Judge: Robert B. Broadbelt, Case: 20STCV47259, Date: 2023-02-17 Tentative Ruling
Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.
Case Number: 20STCV47259 Hearing Date: February 17, 2023 Dept: 53
Superior Court of California
County of Los Angeles – Central District
Department
53
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wells fargo equipment finance, inc. vs. screamline investment corporation |
Case
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20STCV47259 |
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Hearing
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February
17, 2023 |
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[Tentative]
Order RE: plaintiff’s motion for summary judgment or,
in the alternative, summary adjudication |
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MOVING PARTY: Plaintiff Wells Fargo Equipment Finance
RESPONDING PARTIES: Defendants Screamline Investment Corporation,
Kamrouz Farhadi, and Starline Tours of Hollywood, Inc.
Motion for Summary Judgment or, in the Alternative, Summary
Adjudication
The court
considered the moving, opposition, and reply papers filed in connection with
this motion.
EVIDENTIARY OBJECTIONS
The court rules on Defendants’ evidentiary objections to the
declaration of Matt Hotchkiss, filed on October 31, 2022, as follows:
The court overrules Objections Nos. 1-8.
The court rules on Defendants’ evidentiary objections to the
declaration of Mark M. Scott, filed on October 31, 2022, as follows:
The court overrules Objections Nos. 1-2.
The court rules on Defendants’ evidentiary objections to the
declaration of William C. Barber, filed on October 31, 2022, as follows:
The court overrules Objections Nos. 1-40.
The court rules on Plaintiff’s evidentiary objections to the
declaration of Shoeleh Sapir, filed on January 6, 2023, as follows:
The court overrules and denies Plaintiff’s objection to and request
that the court strike the entire declaration of Shoeleh Sapir.
The court overrules Objections Nos. 1-6.
The court rules on Plaintiff’s evidentiary objections to the
supplemental declaration of Jeremy A. Rhyne, filed on January 6, 2023, as
follows:
The court overrules and denies Plaintiff’s objection to and request
that the court strike the entire supplemental declaration of Jeremy A. Rhyne.
The court overrules Objection No. 1.
LEGAL STANDARD
The purpose of a motion for summary judgment or summary
adjudication “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.) “Code of Civil
Procedure section 437c, subdivision (c), requires the trial judge to grant
summary judgment if all the evidence submitted, and ‘all inferences reasonably
deducible from the evidence’ and uncontradicted by other inferences or
evidence, show that there is no triable issue as to any material fact and that
the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.)
“On a motion for summary judgment, the initial burden is always on
the moving party to make a prima facie showing that there are no triable issues
of material fact.” (Scalf v. D.B.
Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) For the purposes of motion for summary
judgment and summary adjudication, “[a] plaintiff or cross-complainant has met
his or her burden of showing that there is no defense to a cause of action if
that party has proved each element of the cause of action entitling the party
to judgment on the cause of action.”
(Code Civ. Proc., § 437c, subd. (p)(1).)
“Once the plaintiff . . . has met that burden, the burden shifts to the
defendant . . . to show that a triable issue of one or more material facts
exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1).) “When deciding whether to grant summary
judgment, the court must consider all of the evidence set forth in the papers
(except evidence to which the court has sustained an objection), as well as all
reasonable inferences that may be drawn from that evidence, in the light most
favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical
Center (2008) 159 Cal.App.4th 463, 467; Code
Civ. Proc., § 437c, subd. (c).)
Plaintiff Wells Fargo Equipment Finance,
Inc. (“Plaintiff”) moves the court for an order granting summary judgment in
its favor or, in the alternative, granting summary adjudication on (1) its
first and fifth causes of action, and (2) defendants Screamline Investment
Corporation (“Screamline”), Kamrouz Farhadi (“Farhadi”), and Starline Tours of
Hollywood, Inc.’s (“Starline Tours”) (collectively, “Defendants”) 1st through 14th
affirmative defenses.
1. Procedural
Defects
As a thresholder matter, Defendants contend that Plaintiff’s
motion should be denied due to (1) procedural deficiencies with its separate
statement, and (2) Plaintiff’s refusal to make available for deposition Matt
Hotchkiss.
First, the court finds that (1) Plaintiff’s separate statement is
in substantial compliance with California Rules of Court rule 3.1350, and (2)
Defendants have not shown that any defects with the separate statement impaired
their ability to file an opposition. The
court therefore does not deny Plaintiff’s motion pursuant to Code of Civil
Procedure section 437c, subdivision (b)(1) and California Rules of Court rule
3.1350. (Holt v. Brock (2022) 85
Cal.App.5th 611, 620 [court did not abuse its discretion by granting summary
judgment when plaintiff did not show that the procedural defect impaired his
ability to oppose the defense].)
Second, Defendants have presented evidence demonstrating that they
have since been able to depose Mr. Hotchkiss.
(Supp. Rhyne Decl., ¶¶ 4-5.) The
court therefore does not deny Plaintiff’s motion pursuant to Code of Civil
Procedure section 437c, subdivision (h).
The court also exercises its discretion to consider the supplemental
declaration of Jeremy A. Rhyne, timely filed on December 30, 2022, and the exhibit
attached thereto.
2. First
Cause of Action for Breach of Written Agreements against defendant Screamline
“[T]he elements of a cause of action for breach of contract are
(1) the existence of the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) the resulting damages to the
plaintiff.” (Oasis West Realty, LLC
v. Goldman (2011) 51 Cal.4th 811, 821.)
The court finds that Plaintiff has met its burden of showing that
there is no defense to the first cause of action for breach of contract against
defendant Screamline because Plaintiff has proved each element of the cause of
action entitling Plaintiff to judgment on that cause of action.
First, Plaintiff has presented evidence to prove three contracts
between Plaintiff and Screamline: (1) the May 19, 2014 agreement entered into
by and between Alliance Bus Group (“ABG”) on the one hand, and defendant
Screamline on the other hand (“Agreement No. 1”), whereby ABG agreed to lend to
Screamline the principal amount of $429,574 plus interest, secured by a 2014
motorcoach passenger bus (the “First Vehicle”), which was assigned to Plaintiff
by ABG on May 19, 2014; (2) the August 27, 2015 installment sale agreement
entered into by and between Fleet Financing Resources, LLC (“Fleet”) on the one
hand, and Screamline on the other hand (“Agreement No. 2”), whereby Screamline
purchased two vehicles in exchange for an initial payment of $155,000 and 84
monthly payments in the amount of $12,300, secured by a motor coach and intercity
motor coach (the “Second Vehicles”), which was assigned to Plaintiff; and (3)
the March 30, 2017 agreement entered into by and between Fleet, on the one
hand, and Screamline on the other hand (“Agreement No. 3”), whereby Screamline
purchased a vehicle from Fleet and agreed to make 72 monthly payments of
$5,271.65, secured by one motor coach (the “Third Vehicle”), which was later
assigned to Plaintiff. (Undisputed
Material Fact (“UMF”) Nos. 1, 5, 9; Pl. Material Fact Nos. 3, 7; Barber Decl.,
Ex. 1, Agreement No. 1, p. 1, ¶ 1; Barber Decl., Ex. 3, Notice and
Acknowledgment of Assignment; Barber Decl., Ex. 5, Agreement No. 2, pp. 1, 4;
Barber Decl., Ex. 7 [letter from Fleet informing Screamline that Fleet assigned
all its right, title and interest in Agreement No. 2 to Plaintiff]; Barber
Decl., Ex. 11, Agreement No. 3, pp. 1, 4; Barber Decl., Ex. 13 [letter from
Fleet informing Screamline that Fleet assigned all of its right, title and
interest in Agreement No. 3 to Plaintiff].)
Second, Plaintiff has presented evidence to prove that Plaintiff
performed its obligations under Agreement No. 1, Agreement No. 2, and Agreement
No. 3 (collectively, “the Agreements”).
(Pl. Material Fact Nos. 4, 8, 12; Barber Decl., ¶¶ 9, 13, 17
[stating that Plaintiff has performed all covenants, conditions and promises
required under Agreement No. 1, Agreement No. 2, and Agreement No. 3,
respectively].)
Third, Plaintiff has presented evidence to prove that Screamline
breached the Agreements. (Barber Decl.,
¶ 21 [Screamline defaulted under the Agreements “by, among other things,
failing to make the payments owed thereunder”]; Barber Decl., Ex. 19 [Pay
History Report].)
Fourth, Plaintiff has presented evidence to prove the resulting
damages to Plaintiff in the total amount of $300,522.56 following the sale of
each of the vehicles secured by the Agreements.
(Pl. Material Fact No. 19; Barber Decl., ¶ 37.) As to the reasonableness of the sale of the
First Vehicle, Second Vehicles, and Third Vehicle (collectively, the “Vehicles”),
Plaintiff presents evidence establishing that the Second Vehicles were sold for
an amount that exceeded the Bus Blue Book Values, and that although the two
older vehicles—the Third Vehicle and the First Vehicle—sold for an amount below
what they had been valued in the Bus Blue Book, “it was cost effective” to
dispose of them at a public option.
(Hotchkiss Decl., ¶¶ 5-8; Hotchkiss Decl., Ex. 1.) Thus, the court finds that Plaintiff has
established that it has been damaged in the total amount of $300,522.56, consisting
of the remaining balances owed on the Agreements as follows: (1) $75,518.85
under Agreement No. 1; (2) $45,782.43 under Agreement No. 2; and (3)
$179,221.28 under Agreement No. 3.
(Barber Decl., ¶ 37; Barber Decl., Ex. 35 [Buyouts for the
Agreements].)
In opposition, Screamline contends that there are triable issues
of material fact as to (1) whether Plaintiff is the proper assignee, and (2)
Plaintiff’s compliance with the Commercial Code.
a. Existence
of Contract between Screamline and Plaintiff
The court finds that Screamline has not met its burden to show
that a triable issue of material fact exists as to the element of the existence
of a contract between Screamline and Plaintiff because Screamline has not met
its burden of establishing a triable issue of material fact as to whether
Plaintiff is the proper assignee.
In support of its argument that Plaintiff is not the proper
assignee, Screamline points to (1) the absence of Defendants’ signatures on the
notices of assignment as to Agreement No. 2 and Agreement No. 3, and (2) the
notices of sale in 2021, which state that the secured parties are ABG and
Fleet, and not Plaintiff.
The court finds that neither argument demonstrates a triable issue
of material fact as to whether ABG and Fleet assigned to Plaintiff the rights
under the Agreements. The court
acknowledges that the notices informing Screamline of the assignment as to
Agreement No. 2 and Agreement No. 3 are not signed by Plaintiff or Defendants. (Barber Decl., Exs. 7 [Agreement No. 2], 13
[Assignment No. 3].) However, the terms
of Agreement No. 2 and Agreement No. 3 do not require consent on the part of
Defendants to assign the rights under the agreements; instead, Agreement No. 2
and Agreement No. 3 provide that the secured party (i.e., Fleet) “may sell,
transfer, assign, or encumber this Agreement.”
(Barber Decl., Exs. 5, p. 2, ¶ 13 [Agreement No. 2]; 11, p. 2,
¶ 13 [Agreement No. 3].) Defendants
identify no language requiring their consent of any assignment. Moreover, the notices of assignment are
signed by Fleet. (Barber Decl., Exs. 7,
13.)
Screamline also takes issue with the notices of disposition of
collateral, which identify the secured parties to be ABG and Fleet. (Barber Decl., Ex. 22.) Screamline contends that (1) if the
assignments were valid, Plaintiff would be identified as the secured party, and
(2) if Plaintiff was properly assigned the rights to the Agreements, the
notices were incorrect. The court finds
that this evidence is insufficient to establish a triable issue of material
fact as to the validity of the assignments of the Agreements to Plaintiff. As to Fleet, the parties do not appear to
dispute that an omnibus amendment to master purchase agreement between Fleet
(under its previous name of A-Z Resources, LLC) and Plaintiff granted Plaintiff
“the right and license” to use the name “Fleet” in its contracts. (Barber Decl., Ex. 10, p. 1, ¶ F, p. 2,
¶ 2, subd. (a).)
There appears to be no similar provision in the purchase agreement
as between Plaintiff and ABG. However,
the court finds that the identification of ABG as secured party does not
present a triable issue of material fact as to the validity of the assignment
of Agreement No. 1. Plaintiff has
produced evidence establishing that (1) it holds title to the 2014 CAIO G3600
Motorcoach 56 Passenger, VIN number 4UZFDGA84BCAU7818 described in Agreement
No. 1; (2) Screamline acknowledged the assignment of Agreement No. 1 to
Plaintiff on May 19, 2014; and (3) Screamline and Plaintiff executed an
amendment to Agreement No. 1 on April 30, 2020, further establishing that the
assignment was valid. (Barber Decl., Ex.
1, p. 2 [Agreement No. 1]; Barber Decl., Ex. 2 [Certificate of Title]; Barber
Decl., Ex. 3 [Notice and Acknowledgement of Assignment]; Barber Decl., Ex. 18
[Amendment].)
To avert summary judgment, the opposing party may not rely on
evidence “that gives rise to no more than mere speculation” and, instead, “must
produce substantial responsive evidence sufficient to establish a triable issue
of material fact on the merits of the [moving party’s] showing.” (Sangster v. Paetkau (1998) 68
Cal.App.4th 151, 162-163.) The court
finds that Screamline has not met its burden of disputing the validity of
Assignment No. 1 merely by pointing to the use of the original secured party’s
name (i.e., ABG) on the notice of disposition of collateral.
b. Plaintiff’s
Compliance with Commercial Code
In opposition, Screamline raises arguments under the Commercial Code
regarding (1) the commercial reasonableness of the sales of the Vehicles, and
(2) the adequacy of the disposition notices.
As a threshold matter, the court notes that Plaintiff, in reply,
contends that Screamline did not plead defenses under the Commercial Code and
therefore cannot raise such arguments in opposition to its motion. On a motion for summary judgment, the pleadings
“delimit the scope of issues” to be considered.
(FPI Development, Inc. v. Nakashima (1991) 229 Cal.App.3d 727, 741.)
“The complaint measures the materiality
of the facts tendered in a defendant’s challenge to the plaintiff’s cause of
action. [Citation.] The answer supplements that measure where the
plaintiff is the moving party and the defendant relies upon an affirmative
defense.” (Ibid.) As noted by Plaintiff, Screamline did not
plead defenses under the Commercial Code on which it now relies in opposition
to Plaintiff’s motion for summary judgment.
The general rule is that “‘[a] party who fails to plead affirmative
defenses waives them.’” (Department
of Finance v. City of Merced (2019) 33 Cal.App.5th 286, 294.)
The court finds that Screamline has not waived its right to raise
as a defense any alleged deficiencies as to the notices of disposition and sale
of the Vehicles. Commercial Code section
9602 provides that, “to the extent that they give rights to a debtor or obligor
and imposes duties on a secured party, the debtor or obligor may not waive or
vary the rules stated in the following listed sections: [¶¶] (7) Subdivision
(b) of Section 9610, and Sections 9611, 9613, and 9614, which deal with
disposition of collateral.” (Com. Code,
§ 9602, subd. (7).) In opposition,
Screamline contends that (1) the notices of disposition provided by Plaintiff
were insufficient because they failed to comply with Commercial Code section
9613, and (2) there is a dispute of fact as to whether the disposition of the
collateral (i.e., the Vehicles) was commercially reasonable as required by
Commercial Code section 9610. These
obligations cannot be waived and are therefore properly before the court. (Com. Code, § 9602, subd. (7); Barber
v. LeRoy (1974) 40 Cal.App.3d 336, 343-344 [holding that the defendant did
“not lose the protection” of former Commercial Code section 9504 (now section
9610) “by failing to affirmatively plead noncompliance as a defense”].)
First, the court finds that Screamline has not met its burden to
show a triable issue of material fact as to the commercial reasonableness of
the sales.
Under the Commercial Code, “[e]very aspect of a disposition of
collateral, including the method, manner, time, place, and other terms, must be
commercially reasonable.” (Com. Code, §
9610, subd. (b).) Screamline contends
that (1) Plaintiff did not meet its burden of establishing the commercial
reasonableness of the sale of the Vehicles, and (2) the prices obtained for the
Vehicles were “far below what one would expect” the prices to be. The court has determined, as set forth above,
that Plaintiff submitted evidence sufficient to meet its burden as to the
commercial reasonableness of the sale of the Vehicles based on the declaration
of Mark Hotchkiss.
Defendants have introduced the declaration of Starline Tours and
Screamline’s Chief Financial Officer to argue that (1) “the values obtained for
these [Vehicles]” are “far below what would be expected in a commercially
reasonable sale,” and (2) it was expected that the vehicles would sell for a higher
price than what was actually obtained.
(Sapir Decl., ¶¶ 4-6.) However,
“[t]he fact that a greater amount could have been obtained by a collection,
enforcement, disposition, or acceptance at a different time or in a different
method from that selected by the secured party is not of itself sufficient to
preclude the secured party from establishing that the collection, enforcement,
disposition, or acceptance was made in a commercially reasonable manner.” (Com. Code, § 9627, subd. (a).)
The court notes that Screamline also appears to take issue with
Plaintiff’s decision to use Ritchie Bros. Auctioneers for the sale of the
Vehicles. Specifically, Screamline
argues that Ritchie Bros. specializes in heavy duty construction and truck
sales, and not buses. (Def. Material
Fact No. 23.) Screamline cites to the
deposition of Wade Whitenberg, the representative designated by Ritchie Bros.,
and to exhibit 16 of the declaration of Mark M. Scott for this
proposition. (Def. Material Fact No.
23.) However, there appear to be no
portions of the deposition which state that Ritchie Bros specializes in heavy
duty construction, and exhibit 16 of the Mark M. Scott declaration, submitted
in support of Plaintiff’s moving papers, is a copy of the marketing efforts of
the September 24, 2021 auction. (Scott
Decl., ¶ 3, subd. (c); Scott Decl., Ex. 16.) Thus, Screamline has not presented any
evidence establishing that Ritchie Bros. specializes in heavy equipment
sales. Even if Screamline had produced
such evidence, Screamline did not present evidence or argument showing that
Ritchie Bros. was not reasonably qualified to conduct the public sale, or that
the use of Ritchie Bros. was otherwise commercially unreasonable.
Second, the court finds that Screamline has met its burden of
establishing a triable issue of material fact as to whether Plaintiff complied
with the applicable Commercial Code provisions regarding notice and therefore
has shown that a triable issue of material fact exists as to whether Plaintiff
is entitled to a deficiency judgment on this cause of action. (Barber, supra, 40 Cal.App.3d
at p. 342 [if a secured creditor does not comply with the Commercial Code, it
cannot obtain a deficiency judgment].)
A secured party disposing of collateral must send the debtor “a
reasonable authenticated notification of disposition.” (Com. Code, § 9611, subd. (b).) A notification of disposition is sufficient
if it (1) describes the debtor and the secured party; (2) describes the collateral
that is the subject of the intended disposition; (3) states the method of intended
disposition; (4) states that the debtor is entitled to an accounting of the
unpaid indebtedness; and (5) states the time and place of the public
disposition or the time after which any other disposition is to be made. (Com. Code, § 9613, subd. (1).) “Whether the contents of a notification that
lacks any of the information specified [above] are nevertheless sufficient is a
question of fact.” (Com. Code,
§ 9613, subd. (2).) The contents of
a notification “providing substantially the information” specified by
statute are sufficient, even if the notification includes information not
specified by the statute, or “[m]inor errors that are not seriously
misleading.” (Com. Code, § 9613,
subd. (3) [emphasis added].)
Screamline contends that the notifications of disposition do not
comply with section 9613 because they (1) identify the original secured
parties, and not Plaintiff, and (2) did not provide notice of the public
auction of the First Vehicle that occurred on December 10, 2021.
As to the identification of the original secured parties, the
court finds that Screamline has not met its burden of establishing that the
notices are insufficient. As to Fleet,
as set forth above, Plaintiff was contractually permitted to use Fleet’s
name. (Barber Decl., Ex. 10, p. 1,
¶ F, p. 2, ¶ 2, subd. (a).) As
to ABG, the court has already concluded that there is no similar contractual
permission. However, as noted by
Plaintiff in reply, it does not appear to be disputed that the notification
described the correct agreement (i.e., Agreement No. 1) and vehicle (i.e., the
First Vehicle). Moreover, as set forth
above, the evidence submitted in connection with this motion indicates that
Screamline knew of the assignment of Agreement No. 1 to Plaintiff. Accordingly, the court finds that the
evidence submitted demonstrates that the notices of disposition provided
“substantially” all of the information regarding the secured parties and is
therefore sufficient. (Com. Code, §
9613, subd. (3).)
However, the court finds that Screamline has met its burden of
showing a triable issue of material fact as to whether Plaintiff failed to
comply with section 9613 by failing to provide “the time and place of a public
disposition or the time after which any other disposition is to be made” as to
the December 10, 2021 public auction of the First Vehicle. (Com. Code, § 9613, subd. (1)(E).) The notices of disposition of sale submitted
by Plaintiff establish that Screamline was given notice of the September 24,
2021 sale date, but not of the December public auction. (Barber Decl., Ex. 22 [notices of disposition
of collateral for September 24, 2021 sale dates]; Barber Decl., ¶ 28 [“The
First Vehicle was later sold at the December 10, 2021 Ritchie Bros auction”].)
The court therefore finds that Screamline has met its burden to
show that a triable issue of material fact exists as to Plaintiff’s compliance
with the Commercial Code, and thus has shown that there is a triable issue of
material fact as to whether Plaintiff may obtain a deficiency judgment against
Screamline concerning Agreement No. 1.
The court notes that Screamline has established a triable issue of
material fact only as to the sale of the First Vehicle and the amount that can
be recovered under Agreement No. 1.
However, the court cannot grant partial summary adjudication as to
whether Plaintiff is entitled to judgment concerning the other agreements. (Code Civ. Proc., § 437c, subd. (f)(1)
[the court may grant a motion for summary adjudication “only if it completely
disposes of a cause of action”].)
The court therefore denies Plaintiff’s motion for summary
adjudication as to the first cause of action for breach of written agreements.
3. Fifth
Cause of Action for Breach of Guaranty against defendants Farhadi and Starline
Tours
“A lender is entitled to judgment on a breach of guaranty claim
based upon undisputed evidence that (1) there is a valid guaranty, (2) the
borrower has defaulted, and (3) the guarantor failed to perform under the
guaranty.” (Gray1 CPB, LLC v.
Kolokotronis (2011) 202 Cal.App.4th 480, 486.)
The court finds that Plaintiff has met its burden of showing that
there is no defense to the fifth cause of action for breach of guaranty against
defendants Farhadi and Starline Tours because Plaintiff has proved each element
of the cause of action entitling Plaintiff to judgment on that cause of action.
First, Plaintiff has presented evidence to prove that there are
three valid guaranties as between (1) Plaintiff and Farhadi, and (2) Plaintiff
and Starline Tours. As to Starline
Tours, Plaintiff presents the following evidence: (1) Starline Tours executed a
guaranty of the performance of Screamline under Agreement No. 1, which was
assigned to Plaintiff; (2) Starline Tours executed Agreement No. 2 as
“Corporate Guarantor,” the rights of which were assigned to Plaintiff; and (3) Starline
Tours executed Agreement No. 3 as “Corporate Guarantor,” which was assigned to
Plaintiff. (Pl. Material Fact No. 13; Barber
Decl., Ex. 16 [Guaranty of Agreement No. 1]; Barber Decl., Ex. 5, p. 1
[Agreement No. 2]; Barber Decl., Ex. 11, p. 1 [Agreement No. 3]; Barber Decl.,
Exs. 3, 7, 13 [notices of assignment].) As
to Farhadi, Plaintiff presents the following evidence: (1) Farhadi executed a
guaranty of the performance of Screamline under Agreement No. 1, which was
assigned to Plaintiff; (2) Farhadi executed the Agreement No. 2 as a “Personal
Guarantor,” the rights of which were assigned to Plaintiff; and (3) Farhadi
executed Agreement No. 3 as “Personal Guarantor,” the rights of which were
assigned to Plaintiff. (Pl. Material
Fact No. 13; Barber Decl., Ex. 17 [Guaranty of Agreement No. 1]; Barber Decl.,
Ex. 5, p. 1 [Agreement No. 2]; Barber Decl., Ex. 11, p. 1 [Agreement No. 3];
Barber Decl., Exs. 3, 7, 13 [notices of assignment].)
Second, Plaintiff has presented evidence to prove that the
borrower (defendant Screamline) has defaulted.
(Pl. Material Fact No. 15; Barber Decl., ¶¶ 21, 25.)
Third, Plaintiff has presented evidence to prove that Starline Tours
and Farhadi, as guarantors, have failed to perform under the respective
guaranties. (Pl. Material Fact No. 19;
Barber Decl., ¶ 25 [“Starline [Tours] and Farhadi have failed to honor
their Guaranties”].)
Finally, Plaintiff has presented evidence, as set forth above,
that following the sale of the Vehicles, Plaintiff is still owed the balance of
$300,522.26. (Pl. Material Fact No. 19;
Barber Decl., ¶ 37.)
The court finds that defendants Starline Tours and Farhadi have
met their burden to show that a triable issue of material fact exists as to Plaintiff’s
compliance with the Commercial Code, and thus has shown that there is a triable
issue of material fact as to whether Plaintiff may obtain a deficiency judgment
concerning Agreement No. 1.
As set forth above, a secured party that disposes of collateral
“shall” send to the debtor and any secondary obligor a reasonable authenticated
notification of disposition. (Com. Code,
§ 9611, subds. (b), (c)(1)-(c)(2).)
A notification of disposition is sufficient if it states, inter alia,
the date and time of a public disposition or the time after which any other
disposition is to be made. (Com. Code,
§ 9613, subd. (1)(E).) The court
finds that defendants Farhadi and Starline Tours have met their burden of
showing that Plaintiff did not provide them with notice of the December 10,
2021 sale of the First Vehicle for the reasons set forth above in connection
with the first cause of action, and therefore have met their burden of showing
a triable issue of material fact exists as to Plaintiff’s noncompliance with
the Commercial Code. (Barber, supra,
40 Cal.App.3d at p. 342 [if a secured creditor does not comply with the
Commercial Code, it cannot obtain a deficiency judgment].)
The court therefore denies Plaintiff’s motion for summary
adjudication as to the fifth cause of action for breach of guaranty.
4. First
through Fourteenth Affirmative Defenses
“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;
Code Civ. Proc., § 437c, subd. (f)(1).)
To meet the initial burden of showing that there is no triable issue of
material fact as to the defense, “the plaintiff must negate an essential
element of the defense, or establish the defendant does not possess and cannot
reasonably obtain evidence needed to support the defense.” (See’s Candy Shops, Inc., supra,
210 Cal.App.4th at p. 900.)
a. First
Affirmative Defense: Uncertainty
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the first affirmative defense of uncertainty because
Plaintiff does not (1) cite to any evidence in support of this argument, or (2)
present sufficient argument negating an element of this defense, stating only
that it disagrees with any assertion that the Complaint is unintelligible. (Mot., pp. 9:25-10:4.)
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ first affirmative defense of uncertainty.
b. Second
Affirmative Defense: Statute of Limitations
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the second affirmative defense of statute of limitations.
Plaintiff asserts that this action is within the four-year statute of
limitations based on Defendants’ defaults in May of 2020 and the December 2020
filing of Plaintiff’s Complaint. However, Plaintiff does not (1) point to any
evidence specifically establishing the date of defaults in connection with this
argument, or (2) cite the governing statute of limitations. The court therefore finds that Plaintiff has
not met its burden of negating an element of the affirmative defense of the
statute of limitations.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ second affirmative defense of statute of limitations.
c. Third
Affirmative Defense: Failure to State Facts Sufficient to Constitute a Cause of
Action
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the third affirmative defense for failure to state facts
sufficient to constitute a cause of action because Plaintiff failed to present
evidence or sufficient argument negating an element of this defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ third affirmative defense of for failure to state facts
sufficient to constitute a cause of action.
d. Fourth
Affirmative Defense: Failure to Mitigate Damages
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the fourth affirmative defense for failure to mitigate.
It appears that Plaintiff principally contends that this defense lacks
merit on the ground that the sales were commercially reasonable. (Mot., pp. 11:18-12:1 [discussing cases
relating to the commercial reasonableness of sales of collateral].) The court has addressed these arguments in
connection with the first and fifth causes of action. To the extent that Plaintiff contends that
Defendants’ failure to mitigate damages defense lacks merit independent of any
discussion concerning the Commercial Code, Plaintiff has not (1) submitted or
cited to any evidence, or (2) presented sufficient argument to negate this
defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ fourth affirmative defense for failure to mitigate.
e. Fifth
Affirmative Defense: Comparative Fault
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the fifth affirmative defense of comparative fault.
Plaintiff argues that this defense is “completely inapplicable” to
this action and provides a general citation to Li v. Yellow Cab (1975)
13 Cal.3d 804. However, Plaintiff does
not provide (1) meaningful discussion as to the applicability of this defense, or
(2) a pinpoint citation to any particular page of Li that could be read
to support its argument. The court
therefore finds that Plaintiff has not met its burden to negate an element of
this defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ fifth affirmative defense of comparative fault.
f. Sixth
Affirmative Defense: Waiver
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the sixth affirmative defense of waiver.
Plaintiff contends that this defense lacks merit because “Defendants
cannot proffer one iota of evidence in support of a waiver claim.” (Mot., p. 12:17-18.) However, Plaintiff has not provided the court
with meaningful discussion or citation to evidence in support of this
contention and therefore has not met its burden of negating an element of this
defense or establishing that Defendants do not and cannot reasonably obtain
evidence necessary to support this defense.
(See’s Candy Shops, Inc., supra, 210 Cal.App.4th at p. 900
[plaintiff must negate element of defense or establish that defendant does not
possess and reasonably cannot obtain evidence to support that defense].)
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ sixth affirmative defense of waiver.
g. Seventh
Affirmative Defense: Estoppel
The court finds that Plaintiff has not met its burden of proving that there
is no merit to the seventh affirmative defense of estoppel because Plaintiff
has not presented any evidence or argument negating an element of the defense
or establishing that Defendants do not possess and reasonably cannot obtain
evidence to support this defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ seventh affirmative defense of estoppel.
h. Eighth
Affirmative Defense: Release and Discharge
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the eighth affirmative defense of release and discharge
because Plaintiff has not presented or cited to any evidence or argument negating
an essential element of the defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ the eighth affirmative defense of release and discharge.
i. Ninth
Affirmative Defense: Unclean Hands
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the ninth affirmative defense of unclean hands because
Plaintiff has not submitted or cited to any evidence, or presented sufficient
argument, negating an element of the defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ ninth affirmative defense of unclean hands.
j. Tenth
Affirmative Defense: Laches
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the 10th affirmative defense of laches because Plaintiff
has not provided sufficient argument or evidence negating an element of the
defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ 10th affirmative defense of laches.
k. Eleventh
Affirmative Defense: Standing
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the 11th affirmative defense of standing because Plaintiff
has not presented sufficient argument or evidence negating an element of the
defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ 11th affirmative defense of standing.
l. Twelfth
Affirmative Defense: Force Majeure
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the 12th affirmative defense of force majeure. Although Plaintiff argues that the Agreements
and corresponding Guaranties do not include a force majeure provision and
instead “reiterate Screamline’s unconditional obligation to pay regardless of
circumstances[,]” Plaintiff does not (1) cite to any evidence in support of
this contention, or (2) present sufficient argument negating an element of this
defense. (Opp., p. 14:19-25.)
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ 12th affirmative defense of force majeure.
m. Thirteenth
Affirmative Defense: Frustration of Purpose
The court finds that Plaintiff has not met its burden of showing that
there is no merit to the 13th affirmative defense of frustration of purpose.
First, Plaintiff argues that the purpose of the loan was not
frustrated. (Opp., pp. 15:27-16:3.) However, Plaintiff does not (1) cite to any
evidence in support of this contention, or (2) set forth the elements of the
defense of frustration of purpose and explain which element it contends is
negated by Plaintiff’s funding of the loan.
Second, Plaintiff contends that this defense is inapplicable because
the Agreements are non-cancellable, Defendants’ obligations are unconditional,
and Screamline agreed that its payment obligation would not be subject to
abatement, reduction, set off or defense of any kind. As to Agreement No. 1, Plaintiff cites to
section 1. Plaintiff does not quote any
specific language in this provision; however, the court notes that Agreement
No. 1 provides that Screamline’s “obligation to re-pay the principal amount of
this Loan…is absolute, unconditional and irrevocable….” (Barber Decl., Ex. 1, § 1.) As to Agreement No. 2, Plaintiff cites,
generally, to section 4, which provides that the debtor’s “obligation to make
payments and pay other amounts hereunder is absolute and unconditional and not
subject to abatement, reduction or set-off for any reason whatsoever.” (Barber Decl., Ex. 5, § 4.) Finally, Plaintiff cites to section 4 of Agreement
No. 3, which includes identical language.
(Barber Decl., Ex. 11, § 4 [“Your obligation to make payments and
pay other amounts hereunder is absolute and unconditional and not subject to
abatement, reduction or set-off for any reason whatsoever”].)
The court acknowledges that the Agreements include language stating
that the obligation to make payments is absolute. However, Plaintiff has not cited any
authority establishing that this language is sufficient to negate the
applicability of the frustration of purpose defense.
The court therefore denies Plaintiff’s motion for summary adjudication
as to Defendants’ 13th affirmative defense of frustration of purpose.
n. Fourteenth
Affirmative Defense: Reservation of Right to Assert or Delete Affirmative
Defenses
The court finds that Plaintiff has met its burden of showing that
Defendants’ fourteenth affirmative defense of reservation of right to assert or
delete affirmative defenses has no merit.
Plaintiff argues that Defendants’ fourteenth affirmative defense “is
not a defense.” (Motion, p.
17:1-3.) “[A]ny issue on which defendant
bears the burden of proof at trial is ‘new matter’ and must be specially
pleaded in the answer.” (Weil &
Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group
2022) ¶ 6:431; Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 239
[“if the onus of proof is thrown upon the defendant, the matter to be proved by
him is new matter”].) Defendants’ 14th
defense is not new matter, and instead an attempt to reserve the right to raise
or delete affirmative defenses. The
court therefore finds that it is inappropriately pleaded as an affirmative
defense.
The court therefore grants Plaintiff’s motion for summary adjudication
as to Defendants’ 14th affirmative defense of reservation of right to assert or
delete affirmative defenses.
ORDER
The court denies plaintiff Wells
Fargo Equipment Finance, Inc.’s motion for summary judgment.
The court denies plaintiff Wells Fargo Equipment Finance, Inc.’s motion
for summary adjudication as to (1) plaintiff Wells Fargo Equipment Finance,
Inc.’s first and fifth causes of action, and (2) defendants Screamline
Investment Corporation, Kamrouz Farhadi, and Starline Tours of Hollywood,
Inc.’s 1st through 13th affirmative defenses.
The court grants plaintiff Wells Fargo Equipment Finance, Inc.’s
motion for summary adjudication as to defendants Screamline Investment
Corporation, Kamrouz Farhadi, and Starline Tours of Hollywood, Inc.’s 14th
affirmative defense.
The court orders defendants Screamline Investment Corporation, Kamrouz
Farhadi, and Starline Tours of Hollywood, Inc. to give notice of this ruling.
IT IS SO ORDERED.
DATED:
_____________________________
Robert
B. Broadbelt III
Judge
of the Superior Court