Itria Ventures LLC v. Michael Luis Esquibel, et al. 

PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

 

MOVING PARTY: Plaintiff Itria Ventures LLC

RESPONDING PARTY(S): None

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Itria Ventures LLC brought this action against Defendants Michael Luis Esquibel dba All Service Plumbing. Plaintiff alleges it entered int Receivable Sales Agreement whereby Plaintiff would provide the working capital the Defendants needed for their business

operations in exchange for a portion of Merchant Defendants’ future accounts receivable. Individual Defendant Esquibel guaranteed Defendants’ performance pursuant to a written guaranty. Plaintiff alleges Defendants have failed to remit what is owed under the Agreement. Plaintiff asserts causes of action for (1) appointment of receiver, (2) preliminary injunction, (3) breach of written contract, and (4) breach of written guaranty.

Plaintiff now moves for summary adjudication of the Third and Fourth Causes of Action against Defendant Esquibel. No opposition was filed. [FN 1]

TENTATIVE RULING:

Plaintiff’s Motion for Summary Adjudication of the Third and Fourth Causes of Action is GRANTED.

Plaintiff is ordered to file a [Proposed] Amended Judgment consistent with this and the prior rulings of this court.

Plaintiff is ordered to give notice.

DISCUSSION:

Motion for Summary Adjudication

I. Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.  Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.  Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. 

Where a plaintiff moves for summary judgment, the burden is to produce admissible evidence on each element of a “cause of action” entitling him or her to judgment. (CCP § 437c(p)(1); see Hunter v. Pacific Mechanical Corp. (1995) 37 CA4th 1282, 1287, 44 CR2d 335, 337 (citing text) (disapproved on other grounds by Aguilar v. Atlantic Richfield Co. (2001) 25 C4th 826, 107 CR2d 841)).  This means that plaintiffs who bear the burden of proof at trial by a preponderance of evidence must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not.  At that point, the burden shifts to defendant “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)).

II. Analysis

A. Allegations in Complaint

In analyzing motions for summary judgment or adjudication, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)

Plaintiff alleges it entered into a Receivables Sales Agreement (“RSA”) with Defendant All Service Plumbing LLC and All Service Plumbing (a California sole proprietorship) “whereby Itria would provide the working capital Merchant Defendants needed for their business operations in exchange for a portion of Merchant Defendants’ future accounts receivable.” (Compl. ¶¶ 2, 3, 10.) “On or about January 26, 2023, Itria agreed to pay $180,000 (less all applicable fees, as defined in the RSA) for the purchase of $219,600 of Merchant Defendants’ future accounts receivable.” (Id. ¶ 11.) As security for Defendants’ performance under the RSA, Plaintiff obtained a first-priority secured lien in certain of Defendant’s collateral. (Id.) 

Under the RSA, Defendants “agreed to allow Itria to collect 7.15% of Merchant Defendants’ accounts receivable every week, which amounted to $4,575.00 every week (the “Weekly Remittance”) until Itria had collected the full Amount Sold.” (Id. ¶ 17.) Additionally, Defendants were “required to maintain an Approved Account from which Itria can perform direct debits of the Weekly Remittance via the Automatic Clearing House (“ACH”). (Id. ¶ 18.) 

Defendants made the Weekly Remittance on time for just 7 weeks. (Id. ¶ 19.) Plaintiff alleges Defendants breached the RSA by failing to remit the Weekly Remittance as and when due, maintaining insufficient funds in the Approved Account, and failing to notify Itria of the insufficient funds. (Id. ¶ 21.)

At the same time the parties entered into the RSA, Defendant “Esquibel agreed to, signed, executed, and delivered to Itria his unconditional personal Guaranty of Performance in favor of Itria (the “Guaranty”)…” (Id. ¶ 12.) “By the terms of the Guaranty, Guarantor personally and unconditionally guaranteed full, complete, and timely performance of all of Merchant Defendants’ obligations to Itria under the RSA, including Merchant Defendants’ obligations to timely remit the accounts receivable purchased by Itria.” (Id.) Therefore, Plaintiff alleges Esquibel is “liable to Itria for the remaining Amount Sold and all other sums due and payable under the RSA.” (Id. ¶ 23.) 

B. Moving Party’s Burden

Plaintiff moves for Summary Adjudication of Plaintiff’s Third Cause of Action against Defendant Michael Luis Esquibel dba All Service Plumbing, a California Sole Proprietorship (“All Service”), and Plaintiff’s Fourth Cause of Action against Defendant Michael Luis Esquibel (“Esquibel”) in his individual capacity as Guarantor. Each is addressed in turn.

1. Third Cause of Action for Breach of Contract

Plaintiff asserts its third cause of action against Defendant All Service Plumbing, LLC, and Michael Luis Esquibel dba All Service Plumbing, a California Sole Proprietorship. This court already entered a default judgment against Defendant All Service Plumbing, LLC in the total amount of $226,915.03. (See 10/21/2024 Default Judgment.)  [FN 2]

Even where a motion for summary judgment is unopposed, the moving party still must meet its initial burden. (Wright v. Stang Mfg. Co. (1997) 54 Cal. App. 4th 1218, 1228; Harman v. Mono General Hospital (1982) 131 Cal.App.3d 607, 613.) The burden begins with Plaintiff to produce admissible evidence on each element of its cause of action entitling it to judgment. (CCP § 437c(p)(1).)

The RSA calls for the application of New York Law. (See Smalbach Decl., Exh. A, ¶ 15 [providing that the RSA “and all transactions hereunder…will be governed by and enforced exclusively in accordance with the internal laws of the State of New York…”].) To establish a breach of contract under New York law, a plaintiff must show “ the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of its contractual obligations, and damages resulting from the breach.” (Kapoor v. AWI Wireless LLC, 159 AD.3d 1027, 1030 (NY App. 2d 2018).) This mirrors the law in California. (See Oasis W. Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 821 [setting forth the elements for breach of contract].)

Here, Plaintiff has established the existence and execution of the RSA and Guaranty between Itria and Defendants. (SSUMF 1, 7; Smalbach Decl. ¶ 4, Exh. A.) Plaintiff has established its performance under the RSA by paying $180,000, less applicable fees as provided in the RSA, to Merchant Defendants. (SSUMF 4, 6, 8; Smalbach Decl. ¶ 8, Exh. B.) Plaintiff has established the Merchant Defendants’ failures to make the Weekly Remittance Payments as required under the RSA. (SSUMF 5, 6; Smalbach Decl. ¶¶ 9-12, Exh. C.) Plaintiff has also presented evidence that Merchant Defendants failed to notify Itria that the Approved Accounts lacked sufficient funds to remit the required Weekly Remittance payments; and that Defendants failed to notify Itria of a change in its financial condition that would prevent Itria from collecting the full Amount Sold. (SSUMF 6.) As a result, Itria suffered damages in the amount of $189,466.66, plus attorney’s fees, interest, and costs. (SSUMF 6, 10; Smalbach Decl. ¶¶ 12, 14, Exh. C.)

On these facts, Plaintiff has established all elements of its cause of action for breach of contract against Defendant Esquibel dba All Service Plumbing, a California Sole Proprietorship. By failing to oppose the motion, Defendant has not established a triable issue of material fact.

Accordingly, Plaintiff’s Motion for Summary Adjudication of the Third Cause of Action is GRANTED.

2. Fourth Cause of Action for Breach of Guaranty

Plaintiff also moves for summary adjudication of the Fourth Cause of Action for Breach of Guaranty against Defendant Esquibel in his individual capacity as Guarantor. 

As part of the RSA, Defendant Esquibel, as guarantor, “guarantee[d]…Merchant’s complete and timely performance of the obligations specified” in the RSA upon a breach. (Smalbach Decl., Exh. A, ¶ 16.) Thus, he acknowledged that, “upon a Material Breach of the Agreement by Merchant,” Plaintiff could “bring an action against each Guarantor…” (Id.)

As discussed supra, Plaintiff has established all elements of its breach of contract cause of action against Defendant All Service Plumbing. Plaintiff has also established that Defendant Esquibel guaranteed Defendant’s performance. Finally, Plaintiff has established that Defendant Esquibel breached the Guaranty by failing to ensure the Merchant Defendants’ obligations under the RSA, including but not limited to, payment of the Weekly Remittance Payments, maintaining sufficient funds in the Merchant Defendants’ Approved Accounts to allow Itria to debit the Weekly Remittance Payments, and failing to notify Itria of a change in the Merchant Defendants’ financial condition that might affect Itria’s ability to collect the full Amount Sold under the RSA. (SSUMF 9.) 

Therefore, Plaintiff has established all elements of its Fourth Cause of Action. By failing to oppose the motion, Defendant has not established a triable issue of material fact.

Accordingly, Plaintiff’s Motion for Summary Adjudication of the Fourth Cause of Action is GRANTED.

Amendment of Judgment

Concurrently with the motion for summary adjudication, Plaintiff “requests that the Court amend the judgment nunc pro tunc to add Defendant Esquibel as an additional Judgment Debtor, jointly and severally.” (Mtn. 10: 23-24.) As it stands, the judgment is against Defendant All Service Plumbing, LLC, only, in the amount of $226,915.03. (See 10/21/2024 Judgment by Default.)

Based on the granting of this motion, the court will amend the judgment to add Defendant Esquibel, individually and as guarantor, as a judgment debtor.  However, that will NOT be entered nunc pro tunc, as requested.  He will be added as a judgment debtor as of the date of entry of the amended judgment.

Plaintiff is ordered to file and serve a [Proposed] Amended Judgment consistent with this and the prior rulings of this court.

Plaintiff is ordered to give notice.

IT IS SO ORDERED.

Dated:   January 16, 2025 ___________________________________