Judge: Mark A. Young, Case: 22SMCV01151, Date: 2023-10-09 Tentative Ruling
Case Number: 22SMCV01151 Hearing Date: October 9, 2023 Dept: M
CASE NAME: Creditors Adjustment Bureau Inc., v. Quantum
Epigenetics Consulting LLC, et al.
CASE NO.: 22SMCV01151
MOTION: Motion
for Summary Judgment/Adjudication
HEARING DATE: 10/9/2023
Legal
Standard
A party may move for summary
judgment in any action or proceeding if it is contended the action has no merit
or that there is no defense to the action or proceeding. (CCP, § 437c(a).) “The
purpose of the law of 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. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)
“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 the
party contends that the cause of action has no merit, that there is no
affirmative defense to the cause of action, that there is no merit to an
affirmative defense as to any cause of action, that there is no merit to a
claim for 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.” (CCP, § 437c(f)(1).) If a party seeks summary
adjudication as an alternative to a request for summary judgment, the request
must be clearly made in the notice of the motion. (Gonzales v. Superior
Court (1987) 189 Cal.App.3d 1542, 1544.) “[A] party may move for
summary adjudication of a legal issue or a claim for damages other than
punitive damages that does not completely dispose of a cause of action,
affirmative defense, or issue of duty pursuant to” subdivision (t).
(CCP, § 437c(t).)
To
prevail, the evidence submitted must show there is no triable issue as to any
material fact and that the moving party is entitled to judgment as a matter of
law. (CCP, § 437c(c).) The motion cannot succeed unless the
evidence leaves no room for conflicting inferences as to material facts; the
court has no power to weigh one inference against another or against other
evidence. (Murillo v. Rite Stuff Food Inc. (1998) 65 Cal.App.4th
833, 841.) In determining whether the facts give rise to a triable issue of
material fact, “[a]ll doubts as to whether any material, triable, issues of
fact exist are to be resolved in favor of the party opposing summary judgment…”
(Gold v. Weissman (2004) 114 Cal.App.4th 1195, 1198-99.) “In other
words, the facts alleged in the evidence of the party opposing summary judgment
and the reasonable inferences there from must be accepted as true.” (Jackson
v. County of Los Angeles (1997) 60 Cal.App.4th 171, 179.) However, if
adjudication is otherwise proper the motion “may not be denied on grounds of
credibility,” except when a material fact is the witness’s state of
mind and “that fact is sought to be established solely by the [witness’s]
affirmation thereof.” (CCP, § 437c(e).)
Once
the moving party has met their burden, the burden shifts to the opposing party
“to show that a triable issue of one or more material facts exists as to that
cause of action or a defense thereto.” (CCP § 437c(p)(1).) “[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... necessary to sustain a judgment in his
favor.” (Consumer Cause, Inc. v. SmileCare (2001) 91
Cal.App.4th 454, 468.)
“The pleadings play a key role in a summary
judgment motion. The function of the pleadings in a motion for summary judgment
is to delimit the scope of the issues and to frame the outer measure
of materiality in a summary judgment proceeding.” (Hutton v. Fidelity
National Title Co. (2013) 213 Cal.App.4th 486, 493, quotations
and citations omitted.) “Accordingly, the burden of a defendant moving for
summary judgment only requires that he or she negate plaintiff's theories of
liability as alleged in the complaint; that is, a moving party need
not refute liability on some theoretical possibility not included in the
pleadings.” (Ibid.)
Analysis
Plaintiff Creditors Adjustment
Bureau, Inc. moves for summary judgment on its complaint against defendants Quantum
Epigenetics Consulting, LLC, and Aaron William Cameron Phypers.
Alternatively, Plaintiff requests summary adjudication of each cause of action in
the complaint. The complaint alleges two causes of action for breach of
promissory note and unjust enrichment.
Breach of Contract
“The standard elements of a claim
for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff
therefrom.’” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164
Cal.App.4th 1171, 1178.)
Plaintiff alleges a breach of a
promissory note for a loan between Plaintiff’s assignor, 2247076 Ontario Inc.
(“Assignor”), and Defendants. In early 2019, Assignor’s president, Tom
McCormick, met with Phypers who was running a business called The Q360 Club
(“Q360”) operating at 24903 Pacific Coast Hwy, Ste 100, in Malibu. McCormick
agreed to loan $100,000.00 to Q360. On February 1, 2019, Assignor and
Defendants entered into a promissory note setting forth the loan and repayment
terms. (UMF 1.) The Promissory Note identified the Defendants, Quantum and
Phypers, as a “Borrower”, and 2247076 Ontario, Inc. as the “Lender.” (UMF 2.)
Borrowers would repay the entire principal, plus interest by February 1, 2020.
(UMF 3.)
On May 14, 2019, Defendants and
2247076 Ontario, Inc. signed a “First Amendment to Promissory Note” establishing
a payment plan of equal monthly payments of $6,000.00 from May 15, 2019,
through January 15, 2020, and a maturity date of February 1, 2020. (UMF 4.) Pursuant
to the First Amendment to Promissory Note, Defendants provided Assignor with
nine (9) post-dated checks, each for $6,000.00, to be deposited as payment on
the 15th day of each month. (UMF 5.) Pursuant to the Note, from May 15, 2019,
to September 15, 2019, Assignor cashed five of the checks on the 15th of every
month, equaling the total sum of $30,000.00. (UMF 5.)
On August 27, 2019, Assignor
further loaned $60,000.00 to Quantum. (UMF 6.) On October 14, 2019, Phypers and
Quantum’s CFO, Steve Barnard, requested that 2247076 Ontario, Inc. not deposit
the $6,000.00 check dated October 15, 2019. (UMF 7.) Pursuant to Quantum’s
request, the check post-dated October 15, 2019, was not deposited. (Id.)
On November 20, 2019, Assignor and
Defendants executed a third document entitled “Replacement and Additional
Advance Promissory Note A-1” (the “Replacement Note”) in the principal amount
of $190,000.00 to evidence additional monies loaned to Defendants. (UMF 8.)
This amount included the $100,000.00 loaned on the initial Promissory Note,
less $30,000.00 in payments made by Defendants, plus an additional $60,000.00
advance to Quantum, $26,412.62 paid to Quantum’s landlord via wire, and another
$30,000 advance to Quantum on December 6, 2019. (UMF 8, 11 [total $186,412.62].)
Phypers signed the Replacement Note in both his individual capacity, and on
behalf of Quantum, as its president. (UMF 9.) The Replacement Note’s maturity
date was November 1, 2020, with interest accruing at a rate of 8% from February
1, 2020, to November 1, 2020. (UMF 10, 14.) Defendants failed to pay the
Replacement Note balance when it matured on November 1, 2020. (UMF 4.) The
remaining principal balance of $186,412.62 remains unpaid, plus accrued unpaid
interest at the rate of 10% per annum from November 1, 2020, to the present, as
set forth in the Replacement Note. (UMF 13, 14, 15.)
On May 31, 2022, Assignor assigned
this matter to Plaintiff for collection purposes. (UMF 16.) Plaintiff claims
damages of the unpaid balance remaining due and owing on the Replacement Note,
plus interest, attorneys’ fees, and costs as to the first cause of action for
breach of promissory note, and as to the second cause of action for unjust
enrichment. (UMF 17.)
Plaintiff presents undisputed evidence supporting each
element of the first cause of action for breach of the Notes. As stated above,
the Replacement Note was executed by Phypers individually, and as President of
Quantum. (UMF 8-9.) Assignor loaned and
delivered the promised money to Defendants, thereby performing all material
obligations under the Replacement Note. (UMF 11, 18.) Defendants breached the
terms of the Replacement Note by failing to pay the balance in full when it
matured on November 1, 2022. (UMF 11-12.) Therefore, Assignor was damaged in
the remaining principal amount of $186,412.62, plus interest, attorneys’ fees,
and costs. (UMF 13-15, 28-30.) Plaintiff computes the interest through the date
of this hearing -- $65,738.40. (UMF 28-29.)
Plaintiff therefore proves damages in the amount of $252,151.02, plus fees and
costs. Plaintiff also provides evidence of the assignment of this claim to it.
(UMF 17.) On the Court’s own motion, the
Court continued the matter to October 9, 2023.
Thus, an additional $204.15 in interest accrued. Thus, the total interest would be $65,942.55,
and the total amount of damages would be $252,355.17.
With this evidence, Plaintiff meets
its burden of proof on the motion for adjudication of the first cause of
action.
Defendants failed to oppose, and
therefore failed to meet their burden to demonstrate a dispute of material
fact.
Accordingly, the motion is GRANTED
as to the first cause of action. The judgment
amount would be $252,355.17.
Unjust Enrichment
California Courts have explicitly held
that “there is no cause of action in California for unjust enrichment.” (Melchior
v. New Line Prods., Inc. (2003 – 2nd Dist.) 106 Cal.App.4th 779, 793; McKell
v. Wash. Mut., Inc. (2006 – 2nd Dist.) 142 Cal.App.4th 1457, 1490; Jogani
v. Superior Court (2008 – 2nd Dist.) 165 Cal.App.4th 901, 911.) These
courts reason that unjust enrichment is “not a cause of action ... or even a
remedy, but rather a principle, underlying various legal doctrines and
remedies. It is synonymous with restitution.” (McBride v. Boughton
(2004) 123 Cal.App.4th 379, 387, internal quotation marks and citations omitted;
but see First Nationwide Sav. v. Perry (1992 – 6th Dist.) 11 Cal.App.4th
1657, 1662–63 [recognizing an independent cause of action for unjust enrichment].)
Following Second District authority, the Court cannot grant relief on the
unjust enrichment cause of action. In any event, the second cause of action is
largely duplicative of the first.
The motion for summary judgment is
therefore DENIED. Likewise, the motion for summary adjudication is DENIED as to
the second cause of action.