Preview
JOSEPH H. BOYD (SB#240219)
1 THE LAW OFFICES OF JOSEPH H. BOYD Electronically Filed
17351 4S Ranch Parkway 4/20/2021 12:31 PM
2 San Diego, California 92127 Superior Court of California
Phone (559) 492-8557 County of Stanislaus
3 Fax (559) 354-6693 Clerk of the Court
jhboydlaw@gmail.com
4 By: Sonia Krohn, Deputy
Attorney for Defendants
5
6
SUPERIOR COURT OF THE STATE OF CALIFORNIA
7
IN AND FOR THE COUNTY OF STANISLAUS
8
9 NINE ISLANDS I, LLC., a California limited ) CASE NO. CV-20-004050
liability company, )
10 )
) JOINT MEMORANDUM OF POINTS AND
11 Plaintiff(s), )
) AUTHORITIES ON BEHALF OF ALL
12 v. ) DEFENDANTS IN OPPOSITION TO
) PLAINTIFF’S APPLICATION FOR RIGHT
13 ) TO ATTACH ORDER AND ORDER FOR
SUPERCUTS, INC., a Delaware corporation, )
14 SUPERCUTS CORPORATE SHOPS, INC., a ISSUANCE OF WRIT OF ATTACHMENT
)
Delaware corporation, MOXIE )
15 MANAGEMENT GROUP, LLC, a Delaware )
) Date: Apr. 27, 2021
16 limited liability company, REGIS )
CORPORATION, a Minnesota corporation; Time: 8:30 a.m.
)
17 and DOES 1 through 50, Inclusive, ) Dept.: 24
)
18 )
Defendants.
)
19 )
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21 Defendants SUPERCUTS, INC., SUPERCUTS CORPORATE SHOPS, INC., MOXIE
22 MANAGEMENT GROUP, LLC, and REGIS CORPORATION (collectively, “Defendants”)
23 hereby jointly oppose the multiple Applications for Right to Attach Order and Order for Issuance
24 of Writ of Attachment submitted by Plaintiff Nine Islands I, LLC. (“Plaintiff”).
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 INTRODUCTION
2 Plaintiff seeks a writ of attachment against a business that has suffered egregiously during
3 the COVId-19 pandemic. For more than a century, the state of California has not restricted
4 businesses due to such a pandemic as it has now.
5 Hair salons have been deemed a non-essential business, and thus have been closed or
6 severely restricted for almost a year now.
7 Defendants operated under a lease with Plaintiff with practically no problem for almost 25
8 years. Then, when the pandemic hit, Defendants’ business suffered losses of over 96% of their
9 monthly gross revenues.
10 Specifically, over a period of several months during the pandemic, Defendants were
11 forced to completely close their business, resulting in zero net revenues during those months.
12 Even during the few times when the government allowed the premises to open, Defendants
13 received only a small portion of their normal gross revenues.
14 Finally, the burden was too much for Defendants to bear and they closed the salon.
15 Said losses have effectively terminated the lease through the doctrine of Commercial
16 Frustration as well as through terms in the lease relating to government takings. Furthermore,
17 Plaintiff only seeks to add to these losses by refusing to mitigate its damages and by seeking
18 exorbitant attorneys’ fees without justification.
19 To grant Plaintiff’s application would be highly prejudicial and inordinately punitive to a
20 good business that has been decimated by the COVId-19 pandemic and the subsequent
21 restrictions placed by the state of California and local governments.
22 Therefore, Plaintiff’s application for writ of attachment should be denied.
23 STANDARD OF REVIEW & BURDEN OF PROOF
24 As a creature of statute, prejudgment attachment is subject to strict construction.
25 Commercial & Farmers Nat. Bk. v. Hetrick (1976) 64 Cal.App.3d 158, 165.
26 Moreover, the plaintiff has the burden to prove (1) his claim is one upon which attachment
27 may be issued and (2) the probable validity of such claim. Legislative Com. Comment to Cal.
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 Civ. Proc. Code § 484.090; Chino Comm'l Bank, N.A. v. Peters (2010) 190 Cal.App.4th 1163,
2 1169.
3 STATEMENT OF FACTS
4 Defendants entered into a Shopping Center Lease (the “Lease”) with Plaintiff’s
5 predecessor in interest on August 8, 1995. 1
6 According to the Lease, Defendants were to use the premises to “[o]perate primarily as a
7 discount/no appointment hair salon for men, women and children.” 2
8 The Lease states that “Tenant may peaceably and quietly occupy the premises in
9 accordance with the terms of this Lease without hindrance or molestation. Landlord shall defend
10 Tenant’s right to occupy and/or use the Premises.” 3
11 The Lease specifically allows for Defendants to cease use of the Premises if Defendants
12 are in any way “prevented from doing so by strike, fire, or other cause beyond Tenant’s
13 reasonable control.” 4
14 The Lease also calls for its automatic termination in the event that a government taking
15 results in the loss of 40% or more of the premises. 5
16 For nearly 25 years, Defendants used the premises with nary a problem. Rent was timely
17 paid and Defendants were able to operate their hair salon.
18 In March of 2020, the COVId-19 pandemic severely altered the course of business. In
19 attempt to curb the spread of the deadly and contagious virus, federal, state, and local
20 governments ordered the restriction and closure of several businesses. Hair salons, being deemed
21 non-essential, were among those hit hardest.
22 In this particular case, Defendants were hit especially hard. The hair salon operated by
23 Defendants at the premises saw its monthly revenues drop during the COVId-19 pandemic by
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25 1 Plaintiff relies on the copy of the Lease attached as Exhibit A to the Declaration of Joseph B. Vieira in Support of
Plaintiff’s Joint Applications for Right to attach Order and Writ of Attachment. For purposes of this motion,
26 Defendants shall use the same copy of the Lease.
2 See the Lease, page 1, ¶5
27 3 See First Addendum to Shopping Center Lease, page 2 of 3, Section 2
4 See the Lease, page 7, Article VI(b).
28 5 See the Lease, page 16, Article XI, Section 11.01
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 more than 96%. Operating on less than 4% of its anticipated revenues made it practically
2 impossible to continue operations at the premises.
3 Specifically, during the months of mid-March through mid-June 2020 and mid-July 2020
4 through late-January 2021, Defendants were forced by the government to completely shut down
5 their operations at the premises. This resulted in absolutely zero gross revenues during this
6 period of time.
7 Finally, in February 2021, it became financially unfeasible to continue operations at the
8 premises. Defendants therefore vacated the premises and turned them over to the landlord so that
9 the landlord could mitigate its damages by re-leasing the premises.
10 In fact, Defendants have tried since the beginning to work with the landlord to mitigate
11 landlord’s damages. At the very onset of this matter, Defendants offered to bring all past-due
12 rents current, pay an additional 3 months’ worth of rent, and to vacate the premises in 15 days.
13 Considering the massive losses that were being suffered by Defendants, this offer was more than
14 generous. Nevertheless, Plaintiff rejected said offer in demand of full payment of all rent through
15 the end of the term of the lease, which still had more than a year remaining, plus penalties and
16 costs.
17 ARGUMENT
18 Among the requirements to be established in order be granted a writ of attachment, a
19 petitioning party must prove there is a probable validity to the claim. Cal. Civ. Pro.
20 §484.090(a)(2)
21 Plaintiff’s application for writ of attachment fails this requirement for multiple reasons.
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I. DEFENDANTS’ OBLIGATIONS TO PERFORM ACCORDING TO THE
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LEASE HAVE BEEN DISCHARGED THROUGH THE DOCTRINE OF
24 COMMERCIAL FRUSTRATION.
25 a. The COVId-19 Outbreak Frustrated Defendants’ Purpose in Entering the
Lease.
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 A party to a contract may be excused from performance thereby if that party’s purpose in
2 entering into the contract was frustrated by a supervening, unforeseen event. Dorn v. Goetz
3 (1948) 85 Cal.App.2d 407, 410.
4 In the case of Brown v. Oshiro (1943) 58 Cal.App.2d 190, the defendant, a Japanese-
5 American, was prohibited from operating his business because of temporary rules that were set in
6 place against Americans of Japanese descent during World War II. Id at 191. The court held
7 that, because the defendant was not at fault for the changes in the law, even though temporary,
8 and because the law was unforeseeable at the time that the contract was entered into, the
9 Defendant was excused from performance thereof. Id at 193-194. The court supported its
10 decision with the rule that, where the assumed possibility of a desired object or effect to be
11 attained by either party to a contract forms the basis on which both parties enter into it, and this
12 object or effect is or surely will be frustrated, a promisor who is without fault in causing the
13 frustration, and who is harmed thereby, is discharged from the duty of performing his promise
14 unless a contrary intention appears. Id at 193.
15 The elements necessary to prove frustration of purpose are as follows:
16 1. The frustrated purpose must have been the principal purpose of the party;
17 2. The frustration must be substantial; and
18 3. The frustrating event must have been unforeseeable. Restatement (Second) of
19 Contract §265.
20 Here, all elements have been met. First, the stated purpose of the Lease was for
21 Defendants to “[o]perate primarily as a discount/no appointment hair salon for men, women and
22 children.”
23 Second, the frustrating event was the complete shutdown, as ordered by the government
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after the COVId-19 outbreak in mid-March 2020. From that point forward, Defendants were
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entirely prohibited from operating their business during most of the time until they vacated the
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premises. Even during those small portions of time when Defendants were allowed to re-open,
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the restrictions placed upon Defendants were so grave as to make it entirely unfeasible to
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 continue to operate the salon. The only remaining option was for Defendants to vacate the
2 premises and turn it back over to the landlord.
3 Third, the COVId-19 outbreak, and its subsequent changes to the economy, was entirely
4 unforeseeable, as evidenced by the grave changes throughout the world. Nobody knew that the
5 state of California, much less the entire world, was about to undergo such an egregious pandemic
6 that would necessitate the entire shutdown of multiple industries deemed non-essential by the
7 government, which included Defendants’ salon.
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9 b. The Major Delay in Performance Has Frustrated the Purpose to the Effect
that Defendants’ Are Discharged from Their Remaining Obligations.
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When the frustration of purpose is only temporary, the party may still be discharged of its
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obligation to perform if performance becomes more burdensome for that party because of the
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frustration. Restatement (Second) of Contracts §269.
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While this nuance to the doctrine of Frustration of Purpose is rare, there are some cases
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that have occurred outside of California that shed light on its application.
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For example, in the case of Village of Minneota v. Fairbanks, Morse & Co. (1948) 31
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N.W.2d 920, the defendant was contracted to build a power plant for the plaintiff for the price of
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$10,000,000. Id at 921. However, because of the outbreak of World War II, there was a shortage
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of materials that made it impossible for defendant to perform during the war. Id at 922.
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Furthermore, the delay in performance caused by the war also caused the price of materials to
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increase sufficiently that it became substantially more burdensome for defendant to perform
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according to the contract. Id. Therefore, the court held that the defendant was discharged of its
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duty to perform under the contract. Id at 925.
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In fact, this very doctrine has been applied in other jurisdictions in relation to the effects
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of government restrictions imposed by the COVId-19 pandemic. In the case of UMNV 205-207
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Newbury, LLC v. Caffé Nero Americas Inc. (Massachusetts Superior Court, Suffolk County, Case
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 #2084CV01493-BLS2), the defendant leased from the plaintiff premises to be used as a café. 6
2 On March 24, 2020, the governor of Massachusetts issued emergency orders banning the on-
3 premises consumption of food or beverages. 7 The court not only denied the plaintiff’s motion
4 for summary judgment, but actually granted partial summary judgment in favor of the defendant. 8
5 The Court cited a similar Restatement of Contracts as cited by the court in Brown, above, and
6 then gave an additional illustration of the application of this doctrine, as follows:
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8 “A classic example of frustration of purpose with respect to a tenancy occurs
where the leased premises are destroyed by something beyond the tenant’s
9 control. If that were to happen, it would still be possible for the tenant to perform
its contractual obligation of paying rent. But since the purpose to be achieved by
10 paying rent has been completely frustrated, the tenant is excused from further
11 performance unless the lease clearly allocates the risk of that even to the tenant.” 9
12
In Caffé Nero, the court ruled that, because the defendant’s purpose in entering into the
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14 lease with the landlord was frustrated because of the government’s orders, the defendant was
15 absolved from paying rent at the very least during the time that the orders were in effect. 10
16 In this case, there is no question that Defendants have suffered immensely due to the strict
17 restrictions placed upon them during the COVId-19 pandemic. Defendants’ lost almost an entire
18 year’s worth of gross revenue. Considering that the Lease is set to expire in less than a year, there
19 is no way that Defendants can continue operating thereunder and still meet their obligations. The
20 government shutdown from COVId-19 has completely destroyed Defendants’ ability to perform.
21 Therefore, pursuant to the doctrine of Frustration of Purpose, Defendants’ obligations to
22 continue performing under the Lease have been discharged and no writ of attachment should be
23 granted.
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6 See page 1 of the Memorandum and Order on Plaintiff’s Motion for Partial Summary Judgment dated 2/8/2021 (the
26 “Caffé Nero Order”), which is attached as Exhibit A to the Declaration of Joseph Boyd, filed concurrently herewith.
7 See page 3 of the Caffé Nero Order.
27 8 See page 1 of the Caffé Nero Order.
9 See page 5 of the Caffé Nero Order.
28 10 See page 12 of the Caffé Nero Order.
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
II. THE LEASE HAS BEEN AUTOMATICALLY TERMINATED AS THE
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DEFENDANTS’ RIGHTS TO THE PREMISES HAVE BEEN LOST
2 THROUGHT A GOVERNMENT TAKING.
3 A government taking is more than simply the government’s physical confiscation of
4 property; it can also include the implementation of law or regulation that deprives the property
5 owner of the economically beneficial or productive use of the property. Lucas v. South Carolina
6 Coastal Council (1992) 505 U.S. 1003, 1004. [See also Santa Monica Beach, Ltd. V. Superior
7 Court (1999) 19 Cal.4th 952 (ruling that the imposition of rent control laws resulting in a
8 deprivation of the fair rate of return to the landlord constitute a government taking.)]
9 In this case, the Lease anticipated government takings and specifically stated that the
10 Lease would automatically terminate if more than 40% of the premises was lost through such
11 takings.
12 Clearly, there has been more than a 40% loss. Defendants have lost over 96% of their
13 monthly revenues due to the government regulations restricting the operation of hair salons
14 during the COVId-19 pandemic. This loss was directly attributable to the emergency orders set in
15 place by the State of California and local governments. Had the state not issued such orders,
16 Defendants would not have been deprived of the fair value of the premises according to the
17 Lease.
18 Furthermore, the fact that the government’s emergency orders decreased Defendants’
19 monthly revenues by more than 96% clearly meets the 40% threshold called for in the Lease.
20 Therefore, the very terms of the Lease call for its automatic termination due to a government
21 taking.
22 Because Defendants’ lost more than 40% of the value of their property value in the
23 premises due to government takings, the Lease should be automatically terminated as per its own
24 terms, and no writ of attachment should be granted.
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26 III. PLAINTIFF HAS FAILED TO MEET ITS BURDEN TO SHOW THAT IT HAS
MITIGATED ITS DAMAGES IN THIS CASE.
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 In a case of a breach of lease, a landlord is required to exercise reasonable measures to
2 mitigate its damages for rents not yet incurred during the term of the lease. Cal. Civ.
3 1951.2(a)(2). [See also Lu v. Grewal (2005) 130 Cal.App.4th 841, 849 (a landlord can only seek
4 damages for future rents that could not have otherwise been mitigated.)]
5 An obvious purpose of §1951.2 is to induce the landlord to re-lease the premises in or der
6 mitigate damages. Willis v. Soda Shoppes of California, Inc. (1982) 134 Cal.App.3d 899, 902.
7 The landlord is not entitled to recover a windfall, and the tenant may owe nothing or a reduced
8 amount. Id.
9 Here, Plaintiff maintains the burden to prove that it cannot re-lease the premises during
10 the remaining term of the Lease. The only evidence that Plaintiff has provided is the declaration
11 of Joseph B. Vieira, which shows that Plaintiff has only tried to re-lease the premises for a total of
12 8 days (from March 2, 2021 to March 10, 2021). This is hardly sufficient to support a claim for
13 all future unpaid rents.
14 Plaintiff continues to maintain a duty to mitigate its damages. It is entirely possible that
15 Plaintiff might even rent the premises at a rate greater than what Defendants were paying, which
16 would absolve Defendants from any damages for future unpaid rent. Until Plaintiff can
17 unequivocally show that it was unable to mitigate its damages, it cannot meet its burden for
18 damages based upon future unpaid rents.
19 What’s more, Plaintiff has had ample opportunity to mitigate its damages, and yet has
20 failed to do so. Specifically, in October 2020, Defendants offered to pay all amounts due up to
21 that date, to abandon the premises within 3 weeks, and to pay an additional 3 months’ worth of
22 minimum rent. Plaintiff refused this generous offer and demanded that all future rents be paid in
23 order to terminate the lease.
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Surely, an additional 3 months’ worth of rent was generous and would have allowed
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Plaintiff to find another tenant to fill the premises. Nevertheless, it is Plaintiff’s greed and refusal
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to mitigate its own damages that have brought the litigation to this point.
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 Furthermore, Plaintiff is now in full possession of the premises and can re-lease them at
2 will.
3 Plaintiff has not provided sufficient evidence that it will be unable to re-lease the premises
4 during the remaining term of the lease.
5 Because of Plaintiff has failed to demonstrate that it has mitigated its damages in this case,
6 Plaintiff should be precluded from obtaining all future rent and penalties from Defendants.
7 Therefore, no writ of attachment should be granted.
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9 IV. PLAINTIFF FAILS TO JUSTIFY ITS REQUEST FOR ATTORNEYS’ FEES.
In contested cases, attorney fees based on contract must be determined by noticed motion.
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Cal. Civ. Pro. §1033.5(c)(5). The lodestar method of calculating and determining the amount of
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attorney’s fees to award is used when determining the amount of fees to award under Cal. Civ.
12
§1717. PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1097.
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14 Plaintiff has not provided any evidence demonstrating the proper calculation of attorneys’
15 fees to be paid in this action. No evidence of reasonableness of said fees has been presented and
16 the proper lodestar has not been determined.
17 According to its own application, the unpaid rent claimed by Plaintiff through January
18 2021 is only $35,450.86. However, Plaintiff seeks an attachment of an additional $100,000 for
19 attorneys’ fees and costs. Said future attorneys’ fees are almost three times the amount of the
20 damages sought. Such high attorneys’ fees can hardly be deemed reasonable.
21 Plaintiff has clearly failed to meet its burden to provide sufficient evidence to support a
22 claim of $100,000 in future attorneys’ fees.
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V. A WRIT OF ATTACHMENT WOULD BE HIGHLY PREJUDICIAL IN THIS
24 CASE.
25 A prejudgment writ of attachment is a severe remedy that is to be used in strict
26 circumstances. Arcata Publications Group v. Beverly Hills Publishing Co. (1984) 154
27 Cal.App.3d 276, 279.
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
1 In this case, Defendants are a group of businesses that have been hit extraordinarily hard
2 by the COVId-19 pandemic and the subsequent government regulations imposed by the state of
3 California and the local governments. While remedies to obtain judgments for rents may still be
4 available to Plaintiff in such a case, to impose a writ of attachment would be an extraordinarily
5 severe prejudgment remedy that could lead to drastic results to a business that has already been
6 devastated by the pandemic. Therefore, it is incumbent upon the Court to exercise extreme care
7 in granting such a provisional remedy, and the application should be denied unless no other
8 course of action is available.
9 CONCLUSION
10 Plaintiff fails to meet its burden to support its application for writ of attachment.
11 First, Plaintiff’s claims have no merit as Defendants failure to perform has been excused
12 through the doctrine of Commercial Frustration.
13 Second, the Lease was automatically terminated through a government taking of more
14 than 40% of the Defendants’ rights in the property.
15 Third, Plaintiff has grossly failed to mitigate its damages in this case. In fact, Plaintiff has
16 been the main contributor to the majority of the damages it seeks.
17 Fourth, Plaintiff fails to justify the exorbitant amount of future attorneys’ fees requested.
18 Finally, to grant a writ of attachment against a business that has already been eviscerated
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by the effects of COVId-19 and the government’s subsequent regulations would be highly
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prejudicial and uncalled-for in this time of emergency.
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For all the foregoing reasons, Defendants respectfully request that the Court deny
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Plaintiff’s application.
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Dated: April 20, 2021 THE LAW OFFICES OF JOSEPH H. BOYD
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By: ______________________________
27 JOSEPH H. BOYD
Attorney for Defendants
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JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S
APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT
Preview
JOSEPH H. BOYD (SB#240219) 1 THE LAW OFFICES OF JOSEPH H. BOYD Electronically Filed 17351 4S Ranch Parkway 4/20/2021 12:31 PM 2 San Diego, California 92127 Superior Court of California Phone (559) 492-8557 County of Stanislaus 3 Fax (559) 354-6693 Clerk of the Court jhboydlaw@gmail.com 4 By: Sonia Krohn, Deputy Attorney for Defendants 5 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA 7 IN AND FOR THE COUNTY OF STANISLAUS 8 9 NINE ISLANDS I, LLC., a California limited ) CASE NO. CV-20-004050 liability company, ) 10 ) ) JOINT MEMORANDUM OF POINTS AND 11 Plaintiff(s), ) ) AUTHORITIES ON BEHALF OF ALL 12 v. ) DEFENDANTS IN OPPOSITION TO ) PLAINTIFF’S APPLICATION FOR RIGHT 13 ) TO ATTACH ORDER AND ORDER FOR SUPERCUTS, INC., a Delaware corporation, ) 14 SUPERCUTS CORPORATE SHOPS, INC., a ISSUANCE OF WRIT OF ATTACHMENT ) Delaware corporation, MOXIE ) 15 MANAGEMENT GROUP, LLC, a Delaware ) ) Date: Apr. 27, 2021 16 limited liability company, REGIS ) CORPORATION, a Minnesota corporation; Time: 8:30 a.m. ) 17 and DOES 1 through 50, Inclusive, ) Dept.: 24 ) 18 ) Defendants. ) 19 ) 20 21 Defendants SUPERCUTS, INC., SUPERCUTS CORPORATE SHOPS, INC., MOXIE 22 MANAGEMENT GROUP, LLC, and REGIS CORPORATION (collectively, “Defendants”) 23 hereby jointly oppose the multiple Applications for Right to Attach Order and Order for Issuance 24 of Writ of Attachment submitted by Plaintiff Nine Islands I, LLC. (“Plaintiff”). 25 26 27 28 1 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 INTRODUCTION 2 Plaintiff seeks a writ of attachment against a business that has suffered egregiously during 3 the COVId-19 pandemic. For more than a century, the state of California has not restricted 4 businesses due to such a pandemic as it has now. 5 Hair salons have been deemed a non-essential business, and thus have been closed or 6 severely restricted for almost a year now. 7 Defendants operated under a lease with Plaintiff with practically no problem for almost 25 8 years. Then, when the pandemic hit, Defendants’ business suffered losses of over 96% of their 9 monthly gross revenues. 10 Specifically, over a period of several months during the pandemic, Defendants were 11 forced to completely close their business, resulting in zero net revenues during those months. 12 Even during the few times when the government allowed the premises to open, Defendants 13 received only a small portion of their normal gross revenues. 14 Finally, the burden was too much for Defendants to bear and they closed the salon. 15 Said losses have effectively terminated the lease through the doctrine of Commercial 16 Frustration as well as through terms in the lease relating to government takings. Furthermore, 17 Plaintiff only seeks to add to these losses by refusing to mitigate its damages and by seeking 18 exorbitant attorneys’ fees without justification. 19 To grant Plaintiff’s application would be highly prejudicial and inordinately punitive to a 20 good business that has been decimated by the COVId-19 pandemic and the subsequent 21 restrictions placed by the state of California and local governments. 22 Therefore, Plaintiff’s application for writ of attachment should be denied. 23 STANDARD OF REVIEW & BURDEN OF PROOF 24 As a creature of statute, prejudgment attachment is subject to strict construction. 25 Commercial & Farmers Nat. Bk. v. Hetrick (1976) 64 Cal.App.3d 158, 165. 26 Moreover, the plaintiff has the burden to prove (1) his claim is one upon which attachment 27 may be issued and (2) the probable validity of such claim. Legislative Com. Comment to Cal. 28 2 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 Civ. Proc. Code § 484.090; Chino Comm'l Bank, N.A. v. Peters (2010) 190 Cal.App.4th 1163, 2 1169. 3 STATEMENT OF FACTS 4 Defendants entered into a Shopping Center Lease (the “Lease”) with Plaintiff’s 5 predecessor in interest on August 8, 1995. 1 6 According to the Lease, Defendants were to use the premises to “[o]perate primarily as a 7 discount/no appointment hair salon for men, women and children.” 2 8 The Lease states that “Tenant may peaceably and quietly occupy the premises in 9 accordance with the terms of this Lease without hindrance or molestation. Landlord shall defend 10 Tenant’s right to occupy and/or use the Premises.” 3 11 The Lease specifically allows for Defendants to cease use of the Premises if Defendants 12 are in any way “prevented from doing so by strike, fire, or other cause beyond Tenant’s 13 reasonable control.” 4 14 The Lease also calls for its automatic termination in the event that a government taking 15 results in the loss of 40% or more of the premises. 5 16 For nearly 25 years, Defendants used the premises with nary a problem. Rent was timely 17 paid and Defendants were able to operate their hair salon. 18 In March of 2020, the COVId-19 pandemic severely altered the course of business. In 19 attempt to curb the spread of the deadly and contagious virus, federal, state, and local 20 governments ordered the restriction and closure of several businesses. Hair salons, being deemed 21 non-essential, were among those hit hardest. 22 In this particular case, Defendants were hit especially hard. The hair salon operated by 23 Defendants at the premises saw its monthly revenues drop during the COVId-19 pandemic by 24 25 1 Plaintiff relies on the copy of the Lease attached as Exhibit A to the Declaration of Joseph B. Vieira in Support of Plaintiff’s Joint Applications for Right to attach Order and Writ of Attachment. For purposes of this motion, 26 Defendants shall use the same copy of the Lease. 2 See the Lease, page 1, ¶5 27 3 See First Addendum to Shopping Center Lease, page 2 of 3, Section 2 4 See the Lease, page 7, Article VI(b). 28 5 See the Lease, page 16, Article XI, Section 11.01 3 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 more than 96%. Operating on less than 4% of its anticipated revenues made it practically 2 impossible to continue operations at the premises. 3 Specifically, during the months of mid-March through mid-June 2020 and mid-July 2020 4 through late-January 2021, Defendants were forced by the government to completely shut down 5 their operations at the premises. This resulted in absolutely zero gross revenues during this 6 period of time. 7 Finally, in February 2021, it became financially unfeasible to continue operations at the 8 premises. Defendants therefore vacated the premises and turned them over to the landlord so that 9 the landlord could mitigate its damages by re-leasing the premises. 10 In fact, Defendants have tried since the beginning to work with the landlord to mitigate 11 landlord’s damages. At the very onset of this matter, Defendants offered to bring all past-due 12 rents current, pay an additional 3 months’ worth of rent, and to vacate the premises in 15 days. 13 Considering the massive losses that were being suffered by Defendants, this offer was more than 14 generous. Nevertheless, Plaintiff rejected said offer in demand of full payment of all rent through 15 the end of the term of the lease, which still had more than a year remaining, plus penalties and 16 costs. 17 ARGUMENT 18 Among the requirements to be established in order be granted a writ of attachment, a 19 petitioning party must prove there is a probable validity to the claim. Cal. Civ. Pro. 20 §484.090(a)(2) 21 Plaintiff’s application for writ of attachment fails this requirement for multiple reasons. 22 I. DEFENDANTS’ OBLIGATIONS TO PERFORM ACCORDING TO THE 23 LEASE HAVE BEEN DISCHARGED THROUGH THE DOCTRINE OF 24 COMMERCIAL FRUSTRATION. 25 a. The COVId-19 Outbreak Frustrated Defendants’ Purpose in Entering the Lease. 26 27 28 4 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 A party to a contract may be excused from performance thereby if that party’s purpose in 2 entering into the contract was frustrated by a supervening, unforeseen event. Dorn v. Goetz 3 (1948) 85 Cal.App.2d 407, 410. 4 In the case of Brown v. Oshiro (1943) 58 Cal.App.2d 190, the defendant, a Japanese- 5 American, was prohibited from operating his business because of temporary rules that were set in 6 place against Americans of Japanese descent during World War II. Id at 191. The court held 7 that, because the defendant was not at fault for the changes in the law, even though temporary, 8 and because the law was unforeseeable at the time that the contract was entered into, the 9 Defendant was excused from performance thereof. Id at 193-194. The court supported its 10 decision with the rule that, where the assumed possibility of a desired object or effect to be 11 attained by either party to a contract forms the basis on which both parties enter into it, and this 12 object or effect is or surely will be frustrated, a promisor who is without fault in causing the 13 frustration, and who is harmed thereby, is discharged from the duty of performing his promise 14 unless a contrary intention appears. Id at 193. 15 The elements necessary to prove frustration of purpose are as follows: 16 1. The frustrated purpose must have been the principal purpose of the party; 17 2. The frustration must be substantial; and 18 3. The frustrating event must have been unforeseeable. Restatement (Second) of 19 Contract §265. 20 Here, all elements have been met. First, the stated purpose of the Lease was for 21 Defendants to “[o]perate primarily as a discount/no appointment hair salon for men, women and 22 children.” 23 Second, the frustrating event was the complete shutdown, as ordered by the government 24 after the COVId-19 outbreak in mid-March 2020. From that point forward, Defendants were 25 entirely prohibited from operating their business during most of the time until they vacated the 26 premises. Even during those small portions of time when Defendants were allowed to re-open, 27 the restrictions placed upon Defendants were so grave as to make it entirely unfeasible to 28 5 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 continue to operate the salon. The only remaining option was for Defendants to vacate the 2 premises and turn it back over to the landlord. 3 Third, the COVId-19 outbreak, and its subsequent changes to the economy, was entirely 4 unforeseeable, as evidenced by the grave changes throughout the world. Nobody knew that the 5 state of California, much less the entire world, was about to undergo such an egregious pandemic 6 that would necessitate the entire shutdown of multiple industries deemed non-essential by the 7 government, which included Defendants’ salon. 8 9 b. The Major Delay in Performance Has Frustrated the Purpose to the Effect that Defendants’ Are Discharged from Their Remaining Obligations. 10 When the frustration of purpose is only temporary, the party may still be discharged of its 11 obligation to perform if performance becomes more burdensome for that party because of the 12 frustration. Restatement (Second) of Contracts §269. 13 While this nuance to the doctrine of Frustration of Purpose is rare, there are some cases 14 that have occurred outside of California that shed light on its application. 15 For example, in the case of Village of Minneota v. Fairbanks, Morse & Co. (1948) 31 16 N.W.2d 920, the defendant was contracted to build a power plant for the plaintiff for the price of 17 $10,000,000. Id at 921. However, because of the outbreak of World War II, there was a shortage 18 of materials that made it impossible for defendant to perform during the war. Id at 922. 19 Furthermore, the delay in performance caused by the war also caused the price of materials to 20 increase sufficiently that it became substantially more burdensome for defendant to perform 21 according to the contract. Id. Therefore, the court held that the defendant was discharged of its 22 duty to perform under the contract. Id at 925. 23 In fact, this very doctrine has been applied in other jurisdictions in relation to the effects 24 of government restrictions imposed by the COVId-19 pandemic. In the case of UMNV 205-207 25 Newbury, LLC v. Caffé Nero Americas Inc. (Massachusetts Superior Court, Suffolk County, Case 26 27 28 6 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 #2084CV01493-BLS2), the defendant leased from the plaintiff premises to be used as a café. 6 2 On March 24, 2020, the governor of Massachusetts issued emergency orders banning the on- 3 premises consumption of food or beverages. 7 The court not only denied the plaintiff’s motion 4 for summary judgment, but actually granted partial summary judgment in favor of the defendant. 8 5 The Court cited a similar Restatement of Contracts as cited by the court in Brown, above, and 6 then gave an additional illustration of the application of this doctrine, as follows: 7 8 “A classic example of frustration of purpose with respect to a tenancy occurs where the leased premises are destroyed by something beyond the tenant’s 9 control. If that were to happen, it would still be possible for the tenant to perform its contractual obligation of paying rent. But since the purpose to be achieved by 10 paying rent has been completely frustrated, the tenant is excused from further 11 performance unless the lease clearly allocates the risk of that even to the tenant.” 9 12 In Caffé Nero, the court ruled that, because the defendant’s purpose in entering into the 13 14 lease with the landlord was frustrated because of the government’s orders, the defendant was 15 absolved from paying rent at the very least during the time that the orders were in effect. 10 16 In this case, there is no question that Defendants have suffered immensely due to the strict 17 restrictions placed upon them during the COVId-19 pandemic. Defendants’ lost almost an entire 18 year’s worth of gross revenue. Considering that the Lease is set to expire in less than a year, there 19 is no way that Defendants can continue operating thereunder and still meet their obligations. The 20 government shutdown from COVId-19 has completely destroyed Defendants’ ability to perform. 21 Therefore, pursuant to the doctrine of Frustration of Purpose, Defendants’ obligations to 22 continue performing under the Lease have been discharged and no writ of attachment should be 23 granted. 24 25 6 See page 1 of the Memorandum and Order on Plaintiff’s Motion for Partial Summary Judgment dated 2/8/2021 (the 26 “Caffé Nero Order”), which is attached as Exhibit A to the Declaration of Joseph Boyd, filed concurrently herewith. 7 See page 3 of the Caffé Nero Order. 27 8 See page 1 of the Caffé Nero Order. 9 See page 5 of the Caffé Nero Order. 28 10 See page 12 of the Caffé Nero Order. 7 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT II. THE LEASE HAS BEEN AUTOMATICALLY TERMINATED AS THE 1 DEFENDANTS’ RIGHTS TO THE PREMISES HAVE BEEN LOST 2 THROUGHT A GOVERNMENT TAKING. 3 A government taking is more than simply the government’s physical confiscation of 4 property; it can also include the implementation of law or regulation that deprives the property 5 owner of the economically beneficial or productive use of the property. Lucas v. South Carolina 6 Coastal Council (1992) 505 U.S. 1003, 1004. [See also Santa Monica Beach, Ltd. V. Superior 7 Court (1999) 19 Cal.4th 952 (ruling that the imposition of rent control laws resulting in a 8 deprivation of the fair rate of return to the landlord constitute a government taking.)] 9 In this case, the Lease anticipated government takings and specifically stated that the 10 Lease would automatically terminate if more than 40% of the premises was lost through such 11 takings. 12 Clearly, there has been more than a 40% loss. Defendants have lost over 96% of their 13 monthly revenues due to the government regulations restricting the operation of hair salons 14 during the COVId-19 pandemic. This loss was directly attributable to the emergency orders set in 15 place by the State of California and local governments. Had the state not issued such orders, 16 Defendants would not have been deprived of the fair value of the premises according to the 17 Lease. 18 Furthermore, the fact that the government’s emergency orders decreased Defendants’ 19 monthly revenues by more than 96% clearly meets the 40% threshold called for in the Lease. 20 Therefore, the very terms of the Lease call for its automatic termination due to a government 21 taking. 22 Because Defendants’ lost more than 40% of the value of their property value in the 23 premises due to government takings, the Lease should be automatically terminated as per its own 24 terms, and no writ of attachment should be granted. 25 26 III. PLAINTIFF HAS FAILED TO MEET ITS BURDEN TO SHOW THAT IT HAS MITIGATED ITS DAMAGES IN THIS CASE. 27 28 8 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 In a case of a breach of lease, a landlord is required to exercise reasonable measures to 2 mitigate its damages for rents not yet incurred during the term of the lease. Cal. Civ. 3 1951.2(a)(2). [See also Lu v. Grewal (2005) 130 Cal.App.4th 841, 849 (a landlord can only seek 4 damages for future rents that could not have otherwise been mitigated.)] 5 An obvious purpose of §1951.2 is to induce the landlord to re-lease the premises in or der 6 mitigate damages. Willis v. Soda Shoppes of California, Inc. (1982) 134 Cal.App.3d 899, 902. 7 The landlord is not entitled to recover a windfall, and the tenant may owe nothing or a reduced 8 amount. Id. 9 Here, Plaintiff maintains the burden to prove that it cannot re-lease the premises during 10 the remaining term of the Lease. The only evidence that Plaintiff has provided is the declaration 11 of Joseph B. Vieira, which shows that Plaintiff has only tried to re-lease the premises for a total of 12 8 days (from March 2, 2021 to March 10, 2021). This is hardly sufficient to support a claim for 13 all future unpaid rents. 14 Plaintiff continues to maintain a duty to mitigate its damages. It is entirely possible that 15 Plaintiff might even rent the premises at a rate greater than what Defendants were paying, which 16 would absolve Defendants from any damages for future unpaid rent. Until Plaintiff can 17 unequivocally show that it was unable to mitigate its damages, it cannot meet its burden for 18 damages based upon future unpaid rents. 19 What’s more, Plaintiff has had ample opportunity to mitigate its damages, and yet has 20 failed to do so. Specifically, in October 2020, Defendants offered to pay all amounts due up to 21 that date, to abandon the premises within 3 weeks, and to pay an additional 3 months’ worth of 22 minimum rent. Plaintiff refused this generous offer and demanded that all future rents be paid in 23 order to terminate the lease. 24 Surely, an additional 3 months’ worth of rent was generous and would have allowed 25 Plaintiff to find another tenant to fill the premises. Nevertheless, it is Plaintiff’s greed and refusal 26 to mitigate its own damages that have brought the litigation to this point. 27 28 9 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 Furthermore, Plaintiff is now in full possession of the premises and can re-lease them at 2 will. 3 Plaintiff has not provided sufficient evidence that it will be unable to re-lease the premises 4 during the remaining term of the lease. 5 Because of Plaintiff has failed to demonstrate that it has mitigated its damages in this case, 6 Plaintiff should be precluded from obtaining all future rent and penalties from Defendants. 7 Therefore, no writ of attachment should be granted. 8 9 IV. PLAINTIFF FAILS TO JUSTIFY ITS REQUEST FOR ATTORNEYS’ FEES. In contested cases, attorney fees based on contract must be determined by noticed motion. 10 Cal. Civ. Pro. §1033.5(c)(5). The lodestar method of calculating and determining the amount of 11 attorney’s fees to award is used when determining the amount of fees to award under Cal. Civ. 12 §1717. PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1097. 13 14 Plaintiff has not provided any evidence demonstrating the proper calculation of attorneys’ 15 fees to be paid in this action. No evidence of reasonableness of said fees has been presented and 16 the proper lodestar has not been determined. 17 According to its own application, the unpaid rent claimed by Plaintiff through January 18 2021 is only $35,450.86. However, Plaintiff seeks an attachment of an additional $100,000 for 19 attorneys’ fees and costs. Said future attorneys’ fees are almost three times the amount of the 20 damages sought. Such high attorneys’ fees can hardly be deemed reasonable. 21 Plaintiff has clearly failed to meet its burden to provide sufficient evidence to support a 22 claim of $100,000 in future attorneys’ fees. 23 V. A WRIT OF ATTACHMENT WOULD BE HIGHLY PREJUDICIAL IN THIS 24 CASE. 25 A prejudgment writ of attachment is a severe remedy that is to be used in strict 26 circumstances. Arcata Publications Group v. Beverly Hills Publishing Co. (1984) 154 27 Cal.App.3d 276, 279. 28 10 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT 1 In this case, Defendants are a group of businesses that have been hit extraordinarily hard 2 by the COVId-19 pandemic and the subsequent government regulations imposed by the state of 3 California and the local governments. While remedies to obtain judgments for rents may still be 4 available to Plaintiff in such a case, to impose a writ of attachment would be an extraordinarily 5 severe prejudgment remedy that could lead to drastic results to a business that has already been 6 devastated by the pandemic. Therefore, it is incumbent upon the Court to exercise extreme care 7 in granting such a provisional remedy, and the application should be denied unless no other 8 course of action is available. 9 CONCLUSION 10 Plaintiff fails to meet its burden to support its application for writ of attachment. 11 First, Plaintiff’s claims have no merit as Defendants failure to perform has been excused 12 through the doctrine of Commercial Frustration. 13 Second, the Lease was automatically terminated through a government taking of more 14 than 40% of the Defendants’ rights in the property. 15 Third, Plaintiff has grossly failed to mitigate its damages in this case. In fact, Plaintiff has 16 been the main contributor to the majority of the damages it seeks. 17 Fourth, Plaintiff fails to justify the exorbitant amount of future attorneys’ fees requested. 18 Finally, to grant a writ of attachment against a business that has already been eviscerated 19 by the effects of COVId-19 and the government’s subsequent regulations would be highly 20 prejudicial and uncalled-for in this time of emergency. 21 For all the foregoing reasons, Defendants respectfully request that the Court deny 22 Plaintiff’s application. 23 24 Dated: April 20, 2021 THE LAW OFFICES OF JOSEPH H. BOYD 25 26 By: ______________________________ 27 JOSEPH H. BOYD Attorney for Defendants 28 11 JOINT MEMORANDUM OF POINTS AND AUTHORITIES ON BEHALF OF ALL DEFENDANTS IN OPPOSITION TO PLAINTIFF’S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT