United States District Court, C.D. California
CONSTRUCTION LABORERS TRUST FUNDS FOR SOUTHERN CALIFORNIA ADMINISTRATIVE COMPANY, Plaintiff,
GEORGE ANDREW DOMINGUEZ, et al., Defendants.
MEMORANDUM DECISION AND ORDER GRANTING
PLAINTIFF'S APPLICATION FOR RIGHT TO ATTACH ORDER AND
WRIT OF ATTACHMENT [DKT. NO. 13]
SUZANNE H. SEGAL UNITED STATES MAGISTRATE JUDGE
September 28, 2017, Plaintiff Construction Laborers Trust
Funds for Southern California Administrative Company
(“CLTF” or “Plaintiff”) filed a civil
complaint against Defendants George Andrew Dominguez
(“Dominguez”), Hudson Insurance Company
(“Hudson”), and Suretec Insurance Company
(“Suretec”). (“Complaint, ” Dkt. No. 1).
The Complaint asserts claims for contributions to employee
benefit plans, specific performance, preliminary and
permanent injunctive relief, breach of settlement agreement,
recovery against license bond, and recovery against labor and
material payment bonds. (Id. at 4-16).
weeks later after Plaintiff filed the Complaint, on October
12, 2017, Plaintiff filed an Ex Parte Application for a Right
to Attach Order and Writ of Attachment, and for a Temporary
Protective Order. (“Application” or
“Appl., ” Dkt. No. 13). The Application was
supported by a Memorandum of Points and Authorities
(“Memo.”) and the declarations of Marsha M.
Hamasaki (“Hamasaki Decl.”) and Yvonne Higa
(“Higa Decl.”). (Id.). Defendant filed
an Opposition on October 16, 2017, (“Opp.”),
including the declaration of George Andrew Dominguez
(“Dominguez Decl.”). (Dkt. No. 17). That same
day, the Court held a telephonic hearing and issued an Order
denying the Ex Parte Application without prejudice on the
procedural ground that Plaintiff had not shown that it would
suffer irreparable harm if the matter were heard as a
regularly noticed motion. (Dkt. No. 19). On October 17, 2017,
Plaintiff filed a Notice of Hearing setting the hearing on
the merits of its Application for November 7, 2017, (Dkt. No.
20), which the Court continued to November 21, 2017. (Dkt.
October 27, 2017, Defendant filed a Supplemental Opposition,
(“Supp. Opp.”), including another declaration of
George Andrew Dominguez (“Dominguez Supp.
Decl.”). (Dkt. No. 26). Plaintiff filed a Reply on
November 3, 2017, (“Reply, ” Dkt. No. 29),
including additional declarations by Marsha M. Hamasaki,
(“Hamasaki Supp. Decl., ” Dkt. No. 30), and
Yvonne Higa. (“Higa Suppl. Decl., ” Dkt. No. 31).
The Court held a hearing on November 21, 2017. For the
reasons discussed below and at the hearing, Plaintiff's
Application for a Right to Attach Order and Writ of
Attachment is GRANTED.
OF THE COMPLAINT
is an administrator and agent for collection of several
employee benefit plans, and a fiduciary as to those plans.
(Complaint ¶ 3). The plans were created by written
agreements, and qualify as “employee benefit
plans” and “multi-employer plans” within
the meaning of the relevant provisions of the Employee
Retirement Income Security Act of 1974 (“ERISA”).
is an individual doing business as G.A. Dominguez.
(Id. at ¶ 4). Defendant is a party to written
collective bargaining agreements with Plaintiff and its
affiliated local unions. (Id. ¶ 11). Pursuant
to these agreements, Defendant is required to pay fringe
benefit contributions for each hour worked by his employees
performing services covered by the agreements, and to deliver
to Plaintiff monthly contribution reports that identify the
employees, the hours worked by each employee, and the amount
of the contributions due. (Id. ¶ 13). The
contributions are to be paid monthly. (Id.). In the
event that Defendant fails to pay the contributions timely,
he is liable for interest on the unpaid amounts, plus
liquidated damages in a sum equal to the greater of $25.00 or
20% of the unpaid contributions. (Id. ¶¶
16-17). The agreements empower Plaintiff to audit
Defendant's payroll and business records, with resulting
costs charged to Defendant. (Id. ¶ 18).
alleges that Defendant employed workers covered by the
agreements but failed to pay benefits for certain periods
from January 2014 through July 2017. (Id.
¶¶ 19 & 23). Defendant previously entered into
a settlement agreement concerning amounts owed for the period
from March 2016 to September 2016, (id. ¶¶ 41-42),
but failed to make all the payments. (Id. ¶
44). Defendant has also failed to permit Plaintiff to conduct
a complete audit of his payroll and business records.
(Id. ¶¶ 20-21).
ATTACHMENT APPLICATION AND THE PARTIES'
instant Application, Plaintiff “seeks to attach funds
owed to [Defendant] by his prime contractor and by the public
agencies pending final judgment[, ] which may partially
secure recovery of the funds owed by [Defendant, ] and to
record the writ of attachment against [Defendant's]
business property prior to its sale.” (Memo. at 2).
Plaintiff calculated in its opening brief that as of
September 27, 2017, Defendant owed Plaintiff at least $158,
832.85. (Id. at 10). However, Plaintiff sought to
attach only $130, 000.00 of Defendant's assets in light
of the possibility that it might prevail on its Sixth Claim
for Relief against Suretec for unpaid compensation guaranteed
by a payment bond. (Id.; see also Complaint at
20-21). Plaintiff further revised its calculations in its
Reply to reflect adjustments made after the Application was
filed. Plaintiff determined that the revised total amount
owed by Defendant, including unpaid fringe benefits,
liquidated damages, audit fees, and interest as of October
27, 2017, was $139, 576.26. (Id.; see also Higa
Supp. Decl. ¶ 9). Plaintiff further conceded that the
amount it is now seeking from Suretec could reduce
Defendant's liability to $102, 185.95. (Reply at 11).
Plaintiff presently seeks to attach only $75, 000.00 of that
amount in order to “free some $27, 000.00 to
[Defendant] for the expenses and legal fees pending final
judgment” of this matter. (Id.).
specific assets owned by Defendant which Plaintiff seeks to
A) Lien against real property commonly known as 535 537 W.
Grand Avenue, Escondido, CA 92025;
B) Proceeds of the sale of real property commonly known as
535-537 W. Grand Avenue, Escondido, CA 92085 [sic];
C) All contract earnings, right to payments, retention, for
work performed by Defendant for the San Diego Unified School
D) All contract earnings, right to payments, retention for
work performed for the Whittier Union High School District;
E) All Defendant's accounts receivables, payments, right
to payments, owed by JTS Modular Inc., and all funds payable
thereto up to [$75, 000.00] in JTS Modular Inc.'s
possession, custody and/or control, including subcontract
earnings for work performed for JTS Modular Inc., for the
Pomona Unified School District and/or any other subcontract
work by Defendant for JTS Modular, Inc.
F) Funds held in bank accounts with City National Bank.
(Appl., Exh. A at 6).
argues that it is entitled to attach Defendant's assets
for at least three reasons. First, Plaintiff contends that
Defendant evidently does not have the funds on hand to pay
the amounts owed, as demonstrated by his failure to pay
monies due under the settlement agreement and his alleged
submission of “unpaid false reports as confirmed by the
audit of payroll records, and certified payroll records on
public works projects.” (Memo. at 10). Plaintiff
believes that Defendant owes “substantial debt”
not only to Plaintiff, but also to the IRS, as evidenced by
tax liens levied by the IRS. (Reply at 3; Hamasaki Decl.
¶ 8 & Exh. 3). Second, Plaintiff is concerned that
Defendant may be shutting down his business because his
commercial property is for sale by owner. (Memo. at 10).
Plaintiff argues that further evidence of Defendant's
potential imminent departure from the business is suggested
by Defendant's failure to submit monthly contribution
reports since May 2017, even though other records confirm
that he has had employees on his payroll since that time, and
by his failure to pay the contributions due. (Id.).
Third, Plaintiff maintains that Defendant's unwillingness
to communicate indicates that Plaintiff will recover nothing
unless it obtains contributions from Defendant's known
projects for which Defendant will receive payment, or from
the proceeds of the sale of his commercial property.
(Id. at 11).
does not challenge Plaintiff's allegations that he is
delinquent in making required contributions, or even the
amounts that Plaintiff alleges that he owes. Instead,
Defendant argues that the “scope” of the proposed
attachment is “problematic” and that there is no
danger that funds will not be available if Plaintiff prevails
in this action. (Supp. Opp. at 1). Defendant asserts four
challenges to the “scope” of the proposed
attachment, which he contends impermissibly encompasses
exempt property. Defendant notes first that “it could
be argued” that Plaintiff is seeking to attach assets
held “in trust” by Defendant in which he has no
ownership interest. (Id.). According to Defendant,
the rights of his bond issuers (and co-Defendants), Hudson
and Suretec, create a “trust relationship” in
which payments by third parties to Defendant for work covered
by the bonds should be construed as monies held “in
trust” by Defendant for the benefit of Hudson and
Suretec. (Id.). Second, Defendant claims that his
assets are community property, and that attachment would
infringe the property rights of his non-debtor spouse.
(Id.). Third, Defendant maintains that as an
individual, he is “entitled to assert certain
exemptions” under California Code of Civil Procedure
§§ 703.010-704.995, although he does not identify
the specific exemptions that he believes may
apply. (Id.). Fourth, Defendant asserts
that Plaintiff is not permitted under California Code of
Civil Procedure § 487.020(b) to attach property that is
necessary to support Defendant and his family, including
funds needed to pay for attorney's fees so that Defendant
may meaningfully defend the instant action on the merits.
(Id.) (citing Randone v. Appellate Dep't, 5
Cal.3d 536, 562 (1971)).
the contention that there is no risk that funds will not be
available to make Plaintiff whole should Plaintiff prevail in
this action, Defendant argues that “[t]he issuance of
payment and performance bonds on each of the projects upon
which [Plaintiff] has filed its lawsuit, as well as all other
public works projects, ensures that, should [Plaintiff]
prevail, funds will be available to satisfy [Plaintiff's]
claim.” (Supp. Opp. at 2). According to Defendant,
“[p]ractically speaking, the presence of such bonds
already secure[s] [Plaintiff's] claim, ” thereby
satisfying the purpose of prejudgment attachments.
(Id. at 6). Finally, Defendant states in his
declaration that although he listed real property for sale by
owner with an asking price of $585, 000.00, he has received
no reasonable offer in the year that the property has been on
the market, and he does not anticipate that a sale will be
finalized “in the near future.” (Dominguez Supp.
Decl. ¶ 10).
refutes each of the defenses raised by Defendant. With
respect to Defendant's challenges to the
“scope” of the proposed attachment, Plaintiff
argues that sums owed by third parties to Defendant are
Defendant's “accounts receivable” and are not
held “in trust” for the benefit of
Defendant's bond issuers. (Reply at 5). Plaintiff further
contends that community assets are subject to attachment.
(Id.) (citing, inter alia, Century Surety Co. v.
Polisso, 139 Cal.App.4th 922, 942 (2006), and California
Family Code § 910(a)). To the extent that Defendant is
entitled to any statutory exemptions from attachment, which
he does not identify, Plaintiff notes that the California
Code of Civil Procedure sets out procedures for claiming
exemptions after levy. (Reply at 7) (citing Cal. Code Civ.
Proc. §§ 703.510 et seq.). With respect to
Defendant's claim that the assets Plaintiff seeks to
attach are needed to support his family and his defense in
this litigation, Plaintiff states that such a claim requires
a full disclosure of Defendant's assets. (Reply at 7). As
to Defendant's contention that funds will be available
through bond issuers Hudson and Suretec, Plaintiff argues
that it is not clear that the bond amounts will be sufficient
as “[p]ayment bonds on projects only cover the
contributions owed to the employees for their work on the
bonded project, and do not cover [Plaintiff's] claim for
liquidated damages and audit fees.” (Id. at
4). Finally, with respect to Defendant's claim that
liquidated damages are “arguably impermissible”
given their punitive nature, Plaintiff emphasizes that both
the written agreements and ERISA, 29 U.S.C. §
1132(g)(2), provide for liquidated damages, which the Ninth
Circuit has “repeatedly held . . . are mandatory
elements of any court award.” (Reply at 2) (citing
cases; emphasis in original).
California Law Applies To Plaintiff's Application For
Right To Attach Order And Writ Of Attachment
in federal court may invoke whatever remedies are provided
under the law of the state in which the federal court is
located for “seizing a person or property to secure
satisfaction of the potential judgment.” Fed.R.Civ.P.
64; Reebok Int'l, Ltd. v. Marnatech Enters., Inc., 970
F.2d 552, 558 (9th Cir. 1992) (discussing Rule 64); NML
Capital, Ltd. v. Spaceport Sys. Int'l, L.P., 788
F.Supp.2d 1111, 1116 (C.D. Cal. 2011). These remedies may
include a writ of attachment. Fed.R.Civ.P. 64; see also VFS
Fin., Inc. v. CHF Express, LLC, 620 F.Supp.2d 1092, 1094-95
(C.D. Cal. 2009) (Rule 64 “provides for prejudgment
attachment and other prejudgment remedies . . .”
authorized under state law). Because attachment is sought
against Defendant in the state of California, California law
determines whether and under what conditions a writ of
attachment may issue. In California, the procedures and
grounds for obtaining orders for prejudgment writs of
attachment are codified at California Code of Civil Procedure
Overview Of California Law Governing Attachment
“is a remedy by which a Plaintiff with a contractual
claim to money (not a claim to a specific item of property)
may have various items of a defendant's property seized
before judgment and held by a levying officer for execution
after judgment.” Waffer Int'l Corp. v. Khorsandi,
69 Cal.App.4th 1261, 1271 (1999) (emphasis omitted).
California allows prejudgment attachments under limited
circumstances as “a provisional remedy to aid in the
collection of a money demand.” Kemp Bros. Constr. Inc.
v. Titan Elec. Corp., 146 Cal.App.4th 1474, 1476 (2007). It
is “a harsh remedy because it causes the defendant to
lose control of his property before the plaintiff's claim
is adjudicated.” Martin v. Aboyan, 148 Cal.App.3d 826,
831 (1983). Therefore, the requirements for the issuance of a
writ of attachment are strictly construed against the
applicant. Pos-A-Traction, Inc. v. Kelly-Springfield Tire
Co., 112 F.Supp.2d 1178, 1181 (C.D. Cal. 2000)
(“Attachment is a purely statutory remedy, which is
subject to strict construction.”). The burden is on the
applicant to establish each element necessary for an
attachment order by a preponderance of the evidence. Loeb
& Loeb v. Beverly Glen Music, Inc., 166 Cal.App.3d 1110,
of attachment may be issued “only 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. Code Civ.
Proc. § 483.010(a) (emphasis added). For damages to be
“readily ascertainable, ” the contract
“must furnish a standard by which the amount due may be
clearly ascertained and there must exist a basis upon which
the damages can be determined by proof.” CIT
Group/Equipment Financing, Inc. v. Super DVD, Inc., 115
Cal.App.4th 537, 540 (2004) (internal quotation marks
omitted); see also Pet Food Express, Ltd. v. Royal Canin USA
Inc., 2009 WL 2252108, at *5 (N.D. Cal. July 28, 2009)
(“lost profits” that plaintiff sought to attach
were not “certain, fixed, or even readily
ascertainable” and thereby failed to “meet the
threshold requirement for this court to even consider issuing
a writ of attachment”). Attachment is permitted on
unsecured claims or claims secured by personal property, but
not on claims secured by real property. Cal. Code Civ. Proc.
§ 483.010(b). Attachment lies on any claim against a
partnership or corporation or on claims against individuals
that arise out of the conduct by the individual of a trade,
business, or profession. Id. § 483.010(c).
must find all of the following before an attachment order may
issue: (1) the claim upon which the attachment is based is
one upon which an attachment may be issued; (2) the plaintiff
has established the probable validity of the claim upon which
the attachment is based; (3) the attachment is not sought for
a purpose other than recovery of the claim upon which the
attachment is based; and (4) the amount to be secured by the
attachment is greater than zero. Id. §
484.090(a). To establish the “probable validity”
component, the plaintiff must show that it is more likely
than not that it will obtain a judgment against the
defendant. Id. § 481.190; see also
Pos-A-Traction, 112 F.Supp.2d at 1182. “In determining
the probable validity of a claim where the defendant makes an
appearance, the court must consider the relative merits of
the positions of the respective parties and make a
determination of the probable outcome of the
litigation.” Loeb & Loeb, 166 Cal.App.3d at 1120.
law restricts the availability of pre-judgment attachments in
part by providing the defendant with an opportunity, prior to
a ruling on an attachment application, to establish that the
property sought to be ...