Judge: Ashfaq G. Chowdhury, Case: 22GDCV00296, Date: 2024-02-22 Tentative Ruling

Case Number: 22GDCV00296    Hearing Date: February 23, 2024    Dept: E

Hearing Date: 02/23/2024 – 2:00pm

Case No:  22GDCV00296
Trial Date: 04/11/2024

Case Name: AMERICAN CONTRACTORS INDEMNITY COMPANY, a California corporation, v. ARTHUR SARKISSIAN, an individual; ZHORA SARGISYAN, an individual; and DOES 1-50 inclusive

[PLAINTIFF’S MSJ/MSA] 

RELIEF REQUESTED
Plaintiff, American Contractors Indemnity Company (“ACIC”), by and through counsel, Lanak & Hanna, P.C., move the Court, pursuant to California Code of Civil Procedure §  437c, for an order granting summary judgment, or alternatively summary adjudication, against Defendant ZHORA SARGISYAN, an individual (“Defendant” or “SARGISYAN”) and in favor of ACIC (the “Motion”).

ACIC bases its motion on the grounds that it has established the elements of its claims, there are no triable issues of material fact as to the summary judgment sought, and that ACIC is entitled to judgment as a matter of law. ACIC argues that Defendant has no defenses to this straightforward breach-of0contract claim that would prevent the Court from granting summary judgment in favor of ACIC.

PROCEDURAL

Moving Party: Plaintiff, American Contractors Indemnity Company

Responding Party: Defendant, Zhora Sargisyan

Moving Papers: Notice/Motion; Separate Statement; Proposed Order; Kim Decl.; Baciocco Decl.; Proof of Service

Opposition Papers: Opposition; Separate Statement; Arthur Sarkissian Decl.; Zhora Sargisyan Decl.; Proof of Service

Reply Papers: Reply; Response to Defendant’s Additional Material Facts; Objections by ACIC to Evidence in Opposition

Proof of service timely filed (CRC 3.1300(c)): Ok

Correct Address (CCP §§ 1013, 1013(a)): Ok

75/80 Days

Under § 437c(2), notice of the motion and supporting papers shall be served on all other parties to the action at least 75 days before the time appointed for hearing. If the notice is served by mail, the required 75-day period of notice shall be increased by 5 days if the place of address is within the State of California. If the notice is served by facsimile transmission, express mail, or another method of delivery providing for overnight delivery, the required 75-day period of notice shall be increased by two court days. (CCP §437c(a)(2).)

Here, Plaintiff’s motion appears timely; further, Defendant did not object to the timeliness of the motion.

LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

CCP § 437c(a) provides that “a party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding.” The motion shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (CCP § 437c(c).) In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact. (Id.)

CCP § 437c(f)(1) states:

A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.

(CCP § 437c(f)(1).)

Further, CCP § 437c(f)(2) provides:

A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. A party shall not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court unless that party establishes, to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion.

(CCP § 437c(f)(2).

Further, for purposes of motions for summary judgment and summary adjudication:

A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant or cross-defendant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.

(CCP § 437c(p)(1).)

ANALYSIS

Plaintiff filed a Complaint against Arthur Sarkissian and Zhora Sargisyan on 06/07/2022 alleging two causes of action for (1) Breach of Contract and (2) Declaratory Relief against Defendants.

Generally speaking, Plaintiff argues as follows:

On or about April 6, 2017, Defendant SARGISYAN executed the written Indemnity Agreement (the “IA”), in favor of ACIC (as the surety). (Separate Statement of Undisputed Facts (“SSUF”) 1.) SARGISYAN’s signature on the IA was notarized. (SSUF 2.) In exchange for the IA and in reliance on Defendant’s promises to indemnify ACIC for all losses, costs, damages, attorney’s fees, and expenses, ACIC issued the BMC-84 Freight Broker Surety Bond No. 100281580 in the amount of $75,000.00 (the “Bond”), which named Defendant’s business, Wynn Logistics, Inc. (“Wynn”), as principal and the Federal Motor Carrier Safety Administration as obligee. (SSUF 3.)

Pursuant to Section 2 of the IA, Defendant SARGISYAN agreed that:

To indemnify Surety against all losses, liabilities, costs, damages, attorney’s fees and expenses the Surety may incur or has incurred due to the execution and issuance of the bond on, before, or after this date including any modifications, renewals or extensions of the bond or the enforcement of the terms of this indemnity agreement. (SSUF 4.)

ACIC received multiple claims on the Bond. (SSUF 5.) Following ACIC’s investigation of the claims, ACIC determined liability under the Bond was reasonably clear and ACIC issued payments from the Bond to settle the claims in various amounts totaling the entire penal sum of $75,000.00. (SSUF 6.)

On or about July 19, 2018, ACIC sent Defendant SARGISYAN correspondence to advise that ACIC would incur loss payment damages as a result of the claims against the Bond and that ACIC would demand reimbursement of the then-total sum of $75,000.00 pursuant to the terms of the IA. (SSUF 7.)

Thereafter, ACIC sent Notices of Reimbursement Due to Defendant SARGISYAN on July 10, 2019, October 21, 2019, July 9, 2020, and April 20, 2022. (SSUF 8.)

To date, Defendant SARGISYAN has failed and refused to take whatever actions necessary and appropriate to hold ACIC harmless from liability and expense, as agreed in the IA. (SSUF 9.)

The outstanding principal balance of $75,000.00 remains unpaid and due. (SSUF 10.)

The principal sum due and owing by SARGISYAN, under the terms of the IA, is continuing to accrue interest at the legal rate of 10% per annum form the dates each claim or expense was paid, through February 23, 2024. (SSUF 11.) The total interest accrued on the outstanding principal balance, from the dates the claim or expense payments were made on July 20, 2018, through the February 23, 2024 hearing date on this Motion, at the legal rate of 10% per annum, is $42,000.00. (SSUF 12.) Finally, under the terms of the IA, ACIC is also entitled to recover from Defendant SARGISYAN the attorney’s fees and costs incurred in the prosecution of the instant action. (SSUF 13.)

There is an actual controversy between the parties, ACIC and SARGISYAN, as to SARGISYAN’s rights and obligations under the IA. (SSUF 14.) ACIC’s claim against SARGISYAN arises out of his failure to reimburse ACIC pursuant to the terms of the IA, which he agreed to. (SSUF 15.) ACIC’s Loss Report is authentic and there is no dispute that the amounts listed therein were paid to the respective claimants by ACIC. (SSUF 16). There is no dispute as to the applicable interest rate to be charged, or as to the payment of reasonable attorney’s fees incurred to enforce the terms of the IA. (SSUF 17).

(Pl. Mot. p.3-4.)

Separate Statement

As a preliminary matter, Plaintiff’s formatting of the Separate Statement does not appear to comply with the formatting requirements in CRC Rule 3.1350(h) pertaining to motions for summary adjudication. Rule 3.1350(h), as to formatting the separate statement for summary adjudication, delineates each issue and the material facts and supporting evidence for each issue. Here, Plaintiff did not delineate which material facts and supporting evidence pertain to the two issues mentioned on page 2 of Plaintiff’s Separate Statement.

Further, Plaintiff did not appear to comply with CRC Rule 3.1350(d)(1).

CRC Rule 3.1350(d)(1) states that the Separate Statement of Undisputed Material Facts in support of a motion must separately identify: “(A)  Each cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion; and (B)  Each supporting material fact claimed to be without dispute with respect to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion.” (CRC, Rule 3.1350(d)(1)(A)-(B).)

In addition to Plaintiff arguing that it successfully established each element of each cause of action in the Complaint, Plaintiff’s motion also appears to attack the defenses in the answer such as fraud and unilateral or bilateral mistake defenses. However, Plaintiff did not put theses issues of the affirmative defenses into its moving Separate Statement.

First Cause of Action – Breach of Contract

“Indemnity agreements are construed under the same rules which govern the interpretation of other contracts.” (Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53 Cal.App.4th 500, 504 citing Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 969.)

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186 citing Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

(1)   The Contract

(2)   Plaintiff argues it satisfied this element by arguing:

Here, the existence of a written agreement, the IA, cannot be disputed. Defendant SARGISYAN entered into the IA on April 6, 2017. (SSUF 1.) As such, the existence of the IA and its terms cannot be refuted. The IA entered into between ACIC and Defendant SARGISYAN clearly identifies each of the terms of the agreement namely: in exchange for ACIC’s issuance of the Bond to the Principal Wynn, Defendant SARGISYAN agreed to indemnify and reimburse ACIC for “all losses, liabilities, costs, damages, attorney’s fees and expenses the Surety may incur or has incurred due to the execution and issuance of the bond on, before, or after this date including any modifications, renewals or extensions of the bond or the enforcement of the terms of this indemnity agreement.” (SSUF 4.)

(Pl. Mot. p. 6.)

(2) Plaintiff’s Performance of the Contract or Excuse for Nonperformance
Plaintiff argues it satisfied this element by arguing:

ACIC performed its obligations under the terms of the IA. (SSUF 3, 6.) Specifically, ACIC issued the Bond in consideration of Defendant SARGISYAN ’s execution of the IA and, in so doing was obligated to (and did) make payments from the Bond to certain parties making a claim on the Bond if ACIC determined the claims were valid. (SSUF 3.) As a result of its statutory obligations, ACIC incurred a loss in the principal amount of $75,000.00, which SARGISYAN was contractually obligated to reimburse. (SSUF 5, 6, 7.)

(Pl. Mot. p. 6.)

(3) The Defendant’s Breach
Plaintiff argues it satisfied this element by arguing:

Although Defendant SARGISYAN was contractually obligated to indemnify ACIC for the losses ACIC incurred due to the issuance of the Bond and, despite demands therefor, Defendant SARGISYAN has failed and refused to do so. (SSUF 1, 3, 4, 7, 8-10.) Such failure of indemnification constitutes a clear breach of the terms of the IA by Defendant SARGISYAN.

(Pl. Mot. p. 6.)

(4) The resulting damage to the plaintiff
Plaintiff argues it satisfied this element by arguing:

The issue of damages is self-evident based on Defendant SARGISYAN’s failure to reimburse ACIC, as agreed upon in the IA. ACIC has been damaged in the principal sum of $75,000.00, plus interest at the legal rate of 10% from the date each payment was made by ACIC to the claimants. (SSUF 10, 11, 12.) Further, ACIC has incurred substantial costs and attorney’s fees as a result of being forced to bring this lawsuit, which, under the IA, it is also entitled to recover. (SSUF 13.)

(Pl. Mot. p. 6.)

Opposition

Defendant’s general arguments against Plaintiff’s MSJ are asserted on pages 2-3 of the Opposition.

(1)   -The Contract

 The Opposition appears to dispute aspects of whether the contract actually existed. The Opposition cites to Civil Code §1550 which states, “It is essential to the existence of a contract that there should be: 1. Parties capable of contracting; 2. Their consent; 3. A lawful object; and, 4. A sufficient cause or consideration.” (Civ. Code §1550.)

Opposition argues there are triable issues of fact as to consent and consideration.

(1)-The Contract – Consent

The Opposition’s argument as to there being a triable issue of fact as to consent is confusingly written.

The Opposition argues:

To begin with, Mr. Sargisyan was not a freight broker at the time of signing of the indemnity agreement. A freight broker is one who for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. 49 CFR § 371.2. A freight broker must be registered with the U.S. Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA). 49 U.S.C. § 13904 (a). Along with other requirements, freight brokers must have a surety bond or trust fund of $75,000.00 in effect. 49 CFR § 387.307(a). Mr. Sargisyan did not need a surety bond made specifically obligatory for licensed freight brokers.

The consent of the parties must be freely given. Civ. Code §¿1565. An apparent consent is not real or free when obtained through duress, menace, fraud, undue influence, or mistake. Civ. Code §¿1567. Consent is deemed to have been obtained through one of the causes mentioned in the last section only when it would not have been given had such cause not existed. Civ. Code §¿1568. A mistake of fact may be urged as a defense to an action upon a contract only if the mistake is material to the contract. Edwards v. Lang (1961) 198 Cal. App. 2D 5,12; 18 Cal. Rptr. 60. Zhora Sargisyan mistakenly believed that he had to sign the agreement when told to do so by the notary. Mr. Sargisyan thought at the time that he was signing the document because it was getting notarized and not because he was being bound by an indemnity contract. Zhora Sargisyan Decla. ¶ 6. As silly or stupid as that may sound to us legal professionals, Mr. Sargisyan’s actions must be judged from the perspective of an unsophisticated 21 year old boy who at the time had never notarized anything much less know what a notary public’s functions are. Zhora Sargisyan Decla. ¶ 5.

Under the specific circumstances of this case, whether one is mistaken about being bound by an indemnity agreement specifically for freight brokers and required by federal law is extremely material to the contract. Had Mr. Sargisyan known that he was being bound by a surety agreement for freight brokers, he would not have signed the agreement.

The affirmative defense of unilateral mistake must relate to basic or material fact, not a collateral matter. Wood v. Kalbaugh (1974) 39 Cal. App. 3D 926, 932; 114 Cal. Rptr 673. “A ‘mistake’ within the meaning of subdivision (b)(1) of section 1689 of the Civil Code can be either one of fact or of law. ‘Generally a mistake of fact occurs when a person understands the facts to be other than they are . . . .’When both parties understand the facts other than they are, the mistake necessarily is mutual and thus becomes a basis for rescission.” Crocker-Anglo Nat’l Bank v. Kuchman (1964) 224 Cal. App. 2D 490, 496; 36 Cal. Rptr. 806.

There is a triable issue of material fact as to Mr. Sargisyan’s mistaken belief of what he was signing when he signed the indemnity agreement subject to this lawsuit. There are also triable issues of material fact as to Plaintiff’s mistake of believing that Mr. Sargisyan was an authorized representative of Wynn Logistics, Inc. or a licensed freight broker or somehow a part of Wynn Logistics freight business and the reasonableness of its belief. There is a triable issue of material facts as to what due diligence Plaintiff performed when, or if, it noticed that another person had signed the indemnity agreement. These material facts go to the essence of the indemnity agreement which are required by law only for freight brokers. As such summary judgment/adjudication should be denied.

(Def. Oppo. p.5-7.)

Discussion – Consent

The Court is not persuaded by the Opposition’s arguments on consent.

The Opposition cites the CFR, but the Opposition does not make it clear how the CFR is legally relevant to consent.

Further, the Opposition argues about mistake, and the Edwards v. Lang case that Opposition cited is inapposite in the instant context. The case cited by Opposition pertains to a mistake material to the contract, whereas Opposition is making arguments in the context of Defendant being mistaken about whether he had to sign the contract because the notary allegedly told him to do so.

The Reply cites to Marin Storage & Trucking, Inc. which states, “Every contract requires mutual assent or consent (Civ. Code, §§ 1550, 1565), and ordinarily one who signs an instrument which on its face is a contract is deemed to assent to all its terms. A party cannot avoid the terms of a contract on the ground that he or she failed to read it before signing.” (Marin Storage & Trucking, Inc. v. Benco Contracting and Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049.)

Further, the Opposition argues that “[t]here are also triable issues of material fact as to Plaintiff’s mistake of believing that Mr. Sargisyan was an authorized representative of Wynn Logistics, Inc. or a licensed freight broker or somehow a part of Wynn Logistics freight business and the reasonableness of its belief. There is a triable issue of material facts as to what due diligence Plaintiff performed when, or if, it noticed that another person had signed the indemnity agreement. These material facts go to the essence of the indemnity agreement which are required by law only for freight brokers.” (Def. Oppo. p. 6-7.) However, the Opposition does not cite any legal authority on these issues to support its argument.

The Reply cites inapposite case law pertaining to Sargisyan and his authority, or lack thereof, to sign. Reply cited Snukal v. Flightways Mfg., Inc. (2000) 23 Cal.4th 754, 782-83. Snukal deals with whether a corporation can be bound. Here, Plaintiff is not trying to bind the corporation, Plaintiff is attempting to make the argument that the individual Defendant Zhora Sargisyan can be personally bound.

The Defendant’s primary contention on this point appears to be that he, a 21-year-old individual who is apparently competent and does not suffer from any disability, somehow was forced or cowed by a Notary to sign the relevant document.

Mr. Sarkissian’s declaration appears to make clear that he received the notarized document—with Mr. Sargisian’s signature and the notation that Mr. Sargisian was a “Manager”—and sent this on to Plaintiff.

Is the Defendant claiming fraud or criminal wrongdoing by the Notary? Have claims been filed against the Notary? Is there a complaint that has been filed against the Notary? Mr. Sarkissian’s declaration suggests that the Notary committed fraud by listing Mr. Sargisyan as a Manager. There are presumptions attached to notarized documents, given the licensing requirements notaries must fulfill, and the oaths they must take.  (See, e.g., Evid. Code § 1451; Jacobson v. Gourley (2000) 83 Cal.App.4th 1331, 1334.)  

Is the Defendant alleging that the Notary violated an oath and committed fraud? If that is the allegation, it should be made clear.

Because in the absence of that, a possible view of the situation is that the Defendant was a part of the Wynn Logistics company, and his signature was added to as an Indemnitor to obtain the bond; the CEO of Wynn was aware of Sargisyan’s signature being added, sent the executed and notarized form to the Plaintiff, but now both Mr. Sarkissian and Mr. Sargisyan seek to avoid responsibility for the agreement they signed and had notarized.

(1) The Contract –A sufficient cause or consideration.

The Opposition argues there is a triable issue of fact because no contract existed between Plaintiff and Defendant because there was no mutuality of obligation.

Opposition argues as follows:

It is essential to the existence of a contract that there should be a sufficient cause or consideration. Civ. Code §¿1550. When parties attempt to make a contract and promises are exchanged as the consideration, the promises must be mutual in obligation. For the contract to bind either party, both must have assumed some legal obligation, and each of the reciprocal promises must have been given as inducement for the other promise at the time each party gave consent Mattei v. Hopper (1958) 51 Cal. 2d 119, 122, 330 P.2d 625; Jara v. Suprema Meats, Inc. (2004) 121 Cal. App. 4th 1238, 1249, 18 Cal. Rptr. 3d 187. Here, Plaintiff cannot show sufficient consideration given to Mr. Sargisyan as a required element in the formation of a contract. Plaintiff did not confer any benefit whatsoever to Mr. Sargisyan under the indemnity agreement. The benefit was conferred to Wynn Logistics, Inc. who was the freight broker in need of a surety bond. Plaintiff admits this in their moving papers and in their complaint. Complaint ¶ 10.

Consideration is an act or return promise, bargained for and given in exchange for a promise, which either gives a benefit to the promisor or imposes a burden on the promisee. Civ. Code §¿1605; Flojo Internat., Inc. v. Lassleben (1992) 4 Cal. App. 4th 713, 719, 6 Cal. Rptr. 2d 99; Peterson Tractor Co. v. State Board of Equalization (1962) 199 Cal. App. 2d 662, 670, 18 Cal. Rptr. 800. A promise alone, unsupported by consideration, is not enforceable and has no binding force. Western Lith. Co. v. Vanomar Producers (1921) 185 Cal. 366, 369, 197 P. 103. Merely signing the indemnity agreement by mistake does not make an enforceable contract. There was no bargain for an exchange. ACIC promised nothing to Mr. Sargisyan because Mr. Sargisyan was not a freight broker licensed under federal law nor was he in need of a surety for $75,000.00. Further, ACIC delivered absolutely nothing to Mr. Sargisyan. ACIC bargained with Arthur Sarkissian and issued him and his company a surety, which paid for losses caused by Wynn NOT Mr. Sargisyan. ACIC is pursuing Mr. Sargisyan in bad faith because it knows it cannot recover from Arthur Sarkissian because of Mr. Sarkissian’s chapter 7 discharge.

A party claiming breach must show that it conferred some benefit on the other party. Cal Civ Code § 1605; Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024, 1028-1029. Here there is a triable issue of material fact as to whether Plaintiff conferred any benefit to Mr. Sargisyan who did not receive anything in return by mistakenly signing the indemnity agreement for the surety bond. Mr. Sargisyan was not a freight broker and did not need a $75,000 bond to comply with federal laws and regulations. He mistakenly signed the agreement and Plaintiff is taking advantage of defendant’s ignorance. Plaintiff admits that several claims were made on the bond issued to Wynn Logistics, Inc., which it paid. There are triable issues of fact as to whether Mr. Sargisyan received any benefit whatsoever by the mere fact that Plaintiff paid on those claims when Mr. Sargisyan had nothing to do with the freight business of Wynn Logistics, Inc.

(Def. Oppo. p. 8.)

In Reply, as to the issue of consideration, Plaintiff argues:

“It is well established in California that, to maintain an action at law for breach of contract, one need only prove the existence of consideration, rather than its adequacy. See, e.g., Kremen v. Cohen, 337 F.3d 1024, 1028 (9th Cir.2003) (“The adequacy of consideration doesn't matter, but it must be ‘something of real value.’ ”)” Gallagher v. Holt (9th Cir. 2011) 436 Fed.Appx. 754, 755. A written contract, however, “is presumptive evidence of consideration.” Cal.Civ.Code § 1614.

The first sentence of the Indemnity Agreement states it is executed “[i]n consideration of American Contractors Indemnity Company…issuing the bond applied for, or any bond(s).” Defendant doesn’t dispute that ACIC issued the BMC-84 Freight Broker Surety Bond No. 100281580 in the amount of $75,000.00 (See Separate Statement of undisputed material facts ¶ 3) The argument that he did not receive a benefit from the issuance of the bond is without legal basis. A party to a contract can provide consideration by suffering a detriment (such as issuing a bond); there is no requirement that the other party obtain a benefit. See Civil Code § 1605. Regardless of whether Defendant considers that the issuance of bonds by ACIC was a benefit to him, it cannot be denied that their issuance was a detriment to ACIC since it potentially exposed ACIC to claims against those bonds and expenses in that connection. In fact, in this case that became more than just a potential exposure since ACIC actually did pay claims against its bonds and expenses. As such ACIC has proven consideration, and there is no issue of disputed fact.

(Pl. Reply. p. 5-6.)

Discussion – The Contract – A sufficient cause or consideration

Both parties cite to Civil Code § 1065 which states, “Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.”

The parties come to different conclusions when citing the same code section. The Opposition argues there was no bargained-for exchange, and Reply argues that regardless of whether Defendant considers the issuance of bonds by ACIC was a benefit to him, it cannot be denied that their issuance was a detriment to ACIC since it potentially exposed ACIC to claims against those bonds and expenses in that connection.

“It is essential to the existence of a contract that there should be: 1. Parties capable of contracting; 2. Their consent; 3. A lawful object; and, 4. A sufficient cause or consideration.” (Civ. Code § 1550.)

The Court is not persuaded by the Defendant’s arguments.

The parties seem to argue around the primary issue: What consideration is necessary for an indemnity agreement such as this one?

How, for example, is this case any different than the situation where a friend or relative signs as a guarantor on someone else’s lease? What does the friend or relative gain in that situation? It’s presumed that the friend or relative guarantor signs as a guarantor in order to help persuade the landlord to enter into the lease because the guarantor wishes that the apartment be leased (to their friend or relative). The guarantor in that situation does not need to sign the agreement as a guarantor; the guarantor does not receive a tangible or monetary benefit; but they receive the benefit of the lease being entered into by their friend or relative, which is something they are presumed to desire in the transaction. (See, e.g., Davenport v. Stratton (1944) 24 Cal.2d 232, 243-44 [noting that a contract of guaranty is executed in consideration of execution of the lease].)

The Defendant’s argument regarding consideration would, in the Court’s view, render every indemnity or guarantor contract void, where it could not be shown that the indemnitor or guarantor received some tangible benefit from the transaction.  That take on contract law appears to be contrary to basic contract principles.

TENTATIVE RULING

Defendant has failed to demonstrate there is a triable issue of material fact as to the existence of the contract

While it is true that “the question of adequacy of consideration is generally considered as a question of fact…” (Henderson v. Fisher (1965) 236 Cal.App.2d 468, 475,) the Court does not agree with Defendant’s consideration argument.

At its core, the Defendant’s argument seems to be that he was a “21-year-old boy [sic]” who was cowed by a Notary into signing legal documents and should therefore be excused from being bound by the legal documents he signed, in front of a notary, after producing his valid identification, etc. Defendant does not argue that he could not or had not opportunity to read the documents he signed. Defendant does not seem to argue that he could not read or object to his title being listed as Manager.

Defendant’s arguments all fly in the face of the general and ancient rule that competent adults are presumed to have read documents they sign.  The law effectively presumes that everyone who signs a contract has read it thoroughly, whether or not that is true. The basic rule of contract law is, “ ‘in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.’ ” (Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1588.) 

Plaintiff’s motion for summary judgment, or in the alternative summary adjudication as to the first cause of action for breach of contract is GRANTED.

Plaintiff’s motion for summary judgment, or in the alternative summary adjudication as to the second cause of action for declaratory relief is also GRANTED because it appears as if the declaratory relief claim is based on the results of the first cause of action for breach of contract.

In Reply, Plaintiff asserted objections to the Sarkissian Declaration and the Sargisyan Declaration on the grounds of hearsay, relevance, lacks foundation/speculation, and immateriality. It is not clear by any means as to what specifically in the Sarkissian and Sargisyan Declarations Plaintiff is objecting to. Since the Court is unclear as to what paragraphs in each declaration Plaintiff is objecting to, the Court overrules Plaintiff’s objections submitted in reply.