Judge Upinder S. Kalra, Case Number: 21STCV44542, Date: 2024-01-26 Tentative Ruling

1. Summary Adjudication of the First, Second, Fourth, and Fifth Causes of Action in Plaintiff’s Favor.

1. Motion for Summary Adjudication is GRANTED as to the First and Second Causes of Action and DENIED as to the Fourth and Fifth Causes of Action.

On December 7, 2021, Plaintiff 1^st Source Bank (Plaintiff) filed a Complaint against Defendants CTOUR Charter, LLC, CTOUR Investment Holding, Inc., and Charlie Lu (Defendants) with five causes of action for: (1) Breach of Lease Agreement; (2) Enforcement of Guaranty; (3) Enforcement of Guaranty; (4) Account Stated; and (5) Open Book Account.[1]

According to the Complaint, there are two lease agreements at issue: One executed March 22, 2018 and one executed April 20, 2018. These agreements involve equipment rental. Plaintiff alleges that Defendants owe $229,602.90 plus interest and reasonable attorneys’ fees. Plaintiff also alleges that Defendant CTOUR Investment executed a Guaranty of Payment in conjunction with the leases.

On February 24, 2022, Defendants CTOUR Charter, LLC and CTOUR Investment Holding, Inc. filed an Answer.

On November 3, 2023, Plaintiff filed the instant motion for summary judgment, or alternatively, motion for summary adjudication.

On December 6, 2023, Plaintiff filed a Request for Dismissal as to Defendant Charlie Lu only.

On December 22, 2023, Defendants filed an opposition to the motion for summary judgment.

A party seeking summary judgment has the burden of producing evidentiary facts sufficient to entitle him/her to judgment as a matter of law.¿ (Code Civ. Proc. § 437c(c).)¿ The moving party must make an affirmative showing that he/she is entitled to judgment irrespective of whether or not the opposing party files an opposition.¿ (Villa v. McFerren (1995) 35 Cal.App.4th 733, 742-743.)¿ Thus, “the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.”¿ (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519 (citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)¿

When a plaintiff seeks summary judgment, he/she must produce admissible evidence on each element of each cause of action on which judgment is sought.¿ (Code Civ. Proc., § 437c(p)(1).)¿ When a defendant seeks summary judgment, he/she has the “burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.”¿ (Code of Civ. Proc. § 437c(p)(2).)¿

The opposing party on a motion for summary judgment is under no evidentiary burden to produce rebuttal evidence until the moving party meets his or her initial movant’s burden.¿ (Binder v. Aetna Life Insurance Company (1999) 75 Cal.App.4th 832, 840.)¿ Once the initial movant’s burden is met, then the burden shifts to the opposing party to show, with admissible evidence, that there is a triable issue requiring the weighing procedures of trial.¿ (Code Civ. Proc. § 437c(p).)¿ The opposing party may not simply rely on his/her allegations to show a triable issue but must present evidentiary facts that are substantial in nature and rise beyond mere speculation.¿ (Sangster v. Paetkau (1998) 68¿Cal.App.4th 151, 162.)¿ Summary judgment must be granted “if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”¿ (Adler v. Manor Healthcare Corp. (1992) 7¿Cal.App.4th¿1110, 1119.)¿¿

As to any alternative request for summary adjudication of issues, such alternative relief must be clearly set forth in the Notice of Motion and the general burden-shifting rules apply but the issues upon which summary adjudication may be sought are limited by statute.¿ (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.)¿

Plaintiff contends there are no triable issues of material fact as to its first cause of action for breach of lease. Defendants contend there are triable issues of material fact concerning Plaintiff’s notice regarding the sale/disposition of the vehicles under each lease as well as the amount of damages claimed by Plaintiff.

To state a claim for breach of contract, a plaintiff must allege sufficient facts to establish (1) a contract between the parties, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damages to the plaintiff from the breach. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)¿“As damages are an element of a breach of contract cause of action [citation], a plaintiff cannot obtain judgment on a breach of contract cause of action in an amount of damages to be determined later.” (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241 (Paramount Petroleum).)

Here, Plaintiff met its initial burden to establish breach of lease. First, there is a contract between the parties – namely, the March 2018 and April 2018 leases. (Separate Statement of Undisputed Material Facts (SSUMF) Nos. 3, 7.) Second, Plaintiff performed under the leases. (Rozenboom Decl. ¶¶ 7, 8, 12, 1, 14, 19.) Third, Defendants breached by failing to pay the outstanding balance due pursuant to the leases. (Rozenboom Decl. ¶ 18, Exhibit 7.) Fourth, Plaintiff suffered monetary damages as a result of the breach. (Rozenboom Decl. ¶ 20.)

Defendants have not provided evidence showing a triable issue of material fact remains. First, Ms. Ju’s declaration indicating that Defendants did not receive Plaintiff’s October 29, 2021 letter is not evidence that Plaintiff did not provide notice. (Ju Decl. ¶ 6.) ¿Second, Defendants have not shown a material factual dispute as to damages. Unlike in Paramount Petroleum, where the moving party sought summary adjudication of liability only, here, Plaintiff has not only sought summary adjudication of its entire breach of contract claim (including damages) but also provided evidence supporting its damages calculation. (Rozenboom Decl., Exhibit 8.) Defendants’ reliance on Paramount Petroleum is also misplaced because damages in that case could not be reasonably calculated due to a shifting scale for determining the price of crude oil. (Paramount Petroleum, supra, at pp. 231-232.) Here, leases provide a Stipulated Loss Schedule which sets forth a how to calculate amounts owed. (Rozenboom Decl., Exhibits 2, 3.) In response, Defendants’ argument that it reached a different calculation is conclusory. (Ju Decl. ¶ 5.) Stated otherwise, Ju’s conclusion of amount owed does not create a triable issue of material fact.

Accordingly, the court GRANTS summary adjudication of the first cause of action.

Plaintiff contends there are no triable issues of material fact as to its second cause of action for enforcement of guaranty. Defendants contend there are triable issues of material fact concerning Plaintiff’s notice regarding the sale/disposition of the vehicles under each lease as well as the amount of damages claimed by Plaintiff.

“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).

Alternatively, Plaintiff’s claim can also be interpreted as a breach of contract claim.³ To state a claim for breach of contract, a plaintiff must allege sufficient facts to establish (1) a contract between the parties, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damages to the plaintiff from the breach. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)¿“As damages are an element of a breach of contract cause of action [citation], a plaintiff cannot obtain judgment on a breach of contract cause of action in an amount of damages to be determined later.” (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241.)¿

For the same reasons discussed above, Plaintiff met its initial burden and Defendants failed to show a material factual dispute.

Accordingly, the court GRANTS summary adjudication of the second cause of action.

Defendants contend that Plaintiff has not met its initial burden because a cause of action for account stated cannot be based on the instant lease contract claims.

“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; [and] (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.) “An express contract, which defines the duties and liabilities of the parties, whether it be oral or written, is not, as a rule, an open account.” (Eloquence Corporation v. Home Consignment Center (2020) 49 Cal.App.5th 655, 665 (Eloquence) (quoting Durkin v. Durkin (1955) 133 Cal.App.2d 238, 290.) An exception “may lie where the parties had agreed to treat money due under an express contract as items under an open book account.” (Ibid.) An express agreement is not necessary. (Id. at p. 666.) But, “mere[ly] recording in a book of transactions or the incidental keeping of accounts under an express contract does not itself create a book account.” (Ibid.)

Here, Plaintiff has not met its initial burden showing it is entitled to summary adjudication in its favor. First, Plaintiff provided no evidence supporting its claim for account stated. As in Eloquence, where the contract specifically defined obligation to pay specified amounts during specified periods, here, the March 2018 and April 2018 Supplement and Schedule A calls for the “monthly rental factor, monthly rentals, advance payment, commencement date, final adjustment percentage, number of months in term, expiration date and residual value.” (Ju Decl., Exhibit 1, Exhibit 2.) Plaintiff provided no evidence, and did not argue, that the parties agreed to treat the March 2018 or April 2018 contracts as open book accounts.

Accordingly, the court DENIES summary adjudication of the fourth cause of action.

Defendants contend that Plaintiff has not met its initial burden because a cause of action for open book accounting cannot be based on the instant lease contract claims.

To establish a cause of action for open book account, the following elements must be satisfied: (1) plaintiff and defendant had financial transactions, (2) plaintiff kept an account of the debits and credits involved in the transactions, (3) defendant owes plaintiff money on the account, and (4) the amount of money that the defendant owes the plaintiff. (State Comp. Ins. Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal. App. 5th 422, 449.) A book account is “open” if a balance remains due on this account. (Interstate Group Administrators, Inc. v. Cravens, Dargan & Co. (1985) 174 Cal.App.3d 700, 708; Eloquence, supra, at pp. 664-665.) “An express contract, which defines the duties and liabilities of the parties, whether it be oral or written, is not, as a rule, an open account.” (Eloquence, supra, at p. 665 (quoting Durkin v. Durkin (1955) 133 Cal.App.2d 238, 290.) An exception “may lie where the parties had agreed to treat money due under an express contract as items under an open book account.” (Ibid.) An express agreement is not necessary. (Id. at p. 666.) But, “mere[ly] recording in a book of transactions or the incidental keeping of accounts under an express contract does not itself create a book account.” (Ibid.)

Here, Plaintiff has failed to meet its initial burden for the same reasons as the fourth cause of action.

Accordingly, the court DENIES summary adjudication of the fifth cause of action.

1. Motion for Summary Adjudication is GRANTED as to the First and Second Causes of Action and DENIED as to the Fourth and Fifth Causes of Action.

[1] The third cause of action is presently moot upon Plaintiff’s dismissal of Defendant Charlie Lu. Accordingly, the court declines to discuss argument pertaining to the third cause of action.