FS GiiKER Technology Co., Ltd. v. Cruz-Pizarro

Background

FS Giiker Technology Co., Ltd. alleged that Michael Gabriel Cruz-Pizarro breached an implied contract and committed fraud in connection with Giiker’s online TikTok store. Giiker alleged that the parties agreed Michael would hold the TikTok Shop account nominally and that the revenue would belong to Giiker. Giiker claimed that sales generated $380,120.35 in gross proceeds and that Michael owed it $321,620.35 after taxes and other amounts.

Giiker also alleged that Michael transferred control of the TikTok Shop account to Sniffy LLC and acted in concert with Edgardo Cruz and Elisa Cruz. Giiker asserted claims for breach of implied contract, fraud, unjust enrichment, and alter-ego liability. The opinion describes these claims as allegations; the court did not decide their ultimate merits.

Application

Giiker sought a right-to-attach order and writ of attachment for $321,620.35 against Michael’s bank accounts that had been used to receive, transfer, or hold TikTok Shop funds. It also sought attachment against the real property at 170 Plumas Court, San Bruno, California, titled in the names of Edgardo Cruz and Elisa Cruz. Giiker brought the application without first giving notice, arguing that notice would create a substantial risk that the defendants would transfer, conceal, or dissipate the assets.

Legal Standard

The court applied California attachment law. Under California Code of Civil Procedure section 485.220, a court may issue a prejudgment attachment order on an ex parte basis only if several requirements are met, including that the plaintiff establish the probable validity of the claim and show that it will suffer great or irreparable injury if the order is delayed until the defendants can be heard. California attachment law is strictly construed, and attachment before a noticed hearing is appropriate only in exceptional circumstances.

Court’s Analysis

The court focused first on whether Giiker had shown great or irreparable injury if attachment were delayed. It held that Giiker had not made that showing. The court noted that Giiker appeared to seek attachment of a bank account that had already been emptied. Even assuming the account contained funds, the court found Giiker’s evidence insufficient to establish exigent circumstances.

The court explained that Michael’s alleged failure to pay this disputed debt did not, by itself, establish the required emergency. Giiker alleged that Michael refused to sign a settlement agreement requiring payment, so the court concluded that the debt was subject to a genuine dispute.

The court also criticized the support for Giiker’s fraud allegations. It described those allegations as conclusory and found that statements in the submitted declarations about Michael’s communications concerning the parties’ agreement were hearsay. Giiker had not provided the underlying communications in which Michael allegedly agreed that all store proceeds belonged to Giiker or allegedly did not dispute that the bank funds were owed to Giiker. The court also found that Giiker had not identified conduct showing Michael agreed to turn over all TikTok Shop proceeds, after taxes, to Giiker.

The court found the allegations against Edgardo and Elisa even weaker. The evidence that they acted in concert with Michael or that alter-ego liability applied was primarily that Edgardo and Michael listed the same home address for their businesses. The court concluded that sharing a home address, given the different apparent nature of their businesses, did not strongly suggest that Edgardo or Elisa acted in concert with Michael. The court also found no evidence that any defendant was considering transferring or encumbering the residence or otherwise making it unavailable to satisfy a future judgment.

Disposition

The court denied Giiker’s ex parte application for a right-to-attach order and writ of attachment. The order did not resolve the merits of Giiker’s underlying claims.