CIT Group/Equipment Financing, Inc. v. Super DVD, Inc.

California Court of Appeal Jan 30, 2004 No. A102151Published

Before: Kay

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Holding. The court held that a commercial equipment lease providing a clear formula for calculating damages—monthly rent multiplied by the unexpired term—constitutes a contract for a fixed or readily ascertainable amount, thereby supporting the issuance of a right to attach order.

Issues

Whether a claim for damages under a commercial equipment lease qualifies as a 'fixed or readily ascertainable amount' under Code of Civil Procedure section 483.010, subdivision (a).
Whether the uncertainty of damages at the time of contract formation precludes the issuance of a writ of attachment.

Disposition. affirmed

Quotations verified verbatim against the opinion

“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.”

“As the Lewis court found, uncertainty as to the specific amount of ultimate damages is not a basis to deny attachment.”

Opinion

KAY, P. J.

Appellants, Super DVD, Inc., a California corporation (Super DVD) and Julius Liu, defaulted on a commercial equipment lease, which

[539]

resulted in the issuance of a right to attach order (RTO) in favor of respondent, The CIT Group/Equipment Financing, Inc., a Delaware corporation (CIT). Appellants now appeal, contending the trial court erred in issuing this order. We affirm.

I. BACKGROUND

On September 14, 2000, appellant Super DVD entered into a master lease agreement with CIT for the lease of certain equipment to be utilized in its business, pursuant to lease schedules to be issued thereunder. Appellant Julius Liu guaranteed the payment of all obligations under the master lease. On the same day, the parties also entered into two lease schedules regarding two DVD duplication machines. Lease Schedule 1 required Super DVD to make 60 monthly payments of $9,901.10 and provided for an aggregate rental of $594,067.00; Lease Schedule 2 required Super DVD to make 60 monthly payments of $8,455.56 and provided for an aggregate rental of $507,434.60. The master lease provided CIT with remedies in the event of default, which included declaring all sums immediately due and payable.

According to CIT’s declaration in support of the RTO, on or about December 28, 2000, Super DVD defaulted on its payments under the master lease and both lease schedules. At the time of the default, the amount owed under the master lease, pursuant to Schedules 1 and 2, exclusive of litigation costs and attorney fees, was $1,066,796.28 ($571,451.96 under Schedule 1 and $495,344.32 under Schedule 2). Then, using an investment rate of approximately 10.14 percent, CIT reduced the amount owed to its present value of $751,266.16. After due notice, CIT sold the equipment for a net recovery, after expenses, of $394,250.00, which left a balance of $357,016.16. Thereafter, CIT sought a writ of attachment to recover the deficiency. The trial court issued an RTO in the amount of $359,416.16.

CIT Group/Equipment Financing, Inc. v. Super DVD, Inc.

AI Brief

KAY, P. J.

I. BACKGROUND

II. DISCUSSION

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