Morton Regent Enters., Inc. v. Leadtec Cal., Inc.

Morton Regent Enterprises, Inc. (Regent) is a distributor of men’s pants. Leadtec California, Inc. (Leadtec) manufactures those items. Regent contracted with Leadtec whereby Regent would furnish bulk material to Leadtec and Leadtec would manufacture a quantity of men’s pants for Regent.

During the performance of the contract a dispute arose between Leadtec and Regent. Regent brought an action for breach of contract and to recover possession of $18,000 worth of the bulk material which had been shipped to Leadtec. Regent availed itself of the provisional remedy of claim and delivery and recovered several thousand yards of fabric which had been provided to Leadtec. Highlands Insurance Company of Houston, Texas (Highlands) provided the surety bond in the amount of $36,000 as required by former Code of Civil Procedure section 511, subdivision (b) (now Code Civ. Proc., § 515.010).

Leadtec filed an answer which, among other things, denied that it had possession of the material because it had already been replevined. Leadtec also filed a cross-complaint for breach of contract and fraud. The cross-complaint prayed for money due for work performed and punitive damages for the…