HighWired Technologies v. Sup. Ct.

Filed 10/25/06 HighWired Technologies v. Sup. Ct. CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

I. INTRODUCTION

Petitioner HighWired Technologies, Inc. (HighWired) is the defendant in an action filed by real party in interest Palm Associates (Palm) to collect payment for Palm’s software development services. The superior court issued a right to attach order that included a provision requiring HighWired to turn over all of its computer equipment to the levying officer. HighWired filed a petition for writ of mandate challenging the validity of the turnover order on the ground that a turnover order is not authorized for the property of a going business, pursuant to Code of Civil Procedure section 488.375, subd. (a).)[1] This court issued a temporary stay of the turnover order and requested preliminary opposition from Palm.

The parties subsequently entered into a stipulation and proposed order in which they agreed that the turnover order would have no force and effect and that HighWired had no obligation to transfer possession of its computer equipment. Thus, Palm has implicitly conceded that the writ relief sought by HighWired should be granted. For reasons that we will explain, we find the concession appropriate and that no purpose could reasonably be served by plenary consideration of the issue. Therefore, we will issue a peremptory writ in the first instance directing the superior court to vacate the turnover order.

II. FACTUAL AND PROCEDURAL BACKGROUND

HighWired is in the business of developing messaging software. After HighWired contracted with Palm for software development services, Palm filed a complaint seeking payment of approximately $250,000 for computer code that Palm had developed for HighWired’s products. HighWired cross-complained against Palm, alleging, among other things, that Palm had breached their contract.

During the course of the litigation, Palm filed an application for a writ of attachment order and a writ of attachment. After a hearing, the trial court on July 10, 2006, issued a right to attach order and order for issuance of writ of attachment. The trial court found that Palm had the right to attach property of HighWired in the amount of $249,527, subject to a $25,000 undertaking, and included a provision (the turnover order) requiring HighWired to transfer to the levying officer possession of “all computer equipment, including, but not limited to, servers, cables, monitors and any rack on which such computer equipment is located.”

HighWired filed a request for clarification of the July 10, 2006, order, asserting that Code of Civil Procedure section 488.375 did not authorize seizure of the equipment of a going business. Palm opposed the request for clarification , and on July 28, 2006, the superior court denied the request. On July 31, 2006, HighWired filed a petition for writ of mandate in this court, in which it sought extraordinary relief from the turnover order and a temporary stay of the order pending writ review. Due to the potential harm to HighWired’s business if all of its computer equipment was seized we issued a temporary stay of the turnover order and requested preliminary opposition from Palm.

Palm did not file opposition to the writ petition. In a letter dated August 17, 2006, the parties jointly advised this court that they had tentatively agreed to resolve the issues raised in the writ petition, contingent upon the superior court entering the parties’ stipulation and proposed order as the order of the court. The stipulation and proposed order states, in pertinent part, “Palm and HighWired stipulate and agree as follows: Subject to the Court’s approval, the Turnover Order shall have no force or effect, and HighWired shall have no obligation to transfer possession of its computer equipment and will not face any penalties for failure to do so. This agreement is without prejudice [to Palm] seeking another Turnover Order if it obtains judgment in its favor for the above-referenced case, and is also without prejudice to HighWired opposing any request for a Turnover Order or challenging any Turnover Order that may be issued. This Stipulation and Order does not change any other provisions of the Right to Attach Order.”

The parties also requested that we defer action on the writ petition while their stipulation and proposed order were pending in the superior court. Subsequently, in a letter dated September 20, 2006, the parties requested that this court issue a writ directing the superior court to enter the stipulation and order as the order of the court because the superior court had declined to do so.

III. DISCUSSION

We will consider issuing a peremptory writ in the first instance because Palm, the real party in interest, has implicitly conceded that the relief sought in HighWired’s writ petition should be granted. In limited situations, an appellate court may issue a peremptory writ in the first instance, without issuance of an alternative writ or order to show cause, and without providing an opportunity for oral argument. (Code Civ. Proc., § 1088; Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1252-1253.) “A court may issue a peremptory writ in the first instance ‘ “only when petitioner’s entitlement to relief is so obvious that no purpose could reasonably be served by plenary consideration of the issue--for example, when such entitlement is conceded or when there has been clear error under well-settled principles of law and undisputed facts--or where there is an unusual urgency requiring acceleration of the normal process. . . .” [Citation.]’ [Citation.]” (Lewis v. Superior Court, supra, 19 Cal.4th at p. 1241.)

In its writ petition, HighWired argues that the turnover order requiring it to transfer possession of all of its computer equipment to the levying officer should be vacated because section 488.375 does not authorize a turnover order for the property of a going business. The parties subsequently stipulated that the turnover order has no force or effect. We find that Palm has implicitly conceded, pursuant to the stipulation, that HighWired is entitled to writ relief. We also find the concession appropriate under the relevant attachment law.

In general, “[a]ttachment is a prejudgment remedy which requires a court to make a preliminary determination of the merits of a dispute. It allows a creditor who has applied for an attachment following the statutory guidelines and established a prima facie claim to have a debtor’s assets seized and held until final adjudication at trial.” (Lorber Industries v. Turbulence, Inc. (1985) 175 Cal.App.3d 532, 535; § 481.010 et seq..) A specific statutory provision, section 488.375, subdivision (a), governs the attachment of the assets of a going business.

Section 488.375, subdivision (a) states in pertinent part, “Except as provided by Section 488.385 [attachment of the vehicles/vessels of a going business], to attach equipment of a going business in the possession or under the control of the defendant, the levying officer shall file with the office of the Secretary of State a notice of attachment, in the form provided by the Secretary of State . . . .” (Italics added.) Thus, the plain language of section 488.375 provides that the levying officer attaches the property of a going business by notice, rather than by seizure. (Pacific Decision Sciences Corp. v. Superior Court (2004) 121 Cal.App.4th 1100, 1110 (Pacific Decision.)

The conclusion that the plain language of section 488.375 does not authorize a turnover order to aid attachment of the property of a going business is consistent with the statute authorizing turnover orders, section 482.080,[2] and the related Law Revision Commission comments. Section 482.080 provides in pertinent part, “If a writ of attachment is issued, the court may also issue an order directing the defendant to transfer to the levying officer either or both of the following: (1) Possession of the property to be attached if the property is sought to be attached by taking it into custody.” Thus, as stated in Pacific Decision, supra, 121 Cal.App.4th at page 1106, “[t]he purpose of a turnover order issued pursuant to section 482.080 is to compel defendant to cooperate with the levying officer [to whom the writ of attachment is directed] when the levy must be made by taking possession of the property or documentary evidence of title to property or of a debt.”

Where the levy is made by notice, rather than by taking possession of the property sought to be attached, section 482.080 does not apply. As stated in the Law Revision Commission comments to the 1976 amendment to section 482.080, “Section 482.080 is amended to make clear that an order may be issued under subdivision (a)(1) only where the property is sought to be attached by taking it into custody. See, e.g., Sections 488.320 (tangible personal property in possession of defendant), 488.380(a)(2) (chattel paper in possession of defendant). The enforcement of such an order is not appropriate where the property sought to be attached is in the possession of a third person or is levied upon by notice. See, e.g., Sections 488.330 (tangible personal property in possession of a third person), 488.380 (a)(1) (chattel paper in possession of a third person).” (Cal. Law Revision Com. com., 15A West’s Ann. Code Civ. Proc. (1979 ed.) foll. § 482.080, p. 35 (italics added); Pacific Decision, supra, 121 Cal.App.4th at p. 1106.)

Our conclusion that a turnover order is not authorized with respect to the property of a going business, pursuant to sections 488.375 and 482.080, is also supported by the principle of statutory interpretation applicable to that section: “Attachment Law statutes are subject to strict construction, and where a court is required to exercise its jurisdiction in a particular manner or subject to certain limitations, an act beyond those limits is in excess of its jurisdiction and void. [Citation.]” (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.) Accordingly, because sections 488.375 and 482.080 do not expressly authorize a turnover order for the purpose of attaching the property of a going business, and the parties agree that the turnover order requiring HighWired to transfer possession of its computer equipment to the levying officer shall have no force or effect, writ relief is warranted.

However, Code of Civil Procedure section 1088 “ ‘ “requires, at a minimum, that a peremptory writ of mandate or prohibition not issue in the first instance unless parties adversely affected by the writ have received notice, from the petitioner or from the court, that the issuance of such a writ in the first instance is being sought or considered. In addition, an appellate court, absent exceptional circumstances, should not issue a peremptory writ in the first instance without having received, or solicited, opposition from the party or parties adversely affected.” ‘ “ (Lewis v. Superior Court, supra, 19 Cal.4th at p. 1240.)

While this court did not provide notice that a peremptory writ in the first instance might issue, we solicited opposition. Palm, the real party in interest, did not file opposition and has implicitly conceded that the relief sought in HighWired’s writ petition should be granted. Under these circumstances, notice is not necessary to protect Palm’s due process rights, and we have complied with all other procedural requirements for issuance of the writ in the first instance.

We will direct the superior court to modify its July 10, 2006, right to attach order and order for issuance of writ of attachment by vacating the turnover requirement as per the parties’ stipulation. Our decision today is limited to the record before us and we express no opinion regarding any future attachment proceedings that may occur. We will not grant the parties’ request, made by way of letter to this court, that we direct the superior court to enter their stipulation and proposed order as the order of the superior court because that request was not included in the writ petition and is not properly before us.

IV. DISPOSITION

Let a peremptory writ of mandate issue commanding the superior court to modify the July 10, 2006, right to attach order and order for issuance of writ of attachment by vacating the turnover order set forth in Paragraph 3(d). The temporary stay order is

vacated. This opinion is made final as to this court seven days from the date of filing. (Cal. Rules of Court, rule 24(b)(3).) Each party to bear its own costs.

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Bamattre-Manoukian, ACTING P.J.

WE CONCUR:

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MIHARA, J.

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MCADAMS, J.

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[1] All further statutory references are to the Code of Civil Procedure unless otherwise indicated

[2] Section 482.080 provides, “(a) If a writ of attachment is issued, the court may also issue an order directing the defendant to transfer to the levying officer either or both of the following: (1) Possession of the property to be attached if the property is sought to be attached by taking it into custody. (2) Possession of documentary evidence of title to property of or a debt owed to the defendant that is sought to be attached. An order pursuant to this paragraph may be served when the property or debt is levied upon or thereafter. (b) The order shall be personally served on the defendant and shall contain a notice to the defendant that failure to comply with the order may subject the defendant to arrest and punishment for contempt of court.”