Judge: Mark A. Young, Case: SC129711, Date: 2023-01-12 Tentative Ruling
Case Number: SC129711 Hearing Date: January 12, 2023 Dept: M
CASE NAME: AMAG Inc., v. Large, et al.
CASE NO.: SC129711
MOTION: Motion for Summary Judgment
HEARING DATE: 1/12/2023
BACKGROUND
On August 21, 2018, Plaintiff AMAG Inc. filed the instant action for breach of contract against Corey Large, Alan Pao, Rudi Krieger, Wingman Productions, U.S., Inc., and 308 Enterprises LLC. The Complaint states five causes of action for 1) Breach of Loan Agreement (Corey Large), 2) Breach of Continuing Personal Guaranty (Alan Pao), 3) Breach of Continuing Personal Guaranty (Jody Lianne Large and Rudi Krieger), 4) Breach of Security Agreement Mortgage of Copyright, and Article 9 Foreclosure (Wingman Productions U.S. Inc.), and 5) Conversion (Corey Large and 308 Enterprises). On October 27, 2022, Plaintiff filed a motion for summary judgment only against Defendants Corey Large, Pao, Jody Large and Krieger.
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.)
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 RULINGS
Defendants’ objections to the declaration of Robert Frcek are OVERRULED.
As to objections nos. 1-9, and 11-21, Mr. Frcek establishes his personal knowledge, and the business record exception applies to the hearsay components. As to objection no. 10, Defendants argue that a default interest rate is not specified anywhere in the agreements attached to Plaintiff’s moving papers and, in addition, varies from the interest rate being charged by Plaintiff. Defendants misstate the evidence. The Frcek declaration, Ex. 1 ¶¶ 8.f.i, states: “In the event the Loan has not Been repaid in whole prior to an Event of Default, as defined below, or the Repayment Date [October 1, 2012], whichever occurs first, the then Loan be deemed to be in default, and in addition to Lender's right to receive an amount equal to the outstanding balance of the Loan, Lender shall be entitled to the following: [¶] Compounded interest at the rate equal to 1.5% per month, which is due and payable monthly in arrears (no later than the 5th business day of the month). Interest shall accrue monthly, and shall be added to all other amounts owed pursuant to the Loan, commencing on the earlier of the Repayment Date or an Event of Default and continuing until the date the Loan has been repaid in full . . ..” Of note, UMF no. 10 – which deals with this exact issue -- is undisputed.
As to an additional evidentiary issue, the declaration of Corey Large was not properly verified under penalty of perjury under the laws of California.
Analysis
Defects in Notice
As an initial matter, Plaintiff’s notice is defective because it does not strictly comply with Code of Civil Procedure section 1010. Indeed, the notice fails to state the grounds for summary judgment (i.e., section 437c) in the notice, or a specific order or judgment sought. (See CCP § 1010 [notices must state “the grounds upon which it will be made,” and the papers, if any, upon which it is to be based]; see Weil & Brown, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 10-C, 10:85 [“notice of motion should name the party in whose favor and against whom the judgment is sought; and the amount thereof, if applicable.”].)
The notice of motion must state in the first paragraph exactly what relief is sought and why. (People v. American Sur. Ins. Co. (1999) 75 Cal.App.4th 719, 726.) The court generally cannot grant different relief, or relief on different grounds, than stated in the notice of motion. (Id.) Additionally, summary judgment remains a “drastic” remedy, and as such the movant “is held to strict compliance with the procedural requisites.” (Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 949.) The notice only states that the motion for summary judgment is brought “as to Defendant Corey Large ("Large"), Defendant Alan Pao ("Pao") and Defendants Jody Lianne Large and Rudi Krieger for hearing” and the documents upon which the motion is based. It never specifies whether the motion is directed to the entire complaint or particular causes of action.
However, the Court has the discretion to consider a motion despite defective notice. The purpose of the notice requirements “is to cause the moving party to ‘sufficiently define the issues for the information and attention of the adverse party and the court.’ ” (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1125.) “Sometimes this purpose is met notwithstanding deficient notice. For example, it may be sufficient that the supporting papers contain the grounds for the relief sought, even if the notice does not. (Kinda v. Carpenter (2016) 247 Cal.App.4th 1268, 1277-1278 [court had discretion to rule on grounds not stated in motion where no objection and parties had fair opportunity to address issues]; see Luxury Asset Lending, LLC v. Philadelphia Television Network, Inc. (2020) 56 Cal.App.5th 894, 908-909 [where memorandum made clear the grounds for relief sought under section 473.5, the court “should have overlooked” omission of grounds in notice].) Here, the Court concludes that the notice meets the intended purpose of section 1010. The Court determines there is negligible prejudice or confusion regarding whether Plaintiffs sought summary judgment and the statutory authority supporting such a motion. In their opposition, Defendants fairly addressed the issues presented by the motion for summary judgment.
Thus, the Court will exercise its discretion and consider the summary judgment motion despite the notice defect. Plaintiff’s notice of motion, however, is defective as to any purported motion for summary adjudication. Plaintiff asserts in reply that they intended to move for summary adjudication, and the court should treat this motion as such. However, the notice of motion only provides for summary judgment and provides for no other issues. The Court cannot grant a motion for summary adjudication of non-noticed issues. (Gonzales v. Superior Court (1987) 189 Cal.App.3d 1542, 1545-46; see Department of General Services v. Superior Court (1978) 85 Cal.App.3d 273, 284 [because summary judgment is a “drastic” remedy, a moving party “is held to strict compliance with the procedural requisites”].) “[I]t is improper to grant summary adjudication absent a motion therefor. [Citations.] Therefore, because [the moving party] did not move in the alternative for summary adjudication of specified issues, we will not address whether [he] may have prevailed on some issues in this case. [Citation.]” (Hawkins, supra, 144 Cal.App.4th at 949.)
Furthermore, as noted further below, Plaintiff’s separate statement does not “separately identify” the “cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion,” or contain the proper identification of issues. Therefore, any adjudication motion would be denied, even if Plaintiff moved for such relief. As noticed, the Court may only consider Plaintiff’s motion for summary judgment.
Summary Judgment as to Corey Large
The motion for summary judgment as to Corey Large is DENIED. “[A] motion for summary judgment must be directed to the issues raised by the pleadings.” (Lockhart v. County of Los Angeles (2007) 155 Cal.App.4th 289, 304, emphasis added.) If a party does not address an issue in a motion for summary judgment that has been raised in the complaint, it fails to meet its initial burden to show submitting evidence as to every element of the cause of action. (See Hedayati v. Interinsurance Exchange of the Automobile Club (2021) 67 Cal.App.5th 833, 843; Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 949.)
As to Defendants, including Corey Large, Plaintiff claims four causes of action: 1) Breach of Loan Agreement (Corey Large); 2) Breach of Continuing Personal Guaranty (Alan Pao); 3) Breach of Continuing Personal Guaranty (Jody Lianne Large and Rudi Krieger); and 5) Conversion (Corey Large and 308 Enterprises). Plaintiff failed to address the fifth cause of action for conversion, which would be required for a judgment against Corey Large on the complaint. Since there is no evidence or discussion of the conversion claim, Plaintiff has not demonstrated entitlement to judgment as a matter of law against Defendant Corey Large.
As to the other noticed defendants, Defendants do not provide authority that a plaintiff must demonstrate that all causes of action against all defendants must be proved in order to prevail on a motion for summary judgment against those defendants. Thus, simply because Plaintiff failed to demonstrate entitlement to judgment as a matter of law against Corey Large, does not mean that Plaintiff will be unable to demonstrate entitlement to judgment against the other defendants. Defendants do not suggest that a plaintiff cannot move for summary judgment against a particular defendant, rather than some or all defendants at once.
Defects in Separate Statement
AMAG concedes “that its pleadings may not have fully complied with certain California rules, [but] the deficiencies are minor . . . because the Defendants have provided no explanation of how any alleged deficiency would impair the Defendants' ability to respond to AMAG’s motion and because the statutes and rules governing the format of summary judgment moving papers are "permissive, not mandatory[.]" (Brown v. El Dorado Union High School District, (2022) 76 Cal. App. 5th 1003, 1019-1020; Truong v. Glasser, (2009) 181 Cal. App. 4th, 102, 118.) AMAG requests that the Court exercise its discretion to overlook the defect. In this instance, the Court will exercise its discretion and consider the motion and statement.
Plaintiff’s Initial Burden on Summary Judgment
Plaintiff moves for summary judgment against Defendants Pao, Jody Large, and Krieger. When a plaintiff or cross-complainant seeks summary judgment, he/she must produce admissible evidence on each element of each cause of action on which judgment is sought. (CCP § 437c(p)(1).) Plaintiff/Cross-Complainant is not required to disprove any affirmative defenses to discharge this burden. The opposing party on a motion for summary judgment is under no evidentiary burden to produce rebuttal evidence until the moving party meets his or her initial movant’s burden. (Binder v. Aetna Life Insurance Company (1999) 75 Cal.App.4th 832.) Once the initial movant’s burden is met, then the burden shifts to the opposing party to show, with admissible evidence, that there is a triable issue requiring the weighing procedures of trial. (CCP § 437c(p).)
The Complaint states two causes of action for breach of contract stemming from Defendants’ personal guarantees. On October 5, 2011, Corey Large and AMAG entered into a Loan Agreement in the principal amount of $600,000.00 ("Loan Agreement"). (UMF 1-3.) In accordance with the Loan Agreement, AMAG transferred the principal amount of $600,000.00 to Large on October 14, 2011. The Loan Agreement provides in Paragraph 8 that the Loan will accrue interest at the rate of 12% per annum. However, Paragraph 8.f.i states:
“In the event the Loan has not Been repaid in whole prior to an Event of Default, as defined below, or the Repayment Date [October 1, 2012], whichever occurs first, the then Loan be deemed to be in default, and in addition to Lender's right to receive an amount equal to the outstanding balance of the Loan, Lender shall be entitled to the following: [¶] Compounded interest at the rate equal to 1.5% per month, which is due and payable monthly in arrears (no later than the 5th business day of the month). Interest shall accrue monthly, and shall be added to all other amounts owed pursuant to the Loan, commencing on the earlier of the Repayment Date or an Event of Default and continuing until the date the Loan has been repaid in full…”
On October 12, 2011, Pao signed a Continuing Personal Guaranty pursuant to which Pao guaranteed payment of the Loan Agreement. (UMF 4.) As of June 30, 2014, Jody Large and Rudi Krieger signed a Personal Guaranty, in which they guaranteed the payment of the amounts due under the Loan Agreement. (UMF 6.) Paragraph 6 of the Loan Agreement sets October 1, 2012, as the Repayment Date. (UMF 7.) As of October 1, 2012, the balance that had not been paid was the principal amount of $600,000 and accrued interest in the amount of $5,917.81 for a total amount due of $605,917.81. (UMF 9.)
AMAG provides evidence that it received payments from Defendants (specifically, Mr. Large) on the following dates in the following amounts:
(1) October 26, 2012 in the amount of $5,917.81;
(2) November 9, 2012 in the amount of $69,837.34;
(3) December 11, 2012 in the amount of $8,876.71;
(4) January 11, 2013 in the amount of $9,172.60;
(5) February 11, 2013 in the amount of $9,172.60;
(6) March 11, 2013 in the amount of $8,284.93;
(7) April 30, 2013 in the amount of $9,172.60;
(8) June 14, 2013 in the amount of $18,185.02;
(9) July 18, 2013 in the amount of $8,876.72;
(10) August 26, 2013 in the amount of $9,172.61;
(11) September 13, 2013 in the amount of $10,089.86;
(12) October 10, 2013 in the amount of $8,935.52;
(13) November 19, 2013 in the amount of $10,089.86;
(14) December 19, 2013 in the amount of $9,809.15;
(15) February 4, 2014 in the amount of $14,053.33;
(16) October 23, 2014 in the amount of $255,942.27;
(17) October 5, 2015 in the amount of $20,000.00;
(18) November 27, 2015 in the amount of $19,985.00;
(19) January 19, 2016 in the amount of $20,015.00;
(20) February 11, 2016 in the amount of $20,000.00;
(21) March 7, 2016 in the amount of $20,000.00;
(22) April 19, 2016 in the amount of $20,000.00;
(23) May 27, 2016 in the amount of $20,000.00;
(24) June 29, 2016 in the amount of $20,005.00;
(25) August 17, 2016 in the amount of $20,000.00;
(26) September 28, 2016 in the amount of $19,990.00;
(27) November 16, 2016 in the amount of $70,000.00;
(28) December 9, 2016 in the amount of $20,000.00;
(29) July 6, 2017 in the amount of $30,000.00;
(30) August 9, 2017 in the amount of $18,000.00.
(Frcek Dec, ¶ 13.) As of August 9, 2017, the date of the last payment made by Mr. Large pursuant to the Loan Agreement, the principal balance owed was $337,905.20. (UMF 12.)
As of October 26, 2022, the balance of principal that remains unpaid pursuant to the Loan Agreement is $337,905.20 and the accrued interest that remains unpaid is $524,065.64 for a total balance due of $861,970.84. (UMF 13.) Interest continues to accrue after October 26, 2022, in accordance with the terms of the Loan Agreement until judgment is entered in this case. (UMF 14.)
The evidence thus demonstrates that Defendants Pao, Ms. Large and Krieger were obligated to pay the amounts due under the Loan pursuant to their respective personal guarantees. Accordingly, Plaintiff meets its burden to show entitlement to judgment as a matter of law on the outstanding amount of the Loan.
Defendants’ Burden
Defendants assert that Plaintiff has not established breach since Pao – not the other defendants, would be responsible for the unpaid principal and interest on the Loan. By 2014, the Loan had not been fully repaid. That year, Corey Large met with Pao, Plaintiff’s CEO and an agent of A-Mark Entertainment, LLC to discuss restructuring the payment schedule. (C. Large Dec. ¶¶ 6, 7.) At this meeting, the parties all agreed to modify the Loan Agreement so that Pao would be responsible for any unpaid principal and interest since, up to that point, only Corey had been making payments. (C. Large Dec. ¶ 6.) Defendants reason that since the parties expressly agreed that Defendants would no longer be obligated to make payments on the Loan, there can be no breach. Moreover, “It was known and understood by everyone at the meeting that neither Corey nor his parents, Jody and Rudi, would be obligated to make any additional payments towards the Loan.” (Large Dec., Ex. 4, with Frcek Dec., Ex. 5; see also Opp. at Section II.B.2(a).)
Consistent with his agreement to assume responsibility for any remaining payments, the Forbearance Agreement explicitly required Pao to pay Plaintiff “no less than $5,000 per month” beginning July 31, 2014 and to “guaranty all” all of the loan obligations in order to pay his fair share of the Loan obligations. (Large Dec. ¶ 7.) This statement, however, ignores the preceding assertion that “Jody I., Large and Rudi Krieger will jointly and severally guaranty all obligations of Borrower pursuant to a Continuing Personal Guaranty in a form acceptable to Lender.” (Frcek Decl., Ex. 3, ¶2(a).) Notwithstanding that Pao purportedly agreed to cover the remaining debts, Defendants continued to make payments on the loan since Corey was business partners with Pao and wanted to ensure their mutual success. (Large Decl., ¶ 8.) Large contends that all parties understood that Pao was solely responsible for keeping up on any remaining loan payments. (Large Dec. ¶ 8.) Plaintiff sent Pao a number of emails notifying him that he was in default of the Forbearance Agreement. Defendants assert that this evidence demonstrates the parties’ oral agreement to modify the terms of the written Loan Agreement so that Pao—not Defendants— would only be responsible for any balance on the Loan. (Large Dec. ¶ 9, Exs. A-C.) Even if liberally construed, these emails merely advise Pao that AMAG has not received the payments of $5,000 per month referred to in the Forbearance Agreement.
Furthermore, the non-specific, self-serving statements concerning an oral agreement to modify the terms of a written instrument would run headlong against the parol evidence rule. The parol evidence rule “generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument.” (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343.) The parol evidence rule does not “prohibit the introduction of extrinsic evidence ‘to explain the meaning of a written contract … [if] the meaning urged is one to which the written contract terms are reasonably susceptible.’” (Id. (emphasis added); CCP sec. 1856(g) [“This section does not exclude other evidence . . . to explain an extrinsic ambiguity or otherwise interpret the terms of the agreement.”].) Defendants do not explain how this evidence would clarify any ambiguity with the contract terms. Instead, Defendants use the parol evidence to vary and add terms to the integrated, written agreement. (See Frcek Decl., Ex. 3, ¶ 17.) The inclusion of that sentence does not constitute an express agreement by AMAG that Defendants would no longer be obligated to make payments on the Loan.
Defendants assert that the most obvious flaw with Plaintiff’s damages calculus is that it does not include all payments made by Defendants. For example, Checks 2020 and 2024 are not accounted for, and there are discrepancies with Checks 2024, 2028, and 2030. (See AMF 18-20.) However, this would not create a dispute of material fact. The current amount owed stems from the Loan agreement, which was restructured in 2014. Thus, any dispute as to how the checks were apportioned during the period from February 7, 2012, to April 11, 2012, is immaterial to the issues in this motion. Here, Defendants entered into the Forbearance Agreement on June 30, 2014 and expressly agreed that the owed balance pursuant to October 5, 2011 Loan Agreement was $655,731.35, with interest continuing to accrue at the per diem rat of $321.30. (Frcek Dec., Ex. 3, p. 1, Recital B.) The Court further notes that in their reply brief, Plaintiff presented evidence that these amounts were credited to an earlier loan.
Defendants further suspect that there are additional inaccuracies in Plaintiff’s account. This speculation is insufficient to sustain a burden of proof on summary judgment.
Defendant also raises two affirmative defenses of estoppel and waiver. “Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.” (Evid. Code § 623.) Thus, “[t]o establish a defense of equitable estoppel, four elements must ordinarily be proved: ‘(1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had the right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his injury.”’ (Nicolopulos v. Superior Court (2003) 106 Cal.App.4th 304, 311.)
Defendants fail to show Plaintiff’s represented to Defendants at any time that Pao alone assumed responsibility for any remaining payments and that Plaintiff did not expect Defendants to pay (despite their written agreements to the contrary). Defendants only provide the conclusory, self-serving declaration of Corey Large. He states that at a meeting in 2014, “we all agreed to modify the Loan Agreement so that Pao would be responsible for any unpaid principal and interest since, up to that point, only I had been making payments. It was known and understood by everyone at the meeting that neither myself nor my parents, Jody and Rudi, would be obligated to make any additional payments towards the Loan.” (Large Decl., ¶ 6.) He also contends that the Forbearance Agreement is “consistent” with Pao’s agreement to assume responsibility for any remaining payments. (¶ 7.) Simply put, there is no admissible evidence that AMAG agreed to release the Defendants from liability for the Loan. To the contrary, the undisputed record demonstrates that Defendants remained liable to repay the Loan per their guarantees. Defendants have not put forth any evidence disputing these guarantees. Defendants have not put forth evidence of any representation by AMAG that would reasonably lead Defendants to believe that they no longer had to pay the Loan.
Defendants’ waiver argument similarly fails. “Waiver is the voluntary relinquishment of a known right.” (Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 41; see also Civ. Code § 3513 (“Any one may waive the advantage of a law intended solely for his benefit.”).)“To constitute a waiver, it is essential that there be an existing right, benefit, or advantage, a knowledge, actual or constructive, of its existence, and an actual intention to relinquish it or conduct so inconsistent with the intent to enforce the right in question as to induce a reasonable belief that it has been relinquished.” (Outboard Marine Corp., supra, 52 CalApp.3d at 41.) Defendants rely on their erroneous and unsupported contention that AMAG agreed that Alan Pao would be the only person held responsible for repayment of the loan. Defendants point to no conduct by AMAG that would constitute a waiver of the Loan agreement as to Defendants.
Accordingly, Plaintiff’s motion is GRANTED as to Defendants Pao, J. Large and Krieger.