When a business delivers goods to a customer and receives no payment, obtaining a judgment may take months or longer. A prejudgment writ of attachment can help secure the defendant’s assets while the lawsuit proceeds.
But must the creditor prove that the defendant is insolvent or attempting to hide its assets before obtaining attachment?
For an ordinary noticed application, the answer is no. California law draws an important distinction between a regularly noticed application and an emergency ex parte application.
A Noticed Application Does Not Require Insolvency
Under California Code of Civil Procedure section 484.090, a court must issue a right-to-attach order when the statutory requirements are satisfied. These include an attachment-eligible claim, probable validity of that claim, a legitimate recovery purpose, and a positive amount to be secured.
Under section 483.010, attachment generally applies to contractual monetary claims involving a fixed or readily ascertainable amount of at least $500, subject to additional statutory limitations.
Neither statute requires proof that the defendant is insolvent, concealing assets, or experiencing financial distress.
In Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, the Court of Appeal explained that probable validity requires the plaintiff to demonstrate that it is more likely than not to obtain judgment. The court emphasized the importance of competent declarations and properly authenticated business records.
Thus, a seller seeking attachment for unpaid merchandise should focus on establishing the contract, delivery, outstanding invoices, and the amount owed. The seller does not need to prove that the buyer is approaching bankruptcy.
Ex Parte Attachment Requires an Additional Showing
The requirements change when the plaintiff seeks an attachment order without waiting for a regularly noticed hearing.
Under Code of Civil Procedure sections 485.010 and 485.220, an ex parte application requires evidence that delaying attachment would cause great or irreparable injury.
Section 485.010 identifies several circumstances that may satisfy this requirement, including a danger that assets will be concealed or made unavailable for levy, or evidence that the defendant has failed to pay the underlying debt and is generally not paying undisputed debts as they become due.
Insolvency is one recognized basis for emergency attachment, but it is not the only one. Evidence of impending asset transfers or other circumstances establishing the statutory danger of delay may also support an ex parte application.
What California Courts Have Said
In California Retail Portfolio Fund GMBH & Co. KG v. Hopkins Real Estate Group (2011) 193 Cal.App.4th 849, the Court of Appeal addressed a related setting: attachment in aid of arbitration under section 1281.8.
When the underlying dispute is subject to arbitration, a court may grant attachment only if the applicant also shows that the arbitration award to which it may be entitled may be rendered ineffectual without provisional relief.
The court held that the criteria in section 485.010, the provision governing ex parte attachment, provide guidance on that question. It affirmed an attachment order where the evidence indicated that the defendant was not paying its debts and might be unable to satisfy an award.
Insolvency is not an absolute requirement in that setting either. The court recognized that other evidence of serious financial distress, or of the debtor’s inability to satisfy an eventual award, may be sufficient.
The decision illustrates where a debtor’s financial condition becomes relevant: in emergency ex parte applications and, by reference to the same criteria, in attachments sought in aid of arbitration. Neither showing is required for an ordinary noticed application in a civil lawsuit, which is governed by the findings listed in section 484.090.
What This Means for Unpaid Commercial Transactions
Suppose a supplier delivers $500,000 in merchandise, the buyer refuses to pay, and the supplier has no evidence that the buyer is insolvent.
The supplier may still seek a prejudgment writ of attachment through a regularly noticed application, provided the statutory requirements are met.
If the supplier instead seeks immediate ex parte relief, it must establish the additional danger of delay required by section 485.010.
The distinction is consequential. A creditor should not abandon an otherwise viable attachment application simply because it cannot prove insolvency. Choosing the correct procedure and presenting admissible evidence of the underlying debt are often more important.
Legal Authorities
- Code of Civil Procedure § 483.010 — official text
- Code of Civil Procedure § 484.090 — official text
- Code of Civil Procedure § 485.010 — official text
- Code of Civil Procedure § 485.220 — official text
- Code of Civil Procedure § 1281.8 — official text
- Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937 — official opinion
- California Retail Portfolio Fund GMBH & Co. KG v. Hopkins Real Estate Group (2011) 193 Cal.App.4th 849 — opinion
Related practice areas: Creditor Rights and Judgment Enforcement · Civil Litigation