Plaintiff’s Motion to Increase Bond
5 Pacific Stone Plaintiff's Motion to Increase Bond Construction, Inc. vs. Rafipoor Plaintiff Pacific Stone Construction, Inc.’s motion to increase bond is GRANTED. The bonds posted by certain of the PKG Parties are to be increased as follows no later than July 10, 2026:
• Santa Brassy, Inc. is to post an increase of $291,100.11. • Santa Broadway, Inc. is to post an increase of $283,857.42. • Santa Cerritos, Inc. is to post an increase of $98,849.32. • Santa LBX, Inc. is to post an increase of $293,917.81. • Santa Mix, Inc. is to post an increase of $64,252.05.
EVIDENTIARY MATTERS
PSC’s unopposed request for judicial notice of various filings in this Court and liquor license documents from the California Department of Alcoholic Beverage Control (ROA 541) is GRANTED.
The PKG Parties’ evidentiary objections (ROA 589) to the declaration of Michael Collins (included in ROA 543) are OVERRULED. As to the CCP § 996.010(b) objection, the statute simply requires that a motion to increase the bond be supported by an “affidavit.” The statute says nothing about the required contents of the affidavit, let alone that it must include the specific information the PKG Parties demand in their opposition brief. As to the foundation and hearsay objections, the facts set forth in the moving papers, which Collins verifies in his declaration, are easily gleaned from the documents the Court has already granted judicial notice of.
GROUNDS FOR RULING
The Court entered judgment in this matter on 08/14/24, with interest accruing at the rate of 10% beginning 10/31/23. (ROA 438.) In a minute order dated 10/25/24, the Court granted the PKG Parties’ motion to reduce the bond, allowing them to post the principal rather than 1.5 times the principal (if the bond were given by an admitted surety) or twice the principal (if the bond were given by anyone else). In granting the motion, the Court noted that while the PKG Parties were having financial issues that prevented a statutorily compliant bond, profit was trending upward. (ROA 478 at p. 2.) Accordingly, the Court ordered the PKG Parties to post bonds totaling
$4,175,959.
The PKG Parties appealed the Court’s judgment against them. The Court of Appeal affirmed in an unpublished decision. (Pacific Stone Construction, Inc. v. Santa Mix, Inc. (2026) 2026 WL 866345.) Last month, the PKG Parties petitioned the California Supreme Court for review. (Pacific Stone Construction, Inc. v. Santa Mix, Inc., S296584.) All the while, interest has continued to accrue. As set forth in a table at page 5 of the moving papers, the balance as of filing of this motion was $5,207,935.72.
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CCP § 996.010(a) provides: “If a bond is given in an action or proceeding, the court may determine that the bond is or has from any cause become insufficient because the sureties are insufficient or because the amount of the bond is insufficient.” Upon finding the bond insufficient, the court “shall order that a sufficient new, additional, or supplemental bond be given within a reasonable time not less than five days.” (CCP § 996.010(c).) Section 996.010 “reflects a common sense view that the sufficiency of the undertaking should be assessed in light of those sums which it may be required to satisfy, not in light of the formula for initially setting the amount of the undertaking.” (Grant v. Superior Court (1990) 225 Cal.App.3d 929, 938.) Accrued interest is a “proper factor[] for the trial court to consider in ruling on” a § 996.010 motion. (Ibid.)
The PKG Parties now owe over a million dollars more than the amount secured by the bonds they posted. Exercising its discretion, the Court finds the bonds insufficient. The PKG Parties are ordered to post supplemental bonds in the amounts noted above, which will result in a total of $5,207,935.72 in bonds. In addition, the Court notes that the PKG Parties have valid, active liquor licenses, suggesting their business continues on an upward trend.
Apart from their argument about the content of the Collins Declaration, rejected above, the PKG Parties offer four reasons the motion should be denied. The Court disagrees on all counts.
First, they contend Grant is factually inapposite because the court in that case originally set the bond at the full statutory amount, and the judgment creditor later asked the court to exercise its discretion to increase the bond over the full statutory amount. Here, the PKG Parties argue, the Court has already exercised its discretion to set a bond different from the statutory amount. This argument might be persuasive if PSC argued an increase was
required by Grant, but PSC simply asks the Court to exercise its discretion anew. Nothing in Grant prevents such an exercise of discretion.
Second, they point to the following language in Grant: “Likewise, we do not mean to imply that, just because sometime in the future the bond will become insufficient due to increasing interest, the bond can be increased before it reasonably is necessary to assure the judgment creditor of the security to which he or she is entitled.” (Grant, supra, 225 Cal.App.3d at p. 939.) This language concerns a scenario not before the Court. With already accrued interest, the prior bond is indisputably insufficient to secure the judgment. This is not a bond that will “become insufficient” at “sometime in the future.” The bond is insufficient now.
Third, the PKG Parties argue the Court has already accounted for post- judgment interest by excluding it from the original bond because they couldn’t afford to cover both principal and interest. This argument fails to consider the evidence before the Court in October 2024, which showed that while the PKG Parties were unable to afford both principal and interest at that time, profits were “either stable or trending upwards.” (ROA 456 at p. 5.) The Court took the PKG Parties’ evidence and argument at face value.
Two years of stable or upward-trending profits have passed, and the evidence reflects the PKG Parties remain going concerns, in that they have valid liquor licenses. Nothing in the record indicates the PKG Parties’ own characterization of future business expectations was incorrect, so it stands to reason that what they can afford today is different from what they could afford nearly two years ago.
Fourth, they argue PSC has failed to show “a real, substantial possibility, not just speculation,” that the bond is insufficient. (Grant, supra, 225 Cal.App.3d at p. 938.) Again, the bond is indisputably insufficient to secure the judgment. Nearly two years of interest have accrued. The Court is permitted to consider this accrual under Grant, and it is also permitted to consider two years of what the PKG Parties themselves called stable and upward-trending profits.
For all of these reasons, in the exercise of its discretion, the Court concludes the bonds should be increased as set forth above.
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