United States District Court, N.D. California
ORDER GRANTING IN PART MOTION FOR ATTACHMENT RE: DKT.
C. SPERO Chief Magistrate Judge.
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
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
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 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.
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)
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.
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).
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.
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).
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).
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