TENTATIVE RULING

Plaintiff Webster Bank, National Association’s Motion for Summary Judgment, or in the Alternative, Summary Adjudication is GRANTED in the reduced amount of $8,253,264.75.

Plaintiff Webster Bank, National Association shall prepare, serve, and submit a proposed judgment as per statute. Costs shall be determined by statute. Attorney fees shall be determined pursuant to a noticed motion.

Plaintiff Webster Bank, National Association to give notice. 

REASONING

Plaintiff Webster Bank, National Association (“Plaintiff”) moves the Court for an order granting summary judgment or adjudication in its favor as to its first cause of action for recovery of personal property against Defendant PM Factors, Inc. and its third cause of action for breach of guaranty against Defendant Peter Perl. No defendant has filed an opposition to Plaintiff’s motion. While the moving party generally bears the initial burden of proof on its motion, and lack of opposition will not automatically entitle the moving party to prevail on its motion, a party’s failure to file an opposition can be considered a concession that the motion is meritorious. (See Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410.)

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “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.) 

“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 or summary adjudication “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, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (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.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Med. Ctr. (2008) 159 Cal.App.4th 463, 467 (Avivi).)

“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.) “[T]he court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection) . . . in the light most favorable to the party opposing summary judgment.” (Avivi, supra, 159 Cal.App.4th at p. 467; see also Code Civ. Proc., § 437c, subd. (c).)

Background

Plaintiff Sterling National Bank (“Sterling”) alleged in the complaint that Defendant PM Factors, Inc. (“PMF”) entered into a Loan and Security Agreement with Sterling on December 15, 2015, and on April 4, 2018, PMF entered into a Note Modification Agreement to increase the principal loan amount from $11,000,000 to $12,000,000. (Compl. ¶¶ 10-11.) On March 28, 2019, PMF entered into a second Note Modification Agreement, and on June 17, 2020, PMF entered into an Allonge to Loan and Security Agreement to amend the maturity date under the Loan Agreement to August 31, 2020. (Compl. ¶¶ 12-13.) On November 23, 2020, PMF entered into an Amendment to Loan and Security Agreement to amend the maturity date under the Loan Agreement to December 31, 2020. (Compl. ¶ 14.) On March 15, 2021, PMF entered into an Amendment to Loan and Security Agreement to amend the maturity date under the Loan Agreement to June 30, 2022, subject to acceleration in the event of default, and Defendant Peter Perl (“Perl”) entered into a Reaffirmation of Guaranty dated March 15, 2021 and Amendment and Reaffirmation of Subordination Agreement dated March 15, 2021. (Compl. ¶ 15.) Pursuant to the Loan Agreement, Sterling extended credit to PMF, and as of October 14, 2021, the outstanding amount due is a principal of $8,632,981.16, plus interest, field examination fees, and attorney fees and costs. (Compl. ¶ 16.) On August 29, 2024, the Court granted an Ex Parte Application to Amend the Party Name of Plaintiff Sterling National Bank to Webster Bank, National Association, making Plaintiff Webster Bank, National Association the plaintiff in this action.

In the present motion, Plaintiff moves for summary judgment or adjudication as to its first cause of action for recovery of personal property against PMF and third cause of action for breach of guaranty against Perl. On November 12, 2024, Plaintiff voluntarily dismissed its fourth cause of action for judicial foreclosure against PMF.

To establish a cause of action for breach of contract, Plaintiff must be able to establish “(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.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) The elements of cause of action for breach of guaranty are “1) there is a valid guaranty, 2) the borrower has defaulted, and 3) the guarantor failed to perform under the guaranty.” (Gray1 CPB, LLC v. Kolokotronis (2011) 202 Cal.App.4th 480, 486.)

Plaintiff provides evidence that on December 15, 2015, Plaintiff and PMF executed the Loan and Security Agreement whereby PMF borrowed revolving loans not to exceed $10,000,000, and they entered into a Subordination Agreement for the Loan Agreement to take priority over any present or future indebtedness of PMF to junior creditors. (Pl.’s UMF Nos. 1, 3.) PMF entered into a Note Modification on April 4, 2018, to increase the principal loan amount from $11,000,000 to $12,000,000, on March 28, 2019, PMF entered into a second Note Modification Agreement, and on June 17, 2020, PMF entered into an Allonge to Loan and Security Agreement to amend the maturity date under the Loan Agreement to August 31, 2020. (Pl.’s UMF Nos. 4-6.) On November 23, 2020, PMF entered into an Amendment to Loan and Security Agreement to amend the maturity date under the Loan Agreement to December 31, 2020. (Pl.’s UMF No. 7.)  On March 15, 2021, PMF entered into an Amendment to Loan and Security Agreement to amend the maturity date under the Loan Agreement to June 30, 2022, subject to acceleration in the event of default, and Perl entered into a Reaffirmation of Guaranty dated March 15, 2021 and Amendment and Reaffirmation of Subordination Agreement dated March 15, 2021. (Pl.’s UMF Nos. 10-12.) As of August 28, 2024, the outstanding amount due to Plaintiff is principal in the amount of $5,040,994.30; accrued non-default interest in the amount of $1,314,337.40; late fees in the amount of $437,897.05; accrued default interest in the amount of $1,445,761.00, which

commenced on June 7, 2021, and accrues at the per diem rate of $1,199.03; appraisal fees in the amount of $14,275.00; and attorney fees and costs. (Pl.’s UMF No. 21.) Neither PMF nor Perl has paid the outstanding amount due and owing to Plaintiff. (Pl.’s UMF Nos. 18, 19.)

The Loan Agreement gives Plaintiff a security interest in PMF’s collateral, and it defines “Collateral” as follows:

[A]ll right, title and interest of each Entity Loan Party in and to each of the following items, whether now owned or existing or hereafter created, acquired or arising, and wherever located from time to time: (i) accounts; (ii) chattel paper, (iii) goods, (iv) inventory, (v) equipment, (vi) fixtures; (vii) farm products; (viii) instruments; (ix) investment property; (x) documents; (xi) commercial tort claims; (xii) deposit accounts and money; (xiii) letter-of-credit rights; (xiv) general intangibles; (xv) all contract rights, including without limitation, all rights of Borrower in, to and under the Borrower Financing Agreements and other agreements related there.to (including, without limitation, all Security Documents); (xvi) supporting obligations; (xvii) vehicles; (xviii) real property; (xix) to the extent not listed above, all other personal property and real property; (xx) health-care insurance receivables; (xxi) money; (xxii) all assets described in Section 2.1; and (xxiii) all proceeds and products of the foregoing.

(Pl.’s UMF No. 1; Mot., Burke Decl. ¶ 7, Ex. 1, paragraph breaks omitted.)

This evidence allows Plaintiff to meet its burden of establishing that there is no triable issue of material fact as to its claims for recovery of personal property and breach of guaranty. No defendant has opposed the present motion, thereby failing to establish that a triable issue of material fact exists as to Plaintiff’s claims.

Accordingly, Plaintiff Webster Bank, National Association’s Motion for Summary Judgment, or in the Alternative, Summary Adjudication GRANTED in the reduced amount of $8,253,264.75. Plaintiff Webster Bank, National Association shall prepare, serve, and submit a proposed judgment as per statute. Costs shall be determined by statute. Attorney fees shall be determined pursuant to a noticed motion.