Judge: David A. Hoffer, Case: 30-2020-1143293, Date: 2022-09-19 Tentative Ruling

Plaintiff Balboa Capital Corporation’s Motion for Summary Adjudication is GRANTED. (C.C.P. § 437c.)

Plaintiff met its initial burden to show each element of its causes of action for breach of financing agreement, breach of guaranty, and indebtedness. (See Code Civ. Proc., § 437c, subd. (p)(1) [burden]; Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1124 [same]; Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [elements of breach of contract]; Gray1 CPB, LLC v. Kolokotronis (2011) 202 Cal.App.4th 480, 486 [elements of breach of guaranty]; Farmers Ins. Exchange v. Zerin, (1997) 53 Cal. App. 4th 445, 460 [elements of indebtedness]; see generally, Plaintiff’s SSUF.)

Defendants failed to meet their shifted burden to show triable issues of material fact. (See Code Civ. Proc., § 437c, subd. (p)(2); Food Safety Net Services, supra, 209 Cal.App.4th at 1124.) 

Defendants do not dispute that Galleria Medical Suites, LLC (“Galleria”) entered into the Equipment Financing Agreement (“EFA”) and that Galleria stopped paying Plaintiff under the EFA.  Instead, Defendants argue they were excused from performing under the contract due to impracticability of performance and frustration of purpose, as a result of the impact of the COVID-19 pandemic and related governmental shutdown orders.

Defendants cite cases from other jurisdictions that are not binding on this court. Defendants cite no controlling California law holding that the pandemic excuses repaying a commercial loan.

Here, the COVID-19 pandemic was an unprecedented and unforeseeable event. However, the evidence Defendants presented does not raise a triable issue of material fact as to whether Defendants’ performance was excused. (See Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1336, also citing Lloyd v. Murphy (1944) 25 Cal.2d 48 (Lloyd) [discussion of doctrines of impracticability of performance and frustration of purpose].)

Defendants contend that as a result of the COVID-19 pandemic and state of emergency declared by the Governor of Florida (where Galleria was located), a mandatory stay-at-home order was issued which closed all non-essential businesses. (Mileo Decl. [ROA 125], ¶ 7.) Defendants state that, as a result of the orders, Galleria was forced to close its business from shortly after March 9, 2020 to September/October 2020, and, when it reopened, it was only open two days a week. (Id. at ¶¶ 7-8.)

Defendants did not provide a copy of the State of Florida’s stay-at-home orders and did not show that Galleria’s business is non-essential. Although admissible evidence in opposing declarations is liberally construed (Bozzi v. Nordstrom, Inc. (2010) 186 Cal.App.4th 755, 761), without the orders, it cannot be determined what the orders actually said. Thus, Defendants failed to raise a triable issue as to the defenses of impracticability and frustration of purpose.

Defendants also argue that the EFA’s purported waiver of defenses provision is unconscionable. Unconscionability is a question of law. (Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 621 [elements of unconscionability].) Here, Defendants failed to show procedural unconscionability. There are no facts presented showing Defendants did not have a proper opportunity to negotiate the terms of the EFA with Plaintiff. There are no facts presented showing that Defendants were required to obtain financing only through Plaintiff and could not have chosen another lender. There are no facts presented showing the transaction was anything less than an arms-length negotiation.

Thus, Defendants failed to raise a triable issue of fact regarding unconscionability. (See Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App. 3d 758, 768-772 [rejecting claim of unconscionability where, although it was conceded for purpose of argument that “some measure of substantive unconscionability might be present,” lack of either “oppression” or “surprise” defeated procedural element of unconscionability].)

Accordingly, the motion is granted.

Plaintiff’s request for judicial notice (ROA 132) is GRANTED as to the existence of and legal effects of the records, but not as to the truth of any disputed facts asserted therein. (Ev. Code §452(d); Fontenot v. Wells Fargo Bank, NA (2011) 198 Cal.App.4th 256, 264; Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)

Defendants’ evidentiary objections (ROA 127) are OVERRULED as to objection nos. 3, 4, 5, 8, 9 and 10. The Court declines to rule on objection nos. 1, 2, 6 and 7 as not material to the disposition of the motion (Code Civ. Proc. §437c(q)).

Plaintiff’s evidentiary objections (ROA 130) are OVERRULED as to objection nos. 1, 2, 5, 6 and 7 and SUSTAINED as to objection nos. 3 and 4 (lacks foundation/hearsay).

The moving party is ordered to give notice and to provide a proposed order.