One of the drawbacks to the legal system is the time it takes to have your day in court. As a result, debtors can dissipate their assets while a lawsuit is pending so that even if a large judgment is entered against them, creditors will have nothing to collect in the end. To address this common concern for creditors, California Code of Civil Procedure section 484.090 provides a Writ of Attachment, which allows creditors to attach assets of the debtor prior to trial. This will ensure that the debtor’s assets will remain while the case is pending.
In order to obtain a Writ of Attachment, the creditor will have to show that: (1) the claim is based on one where an attachment may be issued, (2) the creditor has established a probable validity of the claim, (3) the attachment is not sought for an improper purpose, and (4) the amount to be attached is greater than zero. Cal. Civ. Proc. Code § 484.090.
Claims where an attachment may be issued are claims for money based upon a contract where the total amount of the claim is “fixed, readily ascertainable amount not less than $500.” Cal. Civ. Proc. Code § 483.010. Moreover, the creditor’s claim must be fully or partially unsecured, and the claim must arise from a commercial transaction. Id.
To establish probable validity, the creditor must prove: (1) that the parties are subject to an express or implied binding agreement; (2) that the creditor has performed his or her obligations; (3) that the debtor breached the agreement by failing to pay; and (4) that the creditor has incurred damages. Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 3d 1371, 1388 (1990).
The usual and main purpose of an attachment is to secure and ensure the payment of any judgment that may be recovered in the successful prosecution of an action in order that the ends of successful litigation are not fruitlessly pursued or frustrated. Loeb & Loeb v. Beverly Glen Music, Inc., 166 Cal. App. 3d 1110, 1118 (1985).
Of course, obtaining the Writ of Attachment is only half the battle. Once the court issues a right to attach order, the creditor must still enforce it in order to secure the debtor’s assets. A common asset subject to attachment is real property because real property can be easily discovered through a public records search. It is often the debtor’s most valuable asset, and once it is attached, the debtor will be unable to dissipate the asset. Another asset that a creditor can attach is the debtor’s bank account. This will lock up the money that the debtor has in the account and prevent the debtor from emptying out the account. In addition to ensuring that the money will still be there by the time a judgment is obtained, freezing the account can have drastic consequences that may bring the debtor to the bargaining table.
Other properties that are subject to attachment are listed at Cal. Civ. Proc. Code § 487.010 and include equipment, inventory, final money judgments arising out of the conduct by the defendant of a trade, business, or profession, money on the premises where a trade, business, or profession is conducted, negotiable documents, instruments, and securities.
Because a Writ of Attachment is considered an extreme remedy, courts are often reluctant to grant it. However, it is a powerful tool, and even if it is brought unsuccessfully, it can still have positive effects. It would force the other side to lay out their case. It should also deter debtors from taking further steps to dissipate their assets because the court would be aware of the case and may be more willing to grant the Writ of Attachment based on the subsequent actions taken by the debtors.