Judge: Lee W. Tsao, Case: 22NWCV00181, Date: 2023-08-22 Tentative Ruling
Case Number: 22NWCV00181 Hearing Date: October 10, 2023 Dept: C
Signature
Financial, LLC v. Dan Kloss, et al.
CASE
NO.: 22NWCV00181
HEARING:
10/10/23 @ 10:30 a.m.
#7
TENTATIVE
ORDER
Plaintiff Signature
Financial’s Motion for Summary Judgment against Defendant Kloss is GRANTED.
Moving party to give notice.
Background
This breach of contract action was filed on March 14, 2022,
by Plaintiff Signature Financial, LLC and asserts the following causes of
action: (1) Breach of Contract; (2) Breach of Guaranty; and (3) Turnover/Claim
and Deliver.
The facts, as alleged, are as follows: “Precision Forging
and Liberty Capital Group, Inc. d/b/a NJ Liberty Capital Group (“Liberty
Capital”) entered into an Collateral Financing Agreement on or about May 10,
2019 (“Collateral Financing Agreement”), pursuant to which Liberty Capital
agreed to lend Precision Forging $1,022,017.00 in order to fund Precision
Forging’s purchase of a Mighty Viper Precision Boring Machine (Serial #
5481605011), a Mighty Viper CNC Vertical (Serial # 7581712011), and a Mighty Viper
VTL-20.25 Vertical (Serial # 7661304011), including all tooling, standard and
accessory equipment.” (Compl., ¶ 5.) “Pursuant to the terms of the Contract,
Precision Forging was required to make 60 consecutive monthly payments of
$20,601.00 each to Liberty Capital.” (Compl., ¶ 6.) “Defendant Kloss personally guaranteed the
Contract, contemporaneously executing a personal guaranty.” (Compl., ¶ 7.) “The
Contract provided that ‘the failure by Obligor to make any payment when due
hereunder or the failure by a Debtor (as hereinafter defined) to pay when due
any of the Liabilities’ would constitute an ‘Event of Default.’” (Compl., ¶ 10.) “On or
about May 30, 2019, Liberty Capital entered into an assignment agreement,
assigning, among other things, the Contract and Guaranty to Signature Financial
(the “Assignment”).” (Compl., ¶ 14.) “Defendants were provided notice and issued
their consent to the Assignment.” (Compl., ¶ 15.) “The COVID-19 pandemic adversely impacted
Precision Forging’s business, so on or about May 6, 2020, Signature Financial
agreed to amend the Contract to defer Precision Forging’s monthly payments and
extend the maturity date by three months, with regular monthly payments to
resume on August 10, 2020.” (Compl., ¶ 17.) “On or about August 7, 2020, Signature
Financial agreed to again amend the Contract to defer Precision Forging’s
payments for an additional three months and extend the maturity date.” (Compl.,
¶ 18.) “On or
about January 26, 2021, Signature Financial again agreed to amend the Contract
to defer Precision Forging’s payments for an additional four months for a total
of ten months.” (Compl., ¶
19.) “On or about February 24, 2022 and March 1, 2022, Signature
Financial sent a demand letter to Defendants, advising them that under the
terms of the Contract and Guaranty, they were in default by, among other
things, failing to make the required payments when due and that, as a result of
their defaults, Signature Financial had accelerated and declared immediately
due and payable all amounts due under the terms of the Contract and Guaranty.”
(Compl., ¶ 24.) “To date,
Defendants have failed and refused to cure the default or turnover the
Collateral to Signature Financial.” (Compl., ¶ 25.)
Plaintiff
Signature Financial, LLC’s motion for summary judgment or alternatively summary
adjudication:
Plaintiff Signature Financial,
LLC (“Plaintiff”) moves for summary judgment on the following grounds: (1)
There are no genuine issues of material fact that Defendant Dan Kloss
(“Defendant”) breached his obligations under the guaranty.
Defendant Dan Kloss does not
oppose the motion.
Legal Standard
Burdens on Summary Judgment
Summary judgment is proper “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 judgment as a matter of law.” (Code Civ.
Proc. §437c(c).) Where a defendant seeks summary judgment or
adjudication, he 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.” (Id. at §437c(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 the
plaintiff to show that a “triable issue of one or more material facts exists as
to that cause of action or defense thereto.” (Id.)
The moving party bears the initial burden of
production to make a prima facie showing that there are no triable issues of
material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 850.) A defendant moving for summary judgment must show
either (1) that one or more elements of the cause of action cannot be
established or (2) that there is a complete defense to that cause of
action. (Code Civ. Proc. §437c(p).) A defendant may discharge this
burden by furnishing either (1) affirmative evidence of the required facts or
(2) discovery responses conceding that the plaintiff lacks evidence to
establish an essential element of the plaintiff's case. If a defendant chooses
the latter option, he or she must present evidence “and not simply point out that
plaintiff does not possess and cannot reasonably obtain needed evidence….” (Aguilar,
supra, 25 Cal.4th at 865-66.)
[A]
defendant may simply show the plaintiff cannot establish an essential element
of the cause of action “by showing that the plaintiff does not possess, and
cannot reasonably obtain, needed evidence.” (Id. at p. 854.) Thus, rather
than affirmatively disproving or negating an element (e.g., causation), a
defendant moving for summary judgment has the option of presenting evidence
reflecting the plaintiff does not possess evidence to prove that element. “The
defendant may, but need not, present evidence that conclusively negates an
element of the plaintiff's cause of action. The defendant may also present
evidence that the plaintiff does not possess, and cannot reasonably obtain,
needed evidence—as through admissions by the plaintiff following extensive
discovery to the effect that he has discovered nothing” to support an essential
element of his case. (Aguilar, supra, at p. 855.) Under the latter approach, a
defendant's initial evidentiary showing may “consist of the deposition
testimony of the plaintiff's witnesses, the plaintiff's factually devoid
discovery responses, or admissions by the plaintiff in deposition or in
response to requests for admission that he or she has not discovered anything
that supports an essential element of the cause of action.” (Lona v. Citibank,
N.A., supra, 202 Cal.App.4th at p. 110.) In other words, a defendant may
show the plaintiff does not possess evidence to support an element of the cause
of action by means of presenting the plaintiff's factually devoid discovery
responses from which an absence of evidence may be reasonably inferred.
(Scheiding v. Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, 83.)
Thus,
a moving defendant has two means by which to shift the burden of proof under
the summary judgment statute: “The defendant may rely upon factually
insufficient discovery responses by the plaintiff to show that the plaintiff
cannot establish an essential element of the cause of action sued upon.
[Citation.] [Or a]lternatively, the defendant may utilize the tried and true
technique of negating (‘disproving’) an essential element of the plaintiff's
cause of action.”
(Leyva
v. Garcia (2018) 20 Cal.App.5th 1095, 1103.)
Until the moving defendant has discharged its
burden of proof, the opposing plaintiff has no burden to come forward with any
evidence. Once the moving defendant has discharged its burden as to a
particular cause of action, however, the plaintiff may defeat the motion by
producing evidence showing that a triable issue of one or more material facts
exists as to that cause of action. (Code Civ. Proc. §437c(p)(2).)
On a motion for summary judgment, the moving party's supporting documents are
strictly construed and those of his opponent liberally construed, and doubts as
to the propriety of summary judgment should be resolved against granting the
motion. (D’Amico v. Board of Medical Examiners (1974) 11
Cal.3d 1, 21.)
Second
Cause of Action—Breach of Guaranty
To prevail on its claim for breach of the personal
guaranty, movant need only establish: (1) the existence of a valid and
enforceable contract; (2) performance by movant or excuse for non-performance;
(3) breach of contract by Defendants; and (4) resulting damage to movant. (Lortz
v. Connell, (1969) 273 Cal. App. 2d 286, 290.)
a. Existence
of a Valid Contract.
“[T]he existence of a contract requires parties capable of
contracting, their consent, a lawful object, and a sufficient cause or
consideration.” (J.B.B. Investment Partners Ltd. v. Fair (2019) 37
Cal.App.5th 1, 10 (citing Cal. Civ. Code. § 1550).)
Here, it is undisputed that the Contract and Guaranty are
valid contracts between Liberty Capital and Kloss. Through the Contract, Liberty
Capital agreed to loan Precision Forging funds in exchange for Precision
Forging making certain monthly payments thereunder. (UMF 1-3.) In order to induce Liberty Capital to enter in
the Contract, Kloss executed the Guaranty, pursuant to which he guaranteed the
prompt payment and performance of Precision Forging’s obligations under the
Contract. (UMF 18-20.) Given these undisputed facts, there is no issue of
material fact that the Contract and Guaranty are valid and enforceable
contracts.
b. Liberty
Capital’s Performance Under the Contract.
Plaintiff offers that it has performed, and continues to
perform, all of its obligations under the Contract. By loaning Precision Forging funds for the
purchase of the Collateral, Plaintiff performed under the Contract once it
loaned Precision Forging those funds.
c. Breach
of Guaranty by Defendant Kloss.
Here, it is undisputed that Plaintiff fully complied with
its obligations under the Contract, as Plaintiff loaned Precision Forging the
funds to purchase the Collateral. Likewise, there is no dispute that Kloss
breached the terms of the Guaranty by failing to pay Plaintiff the amounts due
and owing and by failing to make ensuing payments as they came due. (UMF 21.)
Therefore, Kloss breached the guaranty.
d. Damage
to Signature Financial.
Here, the undisputed evidence establishes that, as a result
of Defendant’s defaults under the Contract and Guaranty, Signature Financial
has suffered damages, as of April 3, 2023, as follows: (i) $940,044.23 under
the Collateral Financing Agreement and the Guaranty; (ii) interest and late
fees totaling $39,513.33; and (iii) $91,089.63 in reasonable attorneys’ fees
and costs incurred in connection with Signature Financial’s enforcement of its
remedies under the Contract and the Guaranty. (UMF 25.)
Plaintiff meets its burden by presenting no triable issue
of fact. Defendant Kloss does not oppose
this motion and thus has not produced evidence
showing that there is a triable issue of one or more material facts.
Therefore, Plaintiff’s Motion
for Summary Judgment is GRANTED.
Conclusion
Plaintiff Signature
Financial’s Motion for Summary Judgment against Defendant Kloss is GRANTED.
Moving party to give notice.