Judge Teresa A. Beaudet, Case 19STCV06757 2022-11-07 Tentative Ruling

This matter came on for trial on August 17-19, 2022 in Department 50 of the above-entitled Court before the Hon. Teresa A. Beaudet, sitting without a jury. Thereafter, the dismissal without prejudice of Defendant OP Bancorp[1] by Plaintiffs was entered on September 6, 2022. The Court, having considered the evidence and read the arguments of counsel, issues this tentative and proposed Statement of Decision. This tentative and proposed Statement of Decision will become the Statement of Decision unless, within 15 days hereafter, a party serves and files objections to the proposed Statement of Decision.

1. Exhibit[s] 1 through 4 accurately reflect[] the loans made by or on behalf of SUSAN HEO to HYONG DO MIN, RUNI EXPRESS INC., between May 4, 2018, and June 20, 2018.

2. Exhibit 5 accurately reflects an interest payment by MJ GLOBAL ENTERPRISES, INC. on behalf of HUNG DO MIN, on the loan[s] of Exhibit[s] 1 through 4.

3. Exhibit 6 accurately reflects repayment of loans made by SUSAN HEO between May 4, 2018 and June 20, 2018.

4. Exhibit 201 is a promissory note for loans made by SUSAN HEO between May 4, 2018, and June 20, 2018.

5. Exhibit 13 is a deed of trust recorded on July 26, 2018, securing Exhibit 201.

6. Exhibit 14 is also a deed of trust recorded on July 26, 2018, securing Exhibit 201.

7. Exhibit 7 accurately reflects the promissory note for a loan of $400,000 made by or on behalf of SUSAN HEO between August 30, 2018, and November 21, 2018.

8. Exhibit[s] 8 and 9 accurately reflect loans made by or on behalf of SUSAN HEO between August 30, 2018, and November 21, 2018.

9. Exhibit[s] 10 and 11 accurately reflect copies of the post-dated checks issued and provided by MJ GLOBAL ENTERPRISE, INC.[] as a promise to repay the loan in Exhibit[s] 7 through 9.

10. Exhibit 12 accurately reflects an interest payment by MJ GLOBAL, on the loan of Exhibit[s] 7 through 9.

12. OP BANCORP (“OPEN BANK”) did not make any loan to HYUNG DO MIN, 2017 SKY LLC, or MJ GLOBAL.

13. HYUNG DO MIN, 2017 SKY LLC, or MJ GLOBAL have not submitted a loan application to OPEN BANK.

15. OPEN BANK is a banking institution and SUSAN HEO is an employee of OPEN BANK.

18. 2017 SKY LLC is a limited liability company organized in California on July 24, 2017, and is the owner of Rosecrans Property.

19. Plaintiffs filed a complaint with FDIC about OPEN BANK and SUSAN HEO, and no violation of any financial laws, codes, rules, or regulations was found.

In their Fourth Amended Complaint (“FAC”), Plaintiffs HYUNG DO MIN (“MIN”), MJ GLOBAL ENTERPRISE, INC. (“MJ”), and 2017 SKY, LLC (“SKY”) alleged that Defendant SUSAN HEO (”HEO”) made certain loans to them. In connection with those loans, they allege fraud causes of action (1st - fraud and deceit, 3rd - conspiracy to commit fraud, and 12th - fraud and deceit for intentional misrepresentation), usurious and unconscionable interest (2d cause of action), violation of California financing law (4^th cause of action ), unfair business practices (5th cause of action) and cancellation of written instruments (10th and 11th). Although Plaintiffs assert in their closing argument that they are seeking “declaratory relief to release the two deeds of trust on plaintiff’s real property,” the cause of action for declaratory relief (13th) in the FAC is brought only as to DOES 1-50 and pertains to “a controversy [that] exists between Plaintiffs and an unknown buyer.”

In her Cross-Complaint, HEO sued Plaintiffs for breach of written agreements (1st cause of action), MIN for false promise (2dcause of action) and Plaintiffs for unjust enrichment (3d cause of action).

The Court has identified the following as the material issues to be determined by the Court with regard to the FAC:

• Did Plaintiffs prove all of the elements of their three fraud causes of action against HEO?

• Did Plaintiffs prove all of the elements of their second cause of action for usury against HEO?

• Did Plaintiffs prove all of the elements of their fourth cause of action for violation of California financing law against HEO?

• Did Plaintiffs prove all of the elements of their fifth cause of action for unfair business practices against HEO?

• Did Plaintiffs prove all of the elements of their two causes of action for cancellation of instruments against HEO?

The Court has identified the following as the material issues to be determined by the Court with regard to HEO’s Cross-Complaint:

• Did HEO prove all the elements of her first cause of action for breach of written agreement against MIN, MJ and SKY?

• Did HEO prove all the elements of her second cause of action for false promise against MIN?

• Did HEO prove all the elements of her third cause of action for unjust enrichment against MIN, MJ and SKY?

A. Did Plaintiffs Prove All the Elements of Their Three Fraud Causes of Action Against HEO?

Plaintiffs alleged in paragraphs 25 through 27 of the FAC, that in June of 2018, they met with HEO at OPEN BANK to procure a business loan, that “HEO offered to provide a loan for $200,000,” and she made two representations: First, “HEO informed Plaintiffs that OPEN BANK could only offer a loan to them through her because Plaintiffs needed the funding right away.” Second, “HEO represented that she provided such services to her clients all the time. She represented that because of the bank regulations, some loans could not be handled directly by OPEN BANK, and she had an understanding with OPEN BANK to provide lending services to those clients.” Plaintiffs further alleged that “when the loan was made to Plaintiffs, HEO concealed any and all applicable disclosures related to the loan” and “failed to fully disclose any and all arrangements that she may [have] had with the OPEN BANK related to these lending activities, and failed to obtain any consent from Plaintiffs.” In paragraph 29 of the FAC, Plaintiffs alleged that HEO made the false representations and concealments “to induce Plaintiffs to borrow money from her as an agent of OPEN BANK.” In Paragraph 33 of the FAC, Plaintiffs indicated that they were informed and believed “that HEO obtained the funding from OPEN BANK.” Finally, in paragraph 36 of the FAC, Plaintiffs alleged that HEO falsely “represented that she had released her short form deed of trust recorded against [MIN’s and SKY’s] properties.”

At trial, Plaintiffs presented no evidence that HEO made the representations described in the first cause of action.[3] None of the witnesses, including MIN and his CFO and daughter Juni Espinosa (“ESPINOSA”), so testified. Moreover, Plaintiffs did not make the claim at trial that HEO made false representations and concealments “to induce Plaintiffs to borrow money from her as an agent of OPEN BANK.” Plaintiffs contended that the loans by HEO were made by HEO. Plaintiffs put on no evidence “that HEO obtained the funding from OPEN BANK. Finally, there was no evidence that HEO “represented that she had released her short form deed of trust recorded against [MIN’s and SKY’s] properties.”

Because there was no evidence presented at trial to support the first cause of action for fraud and deceit, the Court finds that Plaintiffs failed to prove their first cause of action.

In Plaintiffs’ third cause of action for conspiracy to commit fraud, they made essentially

the same allegations as in the first cause of action except they asserted in paragraph 51, that “HEO and OPEN BANK, and each of them were part of the conspiracy to commit fraud against Plaintiff, and agreed to commit this fraud against Plaintiffs.” However, Plaintiffs put on no evidence whatsoever of any conspiracy by HEO and anyone at OPEN BANK. Because there was no evidence presented at trial to support the third cause of action for conspiracy to commit fraud, the Court finds that Plaintiffs failed to prove their third cause of action.

In paragraphs 142 and 143 of the FAC, Plaintiffs alleged that HEO made “numerous

representations, including a confirmation letter sent through her counsel, that both deeds of trust [recorded against certain property] were removed, but it was a false representation.” However, here again, Plaintiffs put on no evidence of such representations nor did they proffer any such confirmation letter sent through her counsel.[4] Consequently, the Court finds that Plaintiffs failed to prove their twelfth cause of action.

B. Did Plaintiffs Prove All of the Elements of Their Second Cause of Action for Usury Against HEO?

In their Second Cause of Action, Plaintiffs allege that HEO violated the California

Constitution by charging interest on the $200,000 and the $400,000 loans in excess of the 10% permitted by the Constitution. (Paragraphs 41-46.) There is no claim of usury alleged regarding the $30,000 loan by HEO to MIN.

The parties stipulated that Exhibit 201 is a promissory note for loans made by HEO. (Stip. 4.) Exhibit 201 identifies the amount of the loan as $200,000, but there is no amount stated for interest. The parties also stipulated that Exhibit 5, a check in the amount of $2,500 by MJ to Yoobi Investment, a company owned by HEO’s husband, accurately reflects an interest payment by MJ on behalf of MIN on “the loan[s] of Exhibit[s] 1 through 4.” (Stip. 2; TR. 8/19, 13:27-28.) Exhibit 1 reflects the $30,000 loan by HEO (through her husband’s company Milano Consulting Inc. (“Milano”) to MIN; Exhibits 2 through 4 reflect three loan payments totaling $200,000 to MIN’s designee RUNI EXPRESS by Milano. (TR 8/17, 39:14-19, 25-28, 40:1-11.)Thus, the impact of stipulation 2 is unclear since it indicates that the $2,500 payment evidenced by Exhibit 5 reflects an interest payment for four loan payments by HEO, only three of which are covered by the usury cause of action.

At trial, MIN first testified that he “gave every month the interest” on the $200,000 loan. When asked how much was the interest, he said “maybe it was 5,000.” After his daughter inappropriately shouted out “3,000,” he then testified “maybe 3,000.” (TR 8/17, 41:14-22.) He then testified that Exhibit 5, the $2,500 check, was an interest payment on the $200,000 loan. (TR. 8/17, 42:4-13.) MIN was then asked, “was the agreement $2,500 per month until the loan was paid?” MIN did not so confirm; instead he testified that “[t]he interest for borrowing $200,000 was monthly – I think we said that I would give $4,000. $4,000.” (TR. 8/17., 42:14-18.) It was unclear from this testimony whether the total amount to be paid was $4,000 or $4,000 was the monthly amount. There was no testimony or evidence that MIN ever paid $4,000 in interest on the $200,000 loan. Moreover, MIN offered no testimony as to when such a statement was made and by whom. He also appeared to be unsure as to exactly what purportedly was said. MIN acknowledged that he did now know how many payments of $2,500 he made.” (TR. 8/17, 43:14-20.)

At trial, Ms. Espinosa offered testimony about what she believed to be cash payments made by her father MIN. (TR. 8/18, 52:17-24.) The Court did not find this testimony credible because Ms. Espinosa acknowledged that she did not have personal knowledge regarding any interest payments made by her father MIN on the $200,000 loan. (TR. 8/18, 54:8-11.)

At trial, HEO testified about the $2,500 payment. When asked if she asked MJ to write Yoobi Investment a check for $2,500 she said “Yes. Well, you know, including the $200,000, I never charged him any interest, but Mr. Min gave me this check for $2,500, expressing his gratitude.” When asked “how did he know about Yoobi Investments,” she said she “asked him to write it that way.” Upon further inquiry, she was asked if MIN “said ‘I want to give you some money, who do I make a check to?’ and you told him ’Yoobi Investments’?” She responded “Yes. You know, the money came from my husband anyway. So I gave the money back to my husband that way.” ((TR. 8/19, 14:1-16.) After HEO testified about this gratitude payment, MIN did not rebut her testimony.

The Court finds that Plaintiffs failed to establish that HEO entered into an agreement with MIN to charge any specific amount of interest in connection with the $200,000 loan. The note evidencing the loan did not contain any amount for interest and the testimony by MIN regarding a purported agreement to charge $4,000 in interest (or possibly $5,000 or $3,000) was not credible. Even if the $2,500 was an interest payment, it is unclear whether it all applied to the $200,000 loan, or some portion of it applied to the $30,000 and if so, what portion. Stipulation 2 provides that the $2,500 check, Exhibit 5, reflects interest on both loans. Additionally, it was unclear as to the time period covered by the $2,500 check. As a consequence, the Court cannot conclude that the $2,500 payment, even if it did constitute interest, was usurious.

The parties stipulated that Exhibit 7 accurately reflects the promissory note for the $400,000

loan. That note expressly states that MIN will pay $5,000 per month in interest. That monthly amount results in a rate of interest of 15%. The parties also stipulated that Exhibit 12, a payment by MJ to YBK “accurately reflects an interest payment by MJ GLOBAL” on the $400,000 loan. Although there was no testimony regarding the date the $5,000 payment was made, the endorsement on the back has a date of “2019-01-07.” There was no evidence of any other interest payment on the $400,000 loan. Ms. Espinosa, who by that time was working for her father MIN, testified that she was “only aware of one interest payment of 5,000.” (TR. 8/18/22, 54:12-19.)

Plaintiffs rely upon the California Constitution, Article V, § 1, subdivisions 1-2 for their usury cause of action. Subdivision 1 applies to loans “for use primarily for personal, family, or household purposes.” MIN and HEO both testified that the loans made to MIN were for his business. (TR. 8/17, 34:27- 35:2; TR. 8/19, 20:7-13.) Subdivision 2 applies to “any other use” for which there is no exemption. For such loans, the loan can be made “at a rate not exceeding the higher of (a) 10 percent per annum or (b) 5 percent per annum plus the rate prevailing on the 25^th day of the month preceding the earlier of (i) the date of execution of the contract to make the loan or forbearance, or (ii) the date of making the loan or forbearance established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13a of the Federal Reserve Act as now in effect or hereafter from time to time amended . . . .” Neither party addressed this provision of the California Constitution nor did they present evidence as to whether 10% was higher than the rate allowed by the rest of the formula in subdivision 2. Consequently, it is unknown whether the 15% interest rate set forth in the note for the $400,000 loan was within the amount allowed under the second part of the subdivision 2 formula.

Even if it had been established that 10% was the highest amount allowed under subdivision 2 at the time of the note, there was no testimony at trial as to what period of time the $5,000 payment made in January 2019 covered. The $400,000 loan was made in part on August 30, 2018 in the amount of $100,000; that was nearly three months before the $400,000 note was even signed on November 21, 2018. And the remaining $300,000 was loaned on November 21, 2018. (Exs. 7-9.) Consequently, a $5,000 interest payment made in January might have covered more than just one month’s interest, thereby resulting in a payment that reflected less than a 10% interest rate. Because there was a failure of proof as to the applicable interest rate cap that applied to the $400,000 loan and a failure of proof as to the time period covered by the $5,000 payment, Plaintiffs failed to prove that the $400,000 loan was usurious

Because Plaintiffs did not prove that either the $200,000 loan or the $400,000 loan was usurious, Plaintiffs failed to prove their second cause of action.

C. Did Plaintiffs Prove All of the Elements of Their Fourth Cause of Action for Violation of California Financing Law Against HEO?

In paragraph 62 of the FAC, Plaintiffs alleged that “HEO was not licensed by the

State of California Department of Business Oversight as the California Finance Lender to enter into any loan agreement with Plaintiffs.” In paragraph 63 of the FAC, Plaintiffs alleged that HEO and OPEN BANK, as a ‘joint venture’, was not licensed by the State of California Department of Business Oversight as the California Finance Lender to enter into any loan agreement with Plaintiffs.” Plaintiffs seek treble damages under California Civil Code §1916-3.

In their Closing Argument at page 3, lines 25-28, Plaintiffs address their fourth cause of action in one brief paragraph by referencing Financial Code 22000 and stating that “Heo was not licensed by the State of California as a California Financial lender to enter into a loan agreement with plaintiff.” Plaintiffs then reference three loans and the interest rates therefor.

Finance Code § 22000, the only portion of the Finance Code cited by Plaintiffs, merely states that “[t]his division is known and may be cited as the ‘California Financing Law.’” The Court notes that Finance Code § 22009 provides that “‘Finance lender’ includes any person who is engaged in the business of making consumer loans or making commercial loans.” No evidence was presented by Plaintiffs at trial as to whether HEO was or was not licensed by the State of California as a California Financial lender. There was no evidence presented that she was herself “engaged in the business of making consumer loans or making commercial loans.” She did work for a bank, but her testimony was that she handles “the marketing and managing the customers” and, when asked whether she was “a loan officer,” she said “No.” (TR 8/19, 4:4-8.) Additionally, there was no evidence presented that HEO and OPEN BANK operated as a “joint venture.” Consequently, the Court finds that Plaintiffs failed to prove their fourth cause of action.

D. Did Plaintiffs Prove All of the Elements of Their Fifth Cause of Action for Unfair Business Practices Against HEO?

In paragraph 67 of the FAC, Plaintiffs alleged that HEO engaged in “business acts or

practices that are unlawful, unfair or fraudulent within the meaning of California business and Professionals Code Sections 17200, et seq., when [she] engaged in the lending activity without complying with the California Financing Law and in violation of the FDIC Guidelines.” In paragraph 68 of the FAC, Plaintiffs alleged that HEO “made misrepresentations when [she] solicited Plaintiffs to enter into agreement in violation of applicable statutes governing these activities. [She] also made misrepresentation and committed fraud against Plaintiffs.”

In their Closing Argument at page 4, lines 2-5, Plaintiffs address their fifth cause of action in one sentence by stating that “Heo engaged a[sic] lending activity without complying with California financial law violating FIDC[sic] guidelines.” Plaintiffs do not identify any FDIC guidelines in their Closing Argument or in the FAC.

As discussed above, the Court found that Plaintiffs failed to prove their fraud causes of action and their cause of action for violating California Financing Law. Consequently, because the basis alleged in the FAC for the Business and Professions Code §17200 violation was not proven, the fifth cause of action also fails for lack of proof.

E. Did Plaintiffs Prove All of the Elements of Their Two Causes of Action for Cancellation of Instruments Against HEO?

In the tenth cause of action, Plaintiffs allege in paragraphs 125-131 that certain property

described as “the Norwalk Property” is owned by SKY and they “seek to have the deed of trust recorded against the Norwalk Property cancelled . . . because the underlying loan was fully paid on July 28, 2018.” Similarly, in the eleventh cause of action, Plaintiffs allege in paragraphs 133–139 that certain property described as the “Residential Property” is owned by MIN and they “seek to have the deed of trust recorded against the Residential Property cancelled . . . because the underlying loan was fully paid on July 28, 2018.”

In the Closing Argument at page 4, lines 11-16, Plaintiffs state that they seek “damages for clouding the title of two properties at the rate of $ 100 per day for each property from July 27, 2018. Damages for slander of title may be compensatory and or punitive. Plaintiff is seeking punitive damages as a result of defendant’s behavior and the exorbitant amount of time that she refused to reconvey the deeds of trust which is now over four years.” However, Plaintiffs have not brought a claim for “clouding the title” or “slander of title,” nor did they allege that they were seeking damages at the rate of $100 per day or punitive damages.

The evidence presented during the trial shows that MIN began requesting additional loans from HEO within a month after his daughter repaid the $230,000 loan for him. ((TR. 8/17, 43: 21-44:5, Ex. 6 evidencing payment of the $230,000 loan dated 7/27/18; TR. 8/18, 43:27-44:2, Ex. 8, evidencing $100,000 loan on 8/30/18; Ex. 9 evidencing $300,000 loan on 11/21/18; TR. 8/17, 44: 13-19, Ex. 7, the promissory note for the $400,000 in loans.) HEO’s testimony, which the Court found to be more credible than the testimony of MIN and Espinosa, shows that the parties agreed to leave the deeds as recorded as security for the $400,000 in loans requested by MIN from HEO. In response to an inquiry by counsel for Plaintiffs, HEO testified that Min “said that he needed the money and there was no need to be in a hurry about releasing the lien.” (TR. 8/19, 24:24-28.) When counsel pointed out that the November loan was “a new transaction,” HEO acknowledged that but confirmed the agreement by MIN to leave the liens as they were: “It may be a new transaction, but he’s the one who said it’s okay to leave it the way it is.” (TR. 8/19, 25: 1-4). HEO further testified that this agreement was consistent with her understanding of the provision in the Deeds of Trust that allowed for it to apply to “any extensions or renewal of the deed secured by the Deed of Trust. (TR. 8/19, 30:5- 31:16, 32:7-10; Exs. 13 and 14.)

Plaintiffs did not refute the testimony of HEO about this agreement regarding the liens nor did they address it in their Closing Argument. Since Plaintiffs have stipulated that the $400,000 loan has not been repaid, cancellation of the deeds at this time appears to be premature. Consequently, Plaintiffs have failed to prove their tenth and eleventh causes of action.

Because Plaintiffs failed to prove any of their causes of action, they are not entitled to

G. Did HEO Prove All the Elements of Her First Cause of Action for Breach of Written Agreement Against MIN, MJ and SKY?

In the first cause of action in her Cross-Complaint (“CC”), HEO alleged breach of

written agreements in the form of two loans made totaling $400,000. In paragraph 24, she alleged that the first loan was made on August 30, 2018 in the amount of $100,000 when MIN asked to borrow that sum to pay off a portion of existing loans on the Norwalk Property for the benefit of SKY. As a promise to repay the $100,000 by October 30, 2018, MIN issued a post-dated check in that amount dated October 30, 2018. In paragraph 25, HEO alleged that MIN was not able to repay the $100,000 as planned, and he asked for an additional $300,000 to pay off other loans with unfavorable terms. MIN promised to repay the two loans no later than January 30, 2019. HEO alleged in paragraph 26, that a post-dated check in the amount of $300,000 dated October 2018 was issued by MJ in connection with the $400,000 loan “as a repayment guaranty.” Additionally, HEO alleged that MIN signed a promissory note dated November 21, 2018 for the total sum of $400,000. In paragraph 32, HEO alleged that “Cross-Defendants” breached the Note and failed to pay the $400,000 plus interest.

The elements of a breach of contract cause of action 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. 4^th 811, 821.) HEO has established all of the elements of her cause of action against MIN for breach of written agreements. Stipulated Fact no. 7 provides that Exhibit 7, a handwritten promissory note signed by MIN, “accurately reflects the promissory note for a loan of $400,000 made by or on behalf of SUSAN HEO between August 30, 2018 and November 21, 2018.” HEO’s full performance is reflected in Exhibits 8 and 9 (the $100,000 check issued at MIN’s request in the name of P.B.C., a creditor of MJ, a company owned by MIN. (TR. 8/17, 51:15-24; TR. 8/18, 8:24-26.); and the $300,000 remittance reflecting funds wired from HEO to the bank account of MJ at MIN’s request.) MIN has stipulated that the two loans have not been repaid. (Stip. Fact 11.) Because MIN did not present any evidence or testimony to dispute or offset the obligation to repay the $400,000, the Court finds that HEO proved all the elements of her first cause of action for breach of written agreements against MIN. Although the first cause of action was alleged as to all Cross-Defendants, no evidence was presented that MJ or SKY borrowed the $400,000 from HEO. Neither signed the promissory note. Consequently, the Court finds that HEO failed to prove her first cause of action for breach of written agreements as to MJ or as to SKY.

H. Did HEO Prove All the Elements of Her Second Cause of Action for False Promise Against MIN?

$400,000 loan but when he made his promises, he had a fraudulent intent than neither he nor SKY or MJ would perform the promises “as evidenced by his refusal to repay or to instruct the escrow to pay the loan from the proceeds of the sales of NORWALK PROPERTY, and by the fact that he has failed to keep the promises.” HEO further alleged in paragraph 36 of the CC, on information and belief, that “MIN’s intention was only to defer the payment obligations . . . and eventually to ignore and refuse the obligation to make payment until the time of transferring, hiding or selling off [certain] assets.” HEO also alleged in paragraphs 37 and 38 that she was ignorant of MIN’s “secret intention not to pay,” she relied on his promises in waiting for him to perform, and she suffered damages.

As set forth in the case of Lazar v Superior Court (1996) 12 Cal. 4^th 631, 638,

“‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citation.] An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract. (Chelini v. Nieri (1948) 32 Cal. 2d. 480, 487 [196 P.2d 915]( ["tort of deceit" adequately pled where plaintiff alleges "defendant intended to and did induce plaintiff to employ him by making promises . . . he did not intend to (since he knew he could not) perfor (fn. omitted)].”

In her Closing Argument Brief at page 12, lines15-18, HEO argues that the failure of

MIN to “even attempt to repay the loan to HEO” and the filing of this action against HEO are proof that MIN did not intend to repay the loan. HEO does not cite to any evidence that demonstrates that MIN never attempted to repay the loan; no questions were asked of MIN as to what efforts he made to repay the loan. There was no testimony at trial as to the reason MIN filed this action and there was no testimony regarding the alleged refusal of MIN to pay HEO money out of the proceeds of the sale of the Norwalk Property. There was evidence that MIN paid $5,000 in interest, as discussed above, which undercuts the notion to some degree that MIN never intended to perform his promises regarding the $400,000 loan.

Because there was no evidence presented at trial to support the second cause of action for false promise, the Court finds that HEO has failed to prove her second cause of action.

I. Did HEO Prove All the Elements of Her Third Cause of Action for Unjust Enrichment Against MIN, MJ and SKY?

In paragraphs 41 of the CC and erroneously labeled paragraph 33 which should have

been paragraph 42, HEO alleged that SKY and MJ received $100,000 and $300,000 respectively to repay an existing loan (SKY) and other debt (MJ), but neither of them have repaid the amounts received despite the benefits they received, and MIN received a benefit as a principal of SKY and MJ.

As noted in the case of Peterson v Cellco Partnership (2008) 164 Cal. App. 4^th 1583,

1593, “the elements of an unjust enrichment claim are the ‘receipt of a benefit and [the] unjust retention of the benefit at the expense of another.’ [Citation.]” HEO in her Closing Argument Brief, points out that “Section 39 of the Restatement (Third) of Restitution and Unjust Enrichment provides for . . . alternative breach of contract damages as follows: ‘Profit from Opportunistic Breach (1) If a deliberate breach of contact results in profit to the defaulting promisor and the available damage remedy affords inadequate protection to the promisee’s contractual entitlement, the promisee has a claim to restitution of the profit realized by the promisor as a result of the breach . . . .”

In this case, there is no basis for concluding that the contract damages for breach of the agreement to repay the $400,000 loan are inadequate to protect HEO’s contractual entitlement. The fact that the properties that secure the loan have gone up in value does not make this a case of unjust enrichment; in fact, if anything, the increase in value of the properties has afforded her greater security. If HEO collects on a judgment for the amount of the loan plus interest, she will be made whole, irrespective of whether the properties that provide the security for the repayment of the loan have more equity than they would have had at the time the loan became due. The decision to wait to foreclose on those liens (or to cash the two checks provided by MIN for repayment of the $400,000), has been hers. As to SKY and MJ, they are not the “defaulting promisor;” just because MIN used the money borrowed to benefit SKY and MJ does not constitute a basis for finding that those two companies have been unjustly enriched.

The Court finds that HEO has failed to prove a basis for finding unjust enrichment as to MIN, SKY or MJ.

HEO is entitled to judgment in her favor for $400,000 in damages as to MIN, plus

interest at the legal rate from January 31, 2019, the maturity date of the loan.

The Court finds in favor of HEO and against Plaintiffs on all causes of action in the First Amended Complaint. The Court finds in favor of HEO and against MIN only on the first cause of action in her Cross-Complaint for breach of written agreement in the amount of $400,000, plus interest from January 31, 2019 at the legal rate. The Court finds in favor of SKY and MJ on the first cause of action of HEO’s Cross-Complaint. The Court finds in favor of MIN on the second cause of action in HEO’s Cross-Complaint for false promise. The Court finds in favor of MIN, SKY and MJ GLOBAL on the third cause of action in HEO’s Cross-Complaint for unjust enrichment. Within ten days after this Statement of Decision becomes final, HEO is ordered to file and serve a proposed judgment in accordance with these findings, along with a declaration of counsel setting forth the calculation of the interest due and the daily rate therefor.

[1] The parties also referred to OP Bancorp as OPEN BANK or OP BANK.

[2] The list of “[Proposed] Stipulation of Facts” that was adopted by the parties and the Court at the trial was filed on 10/8/21.

[3] In their written Closing Argument at page 3, lines 17-18, Plaintiffs cite to no evidence in the record as to any of the fraud causes of action. Plaintiffs merely assert, without any support, that “Heo made false statements to Mr. Min regarding his ability to qualify or [sic] conventional loan that she could charge usurious interest rate for own [sic] her benefit.”

[4] Evidence of a letter from HEO’s counsel was admitted as Exhibit 15-1, but that letter does not constitute confirmation “that both deeds of trust were removed.”

Superior Court of California

County of Los Angeles

Department 50