Prejudgment Attachment May be an Option For Contract Claims With “Readily Ascertainable” Damages

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Cliff Horner

Email Address: chorner@hornerlawgroup.com

Patrick J. Sullivan

Email Address: psullivan@hornerlawgroup.com

An “attachment” may be recorded as a prejudgment lien against real property. The benefit of an attachment is that it may be obtained long, often years, before a final judgment issues in a court case. One way a party may obtain an attachment is via a breach of contract claim demanding payment of fixed or “readily ascertainable” amount of damages. Additionally, the party advocating for an attachment must only prove the “probable validity” of the party’s claims, which means that the plaintiff need only prove that it is more likely than not (i.e. 50.1%) to prevail on the merits of the case, which is a much lower standard than prevailing on a motion for summary judgment (with that standard being that there must be no triable issue of fact).


In the recent case Park v. NMSI, Inc. (Cal. Ct. App., Oct. 12, 2023, No. B323063), the plaintiffs were able to obtain a prejudgment attachment in excess of $7 million which could then be recorded as a lien against the real property of the opposing party.


Summary:


In the case of Park v. NMSI, Inc., the plaintiffs were executive employees of the defendant NMSI, Inc. (“NSMI”), a residential mortgage lender which operates in 26 states. The plaintiffs entered into favorable contracts with defendant NMSI which included generous profit sharing for the executive employees based upon a fixed calculation. When the defendant NMSI realized the amount it owed to the executive employees under the contract, NMSI attempted to alter the contract terms and eventually terminated the executives without making full payment as required by the contracts. The executive employees sued NMSI to recover the amounts owed to them under the contracts they signed with NMSI. A trial court issued a “right to attach order” for $7 million in favor of the plaintiff employees. The defendant NMSI then appealed the trial court’s granting of the “right to attach order.”


The court of appeals found that the plaintiffs’ contract claims were for a “readily ascertainable” amount because the contracts provided “a standard by which the amount due may be clearly ascertained.” Furthermore, the court found that the plaintiffs’ claims had “probable validity” because the contracts were not modified by either later email exchanges or subsequent conduct, so the plaintiffs were likely to prevail. Therefore, the court of appeals upheld the trial court’s $7 million “right to attach order” granted in favor of the plaintiffs.


Take Away:


In cases where there is a contract claim for a “readily ascertainable” amount, a plaintiff may want to consider requesting a prejudgment attachment. Other cases lending themselves easily to attachments are contract disputes or a tenant owing a landlord rent. Obtaining a prejudgment attachment may create critical leverage for a plaintiff in early stages of litigation which could lead to a favorable settlement for the plaintiff without the plaintiff spending exorbitant litigation costs to obtain a final judgment.


By: Clifford R. Horner, Esq.

Patrick J. Sullivan, Esq.

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