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Valley of California, Inc. v. Rogers

United States District Court, N.D. California

May 5, 2017

MARCUS P. ROGERS, Defendant.


          JOSEPH C. SPERO Chief Magistrate Judge.


         Plaintiff Valley of California, Inc. (―Valley") moves for a writ of attachment of property that belonged to original defendant James Cotter, who is now deceased. Marcus P. Rogers, as administrator of Cotter‘s estate, (the ―Administrator") has been substituted as the defendant in this action and opposes Valley‘s motion. The Court held a hearing on May 5, 2017. For the reasons discussed below, Valley‘s motion is GRANTED IN PART.[1]

         At the hearing, the Court requested that Valley submit a proposed order instructing the Clerk to issue a writ of attachment. Upon further consideration, the Court will prepare that order, to be filed separately from and immediately following this order.


         This case is the latest stage of a prolonged flurry of litigation arising from an ill-fated real estate deal. Cotter retained Valley‘s predecessor Polley, Polley & Madsen[2] in 1996 to represent him in the sale of five parcels of property that he owned in Sebastopol, California. Green Decl. (dkt. 20) ¶¶ 3, 5 & Ex. A (Owner Agency Agreement). Cotter agreed to pay a commission equal to six percent of the transaction price upon sale of the property or certain other conditions, including in the event that Cotter breached a sales agreement with a buyer. Id. Ex. A § 5. In 1997, Valley procured Schellinger Brothers (―Schellinger") as a buyer for the property, and Cotter and Schellinger entered an agreement to sell the property for $2, 775, 000. Id. ¶¶ 8, 9 & Ex. B (Sale Agreement). While waiting for necessary approvals from the City of Sebastopol, the parties agreed to an addendum in 1999 increasing the purchase price to $2, 930, 000. Id. ¶ 10 & Ex. B.

         As of 2007, the City of Sebastopol still had not approved a necessary subdivision map application, the sale had not closed, and the parties became embroiled in litigation. See Id. ¶ 11. Schellinger sued the city, unsuccessfully seeking a writ of mandate requiring approval of Schellinger‘s proposed development project. Schellinger Bros. v. City of Sebastopol (―Schellinger I"), 179 Cal.App.4th 1245 (2009) (affirming dismissal). Cotter sued Schellinger for breach of contract, seeking declaratory relief excusing him from performance on the basis that Schellinger had taken an unreasonably long time to obtain approval from the city; the state courts declined to hold that Schellinger had breached the contract but set a deadline for Schellinger to obtain final approval. Cotter v. Schellinger Bros. (―Schellinger II"), No. A135014, 2013 WL 4007533 (Cal.Ct.App. Aug. 5, 2013). Schellinger thereafter sued Cotter, and the state trial and appellate courts held that Cotter materially breached the sales agreement by hiring a contractor to dig an irrigation trench without obtaining necessary permits and approval. Schellinger Bros. v. Cotter (―Schellinger III"), 2 Cal.App. 5th 984 (2016). The state courts awarded Schellinger damages of $2, 855, 431.77. Id. at 1006. Pending a decision on appeal in Schellinger III, Cotter deposited several million dollars with the California Superior Court for Sonoma County. Glaubiger Decl. (dkt. 19) ¶ 9.

         Valley filed this action in state court in November of 2016, after the California Court of Appeal had affirmed judgment against Cotter in Schellinger III, alleging that Cotter‘s breach of the sales agreement with Schellinger entitled Valley to its commission on the uncompleted sale. See Notice of Removal (dkt. 1) Ex. A (Complaint). Cotter removed to this Court based on diversity jurisdiction. See Notice of Removal ¶ 1.

         After Cotter died in early 2017, see Rule 23(f) Report (dkt. 11), Valley filed its present motion on March 22, 2017, along with an ex parte request for a temporary restraining order, seeking to attach the portion of Cotter‘s deposit with the Superior Court that would be refunded to his estate, as well as other categories of property in California. Mot. (dkts. 15, 16, 17); Ex Parte Application (dkt. 13). At a hearing two days later, the Court denied ex parte relief on the record and set a briefing schedule for the attachment motion. Civil Minute Order (dkt. 24). The Court substituted the Administrator as defendant on April 3, 2017. Order Granting Mot. to Substitute (dkt. 29).

         Valley argues that it is entitled to attachment of under California law due to the probable validity of its claim for breach of contract, based in part on the collateral effect of Schellinger III, for the commission of $175, 800 that it contends it should have received. Mot. at 7-9. Valley also seeks attachment of interest totaling $81, 307.50, estimated attorneys‘ fees of $85, 000, and estimated costs of $15, 000, for a total attachment of $357, 107.50. Id. at 9-10. The Administrator opposes attachment, arguing that Valley‘s motion is an improper attempt to evade the jurisdiction of the probate court in Texas overseeing Cotter‘s estate, Opp‘n (dkt. 31) at 3-5, that this Court lacks jurisdiction to instruct the California Superior Court how to dispose of funds in its possession, id. at 5, and that attachment is a ―harsh remedy" not warranted here, id. at 5-6. The Administrator also contends that Valley has not shown probable validity because the underlying sales contract was unenforceable for violating the Subdivision Map Act, an issue that the Administrator argues is not subject to collateral estoppel, id. at 6-12, that offsetting damages against Valley for professional negligence should negate any right to attachment, id. at 12-13, and that even if Valley is entitled to some attachment, Valley overstates the appropriate measure of interest, costs, and fees, id. at 13-14. Valley disputes those contentions in its reply, and notes that it submitted a claim in the Texas probate proceedings. See generally Reply (dkt. 33); Glaubiger Reply Decl. (dkt. 33-1) ¶ 4 & Ex. D.

         The Administrator filed a ―Notice of Mootness" on April 25, 2017, stating that the California Superior Court for Sonoma County had disbursed to Cotter‘s estate the last of the funds that it was holding, and arguing that the present motion is therefore moot and should be denied. Notice of Mootness (dkt. 34). In a response to that notice, Valley argues that the motion is not moot because it seeks to attach other categories of property besides the funds that had been deposited with the Superior Court, and also notes that its claim in the Texas probate proceeding was rejected by the Administrator. Response to Notice of Mootness (dkt. 35).

         III. ANALYSIS

         A. Legal Standard

         Under Rule 64 of the Federal Rules of Civil Procedure, a party may seek remedies to secure satisfaction of a potential judgment as allowed by the law of the state where the court is situated. Fed.R.Civ.P. 64(a). Attachment is among the remedies authorized by Rule 64. Fed.R.Civ.P. 64(b).

         California law allows for attachment ―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 or claims is a fixed or readily ascertainable amount not less than five hundred dollars." Cal. Civ. Proc. Code § 483.010(a). Attachment is not allowed ―on a claim which is secured by any interest in real property, " or on a claim against a natural person unless it ―arises out of the conduct by the defendant of a trade, business, or ...

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