Judge: Gail Killefer, Case: 22STCV00255, Date: 2023-02-10 Tentative Ruling

Case Number: 22STCV00255    Hearing Date: February 10, 2023    Dept: 37

HEARING DATE:                 February 9, 2023

CASE NUMBER:                  22STCV00255

CASE NAME:                        Piedmont Capital Management LLC v. Michael Harger, et al.

TRIAL DATE:                        None.

MOTION:                               Motion for Summary Judgment of Cross-Complaint

MOVING PARTY:                Plaintiff, Piedmont Capital Management LLC

OPPOSING PARTY:             Defendant, Amy Harger as administrator of the Estate of Michael Harger

PROOF OF SERVICE:          OK

OPPOSITION:                       December 29, 2022 [An untimely supplemental opposition was also filed on 2/1/23.]

REPLY:                                  January 27, 2023

TENTATIVE:                         Plaintiff’s Motion for Summary Judgment is granted. Plaintiff is to give notice and prepare a proposed judgment.

Background

This is an action for breach of contract.  Piedmont Capital Management, LLC (“Plaintiff”) alleges Defendant Michael Harger was the former owner of 2737 Taran Court, Santa Maria, California 93455 (the “Property”).  Plaintiff alleges that Defendant opened an equity reserve line of credit in the amount of $114,000.00 with National City Bank on July 10, 2006, and that the loan was memorialized by an equity reserve agreement or note secured by a Deed of Trust (the “Loan”).  Plaintiff alleges that there was a senior lien secured against the Property in favor of Washington Mutual Bank FA at the time the loan was made (the “Senior Loan”). Plaintiff alleges Washington Mutual Bank FA foreclosed under the senior deed of trust and took title to the property upon a Trustee’s Deed Upon Sale recorded on May 26, 2009.  Plaintiff alleges that the payment obligations owed under the loan as memorialized by the note were not paid.  Plaintiff acquired the note by assignment through a series of transfers. 

On September 22, 2020, Plaintiff filed a complaint against Defendant for breach of contract. On January 4, 2022, venue was transferred to the Superior Court of California, County of Los Angeles.

Plaintiff also named Amy Harger, as Administrator of the Estate of Michael Harger, as Doe Defendant 1. In May 2013, Defendants purchased a property located at 667 Vosburg Drive, Azusa, CA 91702 as joint tenants (“Joint Tenancy Property”).

Plaintiff now moves for summary judgment as to the only cause of action of the Complaint against Michael Harger and Amy Harger, as Administrator of the Estate of Michael Harger. Defendant opposes the motion.

Request for Judicial Notice

Plaintiff requests that the court take judicial notice of the following in support of the instant motion:

1.      National City Bank Deed of Trust recorded in the Official Records of Santa Barbara County as Document No. 2006-0056281 (Declaration of Dennis Lanni, Exhibit 1.)

2.      Senior Deed of Trust recorded in the Official Records of Santa Barbara County July 18, 2006 as Document No. 2006-0056280 (Lanni Decl., Exhibit 6.)

Plaintiff’s requests are granted. The existence and legal significance of these documents are proper matters for judicial notice. (Evidence Code § 452 (d), (h).)

Factual Summary

The following material facts are undisputed: Defendant is the former owner of 2737 Taran Court, Santa Maria, CA 93455; on July 10, 2006, Defendant took out a second loan on the Property in the amount of $114,000.00 with National City Bank; that loan was secured by a deed of trust recorded on the property; the Senior Loan was forced and the Property was conveyed title to the lienholder; and late fees accrue on the outstanding balance at a rate of $40.00 per month. (Separate Statement in Support of Motion (“UMF”), ¶¶ 1-6, 10; Declaration of Dennis Lanni (“Lanni Decl.”) Exh., 1-7.)  The parties do not dispute that the Property was sold on May 14, 2009. (Opposition, 4.)

The parties dispute when the last payment on the Loan was made: Plaintiff contends Defendant failed to make the November 1, 2008 payment, and Defendant contends the last payment was made either in July or August of 2008. (MF 7.) The parties further dispute whether Plaintiff has been assigned all rights to the obligations under the Note of the Loan. (MF 12.) Lastly, Plaintiff sent Defendant an acceleration letter on February 11, 2020 to an address located at 7039 Ohio River Dr., Eastvale CA 9172, but Defendant argues decedent never lived at that address and disputes any notice of the acceleration as a result. (MF 13.)

Discussion

I.                   Legal Standard

“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)  CCP § 437c(a) provides: 

A party may move for summary judgment in any 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 may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct….  The motion shall be heard no later than 30 days before the date of trial, unless the court for good cause orders otherwise.  The filing of the motion shall not extend the time within which a party must otherwise file a responsive pleading. 

A motion for summary judgment may 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.”  (CCP § 437c(c).)   

“The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.  The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed.  Each of the material facts stated shall be followed by a reference to the supporting evidence.  The failure to comply with this requirement of a separate statement may in the court’s discretion constitute a sufficient ground for denial of the motion.”  (CCP § 437c(b)(1); see also Cal. Rules of Court, rule 3.1350(c)(2) & (d).)  

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”  (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294 (Hinsley).)  CCP § 437c(p)(2) provides: 

A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.  Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.  The plaintiff or cross-complainant 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. 

The court must “view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom.”  (Hinesley, 135 Cal.App.4th at p. 294; Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389 [Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”].)  A motion for summary judgment must be denied where the moving party’s evidence does not prove all material facts, even in the absence of any opposition (Leyva v. Sup. Ct. (1985) 164 Cal.App.3d 462, 475). 

II.                Analysis

To state a claim for breach of contract, a Plaintiff must allege sufficient facts to establish: (1) a contract between the parties; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff from the breach.  (See e.g. Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178 (Wall Street).)  A written contract must be pled verbatim in the body of the complaint, be attached to the complaint and incorporated by reference, or be pled according to its legal effect.  (Bowden v. Robinson (1977) 67 Cal.App.3d 705, 718.)  An allegation of an oral agreement must “set[] forth the substance of its relative terms.”  (Gautier v. General Tel. Co. (1965) 234 Cal.App.2d 302, 305.)   

Plaintiff first argues summary adjudication must be granted here as “it is undisputed that there was a contract between the parties, Plaintiff performed all of its obligations under the contract by lending funds, the Defendant breached the contract by failing to make the payments required thereunder, and as a result Plaintiff has been damaged.” (Memorandum of Points and Authorities (“MPA”), 3.)

Defendant contends that the disputed last date of payment creates “a triable issue as to the amount owed and that no credible evidence, documentary or otherwise,” is included with the moving papers to resolve doubts regarding the amount owed. (Opposition, 11.) While Defendant also contends Plaintiff cannot enforce any such judgment against the Joint Tenancy Property, Plaintiff’s Complaint and this cause of action does not seek such an order. (Opp., 11-12.) Therefore, the court disregards this argument.

The parties dispute which statute of limitations is applicable in this action. Plaintiff contends that the Loan contained a choice of law provision outlining that Ohio law should be applied regarding the statute of limitations. (MPA, 4; Lanni Decl., Exh. 2.) Plaintiff argues that should Ohio law apply, Ohio Rev. Code § 2305.06 makes clear that the statute of limitations ran “on the earlier of September 27, 2020 [8 years after the amendment to the Rev. Code limiting the statute of limitations] or November 23, 2023 (15 years after the breach).” (Id.) Plaintiff contends as the complaint was filed on September 22, 2020, the instant action is timely under Ohio law. (Id.)

Plaintiff further argues that if California law is applied, the complaint is still timely under the 6-year statute of limitations for California promissory notes. (MPA, 4-5.) Plaintiff contends the statute of limitations began to run on February 11, 2020 when Plaintiff sent the acceleration demand to Defendant. (Id.)

In opposition, Defendant contends as the acceleration demand was mailed to an incorrect address, such notice was “ineffective” for allowing the statute of limitations to run. (Opp., 10-11.) Defendant further contends Plaintiff’s claims are barred by the statute of limitations as an “Ohio court would, under Ohio Revised Code Section 2305.03(b), defer to California’s Statute of Limitations as California is where the action accrued, which the Plaintiff concedes in its Motion would be six years. ... Under California law the Statute of Limitations would have run from date of the last payment and expired some time in 2014.” (Opp., 9-10.)

In reply, Plaintiff contends that to “the extent that Defendant alleges they never received the acceleration letter, the subject deed of trust shows a loan maturity date of July 10, 2021, ... which would be the triggering event for purposes of the statute of limitations, absent acceleration. ... The deed of trust itself similarly provides that upon default, the lender has the option to declare the entire amount of the loan due and payable, but is not required to do so.” (Reply, 3.) Plaintiff cites Comm. Code § 3118(a) to correctly explain that the 6-year limitations period runs from a “final due date” which are “payable at a definite time.” (Reply, 3-4; citing Cadle Co. v. World Wide Hospitality Furniture, Inc., (2006) 144 Cal.App.4th 504, 514, n.8.) Thus, Plaintiff contends even if the acceleration demand is held to be ineffective, the complaint and claims are timely following the final due date of the Loan. (Id.)

The Court finds that, regardless of which statute of limitations is applicable, the allegations in the complaint and Defendant’s opposition do not affirmatively demonstrate Plaintiff’s claim is barred.  Plaintiff’s breach of contract claim is premised on Defendant’s breach of the note by failing to pay the amounts owed under the note.  (Complaint, ¶ 15.)  There are no allegations in the complaint demonstrating when this breach occurred.  The only date alleged in the complaint is May 26, 2009, the date Washington Mutual Bank, FA, took title to the property via a Trustee’s Deed Upon Sale.  (Id., ¶ 8.)  A discussion of the applicability of Ohio or California law here is unnecessary as Plaintiff has shown that under either caselaw, the complaint has been timely filed. The court further notes here, sua sponte, that a sold out junior lienholder has the authority to enforce the junior debt obligation after a senior lienholder has conducted a trustee’s sale, as was done in this action. (Black Sky Capital, LLC v. Cobb (2017) 12 Cal.App.5th 887, aff'd (2019) 7 Cal.5th 156.)

Given the foregoing and viewing the submitted evidence in the light most favorable to Defendant, the court finds that Defendant has failed to meet their burden of showing the existence of triable, material issues of fact. (Hinsley.) While Defendant seeks to dispute the verification of the allonges here, the Lanni Declaration, as Chief Financial Officer of Plaintiff, has submitted with their Complaint as exhibits the series of transfers which allowed Plaintiff to acquire the note by assignment and Defendant has failed to submit any evidence to rebut this evidentiary presumption. Further, while Defendant contended the claims are time-barred, Defendant has failed to meet their burden of showing any triable issues of fact as to whether the claims are timely. Lastly, while Defendant dispute the amount of the outstanding balances as alleged, Defendant again fails to submit any evidence which would create such material issues of fact as to the amount of damages alleged.

For these reasons, Plaintiff’s motion is granted.

Conclusion

Plaintiff’s Motion for Summary Judgment is granted. Plaintiff is to give notice and prepare a proposed judgment.