Judge Gary I. Micon, Case Number: 24CHCV00153, Date: 2024-10-02 Tentative Ruling

Judge: Gary I. Micon, Case: 24CHCV00153, Date: 2024-10-02 Tentative Ruling

Case Number: 24CHCV00153 Hearing Date: October 2, 2024 Dept: F43

Dept. F43

Date: 10-2-24

Case #24CHCV00153, JP Morgan Chase Bank, N.A. vs. Scrap Solutions, Inc., et al.

Trial Date: N/A

MOTION FOR SUMMARY JUDGMENT

MOVING PARTY: Plaintiff JP Morgan Chase Bank, N.A.

RESPONDING PARTY: Defendants Scrap Solutions, Inc., Amit Syal, and Reena N. Mistry

RELIEF REQUESTED

Motion for Summary Judgment

RULING: Motion is granted.

SUMMARY OF ACTION

Plaintiff JP Morgan Chase Bank, N.A. (Plaintiff) filed this action on January 16, 2024. Plaintiff alleged a cause of action for breach of contract and two causes of action for breach of guaranty.

On October 28, 2016, Plaintiff made a loan to Defendant Scrap Solutions, Inc. (Scrap Solutions) in the principal amount of $230,000.00, and is the current holder of the below mentioned Loan Documents. (UMF 1 and 11.) The loan is evidence by a Line of Credit Note dated October 28, 2016, and a Credit Agreement. (UMF 2-3.) The unpaid balance of the Note would increase and decrease with advances and payments made from time to time. (UMF 4.) Scrap Solutions was required to make monthly payments of accrued interest beginning on December 1, 2016. (UMF 5.) Beginning on August 1, 2023, Scrap Solutions defaulted under the Note and Credit Agreement by failing to make monthly payments as they came due. (UMF 6.) The Credit Agreement provides that, upon an event of default, Plaintiff is entitled to declare the Note, plus any accrued but unpaid interest, fees and other costs, immediately due. (UMF 7.)

On October 19, 2023, Plaintiff notified Scrap Solutions that there had been an event of default under the Note and Credit Agreement, and all sums due thereunder were immediately due and payable. (UMF 8.) Scrap Solutions has failed to pay the outstanding amounts due to Plaintiff under the Loan Documents. (UMF 9.)

As of May 28, 2024, Scrap Solutions was indebted to Plaintiff in the principal amount of $229,927.80, plus late fees and costs of $844.02, and attorney fees and costs in the amount of $8,236.74. (UMF 10 and 12.)

On behalf of Scrap Solutions, Defendants Syal and Mistry executed one Continuing Guaranty each. (UMF 16 and 32.) Pursuant to these Guaranties, Syal and Mistry agreed to pay all obligations of Scrap Solutions to Plaintiff, including interest, fees, costs, and attorney fees and costs, in the event that Scrap Solutions failed to do so. (UMF 17 and 33.) On October 19, 2023, Plaintiff notified Syal and Mistry that there had been an event of default under the Loan Documents and that all sums due thereunder were immediately due and payable. (UMF 24 and 40.) Syal and Mistry failed to pay the outstanding amounts due to Plaintiff under the Loan

Documents. (UMF 25 and 41.) Both Syal and Mistry are indebted to Plaintiff under the Loan Documents and Guaranties in the principal amount of $229,927.80, plus late fees and costs of $844.02, and attorney fees and costs in the amount of $8,236.74. (UMF 26 and 42.)

Plaintiff filed its motion for summary judgment on June 18, 2024. Plaintiff requests that the Court grant summary judgment in the total amount of $239,008.56 for the outstanding principal, late fees and costs, and attorney fees and costs.

Defendants filed their opposition on September 18, 2024. Defendants argue in their opposition that the Court should deny Plaintiff’s alternative motion for summary adjudication on the basis that Plaintiff’s separate statement does not repeat verbatim the specific causes of action for which Plaintiff seeks summary adjudication. Next, Defendants argue that the Court should deny the motion because Defendants dispute whether they breached the terms of the loan agreement because Plaintiff had previously required interest-only payments. Defendants argue that there is a dispute as to whether waiver and estoppel apply. Finally, Defendants argue that the Court should deny Plaintiff’s motion for failure to file proof of their claim for attorney fees.

Defendants’ Evidentiary Objections:

Sustained: None

Overruled: 1, 2, 3, 4, 5

ANALYSIS

The purpose of a motion for 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. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, 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.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

The pleadings frame the issues for motions, “since it is those allegations to which the motion must respond. (Citation.)” (Scolinos v. Kolts (1995) 37 Cal. App. 4th 635, 640-641; FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382-383; Jordan-Lyon Prods., LTD. v. Cineplex Odeon Corp. (1994) 29 Cal.App.4th 1459, 1472.) “On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment “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 . . . cannot be established.” (CCP § 437c(p)(2).) “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Ibid.)

Breach of Contract and Breach of Guaranty Causes of Action

Plaintiff argues that summary judgment should be granted in its favor on the breach of contract and breach of guaranty causes of action because Plaintiff, as the lender, is entitled to judgment as a matter of law because no triable issues of fact exists on these causes of action.

To prevail on a breach of contract cause of action, a plaintiff must prove the following elements: “(1) the contract; (2) plaintiff’s performance […]; (3) defendant’s breach; and (4) the resulting damage to plaintiff.” (Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 59.) When a contract is reduced to writing, the parties’ intention is to be determined from the writing alone, so long as the language is “clear and explicit, and does not involve an absurdity.” (CCP § 1638.) Matters extrinsic to an integrated contract will not be considered to modify the unambiguous language of those contracts. (See CCP § 1856(a); see also Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1382, fn. 4.)

In this case, the existence of the contracts is undisputed. Where a written instrument is the foundation of a cause of action, it may be pleaded in haec verba by attaching a copy as an exhibit and incorporating it by proper reference. (Byrne v. Harvey (1962) 211 Cal.App.2d 92, 103.) Plaintiff has provided evidence of the Loan Documents (Lopez Decl., ¶ 3, Ex. 1) and the Syal and Mistry Guaranties (Lopez Decl., ¶¶ 4-5, Exs. 2-3) by including copies of the documents with its motion for summary judgment.

There are also no conditions precedent in this case because Plaintiff fulfilled its obligations under the Note and Credit Agreement by making available, and lending, the principal amount of $230,000.00 to Scrap Solutions. (UMF 1.) There are also no conditions precedent to the Guaranties because they are continuing guaranties which provide that the Guarantors absolutely and unconditionally agreed to pay all obligations of Scrap Solutions to Plaintiff. (Lopez Decl., Exs. 2-3.)

Next, Plaintiff argues that Defendants breached the contracts because Scrap Solutions defaulted under the Note and Credit Agreement and Syal and Mistry failed to pay all obligations after being notified of Scrap Solutions’ default; therefore, Syal and Mistry have defaulted as well. All This would mean that Defendants are in breach of their respective contracts.

However, Defendants argue in their opposition that there were not in default because for seven years they had made interest-only payments on the loan, and they had done the same thing in October 2023 when they allegedly defaulted. (Defendants’ AMF 49.) Defendants claim that $2,084.77 was deducted from their account as an auto debit in October 2023, though they have provided no evidence that this money was taken from their account. Additionally, on the transaction history submitted by Plaintiff, for the October payment it states “reg pymt rev”, meaning that the payment was reversed. (Lopez Decl., Ex. 4, p. 1.) A couple payments from prior months state the same thing, starting in June 2023, and extra fees began to be assessed as well, likely late fees. It appears then that, for whatever reason, Defendants’ auto debit payments were not going through, perhaps for reasons such as insufficient funds.

Defendants’ arguments regarding waiver and estoppel are misleading then because Plaintiff did not change the terms of Defendants’ interest-only payments; instead, Defendants were not making any payments. At least, their auto debits payments were not going through. Accordingly,

based on the evidence presented, Defendants had, in fact, defaulted on the loan and had therefore breached their contracts.

Additionally, as Plaintiff points out in its reply, Defendants’ argument that they were only required to make interest-only payments is misleading, as that is not what the contract for the loan stated. (See Reply, pp. 3-4.) The provision that Defendants relied on to make this claim states that it is only applicable once the Final Availability Date has been declared, and no party has alleged that it was declared. (Reply, p. 4.)

Finally, Plaintiff has suffered damages as a result of Defendants’ breach in the principal amount of $229,927.80 and late fees and costs of $844.02. (Lopez Decl., ¶ 9, Ex. 4.) Defendants have also incurred attorney fees and costs in the amount of $8,236.74. (Lopez Decl., ¶ 12; Partington Decl., ¶ 2.)

Additionally, Plaintiff argues that Defendants have no defenses to Plaintiff’s causes of action because Plaintiff has not waived any of the provisions of the Credit Agreement and Note or the Syal and Mistry Guaranties. Defendants also have no applicable defenses to Plaintiff’s claims; therefore, Defendants are bound by the terms of the Credit Agreement, Notes, and Guaranties.

Plaintiff’s motion for summary judgment is granted because there are no triable issues of fact for the breach of contract and breach of guaranty causes of action. Because the Court is granting the motion in its entirety, the Court will not address Defendants’ arguments concerning the sufficiency of the basis for summary adjudication.

Defendants also argued in their opposition that Plaintiff should not be able to collect attorney fees because Plaintiff has not sufficiently supported its claimed attorney fees of $8,236.74. However, Plaintiff has provided a declaration from its attorney with a breakdown of the fees accrued on each aspect of the case, showing that there was $875 for review and analysis of loan documents; $875 for evaluation of the bank’s claim; $1,750.00 for drafting of summons and complaint; $3,850.00 for drafting of the motion for summary judgment; $435 in filing fees; and $451.74 in service fees. (Partington Decl., ¶ 2.) Given the nature of this case, these are all reasonable amounts. The Court will not deny Plaintiff’s request for attorney fees.

CONCLUSION

The motion for summary judgment is granted in its entirety. Damages are to be awarded in the total amount of $239,008.56 for the outstanding principal amount, the late costs and fees, and the attorney fees and costs. Plaintiff is ordered to submit a proposed judgment.

Moving party to give notice.