Case Number: BC682421 Hearing Date: June 21, 2018 Dept: 85
Oak River Insurance Company v. Melik Dye Works, Inc., BC 682421
Tentative decision on application for right to attach order: granted
Plaintiff Oak River Insurance Company (“Oak River”) seeks a right to attach order in the amount of $133,876.91 against Defendant Melik Dye Works, Inc., dba Classy Dyeing & Finishing (“Melik Dye”).
The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.
- Statement of the Case
Plaintiff Oak River commenced this proceeding on November 3, 2017, alleging causes of action for (1) breach of contract, (2) open book account, (3) account stated, and (4) quantum meruit. The Complaint alleges in pertinent part as follows.
Oak River is a workers’ compensation insurance carrier and underwriter. Defendants are corporations located in Los Angeles, California.
Within the last four years, Oak River sold Defendants Melik Dye, One Stop Finishing, Inc. (“One Stop”), and DJ Laundering, Inc. (“DJ Laundering”) workers’ compensation insurance under insurance policy MEWC707102 (“Policy”). Oak River performed its obligations under the Policy, but Defendants have refused to pay the insurance premiums earned. Defendants now owe Oak River $127,324.33, together with interest.
- Course of Proceedings
Proofs of service on file show that Defendants were served via personal service with the Complaint and Summons on November 29, 2017 and via mail with the moving papers on May 24, 2018.
- Applicable Law
Attachment is a prejudgment remedy providing for the seizure of one or more of the defendant’s assets to aid in the collection of a money demand pending the outcome of the trial of the action. See Whitehouse v. Six Corporation, (1995) 40 Cal.App.4th 527, 533. In 1972, and in a 1977 comprehensive revision, the Legislature enacted attachment legislation (CCP §481.010 et seq.) that meets the due process requirements set forth in Randone v. Appellate Department, (1971) 5 Cal.3d 536. See Western Steel & Ship Repair v. RMI, (1986) 176 Cal.App.3d 1108, 1115. As the attachment statutes are purely the creation of the Legislature, they are strictly construed. Vershbow v. Reiner, (1991) 231 Cal.App.3d 879, 882.
A writ of attachment may be issued only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500). CCP §483.010(a). A claim is “readily ascertainable” where the amount due may be clearly ascertained from the contract and calculated by evidence; the fact that damages are unliquidated is not determinative. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41 (attachment appropriate for claim based on rent calculation for lease of commercial equipment).
All property within California of a corporation, association, or partnership is subject to attachment if there is a method of levy for the property. CCP §487.010(a), (b). While a trustee is a natural person, a trust is not. Therefore, a trust’s property is subject to attachment on the same basis as a corporation or partnership. Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, supra, 197 Cal.App.3d at 4.
The plaintiff may apply for a right to attach order by noticing a hearing for the order and serving the defendant with summons and complaint, notice of the application, and supporting papers any time after filing the complaint. CCP §484.010. Notice of the application must be given pursuant to CCP section 1005, sixteen court days before the hearing. See ibid.
The notice of the application and the application may be made on Judicial Council forms (Optional Forms AT-105, 115). The application must be supported by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based. CCP §484.040.
Where the defendant is a corporation, a general reference to “all corporate property which is subject to attachment pursuant to subdivision (a) of Code of Civil Procedure Section 487.010” is sufficient. CCP §484.020(e). Where the defendant is a partnership or other unincorporated association, a reference to “all property of the partnership or other unincorporated association which is subject to attachment pursuant to subdivision (b) of Code of Civil Procedure Section 487.010” is sufficient. CCP §484.020(e). A specific description of property is not required for corporations and partnerships as they generally have no exempt property. Bank of America v. Salinas Nissan, Inc., (“Bank of America”) (1989) 207 Cal.App.3d 260, 268.
A defendant who opposes issuance of the order must file and serve a notice of opposition and supporting affidavit as required by CCP section 484.060 not later than five court days prior to the date set for hearing. CCP §484.050(e). The notice of opposition may be made on a Judicial Council form (Optional Form AT-155).
The plaintiff may file and serve a reply two court days prior to the date set for the hearing. CCP §484.060(c).
At the hearing, the court determines whether the plaintiff should receive a right to attach order and whether any property which the plaintiff seeks to attach is exempt from attachment. The defendant may appear at the hearing. CCP §484.050(h). The court generally will evaluate the attachment application based solely on the pleadings and supporting affidavits without taking additional evidence. Bank of America, supra, 207 Cal.App.3d at 273. A verified complaint may be used in lieu of or in addition to an affidavit if it states evidentiary facts. CCP §482.040. The plaintiff has the burden of proof, and the court is not required to accept as true any affidavit even if it is undisputed. See Bank of America, supra, 207 Cal.App.3d at 271, 273.
The court may issue a right to attach order (Optional Form AT-120) if the plaintiff shows all of the following: (1) the claim on which the attachment is based is one on which an attachment may be issued (CCP §484.090(a)(1)); (2) the plaintiff has established the probable validity of the claim (CCP §484.090(a)(2)); (3) attachment is sought for no purpose other than the recovery on the subject claim (CCP §484.090(a)(3); and (4) the amount to be secured by the attachment is greater than zero (CCP §484.090(a)(4)).
A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. CCP §481.190. In determining this issue, the court must consider the relative merits of the positions of the respective parties. Kemp Bros. Construction, Inc. v. Titan Electric Corp., (2007) 146 Cal.App.4th 1474, 1484. The court does not determine whether the claim is actually valid; that determination will be made at trial and is not affected by the decision on the application for the order. CCP §484.050(b).
The amount to be secured by the attachment is the sum of (1) the amount of the defendant’s indebtedness claimed by the plaintiff, and (2) any additional amount included by the court for estimate of costs and any allowable attorneys’ fees under CCP section 482.110. CCP §483.015(a); Goldstein v. Barak Construction, (2008) 164 Cal.App.4th 845, 852. This amount must be reduced by the sum of (1) the amount of indebtedness that the defendant has in a money judgment against plaintiff, (2) the amount claimed in a cross-complaint or affirmative defense and shown would be subject to attachment against the plaintiff, and (3) the value of any security interest held by the plaintiff in the defendant’s property, together with the amount by which the acts of the plaintiff (or a prior holder of the security interest) have decreased that security interest’s value. CCP §483.015(b). A defendant claiming that the amount to be secured should be reduced because of a cross-claim or affirmative defense must make a prima facie showing that the claim would result in an attachment against the plaintiff.
Before the issuance of a writ of attachment, the plaintiff is required to file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action. CCP §489.210. The undertaking ordinarily is $10,000. CCP §489.220. If the defendant objects, the court may increase the amount of undertaking to the amount determined as the probable recovery for wrongful attachment. CCP §489.220. The court also has inherent authority to increase the amount of the undertaking sua sponte. North Hollywood Marble Co. v. Superior Court, (1984) 157 Cal.App.3d 683, 691.
- Statement of Facts
- Plaintiff’s Evidence
Employers may secure coverage for workers’ compensation benefits through the purchase of insurance. Lee Decl. ¶4. On October 13, 2015, the Workers Compensation Insurance Rating Bureau (“WCIRB”) issued an experience modification rating of 101% for Melik Dye, effective as of February 10, 2016. Lee Decl. ¶8.
On November 12, 2015, R-T Specialty Insurance Services (“R-T”), Melik Dye’s broker, submitted Melik Dye’s application for workers’ compensation insurance to Oak River. Lee Decl. ¶7, Ex. 1. Oak River issued a final quote based upon Melik Dye’s application. Lee Decl. ¶9, Ex. 3.
On February 16, 2016, Oak River issued the Policy. Lee Decl. ¶¶ 11, 16. The Policy’s effective date commenced February 10, 2016 and terminated on February 10, 2017. Lee Decl. ¶11, Ex. 4. The Policy states that the estimated annual premium is $26,925 and provides that it is to be paid with one deposit and nine monthly installments. Lee Decl. ¶¶ 11, 15, Ex. 4, p.8.
The Policy characterizes itself as “a contract of insurance between” Melik Dye and Oak River. Lee Decl. Ex. 4, p.15. The Policy continues, “The only agreements relating to this insurance are stated in this policy. The terms of this policy may not be changed or waived except by endorsement issued by [Oak River] to be part of the policy.” Id.
As to insurance premiums, the premiums charged by a worker’s compensation insurance company are based upon the insured’s employees’ job classifications and payroll. Id; Williams Decl. ¶4. The employer is required to keep adequate records so that the insurance carrier may determine the correct classification of employees and amount of payroll. Id. The Policy contains three employee classification codes based on job duties performed by each employee: clerical office (8810), Textiles (2413), and Laundries (2585). Williams Decl. ¶4.
The Policy provides: “The premium shown on the Information Page, schedules, and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance.” Lee Decl. ¶13, Ex. 4, p.19. The Policy does not allocate the estimated premium among the named insureds. Lee Decl. ¶14. The Policy instead provides that the insured is responsible for the premium based on the business and work covered by the Policy. Lee Decl. Ex. 4, p.19.
On February 18, 2016, KZ Insurance Brokerage (“KZ”), the service agent on the account, requested that two new named insureds be added to the Policy: Defendants DJ Laundering and One Stop. Lee Decl. ¶16, Ex. 5. KZ also submitted policy applications for DJ Laundering and One Stop. Lee Decl. ¶16, Exs. 6-7. Farzad Labib (“Labib”), Melik Dye’s sole shareholder and officer, completed a WCIRB form 601 entitled “Notification of Change in Ownership and/or Combinability of Entities” for each of DJ Laundering and One Stop and forwarded the forms to Oak River. Lee Decl. ¶16, Exs. 8-9. Per both forms, Labib is the 100% owner of Melik Dye, DJ Laundering, and One Stop. Id.
On March 8, 2016, Oak River complied with Melik Dye’s request and added the entities as named insureds to the Policy. Lee Decl. ¶17. The addition of these entities increased the estimated annual premium to $194,212. Id., Ex. 4, p.48.
After the Policy expired, Oak River conducted an audit of the named insureds’ payroll. Lee Decl. ¶18; Williams Decl. ¶5. On or around February 7, 2017, Oak Rivers’ auditor, Mitzy Malek Williams (“Williams”) sent Melik Dye a letter asking for an appointment to conduct an audit. Williams Decl. ¶5. On or around March 20, 2017, Williams was contacted by Sharona Labib, who identified herself to Williams as “Client Specialist” for Melik Dye, DJ Laundry, and One Stop. Williams Decl. ¶6. Sharona Labib informed Williams that she needed to audit two other entities besides Melik Dye. Id. On April 20, 2017, Williams met with the accountant for One Stop and DJ Laundering. Williams Decl. ¶7. On April 21, 2017, Sharona Labib provided Williams with Melik Dye’s payroll information. Id. The audit was completed and submitted to Oak River for review. Williams Decl. ¶7, Ex. 13.
The audit results showed that Oak River was owed an additional premium in the amount of $130,926. Lee Decl. ¶19, Ex. 10, p.2. On July 5, 2017, Oak River issued Defendants an audit invoice and Final Audit reconciliation. Lee Decl. ¶19, Ex. 10.
On September 5, 2017, Melik Dye remitted a payment of $3,601.67 towards the additional premium balance. Lee Decl. ¶22, Ex. 11. This payment reduced the principal balance due from $130,926 to $127,324.33. Lee Decl. ¶23.
As of February 28, 2018, Oak River has received no dispute regarding the contents of the final audit by the named insureds. Lee Decl. ¶24.
In addition to the remaining balance of $127,324.22, Oak River seeks $5,816.49 in attorneys’ fees under Local Rule 3.214. Lee Decl. ¶27; Sauer Decl. ¶7. The Policy provides in pertinent part: “The prevailing party to such action to collect said premium shall be entitled to reasonable costs and attorneys’ fees, as well as interest if applicable.” Id., Ex. 4, p.45. Oak River also seeks court costs in the total amount of $736.09 comprised of the following: an initial filing fee of $435, service fees of $241.09, and a motion filing fee of $60. Lee Decl. ¶28; Sauer Decl. ¶6.
- Defendant’s Evidence
Labib is the President of Melik Dye, One Stop, and DJ Laundering. Labib Decl. ¶1. Melik Dye was incorporated in California in 1998 with its principal of business located at 3780 S. Main Street, Los Angeles. Labib Decl. ¶¶ 2, 3. One Stop and DJ Laundering were incorporated in 2016 with a principal place of business at 710 West 58th Street, Los Angeles. Labib Decl. ¶4. Melik Dye hires employees separate from those that work at One Stop and DJ Laundering. Labib Decl. ¶5.
Melik Dye engages in the business of dyeing and finishing textiles for the apparel, automotive, kitchenware, tableware, home furnishing, and medical industries. Labib Decl. ¶2. One Stop engages in “dry finisher” of jeans and DJ Laundering engages in the dyeing, laundering, and stone washing of jeans. Labib Decl. ¶5.
From February 10, 2015 through February 10, 2017, Oak River issued workers’ compensation insurance to Melik Dye. Labib Decl. ¶2. On February 16, 2016, Oak River issued a renewal of Melik Dye’s workers’ compensation insurance policy, estimating an annual premium of $26,925. Labib Decl. ¶6.
On February 18, 2016, One Stop and DJ Laundering sought to obtain workers’ compensation insurance for their respective employees. Labib Decl. ¶7; S. Labib Decl. ¶2. Melik Dye had no interest in and derived no benefit from procuring workers’ compensation insurance on behalf of these two other companies. Id. At all times, Melik Dye only paid the premiums issued for its own benefit. Id. It did so by designating each check as on behalf of Melik Dye. Id.
Melik Dye did not sign an Endorsement in which it agreed to be liable for the workers’ compensation insurance premiums charged to DJ Laundering or One Stop. Labib Decl. ¶9.
Melik Dye has informed Oak River that it disputes the veracity of the audit. Labib Decl. ¶10. Despite repeated requests, including those made in discovery in the instant action, Oak River has failed to provide the supporting information upon which it calculated the additional premiums. Id. The audit worksheet provided by Oak River (Ex. 13) does not provide supporting documentation for the increase attributed to One Stop and DJ Laundering; it only lists the employees of Melik Dye and identifies the amount of increased payroll for Melik Dye’s employees. Id. Exhibit 13 only listed 11 of DJ Laundering’s employees, and three were misclassified. Id. The exhibit fails to list any supporting documentation for the increase claimed for One Stop employees. Id.
Labib has performed his own calculation for Melik Dye using Oak River’s job classifications and the actual payroll increases of its employees. Labib Decl. ¶11(a), (b). He multiplied this number by the rates in Oak River’s original quote and found that Melik Dye owed a total premium increase of $14,891.38. Labib Decl. ¶11(c).
The total payroll of Defendants was $2,213,823.33 for workers’ compensation purposes during the period of the Policy’s coverage. Labib Decl. ¶12. Oak River’s assertion that Defendants’ total premium is $325,138 means that the premium would constitute 15% of Defendants’ total payroll. Id.
Labib laid off various employees at One Stop and DJ Laundering because of high labor costs. Labib Decl. ¶13. Labib did not make this decision to avoid payment of workers’ compensation premiums. Id.
Plaintiff Oak River seeks a right to attach order against Defendant Melik Dye in the amount of $133,876.91, including estimated costs of $736.09, and attorneys’ fees of $5,816.49. Defendants oppose.
- The Application’s Refiling
CCP section 484.040 states in relevant part: “At the time set for the hearing [for the application], the plaintiff shall be ready to proceed. If the plaintiff is not ready, or if he has failed to comply with Section 484.040, the court may either deny the application for the order or, for good cause shown, grant the plaintiff a continuance for a reasonable period.”
Defendant Melik Dye contends that Plaintiff Oak River has circumvented CCP section 484.080 by refiling this application for writ of attachment. Opp. at 12. Defendant argues that CCP section 484.040 does not contemplate a plaintiff taking an application off-calendar and then refiling it after receiving a defendant’s opposition. Opp. at 13. Defendants argue that Oak River is deliberately attempting to make Defendants incur attorneys’ fees. Id.
Defendants’ argument is spurious. Neither CCP section 484.040, nor any other statutory authorization for a motion of which the court is aware, precludes a moving party from taking a motion off calendar and then refiling it. CCP section 484.040 merely sets forth rules for the evaluation of an application for attachment at hearing in the event the plaintiff is not ready to proceed. By taking the application off calendar, Oak River ensured that CCP section 484.040 did not come into play.
Of course, Melik Dye should not have to be forced to oppose an initial application, only to have Oak River change its position after reviewing the opposition. That does not appear to have happened, as Oak River took the motion off-calendar because of inadvertent clerical errors. See Marcelli Decl. ¶2. If it did not believe this position, Melik Dye had the remedy of a motion for sanctions pursuant to CCP section 128.7.
- Proper Claim
Oak River’s claim is based on an express written contract — the Policy issued initially to Melik Dye and amended to include DJ Laundering and One Stop. Lee Decl. Ex. 4, pp. 15 (characterizing Policy as “contract of insurance”), 48 (showing endorsements to Policy). According to an invoice produced by Oak River’s audit, the amount due under the Policy is $130,926. Lee Decl. Ex. 8, p.1. Following Melik Dye’s payment of $3,601.67, the outstanding amount owed is $127,324.33. Lee Decl. ¶¶ 22-23.
Defendants contend that the amount owed is neither fixed nor readily ascertainable. Opp. at 13.
An attachment may be issued, inter alia, only in an action where the total amount of the claim is a fixed or readily ascertainable amount. CCP §483.010(a). Although damages need not be liquidated, they must be measurable by reference to the contract sued upon, and their basis must be reasonable and certain. Kemp Bros. Const., Inc. v. Titan Elec. Corp., (2007) 146 Cal.App.4th 1474, 1481 fn.5. In other words, the contract sued on must furnish a standard by which the amount due may be clearly ascertained and there must exist a basis upon which the damages can be determined by proof. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540.
Defendants contend that the amount owed is not readily ascertainable for several reasons: (1) Oak River’s auditor Williams does not include an explanation of how she calculated the amount sought or attach her calculations. The only part of the audit which indicates how a portion of the increase was calculated is attributable to Melik Dye’s employees, which only results in a modest premium increase of approximately $15,00 (Labib Decl. ¶11); (2) Oak River failed to produce documents in response to a discovery request seeking the evidence underlying the audit worksheet and performing the calculation of total premium due; and (3) the total premium amount is 15% of the Defendants’ total payroll and thus allegedly excessive. Opp. at 14.
The Policy contains a methodology for calculating the final premium: “our manuals, rules, rates, rating plans, and classifications, which can only be changed if permitted by law. Lee Decl. Ex. 4, p. 19. The methodology is based on classifications and multiply a rate times payroll for each classification. Id.
While not a model of clarity, Williams explains how she calculated the premium owed under this methodology. She conferred with One Stop’s and DJ Laundering’s accountant and received Melik Dye’s payroll information from Sharona Labib. Williams Decl. ¶7. Oak River has evidence of the numbers underlying its audit computations. Oak River has filed employee earnings statements from all three Defendants, in addition to the audit worksheet and Final Audit Reconciliation. Sauer Decl. Exs. 21-22.
Based on this information, Williams created an audit worksheet. Williams Decl. Ex. 13. Consistent with her declaration, the worksheet reflects the calculation of premiums based on employee classification codes and payroll information for each business. Williams Decl. ¶4, Ex. 13. These final calculations show a large variance ($883,541) in payroll for job classification 2585. Williams Decl. Ex. 13, p.5. Williams then inputted these figures into the Final Audit Report (Lee Decl. Ex. 10, p.8) to determine the annual premiums. This is evidence from a trained auditor experienced in performing these sorts of audits. A second auditor then reviewed this work and furnished similar results strengthens this conclusion. Eastwood Decl. ¶¶ 4-6, Ex. 22.
The size of the numbers is of some concern. The Endorsement to the Policy states that premiums would increase by $167,287, a total of $194,138. Lee Decl. Ex. 4, p.48. Oak River now seeks an additional $130,926, for a total premium of $325,138. Id. Oak River does not really explain the variance; it only provides the numbers from which the variance was calculated. Melik Dye states that this total premium is 15% of the entire payroll for all three companies. This fact is troublesome, but Melik Dye does not adequately undermine the calculations of Williams and a second auditor. Labib’s lay calculations are insufficient to overcome their conclusions.
To the extent that Melik Dye disputes the veracity of the audit, it has the contractual right to submit a written complaint to Oak River. Lee Decl. ¶24. The Policy states: “You may send [Oak River] a written Complaint and Request for Action requesting that we reconsider a change in a classification assignment that results in an increased premium and/or requesting that we review the manner in which our rating system has been applied in connection with the insurance afforded or offered you.” Lee Decl. Ex. 4, p.28.
Oak River relies on P.W. Stephens, Inc. v. State Compensation Insurance Fund, (“P.W. Stephens”) (1994) 21 Cal.App.4th 1883, to contend that this procedure is mandatory and the court lacks subject matter jurisdiction to consider Melik Dye’s dispute. App. at 3; Reply at 10. Melik Dye properly distinguishes P.W. Stephens as rate dispute in which the court deferred to the expertise of the Commissioner and Workers Compensation Insurance Rating Bureau to require exhaustion of administrative remedies. 21 Cal.App.4that 1841-42. Melik Dye does not dispute the rates; it disputes the change in employee classifications and application of the rates to payroll. Opp. at 8-9. The Policy permits Melik Dye to follow this internal grievance approach, but does not require it to do so.
The amount owed is fixed and readily ascertainable.
- Probable Validity
Oak River asserts that it has established the probable validity of its breach of contract claim. App. at 4-8.
The elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) resulting damages to plaintiff. Oasis West Realty, LLC v. Goldman, (2011) 51 Cal.4th 811, 821.
Oak River’s evidence satisfies all four elements. As noted ante, an insurance contract existed between Melik Dye and was amended to include DJ Laundering and One Stop. Oak River performed its obligations under the contract by providing workers’ compensation coverage to Defendants, as demonstrated by its payment of seven claims presented under the Policy. Lee Decl. ¶25. Defendants breached the Policy by failing to make premium payments when due. Lee Decl. ¶23. Oak River has suffered damages as a result. Seeid.
Defendant Melik Dye initially contends that Oak River stated in a verified response to discovery that it sought recovery under policy MEWC601849, not the Policy (MEWC707102). Opp. at 15; Tran Decl. Ex. C, p.29. Melik Dye contends that this distinction should mandate denial of the instant application. Id.
While the initial discovery response was yet another mistake by Oak River, it has amended that error. Even Melik Dye concedes that the Policy is simply a renewal of the former policy. Opp. at 16. The amended discovery response does not defeat Oak River’s claim.
Melik Dye then contends that Oak River has not established that the Policy obligated Melik Dye to pay for the workers’ compensation insurance premiums of One Stop and DJ Laundering. Opp. at 15. It points out that the Endorsement expressly states that it must be countersigned if “issued subsequent to the preparation of the Policy.” Lee Decl. Ex. 4, pp. 48-49. Defendant Melik Dye contend that Oak River has not established that the Policy obligated Melik Dye to pay for the workers’ compensation insurance premiums of One Stop and DJ Laundering. Opp. at 16.
Defendants’ agent, KZ, requested Oak River to add DJ Laundering and One Stop to the Policy. Lee Decl. ¶16, Ex. 5. KZ did not ask that DJ Laundering and One Stop have separate policies, but rather that they be named insureds on Melik Dye’s Policy. KZ assumed that Oak River would require a Form 601, and it did. Lee Decl. Ex. 5. Labib, the president of all three Defendants, signed Form 601son behalf of Melik Dye to combine One Stop and DJ Laundering into Melik Dye for WCIRB purposes. Lee Decl. ¶16, Exs. 8-9. Accordingly, this is how Oak River treated them under the Policy.
This approach is grounded in the language of the Policy. The Policy states that “[i]t is a contract of insurance between you (the employer named in Item 1 of the Information Page) and us (the insurer named on the Information Page).” Lee Decl. Ex. 4, p.15. Whether “you,” refers to Melik Dye or all three Defendants, the result is clear. When the Policy states “[y]ou will pay all premium when due,” it means that each Defendant is liable for all premium incurred under the Policy. See Lee Decl. Ex. 4, p.19; see also Civ. Code §1659 (“Where all the parties who unite in a promise receive some benefit from the consideration, whether past or present, their promise is presumed to be joint and several.”).
Defendant contends that the Endorsement’s validity is contingent on a countersignature from Melik Dye. Opp. at 16. The Endorsement provides: “The endorsement changes the policy to which it is attached and is effective on the ate issued unless otherwise stated. ¶(The information below is required only when this endorsement is issued subsequent to preparation of the policy.)” and below this text features a countersignature line. Lee Decl. Ex. 4, pp. 50-51. Melik Dye contends that Oak River did not obtain its signature, thereby nullifying the Endorsement. Opp. at 16.
Oak River responds that the Endorsement need not be countersigned because only it signs that space and it is not disputing the validity of the endorsement. App. at 10. The court need not decide whether Oak River or Melik Dye is the “countersignor” because neither one did so. The issue is whether the Endorsement remains valid as a partly written, partly oral contract. In this regard, it is no different than the Policy, which is also unsigned.
It is clear that the parties intended the Policy, as amended by the Endorsement, to be a contract. The communications with Melik Dye’s broker, KZ, the Forms 601, and the parties’ performance under the endorsed Policy show as much. This countersignature requirement is inconsistent with the practice and main intention of the parties and is therefore rejected. Unlike Harrison v. Californai State Auto Assn. Ineter-Nis. Bureau, (1976) 56 Cal.App.3d 657, 665, the Policy does not state that require the “countersignature” of any party. Indeed, the Endorsement states that it is effective as of February 10, 2016 without the condition of a counter-signature. Lee Decl. Ex. 4, p. 50.
Defendants similarly contend that the Endorsement is barred by the statute of frauds. Melik Dye argues that the Endorsement seeks to hold Melik Dye liable for the debts of another, and it received no benefit from workers compensation insurance issued to DJ Laudnering and One Stop. Opp. at 17. Oak River admits that the audit takes place after the Policy expires, and was not capable of being performed in one year. Therefore, it is barred by the statute of frauds. Civ. Code §1624(a)(1). Opp. at 18.
A contract coming within the statute of frauds is invalid unless it is memorialized by a writing subscribed by the party to be charged. Civ. Code §1624; Secrest v. Security Nat. Mortg. Loan Trust 2002-2, (2008) 167 Cal.App.4th 544, 552. An agreement that by its terms is not to be performed within a year from the making thereof comes within the statute of frauds. Civ. Code §1624(a)(1). Contracts which may be terminated at will by either party can, pursuant to such terms, be performed within one year. Foley v. Interactive Data Corp., (“Foley”) (1988) 47 Cal.3d 654, 675 (oral employment contract outside statute of frauds if either party can terminate within a year).
In Dutton Dredge Co. v. U.S. Fidelity & Guaranty Co., (“Dutton”) (1934) 136 Cal.App. 574, 579, appellant argued that the insurance policy in dispute fell within the statute of frauds because it set forth a policy period of one year. Appellant conceded that the contract could be terminated at any time by either party after giving written notice. Id. The Dutton court concluded that the contract by its terms could have been performed within a few days because of the termination provision and, therefore, did not come within the statute of frauds. Id.
Foley and Dutton disprove Melik Dye’s contention. The Policy contains a cancellation provision which enables both parties to terminate the Policy via written notice to the other party. Lee Decl. Ex. 4, p.20. Policy protection thereby ends on the day and hour stated in the cancellation notice. Id. Because the parties had the ability to terminate the Policy within one year, the Policy is not subject to the statute of frauds.
Melik Dye argues that Dutton is inapplicable because it did not determine whether a parol contract of insurance was subject to the statute of frauds. Opp. at 19. This is a distinction without a difference. Dutton’s holding is that insurance contracts subject to termination within a year fall outside the statute of frauds.
Although the parties do not discuss it, there may be another reason why the statute of frauds does not apply. The statute of frauds does not apply to an oral contract fully performed. See Dallman Co. v. Southern Heater Co., (1968) 262 Cal.App.2d 582, 588. The parties entered into a contract – the Policy as amended by the Endorsement – for Oak River to provide workers compensation insurance. Oak River did so, and has covered the pertinent workers compensation claims. At the end of the Policy period, Oak River performed the final audit and billed Defendants for the additional premium. There appears to be nothing more for Oak River to do (although it is possible that the insurance has a “tail” for which Oak River must continue to pay claims). If true, then only Melik Dye has not performed by paying the final invoice. As such, the statute of frauds would not permit Melik Dye to use the statute of frauds to avoid payment when it has received every benefit from Oak Rivers.
Oak River has established the probable validity of its breach of contract claim.
- Attorneys’ Fees and Costs
Oak River seeks to attach estimated costs of $736.09 and attorneys’ fees of $5,816.49. Lee Decl. ¶27; Sauer Decl. ¶¶ 6-7. The Policy addresses actions filed with the superior court to collect the final audit premium due and owing under the Policy. Lee Decl. Ex. 4, p.45. The Policy provides that the prevailing party of such action is entitled to reasonable costs and attorneys’ fees. Id. Oak River is the prevailing party in this motion and supports these costs and fees with an attorney declaration. Oak River is therefore entitled to these sums.
The application for right to attach order is granted in the amount of $133,876.91. Plaintiff has not submitted a proposed right to attach order on the proper Judicial Council form, and must do so within two court days or it will not be signed. No writ of attachment shall issue until Oak River posts a $10,000 bond.
 Plaintiff Oak River wrongly characterizes its memorandum of points and authorities as merely a “Statement of Facts”. As Defendant Melik Dye points out, Oak River also fails to comply with CRC 2.109’s page numbering requirement and mis-numbers a footnote. Opp. at 8, n.1. The moving papers also refer to Plaintiff as “Cypress”, which is apparently a parent or sister company of Oak River. App. at 4, 8. See Lee Decl. Ex. 4, p. 1. None of these failures are material.
 Defendant Melik asks the court to judicially notice Oak River’s previous application for a right to attach order that was taken off calendar. There is no need to judicially notice documents in the court file.
The court has ruled on Plaintiff Oak River’s written objections. The court also has ruled on Defendant Melik Dye’s written objections by placing “O” for “overruled” and “S” for “sustained next to the objection, sometimes with a comment. Some objections were overruled under Fibreboard Paper Products Corp. v. East Bay Union of Machinists, Local 1304, Steelworkers of America, AFL-CIO, (1964) 227 Cal.App.2d 675, 712 (court may overrule objection if any portion of objected to material is admissible).
As Melik Dye has not filed a motion to seal Plaintiff Oak River’s conditionally sealed Exhibits 21 and 22, they are ordered to be filed unsealed. CRC 2.551(b)(3)(B).
 Melik Dye argues that the fact that Labib owns all three corporations is irrelevant because a corporation is a legal entity distinct from its shareholders. Opp. at 16. True, but Labib’s ownership explains why he would want all three to have a single Policy.