Judge Teresa A. Beaudet, Case 20STCV07425 2022-10-04 Tentative Ruling

On February 20, 2020, Plaintiff Israel Sam Gorodistian (“Plaintiff”) filed this action against Defendants Jadelle Jewelry and Diamonds, LLC (“Jadelle LLC”), Jadelle Inc., Jona Rechnitz (“Jona”), Rachel Rechnitz (“Rachel”), and Robert Rechnitz (“Robert”) (collectively, “Defendants”). Jona, Rachel, and Robert are collectively referred to herein as the “Rechnitzes.” Jadelle LLC and Jadelle Inc. are collectively referred to as the “Jadelle Parties.”

The operative First Amended Complaint (“FAC”) was filed on May 10, 2021 and asserts causes of action for (1) conversion, (2) civil theft (Pen. Code § 496), (3) fraud – false promise, (4) negligent misrepresentation, (5) civil conspiracy to defraud, (6) breach of oral contract – lending agreement, (7) breach of implied-in-fact contract – lending agreement, (8) money lent, (9) account stated, and (10) breach of oral contract – personal loan, (11) breach of implied-in-fact contract – personal loan, and (12) breach of written guaranty.[1]

Plaintiff filed a motion for summary judgment or, in the alternative, summary adjudication. Defendants opposed.

On August 19, 2022, the motion came on for hearing. The Court’s August 19, 2022 minute order provides, inter alia, that “[t]he Court finds that it needs to modify its ruling on the usury issue because it appears that there is a triable issue regarding that defense. The parties will further brief the issue of consideration for the guaranty and the timing thereof. Plaintiff will file and serve a brief of no more than 5 pages on or before 09/06/22 with courtesy copies lodged directly in Department 50. Defendants will file and serve their response on or before 09/13/22.” The Court continued the hearing on the instant motion to October 4, 2022.

On September 6, 2022, Plaintiff filed a supplemental memorandum in support of the motion for summary judgment, or in the alternative, summary adjudication. On September 13, 2022, Defendants filed a supplemental memorandum of points and authorities in opposition to Plaintiff’s motion for summary judgment, or in the alternative, summary adjudication.

The Court rules on the Joint Separate Statement Regarding Defendants’ Evidentiary Objections as follows[2]:

Objection 2: sustained as to the second sentence and sustained to the extent the “Jadelle Parties” include Jadelle Inc., overruled as to the remainder

Objection 3: sustained as to “I entered into a verbal agreement with Defendants,” overruled as to the remainder

Objection 4: sustained to the extent “Defendants” include Jadelle Inc., overruled as to the remainder

Objection 7: sustained as to “again to lure me into lending more funds,” overruled as to the remainder

Objection 8: sustained to the extent “Defendants” include Jadelle Inc. and sustained as to “he otherwise ingratiated himself with me to better position himself to defraud me,” overruled as to the remainder

Objection 9: sustained as to “attempting to place me at ease in furtherance of the Defendants’ fraudulent scheme,” overruled as to the remainder

Objection 10: sustained as to the second sentence, overruled as to the remainder

Objection 13: sustained to the extent “Defendants” includes “Jadelle Inc.,” overruled as to the remainder

Objection 14: sustained as to the fourth sentence, overruled as to the remainder

Objection 15: sustained as to the second sentence, overruled as to the remainder

Objection 16: sustained as to “lying to me” and as to the second sentence, overruled as to the remainder.

Objection 17: sustained to the extent “Defendants” includes “Jadelle Inc.,”

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in¿Civil Code section 3294, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.” (Code Civ. Proc., § 437c(f)(1).)¿“A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Ibid.)¿

The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) 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.)

For purposes of motions for summary judgment and summary adjudication, a plaintiff “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).)

Plaintiff alleges that in or around June 2019, Jona pitched a lending opportunity for Plaintiff in connection with the Rechnitzes’ jewelry business, the Jadelle Parties. (FAC, ¶ 12.)[3]

In particular, Jona represented and promised that (a) as part of their business, the Jadelle Parties make short-term loans to borrowers, which are secured by jewelry from the borrowers as collateral; (b) once the loan funds are repaid by the borrowers, the jewelry is returned to them; (c) outside, private lenders fund the loans made by the Jadelle Parties, who are entitled monthly interest payments until the principal loan is repaid. (FAC, ¶ 13.)

Plaintiff entered into a verbal agreement with Defendants to participate in the lending opportunity, and ultimately lent a total of $1,573,333.33 from June 2019 to November 2019 (the “Lending Agreement”), broken down as follows: (a) $200,000.00 lent on June 28, 2019; (b) $100,000.00 lent on July 24, 2019; (c) $500,000.00 lent on August 28, 2019; (d) $100,000.00 lent on September 3, 2019; (e) $300,000.00 lent on September 16, 2019; and (f) $373,333.33 lent on November 4, 2019. (FAC, ¶ 14.) Under the Lending Agreement, Defendants agreed to repay each loan in a reasonable amount of time, together with interest. (FAC, ¶ 15.)

Defendants made periodic interest payments to Plaintiff for some of the above loans, but those interest payments stopped in or around January 2020. (FAC, ¶ 17.) None of the principal amounts lent under the Lending Agreement were repaid. (FAC, ¶ 25.)

In addition, on January 2, 2020, Jona asked Plaintiff for a personal favor to borrow $86,000.00 on a seven-day loan to cover a shortfall Jona needed to close escrow on a real

property investment. (FAC, ¶ 23.) Plaintiff verbally agreed to the loan, and lent $86,000.00 that day (the “Personal Loan”). (FAC, ¶ 23.) None of the principal amounts loaned under

On January 17, 2020, Jona signed a personal guaranty of all funds lent under the Lending Agreement (the “Jona Guaranty”). (FAC, ¶ 28.) However, Plaintiff has not received a single dollar from Defendants in principal repayment of his lent funds under the Lending Agreement or the Personal Loan, despite Defendants’ repeated promises to do so. (FAC, ¶ 29.) On February 7, 2020, Defendants’ attorney informed Plaintiff that Defendants would not be repaying any of his funds. (FAC, ¶ 30.)

Plaintiff asserts that he has proven each element of his third cause of action for fraud-false promise against Jona and the Jadelle Parties. In support of the third cause of action, Plaintiff alleges that “[b]eginning in or around June 2019, and continuing thereafter, the Jadelle Parties and Jona promised Gorodistian that they would perform their obligations under the Lending

Agreement and Personal Loan,” but that these promises were false. (FAC, ¶¶ 44, 46-47.)

“To prove fraud, a plaintiff must present evidence of (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage. Promissory fraud is a species of fraud requiring proof of (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise[e].” (Ryder v. Lightstorm Entertainment, Inc. (2016) 246 Cal.App.4th 1064, 1079 [internal quotations and citations omitted].)

Plaintiff provides evidence that at a meeting in or around June 28, 2019, Jona represented and promised to Plaintiff that (a) as part of its business, Jadelle LLC makes short-term loans to borrowers, which are secured by jewelry from the borrowers as collateral; (b) once the loan funds are repaid by the borrowers, the jewelry is returned to them; (c) outside, private lenders fund the loans made by the Jadelle Parties, who are entitled monthly interest payments until the principal loan is repaid. (Gorodistian Decl., ¶ 3.) “In reliance on the those promises and representations,” Plaintiff ultimately lent a total of $1,773,333.33 from June 2019 to November 2019 (the “Lending Agreement”). (Gorodistian Decl., ¶ 4.) Plaintiff states that prior to each of Plaintiff’s loans, Jona convinced Plaintiff that each loan was a great deal, that he had numerous contacts in the jewelry business, and that there was solid and more than sufficient collateral. (Gorodistian Decl., ¶ 9.) Plaintiff also provides evidence that on January 2, 2020, Jona asked Plaintiff to borrow $86,000.00, and Plaintiff and lent $86,000.00 that day (the “Personal Loan”). (Gorodistian Decl., ¶ 14.)

Plaintiff received wire transfers from Jadelle LLC on October 17 and 18, 2019 for

$100,000.00 each, which were repayments for the initial June 28, 2019 loan for $200,000.00. (Gorodistian Decl., ¶ 6.) Jona and Robert made reassurances and promises to Plaintiff of repayment, but contrary to, and in repudiation of, the repeated representations, assurances, and promises by Defendants, the payments under the Lending Agreement and Personal Loan stopped completely. (Gorodistian Decl., ¶¶ 19, 23.) Plaintiff did not receive the total principal repayment of his lent funds under the Lending Agreement or the Personal Loan. (Gorodistian Decl. ¶ 23.)

Plaintiff cites to Tenzer v. Superscope (1985) 39 Cal.3d 18, 30-31, where the California Supreme Court found that “something more than nonperformance is required to prove the defendant’s intent not to perform his promise. To be sure, fraudulent intent must often be established by circumstantial evidence. Prosser, for example, cites cases in which fraudulent intent has been inferred from such circumstances as defendant’s insolvency, his hasty repudiation of the promise, his failure even to attempt performance, or his continued assurances after it was clear he would not perform. However, if plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.” (Internal quotations and citation omitted.) Plaintiff appears to argue that fraudulent intent may be inferred from the circumstances here, due to “Defendants’ hasty repudiation of their promises and also their continued assurances after it was clear they would not perform.” (Mot. at p. 12:2-4.)

Defendants counter that a triable issue of material fact exists as to whether Defendants intended not to perform, pointing to Plaintiff’s evidence that Defendants (other than Jadelle Inc.) made periodic interest payments to Plaintiff for some of the loans. (Gorodistian Decl., ¶ 8.) As set forth above, Plaintiff also provides evidence that he received wire transfers from Jadelle LLC which were repayments for the initial June 28, 2019 loan for $200,000.00. (Gorodistian Decl., ¶ 6.) Defendants argue that the fact that Plaintiff was receiving interest payments and received full repayment of one loan installment is evidence that there was no “hasty repudiation.” The Court agrees with Defendants that based on the evidence presented, a triable issue of material fact exists as to whether made a promise made regarding a material fact without any intention of performing it.

Moreover, as Defendants note, Plaintiff does not discuss the remaining elements of his fraud-false promise cause of action in the memorandum of points and authorities in support of the motion. In addition, as to Jadelle Inc., Defendants note that Plaintiff testified that he didn’t interact with Jona, Rachel, or Robert as representatives of Jadelle Inc. during the time Plaintiff was making the loans, that he didn’t have any interactions with Jadelle Inc. specifically, and that Jadelle Inc. wasn’t a party to the personal loan Plaintiff made to Jona or the lending agreement between Plaintiff and Jadelle LLC. (Lane Decl., ¶ 5, Ex. 3 (Gorodistian Depo.) pp. 134:20-135:4; 135:15-23.)

Based on the foregoing, the Court finds that Plaintiff failed to meet his initial burden of proving each element of his third cause of action for fraud-false promise.

Next, Plaintiff contends that he has proven each element of his fourth cause of action for negligent misrepresentation against Jona and the Jadelle Parties. “The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true…negligent misrepresentation is a species of the tort of deceit and like fraud, requires a misrepresentation, justifiable reliance and damage...” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184-185 [internal citations omitted].)

Plaintiff argues that the Jadelle Parties and Jona verbally made false material representations and omissions to Plaintiff that they would perform their obligations under the Lending Agreement and the Personal Loan, but that these representations and omissions were false. As Defendants note, Plaintiff cites to inadmissible evidence in support of his assertion that the Jadelle Parties and Jona knew they would not perform their obligations under the Lending Agreement and Personal Loan at the time they were made. (Mot. at p. 13:10, citing UMF 90.) Plaintiff also simply cites to the fact that payments under the Lending Agreement and Personal Loan stopped in support of the assertion that representations made were false. (Mot. at p. 13:6, UMF 98.)

In addition, discussed above, Defendants note that there is evidence that Defendants (other than Jadelle Inc.) made periodic interest payments to Plaintiff for some of the loans, and that Plaintiff received wire transfers from Jadelle LLC for a total of $200,000.00, as repayment for the June 28, 2019 loan for $200,000.00. (Gorodistian Decl., ¶¶ 6, 8.) Defendants argue that given that Plaintiff received interest payments and some repayments of principal totaling hundreds of thousands of dollars, Plaintiff cannot establish that Defendants had no reasonable grounds to believe a statement about repayment was true.

Based on the foregoing, the Court finds that Plaintiff failed to meet his initial burden of proving each element of his fourth cause of action for negligent misrepresentation.

As Defendants note, Plaintiff does not clearly apply the law to the facts of this case in the motion. Rather, Plaintiff argues that “[t]he gist of [Plaintiff’s] conspiracy claim against all of the Defendants is the fraud in inducing Plaintiff to loan funds in accordance with the Lending Agreement.” (Mot. at p. 14:25-27.)

In addition, Defendants cite to Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511, where the California Supreme Court noted that “[s]tanding alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort…A bare agreement among two or more persons to harm a third person cannot injure the latter unless and until acts are actually performed pursuant to the agreement. Therefore, it is the acts done and not the conspiracy to do them which should be regarded as the essence of the civil action.” Defendants assert that Plaintiff’s conspiracy to defraud claim is based on allegations of underlying promissory fraud. Indeed, Plaintiff alleges in the FAC that “Defendants…knowingly and willfully conspired and agreed among themselves to defraud [Plaintiff] by making made [sic] false promises and false material representations and omissions to [Plaintiff] that the Jadelle Parties and Jona would perform their obligations under the Lending Agreement and Personal Loan....” (FAC, ¶ 64.) As set forth above, the Court finds that Plaintiff failed to meet his initial burden of proving each element of his cause of action for fraud-false promise.

Defendants also note that Plaintiff relies on inadmissible conclusory statements to argue that Defendants had knowledge of and agreed to the representations and promises made by Jona to Plaintiff at the meeting in or around June 28, 2019 in order to implement Defendants’ fraudulent scheme. (See UMF 103.)

Based on the foregoing, the Court finds that Plaintiff has failed to meet his initial burden of proving each element of his cause of action for civil conspiracy.

Plaintiff argues that he has proven each element of his first cause of action for conversion against Jona and the Jadelle Parties. “The elements of a conversion cause of action are (1) plaintiffs’ ownership or right to possession of the property at the time of the conversion; (2) defendants’ conversion by a wrongful act or disposition of plaintiffs’ property rights; and (3) damages.” (Baldwin v. Marina City Properties, Inc. (1978) 79 Cal.App.3d 393, 410.) “In order to establish a conversion, the plaintiff must show an intention or purpose to convert the goods and to exercise ownership over them, or to prevent the owner from taking possession of his property.” (Collin v. American Empire Ins. Co. (1994) 21 Cal.App.4th 787, 812 [internal quotations omitted].)

Plaintiff argues that his “conversion claim is premised on the same underlying facts as his promissory fraud claim. And because the promissory fraud claim is more than sufficient, the

conversion claim is likewise adequate…” (Mot at p. 15:19-21.) Moreover, Plaintiff states in the reply that “the parties agree that Conversion and Promissory Fraud stand or fall together.” (Reply at p. 4:10.) As set forth above, the Court finds that Plaintiff failed to meet his initial burden of proving each element of his cause of action for fraud-false promise. Accordingly, the Court does not find that summary adjudication of Plaintiff’s first cause of action for conversion is warranted.

Plaintiff asserts that he has proven each element of his second cause of action for civil theft (Penal Code section 496) against all Defendants.

“While section 496(a) covers a spectrum of impermissible activity relating to stolen property, the elements required to show a violation of section 496(a) are simply that (i) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property.” (Switzer v. Wood (2019) 35 Cal.App.5th 116, 126.) “A violation of section 496(a) may, by its own terms, relate to property that has been stolen or that has been obtained in any manner constituting theft or extortion…the issue of whether a wrongdoer’s conduct in any manner constituted a theft is elucidated by other provisions of the Penal Code defining theft, such as section 484…Section 484, subdivision (a), states as follows: Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, or who causes or procures others to report falsely of his or her wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft.” (Id. at p. 126-127 [internal quotations and citations omitted, emphasis in original].)

As to the first element, Plaintiff argues that the evidence shows that he loaned money to Defendants based on false pretenses. As to the second element, Plaintiff argues that “[a]t the very least, the facts [sic] that Defendants acknowledged [Plaintiff’s] right to repayments, multiple reassurances that repayment was forthcoming, including specific representations and promises from Robert himself, establishes the inference that Defendants knew the funds were obtained in a questionable manner, and this establishes no genuine issue of material fact as to the second element.” (Mot. at p. 17:9-13.)

Defendants counter that “Plaintiff fails to identify any specific misrepresentations by any of the Defendants. To the extent Plaintiff is relying on statements about repayment, there is clearly a triable issue of facts [sic] as to whether such statements were false when made, as Plaintiff regularly received interest payments for months and was fully repaid for his first loan.” (Opp’n at p. 11:11-14.) The Court agrees with Defendants that this raises a triable issue of fact as to whether the money was loaned based on false pretenses, as well as to whether Defendants knew the property was stolen.

Based on the foregoing, the Court finds that Plaintiff has failed to meet his initial burden of proving each element of his second cause of action for civil theft.

Sixth Cause of Action for Breach of Oral Contract – Lending Agreement and Seventh Cause of Action for Breach of Implied-in-Fact Contract – Lending Agreement

Plaintiff argues that he has proven each element of his sixth and seventh causes of action against Jona and the Jadelle Parties.

In support of his sixth cause of action for breach of oral contract, Plaintiff alleges that the Jadelle Parties and Jona breached the Lending Agreement by failing to make full repayment of the lent funds, totaling $1,573,333.33. (FAC, ¶ 75.) In support of his seventh cause of action for breach of implied-in-fact contract, Plaintiff alleges that by their conduct, the Jadelle Parties and Jona accepted the benefits that accrued to it as a result of the Lending Agreement, and therefore entered into an implied-in-fact contract with Plaintiff, but have nevertheless failed to re-pay the entire $1,573,333.33. (FAC, ¶ 81.)

As set forth above, Plaintiff provides evidence that he lent a total of $1,773,333.33 from June 2019 to November 2019 (the “Lending Agreement”). (Gorodistian Decl., ¶ 4.) Defendants (except for Jadelle Inc.) agreed to repay each loan in a reasonable amount of time, together with interest. (Gorodistian Decl., ¶ 5.) As of the date of his declaration in support of the instant motion, Plaintiff has not received the total principal repayment of his lent funds under the Lending Agreement. (Gorodistian Decl., ¶ 23.)

Defendants assert that while Plaintiff contends that Defendants agreed to “repay each loan in a reasonable amount of time, together with interest,” Plaintiff does not include any evidence as to what the parties believed or agreed constituted a reasonable amount of time. Defendants also argue that it is impossible to know if there was a breach, or when the breach occurred, without evidence establishing when repayment was required. Plaintiff counters that under Civil Code section 1657, “[i]f no time is specified for the performance of an act required to be performed, a reasonable time is allowed. If the act is in its nature capable of being done instantly--as, for example, if it consists in the payment of money only--it must be performed immediately upon the thing to be done being exactly ascertained.” In addition, Plaintiff provides evidence that on February 7, 2020, Defendants’ attorney informed Plaintiff that Defendants would not be repaying any of Plaintiff’s funds. (Gorodistian Decl., ¶ 24.)

As to the damages element, Defendants note that as to the sixth and seventh causes of action, Plaintiff seeks “compensatory and consequential damages in an amount to be proven at trial, in the amount of at least $1,573,333.33.” (FAC, p. 19:3-4; 19:10-11, emphasis added.)

Defendants also note that Plaintiff indicates that Defendants made periodic interest payments, for an unspecified amount. (Gorodistian Decl., ¶ 8.) Defendants argue that to the extent any damages are owed, they would need to be determined by a jury.

Plaintiff counters that “[a]lthough a complaint shall contain … [a] demand for judgment for the relief to which the pleader claims to be entitled, including the amount of damages demanded, the specific dollar amount is necessary only when a default judgment is to be entered. The purpose of such a requirement is to ensure that the defendant is sufficiently aware of the consequences of not answering the complaint. However, in any other case, the court may grant the plaintiff any relief consistent with the case made by the complaint and embraced within the issue. Hence, the absence of a specific amount from the complaint is not necessarily fatal as long as the pleaded facts entitle the plaintiff to relief. (Furia v. Helm (2003) 111 Cal.App.4th 945, 957 [internal quotations and citations omitted].)

Plaintiff provides evidence of deposit slips and wire transfer confirmations for the total loan of $1,773,333.33 from June 2019 to November 2019 (the Lending Agreement). (Gorodistian Decl., ¶ 4, Exs. A-G.) Plaintiff also indicates that he received wire transfers from Jadelle LLC on October 17 and 18, 2019 for $100,000.00 each, which were repayments for the initial June 28, 2019 loan for $200,000.00. (Gorodistian Decl., ¶ 6.) $200,000.00 subtracted from $1,773,333.33 totals $1,573,333.33, the amount pleaded in the FAC as to the sixth and seventh causes of action. Plaintiff provides evidence that other than the partial repayment of $200,000.00, the total principal amounts lent under the Lending Agreement were never repaid to Plaintiff. (Gorodistian Decl., ¶ 16.)

Defendants also cite to Plaintiff’s responses to Jona’s Form Interrogatories, Set One, in support of the assertion that certain paid interest amounts were at usurious rates, such that they need to be deducted in any final calculation.

Based on the foregoing, the Court finds that Plaintiff has met his initial burden of proving each element of his sixth and seventh causes of action as to Jona and Jadelle LLC, but Defendants raised a triable issue of material fact as to these causes of action with regard to usury. Additionally, as set forth above, Defendants provide evidence that Plaintiff testified that Jadelle Inc. wasn’t a party to the lending agreement between Plaintiff and Jadelle LLC. (Lane Decl., ¶ 5, Ex. 3 (Gorodistian Depo.) p. 135:21-23.) Thus, the Court finds that Defendants have raised a triable issue of material fact as to the sixth and seventh causes of action as to Jona, Jadelle LLC and Jadelle Inc.

Tenth Cause of Action for Breach of Oral Contract – Personal Loan and Eleventh Cause of Action for Breach of Implied-in-Fact Contract – Personal Loan

Plaintiff asserts that for the same reasons he can establish his contract claims relating to the Lending Agreement, he can likewise establish his contract claims relating to the Personal Loan. In support of the tenth cause of action, Plaintiff alleges that Jona breached the Personal Loan by failing to make full repayment, totaling $86,000.00. (FAC, ¶ 96.) In support of the eleventh cause of action, Plaintiff alleges that by his conduct, Jona accepted the benefits that accrued to it as a result of the Personal Loan, and therefore entered into an implied-in-fact contract with Plaintiff, but has nevertheless failed to re-pay the entire $86,000.00. (FAC, ¶ 102.)

It is undisputed that on January 2, 2020, Jona asked Plaintiff for a personal favor to borrow $86,000.00 on a seven-day loan to cover a shortfall Jona needed to close escrow on a real property investment, and that Plaintiff verbally agreed to the loan and lent $86,000.00 that day. (UMF 222, Gorodistian Decl., ¶ 14.) Plaintiff provides evidence of a check and deposit slip for this loan deposited into Jadelle LLC’s bank account. (Gorodistian Decl., ¶ 14, Ex. K.) As of the date of Plaintiff’s declaration in support of the instant motion, he has not received the total principal repayment of his lent funds under Personal Loan from Defendants, and on February 7, 2020, Defendants’ attorney informed Plaintiff that Defendants would not be repaying any of his funds. (Gorodistian Decl., ¶¶ 23-24.)

In the opposition, Defendants do not point to any facts that would create a triable issue of material fact as to the tenth and eleventh causes of action as to Jona and Jadelle LLC.

The Court finds that Plaintiff has met his initial burden of proving each element of his tenth and eleventh causes of action as to Jona and Jadelle LLC, and that Defendants have failed to raise a triable issue of material fact as to these causes of action. As set forth above, Defendants provide evidence that Plaintiff testified that Jadelle Inc. wasn’t a party to the personal loan that Plaintiff made to Jona. (Lane Decl., ¶ 5, Ex. 3 (Gorodistian Depo.) p. 135:18-20.) Thus, the Court finds that Defendants have raised a triable issue of material fact as to the tenth and eleventh causes of action as to Jadelle Inc.

Eighth Cause of Action for Money Lent and Ninth Cause of Action for Account Stated

Plaintiff argues that he has proven each element of his eighth and ninth causes of action and Jona and the Jadelle Parties.

“A claim for money lent is one of the common counts…Such an action permitted a plaintiff to recover money that, under the circumstances, the defendant should be required to repay to avoid inequity. A common count claim broadly applies wherever one person has received money which belongs to another, and which in equity and good conscience, or in other words, in justice and right, should be returned.” (Rubinstein v. Fakheri (2020) 49 Cal.App.5th 797, 809 [internal quotations and citations omitted].) “The only essential allegations of a common count are (1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.” (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460 [internal quotations omitted].)

In support of the eighth cause of action for money lent, Plaintiff alleges that “the Jadelle Parties and Jona became indebted to [Plaintiff] in the sum of $1,659,333.33 as result of the Lending Agreement and Personal Loan, for money lent by [Plaintiff] to the Jadelle Parties and Jona at their request, which the Jadelle Parties and Jona agreed to repay,” and that “as of the date of filing of this complaint, $1,659,333.33 is the current principal amount past due and owing.” (FAC, ¶¶ 85, 86.)

As to the money lent cause of action, Defendants assert that Plaintiff has failed to demonstrate that there are no genuine issues of material fact on his breach of contract claims, and thus he should not be allowed to recover for the same under a common count. (Opp’n at p. 16:25-28.) As set forth above, the Court finds that Plaintiff has met his initial burden of proving each element of breach of contract causes of action as to Jona and Jadelle LLC. The Court also finds that Defendants failed to raise a triable issue of material fact as to these causes of action.

For the reasons discussed above in connection with the breach of contract causes of action, the Court finds that Plaintiff has met his initial burden of proving each element of his eighth cause of action for money lent as to Jona and Jadelle LLC. In addition, for the reasons discussed above, the Court finds that Defendants have raised a triable issue of material fact as to the eighth cause of action as to Jadelle Inc.

“The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due.” (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.) In support of the ninth cause of action for account stated, Plaintiff alleges that “an account was stated orally by and between [Plaintiff] and the Jadelle Parties and Jona, and on such statement, a balance of $1,659,333.33 was found due to [Plaintiff] from the Jadelle Parties and Jona.” (FAC, ¶ 89.) “Although demanded by Gorodistian from Jadelle and Jona, they have failed to fully repay the Lending Agreement and Personal Loan.” (FAC, ¶ 90.)

Defendants argue that Plaintiff’s cause of action for account stated fails because Plaintiff has not offered any evidence that Plaintiff entered into a new agreement with Jona and the Jadelle Parties to settle an outstanding debt, separate from the alleged Lending Agreement and Personal Loan. Defendants note that “[a]n account stated is an agreement, based on the prior transactions between the parties, that the items of the account are true and that the balance struck is due and owing from one party to another. When the account is assented to, it becomes a new contract. An action on it is not founded upon the original items, but upon the balance agreed to by the parties . . . . Inquiry may not be had into those matters at all. It is upon the new contract by and under which the parties have adjusted their differences and reached an agreement.” (Gleason v. Klamer (1980) 103 Cal.App.3d 782, 786-787 [internal quotations and citations omitted].) “[A]n action on an account stated is not based on the parties’ original transactions, but on the new contract under which the parties have agreed to the balance due.” (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 968.)

Plaintiff counters that “[t]he agreement of the parties necessary to establish an account stated need not be express and frequently is implied from the circumstances. In the usual situation, it comes about by the creditor rendering a statement of the account to the debtor.”
(Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.) In addition, “[a]n account stated need not cover all the dealings or claims between the parties. There may be a partial settlement and account stated as to some of the transactions.” (Gleason v. Klamer (1980) 103 Cal.App.3d 782, 790.) Plaintiff points to evidence that on January 17, 2020, Jona signed a personal guaranty of funds lent under the Lending Agreement. (Gorodistian Decl., ¶ 19, Ex. L.) The personal guaranty provides that “I have received over $1,500,000.00 USD in various bank deposits from Sam Gorodistian… I personally guarantee repayment of these funds upon request. The funds have been paid to Jadelle Jewelry and Diamonds, LLC and are a repayment obligation of the company as well.” (Gorodistian Decl., ¶ 19, Ex. L.)

As Defendants note, Plaintiff does not point to evidence of a new contract pertaining to the balance due as to the Personal Loan. As set forth above, Plaintiff alleges that “[a]lthough demanded by Gorodistian from Jadelle and Jona, they have failed to fully repay the Lending Agreement and Personal Loan…As of the date of filing of this complaint, $1,659,333.33 is the current principal amount past due and owing.” (FAC, ¶ 90, emphasis added.) The $1,659,333.33 amount includes the $1,573,333.33 owed under the Lending Agreement and the $86,000.00 owed under the personal loan. (FAC, ¶¶ 74, 95.)

As set forth above, “[a] motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c(f)(1).)¿Accordingly, the Court finds that Defendants have raised a triable issue of material fact as to the ninth cause of action as for account stated, and that summary adjudication of this cause of action is not warranted.

Lastly, Plaintiff asserts that he has proven each element of his twelfth cause of action for breach of written guaranty against Jona.

“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.) In support of the twelfth cause of action, Plaintiff alleges that on or about January 17, 2020, Jona agreed to guaranty in writing all the obligations and duties owed by the Jadelle Parties under the Lending Agreement in the “Jona Guaranty,” and that Jona has defaulted on the Jona Guaranty by failing to re-pay the outstanding balance of the Lending Agreement. (FAC, ¶¶ 106-107.)

As set forth above, Plaintiff provides evidence that Jona signed a personal guaranty of funds lent under the Lending Agreement. (Gorodistian Decl., ¶ 19, Ex. L.) Plaintiff also provides evidence that he has not received the total principal repayment of his lent funds under the Lending Agreement. (Gorodistian Decl., ¶ 23.)

Defendants assert that there was never a valid guaranty because Jona “guaranteed” his own debt. Defendants cite to Civil Code section 2787, which provides that “[a] surety or guarantor is one who promises to answer for the debt, default, or miscarriage of another, or hypothecates property as security therefor.” Plaintiff counters that Jona is personally guarantying the debt of another -- Jadelle LLC. As set forth above, the guaranty states that “I have received over $1,500,000.00 USD in various bank deposits from Sam Gorodistian…I personally guarantee repayment of these funds upon request. The funds have been paid to Jadelle Jewelry and Diamonds, LLC and are a repayment obligation of the company as well.” (Gorodistian Decl., ¶ 19, Ex. L.)

In addition, Defendants argue that “[t]he guaranty is also invalid because California law requires ‘consideration distinct from that of the original obligation’ where a guaranty is signed after the time the original obligation comes into effect.” (Opp’n at p. 20:1-2.) Defendants cite to Civil Code section 2792, which provides that “[w]here a suretyship obligation is entered into at the same time with the original obligation, or with the acceptance of the latter by the creditor, and forms with that obligation a part of the consideration to him, no other consideration need exist. In all other cases there must be a consideration distinct from that of the original obligation.” Defendants assert that the evidence demonstrates that there was no consideration for the “guaranty,” because the guaranty states, inter alia, “I have received over $1,500,000.00 USD in various bank deposits from Sam Gorodistian…I personally guarantee repayment of these funds upon request...” (Gorodistian Decl., ¶ 19, Ex. L, emphasis added.) Defendants assert that Jona was merely stating that he would repay an amount that Plaintiff stated Jona already owed pursuant to another contract. Defendants note that “neither a promise to perform a duty nor the performance of a duty constitutes a consideration sufficient to support a new contract.” (Moore v. Bartholomae Corp. (1945) 69 Cal.App.2d 474, 478.)

Plaintiff counters that there was adequate consideration. In the supplemental briefing, Plaintiff cites to Beverly Hills Nat'l Bank v. Glynn (1968) 267 Cal.App.2d 859, 862, in which the “trial court held [defendant] liable on two promissory notes of which he was found to be the maker…and on a continuing guaranty for a certain loan made to [a borrower]. The court refused to find [defendant] liable under the same continuing guaranty for two other loans made by the same [borrower] and the bank appeal[ed] from that portion of the court’s judgment denying recovery.” “[T]he trial court held [defendant] liable on [a] note dated April 22, 1963, which renewed an earlier note preceding the execution of the guaranty, but held him not liable on…notes dated February 1, 1963, and February 13, 1963, on the ground that (as the court found) the guaranty was not executed until February 14th at earliest and possibly not until February 25, 1963. The theory of this ruling was that there was no consideration for the guaranty of the two February notes but that the guaranty did apply to the renewal note later executed.” (Id. at p. 867.) The Court of Appeal found that “[a]dmittedly, the guaranty is not enforceable unless it was given for some consideration. Such consideration may either be the contemporaneous or subsequent loaning of money, or the forbearance to collect on an obligation previously incurred. Tested by these rules, we regard the facts in this case as showing consideration for the guaranty as applied to all three of the notes. The guaranty which [defendant] signed applied, by its express terms, to all sums of money, which the bank heretofore has advanced or loaned or hereafter advances or lends to [the borrower]…The language patently put [defendant] on notice that there had been earlier loans; he was engaged in a transaction by which the bank was to loan [the borrower] more money.” (Beverly Hills Nat'l Bank v. Glynn (1968) 267 Cal.App.2d 859, 867 [internal quotations omitted].) The Court of Appeal noted that “a guaranty may properly apply to loans made prior to the execution of the guaranty.” (Id. at p. 868.)

As set forth above, Plaintiff provides evidence that on January 17, 2020, Jona signed a guaranty of funds lent under the “Lending Agreement.” (Gorodistian Decl., ¶ 19, Ex. L.) The “Lending Agreement” pertains to Plaintiff’s loans of a total of $1,773,333.33 from June 2019 to November 2019. (Gorodistian Decl., ¶ 4.) Plaintiff asserts that the Jona guaranty thus parallels the guaranty made by the defendant in Glynn, in that both guaranteed prior loans and put the guarantors on notice that there were in fact earlier loans, such that the Jona guaranty is also supported by consideration.

As Defendants note, the foregoing arguments were not raised in Defendants’ original moving papers. Defendants also assert that Beverly Hills Nat'l Bank v. Glynn (1968) 267 Cal.App.2d 859, Bank of America v. Granger (1931) 115 Cal.App. 210, and Perry v. Cassidy (1959) 170 Cal.App.2d 175 (cited to by Plaintiff) are distinguishable, because they concern situations where additional loans were made after or contemporaneously with the signing of the guaranty; and the guaranties in these cases stated that they applied to both past and future loans. Indeed, in Beverly Hills Nat'l Bank v. Glynn, supra, 267 Cal.App.2d 859, 863, “[defendant] executed a continuing guaranty which bore the date of February 13, 1963, which guaranteed ‘all sums of money which the bank heretofore has advanced or loaned or hereafter advances or lends’ to [the borrower]...” In Bank of America v. Granger (1931) 115 Cal.App. 210, 212, “[t]he plaintiff sued to recover on certain alleged guaranties.” One guaranty provided, “. . . the undersigned hereby guarantees the payment in United States gold coin to said bank of any and all sums of money which the said bank may have heretofore or may hereafter advance or loan to said corporation. . .” (Id. at p. 213.) The express terms of the other two guaranties do not appear to be set forth in the Granger opinion. In Perry v. Cassidy (1959) 170 Cal.App.2d 175, 175, the defendant “appeal[ed] from a judgment finding her liable on a contract of guaranty.” The “[a]ppellant’s sole contention upon [the] appeal is that the court erred in finding that the contract of guaranty executed by her was supported by a good and sufficient consideration.” (Id. at p. 176.) The Perry Court noted that “[t]he terms of the ‘Continuing Guaranty’…expressly stated that said contract was executed for a valuable consideration and by its terms sets forth that the ‘. . . Guarantors . . . unconditionally guarantee and promise to pay to Central Valley National Bank [plaintiff's assignor], . . . any and all indebtedness of Percy Cassidy . . .’ and by the terms of said contract it is specifically set forth that the indebtedness referred to in the guaranty ‘. . . includes any and all advances, debts, obligations and liabilities of the Borrowers or any one or more of them, heretofore, now, or hereafter made, incurred or created . . .’” (Ibid.)

Moreover, as set forth above, Civil Code section 2792 provides that “[w]here a suretyship obligation is entered into at the same time with the original obligation, or with the acceptance of the latter by the creditor, and forms with that obligation a part of the consideration to him, no other consideration need exist. In all other cases there must be a consideration distinct from that of the original obligation.” (Emphasis added.) Plaintiff acknowledges the existence of this statute, and that Jona signed the written guaranty on January 17, 2020, after the Lending Agreement loans by Plaintiff were made in June to November 2019. (Gorodistian Decl., ¶¶ 4, 19, Ex. L.)

Defendants also assert that Plaintiff was not obligated to do anything under the guaranty, such that there was no consideration by him. Plaintiff counters in his supplemental brief that a creditor’s forbearance to sue constitutes sufficient consideration for a guaranty on a note, citing to Bank of America v. Granger, supra, 115 Cal.App. 210, 219, which held “[b]y delaying its hand in enforcing the collection of the prior loan the bank suffered a prejudice which constituted a good consideration for the guaranties.” Plaintiff argues that “Jona and Jadelle LLC were both already indebted to Gorodistian and were seeking relief, and offered the Jona Guaranty, which

caused Gorodistian to delay enforcement of the Lending Agreement, to his detriment.” (Plaintiff’s Supplemental Brief at p. 5:23-25.) As Defendants note, Plaintiff does not cite to any evidence that Plaintiff delayed in seeking payment. Defendants also note that the instant lawsuit was filed on February 2, 2020, less than one month after the guaranty was signed on January 17, 2020. (Gorodistian Decl., ¶ 19.)

Based on the foregoing, the Court finds that Plaintiff has met his initial burden of proving each element of his twelfth cause of action, and that Defendants have raised a triable issue of material fact as to this cause of action. Accordingly, the Court finds that summary adjudication of the twelfth cause of action is not warranted.

Based on the foregoing, the Court denies Plaintiff’s motion for summary judgment.

The Court grants Plaintiff’s motion for summary adjudication as to the eighth, tenth and eleventh causes of action as to Jona and Jadelle LLC. Summary adjudication of the

Summary adjudication is denied as to Plaintiff’s first, second, third, fourth, fifth, sixth, seventh, ninth and twelfth causes of action.

[1]The first, fourth, sixth, seventh, eighth, and ninth causes of action are alleged against the Jadelle Parties and Jona. The second, third, and fifth causes of action are alleged against all Defendants. The tenth, eleventh, and twelfth causes of action are alleged against Jona only.

[2]The parties indicate that evidentiary objections Nos. 18, 19, and 20 were eliminated. (Joint Statement at p. 1:13-14.)

[3]Plaintiff alleges that Rachel is the managing member of Jadelle LLC and the Chief Executive Officer for Jadelle Inc. (FAC, ¶ 6.) Rachel is Jona’s wife, and Robert is Jona’s father. (FAC, ¶¶ 6, 7.)

ISRAEL SAM GORODISTIAN, Plaintiff, vs. JADELLE JEWELRY AND DIAMONDS, LLC, et al., Defendants.	Case No.:	20STCV07425
	Hearing Date:	October 4, 2022
	Hearing Time:	2:00 p.m.
	[TENTATIVE] ORDER RE: PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION AGAINST DEFENDANTS

Superior Court of California

County of Los Angeles

Department 50