Judge: Theodore R. Howard, Case: 20-1150736, Date: 2023-05-25 Tentative Ruling
Before the court is a Motion for Summary Judgment and/or Summary Adjudication filed by Plaintiff, Pacific Rim Cultural Foundation (“Plaintiff”) against Defendant, Thomas W. Lehmer (“Defendant”) as to Plaintiff’s Complaint. For the reasons set forth below, the motion is DENIED as to Issues 1-3 and 9-10, and GRANTED as to Issues 4-8.
Plaintiff’s request for judicial notice is GRANTED as to the existence of and legal effects of the records, but not as to the truth of any disputed facts asserted therein. (Evid. Code § 452(d); Fontenot v. Wells Fargo Bank, NA (2011) 198 Cal.App.4th 256, 264; Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)
In ruling on a motion for summary judgment or summary adjudication, the court must “consider all of the evidence” and all of the “inferences” reasonably drawn therefrom (CCP § 437c(c)) and must view the evidence and inferences “in the light most favorable to the opposing party.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843; see Ragland v. U.S. Bank Nat'l Ass'n (2012) 209 Cal.App.4th 182, 199.)
A court may not make credibility determinations or weigh the evidence on a motion for summary judgment or adjudication, and all evidentiary conflicts are to be resolved against the moving party. (McCabe v. American Honda Motor Corp. (2002) 100 Cal.App.4th 1111, 1119.)
Issue 1
Plaintiff contends it is entitled to summary judgment against Defendant on the Complaint for Breach of Promissory Note. A cause of action for nonpayment on a promissory note is one for breach of contract. (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1112.) The court finds Plaintiff met its initial burden of demonstrating the nonexistence of any triable issue of material fact as to Issue 1. (Plaintiff’s Separate Statement of Undisputed Material Facts [“UMF”] 4, 25-30.)
The burden then shifted to Defendant to demonstrate the existence of a triable issue of material fact. Defendant met that burden. Defendant contends he is not personally liable under the Note based on the 2003 written release (the “Release”) which purported to release him of all personal liability under the Note and the language of the 2003 Settlement Agreement which states the promise to pay Plaintiff’s assignor, Nicholas Rockefeller (“Rockefeller”) $5 million was not made by Defendant personally. (Defendant’s Additional Material Facts [“DMF”] 39-40.)
Plaintiff’s argument that the condition precedent to the Release’s effectiveness, i.e., Defendant signing and delivering the Note to Rockefeller, was not satisfied fails. Plaintiff has taken the position in this litigation that the legal effect of the clerk’s execution of the Note on Defendant’s behalf as “Elisor,” is the same as if Defendant had executed and delivered the Note himself. (Mtn. 7:22-23.) Thus, based on Plaintiff’s own arguments, the condition precedent of the Release was satisfied when the clerk executed the Note on Defendant’s behalf.
The court finds a triable issue exists as to whether Defendant unreasonably delayed in asserting his rights under the Release. (See Lehmer Decl. ¶ 7.) The court also notes the 2007 Judgment states that Defendant was ordered to execute the promissory note “on behalf of defendants SnackAmerica Corporation, Interbrands Corporation, and Prepared Products Company, Inc.” (RJN Ex. H.) The court finds this language, taken in conjunction with the language in the 2003 Settlement Agreement stating that the promise to pay $5 million was not made by Defendant personally and the terms of the Release stating that Defendant is released from all personal liability under the Note, is sufficient to raise a triable issue of fact as to whether Defendant can be held personally liable on the Note.
Plaintiff’s arguments that it should not be bound by the Release because it was not involved in the prior proceedings and that Rockefeller’s assignment of the Note rescinded the Release’s offer likewise fail as Plaintiff offers no authority in support of said arguments. The court may treat an argument as waived where no legal authority supporting the argument is cited. (Hood v. Gonzales (2019) 43 Cal.App.5th 57, 73-74.) Accordingly, summary adjudication is DENIED as to Issue 1.
Issue 2
For the same reasons as discussed in connection with Issue 1, the motion as to Issue 2 regarding the first affirmative defense is DENIED.
Issue 3
The second affirmative defense alleges that “[t]he performance owed under the contract in issue, if any, by [Lehmer] was excused by the failure of a condition precedent, concurrent or subsequent and/or the material breach of the contract by the assignor of Plaintiff.” (ROA 215.) In discovery, Defendant also relied on the Release in support of the second affirmative defense. (Plaintiff’s Notice of Lodgment of Evidence [“NOL”], Ex. 11.) Likewise, in Opposition, Defendant contends the Release excused any obligation he had to pay on the Note. (Opp. 12:11-13.) Plaintiff argues collateral estoppel precludes the second affirmative defense because the court already ruled in the 2007 Judgment that Rockefeller performed all conditions of the 2003 Settlement Agreement.
Collateral estoppel precludes relitigation of an issue previously adjudicated when the following five requirements are satisfied: (1) the issue sought to be precluded must be identical to that decided in a prior proceeding; (2) the issue must have been actually litigated in the prior proceeding; (3) the issue must have been necessarily decided in the prior proceeding; (4) the decision in the former proceeding must be final and on the merits; and (5) the party against whom issue preclusion is asserted must be the same as or in privity with the party to the prior proceeding. (Sabek, Inc. v. Engelhard Corporation (1998) 65 Cal.App.4th 992, 997.)
Here, Defendant’s answer in the prior proceedings did not specifically identify the existence of the written Release at issue in the present matter. (See RJN Ex. G.) Thus, it cannot be said that the issue of the written Release is “identical” to the issues raised in the prior proceedings or that it was actually litigated in the prior proceedings. Accordingly, Plaintiff’s collateral estoppel argument, at least as to the Release, fails. Because the second affirmative defense relies, in part, on the issue of the Release, which is not precluded by collateral estoppel, summary adjudication on this defense is not warranted. 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. (C.C.P. § 437c(f)(1).) Thus, summary adjudication is DENIED as to Issue 3.
Issue 4
Plaintiff met its initial burden on this issue as the evidence demonstrates Rockefeller assigned his rights, title and interest in the Note to Plaintiff. (UMF 28.) Once a claim has been assigned, the assignee is the owner and has the right to sue on it. (California Bank & Trust v. Piedmont Operating Partnership, L.P. (2013) 218 Cal.App.4th 1322, 1347.) Thus, Plaintiff has standing to enforce the Note as the Note’s Assignee. In the Opposition, Defendant failed to raise any triable issue as to the third affirmative defense of standing. Thus, summary adjudication is GRANTED as to Issue 4.
Issue 5
Defendant’s fourth affirmative defense of unclean hands is based on allegations that Rockefeller and his attorneys engaged in fraudulent conduct in connection with the Original Action and the 2003 Settlement Agreement. However, Defendant failed to raise any triable issue as to whether this Plaintiff acted with unclean hands in connection with the claim at issue here. The unclean hands doctrine does not apply if the inequitable conduct did not occur in the transaction to which the relief sought relates. (O’Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1060.) In addition, “[i]t is not every wrongful act, nor even every fraud, which prevents a suitor in equity from obtaining relief. His misconduct must be so intimately connected to the injury of another with the matter for which he seeks relief, as to make it inequitable to accord him such relief.” (Bradley Co. v. Bradley (1913) 165 Cal. 237, 242.) Because there is no evidence presented that this Plaintiff engaged in any inequitable conduct related to the claim at issue, the unclean hands doctrine does not apply. Thus, summary adjudication is GRANTED as to Issue 5.
Issue 6
In the Opposition, Defendant concedes the fifth affirmative defense of statute of limitations is without merit. (Opp. 13:8-9.) Thus, summary adjudication is GRANTED as to Issue 6.
Issue 7
Plaintiff met its initial burden on this issue. (UMF 10.) In the Opposition, Defendant failed to offer any evidence that Rockefeller owes him any money. As such, Defendant failed to raise any triable issue as to the sixth affirmative defense of offset, and summary adjudication is thus GRANTED as to Issue 7.
Issue 8
Plaintiff met its initial burden on this issue. (UMF 6-7, 9-12, 24-27 and 32.) In the Opposition, Defendant failed to offer any evidence supporting the seventh affirmative defense of failure to mitigate. As such, Defendant failed to raise a triable issue on this defense, and summary adjudication is thus GRANTED as to Issue 8.
Issues 9 and 10
The eighth affirmative defense for estoppel alleges that “Plaintiff should be denied any recovery…because Plaintiff’s assignor led Defendant to believe that he would not be held liable under the terms of the promissory note in issue.” The ninth affirmative defense for fraud/mistake alleges that “Plaintiff is barred from recovery because the terms of the promissory note in issue are the product of fraud and/or mistake in that it was never the intention of the parties that Defendant should be personally liable on the promissory note in issue.” (ROA 215.)
Plaintiff’s argument that the doctrine of collateral estoppel precludes these affirmative defenses fails as the issue of whether Defendant was led to believe he would not be personally liable under the Note was not previously litigated. Rather, the prior proceedings adjudicated whether Defendant failed to comply with the terms of the 2003 Settlement Agreement and the 2007 Judgment by not executing the Note. (RJN Exhs. F, H, K, O.) Moreover, the prior proceedings did not adjudicate whether Defendant was personally liable on the Note, just whether he was obligated to execute the Note pursuant to the 2003 Settlement Agreement. Thus, it cannot be said as a matter of law that collateral estoppel precludes these affirmative defenses.
Plaintiff also contends these defenses are time barred by Code of Civil Procedure section 338. Section 338 provides for a 3-year statute of limitations period for an “action for relief on the ground of fraud or mistake.” (C.C.P. § 338(d).) Plaintiff fails to explain how C.C.P. § 338 applies to Lehmer’s affirmative defenses in this action. Section 338 sets forth a 3-year statute of limitations period for actions for relief on the ground of fraud or mistake. Here, Defendant is asserting fraud and mistake as an affirmative defense, not a cause of action. Plaintiff cites no authority demonstrating that the statute of limitations period stated in C.C.P. § 338(d) is applicable to Defendant’s affirmative defenses. Thus, summary adjudication is DENIED as to Issues 9 and 10.
Plaintiff’s evidentiary objections are OVERRULED as to objection nos. 5-7. The court declines to rule on the remaining objections as not material to the disposition of the motion. (C.C.P. § 437c(q).)
Counsel for Plaintiff is to give notice of this ruling.