United Central Bank v. Superior Court

California Court of Appeal Oct 19, 2009 No. G042247Published

Before: Aronson, Ikola

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Holding. The court held that a creditor may obtain a writ of attachment on an unsecured guaranty even if the underlying principal loan is secured by real property, provided the guarantor has waived the right to require the creditor to proceed against the security first.

Issues

Whether the trial court erred in denying a right to attach order on the basis that the underlying loans were secured by real property.
Whether an unsecured guaranty constitutes a claim upon which an attachment may be issued when the guarantor has waived the right to require the creditor to proceed against the primary security.

Disposition. remanded

Quotations verified verbatim against the opinion

“the trial court plainly erred in ruling that the remedy of attachment was unavailable because the underlying loans are secured by real property.”

“A guaranty is a separate and independent obligation from that of the principal debt.”

“Case law holds that a writ of attachment may issue on a guaranty, regardless of whether the principal loan is secured, so long as the guarantor has waived the right to require the creditor to proceed first against the security”

Opinion

THE COURT.*

Petitioner United Central Bank (the Bank) seeks extraordinary relief from an order denying its motion for a right to attach order and

[214]

issuance of a writ of attachment. Finding plain error, we issue a peremptory writ of mandate in the first instance directing the trial court to vacate its order denying the motion and to conduct a new hearing to determine if the Bank has made the showing necessary for issuance of a right to attach order under Code of Civil Procedure section 484.090.

[213]

*Rylaarsdam, Acting P. J., Aronson, J., and Ikola, J.

[214]

Background

In 2007 and 2008, real party in interest Louisa H.Y. Chang (Chang) provided three personal guaranties to the Bank as additional credit support for three construction loans the Bank made to another party (the borrower). The aggregate principal amount of the three loans was approximately $4 million. Though the three construction loans were secured by deeds of trust on real property, the guaranties were not secured by any interest in real property. In each of the guaranties, Chang waived the right to require the Bank, in the event of the borrower’s default, to proceed first against the borrower or against the real property security for the loan.

Beginning in December 2008, the borrower defaulted on the three loans. Thereafter, the Bank demanded Chang pay the amounts due under the guaranties, but she failed to do so. On April 23, 2009, the Bank sued Chang for breach of the guaranties. A few days later, the Bank filed an application for a right to attach order and issuance of a writ of attachment for the real properties of Chang.

United Central Bank v. Superior Court

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