Judge William A. Crowfoot, Case Number: 23AHCV00560, Date: 2025-03-04 Tentative Ruling

Judge: William A. Crowfoot, Case: 23AHCV00560, Date: 2025-03-04 Tentative Ruling

Plaintiff EBF Holding, LLC dba Everest Business Funding (“Plaintiff”) sued defendants Corinthian Hospice, Inc. (“CHI”) and Abegail Alma Cook (“Cook”) (together “Defendants”) on March 14, 2023, asserting claims for (1) breach of a revenue-based financing agreement, (2) fraud, (3) negligent misrepresentation, (4) unfair competition, (5) claim and delivery, and (6) breach of guaranty.

Plaintiff alleges it paid $60,000.00 (“Purchase Price”) in June 2022 for $85,200.00 in Future Receipts from CHI. (Compl., ¶ 8.) In the course of that transaction, the parties executed several written contracts, which together Plaintiff refers to as “the Purchase Agreement”. (Ibid.) The Purchase Agreement recites, among other things, CHI’s guarantee that the Purchase Price would be used to further CHI’s business operations; in return, the Future Receipts would entitle Plaintiff to a portion of CHI’s future revenue. (Compl., ¶ 9 and Exh. 1, p. 1.)

CHI authorized Plaintiff to automatically debit a good-faith approximation of 15% of CHI’s Accounts Receivable until the Purchase Price was repaid in full. (Id., ¶ 11.)

Plaintiff began receiving non-sufficient funds (“NSF”) notifications from CHI’s bank on August 11, 2022. (Id., ¶ 12.) It received four NSF notifications in total. (Ibid.) Pursuant to the Purchase Agreement, Plaintiff demanded that CHI immediately pay back the remaining balance of the Purchase Price. (Id., ¶ 15.)

Plaintiff alleges CHI breached the Purchase Agreement by failing to make payments as agreed, and also by misrepresenting material facts when the parties executed the Agreement, including by overestimating its monthly and annual sales averages. (Id., ¶ 16.) Defendant Cook guaranteed the Purchase Agreement; Plaintiff alleges she personally made the misrepresentations in question, then closed down and terminated CHI’s business in bad faith, transferred or sold its assets, and has not personally made good on its debts. (Id., ¶¶ 16, 20-21.)

On July 8, 2024, the Court deemed admitted all matters referred to in Plaintiff’s Requests for Admission (Set One) propounded on defendant Cook. On August 7, 2024, the Court issued an equivalent order for defendant CHI.

On October 7, 2024, Plaintiff moved for summary judgment and/or adjudication against defendant Cook. (Plaintiff levies its second through sixth causes of action against Cook, but not its first.)

The function of a motion for summary judgment or adjudication is to enable summary dismissal without the need for trial where an opposing party cannot show evidentiary support for a pleading or claim. (Aguilar v. Atlantic Ritchfield Co. (2001) 25 Cal.4th 826, 843.) Summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist, and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc. § 437c (c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741.)

On July 8, 2024, the Court deemed admitted the genuineness of all documents and the truth of all matters referred to in Plaintiff’s Requests for Admission (Set One) propounded on Cook. (07-08-2024 Minute Order, p. 2 (Pl. Exh. 10).)

Those admissions stand, and they carry Plaintiff’s motion as a matter of law, in the following respects:

The elements of fraud are (1) a misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. [Citation]. (City of Industry v. City of Fillmore (2011) 198 Cal. App. 4th 191, 211.)

Cook admitted she knowingly misrepresented CHI’s ability or willingness to pay the amount agreed upon in the parties’ Purchase Agreement, with the intent to induce Plaintiff’s reliance on those misrepresentations, and that Plaintiff was damaged by its justifiable reliance on her misrepresentations. (Pl. Exh. 5 [RFAs to Cook], 3:4-4:3.)

“The elements of negligent misrepresentation are ‘(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’ ” (National Union Fire Insurance Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal. App. 4th 35, 50, quoting Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)

Plaintiff’s evidence supporting its third cause of action duplicates the evidence supporting its second for fraud. Plaintiff has proven intentional fraud, so it has also proven Cook misrepresented facts without reasonably ground for believing them to be true.

The UCL “bars ‘unfair competition’ and defines the term as a ‘business act or practice’ that is (1) ‘fraudulent,’ (2) ‘unlawful,’ or (3) ‘unfair.’ … Each is its own independent ground for liability under the [UCL], but their underlying purpose ‘is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services’ … .” (Shaeffer v. Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1135, citations omitted.) “[T]he UCL is a chameleon. … Depending on which prong is involved, a UCL claim may most closely resemble, in terms of the right asserted, an action for misrepresentation …, misappropriation …, price fixing …, interference with prospective economic advantage …, or any of countless other common law and statutory claims. ” (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1196.) To establish liability under the UCL, a party must “(1) establish a loss or deprivation of money or property sufficient to qualify as … economic injury, and (2) show that economic injury was … caused by[ ] the unfair business practice … that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.)

For the same reasons stated above, Cook’s deemed admissions show she engaged in fraudulent and otherwise unlawful business practices, and Plaintiff suffered economic injury as a result.

Plaintiff’s fifth cause of action is misplaced against Cook. An action for claim and delivery requires (1) wrongful exercise of dominion by defendant; (2) over the property as to which plaintiff is owner or entitled to possession; (3) demand for return of property, (4) an identification of the property; and (5) request for recovery of property, or damages. (See Law v. Heiniger (1955) 132 Cal.App.2d Supp. 898, 899

Plaintiff directs its claim and delivery cause of action to the collateral pledged in the Purchase Agreement, including the Future Receipts that have gone unpaid.

Plaintiff has not demonstrated Cook is currently in possession of that collateral. It appears that CHI is.

Plaintiff’s motion is denied, against Cook only, as to Plaintiff’s cause of action for claim and delivery.

Conversely, Cook and only Cook is liable on the personal guarantee. A guarantor is entitled to judgment where it proves (1) a valid guarantee, (2) the obligor’s default, and (3) the guarantor’s failure to perform. (See Gray1 CPB, LLC v. Kolokotronis (2011) 202 Cal.App.4th 480, 486.)

By operation of law, Cook admitted the validity of the guarantee, CHI’s default, and Cook’s failure to satisfy CHI’s obligations upon its default. (Pl. Exh. 5, 4:4-20.)

The Court grants Plaintiff’s motion as to Plaintiff’s second, third, fourth, and sixth causes of action, and denies the motion as to the fifth cause of action.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.