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California Retail Portfolio Fund Gmbh & Co. Kg v. Hopkins Real Estate Group

March 22, 2011

CALIFORNIA RETAIL PORTFOLIO FUND GMBH & CO. KG, PLAINTIFF AND RESPONDENT,
v.
HOPKINS REAL ESTATE GROUP, DEFENDANT AND APPELLANT.



Los Angeles County Super. Ct. No. BS124966 APPEAL from an order of the Superior Court of Los Angeles County. Barbara Meiers, Judge. Affirmed.

The opinion of the court was delivered by: Rubin, J.

CERTIFIED FOR PUBLICATION

Hopkins Real Estate Group (Hopkins Group) appeals from the trial court's order authorizing a writ of attachment for California Retail Portfolio Fund (California Retail) in connection with California Retail's arbitration proceeding against the Hopkins Group for breach of a real estate joint venture agreement. Because there was substantial evidence that an award for California Retail might be rendered ineffectual without a writ of attachment, we affirm the order.

FACTS AND PROCEDURAL HISTORY

California Retail is a German limited partnership that entered into a partnership agreement with the Hopkins Group by which California Retail invested more than $5.5 million in five Southern California area shopping centers. The partnership agreement provided that California Retail would receive an annual payment of $582,000 every June 30 from 2006 through 2010. When the Hopkins Group failed to make the first two annual payments, California Retail began arbitration proceedings pursuant to the partnership agreement's arbitration provision.*fn1

Under Code of Civil Procedure section 1281.8, parties to arbitration proceedings may apply to the superior court for writs of attachment and other provisional remedies if, in addition to the usual requirements for such remedies, an award to the petitioner "may be rendered ineffectual" without such relief. (Code Civ. Proc., § 1281.8, subd. (b).)*fn2 In March 2010, California Retail applied to the trial court for a writ of attachment against various assets and funds owned by the Hopkins Group.

The unverified application alleged compliance with all the requirements for issuing a writ of attachment, along with an allegation that without the writ, an award in California Retail's favor would be ineffectual. The application was supported by the declaration of one of California Retail's officers, Joerg Kanebley. Kanebley summarized the terms of the partnership agreement and said that the Hopkins Group had failed to make the 2008 and 2009 annual payments. Neither the declaration, nor any of the other evidentiary materials submitted with the application, addressed whether an award might be ineffectual without the writ. Despite the evidentiary omission, the points and authorities in support of the application argued that an arbitration award for California Retail might be rendered ineffectual because the Hopkins Group was not paying its debts, and because Stephen C. Hopkins (Hopkins), who effectively controlled the Hopkins Group and its related entities, would make sure the company had no remaining assets by the end of the arbitration proceeding.

The Hopkins Group's opposition points and authorities noted the absence of evidence on three issues: (1) the existence of an enforceable written agreement (§§ 483.010, subd. (a)); (2) proof of the probable validity of California Retail's claim, based on the Hopkins Group's counter-demand for arbitration of claims against entities related to California Retail that were also parties to the partnership agreement (§ 484.090, subd. (a)(2)-(3)) that an award for California Retail might be ineffectual without the writ. The opposition brief was supported by the declaration of Hopkins, who offered a different version of the events. However, apart from stating that neither he nor the Hopkins Group had ever declared bankruptcy, Hopkins's declaration was silent as to the solvency of the Hopkins Group.

California Retail filed a reply brief that addressed these evidentiary gaps. As to the insolvency issue, which is the only relevant issue on appeal, California Retail provided a print-out of a June 11, 2008 email to Hopkins from Michael Haines, the chief financial officer of the Hopkins Group. In it, Haines said he wanted to speak with Hopkins about "some concerns I have regarding [the Hopkins Group's] overall liquidity, and other matters." Haines stated that "IGB [a California Retail entity] wants more clarity on the game plan for Fontana and where the IGB II funds are. I don't know how those funds were used so I can not [sic] answer that question. Also, my sense is that missing the guaranteed payments to IGB on Funds I, II and III will likely cause them to not fund on Fund IV. That will put us in a position where we can't resolve Clearfund III and won't be in a position to payoff [sic] the Renfro Note. Andy looked at the IGB agreements. Assuming the payments aren't made and something is not worked out, IGB would at a minimum go after the guaranteed payments that you personally guaranteed." Haines went on to state that completing another transaction would "generate some cash but I do not believe it will be enough to meet all of our needs . . . ." Haines cautioned that "we are not being up front with" another entity about the payments owed to IGB. Haines concluded that "[a]vailable cash is being used up and our development fee stream is effectively down to [shopping centers in Carson and Redlands] which does not come close to covering overhead. [¶] I have brought up assets sales before to monetize value and I know there is concern that we would be discounted but I think we have to look at all alternatives. [¶] It is very important to discuss all of this to strategize on how to keep the Company capitalized."

The delayed production of this email was explained in a declaration from one of California Retail's lawyers. She said that the Hopkins Group had not fully responded to California Retail's discovery requests, forcing California Retail to obtain an interim order from the arbitrator compelling the production of certain documents. The email from Haines to Hopkins was among those produced. The Hopkins Group did not turn over the materials until March 19, 2010, eight days after the application for a writ of attachment was filed. The Hopkins Group does not dispute these events.

At the hearing on the writ application, the Hopkins Group objected that the email from Haines was inadmissible because it was both unauthenticated and hearsay. The trial court never ruled on the objection, and counsel for the Hopkins Group never asked it to do so. When the trial court asked counsel for the Hopkins Group about the absence of an explanation from his client about why the guaranteed annual payments had not been made, counsel said he could not answer that question. The court asked whether there were "certain inferences that [it could] make that are common sense out of what it does have." After further brief argument, the trial court granted the application for a writ of attachment.

STANDARD OF REVIEW

To the extent we interpret section 1281.8, we are presented with an issue of law to resolve under the rules of statutory interpretation. (On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079, 1085.) " 'The fundamental rule of statutory construction is to ascertain the intent of the Legislature in order to effectuate the purpose of the law. . . . In doing so, we first look to the words of the statute and try to give effect to the usual, ordinary import of the language, at the same time not rendering any language mere surplusage. The words must be construed in context and in light of the nature and obvious purpose of the statute where they appear. . . . The statute " 'must be given a reasonable and commonsense interpretation consistent with the apparent purpose and intention of the Legislature, practical rather than technical in nature, and which, when applied, will result in wise policy rather than mischief or absurdity. . . .' " . . . If the language of a statute is clear, we should not add to or alter it to accomplish a purpose which does not appear on the face of the statute or from its legislative history.' [Citations.] Statutes must be harmonized, both internally and with each other." (Pang v. Beverly Hospital, Inc. (2000) 79 Cal.App.4th 986, 994.) When a statute is ambiguous, we may consider its legislative history. (Coso Energy Developers v. County of Inyo (2004) 122 Cal.App.4th 1512, 1526.)

To the extent we review the trial court's factual findings, the substantial evidence standard applies. Under that standard, we view the evidence in favor of the prevailing party, and resolve all conflicts and draw all reasonable inferences in favor of the order. ...


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