Judge: Mark A. Young, Case: 24SMCV01008, Date: 2025-02-13 Tentative Ruling

Case Number: 24SMCV01008    Hearing Date: February 13, 2025    Dept: M

CASE NAME:           Douglas Emmett 1995 LLC v. Saltmine LLC, et al.

CASE NO.:                24SMCV01008

MOTION:                  Motion for Summary Judgment

HEARING DATE:   2/13/2025

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.)¿ 

EVIDENTIARY ISSUES

Plaintiff’s objections are OVERRULED.

Analysis

Defendants Stephen L. Thomas and Pamela N. Thomas move for summary judgment in this matter. Plaintiff Douglas Emmett 1995’s (“DE95”) complaint alleges that the Thomas Defendants are indebted to Plaintiff for the sums due and owing but unpaid under the Lease between itself and Defendant Saltmine LLC (dba Esquire Suites) through the end of the full Lease term on May 31, 2024. (Compl., ¶¶ 13-14, 27.)

“A surety or guarantor is one who promises to answer for the debt, default, or miscarriage of another, or hypothecates property as security therefor.” (Civ. Code, § 2787.) “The liability of the guarantor of an absolute and unconditional guaranty is fixed when the principal obligation matures and is not predicated upon the exhaustion by the creditor of his remedies against the principal debtor, or the exhaustion of other security for the debt; and it is immaterial whether the debtor can or cannot pay the debt.” (Ralston-Purina Company vs Carter (1962) 210 Cal.App.2d 372, 380.)

Thomas Defendants argue that they are not further liable on their personal guaranty on the Lease because they have already paid the maximum amount under the Guaranty’s terms. They present the following undisputed material facts in support of their argument. DE95 and Saltmine entered into an office lease for space on the fourth floor of the office building at 12400 Wilshire Boulevard in the Fall of 1986 for the purpose of subletting to attorneys and other professionals. (UMF 1.) The parties extended and modified their lease, including a separate Guaranty agreement signed by the Thomas defendants pursuant to which the Thomas defendants promised “to perform and be liable for any and all obligations and liabilities of” Esquire Suites under the terms of the lease. (UMF 2.) The most recent renewal, the Third Amendment, specified a “Maximum Liability Amount” as follows:

7. Extension of Guaranty. By their signatures hereinbelow, Tenant and Guarantor(s) acknowledge and agree that, as a material consideration for Landlord entering into this Third Amendment, the provisions and covenants contained in that certain Guaranty of Lease executed by Guarantor on July 17, 2006 (the “Guaranty”), shall extend to and include the provisions of this Third Amendment, as if the same had been originally incorporated into the Lease referenced in said Guaranty. Notwithstanding the foregoing, Paragraph 20 of the Guaranty (as modified by Section 11 of the First Amendment) shall be deleted in its entirety and the following shall be inserted in place and instead of Paragraph 20 as if the same had been originally incorporated into said Guaranty: “20. Maximum Liability Amount. Notwithstanding any other provisions herein to the contrary, the aggregate liability of the undersigned for obligations and liabilities of Tenant under the Lease shall not exceed the sum of (a) Maximum Liability Amount (as defined below) in effect at the time the liability arises or is incurred, plus (b) all costs, (including, without limitation, court costs, reasonable attorney fees and costs and collection costs) of enforcement of this Guaranty. The term “Maximum Liability Amount” means . . .

(iii) $70,000.00 on June 1, 2020.

(UMF 3, emphasis added.)

In 2019-2020, COVID-19 pandemic “stay-at-home” orders forced the subtenants of Esquire Suites to stay at home rather than coming into the office. Subtenants began giving notice of termination of their subleases. (UMF 5.) In April of 2020, Mr. Thomas was concerned that revenue would plummet and Esquire Suites would not be able to pay all of its expenses. (UMF 6.) Mr. Thomas telephoned and met personally with Paige Parker, Douglas Emmett’s then building manager of 12400 Wilshire, to explain to her that subtenants of Esquire Suites were terminating their subleases and that it was unlikely that Esquire Suites would be able to pay rent to Douglas Emmett in the near future. (Id.)

On May 20, 2020, Paige Parker sent a letter to Mr. Thomas at Esquire Suites regarding the office lease. The letter relevantly states:

While we are not pursing evictions of our tenants at this time for non-payment of rent as a direct result of the coronavirus pandemic, and there are certain rules that provide deferral for tenants who cannot pay their rent as a result of the pandemic, you will risk defaulting under the terms of your lease unless we receive your rent and other amounts on a timely basis. To avoid these consequences you should pay as much of your rent as you can. To the extent that you cannot pay all or part of your rent at this time because of the coronavirus pandemic, please let us know by completing the enclosed Tenant Application for Rent Deferral to validate your request. However, please be aware that in the absence of a written agreement signed by us, your Lease continues to govern the respective rights and obligations between landlord and tenant.”

(UMF 6, emphasis added.)

After receipt of the letter, Mr. Thomas met personally with Ms. Parker to advise her that Esquire Suites would not be able to pay rent for June 2020, but that Mr. Thomas would be willing to issue a check from his own account to satisfy their obligation under the personal guaranty. (UMF 7.) Ms. Parker thanked Mr. Thomas for keeping her informed of Esquire Suites situation and for committing to personally pay the rent in performance of the guaranty obligation. (Id.) On May 21, 2020, Douglas Emmett delivered to Esquire Suites an invoice in the sum of $45,756.78 for June’s rent. (UMF 8.) Esquire Suites did not pay the invoice. (Id.) Instead, consistent with Mr. Thomas’ face to face conversation with Ms. Parker, Mr. Thomas paid the entire invoice by personal check dated June 1, 2020, in the sum of $45,756.78, which Douglas Emmett cashed. (UMF 8.) On June 19, 2020, Douglas Emmett delivered an invoice to Esquire Suites in the sum of $45,656.04 for July’s rent. (UMF 9.) On July 1, 2020, Esquire Suites paid $21,412.82 of this invoice to Douglas Emmett and Mr. Thomas paid the remainder of this invoice in the sum of $24,2443.22 by personal check dated July 1, 2020. (Id.) Douglas Emmett cashed this check as well. (Id.) With these two payments, both from Mr. Thomas’ personal Union Bank checking account, the Thomas defendants paid the sum of $70,000, due on the personal Guaranty. (UMF 9.)

Esquire Suites did not pay after July 1, 2020. (UMF 10.) In his meeting with Mr. Parker, Mr. Thomas advised that Esquire Suites would cooperate with Douglas Emmett fully, including surrendering its space back to Douglas Emmett, forming a partnership to operate Esquire Suites, and at no cost to Douglas Emmett, to take over operation of its business. (Id.) In an email to Mr. Thomas dated July 1, 2020, Ms. Parker acknowledged their previous meeting along with his proposals, thanked Mr. Thomas for his payments and stated that Douglas Emmett had not approved any of Esquire Suites proposals. (Id.) In 2022, after the LA County Eviction Moratorium expired, DE 95 demanded that Esquire Suites pay rent or quit. (UMF 11.) In June 2022, Esquire Suites surrendered possession of the premises to Douglas Emmett. (Id.)

The above evidence meets Defendants’ burden of production. Defendants show that the Guaranty was subject to an “aggregate” cap of $70,000.00 on Defendants’ personal liability. Defendants present undisputed evidence that they have personally paid $70,000.00 to Plaintiff pursuant to the Guaranty. The plain language of the Lease and Guaranty show that Thomas Defendants’ obligation and promise to perform of the Guarantor is not conditioned on a demand from the Landlord or a default by the Tenant. In any event, the evidence submitted demonstrates that Saltmine was in default on the June and July 2020 rent at the time of payment. It is undisputed that Saltmine did not pay the demanded rent. Moreover, the May 20, 2020, letter from Ms. Parker demanded that Thomas Defendants comply with the terms of the Guaranty or risk Default even if Plaintiff would not pursue an eviction.

Plaintiff does not submit any dispute of material fact. Plaintiff asserts that its agent, Ms. Parker, had no idea that Mr. Thomas’s personal payments would be applied to the Guaranty cap. (Parker Decl., ¶ 12.) However, Plaintiff submits no substantive evidence that Ms. Parker never discussed any guaranty payments with Mr. Thomas “prior to June 1, 2020.” Ms. Parker’s conclusory statement on this point does not overcome the specific, substantial evidence of the parties’ email correspondence. Mr. Thomas’s payment via personal check is also not disputed. Moreover, Plaintiff does not explain why its agent’s subjective understanding of Defendants’ intent regarding the payments would be significant. (Parker Decl. ¶ 12.) Plaintiff also does not explain why its assent would be required for payments on the Guaranty. If anything, Ms. Parker’s declaration is materially consistent with Thomas Defendants’ personal payment on the Guaranty using Mr. Thomas’s personal checks and funds.

Plaintiff argues that the personal checks do not meet the requirements for accord and satisfaction. This argument fails to create a dispute of material fact. “An accord and satisfaction is the substitution of a new agreement for and in satisfaction of a preexisting agreement between the same parties. The usual purpose is to settle a claim at a lesser amount.” (In re Marriage of Thompson (1996) 41 Cal.App.4th 1049, 1058, emphasis added.) Defendants did not need to create a new obligation via their payments, replacing the pre-existing lease and guarantee, because their payments strictly complied with the pre-existing terms. The undisputed facts show that Defendants paid their “Maximum Liability Amount” as defined by the Lease and Guaranty. Thus, Defendants met their obligations under the existing terms of the contract. Defendants therefore do not need to meet the requirements of accord and satisfaction.

Accordingly, summary judgment is GRANTED for Plaintiff.