The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge
Presently pending before the court is plaintiff 4Wall Las Vegas, Inc.'s application for a writ of possession under California Civil Procedure Code section 512.010, filed on December 19, 2012. (Dkt. No. 12.)*fn1 Plaintiff, a Nevada corporation, essentially alleges that defendant Mark Triebwasser, a California resident doing business as Stage 1, Inc., and defendant Stage 1, Inc., a California corporation, rented entertainment lighting equipment from plaintiff pursuant to a rent-to-own contract. (Id.) Plaintiff contends that defendants have since defaulted on payments and now illegally retain possession of the equipment. On December 31, 2012, defendants filed an opposition to plaintiff's application, and on January 7, 2013, plaintiff filed a reply brief. (Dkt. Nos. 14, 16.)
The court held a hearing on this matter on February 14, 2013. (Dkt. No. 28.) Hank Burgoyne appeared on behalf of plaintiff and Nicholas Yonano appeared on behalf of defendants. For the reasons discussed at the hearing, the court issued an order on February 15, 2013, requiring the parties to submit supplemental briefing/declarations on specified matters. (Dkt. No. 30.) Plaintiff submitted a supplemental declaration on February 21, 2013, and defendants submitted a supplemental declaration on February 28, 2013. (Dkt. Nos. 31, 32.)
After considering the parties' briefing and supporting documentation, the parties' oral argument at the hearing, and other appropriate portions of the record, the court grants plaintiff's application along the terms outlined in this order.
Plaintiff and defendants are all in the business of renting out or supplying entertainment equipment for the entertainment and wedding industries. This dispute stems from defendants' alleged default on a rent-to-own contract with plaintiff involving certain entertainment lighting equipment ("Equipment").
On or around July 18, 2011, plaintiff provided defendants with a "Quote" for the sale of the Equipment, described as a sale of used equipment, for a total price of $53,961.50, providing for "6 equal monthly payments of $7,752.59 shipping." (Dkt. No. 14-2 at 6-7; Dkt. No. 16 at 20-21.) On July 22, 2011, defendants sent an e-mail to plaintiff, requesting to add some inventory to the equipment list and to "discuss the terms." (Dkt. No. 16 at 19-20.) In particular, defendants desired to alter the payment plan in the Quote to allow for smaller payments of $3,000 to $3,500 over a longer period of time. (Id.) The next day, plaintiff's CEO responded:
Because I trust you - I will agree to your proposal. Mancuso will put the agreement together. Please be aware that this equipment will leave as a rental and the title of ownership will not pass until the final payment is made. In the event you return the equipment for some reason, any payments made will be deemed rental and therefore non refundable. (Dkt. No. 16 at 19.)
Thereafter, on August 3, 2011, plaintiff provided defendants with a document titled "Order," which described the parties' agreement as a "RENT TO OWN" agreement and which listed the Equipment to be rented under a heading titled "RENTAL." (Dkt. No. 16 at 23-25.) The Order valued the Equipment at approximately $54,691.50. (Dkt. No. 16 at 25.) Defendants signed the Order that same day, and just above defendant Triebwasser's signature, the Order states that the agreement provides for monthly payments of $3,500 starting October 1, 2011, and that "[t]he equipment will leave as a rental. In the event Stage 1, Inc. returns the equipment for some reason, any payments made to 4Wall Enterprises will be deemed a rental and therefore is non refundable." (Dkt. No. 16 at 25.)
On August 3, 2011, plaintiff additionally provided defendants with a document titled "Out Contract," which also described the parties' agreement as a "RENT TO OWN" agreement and which also listed the Equipment to be rented under a heading titled "RENTAL." (Dkt. No. 16 at 27-29; Dkt. No. 31-1 at 1-4.) Defendants signed the Out Contract, which states, on the bottom of each page, that "SIGNATURE ACKNOWLEDGES AND ACCEPTS TERMS AND CONDITIONS ON REVERSE SIDE." (Id.) The terms and conditions on the reverse side repeatedly refer to the agreement as a rental agreement and specifically states, in part:
It is expressly understood that this is a rental contract and does not involve a purchase agreement. Title to the Equipment shall at all times be vested in 4WALL, and no right, title or interest in the Equipment shall pass to Customer other than the right to possess and use the Equipment for the full Rental Term, which right is conditioned upon Customer's compliance with and fulfillment of the terms and conditions of the Agreement. (Dkt. No. 31-1 at 4.)*fn2
Thus, according to plaintiff, defendants were generally required to make monthly rental payments of $3,500 until the total amount of $54,691.50 (the stated value of the Equipment) was paid, at which point ownership of the Equipment would transfer to defendants. (Dkt. No. 16 at 14; Dkt. No. 18 at 1-2.) However, if defendants were to default prior to paying plaintiff the full $54,691.50, defendants would be required to return the Equipment and all prior payments made by defendants would be deemed as non-refundable, rental payments. (Id.)
Defendants started making payments in September/October 2011, but around December 2011, defendants began falling behind in making timely payments. (Dkt. No. 16 at 14; Dkt. No. 18 at 2.) Defendants made two payments of $3,500 each around February 5, 2012, and two more $3,500 payments around March 12, 2012, which brought their account current to February 2012. (Id.) However, defendants again failed to make the March 2012 payment and continued to default on payments in the following months, without returning the Equipment. (Dkt. No. 16 at 14-15; Dkt. No. 18 at 2.)
Around mid-August 2012, with defendants still in arrears, plaintiff agreed to amend the agreement's payment schedule. (Dkt. No. 16 at 15; Dkt. No. 18 at 2.) This amended payment schedule was memorialized in an August 29, 2012 letter from plaintiff to defendants, emphasizing that the Equipment would have to be returned if defendants failed to meet the amended payment schedule. (Dkt. No. 16 at 15, 31; Dkt. No. 18 at 2-3.) Thereafter, at defendants' request, plaintiff agreed to yet another modification of the payment schedule, memorialized via email on August 24, 2012.*fn3 (Dkt. No. 16 at 15-16, 33-34; Dkt. No. 18 at 3.) The further amended payment schedule required five monthly payments of $6,000, due on the 30th of each month, starting on August 30, 2012. (Id.) The memorializing e-mail from plaintiff stated, in part:
Again, If you cant afford the equipment, which it appears you can[']t. Send it back!!! Which I'm strongly advising you to do NOW! If you miss any of the 5 payments which is due the 30th of the month, we will force you to return it all and consider any payments made RENT! So, again if you don't feel like you can make any of the 5 payments ON TIME, then send it ALL back now and save yourself from further loss. (Dkt. No. 16 at 33.)
Around August 31, 2012, defendants defaulted on the first payment of the further amended payment schedule, paying only $1,000 instead of the agreed-upon $6,000. (Dkt. No. 16 at 16; Dkt. No. 18 at 3.) This was the last payment plaintiff received from defendants. (Id.) It is undisputed that defendants are $29,000 behind in rental payments, having made over $25,000 in payments on the Equipment. (Id.; see also Dkt. No. 32 at 2.)
Plaintiff commenced this action on November 6, 2012, invoking the court's diversity jurisdiction under 28 U.S.C. § 1332. (Dkt. No. 1.) The operative second amended complaint asserts claims against defendants for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) conversion; (4) fraud and deceit - intentional misrepresentation; and (5) breach of quasi-contract. (Dkt. No. 20.)*fn4
On December 19, 2012, plaintiff filed the instant application for a writ of possession under California Civil Procedure Code section 512.010. (Dkt. No. 12.)
Federal Rule of Civil Procedure 64 states, in pertinent part: At the commencement of 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 ...