Judge: H. Jay Ford, III, Case: 19SMCV01709, Date: 2023-11-30 Tentative Ruling

Case Number: 19SMCV01709    Hearing Date: February 13, 2024    Dept: O

Case Name:  City National Bank v. Law Offices of Jeremy Tenser Limited, et al.  

SUBJECT:                MOTION FOR SUMMARY JUDGMENT

MOVING PARTY:  Plaintiff City National Bank

RESP. PARTY:        Defendant Adam Jeremy Tenser

TENTATIVE RULING

            Defendant Adam Jeremy Tenser’s (“Tenser”) Motion for Summary Judgment is DENIED. Tenser’s Motion for Summary Adjudication, in the alternative, is GRANTED as to City National Bank’s (CNB) prayer for punitive damages, and DENIED for all other claims.  Tenser does not meet his burden to show that one or more elements of Plaintiff City National Bank’s claims cannot be established.

            Plaintiff City National Bank’s Request for Judicial Notice (“RJN”) is GRANTED.

“A party is entitled to summary judgment only if it meets its initial burden of showing there are no triable issues of fact and the moving party is entitled to judgment as a matter of law. This is true even if the opposing party fails to file any opposition. The court's assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court's evaluation of the opposing party's papers. Therefore, the burden on the motion does not initially shift as a result of what is, or is not, contained in the opposing papers.” (Mosley v. Pacific Specialty Insurance Company (2020) 49 Cal.App.5th 417, 434–435 [landlord’s failure to address issue of whether they were aware of their tenant’s marijuana growing operation was not grounds to grant summary judgment where moving party failed to satisfy its initial burden as to the issue]; Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1086-1087 [court cannot grant summary judgment based merely on lack of opposition; court must first determine if the moving party has satisfied its burden].)

In addition, the evidence and affidavits of the moving party are construed strictly, while those of the opponent are liberally read. (Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal.App.4th 95, 100. “All doubts as to the propriety of granting the motion (whether there is any issue of material fact [Code of Civil Procedure] § 437c) are to be resolved in favor of the party opposing the motion (i.e., a denial of summary judgment).” (Hamburg v. Wal-Mart Stores, Inc. (2004) 116 Cal.App.4th 497, 502.)

A defendant seeking summary judgment or adjudication, must show that either “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 that cause of action.” (Code of Civil Procedure §437c, subd., (o)(2).) A defendant may satisfy this burden by showing that the claim “cannot be established” because of the lack of evidence on some essential element of the claim. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 574, 590.) Once the defendant meets this burden, the burden shifts to plaintiff to show that a “triable issue of one or more material facts exists as to that cause of action or defense thereto.” (Id.) If unable to prove the existence of a triable issue of material fact, summary judgment or summary adjudication in favor of the defendant is proper. (Id.)

I.                   Tenser failed to submit a proper separate statement of undisputed facts.

 A motion for summary judgment or summary adjudication must be supported by a separate statement of undisputed facts.  California Rules of Court.Rule 3.1350(c)(2) requires:

“(1)   The separate statement “must separately identify:

(A) Each cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion; and

(B) Each supporting material fact claimed to be without dispute with respect to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion.

(2) The separate statement should include only material facts and not any facts that are not pertinent to the disposition of the motion.

(3) The separate statement must be in the two-column format specified in (h). The statement must state in numerical sequence the undisputed material facts in the first column followed by the evidence that establishes those undisputed facts in that same column. Citation to the evidence in support of each material fact must include reference to the exhibit, title, page, and line numbers.”

“[T]he court's power to deny summary judgment on the basis of failure to comply with California Rules of Court, rule 3.1350 is discretionary, not mandatory.” (Truong v. Glasser (2009) 181 Cal.App.4th 102, 118.)

Tensor’s separate statement does not meet the procedural requirements required by Rule 3.1350. (See e.g. Tenser’s Separate Statement of Undisputed Facts (“Tenser SUF”).)  Tenser’s separate statement does not identify each cause of action, claim for damages, issue of duty or affirmative defense that is the subject of the motion. (Id. at (d)(1)(A).) Furthermore, Tenser does not provide a two-column format specified in subdivision (h.) (See Id., at (d)(3) and (h). Tenser’s separate statement does not identify any undisputed material facts that support the Motion for Summary Judgment. Indeed, some of the listed facts support CNB’s claims. (See e.g. Tenser SUF, ¶¶ 4 (“The Firm first utilized the funds June 7, 2016”), 5 (“CNB sent monthly statements for the Line commencing December 28, 2015”), and 10 (“The Firm stopped making payments March 2019.”).)

Thus, Tenser’s Motion for Summary Judgment is procedurally defective and does not identify the undisputed facts or evidence that show CNB’s causes of action for Breach of Contract, Open Book Account, and Account States cannot be established. Tenser’s Motion for Summary Judgment and is DENIED.

II.                Tenser Does Not Meet Defendant’s Burden To Show That One or More Elements of CNB’s Claim Cannot be Established

a.      1^st cause of action—breach of written contract

            The essential elements of breach of contract are “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." (D'Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)

            Tenser argues Plaintiff City National Bank (“CNB”) cannot meet the first element of a breach of written contract cause of action because CNB would need inadmissible parol evidence to show that Tenser personally guaranteed the 2015 loan, CNB does not demonstrate evidence of mutual assent to the Basic Business Builder Agreement (the “BBBA”) also known as the 2015 line of credit, and the BBBA does not create a unilateral agreement by implication. The Court disagrees.  

            Parol evidence is admissible here because the 2015 Line of Credit is not based on an integrated agreement.  Both documents at issue, the 2015 Credit Application and the 2015 Credit Agreement explicitly reference each other as being part of the overall agreement governing the 2015 Line of Credit. (See CNB’s Additional Undisputed Facts (“CNB SSF”), ¶¶ 8, 14, Wartburg Decl., ¶ 8, Ex. E, 2015 Credit Application at p. 129, Ex. F; Tenser FAXC, Ex. 7; see also Civ. Code, § 1642 [“Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.’]; Versaci v. Superior Court (2005) 127 Cal.App.4th 805, 814.) [“Civil Code section 1642 “is most frequently applied to writings executed contemporaneously, but it is likewise applicable to agreements executed by the parties at different times if the later document is in fact a part of the same transaction.”].) Tenser also personally guaranteed the 2015 Line of Credit again when he signed the Overdraft Application in 2018, thus also showing Tenser personally guaranteed the loan. (CNB SSF, ¶ 23, Wartburg Decl., ¶ 13, Ex. I at p. 151.)

            Tenser’s mutual assent argument fails because Tenser signed the 2015 Credit Application which included all the details of Line of Credit agreement, and furthermore Tenser utilized the line of credit thus manifesting assent as per the terms of the line of credit agreement. (See CNB SSF, ¶¶ 8, 19, Wartburg Decl., ¶ 8, Ex. E, 2015 Credit Application at p. 129; Wartburg Decl., ¶ 8, Ex. F, 2015 Credit Agreement at p. 132.) “[A]n offeree, knowing that an offer has been made to him but not knowing all of its terms, may be held to have accepted, by his conduct, whatever terms the offer contains.” (Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal.App.3d 987, 992.) The undisputed facts show that Tenser accepted the terms of the credit agreement by his conduct, and thus there was mutual assent.

            Tensor provides no authority for his final argument that the language of the 2015 Credit Agreement which provided for CNB to cancel or terminate at any time demonstrates a lack of mutual assent between Tenser and CNB. This argument thus fails for lack of authority.

            Thus, Tenser fails to meet his burden to prove the 1^st cause of action for breach of contract cannot be established.

b.      2^nd cause of action—open book account

The elements of a common counts claim for an open book account are as follows:

“[Name of plaintiff] claims that there was an open book account in which financial transactions betwen the parties were recorded and that [name of defendant] owes [him/her/nonbinary pronoun/it] money on the account. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of plaintiff] and [name of defendant] had financial transactions with each other;

2. That [name of plaintiff], in the regular course of business, kept [a written/an electronic] account of the debits and credits involved in the transactions;

3. That [name of defendant] owes [name of plaintiff] money on the account; and

4. The amount of money that [name of defendant] owes [name of plaintiff].”

(CACI 372, Open Book Account.)

            “[W]hen a statement is rendered to a debtor and no reply is made in a reasonable time, the law implies an agreement that the account is correct as rendered (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 968; see (HSBC Bank Nevada, N.A. v. Aguilar (2012) 205 Cal.App.4th Supp. 6, 12 [entering default on open book account for credit card issuer where cardholder failed to pay sums due under written loan agreement in which the issuer agreed to provide credit to the cardholder in exchange for the cardholder’s agreement to pay the issuer under the contract].)

            Tenser’s separate statement of undisputed facts includes the facts that support CNB’s claim for an open book account. Tenser and CNB had financial transactions with each other (Tenser SUF, ¶¶ 1–5, Tenser Decl., Ex A –E.) CNB kept accounts of the debits and credits involved in the transaction as evidenced by CNB sending monthly statements for the line commencing starting in 12-28-15. (Tenser SUF, ¶ 5, Tenser Decl., Ex. E.) Tenser states his firm stopped making payments in March 2019 and CNB made a demand for payments showing that CNB is owed money on the account. (Tenser SUF, ¶¶ 10, 11; Tenser Decl., Ex. I, J.) The exhibits provided by Tenser show the amount of money owed to CNB. (Id.

            Thus, Tensor fails to meet his burden to prove the 2^nd cause of action for open book account cannot be established.

c.       3^rd cause of action—account stated

            “The essential elements of an account stated [common counts] are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due.” (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600, internal citations omitted.)

            Tenser again supplies most, if not all, of the elements of an account stated cause of action within his SUF. Tenser shows that previous transaction between the parties established the relationship of debtor and creditor (Tenser SUF, ¶¶ 1–5, Tenser Decl., Ex A–E.) Tensor provides an unsigned agreement between the parties to show an amount due via the original loan agreement, an email stating the his account was approved, multiple monthly credit statements, and a demand letter for the remaining balance sent by CNB. (Tenser SUF, ¶¶ 1, 3, 4, 5, 10; Tenser Decl., Ex. A, C, D, E, I.) CNB provides evidence of Tenser’s promise to pay CNB for the line of credit by including the signed 2015 line of credit application and agreement, and the 2018 Guaranty Agreement (CNB SSF ¶¶ 7–14, 22–26; Wartburg Decl., ¶¶ 8, 13, Ex. E, I.)

            Thus, Tensor fails to meet his burden to prove the 3^rd cause of action for account stated cannot be established.

d.      Motion For summary adjudication

            Code of Civil Procedure section 437c, subdivision (f)(1) provides: “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if that party contends that the cause of action has no merit or that there is no affirmative defense thereto, or that there is no merit to an affirmative defense as to any cause of action, or both, or that there is no merit to a claim for [punitive] damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Catalano v. Superior Court (2000) 82 Cal.App.4th 91, 95; see CCP § 437c, subd. (f)(1).)

                                                                    i.            Punitives

“It is settled . . . that a claim for punitive damages is one of the substantive areas which is properly the subject of a motion for summary adjudication (Catalano, supra, 82 Cal.App.4th at p. 92.) “Punitive damages are authorized by statute in actions for the breach of an obligation, not arising from a contract, in which the defendant has acted oppressively, fraudulently, or maliciously. Punitive damages may not be recovered in actions founded in contract.” (Roam v. Koop (1974) 41 Cal.App.3d 1035, 1040.)

Tenser argues, CNB cannot be awarded punitive damages under their contract causes of action, and thus is entitled to Summary adjudication for the damages claim. (Motion, p. 19.)  The Court agrees.  CNB does not plead any causes of action sounding in tort in addition to the three contract causes of action.  Thus, CNB’s prayer for punitive damages is not authorized by statute and is subject to a motion to summary adjudication. (See CCP § 437c, subd. (f)(1).)

Tenser’s Motion for Summary Adjudication as to Punitive Damages is GRANTED.

                                                                  ii.            Duty to Disclose the terms of the BBBA, Duty of Good Faith and Fair dealing, Duty to Against Disclosure of Tenser’s Information

‘[T]here is no obligation on the opposing party . . . to establish anything by affidavit unless and until the moving party has by affidavit stated facts establishing every element [of the affirmative defense] necessary to sustain a judgment in his favor....’ ” ' ... [¶] What this means ... is that if an affirmative defense has four elements, it does not suffice even if the defendant produces overwhelming evidence as to three of those elements. If the defendant fails to address the fourth element at all or to produce substantial evidence supporting that element, the trial court cannot properly grant summary judgment. Moreover, a summary judgment granted in those circumstances would have to be reversed, even if the plaintiff failed to introduce a scintilla of evidence challenging that element.'' (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468, emphasis in original.)

Tenser fails to provide facts or evidence within the separate statement or affidavit to prove the elements of the three affirmative defenses raised in his motion for summary adjudication in the alternative. Indeed, Tenser’s own evidence shows CNB did disclose the terms of the 2015 Line of Credit agreement. (Tenser SUF, ¶¶ 1–5, Tenser Decl., Ex. A–E.)

Likewise, Tenser fails to show which conduct violated any duty of good faith, and cites to Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 923 to argue that “[w]here a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing.” (Motion, p. 20.) However, Purdue goes on to state, “a contracting party's discretionary power to vary the price or other performance does not render the agreement illusory if the party's actual exercise of that power is reasonable.” (Perdue (1985) 38 Cal.3d at p. 923.)  Tenser’s ambiguous argument does not show CNB violated any duty of good faith and fair dealing.

            Finally, Tenser does not provide any authority how CNB’s duty not to disclose Tenser’s confidential information is a defense to CNB’s claims. Thus, Tenser’s Motion for Summary Adjudication as to CNB’s Duty Against Disclosure of Tenser’s Information is DENIED.

  Case Name: 
City National Bank v. Law Offices of Jeremy Tenser Limited, et al.  

SUBJECT:                MOTION TO STRIKE THE LAW OFFICE
OF JEREMY TENSER LIMITED’S ANSWER TO CITY NATIONAL BANK’S FIRST AMENDED
COMPLAINT

MOVING
PARTY:  Plaintiff City National Bank

RESP.
PARTY:        Defendant Law Office of
Jeremy Tenser Limited; Adam Jeremy Tenser

TENTATIVE
RULING

             Plaintiff City National Bank’s Motion to
Strike The Law Office of Jeremy Tenser Limited’s Answer to City National Bank’s
First Amended Complaint is GRANTED.

The Law Office of Jeremy Tenser Limited is a suspended corporation
and thus has no capacity to sue or defend itself. The Court may strike a
suspended corporations answer under  Code
of Civil Procedure (CCP) § 436 (The Court may “[s]trike out all or any part of
any pleading not drawn or filed in conformity with the laws of this state, a
court rule, or an order of the court.” and Rev. & Tax. Code, § 23301.5.          

            “[T]he
corporate powers, rights, and privileges of a domestic taxpayer may be
suspended, and the exercise of the corporate powers, rights, and privileges of
a foreign taxpayer in this state may be forfeited, if a taxpayer fails to file
a tax return required by this part. (Rev. & Tax. Code, § 23301.5.) “The
purpose of Revenue and Taxation Code section 23301 is to ‘prohibit the
delinquent corporation from enjoying the ordinary privileges of a going
concern,” in order to pressure it into paying its taxes.” (Center for
Self-Improvement & Community Development v. Lennar Corp. (2009)
173 Cal.App.4th 1543, 1552, quoting Peacock Hill Assn. v. Peacock Lagoon
Constr. Co. (1972) 8 Cal.3d 369, 371.)

            “[R]espondent
corporation had no right to defend in the instant action, or even to
participate therein during the time that its corporate rights were suspended.
Therefore the trial court should have granted appellants' motion to strike the
pleadings of respondent and certainly the trial court had no right to consider
the defenses of the statute of limitations, laches, and estoppel which
respondent set up in its answers.” (Alhambra-Shumway Mines, Inc. v. Alhambra
Gold Mine Corp. (1957) 155 Cal.App.2d 46, 50–51.)

            “Under the
law of California, a corporation which has been suspended for failure to pay
franchise taxes is prohibited from suing, from defending a suit, or from
appealing from an adverse decision.” (Mather Const. Co. v. U. S. (Ct.
Cl. 1973) 475 F.2d 1152, 1155, collecting cases.)

            It is undisputed
that Defendant Law Office of Jeremy Tenser Limited (“Law Office”) has been
suspended due to outstanding taxes. (Motion, p. 3; see SAXC, ¶ 40 [“The
California Secretary of State suspended the Law Office for failure to pay the
One Thousand Eight Hundred Fifty-Five Dollars and Eighty-Five Cents ($1,855.85)
before CNB filed a claim September 26, 2019.”].) CNB argues that because the
Law Office is suspended the Law Office lacks capacity to sue or defend itself,
and thus the Law Office’s Answer “must be stricken in its entirety.” (Id.,
at pp 3–4; see Rev. & Tax. Code 23301.) CNB is correct.

            Law Office
argues the motion is procedurally deficient because CNB did not meet and
confer, nor file a meet and confer declaration, prior to filing the motion as
per CCP § 435.5(a)(3). However, a suspended corporation is generally
disqualified from litigation activities including and meet and confer
obligations. (See Palm Valley Homeowners Ass'n, Inc. v. Design MTC (2000)
85 Cal.App.4th 553, 561 [A suspended corporation “is indeed disqualified from
litigation and all other activities. All its “corporate
powers, rights, and privileges” are suspended; the only exceptions provided by
statute are to change the name of the corporation, and to cure the default by
filing the missing statement.”].) Furthermore, the lack of a meet and confer
declaration with a motion to strike are not grounds to deny the motion. (Code
Civ. Proc., § 435.5, subd., (a)(4).) [“A determination by the court that the
meet and confer process was insufficient shall not be grounds to grant or deny
the motion to strike.”].)

            Law Office
argues (1) the Court has no authority to strike the Law Office Answer; (2) a
suspended corporation can cure its suspension which revives the corporation’s
powers and validates prior litigation activities; (3) CNB has no right to put
the firm in default under Rev. & Tax. Code 23305(a); and (4) CNB should be
equitably estopped from striking the answer. (Oppo., pp. 4–6.) None of these
arguments are persuasive.  As noted
above, the Court does have authority to strike the Law Offices answer under CCP
§ 466(b).  The answer is a pleading, and
Law Office’s filing of their answer is not in conformity with the laws of the
state because Law Office is a suspended corporation. (See Rev. & Tax. Code,
§ 23301.5.)  Law Office has been given a
reasonable opportunity to cure the suspension and Tenser has chosen not to. CNB
has not yet requested the entry of a default or a default judgment against Law
Office so this argument is not ripe.  Regardless, the authority Law Office cites does
not support Law Office’s argument, and only applies to corporations that have
begun revival proceedings. (Ctr. For Self-Improvement & Cmty. Dev, supra,
173 Cal. App. 4th at p. 1553 [holding a “plaintiff may not take the defendant’s
default by virtue of the defendant’s inability to defend due to suspension of
corporate powers, where the defendant consummated revival proceedings upon the
grant of a continuance.”].) Here, Law Office has not commenced any revival
proceedings, and thus a default can be brought when a corporation fails to
respond, i.e. an answer is struck from the record. (See Tabarrejo v.
Superior Ct. (2014) 232 Cal. App. 4th 849, 862 (“[A] suspended corporation
may be sued and a default judgment may be entered upon its failure to
respond.”) Finally, because the Law Firm is suspended, the Court cannot
consider the purported estoppel defense. (Alhambra-Shumway Mines, Inc., supra,
155 Cal.    App. 2d at p. 51 [holding that
suspended corporation’s answer should have been             struck and that
“the trial court had no right to consider the defenses of . . . estoppel.”].)