Case Number: VC063432 Hearing Date: May 12, 2014 Dept: SEC

621 VERMONT INVESTMENT FUND, LLC v. SHERIF OSMAN, INC.
CASE NO.: VC063432
HEARING: 05/13/14

#6
TENTATIVE ORDER

Plaintiff 612 VERMONT INVESTMENT FUND, LLC’s motion for summary judgment or, in the alternative, summary adjudication is DENIED. C.C.P. § 437c.

This action was brought by plaintiff Vermont to recover monies lent. It seeks summary judgment or, in the alternative, summary adjudication of the causes of action for breach of guarantee [sic] (1st) and declaratory relief (2nd) against defendant SHERIF OSMAN, INC. based on its failure to pay.

It is undisputed that in September 2008, OSMAN ELBIALI and HANMI BANK entered in the subject Note for $1,719,937.38. Decl. of Arbahim Kashefi. Thereafter, the parties entered into two Change in Terms agreements (in February 2009 and January 2011). In April 2012, the Bank’s interest in the Note was assigned to plaintiff Vermont. Kashefi decl. , Elbiali

Elbiali failed to make the July 2013 payment. A few days later, he filed for Chapter 11 bankruptcy and entered into a Chapter 11 plan which provides for payments on the Note. Decl. of Osman Elbiali. It is undisputed that the balance of the Note was not paid by the September 2013 maturity date. The act that plaintiff is entitled to payments under the plan, as argued by defendant, does not preclude it from seeking payment from defendant because the guaranty itself provides for enforceability regardless of whether plaintiff exhausts other remedies. Exh. B, p.7, ¶1

Plaintiff’s claims are based on the corporate defendant’s failure to honor its separate guaranty of the Note. Kashefi decl., ¶6; Exh. B. “A contract or guaranty gives rise to a separate and independent obligation from that which binds the principal debtor.” Talbott v. Hustwit (2008) 164 Cal.App.4th 148, 151; see C.C. § 2878.

A court may also grant summary judgment in a declaratory relief action where only legal issues are presented for its determination. Las Tunas Beach Geological Hazard Abatement Dist. v. Superior Court (1995) 38 Cal.App.4th 1002. Here, plaintiff argues that there is no dispute that Elbiali defaulted by filing bankruptcy and not paying the balance by the maturity date, and that defendant Osman is liable under the guaranty in the amount of $1,701,006.32.

In opposition, Osman argues that Mr. Elbiali (1) does not recall signing the “Commercial Guarantee” on the corporation’s behalf, (2) did not understand the legal ramifications of the document, in part because English is not his first language and (3) the document contained terms to which he did not agree. Elbiali decl. He contends that he never intended the corporation to be liable for his personal debt.

Defendant’s argument that Elbiali himself is the “true guarantor” contradicts the plain language of the guaranty. The guaranty expressly designates that defendant “Sherif Osman Inc.” is the guaranty, both at the top of page 1 and just above the signature line. The writing itself is evidence of the parties’ intent. See C.C. § 1639. Elbiali’s statements that he does not recall signing the guaranty and that he did not understand the legal ramifications do not support his position that the guaranty is unenforceable. He fails to explain why the guaranty agreement should be treated differently that the other loan documents, under which he acknowledges his personal liability. His declaration proffers no explanation as to terms to which he allegedly did not agree. The conclusory statements therein do not raise a defense as to the enforceability of the guaranty.

However, the motion must be denied because plaintiff failed to meet its burden on the element of damages. See C.C.P. § 437c(p)(1); Agiular v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853. Its managing member, Abrahim Kashefi submitted a declaration attesting to the total amount of the judgment sought. See ¶20. He failed to provide information supportive of each of the items calculated to reach the $1.7 million. There is no evidence or explanation of the interest, late charges, legal fees or post-default payments. In opposition, defendant argues that he was not provided with an accounting. Elbiali decl.

Even if the Kashefi declaration was deemed sufficient, there exists a factual dispute as to the amount owed. The debt was secured by a Deed of Trust on certain real property in Pico Rivera, CA. In June 2013, the property was partially destroyed by fire and the proceeds from the insurance claim were paid directly to plaintiff. In January 2013, plaintiff paid some of the funds to Elbiali, but withheld $60,000. See Elbiali decl., ¶¶21-26. Defendant argues that amount was not properly credited to the debt. Plaintiff did not address that evidence in the reply, except to object to those portions of the declaration as irrelevant.

For those reasons, the motion must be denied. Plaintiff’s request for a continuance of the motion is moot, but the Court notes that counsel Carlos Negrete’s declaration does not meet the standard set forth in Code of Civil Procedure section 437c, subsection (h). It generally references discovery sought, but does not explain (1) why the discovery was not conducted earlier, and (2) what relevant facts he seeks to discover.

Evidentiary objections
The Court has issued rulings which will be made available for viewing at the time of the hearing. Neither party submitted a proposed order for the judge’s signature, with an extra copy for the file. C.R.C., Rule 3.1354.