Judge: Colin Leis, Case: 21STCV45494, Date: 2023-04-17 Tentative Ruling

Case Number: 21STCV45494    Hearing Date: April 17, 2023    Dept: 74

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES – CENTRAL DISTRICT 

DEPARTMENT 74 

MOVING PARTIES:               Plaintiff Miso Construction, Inc.

RESPONDING PARTIES:    Defendants JooYoung Lee and Gwanggaeto, Inc.

Motion for Summary Adjudication.

The court considered the moving papers, opposition, and reply in connection with this motion.

BACKGROUND

            This action arises out of a contract dispute.

            On August 2, 2021, Plaintiffs Miso Construction, Inc. and Se Sik Park entered a Business Purchase Agreement (BPA) with Defendants Jooyoung Lee and Gwanggaeto, Inc. (Defendants). The BPA concerned the sale of sushi restaurant for $155,000. In addition, the parties entered an Early Takeover Agreement (ETA), whereby Plaintiffs Miso Construction, Inc. and Se Sik Park would hand over the lease and possession of the business to Defendants. The parties eventually agreed to an initial deposit of $50,000. The parties also entered a Seller Financing Agreement (FA), under which Defendants were obligated to pay Plaintiffs Miso Construction, Inc. and Se Sik Park the financing amount ($105,000) plus interest ($3,000) on a monthly payment plan beginning on November 15, 2021.

            On August 15, 2021, Defendants took over the business. Additionally, the parties executed an Addendum to the BPA, which states, “The seller has an active cooperation obligation until the buyer has completed issuing the [Alcoholic Beverage Control] license.”

            Starting in November 2021, Defendants did not make payments as required under the FA.

            On December 10, 2021, Plaintiffs Miso Construction, Inc. and Se Sik Park filed a complaint against defendants. In the complaint, Plaintiff Miso Construction, Inc. (Plaintiff) alleged breach of agreement, fraud, “restitution,” and “unfair/unlawful/fraudulent business practice.”

            On January 18, 2023, Plaintiff filed this motion for summary adjudication as to its claim for breach of agreement.

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 and that the moving party is entitled to a judgment as a matter of law.¿” (¿¿Code Civ. Proc., § 437c, subd. (c)¿¿.) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (¿¿Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850¿¿.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (¿¿Ibid.¿¿) Courts “¿liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.¿” (¿¿Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389¿¿.)

            A plaintiff moving for summary judgment must show that there is no defense to any of the asserted causes of action and does so by proving each element of the cause of action. (Code Civ. Proc., § 437c, subds. (a)(1), (p)(1).)

DISCUSSION 

            Summary Adjudication as to Plaintiff’s “Breach of Agreement” Claim.

            Establishing a claim for breach of contract requires a showing of “(1) the existence of a contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

            The parties do not dispute that they executed the BPA and FA with Promissory Note. (Undisputed Material Facts, at p. 3:18-22.) Nor do the parties dispute that the FA provides that the financed amount of $108,000 is to be paid in monthly installments of $6,000 beginning on November 15, 2021. (UMF, at p. 6:19-23.)

                        There is a Triable Issue of Material Fact as to Whether Plaintiff Satisfied the                               Conditions and Its Duties Under the Agreements.

            A condition is a fact, the happening or nonhappening of which creates or extinguishes a duty on the part of the promisor. (Civ. Code, §§ 1434, 1435.)  

            Plaintiff proffers evidence that it fulfilled its obligations and the conditions under the agreements by transferring possession of the business to Defendants when they deposited $50,000 with the escrow. (Jeong Decl., ¶ 18; Ex. 3; Ex. 26, 30:7-17.) According to Plaintiff, Defendants were thus obligated to pay Plaintiff the balance owed under the agreements. (Jeong Decl., ¶ 4; Ex. 3.) However, Defendants contend Plaintiff did not fulfill its duties under the agreements. Defendants provide an addendum to the BPA, under which Plaintiff agreed to cooperate with the State Department of Alcoholic Beverage Control (SDABC) and Defendants to complete the Alcoholic Beverage Control (ABC) license transfer. (Lee Decl., ¶ 8; Ex. H.) But Plaintiff was allegedly uncooperative in the transfer. (Lee Decl., ¶ 13.) Plaintiff failed to deposit money into the escrow to pay off its existing Economic Injury Disaster Loan (EIDL), which was necessary for the escrow to send notice to ABC to transfer the liquor license. (Lee Decl., ¶ 13; Ex. K.) The evidence further suggests Plaintiff was unwilling to send SDABC the necessary paperwork for the liquor license transfer. (Lee Decl., ¶ 14; Ex. K.) A triable issue of material fact thus exists as to whether Plaintiff satisfied the conditions and its obligations under the agreements.

                        There is a Triable Issue of Material Fact as to Whether Defendants Breached                    the Agreements By Refusing to Pay Plaintiff and Participate in Mediation.

            Wrongful failure to perform a contract is a breach. (Rest.2d Contracts, § 235.) A plaintiff must be free from default to avail itself of the remedies for the defendant’s breach, meaning the plaintiff must plead and prove the plaintiff’s performance or an excuse for nonperformance. (See Pry Corp. of America v. Leach (1960) 177 Cal.App.2d 632, 639 [holding party could not recover because evidence showed that party breached conditions precedent].)

            Plaintiff argues that Defendants have breached the agreements because they failed to pay Plaintiff as required under the FA and Promissory Note. (Motion, at p. 8.) To that end, Plaintiff submits Defendant Lee’s deposition testimony and an email. (Jeong Decl., ¶¶ 4, 18; Ex. 12; Ex. 26.) Defendants, for their part, offer evidence suggesting that they did not breach the agreements; rather, nonpayment was justified in light of Plaintiff’s conduct. As noted above, Plaintiff allegedly did not perform its obligations under the agreements with respect to the ABC license transfer. (Lee Decl., ¶¶ 8, 13, 14; Ex. H; Ex. K.) Moreover, Defendants add that Plaintiff allegedly failed to disclose electrical and water problems with the business in violation of the Seller’s Disclosure Statement. (Lee Decl., ¶ 7; Ex. F; Ex. G.) Lastly, Defendants proffer evidence that they were amenable to mediation and even participated in one such proceeding. (Lee Decl., ¶ 18; Ex. O.)

            Thus, there is a triable issue of material fact as to whether Defendants breached the agreements.

                        There is a Triable Issue of Material Facts as to Whether Defendants Have No                   Excuse or Justification for Their Nonpayment to Plaintiff.

            Prevention or hindrance of the other party’s performance under a contract operates as an excuse for the performance. (Civ. Code, § 1511; Taylor v. Sapritch (1940) 38 Cal.App.2d 478, 481.) Plaintiff questions Defendants’ claim that their alleged breach was justified or excused. (Motion, at p. 8.) By contrast, Defendants provide email between Defendants and Plaintiff’s attorney, which in context suggests Plaintiff failed to provide an address or bank account for receipt of the installment payments. (Lee Decl., ¶ 16; Ex. N.) Moreover, the email exchange could suggest that Plaintiff refused to meet Defendants in person for payment. (Lee Decl., ¶ 16; Ex. N.) These disputes create a triable issue of material fact as to whether Defendants have an excuse or justification for nonpayment.

CONCLUSION

              The court denies Plaintiff’s motion for summary adjudication as to its second cause of action for “breach of agreement.”

             Defendants are ordered to give notice of this ruling. 

IT IS SO ORDERED. 

DATED:  ¿April 17, 2023

_____________________________ 

Colin Leis 

Judge of the Superior Court