Judge: Anne Richardson, Case: 22STCV33196, Date: 2023-12-21 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 22STCV33196    Hearing Date: December 21, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Access Road Capital, LLC sues Defendant Rive Gauche Television, Aftershock Comics, LLC, Jonathan M. Kramer, as an individual and as trustee of the Kramer Family Trust Dated April 11, 1994, Martha Kramer as trustee of the Kramer Family Trust Dated April 11, 1994, Joseph Thomas Pruett, Lee Andrew Kramer, Michael J. Marts, Jawad Qureshi, and Atlantic Screen Company.

The operative October 10, 2022 Complaint alleges claims of (1) Breach of Contract, (2) Money Lent (Common Count), (3) Judicial Foreclosure on Personal Property Security Interest, (4) Recovery of Personal Property, (5) Breach of Guaranty, (6) Judicial Foreclosure of Personal Property Security Interest in Membership Interests, (7) Judicial Foreclosure of Personal Property Security Interest, (8) Wrongful Possession of Personal Property in Rive Gauche Copyrights, (9) Judicial Foreclosure of Personal Property Security Interest in Aftershock Copyrights, (10) Wrongful Possession of Personal Property, and (11) Breach of Guaranty.

The claims arise from allegations that Access Road lent over $13 million to Rive Gauche and Aftershock (the Loan), that the borrowers are in default on the Loan, and that Defendant Jonathan M. Kramer is personally liable for the default up to $8 million as based on a guaranty agreement with Access Road.

On April 28, 2023, Access Road filed an affirmative motion for summary adjudication of the Complaint’s eleventh cause of action, i.e., breach of Jonathan M. Kramer’s personal guaranty of the Loan.

On October 16, 2023, Jonathan Kramer opposed the motion for summary adjudication.

On December 15, 2023, Access Road replied to the opposition.

Access Road’s motion is now before the Court.

Evidentiary Objections

In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review. (Code Civ. Proc., § 437c, subd. (q).) Evidentiary objections not made either in writing or orally shall be deemed waived. (Code Civ. Proc., § 437c, subd. (b).)

Reply Objections

Objection Nos. 1-6: Not ruled on as not material to disposition of motion.

Motion for Summary Adjudication

Legal Standard

A motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact for trial or that the moving party is entitled to a judgment as a matter of law. (Code of Civ. Proc., § 437c, subd. (c).) A party may also seek summary adjudication of select causes of action, affirmative defenses, claims for damages, or issues of duty, which may be made by a standalone motion or as an alternative to a motion for summary judgment and proceeds in all procedural respects like a motion for summary judgment. (Code Civ. Proc., § 437c, subds. (f)(1)-(2), (t); see Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th 1848, 1854-1855, questioned by dictum in Bagley v. TRW, Inc. (1999) 73 Cal.App.4th 1092, 1094, fn. 2 [finding that summary adjudication may be granted as to separate factual grounds supporting a claim stated as a single count because the separate grounds state a separate cause of action].) The moving party bears the initial burden of production to make prima facie showing no triable material fact issues. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) This burden on summary judgment or adjudication “is more properly one of persuasion rather than proof, since he must persuade the court that there is no material fact for a reasonable trier of fact to find, and not to prove any such fact to the satisfaction of the court itself as though it were sitting as the trier of fact.” (Id. at p. 850, fn. 11.) If the moving party meets this burden, the burden shifts to the opposing party to make a rebuttal prima facie showing that a triable issue of material fact exists. (Id. at p. 849.) “[I]n ruling on motions for summary judgment courts are to ‘“liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”’ [Citations].” (Cheal v. El Camino Hospital (2014) 223 Cal.App.4th 736, 760.)

I.

Complaint, Eleventh Cause of Action, Breach of Guaranty: DENIED.

I. Pleadings and Arguments by the Parties

The necessary elements for breach of written guaranty are: (1) that the defendant guaranteed payment of the indebtedness of the primary obligor to the plaintiff; (2) a default on the indebtedness; (3) that the plaintiff notified the guarantor of the default; and (4) that the guarantor did not remit funds to the plaintiff under the guaranty agreement. (See Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 819 [elements drawn from court’s discussion as to why bank was entitled to summary judgment on two breach of guaranty claims].)

The eleventh cause of action alleges that Rive Gauche and Aftershock—currently in bankruptcy proceedings—are in default of the Loan, that based on this default, Jonathan Kramer was required to cover the default in an amount up to $8 million, that Jonathan Kramer is in default based on failure to pay the guarantee amount, that Access Road has performed its contractual obligations, and that Access Road has been damaged in an amount no less than $8 million. (Complaint, ¶¶ 62-67.)

In its motion, Access Road argues that it has shown evidence to support all the elements of the breach of guaranty claim, that a guaranty is a valid agreement, that Jonathan Kramer has breached the guaranty by failing to perform after Rive Gauche and Aftershock’s default, that Access Road has been damaged in the amount of $8 million by Jonathan Kramer’s nonpayment, that no viable defenses to breach exist, and that Access Road is entitled to fees. (Mot., pp. 7-10.)

In opposition, Defendant Jonathan Kramer argues that Access Road has failed to his entitlement to summary adjudication because the guaranty agreement between Kramer and Access Road only makes him liable for up to $8 million in specific circumstances, which have not been shown in the moving papers. Kramer argues that the guaranty provides that he is liable up to $8 million based on Rive Gauche and Aftershock’s default if and only if Rive Gauche and Aftershock had gross earnings (EBITDA, an acronym that stands for Earnings Before Interest, Taxes, Depreciation and Amortization) of up to $2.5 million, and that the guaranty otherwise provides that if Rive Gauche and Aftershock had an EBITDA of $2.5 million to $5 million, the guaranty was lowered to $5 million, and if the EBITDA exceeded $5 million, the guaranty was lowered to $0. Kramer argues that because the moving papers fail to show that Rive Gauche and Aftershock’s EBITDA was less than $2.5 million, Access Road cannot show, for summary adjudication purposes, that Jonathan Kramer actually owes $8 million pursuant to the guaranty agreement. (Opp’n, pp. 2-4.)

Defendant Jonathan Kramer also argues that the motion should be denied because the separate statement fails to include an entry offering proof that Jonathan Kramer breached his personal guaranty, which is not automatically shown by evidence that Rive Gauche and Aftershock defaulted on the Loan. Kramer adds that triable issues remain as to the breach of guaranty claim because Access Road made statements that impeded Defendants’ ability to obtain a loan that would have satisfied the amounts owed to Access Road. In the alternative, Kramer seeks a denial of Access Road’s motion on the ground that Kramer needs a continuance to depose a third-party lender’s representative, who will be able to provide testimony to the effect that Access Road sabotaged Defendants’ attempts to obtain a new loan. (Opp’n, pp. 4-8.)

In reply, Access Road argues that the EBITDA argument is not proper because it is a defense and that, in moving for summary adjudication, Access Road need only show prima facie evidence of each element of its claim, not any evidence related to affirmative defenses raised by Jonathan Kramer. Access Road otherwise argues that Kramer’s performance under the guaranty agreement was not excused, and that Kramer is not entitled to a continuance on the hearing. (Reply, pp. 4-9.)

II. Discussion

The Court finds in favor of Defendant Kramer because Access Road has failed to meet its initial burden on summary adjudication.

Access Road seeks an order in its favor summarily adjudicating Access Road’s breach of guaranty claim against Jonathan M. Kramer in the amount of $8 million. (See Mot., p. 11 [“The Court should grant summary adjudication against Kramer on the eleventh cause of action in the amount of $8,000,000”]; Reply, p. 6 [“Plaintiff has been damaged in the amount of $8 million as a result of Kramer’s breach of the guaranty”].) In doing so, Access Road relies on the guaranty agreement. (See Mot., p. 8.) However, the guaranty agreement only makes Defendant Kramer liable for $8 million on any default on the Loan in the event Rive Gauche and Aftershock’s “EBITDA for any subsequent fiscal year falls below the EBITDA Benchmark” of $2.5 million or more” or the “2nd EBITDA Benchmark” of $5 million or more. (Mot., Shani Decl., Ex. 4, p. 1.) If Access Road is seeking an order awarding it $8 million on summary adjudication, as based on Defendant Jonathan M. Kramer’s breach of the guaranty agreement, then the Court needs evidence showing that the first and second EBITDA Benchmarks were not triggered. However, Access Road’s moving papers do not make such a showing. As a result, Access Road has failed to show, for summary adjudication purposes, that it is entitled to the $8 million it seeks from Jonathan M. Kramer.

Access Road argues that Defendant Kramer raises a mere defense, which is not a proper issue on the moving party’s burden for summary adjudication of a claim (Reply, pp. 3-4). The Court agrees with this as a general proposition, but disagrees with Access Road’s application of this general rule to this case. The $8 million figure is incorporated into the relief requested by Access Road in its motion. To show an entitlement to that amount, Access Road must show that the contractual provisions in the guaranty agreement support an order for $8 million in the event of a breach of agreement. The guaranty agreement shows that Guarantor guarantees all amounts due and payable under the Loan “up to an amount of eight million dollars,” but goes on in the same sentence to note that the $8 million shall be reduced “provided” that Rive Gauche and Aftershock’s earnings equal or exceed certain benchmarks. (Mot., Shani Decl., Ex. 4, p. 1.) Thus, the Court does not agree that this is a defense; rather, it forms part of the claim of entitlement to the $8 million, or an element of the cause of action. (Code Civ. Proc. § 437c subd. (p)(1); cf LAUSD v. Torres Construction Corp. (2020) 57 Cal.App.5th 480, 507 [plaintiff not required to disprove affirmative defenses such as lack of notice, statute of limitations, and damages not recoverable under bond].) No showing was made in the moving papers as to those earnings (EBITDA). A crucial portion of evidence supporting the $8 million is therefore missing and undercuts summary adjudication. To the extent that Plaintiff contends it has no such evidence because Defendant has refused to provide such relevant information, the remedy would be a motion to compel or for issue or evidentiary sanctions.

Access Road’s motion is thus DENIED. 

Conclusion

Plaintiff Access Road Capital, LLC’s Motion for Summary Adjudication is DENIED.