Case Number: EC062146    Hearing Date: July 25, 2014    Dept: NCB

9. EC062146
ATLANTIC TIMES SQUARE X LLC v DAVID HANG KWONG et al
Motion to Reduce Writ of Attachment

This case arises from the Plaintiff’s claim that the Defendant, California Edo Japan, breached a commercial lease by failing to pay rent. Further, the Plaintiff claims that Defendants, David Kwong, Lolo Kwong, and Edmond Kwong, breached a personal guaranty agreement.

On March 11, 2014, the Court granted the Plaintiff’s application for a writ of attachment and issued a writ of attachment for $919,481.25 and ordered the Plaintiff to file a $10,000 undertaking. At this hearing, the Defendants seek an order reducing the amount of the writ of attachment down to the net present value of the money. In addition, the Defendants seek an order increasing the amount of the $10,000 undertaking.

1. Request to Reduce Amount of Writ of Attachment
The Defendant relies upon CACI instruction 359 to support its argument that the attachment should be reduced. CACI instruction 359 states that the amount of damages for future harm must be reduced to present cash value.
However, the Attachment Law does not use this instruction to determine the amount of an attachment. Instead, CCP section 483.015(a)(1) states that the amount of the attachment is the amount of the defendant’s indebtedness claimed by the plaintiff. There is no language reducing this value to the net present value of the money. The Defendants offer no legal authority holding that the statute should be interpreted to include a requirement that the amount claimed by the plaintiff must be reduced to the net present value. Further, there is no legal authority holding that when the Court sets the amount of a writ of attachment, it replaces the express requirement of CCP section 483.015 with a calculation of the net present value of the indebtedness claimed by the plaintiff.
Accordingly, there are no grounds to reduce the amount of the writ of attachment. Instead, CCP section 483.015(a)(1) expressly sets the value of the writ at the amount of the indebtedness claimed by the Plaintiff.

2. Request to Release David Kwong’s Property
Under CCP section 488.720(c), the Court may release the attachment of a defendant’s property to the extent that the value of the defendant’s interest exceeds the amount necessary to satisfy the amount secured by the attachment. This authorizes the Court to release property in excess of that needed to satisfy the amount secured. This procedure permits the Court to determine whether the plaintiff has attached more of defendant’s property than is sufficient to satisfy plaintiff’s demand. Barceloux v. Dow (1959) 174 Cal. App. 2d 170, 173.
For example, in Barceloux, the plaintiffs had obtained a writ for $35,000. The plaintiff then levied 2,000 shares of common stock in the defendants’ name, an interest in an estate, and the defendant’s bank account. The defendant sought to dissolve the writs of attachment on all property in excess of the $35,000 value. The trial court granted the application and released all property except for 1,000 shares of common stock because the Court found that these shares had a value of $50,000 and would adequately protect the plaintiffs.

In the pending case, the writ of attachment secures an amount of $919,481.25. The Defendant, David Kwong, seeks an order that will release his real property at 1705 S. Santa Anita Ave., Arcadia, from the writ of attachment.
However, the Defendant offers no evidence that he has other property subject to the writ that has a value of $919,481.25. Instead, the Defendant provides evidence solely of the value of his real property. This indicates that if his real property were released, then the Plaintiffs would have no protection. Instead, the writ of attachment is a lien on the Defendant’s real property that secures a potential judgment.
Accordingly, the Court denies the request to release David Kwong’s real property from the writ of attachment.

3. Request to Increase Undertaking
CCP section 489.220 sets the amount for an undertaking at $10,000. The Defendant then argues that the amount of the $10,000 undertaking should be increased.
Under CCP section 489.220(b), if, upon objection to the undertaking, the Court determines that the probable recovery for the 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.
Case law interpreting section 489.220(b) finds that it is not intended to frustrate the financial utility of attachment in situations where the evidence before the trial court demonstrates the threat of wrongful attachment is slight. N. Hollywood Marble Co. v. Superior Court (1984) 157 Cal. App. 3d 683, 692. Further, section 489.220(b) does not direct the Court to increase an undertaking upon objection of a defendant. Id. Instead, it authorizes the Court to evaluate material evidence and balance between vital competing needs to determine whether to increase the amount of the undertaking to the value of the total financial loss that a defendant will probably sustain by reason of attachment irrespective of the outcome of the action. Id.

The Court issued the writ of attachment based on evidence in the Plaintiff’s application demonstrating the Plaintiff had a commercial lease with the Defendant, California Edo Japan, and that the lease included a written guaranty agreement with Defendant, David Kwong. The lease had a ten year term. The Plaintiff provided evidence in the declaration of Joanne Chan that the Defendant, California Edo Japan, Inc. tendered a check in September 2013 that failed to clear its bank. Further, Ms. Chan stated that California Edo Japan has failed to make payments for September 2013 or any subsequent month. The amount of rent due from September 2013 to the end of the lease is $919,481.25, which is based on the minimum monthly rent of $9,678.75 due for the remaining 95 months on the lease agreement.
The Defendants’ motion offers no evidence that it has paid the rent. Instead, the Defendants claim that there is evidence that the Plaintiffs were in material breach of the lease agreement and that they were damaging the Defendants. The material breach is a reference to a term in the lease regarding competing businesses with noodle items on their menu.
The evidence is in emails in exhibits A, B, and C. The emails are from Joanne Chan to Patsy, Ronnie Lam to Joanne Chan, and Patsy Ma to Joanne Chan. A review of these emails does not demonstrate that the Plaintiffs were in material breach. Instead, the emails indicate that there was a concern about the menu of 101 Noodles Grill and that their menu should be changed. The emails indicate that 101 Noodles Grill had two menus: a grill menu and a noodles menu. Further, the email from Patsy Ma to Joanne Chan in exhibit B indicates that Patsy Ma planned to tell 101 Noodles that it had to change its menu. The email from Patsy Ma to Joanne Chan in exhibit C indicates that Patsy Ma intended to set up a meeting about 101 Noodles Grill. This evidence indicates that the Plaintiff was attempting to solve the problem created by 101 Noodles Grill’s menu. It is insufficient to demonstrate that the Plaintiff was in material breach of the lease agreement.
Therefore, there appears to be a slight threat that the attachment will be found to be a wrongful attachment because the Plaintiff’s evidence demonstrates that the Defendants were in default on the duty to pay rent.

Further, the Defendants offer no evidence of the total financial loss that they will suffer by reason of the attachment. The Defendants claim that the undertaking should be increased to $1,079,893.48. The Defendants offer no facts to support this amount, e.g., facts demonstrating that if the attachment is found to be wrongful, that they will suffer over $1,000,000 in damages. The attachment is merely a lien that secures a potential judgment. The Defendants offer no facts to demonstrate that they will suffer extensive damages and costs as a result of the attachment.

Accordingly, the Court denies the request to increase the amount of the $10,000 undertaking.