Judge: Ronald F. Frank, Case: 21TRCV00777, Date: 2023-07-10 Tentative Ruling
Case Number: 21TRCV00777 Hearing Date: March 5, 2024 Dept: 8
Tentative Ruling¿
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HEARING DATE: March 5, 2024¿
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CASE NUMBER: 21TRCV00777
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CASE NAME: DBE Loans, LLC v.
Enjoy Repeat, Inc., et al
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MOVING PARTY: Plaintiff, DBE Loans LLC
RESPONDING PARTY: Defendant,
Enjoy Repeat, Inc.
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TRIAL DATE: April 2, 2024
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MOTION:¿ (1) Motion for Summary
Adjudication
¿ Tentative Rulings: (1) DENIED. the
unconscionability defense is potentially applicable to the causes of action
predicated directly on the terms of the contract, a contract as to which Judge
Tanaka has found a triable issue of fact.
All three of the causes of action addressed by this MSA rest on terms of
a contract as to which an unconscionability defense requires a trial to
resolve. Whether that defense is “concocted”
or not, a trial is needed to resolve it.
I. BACKGROUND¿¿
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A. Factual¿¿
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On
October 21, 2021, Plaintiff, DBE Loans, LLC (“Plaintiff”) filed its Complaint
against Defendant, Enjoy Repeat, Inc., and DOES 1 through 50. Plaintiff alleges
the following facts. In 2018, pursuant to written loan agreements, Plaintiff
loaned Defendant in excess of $2 million. Defendant failed to repay the amounts
due on the loans pursuant to the terms delineated in the agreements. Plaintiff
alleges the following causes of action: (1) Breach of Contract; (2) Fraud/False
Promise; (3) Recovery of Personal Property; (4) Specific Performance; (5)
Conversion; (6) Violation of California Civil Code § 1719; and (7) Declaratory
Relief (with Related Request for Injunctive Relief).
On
October 7, 2022, Judge Tanaka ruled on a Motion for Summary Adjudication filed
by Plaintiff as to the First Cause of Action for Breach of Contract and Sixth
Cause of Action for Violation of Civil Code § 1718. Judge Tanaka DENIED summary
adjudication as to the Breach of Contract cause of action, but GRANTED summary
adjudication for the Sixth Cause of Action for Violation of California Civil
Code § 1719.
Now,
Plaintiff, seeks an order on their Motion for Summary Adjudication as to their
Third, Fourth, and Fifth causes of action as it argues no triable issues of
material fact exist.
B. Procedural¿¿
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On December 19, 2023, Plaintiff, DBE Loans, LLC
filed a Motion for Summary Adjudication. On February 20, 2024, Defendant filed
an opposition. On February 27, 2024, Plaintiff filed a reply brief.
II. EVIDENTIARY OBJECTION
Along with
Plaintiff’s reply brief, Plaintiff filed Evidentiary Objections to Defendant’s
evidence.
Evidentiary Objections to Declaration of Gregory Plummer:
Overrule: For the same
reasons Judge Tanaka overruled them, this Court overrules objections to
paragraphs 7, 8, 11-14, 17-19, 27, 32-34, and 42-48. This Court also overrules
the rest of the objections to paragraphs 50-54.
Sustain: none.
Evidentiary Objection to Enjoy Repeat’s Appendix of
Evidence
Overrule: none.
Sustain: For the same
reasons Judge Tanaka sustained the previously-filed objections when he
considered the previous MSA as to different causes of action, this Court
sustains objections to exhibits 4, 14, 19, and 21-23.
III. REQUEST FOR JUDICIAL NOTICE
With its
opposition, Defendant has requested this Court take judicial notice of the
following documents:
1.
Exhibit 1: Complaint,
fi led in DBE Loans LLC v. Enjoy Repeat, Inc. , Case No 21 TRCV00777 on October
21, 2021; and
2.
Exhibit 2: Notice
of Ruling and Minute Order on Plaintiff's Motion for Summary Adjudication as to
the First Cause of Action for Breach of Contract and the Sixth Cause of Action
for Violation of California Civil Code § 1719, filed in DBE Loans LLC v. Enjoy
Repeat, Inc. , Case No 21TRCV00777 on October 7, 2022.
The Court GRANTS Defendant’s request
and takes judicial notice of the above documents.
IV. ANALYSIS¿
Here, Plaintiff
moves for Summary Adjudication on the grounds that the Third Cause of Action
for Recovery of Personal Property, the Fourth Cause of Action for Specific
Performance, and the Fifth Cause of Action for Conversion fail and that there
are no triable issues of fact as to these causes of action.
A. 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.) CCP Section 437(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.)¿ “The function
of the pleadings in a motion for summary judgment is to delimit the scope of
the issues; the function of the affidavits or declarations is to disclose
whether there is any triable issue of fact within the issues delimited by the
pleadings.”¿ (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67,
citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367,
381-382.)¿
As to each claim as framed by the
complaint, the defendant moving for summary judgment must satisfy the initial
burden of proof by presenting facts to negate an essential element, or to
establish a defense. (CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005)
128 Cal.App.4th 1510, 1520. ) Courts “liberally construe the evidence in
support of the party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.”¿ (Dore v. Arnold Worldwide, Inc.¿(2006)
39 Cal.4th 384, 389.)¿
Once the defendant has met that burden,
the burden shifts to the plaintiff to show that a triable issue of one or more
material facts exists as to that cause of action or a defense thereto.¿¿¿ To
establish a triable issue of material fact, the party opposing the motion must
produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68
Cal.App.4th 151, 166.)
B. Discussion
Unconscionability as Applied to the Third,
Fourth, and Fifth Causes of Action
This Court notes
that on October 7, 2022, Judge Tanaka DENIED Plaintiff’s Motion for Summary
Adjudication as to the Breach of Contract cause of action on the grounds that
he found Defendant had met its burden to submit facts to show the existence of
a triable issue of material fact as to the defense of unconscionability.
Defendant now seeks to use this ruling to show that like the Court previously
found the first cause of action to have triable issues of fact as to whether
the contract (“Loan Documents”) were unconscionable, this same argument can be
made for causes of action three through five. This Court recognizes that unconscionability
is not a defense to every cause of action pleaded by Plaintiff in the FAC, but also
recognizes that causes of action predicated on the terms and conditions of the Loan
Documents may well be subject to the unconscionability defense. If the contract’s terms were determined to be
unconscionable, a disputed matter for trial, then a cause of action grounded in
the enforcement of the terms of the contract must also be resolved at trial. Plaintiff’s claim of right to recover the
collateral for the loan is grounded in a term or condition of the Loan Documents,
so Plaintiff’s characterization of the third, fourth, and fifth causes of
action as “non monetary” claims is unavailing.
The claimed right to the collateral and the claimed conversion of the
distributed profits are admittedly based on oner or more terms of the Loan
Documents, a contract as to which the unconscionability defense may apply.
In its reply brief, Plaintiff argues that
Defendant’s argument that the Court (via Judge Tanaka’s October 7, 2022 ruling)
has already found triable issues of fact as to the unconscionability of the
Loan Document does not apply here. The
Reply argues that while unconscionability may be a viable defense to the First
Cause of Action for Breach of Contract which seeks monetary damages, the other
3 causes of action raised in this Motion for Summary Adjudication seek “nonmonetary
damages” in the form of return of collateral, specific performance to obtain
collateral, and the value of withheld collateral. Judge Tanaka’s prior rulings
analyzed fact that Defendant – there – had raised a trial issue of unequal
bargaining power when it came to the creation of the contract or the “Loan
Documents”. But the crux of the
applicable defense is not whether the cause of action seeks monetary recovery,
but rather whether the success of Plaintiff’s asserted cause(s) of action rest
on the contract itself. Specific
performance of the contract plainly rests on proof of an enforceable contract; conversion
of personal property or the return of personal property in defendant’s
possession also rely on the terms of the same allegedly unconscionable contract
as the sources of Plaintiff’s claim of rights.
Here, just as in Judge Tanaka’s
ruling, Defendant has provided evidence to show the existence of a triable
issue of material fact as to procedural unconscionability that bears on the
terms of the contract. Included in the opposition papers, and declaration of
Gregory Plummer, Defendants have shown the presence of evidence that raises a
triable issue of fact as to the existence of unequal bargaining positions of
the parties at the time of the origination of the loans. Defendant relies on
the same evidence of its principal Gregory Plummer having no experience in the
field of commercial lending or borrowing, that he did not negotiate the terms
of the loans, that he only dealt with a third party named SSP America, Inc.
(“SSP” - one of Plaintiff’s alleged partners), and that the loan documents were
actually negotiated by SSP and Plaintiff. (Declaration of Gregory Plummer
(“Plummer Decl.”), ¶¶ 42- 48.) Judge
Tanaka previously found that this evidence is sufficient to show the existence
of a triable issue of material fact as to both procedural and substantive unconscionability.
The provisions of the Loan Documents
are pertinent to the specific performance cause of action are contained in Paragraph
9(d) - “Breach of Covenants; Specific
Performance” : Grantor agrees that a breach of any of the
covenants contained in this Security Agreement will cause irreparable injury to
the Secured Party, that the Secured Party shall have no adequate remedy at law
in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this document shall be specifically enforceable
against Grantor, and Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and payable
in accordance with the agreements and instruments governing and evidencing such
obligations.”
Because
the specific performance cause of action rests on this term of the contract and
since Judge Tanaka has previously ruled that triable issues of fact bear on the
success of an unconscionability defense to the contract, the Court finds a
triable issue of fact as to the specific performance claim.
While
the Court acknowledges Plaintiff’s frustration in awaiting a trial to resolve
its claimed rights to the proceeds, the collateral, the late fees, and other
recoveries, all of those rights are grounded in the enforcement of Plaintiff’s
rights under the allegedly unconscionable contract. But the trial date is looming on the horizon so
the wait is nearly over.