Court Opinion

ID: 5127620
Source: CourtListenerOpinion
Date Created: 2021-11-19 18:03:05.254139+00
Date Added: 2024-06-11T08:23:01.523019
License: Public Domain

Filed 11/19/21 Gluck v. Sarkissian CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                         SECOND APPELLATE DISTRICT
                                        DIVISION TWO
 DANIEL GLUCK et al.,                                         B308327
 as Trustees, etc.,
                                                              (Los Angeles County
          Plaintiffs and                                      Super. Ct. No.
          Respondents,                                        20STCV14590)

           v.
 NICK SARKISSIAN,
           Defendant and
           Appellant.

     APPEAL from orders of the Superior Court of Los Angeles
County, Steven J. Kleifield, Judge. Affirmed.

      Bohm Wildish & Matsen, James G. Bohm, Nicholas P.
Carrigan, Hannah F. Jones; Law Offices of Rafik Ayvazi and
Rafik Ayvazi for Defendant and Appellant.

      Greenberg Glusker Fields Claman & Machtinger and Lee
A. Dresie for Plaintiffs and Respondents.
       After Nick N. Sarkissian (defendant) defaulted on a
commercial lease, Daniel Gluck and Thomas Gluck, as Trustees
of the Gluck Family Trust (plaintiffs), filed suit against him for
breach of guaranty. The trial court issued a right to attach order
and writ of attachment (Code Civ. Proc., § 482.010 et seq.1) in
favor of plaintiffs, and denied defendant’s claim of a retirement
plan exemption. Defendant appeals, contending these orders
were improperly issued. Because the orders were supported by
substantial evidence, we affirm.
                          BACKGROUND
1.     Underlying Suit
       On February 8, 2017, plaintiffs, as landlord, and Dancool
HVAC Supply (Dancool), as tenant, entered into a written five-
year lease of commercial real property (lease) in Canoga Park,
California. In addition to a step-up rent, Dancool was required to
pay the property taxes and maintain the landscaping and the
heating, ventilating, and air conditioning (HVAC) systems for the
property. In his capacity as President of Dancool, defendant
executed the lease and a guaranty of lease (guaranty) in which he
agreed to be personally liable for Dancool’s liabilities and
obligations under the lease.
       In April 2017, Dancool took possession of the Canoga Park
property and began paying rent. On February 1, 2020, Dancool
stopped paying rent and all other amounts due under the terms
of the lease. Defendant refused to pay any amounts owed under
the guaranty.

      1 Further   statutory references are to the Code of Civil
Procedure.

                                  2
       In March 2020, two different entities, Fulton Avenue, LLC
and Sol Mir Venture, LLC, each filed an unlawful detainer action
against defendant and Dancool. In both actions, defendant was
dismissed. He was later sued for breach of guaranty by Fulton
Avenue, LLC and still subject to such a claim by Sol Mir Venture,
LLC. During the same month, plaintiffs initiated an unlawful
detainer action against Dancool, alleging $112,085.39 in
damages.
       On June 29, 2020, defendant and his wife transferred
ownership of their second home (Mountain View property) from
their revocable family trust to Lantem, a limited liability
company. Days earlier, defendant enrolled in two retirement
plans: a private retirement plan (PRP) and a related private
retirement plan trust (PRPT) through his corporation, Glendale
Wholesale Electric Supply, Inc. (Glendale Wholesale Electric).
Defendant then transferred his interest in the Mountain View
property and Lantem to the PRPT, with an unsigned promissory
note secured by their family residence (Heather Ridge residence),
along with other assets.
2.     Breach of Guaranty Action and Application for Right
       to Attach Order and Writ of Attachment
       On April 15, 2020, plaintiffs filed an action against
defendant for breach of guaranty to recover past due rent and
other monies owed pursuant to the guaranty. On June 5, 2020,
plaintiffs also applied for a provisional remedy pending the
outcome of the suit—a right to attach order and writ of
attachment in the amount of $774,582.05 (excluding estimated
attorney fees of $50,000)—based on the breach of guaranty claim.
       On September 22, 2020, defendant filed opposition to the
application, arguing the amount of the claim was not fixed or

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readily ascertainable and he had valid homestead and private
retirement plan exemptions.
       Following briefing and a contested hearing on October 7,
2020, the trial court granted defendant a homestead exemption
for the Heather Ridge residence, but denied him a private
retirement plan exemption. The court issued a temporary
protective order, a right to attach order, and a writ of attachment
as sought by plaintiffs, and ordered defendant to file an
undertaking in the amount of $10,000. This appeal followed.
                           DISCUSSION
1.     Attachment Orders -- Governing Law and Standard
       of Review
       A party applying for a right to attach order and writ of
attachment (§ 484.010) bears the burden of establishing four
elements: (1) its claim is for money “based upon a contract,
express or implied” (§ 483.010, subd. (a)); (2) its claim is
“probably valid” (§484.050, subd. (b)); (3) the attachment is
sought for a proper “purpose, [i.e.,] recovery on the claim” rather
than harassment (§ 484.090, subd. (a)(3)); and (4) the amount to
be secured is “readily ascertainable” and greater than $500
(§483.010, subd. (a)). (See Goldstein v. Barak Construction (2008)
164 Cal.App.4th 845, 852.) If attachment is sought against a
“natural person” (like defendant here), the applicant also must
show the contract claim arises out of the person’s “trade,
business, or profession.” (§ 483.010, subd. (c).)
       The court “shall issue a right to attach order” if the moving
party establishes each required showing. (§ 484.090, subd. (a).)
“If the right to attach order is issued, a writ of attachment will be
issued to attach the property described in the plaintiff’s
application unless the court determines that such property is

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exempt from attachment or that its value clearly exceeds the
amount necessary to satisfy the amount to be secured by the
attachment.” (§ 484.050, subd. (d).)
       “On appeal from an attachment order, we review the record
for substantial evidence to support the trial court’s factual
findings. [Citation.] We apply the same evidentiary standard to
an attachment hearing decided on affidavits and declarations as
to a case tried on oral testimony. [Citations.] We will not disturb
a determination upon controverted facts unless no substantial
evidence supports the court’s determination.” (Goldstein v. Barak
Construction, supra, 164 Cal.App.4th at p. 853.)
2.     Amount of Plaintiffs’ Monetary Claim
       As he did before the trial court, defendant limits his
challenge to the “readily ascertainable” element of section
483.010, subdivision (a). We therefore confine our review to
whether plaintiffs’ $774,582.05 claim in their application for a
right to attach order was “a fixed or readily ascertainable
amount.”
       In support of their application, plaintiffs included (1) a
schedule of the step-up yearly rent increases for the five-year
lease and an explanation of the amounts and conditions of the
late fee and interest payments and of the obligations to pay the
property taxes and maintain the landscaping and HVAC systems
for the property; and (2) a spread sheet listing past due amounts,
plus amounts that will become due, totaling $774,582.05, for the
step-up rent, landscaping, insurance, taxes, interest and late fees
through March 2022, when the lease was to expire.
       In its ruling, the trial court expressly relied on CIT
Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115
Cal.App.4th 537, 541 (CIT Group). In CIT Group, the tenant

                                5
defaulted on a commercial equipment lease. (Id. at p. 539.) The
appellate court held there was a clear basis for attachment.
“There is no profit or other calculation to be made to ascertain
the monthly rent due; each of the lease schedules sets forth the
rental period and the monthly rent due for each machine. The
master lease and corresponding lease schedules provide a clear
and definite formula for the computation of damages, to wit: the
monthly rent multiplied by the unexpired term.” (Id. at p. 541.)
We agree with the trial court’s finding that plaintiffs’ schedule
and spread sheet similarly provided a clear and definite means of
computing present and future damages.
       Without mentioning CIT Group, defendant presents two
 arguments against the trial court’s finding. First, he maintains
 the amount of the claim is not fixed or ascertainable because
 plaintiffs sought $112,085.39 in the unlawful detainer action,
 $774,582.05 in the application for attachment order, and
 $112,085.39 in the breach of guaranty action upon which the
 application was based. As the trial court found, the $112,085.39
 that plaintiffs prayed for in the breach of guaranty action were
 the damages due at the time of filing. Plaintiffs’ calculation of
 the $774,582.05 in the application as the damages due for the
 five-year length of the lease does not make that amount
 speculative or uncertain.
       Defendant further argues the claim for damages was not
fixed or certain because “the trial court was required to speculate
as to the correct amount of damages, including damages for over
18 months in the future.” However, as discussed, CIT Group
concluded a claim for pretrial attachment damages is not
speculative where, as here, future amounts of allowable damages

                                 6
are ascertainable by a clear and definite formula. (CIT Group,
supra, 115 Cal.App.4th at pp. 540–541, and cases cited therein.)
       The trial court’s decision to issue a right to attach order
and writ of attachment in the amount plaintiffs’ request was
supported by substantial evidence.
3.     Retirement Plan Exemption — Governing Law
       and Standard of Review
       “[T]o implement our Constitution’s command that ‘a certain
portion of the homestead and other property of all heads of
families’ be ‘protect[ed], by law, from forced sale [citation], our
Legislature has exempted various items of property from levy by
creditors with money judgments.” (O’Brien v. AMBS Diagnostics,
LLC (2019) 38 Cal.App.5th 553, 559 (O’Brien).) The specific
provision defendant cites as the basis for his claimed exemption,
section 704.115, subdivision (b), provides: “All amounts held,
controlled, or in process of distribution by a private retirement
plan, for the payment of benefits as an annuity, pension,
retirement allowance, disability payment, or death benefit from a
private retirement plan are exempt.”
       On the other hand, the exemption does not apply unless the
plan “holding the funds was, at the time of the levy, ‘principally’
or ‘primarily’ ‘designed and used for retirement purposes.’ ”
(O’Brien, supra, 38 Cal.App.5th at p. 560.) Whether this test is
met depends on the totality of circumstances, including (1) the
debtor’s subjective intent in creating the private retirement plan;
(2) the chronology or timing of the plan’s creation relative to
other events; (3) the degree of control the debtor maintains over
the funds in the plan; (4) whether the debtor violated or complied
with Internal Revenue Service (IRS) rules or the plan’s rules in
contributing to the plan; and (5) if funds are withdrawn from the

                                 7
plan, whether they were used for retirement or, instead, some
other purpose. (Id. at p. 561.) The debtor bears the burden of
proving the private retirement exemption applies. (§ 703.580,
subd. (b).) As a question of fact to be decided by the trial court, it
is reviewed under the substantial evidence standard on appeal.
(Yeasu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 14;
Schwartzman v. Wilshinsky (1996) 50 Cal.App.4th 619, 626.)
4.     Defendant’s Claimed Retirement Plan Exemption
       To clarify, defendant is not disputing the trial court’s ruling
that his Heather Ridge residence qualified for the $175,000
homestead exemption and the surplus equity was subject to a
writ of attachment. Rather, defendant disputes the court’s
conclusion that the private retirement plan exemption did not
apply and that the property in his PRPT, including the Heather
Ridge residence, was subject to attachment. (§ 487.025.)
       Before the trial court, plaintiffs urged that defendant’s
private retirement plans were not exempt under section 704.115,
because they were a sham, a bad faith attempt to shield assets
from creditors. For the trial court, the dispositive inquiry then
was whether defendant had designed and used the private
retirement plans, particularly the PRPT, for retirement purposes.
       To show the retirement plan exemption applied, defendant
offered the following in his declaration and written opposition to
the application: Defendant’s company, Glendale Wholesale
Electric, was incorporated in December 2003 with three
shareholders. Defendant was the current Chief Financial Officer
and owned 37.5 percent of the company. In May 2020, Trust-
CFO helped defendant develop two retirement plans through
Glendale Wholesale Electric. Trust-CFO was an independent
private retirement plan administrator. Neither defendant nor

                                  8
his wife had any management authority or control over Trust-
CFO.
       On June 12, 2020, defendant enrolled in the Glendale
Wholesale Electric private retirement plan, the PRP. The target
retirement age was 72 years. Prior to that date, defendant and
his wife had no retirement plans.
       On June 26, 2020, defendant enrolled in a second Glendale
Wholesale Electric retirement plan, the PRPT. Defendant
transferred assets into the PRPT that were “necessary for [his]
retirement.” These assets were $5,000 cash, a $1,325,000.00
promissory note secured by the Heather Ridge residence, and
defendant’s savings account, his interest in Lantem, which held
title to the Mountain View property, and his interest in HEVAC,
LLC and NCAA, LLC. The assets in the PRPT were “strictly and
solely” for his retirement, so that he could continue to support
himself and his family.
       Defendant had no “direct control” over the management,
administration, or use of the funds in the PRPT because it was
administered by several different third parties. Neither
defendant nor his wife had made any withdrawals from the PRPT
since its inception.
       In his declaration, defendant blamed the recent spate of
lawsuits on his son to whom he had transferred ownership of
Dancool in 2019. Defendant stated: “I am currently 68 years old,
an insulin dependent diabetic, and a survivor of open-heart
surgery. I do not have the health, energy, or strength to start
working again in order to pay the Leases and Line of Credit. I
believe it would kill me. These claims against Ana [his wife] and
I could ruin our retirement if the company and/or Tony [his son]
does not pay these debts.”

                               9
         Attached to the defendant’s opposition were copies of both
retirement plans. Notably, the PRPT exhibit bore no signatures
of defendant, trustee, trust advisor, or trust protectors. All
signature lines were left blank.
         In resolving the issue in favor of plaintiffs, the trial court
found: “Given the timing of their creation, the fact that
Defendant is a part owner of the company that provides the
plans, that there is no averment the plans comport with IRS
rules, and the totality of the circumstances, the Court finds that
the retirement plan exemption does not apply.” As we explain,
that finding was supported by substantial evidence.
         In his declaration, defendant made much of his transferred
assets in the PRPT as critical to financing his retirement.
However, as we explained in O’Brien, “the pertinent legal
question is whether the [particular retirement] plan was
principally or primarily designed and used for retirement
purposes. An inquiry into the initial purpose of the funds is
legally distinct from an inquiry into the purpose of a plan or
account where the funds were subsequently placed; otherwise
funds that were initially placed in a plan or account for
retirement purposes would be forever exempt; however, the law
. . . is to the contrary.” (O’Brien, supra, 38 Cal.App.5th at p. 561.)
         Here, the trial court reasonably inferred that defendant’s
subjective intent behind the PRPT plan in particular was to
shield his assets from his financial obligations. Indeed,
defendant admitted as much in his declaration, stating the
pending lawsuits could “ruin [his] retirement” if the company
and/or his son failed to pay resulting damages. The chronology
and timing of events relative to the plans’ creation supports the
inference: In March 2020, defendant was the target of three suits

                                  10
exposing him to personal liability. Two months later, in May
2020, defendant, who was already past retirement age (at 67 or
68 years old2), had his 17-year-old company establish retirement
plans for the first time. A month later, defendant enrolled in
both plans and transferred his assets to the PRPT.
       As for the degree of control defendant maintains over the
retirement plans, defendant stated in his declaration that he had
“no direct control over the management, administration, or use”
of the retirement plans and named three people as trust
protector, trustee, and plan advisor. Defendant argues he was
just “one of many shareholders of Glendale Wholesale Electric
and his actions alone would not be enough to control” the
retirement plans. However, defendant did not discount his
indirect control of the plans continued existence or termination as
part owner and CFO of Glendale Wholesale Electric.
       Next, defendant had to show he did not violate IRS rules or
the plans’ rules in contributing to the plan. He did not address
IRS rules and simply asserted, without more, that he had
complied with the plans’ rules.
       Finally, defendant argues the fact that he has not
withdrawn funds from the PRP “is further support that the PRP
was created for retirement purposes,” citing several federal cases.
We are not persuaded. As we determined in O’Brien, the debtor’s
decision not to withdraw funds from the retirement plan does not
“ ‘conclusively establish[] a primary retirement purpose’ for the
plan.” (O’Brien, supra, 38 Cal.App.5th at p. 563.) The trial
court’s finding that the retirement plan exemption did not apply
to defendant was supported by substantial evidence.

      2 Defendant   avers to be both ages in his declaration.

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                         DISPOSITION
      The orders are affirmed. Plaintiffs are to recover their
costs on appeal.
      NOT TO BE PUBLISHED.

                                          LUI, P. J.
We concur:

      ASHMANN-GERST, J.

      CHAVEZ, J.

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