Code of Civil Procedure section 482.110 Authorizes Adding Costs and Attorney’s Fees to the Attachable Principal Amount.
For practitioners who have prosecuted or defended collection/contract actions, you have most certainly run into the California pretrial writ of attachment remedy. The pretrial attachment statutory scheme is a potent remedy to allow a suing creditor to freeze or create a cloud on debtor’s assets while a lawsuit is winding to conclusion if the pretrial attachment requirements are satisfied (including the creditor proving that it is likely to prevail on the merits). However, there is an attorney’s fees issue that also lurks in these provisional remedy proceedings.
A pretrial writ of attachment can issue in an express/implied contractual action where the total amount of the claim exceeds $500, the claim is unsecured by real property (except in rare situations), and the creditor demonstrates with competent evidence the probable validity of its claim—namely, it is more likely than not that the creditor will obtain a judgment against debtor on the contractually-based claim. Code Civ. Proc., §§ 483.010, 484.090, 481.190. If all these elements are proven and no exemption is successfully asserted, the creditor can obtain an order to freeze or create a cloud on certain specified assets so that there is something available to satisfy a future possible judgment in the action.
Corporations can have a wide variety of assets subject to attachments. Individuals are subject to pretrial attachments if the claim arises out of a conduct of a trade, business, or profession (i.e., situations not involving personal, family or household purposes). See Code Civ. Proc., § 483.010(c); Advanced Transformer Co. v. Superior Court, 44 Cal.App.3d 127, 144 (1974) [individual guarantor situation]. So, for example, individual guarantors—including guarantors of real property transactions relating to their business—can be liable for guarantee claims, even if real property security was taken for the principal obligation, where suretyship rights were waived. See Engelman v. Bookasta, 264 Cal.App.2d 915 (1968).
Also, tenants in unlawful detainer cases can be subject to pretrial attachment for unpaid rent under the termination notice and damages due until the date of judgment/delivery of possession. Code Civ. Proc., § 483.020.
Now, here is the kicker for costs and attorney’s fees. The creditor, both in normal contract actions and unlawful detainer proceedings, may (in the court’s discretion) also be allowed pretrial attachment for the estimated amount of costs and allowable attorney’s fees, if there is an authorizing statute or contract. (Code Civ. Proc., §§ 482.110, 483.020(a)(2).) We suggest that creditors do two things to preserve recovery under the pretrial attachment statutes: (1) fill out the Judicial Council form sections that ask for an estimate of allowable costs and fees; and (2) provide competent declaration testimony—and it can be terse—about the costs and attorney’s fees spent in drafting the complaint, serving the complaint, drafting pretrial attachment papers (both opening and reply), expending attachment expenses (such as a keeper in more exotic cases), and spending a premium on a pretrial attachment bond. But make sure the hourly rate and time on the services are broken down with adequate specificity.
For those practitioners who are really aggressive, you may want to argue that section 482.110 allows for estimated future costs and attorney’s fees for the entire litigation, which means a projection of what will be spent to a judgment. We know of no case law on this particular issue, but it does create opportunities for novel advocacy.
For an excellent discussion of the elements, burden of proof, and appellate review standards for pretrial attachment proceedings see Justice Flier’s discussion in Goldstein v. Barak Construction, 2008 WL 2655843 at *3-*4 (2d Dist. July 8, 2008).