United States District Court, N.D. California
ORDER RE: SPECIALLY APPEARING DEFENDANTS' MOTION
TO INCREASE UNDERTAKING RE: DKT. NO. 57
M. RYU UNITED STATES MAGISTRATE JUDGE.
Appearing Defendants Wisdom Marine Lines, S.A. and Wisdom
Marine Lines Co. (“Defendants”) move for an order
to increase the undertaking posted by Plaintiff Arabian Gas
and Oil Development Company (“Plaintiff”) by an
additional $186, 804.05. [Docket No. 57]. Plaintiff opposes.
[Docket No. 59]. Having considered the parties' papers
and oral argument, Defendants' motion to increase the
undertaking is Granted in part and Denied in Part. Plaintiff
shall post an additional undertaking in the amount of $171,
804.05 within 14 days of this order.
FACTS & PROCEDURAL HISTORY
dispute underlying this attachment action relates to a ship
that Defendant Wisdom Marine Lines, S.A. (“Wisdom
S.A.”) sold to Plaintiff. Plaintiff alleges that the
ship is defective. The parties initiated arbitration
proceedings in London. Compl. at ¶¶ 22-24 [Docket
No. 1]. In the arbitration, Wisdom S.A. requests that
Plaintiff be ordered to pay the balance of the purchase price
for the ship, and that Plaintiff take possession of the ship.
Compl. at ¶ 23; Defendant's Claim Submission [Ex. 3
to Compl.]. Plaintiff filed a counterclaim, seeking a
declaration that the Memorandum of Agreement regarding the
sale of the ship is unenforceable. Compl. at ¶ 24;
Plaintiff's Defense and Counterclaim [Ex. 4 to Compl.].
7, 2016, Plaintiff filed a verified complaint and an ex
parte application for a writ of attachment to attach a
ship owned by Wisdom S.A. as security for the London
arbitration proceedings. That vessel is named the Global
Faith, IMO Number 9554169 (“Global Faith”), and
was located within the court's jurisdiction at the time
Plaintiff filed its application for the writ of attachment.
See Ex Parte Application for Writ of Attachment
[Docket No. 3]. The court granted Plaintiff's ex
parte application. See 7/8/16 Order [Docket No.
14]. Plaintiff thereafter posted the statutory undertaking of
$10, 000.00. See Special Bond [Docket No. 17];
see also Cal. Code Civ. Pro. § 498.220(a)
(“the amount of an undertaking filed pursuant to this
article shall be ten thousand dollars (“$10,
000)”). The court issued a writ of attachment and the
Global Faith was arrested pursuant to the writ on July 11,
2016 and transferred to a substitute custodian. See
Writ of Attachment [Docket No. 19]; Declaration of Arrest
[Docket No. 20].
20, 2016, Defendants moved to dismiss Plaintiff's
verified complaint and, in the alternative, to set aside the
writ of attachment and to release the Global Faith.
See Defs' Mot. to Dismiss [Docket No. 28].
Defendants also moved, in the alternative, to increase the
amount of Plaintiff's undertaking to $315, 000.00.
See Defs' Mot. to Dismiss at 17-18; Notice of
Objection to Bond Amount [Docket No. 35]. The court
thereafter ordered the parties to submit supplemental
briefing on issues related to the then-pending motion to
dismiss. 8/1/16 Order Requesting Supplemental Briefing
[Docket No. 47]; Plaintiff's Supplemental Briefing
[Docket No. 50]; Defendants' Supplemental Briefing
[Docket No. 51].
August 4, 2016, the court held a hearing at which it set
aside the attachment order, quashed the writ of attachment,
and ordered the immediate release of the Global Faith. 8/4/16
Order setting aside the Right to Attach Order, quashing the
Writ of Attachment, and releasing the vessel from attachment
[Docket No. 52]; 8/14/16 Minute Order [Docket No. 53]. The
court denied Defendants' request to increase the
undertaking, but instructed Defendants that they could file a
separate motion to increase the undertaking to cover any
losses they were likely to incur if the Global Faith's
attachment was ultimately deemed wrongful. 8/4/16 Hearing
Trans. at 34:20-35:24 [Docket No. 56].
September 29, 2016, Defendants filed the instant motion to
increase Plaintiff's undertaking by $186, 804.05, which
represents the attorneys' fees and costs Defendants
incurred in defeating Plaintiff's writ of attachment of
the Global Faith. See Defs' Mot. to Increase
Undertaking [Docket No. 57]. Plaintiff opposes. See
Opp'n to Mot. to Increase Undertaking [Docket No. 59].
Probable Recovery for Wrongful Attachment
move to increase Plaintiff's undertaking by $186, 804.05
pursuant to Cal. Civ. Pro. Code § 490.020(a). They argue
that such an increase is appropriate because that amount
represents their “probable recovery” for wrongful
attachment of the Global Faith, consisting of the
attorneys' fees and expenses they incurred in defeating
the attachment. Plaintiff proffers a myriad of
arguments against increasing the undertaking which
are discussed below, but at the hearing, Plaintiff stressed
that the main reason Defendants' motion should be denied
is because Defendants cannot establish that they are more
likely to prevail in the London arbitration proceedings than
Plaintiff, and therefore cannot show that their recovery for
wrongful attachment is “probable.”
the key arguments turn on the interpretation of
California's attachment statutes, the court begins with
the overall framework and language of California's
attachment proceedings, federal courts apply the “law
of the state where the court is located.” See
Fed. R. Civ. P. 64. California law requires courts to
strictly construe the attachment statutes. See
Jordan-Lyon Prods., Ltd. v. Cineplex Odeon Corp., 29
Cal.App.4th 1459, 1466 (1994) (“‘[The
court's] starting point is the rule that the Attachment
Law statutes (Code Civ. Proc., § 481.010 et
seq.) are subject to strict construction because they
are purely the creation of the Legislature.'”)
(quoting Vershbow v. Reiner, 231 Cal.App.3d 879, 882
(1991)); Rose v. Abraham, No. CIV F 08-606 AWI SMS,
2008 WL 2127996, at *1 (E.D. Cal. May 20, 2008) (collecting
California cases regarding the same).
an attachment is wrongful only under the circumstances
specified in California Code of Civil Procedure Section
490.010(b). One such circumstance occurs where an attachment
is levied “in an action where the plaintiff does not
recover judgment.” Cal. Civ. Pro. Code §
490.010(b); see, e.g., Universal
Trading & Inv. Co. v. Kiritchenko, No. C-99-3073
MMC, 2010 WL 4010232, at *3 (N.D. ...