trade, business or profession, and no evidence that such trade, business, or profession involves obtaining loans to fund purchases of investment property.

While Plaintiff implies that Defendants’ business/trade/profession involves the purchase of “investment properties,” no actual, admissible evidence has been presented in support of that fact. The Court is not persuaded that evidence of a onetime loan from father to son and daughter in law for the purchase of real property suffices to show that the son is in the “business, trade, or profession” of taking on such loans to purchase various “investment properties.” There has been no evidentiary showing that the son and daughter-in-law have purchased any other such “investment properties” using loaned funds, like the ones at issue in the transaction underlying this lawsuit. There is no evidence before the Court that Defendants regularly make such purchases with loaned funds as part of their business, trade, or profession.

At most, in her role as Plaintiff’s “agent declarant” Shaver states only that “on information and belief,” Defendants have “purchased several pieces of investment property” (although Shaver does not state that the purchases used loaned funds). (Shaver Decl. ¶ 5.) Shaver also declares that on her “information and belief,” the $145,000.00 in “loaned funds” were used to buy “investment property” at 601 Champions Dr. in Nevada. (Shaver Decl. ¶ 5.) Allegations based on information and belief do not establish personal knowledge of the facts. Bowden v Robinson (1977) 67 Cal.App.3d 705, 719; Evans v. Unkow (1995) 38 Cal. App. 4th 1490, 1498. Indeed, statements made on information and belief “are hearsay and must be disregarded…, and [they] are ‘unavailing for any purpose’ whatever…A ruling ‘of the court is to be based upon facts which may be presented to it, and not upon the belief of the affiant… Such allegations on ‘information and belief’ furnish no proof of the facts stated.” ( Thiebaut v. Blue Cross (1986) 178 Cal.App.3d 1157, 1161 [quoting Star Motors Imports, Inc. v. Superior Court (1979) 88 Cal.App.3d 201, 204].) While exceptions exist, such exceptions apply only where the information at issue is incapable of positive averment or where expressly permitted by statute. (City of Santa Cruz v. Municipal Court (1989) 49 Cal.3d 74, 87.) Such is not the case here.

Thus, the Court is wary of declarations based only on “information and belief,” especially in the context of provisional remedies such as a prejudgment writ of

attachment. Except where matters are specifically permitted to be shown upon information and belief, affidavits (or declarations under Code Civ. Proc. § 2015.5) filed under the Attachment Law must contain facts set forth “with particularity.” (See, e.g., Code Civ. Proc. § 482.040 (emphasis added); Lydig Construction, Inc. v. Martinez Steel Corp. (2015), 234 Cal App.4th 937, 944.)

Even if Shaver’s statements in this regard were fully credited as based entirely on her personal knowledge of these facts, evidence that Defendants used the loaned funds for a onetime purchase of “investment property” does not suffice to show that Defendants took on the loan as part of their “trade, business, or profession” of taking on loans to purchase investment property. (See e.g., Nakasone, 129 Cal.App.3d at 764-65 (onetime sale of seller’s own real property did not mean she was involved in the “business, trade, or profession” of a realtor; the sale was for “her own account,” such that trial court erred in granting prejudgment writ of attachment).)

On the record currently before the Court, there is no evidence that the underlying transaction – a $145,000 loan from father to son (and daughter-in-law) for the purchase of “residential” property – “arises out of the conduct by the defendant[s] of a trade, business, or profession.” (See Code Civ. Proc. 483.010(c).)

On a related but independent point, Plaintiff has presented no evidence indicating that

the “the money loaned” was not “used by the [D]efendant[s] primarily for personal,

family, or household purposes.” (See Code Civ. Proc. § 483.010(c) (emphasis
added).) On the allegations in the Complaint and the moving papers, the evidence

before the Court shows only that Plaintiff loaned his son (and daughter in law)
$145,000.00 so they could purchase a “residential” property in Nevada (Exh. A to
Compl.) Yet the Promissory Note itself is silent as to whether the real property to be

purchased with the loaned funds would be used as the “investment property” of
Defendants, or whether it would be used as Defendants’ personal residence, or
whether it would be used for some other “personal, family, or household” purpose.

While the record contains evidence that on Shaver’s “information and belief,” Defendants ultimately “use[d] the funds to acquire investment property.” (Shaver Decl.

¶ 5.) It appears that Shaver lacks personal knowledge as to whether and how Defendants did, in fact, spend the loaned funds. However, even if Shaver’s testimony was entirely admissible and based on personal knowledge, Plaintiff’s memorandum of points and authorities makes no attempt to show that a son’s purchasing an “investment property” with funds loaned from his father does not amount to a use of loaned funds for “personal” or “family” purposes as a matter of law.

Ultimately, the Court finds that here, where the defendants Daniel L. Hobbs and Lisa A. Miller-Hobbs are natural persons, moving party plaintiff has presently failed to establish each of the elements necessary to support a prejudgment writ of attachment.

Accordingly, Plaintiff’s Application for Right to Attach Order and Order for Issuance of Writ of Attachment is DENIED.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.