Judge: Mike Camacho, Case: 22SMCV00870, Date: 2024-02-07 Tentative Ruling

Case Number: 22SMCV00870    Hearing Date: February 7, 2024    Dept: P

Tentative Ruling

Wolf v. Kohen et al., Case No. 22SMCV00870

Hearing Date February 7, 2023

Plaintiff Wolf’s Motion for Summary Judgment

Plaintiff Daniella Wolf and her husband Yaakov Wolf operated apparel business Why U. Third-party Eisenberg, a business associate, introduced the Wolfs to defendant Jerry Kohen, whose company American Waste was engaged to provide funds to pay for orders of product or material.

In 2005 the Wolfs signed a promissory note for $500,000 in favor of Jerry and Orit Kohen, secured by a deed of trust on the Wolfs’ home. Between 2005 and 2015, Yaakov Wolf made payments toward satisfaction of the debt. In 2016, the Kohens assigned the note and deed of trust to defendant Haroni.

Plaintiff Daniella Wolf sues for declaratory relief and quiet title, arguing the note and deed of trust are invalid, neither she nor Yaakov owes the Cohens or Haroni any money, and no defendant has a security interest in her property.

Plaintiff Wolf moves for summary judgment, arguing undisputed evidence shows the Kohens never lent the Wolfs or their business money, the Kohens waived their right to recover because of unreasonable delay, and the Kohens will be unable to prove damages. Additionally, Wolf argues there is no evidence linking the deed of trust on the Wolf property to the line of credit allegedly created by the note.

A plaintiff fulfills the initial burden on summary adjudication or judgment by proving each element of the cause of action. Cal. Code Civ. Proc. §437c(p)(1). The burden then shifts to defendant to show a genuine issue of fact as to one or more elements or an affirmative defense. Celotex Corp. v. Catrett (1986) 477 U.S 317, 323.

The parties agree the Wolfs signed a $500,000 promissory note but disagree as to the nature of the loan created.

Plaintiff Wolf argues the note contemplated a single lump-sum payment of $500,000, and the Kohens never paid. Plaintiff’s separate statement 6, Lauritsen decl., exh. B at pg. 52. She argues the Wolfs cannot be compelled to repay a loan that was never made.

Defendants argue the note created a $500,000 line of credit the Wolfs could draw upon as needed. Defendants claim Eisenberg used the of credit repeatedly on the Wolfs’ behalf, taking money forwarded by American Waste, the Kohens’ business, to fund the manufacture and import of Why U products.

Wolf admits that a month after the deed of trust was created, Kohen signed a purported “Credit Line Agreement.” Plaintiff’s separate statement 7. Wolf states neither she nor Yaakov ever signed the Credit Line Agreement and never drew on any line of credit. Plaintiffs separate statement 9-13. Indeed, the Credit Line Agreement was signed by the Kohens, but not by the Wolfs.

Wolf argues Eisenberg lacked authority to incur debts on behalf of the Wolfs or Why U, so any moneys he received from the Kohens are his to repay, not the Wolfs’. Plaintiff’s separate statement 14-15. In support, they cite Eisenberg’s deposition stating whenever he requested money from American Waste to pay Why U’s bills, he did not seek Yaakov Wolf’s permission or approval. Lauritsen decl., exh. F, pg. 74. Additionally, Eisenberg did not remember whether the Wolfs or Why U ever provided him with permission to borrow money on behalf of Why U. Id. pg. 75. This suggests Wolf is correct, and Eisenberg lacked authority to borrow on behalf of her, Yaakov or Why U.

Wolf cites Jerry Kohen’s deposition, where he states he does not remember whether the Wolfs ever told him Eisenberg was authorized to borrow money on their behalf. Lauritsen decl. ¶4, Exh. C at pg. 99. This indicates Eisenberg did not have apparent authority to borrow from the line of credit on Wolf’s behalf.

This is sufficient to carry plaintiff’s initial summary judgment burden. The burden shifts to defendants to provide admissible evidence showing a triable issue of material fact as to whether the Kohens lent money to Wolf, either directly or through Eisenberg.

Defendants argue Yaakov admitted Eisenberg had authority to draw upon the line of credit. Defendants’ response to plaintiffs’ separate statement 3-4. Defendants cite the deposition where Yaakov states Eisenberg promised to buy large quantities of fabric on behalf of Why U, Eisenberg was friends with Jerry Kohen, that if a massive order came in “we could draw upon” funds provided by Kohen, and Yaakov did not know or directly interact with Kohen. Abrams decl., exh. 1, pg. 62.

The language is ambiguous. Yaakov does not directly admit Eisenberg was authorized to borrow on Why U’s behalf. Nonetheless, on summary judgment, evidence must be viewed in the light most favorable to the non-moving party. LPP Mortgage v. Bizar (2005) 126 Cal.App.4th 773, 776. The language, interpreted in the light most favorable to the Kohens, implies that since Eisenberg was responsible for buying fabric on behalf of Why U, and since Yaakov had no direct relationship with Kohen, Eisenberg would be allowed to borrow from Kohen on behalf of Why U. This creates a triable issue of fact as to whether Kohen lent money to the Wolfs.

Defendants argue Yaakov affirmed his debt to the Kohens verbally, in writing and by making partial payments. They point to Yaakov’s deposition, where he acknowledged existence of a line of credit secured against the Wolf property. Defendants’ Response 6, Abrams decl. ¶3. Yaakov’s admission cuts against Daniella Wolf’s argument that the note did not create a line of credit, but it does not establish that the Wolfs ever used the line of credit. This is insufficient to create a triable issue of fact.

Defendants cite a 2012 email to Jerry Kohen from Yaakov Wolf entitled “my debt,” stating “[w]e did make a written agreement of 7 years last time we met which I did plan to honor and still do . . . I will pay you through my work.” Defendants’ Response 6, Abrams decl., exh. 18. Both parties acknowledge Wolf made payments to Kohen and/or Kohen’s company between 2005 and 2015. The import of this email and payments is ambiguous. Wolf argues they constitute an attempt to stave off foreclosure and should not be interpreted as ratification of the debt.

On summary judgment, ambiguous evidence must be interpreted in favor of the non-moving party. A reasonable finder of fact could interpret the email and Yaakov’s  partial payments as acknowledgment of the debt’s validity. Defendants create a triable issue of fact as to ratification.

Wolf argues “even if the Wolfs or Why U incurred a debt to American Waste based upon Eisenberg’s draws, there is nothing tying that debt to the deed of trust.” Motion at pg. 11. Wolf argues the “Credit Line Agreement” is unauthenticated, so inadmissible. Additionally, she argues it constitutes a “promise to answer for the debt, default, or miscarriage of another,” so the statute of frauds requires it to be signed by the parties to be bound.

As Yaakov testified he recalled “an agreement to have a credit line of $500,000,” and the Credit Line Agreement “correlates to the $500,000 line of credit that I understand we had with Jerry Kohen for the purchase of goods[.]” Defendants’ separate Statement 1-2. Here, Yaakov seems to admit the note created a line of credit for $500,000, not an obligation to pay a single lump sum. This is sufficient to create a triable issue of fact as to the Credit Line Agreement’s validity.

As to the statute of frauds, it is unsigned and therefore invalid. However, Yaakov’s deposition create a triable issue of fact as to whether the initial note created a $500,000 line of credit, later memorialized by the Credit Line Agreement. Neither party disputes the Wolfs signed the note and are liable for debts incurred thereunder.

Wolf argues defendants “slept on their rights,” and any rights defendants may have had expired, since no payments have been made since 2015, and defendants have not initiated foreclosure proceedings. Wolf’s motion acknowledges laches is an affirmative defense that can only be asserted by a defendant, so it is improper for plaintiff to rely on it here.

Finally, Wolf argues defendants will be unable to prove damages. However, Kohen provided evidence to establish a triable issue as to whether the Wolfs drew on the line of credit through Eisenberg and failed to repay the amount borrowed. There is a triable issue of fact as to whether defendants suffered damages in the form of unpaid monies advanced under the note.

DENIED.