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Plata v. Darbun Enterprises

September 23, 2009

JAVIER TENORIO PLATA, AN INDIVIDUAL; DOLORES GALVEZ MONTES, AN INDIVIDUAL; ALFONSO VICTOR INCLAN COSTA, AN INDIVIDUAL; GERMAN VASQUEZ FIGUEROA, AN INDIVIDUAL; MICHELL ARIANNE CURTO GONGORA, AN INDIVIDUAL; CARLOS ACEVEDO MENDOZA, AN INDIVIDUAL; LUIS DELGADO; PICASSO, AN INDIVIDUAL; RUBEN ARMAND ROBLES DIAZ, AN INDIVIDUAL; GRACIELA HERRERA RODRIGUEZ, AN INDIVIDUAL; MARIA DE LOS ANGELES SANDOVAL, AN INDIVIDUAL; REINALDO RODRIGUEZ VELASQUEZ, AN INDIVIDUAL; BRAULIO ALBERTO DELGADO BRASIA, AN INDIVIDUAL; FRANCISCA BOND GASTELUM ARAGON, AN INDIVIDUAL; MARIA DE LA VILLANET SANCHEZ GUZMAN, AN INDIVIDUAL; YADIRA CAMBREROS PINEDA, AN INDIVIDUAL; DANIEL OROZCO VALDEZ, AN INDIVIDUAL; REBECCA GUTIERREZ JUAREZ, AN INDIVIDUAL; AND MARTH HUIZAR N., AN INDIVIDUAL, PLAINTIFFS,
v.
DARBUN ENTERPRISES, INC., A CALIFORNIA CORPORATION; OEM SOLUTIONS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; AND DOES 1 THROUGH 10 INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER: (1) DENYING PLAINTIFFS' MOTION FOR RIGHT TO ATTACH ORDER (Doc. No. 18); (2) GRANTING PLAINTIFFS' MOTION TO DISMISS THE COUNTERCLAIM (Doc. No. 20); (3) DENYING DEFENDANT'S MOTION FOR COSTS (Doc. No. 22.); and (4) DENYING DEFENDANT'S MOTION TO STAY (Doc. No. 23). AND RELATED COUNTERCLAIM.

BACKGROUND

I. Factual Background

This is an action by Plaintiffs for enforcement of a foreign judgment pursuant to the Uniform Foreign-Country Money Judgments Recognition Act, Cal. Code Civ. Proc. § 1713 et seq. According to the Amended Complaint ("Complaint"), Plaintiffs are all Mexican citizens who are residents of Tijuana, Baja California, Mexico, and were employed by Soluciones Tecnologicas de Mexico, S.A. de C.V. ("STM") (Complaint ¶¶ 2-21, 24.) Plaintiffs allege Defendants Darbun Enterprises, Inc. ("Darbun" or "Defendant") and OEM Solutions, LLC,*fn1 both of which are California companies, were part of a production unit responsible for the payment of wages to the employees of Soluciones Tecnologicas de Mexico, S.A. de C.V. (Complaint ¶ 25.)

Plaintiffs were not paid their wages due by STM. As a result, on May 31, 2000, Plaintiffs commenced an action against STM, as well as OEM Solutions, LLC and Darbun, before the Number One Special Local [Labor Relations] and Conciliation and Arbitrage Local Authority of the City of Tijuana (the "Labor Board"). [Complaint ¶ 2 and Ex. 5 (the "Judgment").] The Mexican Consulate General in San Diego, California, gave notice of such action to Darbun at the corporate address listed with the California Secretary of State. (Complaint ¶ 27.)

On May 3, 2001, Darbun Enterprises, Inc. granted Hector Cervantes Sanchez, Esq. and Jose Guadalupe San Miguel Torero, Esq., a General Power of Attorney to act on its behalf with regard to the Plaintiffs' litigation before the Labor Relations Board. (Complaint ¶ 28 and Ex. 1.) Darbun voluntarily appeared before the Labor Board through its attorneys on May 7, 2001. (Darbun's Motion to Dismiss the Complaint, Doc. No. 6, p. 3, line 9.) As reflected in the Labor Board's Judgment, however, the Labor Board considered Darbun to be in default because of its failure to appear at the first hearing on February 23, 2001. As a result, the Labor Board deemed all claims against Darbun were admitted. (Judgment, Ex. 5 to the Complaint, pp. 8, 9, 28.)

On September 5, 2003 the Labor Board handed down its initial judgment in Darbun's favor, finding there was no economic unit between STM and Darbun. [September 5, 2003 Labor Board Decision, Ex. 16 to Sherman Decl. ISO Opp. to Motion for Right to Attach Order ("Sherman Decl."), Doc. No. 34-11.] On October 15, 2003, Plaintiffs filed an "amparo" (appeal) of that decision with the Third Collegiate Court of the Fifteenth Circuit ("Federal Court").*fn2 (Exs. 19-20 to Sherman Decl.) On June 1, 2004 the Federal Court ordered that Labor Board to issue a new decision. (Exs. 21-22 to Sherman Decl.) A new judgment finding Darbun and OEM liable as members of an economic production unit that employed Plaintiffs issued on August 13, 2004. (Ex. 5 to Complaint.) Defendant filed an amparo to the Federal Court on September 9, 2004, but it was denied as untimely. (Opp. to Motion for Right to Attach Order, Doc. No. 34, p. 5, and Exs. 25-28 to Sherman Decl.)

On April 29, 2005, the Labor Board entered the judgment in favor of Plaintiffs and against Darbun and OEM. On July 1, 2008, the Labor Board updated the amount of the Judgment to include daily wages due under Mexican Law from April 29, 2005 through July 1, 2008. (Complaint ¶ 40 and Ex. 7.) As of July 1, 2008, the Judgment totaled 40,827,990.57 Mexican pesos. (Complaint ¶ 43.) The Judgment continues to grow at the rate of 16,996.12 Mexican pesos per day, representing per diem wages for each of the Plaintiffs until the Judgment is paid in full. (Complaint ¶ 44.) As of January 8, 2009, the Mexican Judgment totaled $3,250.714.00 in U.S. dollars. (Complaint ¶ 46.)

The updated Judgment of July 1, 2008 refers to writs Plaintiffs brought before the Labor Board on November 11, 2005, October 31, 2007. The filing of these writs apparently "interrupted" the statute of limitations for enforcement of the Judgment. On March 19, 2009 Darbun's Mexican attorneys filed a motion with the Labor Board challenging Plaintiffs' right to enforce the Judgment. Darbun premised this motion on its contention that the recalculation requests stamped November 11, 2005 and October 31, 2007 were actually created at a later date and back-datedin the Labor Board file. This act of fraud, according to Darbun, voided the interruption of the statute of limitations, rendering the Judgment expired. The Labor Board held a hearing on the motion on June 24, 2009. On August 21, 2009, the Labor Board denied Darbun's motion.*fn3 On September 16, 2009, Darbun lodged a Spanish-language document with this Court, purportedly indicating that it has appealed the Labor Board's denial of its motion. (Doc. No. 78.)

II. Procedural Background

Plaintiffs filed their complaint on January 12, 2009. (Doc. No. 1.) On April 22, 2009 Defendant filed an answer and counterclaim to "void[ the] foreign judgment" and for fraud. (Doc. No. 16.) Plaintiffs filed the instant motion for right to attach order on April 30, 2009. (Doc. No. 18.) Defendant filed an opposition (Doc No. 34), and Plaintiff filed a reply. (Doc. No. 46.) Defendant also filed a sur-reply (Doc. No. 69) after seeking leave of the Court. On May 18, 2009 Plaintiffs filed a motion to dismiss the counterclaim. (Doc. No. 20.) Defendant filed an opposition, and then filed a first amended counterclaim on June 1, 2009. (Doc. No. 32.) On May 19, 2009 Defendant filed a motion for an order requiring Plaintiffs to furnish security for payment of costs ("motion for costs bond", Doc. No. 22,) and a motion to stay the case. (Doc. No. 23.) The parties filed opposition and reply briefs to both motions.

Pursuant to a jurisdictional argument Defendant raised in its opposition to Plaintiffs' motion for a right to attach order, the Court ordered Plaintiffs to show cause why the case should not be dismissed for lack of subject matter jurisdiction on June 10, 2009. (Doc. No. 51) Plaintiffs filed a response to the order to show cause on June 12, 2009, and the Court granted Plaintiffs leave to amend the complaint to cure the deficient jurisdictional allegations on June 29, 2009. (Doc. No. 58.) Plaintiffs filed an amended complaint on July 8, 2009 and re-filed the document on July 9, 2009.*fn4 The Court finds Plaintiffs' motion to dismiss the counterclaim suitable for disposition without oral argument pursuant to Local Civil Rule 7.1(d)(1), and previously vacated the August 24, 2009 hearing. The Court heard oral argument on Plaintiffs' motion for right to attach order and Defendants' motions for costs bond and to stay the case on Monday, August 24, 2009.

DISCUSSION

I. Plaintiffs' Motion for Right to Attach Order

Plaintiffs seek a right to attach order and issuance of a writ of attachment to secure recovery on their Mexican judgment pending the outcome of this lawsuit. Plaintiffs seek to attach all of Darbun's corporate property which is subject to attachment pursuant to Cal. Civ. Proc. Code § 487.010(a).*fn5 The attachment would secure $43,938,280.53 Mexican pesos, equivalent to $3,250, 714 based on the January 8, 2009 exchange rate.

A. Legal Standard

Under Fed. R. Civ. P. 64, state law provides all remedies when property is to be seized for the purpose of securing satisfaction of a judgment, unless a federal statute governs. Plaintiffs accordingly seek a writ of attachment under California's Attachment Law, Cal. Code Civ. P. § 482.010 et seq. (the "Attachment Law.") The Attachment Law's statutes are subject to strict construction. Epstein v. Abrams, 57 Cal. App. 4th 1159, 1168 (Cal. Ct. App. 1997).

In seeking a writ of attachment, Plaintiffs have the burden of proving:

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

Cal. Civ. Proc. Code § 484.090 (2009); Loeb & Loeb v. Beverly Glen Music, 166 Cal. App. 3d 1110, 1116 (Cal. Ct. App. 1985).*fn6

"The application [for a right to attach order] shall be supported by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based." Cal. Civ. Proc. Code § 484.030 (2009). A defendant opposing a right to attach order must give notice of his objection "accompanied by an affidavit supporting any factual issues raised and points and authorities supporting any legal issues raised." Cal. Civ. Proc. Code § 484.060 (2009).

A right to attach "order will be issued if the court finds that the plaintiff's claim is probably valid and the other requirements for issuing the order are established. The hearing is not for the purpose of determining whether the claim is actually valid. The determination of the actual validity of the claim will be made in subsequent proceedings in the action and will not be affected by the decisions at the hearing on the application for the order." Cal. Civ. Proc. Code § 484.050 (2009).

B. Element 1: Whether Claim is One Upon Which Attachment May Be Issued

1. Legal Standard

California Civil Procedure Code Section 483.010 provides that an attachment may issue only if the claim sued upon is, unless otherwise provided by statute (1) a claim for money . . . based upon a contract, express or implied; (2) of a "fixed or readily ascertainable amount not less than five hundred dollars ($500);" (3) that is either unsecured or secured by personal property as opposed to real property; and (4) "arises out of the conduct by the defendant of a trade, business, or profession." These provisions are strictly construed against the applicant. Pos-A-Traction, Inc. v. Kelly-Springfield Tire Co., 112 F. Supp. 2d 1178, 1181 (C.D. Cal. 2000).

2. Analysis

The Court finds, based on Plaintiffs' motion and supporting documentation, that the judgment is based upon a contract, because a money judgment is "contractual" or "quasi-contractual" for collection purposes. See Minor v. Minor, 175 Cal. App. 2d 277, 279 (Cal. Ct. App.1959) ("[A]n action based on a judgment is an action based on a contract."). The Court also finds the underlying claim is for a readily ascertainable amount over $500. Although Plaintiffs' papers do not address whether the claim is unsecured or secured by personal property, Plaintiffs clarified at oral argument to the Court's satisfaction that the claim is unsecured. Defendant's papers are silent as to whether Plaintiffs have satisfied the requirements of Section 483.010. The Court therefore finds Plaintiffs have met the threshold requirement for a right to attach order as set forth in Section 483.010.

C. Element 2: Probable Validity of ...


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