Judge David J. Cowan, Case Number: 21STCP03455, Date: 2023-05-25 Tentative Ruling

Consistent with its ruling on the application of plaintiff Bank Otkritie Fin. Corp. (“Bank”) for a right to attach order, in the context of this summary judgment motion, the Court finds Bank meets its burden of proof under California Code of Civil Procedure (“CCP”) sec. 437c(p)(1). Pursuant to that same CCP section, the burden is then switched to defendant Aleksandr defendant Aleksandr Blyumkin (“Blyumkin”) to prove his affirmative defenses.

The Court finds three of those affirmative defenses to be unsupported and without merit, and in particular, the claims that the Russian court lacked personal jurisdiction over Blyumkin, that the Russian court was a seriously inconvenient forum and as to the integrity of that court.

However, pertinent to this motion, the Court is concerned by whether the Russian court’s handling of this matter met the requirement of complying with due process. Specifically, the Court questions why the Russian court might not have informed Blyumkin of its implicit rejection of his several requests to continue the trial, given the COVID travel restrictions, prior to hearing the merits, to give Blyumkin notice that he would need to find some other way to defend the case, either remotely (if possible) or through a lawyer appearing on his behalf. There is no evidence that the Russian court informed Blyumkin that it was going to proceed forward notwithstanding his request for postponement.

The foregoing might have been material here where Blyumkin provided evidence that could have been a whole or partial defense to the case; namely, that Bank did not return to him the collateral he provided for his guaranty that would presumably have been exonerated by the material change in the terms of the loan (and which could have been used to pay off the loan.)

If the stock had the value Blyumkin contends it had when the second loan was executed, that might have eliminated what Blyumkin owes to Bank. However, presumably if the stock then had that value it is not clear why Bank would not have sold that stock instead of entering into a new unsecured loan with Blyumkin rather than with the prior borrower whose stock it held. However, neither Bank nor its expert Dr. Ilia Rachkov (in an otherwise very detailed report) (nor the Russian court) addressed this issue. As a result, Blyumkin has met his burden on this motion of presenting facts that create a material issue as to recognition of the default judgment.

Furthermore, assuming the Russian court could have notified (but did not) Blyumkin of its denial of his requests for continuance the hearing prior to reaching the merits, and that Blyumkin might have had a viable defense if given the opportunity, there is at least some basis upon which the Court as trier of fact might reasonably conclude that there was a failure of due process that would be reason for this Court not to recognize the foreign judgment. Blyumkin never had his “day in court” prior to the issuance of this judgment. Given these facts not previously considered on the application for the right to attach order, the Court cannot now conclude as a matter of law that the Russian proceeding here was “fundamentally fair” where it did not permit Blyumkin to contest this case, either by postponing it as he requested to when he could appear in person or by notifying him that he would instead need to participate in one of the ways Bank suggests. Blyumkin has presented evidence sufficient for this motion that the Russian court’s severe order to deny his request to continue trial on the basis that it was supposedly for purposes of delay does not comport with his reasonable expectations to his “day in court.” Bank’s assertion that Blyumkin could have participated remotely is put into question by Blyumkin’s claim that he inquired into his ability to do so and was allegedly advised that the court did not have the technology to allow him to do so.

On September 19, 2022, Bank filed this motion for summary judgment. Bank seeks recognition of a judgment of the Tagansky District Court in Russia. The motion was supported by a report of an expert, Dr. Ilia Rachkov, a Russian lawyer.

Rachkov explains that the judgment arises from non-payment of a 216 million rubles loan for one year (Agreement 6281) that a predecessor of Bank made to Blyumkin on March 18, 2016. This loan was a refinance of an earlier loan (Agreement 5818) of September 18, 2013 to MCW Energy (“MCW”) that Blyumkin guaranteed by pledge of stock in MCW. Blyumkin failed to pay the remaining amount owed on the due date of March 17, 2017. On May 6, 2020, Bank filed a Statement of Claim in the Tagansky Court seeking the unpaid principal amount, past due interest, certain penalties (delay fees) on the debt and interest, as well as State duty. On July 1, 2020, Bank served Blyumkin with the Statement by DHL courier. On October 12, 2020, the Court entered judgment, which judgment became final after Blyumkin’s appeal was dismissed for technical reasons.

Based on Rachkov’s report, Bank sets forth why this Court should recognize the judgment under CCP sec. 1715 and 1718. In addition, Bank explains why Blyumkin cannot establish a defense under CCP sec. 1716(b); specifically, that the Russian court had personal jurisdiction over Blyumkin, that in any event Blyumkin waived any claim of lack of personal jurisdiction and that the Russian court had subject matter jurisdiction over the civil action.[1] In addition, Bank explains why Blyumkin cannot establish a defense under CCP sec. 1716(c); specifically, that he had sufficient notice of those proceedings, the judgment was not obtained by fraud, the judgment is not repugnant to public policy, the Russian court was not an inconvenient forum and that the judgment was not entered under circumstances impacting the integrity of that court.[2]

On October 22, 2022, as the result of a motion to dismiss this case filed by Blyumkin, the Court issued a stay of this case due to the need for Bank to obtain a specific license to further pursue this case under an Executive Order of President Biden arising from the war in Ukraine. This motion was as a result continued.

On November 22 2023, Bank having obtained a specific license to pursue this case, the Court lifted the stay and denied Blyumkin’s third motion to dismiss this case.

On March 7, 2024, the Court granted the contested application of Bank for a right to attach order and writ of attachment and issued a written ruling that addresses certain of the issues on this motion. The Court found that Bank’s claim had probable validity. On page 7, fn. 6, however, the Court stated:

A finding of probably validity of the claim does not mean that the Court is now finding Blyumkin has no defense to Bank’s case. To the extent that the underlying merits are relevant (which Bank contends they are not under CCP sec. 1716), there are several points that the parties may need to explore further; for example, why Bank allegedly did not return the collateral on the first loan, why Blyumkin became the borrower under the second loan and how Blyumkin could have borrowed the funds Bank states were transferred if the initial borrower was not able to repay what it owed. In addition, it is unclear whether the Tagansky Court should have advised Blyumkin it was denying his request to continue the case before proceeding to hear it. Blyumkin did not support this claim with any evidence or law to warrant denial of this application.

On March 8, 2024, Blyumkin filed his opposition to this motion and related documents:

Blyumkin asserts that he estimates the almost six million shares in MCW he pledged as security for the earlier loan was “at that time” trading at about $0.30 per share. The guaranty was non-recourse. The due date on the earlier loan was extended by an amendment to loan agreement on September 15, 2015. As consideration, Blyumkin transferred a total of 8,764,829 shares to Bank as collateral for his (and other guarantors) continuing guaranty. At that time, the pre-split stock in MCW was trading “in the range of up to $.40 / share.” In view of the inability of MCW to repay the loan, Blyumkin agreed to repay in one year what MCW borrowed by way of a new loan agreement dated March 18, 2016. Blyumkin asserts that at that time MCW stock was trading in the Canadian public market at around $.40 per share and “Bank would have been able to obtain anywhere from $3.5 million to $4 million (U.S.) for the Pledged Stock.” (Blyumkin Decl., para. 16) Blyumkin requested return of the stock certificates. Bank advised Blyumkin that it had lost the certificates and could not be returned. (Blyumkin speculates that Bank may have sold the stock through brokers.) Blyumkin contends that had Bank sold the stock the second loan would not have been necessary and the earlier loan would have been paid off. He asserts that the second loan was a sham whereby Bank avoided having to declare a default on the first loan and by not returning the certificates could still sell the stock. Finally, Blyumkin contends that Bank did not disclose the issues surrounding the stock to the Russian court.

Blyumkin explains that on or about July 1, 2020 he received notice from Bank by mail of the suit in Russia in the form of the documents Bank had filed in the Russian court.[3] There was no summons from the Russian court. By then, Blyumkin could not return to Russia (to defend the case) and could not do so until after entry of the judgment against him by reason of the COVID travel bans of the Russian Government and his inability as a U.S. citizen resident in Los Angeles to obtain a visa. (Blyumkin Decl., para. 28) He therefore requested a postponement of hearings in the case by letter dated July 15, 2020, to which he received no response. He followed up on this request by letters to the Court dated August 5, 2020 and September 1, 2020. He again received no response. Upon discovering that the judgment had been entered against him on October 12, 2020, Blyumkin sent letters to the relevant courts related to his wish to appeal from the judgment given the foregoing circumstances, two dated November 3, 2020 and in turn on November 20, 2020 and December 8, 2020. Blyumkin received no response to any of these letters either.

Blyumkin makes the following arguments under CCP sec. 1716(b) related to recognition of a foreign judgment:

1. The Russian court lacked a basis to exercise personal jurisdiction “that would be sufficient according to the standards governing personal jurisdiction in this state” and under Russian law. (CCP sec. 1717(a)) Bank did not comply with one of the methods for service authorized under the CCP and was further not permitted as a party to itself perform service of process. Mailing of documents was also not permitted under Article 113, secs. 1-3 of the Civil Procedural Code of the Russian Federation (“CPC”).

2. The Russian court proceedings were fundamentally unfair in violating his rights to defend the case, incompatible with the requirements of due process. (CCP sec. 1716(c)(1)G)) He claims he had no reasonable opportunity - given the Russian COVID travel ban - to investigate the facts Bank submitted or to confront witnesses at trial, consistent with Art. 35 of the CPC, that this travesty of denying his requests to postpone the proceedings would not be permitted to occur in this country and that therefore this Court should not recognize the judgment entered against him in his absence. Blyumkin contends that he inquired into his participating remotely in the hearing but was advised the court did not have the technology to allow him to do so. (Decl., para. 30) Under these circumstances, Blyumkin did not fail to provide a valid reason for not appearing to thereby allow the Russian court to proceed in his absence, consistent with Art. 233 of the CPC.

3. The Russian court was a seriously inconvenient forum for trial of the action. (CCP sec. 1716(c)(1)(E))

4. There is substantial doubt about the integrity of the Tagansky court (CCP sec. 1716(c)(1)(F)) Blyumkin speculates that Bank purposely brought the Russian proceeding shortly after the Russian Government issued its travel ban knowing that Blyumkin would not be able to appear and in the court having failed “suspiciously” to grant his repeated requests for a postponement to review the relevant records and question witnesses at trial.

On March 22, 2024, Bank filed its Reply Brief and related documents. Bank argues as follows:

1. Even if service did not comply with California law, Blyumkin waived challenging the judgment on personal jurisdiction grounds where he defended that case on the merits. (CCP sec. 1717(b)(2) and (3)) In addition, the DHL courier service utilized was proper under Art. 113 of the CPC. Due process was also satisfied here where this method taken was reasonably certain to accomplish actual notice. (AO Alfa-Bank v. Yakovlev (2018) 21 Cal.App.5^th 189, 197)

2. The Russian proceeding was not “fundamentally unfair.” Bank argues that even if Blyumkin was unable to appear physically at the Russian court due to the pandemic, this did not wholly prevent him from participating in the proceedings. Indeed, the Russian court found that Blyumkin’s statement of impossibility of personally appearing “is not aimed at securing a legally protected interest, but at delaying the consideration of the statement of claim, which is an abuse of the right and infringes the plaintiff’s right to conduct legal proceedings within a reasonable time.” The Russian court found further that Blyumkin not being able to appear did not preclude his participation because he could have hired a lawyer to appear on his behalf. In addition, Blyumkin provided a statement of his defense and the court addressed the merits of that defense.

3. The “seriously inconvenient forum” defense under CCP sec. 1716 (c)(1)(E) is not applicable here because that section applies where personal jurisdiction is based only upon personal service. Here, Bank relies as a basis for personal jurisdiction that the underlying agreement provided for performance by payment of the loan at the predecessor bank in Moscow. Hence, Bank asserts personal jurisdiction under Art. 29 of the CPC, providing for jurisdiction where there was to be performance of the agreement. The foregoing comports with the standards for personal jurisdiction under CCP sec. 1717(a). (Integral Dev. Corp. v. Weissenbach (2002) 99 Cal.App.4^th 576, 589-90)

4. The claim that Bank and the Russian court colluded to use COVID to deprive Blyumkin of due process lacks supporting evidence. Similarly, there was no basis to contend Bank sent Blumkin papers at the wrong address or did anything to wrongly secure a judgment to constitute extrinsic fraud under CCP sec. 1716(c)(1)(F).

5. Blyumkin may not relitigate the merits of the Russian judgment. Ohno v. Yasuma, 723 F.3d 984, 997 (9^th Cir. 2013), AO Alfa Bank, supra, 21 Cal.App.5^th at 197. The Russian court already addressed his claim that the signature on the underlying loan was forged (which he now admits). Hence, Blyumkin should not be able to raise the issue over the stock Bank held as collateral, as to which Bank contends also Blyumkin provided no supporting evidence.

The Court has ruled on the evidentiary objections to Blyumkin’s declaration separately in the form provided.

The Court grants Bank’s Request for Judicial Notice and Blyumkin’s Request for Judicial Notice of Exs. 1 - 4.

Here, service by DHL courier, which confirms receipt, was in conformity with Art. 113 of the CPC, as indicated by Rachkov. There is no evidence to the contrary. However, Bank effectively acknowledges that service by Bank itself, as a party, and by mail, was not in conformity with any of the bases for service of summons under the CCP.

Notwithstanding the foregoing, however, under CCP sec. 1717(b), a foreign-country judgment shall not be refused recognition for lack of personal jurisdiction (2) if the defendant voluntarily appeared, other than for the purpose of protecting seized or of contesting the jurisdiction over the defendant or (3) the defendant, before the commencement of the proceeding, had agreed to the jurisdiction of the foreign court with respect to the subject matter involved.

Here, the Court finds, as discussed further in its earlier ruling, under CCP sec. 1717(b),the Russian judgment cannot be refused recognition on this basis because (2) Blyumkin contested not only the jurisdiction of the Russian court but also asserted his other defenses to the case on the merits and (3) Blyumkin agreed prior to the commencement of the proceeding to the jurisdiction of the Russian courts in the loan agreement at issue. In addition, more significantly, the Court finds further that the method Bank took to serve Blyumkin was reasonably certain to (and did) accomplish actual notice. (AO Alfa-Bank, supra, 21 Cal.App.5^th at 197)

This defense is not applicable where Bank is not relying solely on personal service as a basis for personal jurisdiction. The underlying loan agreement to which Blyumkin agreed provided for performance in Moscow. Given those facts, Arts. 29 and 402 of the CPC provides that the Russian court may exercise personal jurisdiction over a foreign person. Hence, even if the Tagansky court was inconvenient to Blyumkin, that is not a basis for lack of personal jurisdiction. Inconvenience is not itself a basis to not recognize a foreign judgment.

Blyumkin’s suspicion that Bank waited until there was a travel ban to file this action (by reason of which it would be impossible for him to appear personally) is not evidence. Moreover, Bank’s counsel would not have known beforehand that a pandemic would have begun a month before the filing of this case or that there would be a resulting travel ban. What appears to have precipitated the filing of this case was the expiration of the statute of limitations just one day after the case was filed, according to Dr. Rachkov.

There is also no evidence to infer any collusion between Bank and the Russian court. Further, the Court is not persuaded that Bank intentionally used a wrong address for Blyumkin to serve him with its papers filed in the Russian court – which papers Blyumkin received at another address Bank also used.

It has long been established in this country that the fundamental conception of a court of justice is a decision only after hearing. No one shall be personally bound until he has had his day in court, by which is meant, until he has been duly cited to appear, and has been afforded an opportunity to be heard. An order of a court pronounced against a party without hearing him, or giving him an opportunity to be heard, is not a judicial determination of his rights, and is not entitled to respect in any other tribunal (Hovey v. Elliott, 167 U.S. 409 (1897)).

After further consideration since the hearing on the application for right to attach order, there are at least triable issues of fact as to: (1) the Russian court’s alleged failure to notify Blyumkin of its denial of his requests for continuance of the hearing prior to reaching the merits; and (2) whether it was unduly harsh under the circumstances for the Russian court to conclude that Blyumkin’s statement of impossibility of personally appearing “is not aimed at securing a legally protected interest, but at delaying the consideration of the statement of claim, which is an abuse of the right and infringes the plaintiff’s right to conduct legal proceedings within a reasonable time.” There is at least a question as to whether these issues contravene the traditional notions of due process in this country; namely, that due process protects an individual's right "to have his own day in court" and affords litigants the right to participate in and control lawsuits affecting their interests (See, e.g., IRMO Carlsson (2008) 163 Cal.App.4^th 281, 291, 293 (“Denying a party the right to testify or to offer evidence is reversible [error] per se”) and long established line of cases cited reversing judgments that did not allow a litigant their constitutional right to a full day in court ).See also Guardianship of A.H. (2022) 83 Cal.App.5^th 155, 160-161 (courts should not exercise their discretion arbitrarily in using their power to deny a party what would be their day in court).[4]

As to (1), because of Blyumkin allegedly not receiving notification from the Russian court of its denial of his requests for continuance, he effectively claims that the news of the functional equivalent of a default judgment entered against him came as a surprise. Under CCP sec. 473(b), a court will relieve a party from a judgment taken against him on the basis of, among other things, surprise (e.g. see Shapell Socal Rental Properties, LLC v. Chico's FAS, Inc., (2022) 85 Cal.App.5th 198).

As to (2), Blyumkin’s request was seemingly not about indefinite delay but about confronting Bank’s witnesses and pleading his defense to the Court. The Russian court does not address this basic point – that significantly is also embodied in Art. 233 of the CPC. Moreover, there is no evidence to support the conclusion that Blyumkin sought to unduly delay the proceeding or was “abusing” Bank’s rights. There was no prior request to continue the hearing or consideration of a short postponement that would address Blyumkin’s concerns. It is not clear if the Russian court is blaming him for the restriction on his being able to travel to Russia or as to how long that court believed the travel restriction might last.

Further, there is no evidence in the record to support the court’s conclusion that Bank was suffering any material prejudice by a postponement that would allow Blyumkin to meaningfully participate. Indeed, the loan had already been in default for three years prior to Bank filing suit, according to Rachkov. Blyumkin would presumably have argued - if he could have been there - that any delay was minor given the length of time Bank took to file the case. Had Blyumkin been able to participate, this is exactly the sort of unwarranted conclusion that he could have had a chance to correct.

While having a lawyer appear on Blyumkin’s behalf would mitigate the issue here to some degree, it again may not be adequate if the lawyer has not had an opportunity to meet the client or to know the facts as does the client, as Art. 35 of the CPC contemplates in allowing a party to review the evidence beforehand.[5] The principal roles of the lawyer, after all, are to give advice and to be an advocate (see ABA Model Rules of Professional Conduct, Preamble para. 2); they act as agent for their client but not as a substitute for their client (see, e.g., Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396). The party himself here is entitled to be in court regardless (Hovey, supra; Carlsson, supra; see also 28 U.S. Code § 1654 (parties have a right to conduct their own cases personally)). Indeed, significantly, the Russian court in fact states merely that the defendant “was not deprived of the opportunity to ensure the appearance of an authorized representative in order to participate in the trial…” The Russian court does not find that Blyumkin was not himself deprived of the opportunity to himself personally appear at trial – which there was no question he was.

Finally, while the Russian courts allow remote appearances under Art. 155.1 of the CPC if the court in question has the technical capability of videoconferencing, at least according to Blyumkin the Tagansky Court advised him that it did not have that ability. This Court has no first-hand evidence one way or another whether the Tagansky Court had such capability.

The foregoing evidence as to deficiencies in how the Russian court reached its judgment are material: As discussed above, Blyumkin may have had a defense to Bank’s claim by reason of Bank not having sold the stock in MCW that it held as collateral. Blyumkin contends this stock then had value that would have eliminated the debt. Bank does not offer any evidence on this issue and Dr. Rachkov did not address it in his report either. In turn, the Russian court did not address the issue.[6] As a result, Blyumkin may permissibly raise the issue now where it was not litigated before.[7] While Bank raises concern about the level of proof Blyumkin has provided, his uncontested evidence is sufficient at least for purposes of this motion. For example, there appears no question that under the earlier loan Bank was provided this stock as collateral to secure his guaranty. There is no evidence Bank ever returned it upon entering into a different unsecured loan agreement with Blyumkin.[8]

Issue No. 1: Bank satisfies the requirements for recognition of a foreign judgment under CCP secs. 1715 and 1718.

Blyumkin either admits (or denies but only as to non-material issues, without conflicting evidence, that do not create a factual dispute) Facts 1 through 27.

The Court therefore finds Bank has set forth the necessary facts to allow the Court to summarily adjudicate Issue No. 1 in favor of Bank.[9]

Issue No. 2: Bank is entitled to summary judgment because Blyumkin cannot establish a defense under CCP sec. 1716(b).

Blyumkin either admits (or denies but only as to non-material issues, without conflicting evidence, that do not create a factual dispute) Facts 29 through 52, 54 through 65 and 68-69.

Blyumkin, however, disputes Fact No. 28 that ‘[t]he Russian Tribunal is a court of competent jurisdiction with procedures compatible with the requirements of due process of law.” He contends based upon his declaration that “[t]he legal proceedings in the Tagansky court afforded defendant no procedural protection, was fundamentally unfair, and did not come close to affording Defendant due process protections.”

In addition, Blyumkin disputes in part, based upon his declaration, Fact No. 53: “The purpose of Agreement 6281 is to repay the debt under Agreement 5818. Blyumkin contends the purpose was also to facilitate the return of the pledged securities and for Bank to avoid having to declare a default under Agreement 5818.

Blyumkin also disputes Fact No. 66: “The Bank performed its obligations under the LOAN by transferring funding the amount… to Defendants account no. …” Blyumkin asserts based upon his declaration that Bank “appropriated stock in MCW which, at the time, had a substantial value. The question Defendant is raising is what disposition did the Bank make of 8.7 million shares of Petroteq (formerly MCW) stock.”

Finally, Blyumkin disputes in part Fact No. 67; “Defendant did not repay the loan debt pursuant to his obligation under Agreement 6281.” Blyumkin asserts based upon his declaration, that he “declined to repay the loan because the Bank was illegally keeping, and may have sold, the Pledged Securities.”

The Court finds Blyumkin has set forth facts that dispute these four facts that preclude the Court summarily adjudicating Issue No. 2.

[1] Blyumkin does not raise subject matter jurisdiction in opposition to this motion. This Court previously accepted Bank’s view on this issue, as discussed in granting Bank’s application for right to attach order.

[2] Significantly, however, Bank does not address whether the judgment complied with due process or was “fundamentally fair,” as required by CCP sec. 1716(c)(1)(G), except in so far as it does not reach the level of repugnance for purposes of CCP sec. 1716(c)(1)(C).

[3] Though the documents were in Russian, Blyumkin acknowledges his fluency with Russian – even if some of the documents were still hard to understand.

[4] Bank’s argument that the 9^th Circuit in Bank Melli Iran v. Pahlavi, 58 F.3d 1406 (9^th Cir. 1995) determined that for foreign proceedings to offend traditional notions of due process, the defendant must demonstrate that she could not participate in the foreign proceedings, by virtue of her status as a U.S. citizen, does not mean that is the exclusive means by which a foreign court might offend traditional notions of due process. As the Bank Melli court acknowledges at p. 1409, the leading case of Hlilon v. Guyot (1895) 159 U.S. 113, 205-206 outlines the broader requirements of due process to recognize a foreign judgment.

[5] Article 35, Rights and Duties of the Persons Taking Part in the Case, provides in relevant part:

1) The persons taking part in the case have the right to get acquainted with the materials of the case, to take excerpts from them and take copies, file recusations, supply proofs and participate in their investigation, put questions to the other persons taking part in the case, to witnesses, experts and specialists; to lodge petitions, including for the supply of proof on demand; to furnish explanations to the court, orally and in writing; to advance their arguments on all issues arising in the course of legal proceedings, to raise objections against the petitions and arguments of the other persons participating in the case; to lodge appeals against the judicial decisions and to exercise the other procedural rights granted by the legislation on the civil legal procedure. The persons taking part in the case shall conscientiously exercise all procedural rights, belonging to them.

[6] However, the Russian court would not have had reason to do so where Blyumkin did not raise this issue in his July 15, 2020 letter. That said, where Blyumkin was then primarily requesting a continuance, at least in this country that would be unlikely to then preclude him from raising the issue of the stock at trial.

[7] The Court does not rely on Blyumkin’s different positions as to whether the loan documents were forged that the Russian court did address.

[8] Under California Civil Code sec. 2819, a surety is exonerated, except so far as he or she may be indemnified by the principal, if by any act of the creditor, without the consent of the surety the original obligation of the principal is altered in any respect, or the remedies or rights of the creditor against the principal, in respect thereto, in any way impaired or suspended.

Similarly, a guarantor is released if the original obligation is altered. Parties to an obligation cannot alter its terms without the guarantor's consent even though it may be to the guarantor's advantage. (Ralston-Purina Co. v. Carter (1962) 210 Cal.App.2d 372, 378)

A creditor who has received a continuing guaranty of credit owes the same duty of disclosure during the course of the suretyship as he does at its inception. Thus, each time he accepts the surety's continuing offer by extending further credit to the principal debtor, the creditor has a duty to the surety to disclose facts known by the creditor if the creditor has reason to believe that those facts materially increase the risk beyond that which the surety intended to assume and that those facts are unknown to the surety, and if there is a reasonable opportunity to communicate them. A creditor's failure to disclose such facts to the surety prior to an extension of further credit to the debtor will discharge the surety from liability on a subsequent loan. (Sumitomo Bank v. Iwasaki (1968) 70 Cal. 2d 81)

[9] The motion, however, does not seek an order for summary adjudication of issues. Hence, because the Court finds Issue No. 2 is disputed, the motion must be denied in its entirety.