Judge: Martha K. Gooding, Case: 2021-01218292, Date: 2022-12-05 Tentative Ruling
Motion for Summary Judgment and/or Adjudication
Plaintiff Wells Fargo Vendor Financial Services, LLC (“Plaintiff”) moves for summary judgment against Defendant Gil Alvandi Law Group, Inc. (“Defendant”) on Plaintiff’s Complaint. Alternatively, Plaintiff seeks summary adjudication on its First Cause of Action and on Defendant’s First through Seventh Affirmative Defenses.
For the reasons set forth below, Plaintiff’s Motion for Summary Judgment and Summary Adjudication (the “Motion”) is DENIED in its entirety.
As an initial matter, the parties appear to agree that Iowa contract law applies by reason of a choice of law provision contained in the agreement at issue. But neither party directly addresses the enforceability of this provision. (Declaration of Stephanie Steele [“Steele Decl.”] ¶8 & Exh. 3.)
“California courts enforce contractual choice-of-law provisions if the chosen state has a substantial relationship to the parties or the transaction, or if there is any other reasonable basis for the parties’ choice of law, and the chosen state’s law is not contrary to a fundamental policy of California.” (Kanno v. Marwit Capital Partners II, L.P. (2017) 18 Cal.App.5th 987, 1001-1002.)
Here, no connection with the state of Iowa is immediately apparent to the Court, as all parties to the agreement are California corporations. (¶1-¶2 of Complaint.) Indeed, the Court found no references to Iowa in either the Complaint or the Cross-Complaint. Nor do the parties address in their briefing any connection with the state of Iowa.
Plaintiff’s Motion states: “Iowa citations are provided to the extent the Court determines that Iowa law is applicable.” (Motion at 10:26-28, fn. 2.) In response, Defendant merely references the Iowa choice of law provision. (Opposition at 7:5-7.) Neither statement establishes a connection with the state of Iowa that would justify enforcing the choice of law provision. Additionally, Defendant cites California law in its brief for the elements of a contract claim. (Opposition at 10:5-7.)
With that said, however, the Court notes that the elements of a claim for breach of contract are substantially the same under both California and Iowa law. Under California law, the elements of a breach of contract claim are: (1) the existence of the contract; (2) performance by the plaintiff or excuse for nonperformance; (3) breach by the defendant; and (4) damages. (First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 745.) Under Iowa law, the elements are: “(1) the existence of a contract; (2) the terms and conditions of the contract; (3) that it has performed all the terms and conditions required under the contract; (4) the defendant’s breach of the contract in some particular ways; and (5) that plaintiff has suffered damages as a result of the breach.” (Iowa Arboretum, Inc. v. Iowa 4-H Foundation (2016) 886 N.W.2d 695, 706.)
Thus, for purposes of this Motion, the Court need not determine whether the substantive law of California or the substantive law of Iowa applies, as the result is the same under both. The Court notes that both parties effectively concede that California law re procedure/burdens apply, as both parties cite and rely on California law for these issues in their briefs. (See, e.g., Opposition at 9:1-25; Motion at 9:2-10:8.)
With respect to the first element of a breach of contract claim, it is undisputed that the 2019 Lease Agreement (the “Agreement”) – attached as Exhibit 3 to the Steele Declaration – was executed by Defendant. Although Defendant purports to dispute SSUF No. 3, it does not deny having executed the Agreement. To the contrary, Gil Alvandi admits in his Declaration (submitted with the Opposition) that he executed the Agreement. (Declaration of Gil Alvandi [“Alvandi Decl.”].) The Agreement lists “Wells Fargo Vendor Financial Services, LLC” as the “Owner.” (Steele Decl. ¶8 & Exh. 3.)
With respect to the second element – Plaintiff’s performance of the Agreement – Plaintiff offers the Declaration of Stephanie Steele, who testifies: “WFVFS performed all covenants, conditions and promises required on its part under the terms of the 2019 Lease by making the required payment to Kyocera, allowing GALG to take delivery of all of the 2019 Equipment and allowing GALG to have the quiet use and enjoyment of the 2019 Equipment so long as GALG was not in default.” (Steele Decl. ¶14.)
Defendant disputes this, asserting it did not have quiet use and enjoyment of the equipment because of various operating and performance problems with the equipment. (SSUF No. 8.)
Defendant does not, however, identify any language in the Agreement that required Plaintiff to ensure the functionality of the equipment. To the contrary, the Agreement states that Plaintiff made no warranties as to the merchantability, fitness or suitability of the equipment and that the equipment was provided “as is.” (Steele Decl. ¶8 & Exh. 3 (emphasis added).)
Consequently, the operating problems identified by Defendant do not demonstrate a lack of performance by Plaintiff or create a triable issue of fact re Plaintiff’s performance under the Agreement.
Further, as Plaintiff notes, both California and Iowa law provide that a promise on a finance lease becomes “irrevocable and independent upon the lessee’s acceptance of goods.” (California Commercial Code § 10407 and Iowa Commercial Code § 554.13407.)
Plaintiff submits a Certificate of Acceptance (the “Certificate”) executed by Gil Alvandi on November 22, 2019, which, among other things, states that “[t]he Equipment is accepted for all purposes under the Contract as of the Acceptance Date below.” (Steele Decl. ¶10 & Exh. 6.) In response, Defendant offers the Declaration of Gil Alvandi (“Alvandi Decl.”) asserting that the representations in the Certificate were false because the equipment had not actually been received at that time. (Alvandi Decl. ¶12.) But Defendant cites no authority showing that this would vitiate the express acceptance of the goods reflected in the Certificate.
With respect to the next element – Defendant’s breach of the Agreement – there is no genuine dispute that Defendant stopped making payments on the Lease Agreement in August 2020. (SSUF No. 9 and Steele Decl. ¶ 15.) Although Defendant objects to the use of the word “defaulted,” it does not dispute that it failed to make all payments required by the Agreement. (SSUF No. 9.) Indeed, that fact is expressly admitted in Mr. Alvandi’s Declaration. (Alvandi Decl. ¶ 16.)
Per the Agreement: “You will be in default under this Agreement if…you fail to remit to us payment within ten (10) days of the due date…” (Steele Decl. ¶ 8 & Exh. 3.)
In response Defendant cites C&J Vantage Leasing Co. v. Outlook Farm Golf Club, LLC (2010) 784 N.W.2d 753, for the proposition that fraudulent inducement is a defense to contract formation under Iowa law. (Opposition at 4:2-9; see id. at 759 (“defenses to contract formation, such as fraud in the inducement, may be asserted even where a party has agreed to a hell-or-high-water clause or a waiver-of-defenses provision.”).)
But Defendant did not assert a defense based on fraudulent inducement in its Answer. (ROA No. 15.)
“[S]ummary judgment cannot be denied on a ground not raised by the pleadings.” (Kendall v. Walker (2009) 181 Cal.App.4th 584, 598.) Similarly, “[a] party may not oppose a summary judgment motion based on a claim, theory, or defense that is not alleged in the pleadings,’ and ‘[e]vidence offered on an unpleaded claim, theory, or defense is irrelevant because it is outside the scope of the pleadings.’” (Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal.App.5th 438, 444.) Indeed, courts have indicated that fraudulent inducement is a defense that is not encompassed within a general denial and which must be specially pleaded. (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 383 and 402.)
Thus, the assertion of agency and fraudulent inducement are irrelevant to this Motion.
Nonetheless, with respect to the third element – Plaintiff’s damages – the Court finds a triable issue of fact that necessitates denial of the Motion.
To establish the amount currently owing under the Lease, Defendant offers the Declaration of Stephanie Steele (“Steele”), who states: “As a result of the default, there is due, owing and unpaid as of May 17, 2022 from GALG under the 2019 Lease the sum of $143,169.75 plus attorneys’ fees and costs.” (Steele Decl. ¶ 19.) To support this damages amount, Steele attaches “a true and correct copy of WFVFS computer printout which reflects the contract payoff balance owed by GALG under the 2019 Lease.” (Id.)
On the issue of damages, the Agreement states: “If you default, we may do one or more of the following: (a) recover from you, AS LIQUIDATED DAMAGES FOR LOSS OF BARGAIN AND NOT AS A PENALTY, the sum of: (i) all past due and current Minimum Payments, Excess Per Image Charges and other charges; (ii) the present value of all remaining Minimum Payments and other charges, discounted at the rate of 6% per annum (or the lowest rate permitted by law, whichever is higher); and (iii) the Fair Market Value of the Equipment…” (Steele Decl. ¶ 8 & Exh. 3.)
Notably, the Agreement provides for a term of 63 monthly payments of $2,695.00. (Steele Decl. ¶ 8 & Exh. 3.) Additionally, it is undisputed the default occurred on August 26, 2020. (SSUF No. 9.)
But the computer printout Defendant offers to support the requested amount of $143,169.75 lists a term of 66 months, rather than 63 months. (Steele Decl. ¶ 19 & Exh. 11.) In addition, the printout lists monthly payments of $2,375.42, which does not match the monthly payment of $2,695.00 stated in the Agreement. (Id.) Moreover, the printout includes a charge of $5,264.20, for “Equipment Fair Market Value or Purchase Option,” without further explanation or proof of how that amount was determined. (Id.)
Ultimately, neither the Steele Declaration nor the offered print-out establishes that the amount purportedly owing has been correctly calculated in accordance with the terms of the Agreement.
Plaintiff has attempted to address at least some of these problems in its Reply, by offering – for the first time – a purported Amendment to the Agreement, which appears to have been executed on June 10, 2020. (Supplemental Steele Decl. ¶ 2 & Exh. 1.)
The Court declines to consider this new evidence.
As explained in San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, “[w]hile the code provides for reply papers, it makes no allowance for submitting additional evidence…[t]his is consistent with the requirement supporting papers and the separate statement be served with the original motion.” (Id. at 313.) Additionally, “the court may ignore evidence not disclosed in moving party’s separate statement of undisputed facts.” (Id. at 315; see also Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252.)
Plaintiff inexcusably failed to provide the Court an Amendment to the operative Agreement until its Reply. This is improper and unfairly deprives the Defendant of an opportunity to respond to the new evidence.
Based on all of the above, the Court finds that Plaintiff failed to meet its burden to establish the amount of damages owed and that Plaintiff’s SSUF No. 13 is insufficiently supported.
Moreover, because SSUF No. 13 is included within every request for adjudication, Plaintiff has conceded that this fact is material to all of its requests for adjudication. (Insalaco v. Hope Lutheran Church of West Contra Costa County (2020) 49 Cal.Ap.5th 506, 521.) Consequently, because Plaintiff failed to sufficiently support a fact material to all requests for adjudication, the Motion is denied in its entirety.
Finally, in addition to the above, the Court notes that Plaintiff offered little discussion or analysis of the identified affirmative defenses. Indeed, in many instances, Plaintiff merely asserted that Defendant will not be able to offer admissible evidence. This does not meet Plaintiff’s moving burden. “When a plaintiff moves for summary adjudication on an affirmative defense, the court shall grant the motion ‘only if it completely disposes’ of the defense.” (See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 899-900.) “The plaintiff bears the initial burden to show there is no triable issue of material fact as to the defense and that he or she is entitled to judgment on the defense as a matter of law.” (Id.)
Defendant’s evidentiary Objections Nos. 1 through 16 are overruled. The Court declines to rule on Objection No. 17, as it is not directed to evidence, but only to a statement included in Plaintiff’s Memorandum of Points and Authorities.
Plaintiff’s evidentiary Objections Nos. 1 through 4 are also overruled.
Plaintiff’s Requests for Judicial Notice (ROA Nos. 40 and 123) are granted pursuant to Evidence Code §452(a).
Defendant is ordered to give notice.