A construction project is like a marriage. As with any marriage, there are inevitably some bumps along the way. If the bumps are too big, one or both sides call their lawyers and file for divorce. Construction law practitioners who find their client in the midst of a construction divorce need to move fast to secure their client’s claim. That’s where a writ of attachment may come into the picture.
Moving early for a prejudgment remedy such as a writ of attachment may prevent a collectible judgment from becoming uncollectible while awaiting the outcome of a trial or an appeal. But first, you need to know whether to file a writ of attachment.
To get a writ of attachment, a plaintiff generally has to show that the underlying claim is (CCP §483.010):
- Based on contract;
- “More likely than not” to succeed on the merits at trial;
- Commercial in nature; and
- A “readily ascertainable amount” of not less than $500.
Be familiar with the specific requirements for an attachment and adhere to them as closely as possible. Because the writ of attachment doesn’t have a basis in the common law, courts strictly adhere to these statutes and will readily deny the attachment unless the full requirements are met. Kemp Bros. Constr. Inc. v Titan Elec. Corp. (2007) 146 CA4th 1474, 1476, 53 CR3d 673.
Even if the plaintiff meets these basic requirements, it may not make sense to seek a writ of attachment. Here are some other considerations before you invest your time and your client’s money in seeking a writ of attachment:
- Investigate the claim. Thoroughly investigate the strengths and weaknesses of your client’s claim. Start with the documents that show a contractual relationship and precisely how much your client is owed. See CCP §483.010(a). Essential documents include the executed contract, any change orders (signed and unsigned), purchase orders, delivery tickets, and backcharges.
- Consider defenses. You need to consider any defenses the other side may assert. For examples: Does the statute of limitations prevent collection of the claim? Does the defendant have any potential counterclaims? If your client is a contractor, did it maintain the proper contractor’s license at all appropriate times?
- Check on the assets. You need to know whether the defendant actually has any assets that can be attached. Investigate the debtor’s in-state assets—and, more importantly, the equity the debtor has in those assets—to learn what may and should be attached. If you represent a contractor and the defendant is a single-asset LLC, value the single asset, usually real property, to ascertain whether any equity exists, over and above all encumbrances; if other creditors have already established priority in the defendant’s available assets and there’s no remaining equity to satisfy your client’s debt, a writ of attachment will likely be a fruitless endeavor.
The type of defendant may also play a role in what property can and can’t be attached. Generally, all property located in the state that is owned by a corporation, partnership, or other legal entity (e.g., an LLC) is subject to attachment, but statutory limitations restrict the type of assets owned by a private individual defendant that are subject to attachment. CCP §487.010.
The filing of a writ of attachment also creates several intangible benefits—and risks. For example, the moving papers and hearing may present a unique opportunity to test your case before the judge; if your judge isn’t knowledgeable on construction issues, the attachment proceeding may educate him or her on your client’s claims and the substance of a construction case. An attachment proceeding also forces the defendant into quick discovery-type responses in the form of its opposition, which may costs less than formal discovery.
But there are also risks of filing for a writ of attachment, including that you may force the defendant into filing for bankruptcy, or, if you lose, you may embolden the defendant in the defense of the claim, thus decreasing the likelihood of settlement and increasing the cost of the litigation.
For excellent coverage of obtaining a writ of attachment and other prejudgment remedies, turn to CEB’s Debt Collection Practice in California, chap 6. For more on construction remedies generally, turn to CEB’s California Mechanics Liens and Related Construction Remedies, which includes the new changes in mechanics lien law taking effect July 1, 2012.
This material is reproduced from CEB Blog entry, Get Attached! Using a Writ of Attachment in Construction Cases, CEB Blog (June 25, 2012 http://blog.ceb.com/2012/06/25/get-attached-using-a-writ-of-attachment-in-construction-cases/). Copyright 2012 by the Regents of the University of California. Reproduced with permission of Continuing Education of the Bar - California. For information about CEB publications, telephone toll free 1-800-CEB-3444 or visit our Web site, CEB.com.