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Joshi v. Starbucks Corp.

March 23, 2009

RAKESH JOSHI AND PRANIKA JOSHI, PLAINTIFFS,
v.
STARBUCKS CORPORATION, A WASHINGTON CORPORATION, AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

On January 12, 2009, Rakesh and Pranika Joshi (collectively "plaintiffs") filed a complaint against Starbucks Corporation ("defendant"), asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory fraud. This matter is before the court on plaintiffs' motion for order of right to attach and writ of attachment.

Defendant opposes the motion. For the reasons set forth below,*fn1 plaintiffs' motion to attach is DENIED.

BACKGROUND

This dispute arose out of a lease agreement that defendant allegedly breached by failing to occupy the leased premises and pay monthly rent. Plaintiffs own certain real property located in Chico, California. (Pls. Compl. ("Compl.") [Docket #1], filed Jan. 12, 2009, ¶ 3; Rakesh Joshi's Declaration in Support of Motion for Order of Right to Attach and Writ of Attachment ("R. Joshi Decl.") [Docket #11], filed Jan. 11, 2009, ¶ 2.) In or about June 2007, plaintiffs and defendant began negotiations for defendant to lease a portion of a retail building complex to be constructed by plaintiffs on plaintiffs' property. (Compl. ¶ 7; R. Joshi Decl. ¶ 3.) Defendant negotiated to open one of its coffee shops to serve as the anchor store in the building complex and required that plaintiffs construct the store to its specifications, including constructing a drive-through lane. (Compl. ¶ 7; R. Joshi Decl. ¶ 3.) In February 2008, plaintiffs and defendant entered into a lease agreement, which provided that defendant would lease the anchor store from plaintiffs for a period of ten years. (Compl. ¶ 8; R. Joshi Decl. ¶ 4.) The lease provided that defendant would pay annual rent of $76,500 for the first five years of the lease term and $84,252 for the last five years of the lease term, for a total of $803,760, in addition to its proportional share of a Common Area Maintenance Charge. (Compl. ¶ 8; R. Joshi Decl. ¶ 5.)

Allegedly relying upon execution of the lease with defendant, plaintiffs acquired financing from Community First Bank in the amount of $1,500,000 to construct the building complex. (Compl. ¶ 10; R. Joshi Decl. ¶ 7.) On or about June 20, 2008, a representative of defendant contacted plaintiffs and informed them that although defendant executed a lease with plaintiffs, defendant would not be occupying its contracted retail location in plaintiffs' business complex. (Compl. ¶ 12; R. Joshi Decl. ¶ 9.) Plaintiffs nonetheless proceeded to complete construction of defendant's contracted retail location pursuant to defendant's specifications. (R. Joshi Decl. ¶ 10.) To date, defendant has not occupied the store for which it executed the lease agreement and has not paid rent. (Id. ¶ 11.)

Plaintiffs assert that they would not have acquired financing for the property or constructed the business complex if defendant had not agreed to rent a retail space in the business complex. (Compl. ¶ 14; R. Joshi Decl. ¶ 12.) Further, plaintiffs assert that they have lost rental income because they have not been able to lease their property to other tenants, who allegedly terminated lease negotiations upon discovering that defendant did not intend to occupy a store in plaintiffs' complex. (Compl. ¶ 14; R. Joshi Decl. ¶ 13.)

Plaintiffs request that the court issue a right to attach order and a writ of attachment in the amount of $1.5 million, which represents (1) defendant's total rental payments owed over the course of the ten year term, (2) a portion of the financing cost to construct the business complex, (3) lost profits, (4) the cost of reletting the location, (5) maintenance expenses, and (6) costs and attorneys' fees.

STANDARD

Federal Rule of Civil Procedure 64(a) provides that "at the commencement and throughout an action, every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment." Thus, Rule 64 permits "state seizure provisions to be used in federal courts." Reebok Int'l v. Marnatech Enters., 970 F.2d 552, 558 (9th Cir. 1992). Federal Rule of Civil Procedure 64(b) provides that one of the seizure remedies available under Rule 64 is attachment.

In California, the procedures and grounds for obtaining orders permitting prejudgment writs of attachment are governed by California Code of Civil Procedure ("C.C.P.") §§ 481.010 et seq. C.C.P. § 483.010(a) provides that attachment is only proper "in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim is a fixed or readily ascertainable amount not less than five hundred dollars ($500) exclusive of costs, interest, and attorney's fees." Under California law, a court must make the following findings as a predicate for issuing a right to attach order: (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 a purpose other than the recovery on the claim upon which the attachment is based; and (4) The amount to be secured by the attachment is greater than zero. C.C.P. § 484.090.

The application for a right to attach order must be supported by an affidavit or declaration showing that the applicant, on the facts presented, would be entitled to a judgment on the claim upon which the attachment is based. C.C.P. § 484.030. The affidavit or declaration must state the facts "with particularity." C.C.P. § 482.040.

Plaintiff has the burden of proof to show that a right to attach order should be issued. See Loeb & Loeb v. Beverley Glen Music, Inc., 166 Cal. App. 3d 1110, 1116 (1984); see also Legislative Committee Comment to 1974 Addition to C.C.P. ยง 484.090 (stating that the "plaintiff has the burden of proving (1) that his claim is one upon which an attachment may be issued; and (2) the probable validity of such claim.") Attachment is a harsh remedy in that an alleged debtor loses control of his property before the claim against him is adjudicated, and provisions relating thereto should be strictly ...


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