Judge: Malcolm Mackey, Case: 22STCV00239, Date: 2022-09-27 Tentative Ruling
Case Number: 22STCV00239 Hearing Date: September 27, 2022 Dept: 55
ON
DECK CAPITAL, INC. v. JUTANHAK COSMETICS USA, INC. 22STCV00239
Hearing Date:
9/27/22, Dept. 55
#8: DEMURRER
TO COMPLAINT.
Notice: Okay
Opposition
MP:
Defendants YOUNG HAN KIM and JUTANHAK
COSMETICS, USA, INC.
RP:
Plaintiff
Summary
On 1/4/22, Plaintiff ON DECK CAPITAL, INC. filed a
Complaint for BREACH OF WRITTEN CONTRACT, alleging that, on or about 2/25/20,
Plaintiff's assignor CELTIC BANK, and defendants JUTANHAK COSMETICS USA, INC.
and YOUNG HAN KIM, entered into a written contract for a business loan, but defendants
subsequently breached by failure to make payments, causing damages in the sum
of $133,150.89.
MP
Positions
Moving parties request an order sustaining the
demurrer to the Complaint, on grounds including the following:
·
The almost 50 percent interest rate
exceeds the 10% maximum interest rate permitted under Article XV, section 1 of
the California Constitution, and is usurious, and unconscionable.
·
The alleged assignment is uncertain as to
details.
·
Exhibit A to the Complaint is not an
executed contract.
·
Facts regarding breach are not alleged.
Capital has no idea what term of the
Contract was allegedly breached, when payments were due, what monies
were actually paid and received by Capital's assignor, or the date of breach,
if any, because none of the facts necessary to plead the element of breach have
been alleged.
RP
Positions
Opposing party advocates overruling, for reasons
including the following:
·
Interest in excess of the maximum rate is
legal and enforceable where, as here, the contract is with a bank.
·
The agreement to the terms of the Business
Loan and Security Agreement and Business Loan and Security Agreement Supplement
is evidenced by the signature of all parties on the Signature Page.
·
The Complaint adequately alleges that
about February 25, 2020, a written agreement was made between assignor Celtic
Bank and Jutanhak Cosmetics USA, Inc. and Young Han Kim, guarantor.
·
The terms of the written loan agreement
attached to the Complaint, are clear.
·
The pleading sufficiently alleges that
defendants breached the agreement by failing to make payment as agreed.
Tentative
Ruling
The demurrer is overruled. Twenty days to answer.
Usury and
Unconscionability
Plaintiffs are not required to address affirmative
defenses in their pleadings, unless already revealed. E.g., Gentry v. eBay, Inc.
(2002) 99 Cal.App.4th 816, 825. “‘[A]
demurrer based on an affirmative defense will be sustained only where the face
of the complaint discloses that the action is necessarily barred by the
defense.’” McKenney v. Purepac
Pharmaceutical Co. (2008) 167
Cal.App.4th 72, 78-79.
The defense of a usurious loan is not revealed by the
Complaint. Exhibit A to the Complaint,
at page 1, states that “Celtic Bank” was the lender. Defendant’s name reasonably infers a bank. Banks are exempt from usury law. Jones v. Wells Fargo Bank (2003) 112 Cal.
App. 4th 1527, 1535 n.3. See also Jones v. Wells Fargo Bank (2003) 112
Cal. App. 4th 1527, 1535 (“‘[T]he usury law … is riddled with so many
exceptions that the law’s application itself seems to be the exception rather
than the rule.’”). If the assignor was
not a bank, defendants have the burden to address that, not Plaintiff.
The defense of unconscionability is not revealed by
the Complaint. It is not determined
based upon just the interest rate as a matter of law. Unconscionability turns upon the circumstances
of the transaction, justifications and amounts other consumers pay in similar
transactions. Perdue v. Crocker Nat’l
Bank (1985) 38 Cal. 3d 913, 926-27.
If circumstances support a finding of unconscionability as to the
interest rate, then defendants have the burden to address them, not plaintiffs.
Assignment
Contract
Signatures
Generally, contract signatures are not necessarily
required, unless “‘the signatures of all parties were contemplated as being a
condition precedent to the validity of the contract….’” Rael v. Davis
(2008) 166 Cal.App.4th 1608, 1618 n.15 (citing, e.g., CC §3388). “[I]t is
not the presence or absence of a signature which is dispositive; it is the
presence or absence of evidence of an agreement ….” Banner Entertainment, Inc. v. Sup. Ct. (1998) 62 Cal.App.4th 348, 361 (finding a
complete absence of proof of circumstances showing assent).
“Civil Code section 1633.9 addresses how a proponent
of an electronic signature may authenticate the signature.” Ruiz v. Moss Bros. Auto Grp. (2014)
232 Cal. App. 4th 836, 843 (unsupported assertion the person electronically
signed insufficient authentication). Accord
Espejo v. S. California Permanente Med. Grp. (2016) 246 Cal. App.
4th 1047, 1062 (factual details to
properly authenticated electronic signature, such as using security, passwords,
time and IP address); J.B.B.
Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 989 (insufficient proof to show party printed
name at the end of e-mail with any intent to formalize electronic transaction).
“Mutual assent usually is manifested by an offer
communicated to the offeree and an acceptance communicated to the
offeror.” Donovan v. Rrl Corp.
(2001) 26 Cal. 4th 261, 270-71. “The
requirements are only that there be a writing containing all terms and that
there be acceptance by the party to be charged. How that acceptance is
manifested is a matter of proof. It may be proved by evidence of words spoken,
if believed by the trier of fact. It may be proved by evidence of a particular
act other than signing. It may be proved by evidence that the party to be
charged prepared the written document and offered to perform its terms.” E.O.C. Ord v. Kovakovich (1988) 200
Cal. App. 3d 1194, 1201.
Breach
The Complaint sufficiently alleges defendants’ loan
nonpayment and breach of an individual guaranty of such payment.
Pleaders are to state facts showing a breach. Levy v. State Farm Mutual Automobile Ins.
Co. (2007) 150 Cal. App. 4th 1, 5-6.
Uncertainty