AVRAHAM HASSID VS. OLYMPIC CAPITAL VENTURE

Case Number: BC426828 Hearing Date: June 03, 2014 Dept: 34

Moving Party: Defendants Abraham Assil and Olympic Capital Venture LLC

Resp. Party: Plaintiffs Avraham Hassid, 4606 California LLC, 7621 Van Nuys LLC, and Olympic 2000 Investments Group LLC

Defendants’ motion for summary judgment is GRANTED in its entirety.

Plaintiffs’ Objections to the Declaration of Abraham Assil:

Objection
1 OVERRULED
2 OVERRULED
3 OVERRULED
4 SUSTAINED (Secondary Evidence)
5 SUSTAINED (Secondary Evidence)
6 SUSTAINED (Secondary Evidence)
7 SUSTAINED (Secondary Evidence)

BACKGROUND:

Plaintiffs commenced this action on November 24, 2009. Following the sustaining of a demurrer, plaintiff filed a first amended complaint on January 10, 2011. Following the sustaining of another demurrer, plaintiffs filed a second amended complaint on September 2, 2011, alleging causes of action for: (1) breach of oral contract; (2) breach of covenant of good faith and fair dealing; (3) fraud and deceit; (4) declaratory relief; (5) specific performance; and (6) accounting. Plaintiff alleges he learned that the FDIC was selling a pool of loans at a discount and he set upon a plan to purchase the loan pool. (SAC ¶¶ 23-27.) Defendants were involved in the purchase of the loan pool. (Id., ¶¶ 28-31.) Plaintiff alleges he entered into oral agreements regarding his loans, which were part of the loan pool. (Id., ¶ 35.) Plaintiff alleges defendants renounced these agreements. (Id., ¶ 36.)

On 12/17/13, the Court granted motions for summary judgment and/or adjudication brought by defendants Djavid Hakakian and Hamed Yazdanpanah; Morris Nejathaim and Isaac Javdanfar; and George Eshaghian and Canico Capital Group LLC. Hakakian’s motion for summary adjudication was denied as to the third cause of action for fraud.

A jury trial in the related case of Dromy v. Assil, BC417850, was held from May 12-16, 2014; the jury returned a defense verdict.

ANALYSIS:

Defendants move for summary judgment, or in the alternative summary adjudication of the first, second, third, fourth, fifth, and sixth causes of action asserted in the SAC.

First Cause of Action for Breach of Contract

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

Defendants argue that there is no evidence of a binding contract between plaintiffs and the moving defendants. The existence of a contract requires (1) parties capable of contracting; (2) free, mutual, and communicated consent; (3) a lawful object; and (4) sufficient consideration. (Civ. Code, §§ 1550, 1565.)

Defendants first argue that Assil was not required to perform under the contract because a condition precedent to performance, i.e., that Assil would have 45 days to come up with the money to purchase the loan, never occurred. “A condition precedent is one which is to be performed before some right dependent thereon accrues, or some act dependent thereon is performed.” (Civ. Code, § 1436.) “In contract law, ‘a condition precedent is either an act of a party that must be performed or an uncertain event that must happen before the contractual right accrues or the contractual duty arises.’ [Citation.] The existence of a condition precedent normally depends upon the intent of the parties as determined from the words they have employed in the contract.” (Realmuto v. Gagnard (2003) 110 Cal.App.4th 193, 199.) “[T]he provisions of a contract will not be construed as conditions precedent in the absence of language plainly requiring such construction.” (Larson v. Thoresen (1953) 116 Cal.App.2d 790, 794.)

This evidence is sufficient to establish that a condition precedent to Assil’s performance did not occur. The agreement between Assil and Hassid contemplated that they would be the only persons involved in the purchase, as evidenced by the fact that they would split the profits and losses equally. (See DMF/PMF 13.) In order for this to occur, Assil would have to invest the entire $15 million himself, and was told that he would have 45 days to do so. (DMF/PMF 12, 13.) Therefore, Assil’s investment of the full amount due was dependent upon the allowance of 45 days to obtain the funds. The 45-day time period was a condition precedent to Assil’s performance under the contract, and, when the FDIC informed the parties that they would have only 10 days to pay the purchase price, the material terms of the agreement were altered. Not only was Assil no longer the only investor, there appears to no longer have been an agreement to split the profits evenly between Assil and Hassid or the same agreement regarding Hassid’s repayment of the loans. (See DMF/PMF 29, 31, 34 [discussing agreements with other investors that contradict the agreement with Assil].) Accordingly, the 45-day period was a condition precedent to performance of the alleged agreement between Hassid and Assil.

On this ground alone, the court would sustain defendants’ Motion for Summary Adjudication as to this cause of action.

Defendants also argue that Hassid provided no consideration for the agreement. Consideration includes “[a]ny benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.” (Civ. Code, § 1605.) Plaintiffs argue that Hassid provided consideration by locating and identifying the loan pool, introducing the loan pool to Assil, instructing Galaxy to bid on the purchase of the loan pool, providing the initial deposit, and arranging for the transfer of an additional deposit. (See PMF 21, 71-74.)

Plaintiffs do not point to any admissible evidence that Assil did not know or would not have known of the loan pool without Hassid. Therefore, plaintiffs have not established that Hassid’s location and introduction of the loan pool was adequate consideration. As for the initial deposit, Hassid admitted at deposition that he had no money to purchase the loan pool. (DMF 14.) Hassid testified at deposition that his money was used for the $100,000.00 deposit on the loan pool, but that by his money he meant money that was sent by a Mr. Khorsandi to Assil. (See Pl. Exh. B, p. 313.) Hassid did not clearly indicate that he repaid Khorsandi this amount. (Ibid.) Plaintiffs’ evidence suggests that Hassid obtained a loan from Khorsandi in order to invest in the loan pool, which could be a prejudice suffered by Hassid. However, there is no evidence that Hassid obtained this loan as an inducement to Assil. It appears that Hassid would have obtained this loan, and would have performed the other acts which plaintiffs contend constitute consideration, regardless of whether Assil invested in the loan pool. Therefore, plaintiffs have not established the existence of a triable issue of material fact as to whether plaintiffs provided sufficient consideration for the purported agreement. Without consideration, there could not have been a binding agreement between the parties.

Defendants argue that there is no evidence of an oral agreement between Hassid and Olympic. Because there was no consideration for the alleged agreements on the part of Hassid, the claims against Olympic also fail.

There is also no showing that an agent for Olympic entered into an agreement on its behalf. “The contract of the agent made within the scope of his authority binds his principal and the other contracting party.” (McClintock v. Robinson (1937) 18 Cal.App.2d 577, 582.) Ostensible agency occurs “when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.” (Civ. Code, § 2300.) “Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess.” (Civ. Code, § 2317.) “It is elementary that there are three requirements necessary before recovery may be had against a principal for the act of an ostensible agent. The person dealing with the agent must do so with belief in the agent’s authority and this belief must be a reasonable one; such belief must be generated by some act or neglect of the principal sought to be charged; and the third person in relying on the agent’s apparent authority must not be guilty of negligence.” (Hill v. Citizens Nat. Trust & Savings Bank of Los Angeles (1937) 9 Cal.2d 172, 176.) “ ‘[O]stensible authority must be based upon acts or declarations of the principal and not the conduct or representations of the alleged agent.’ ” (Petersen v. Securities Settlement Corp. (1991) 226 Cal.App.3d 1445, 1452 [quoting South Sacramento Drayage Co. v. Campbell Soup Co. (1963) 220 Cal.App.2d 851, 857].)

On April 17, 2009, the FDIC assigned its interest in the loan pool to Galaxy, who assigned its rights and obligations in the loan pool to Olympic. (DMF/PMF 39-40.) At the same time, ownership of Olympic was transferred from Galaxy to Assil. (DMF/PMF 41.) Olympic was formed by Galaxy or Raffi Cohen and had not conducted any business prior to April 16, 2009. (DMF/PMF 42.) After a lawsuit and settlement June and July 2009, Olympic assigned its interest in the loan pool to Canico. (See DMF/PMF 58-65.)

This evidence is sufficient to establish that Assil could not have acted as Olympic’s agent in the purported oral agreement because this agreement took place in March 2009, before Assil became the owner of Olympic. (See DMF/PMF 10, 13, 39-42.) Hassid and Assil did not further discuss the terms of their purported agreement after Hassid learned that Assil would not be able to fund the entire $15 million. (DMF/PMF 26.) Therefore, there are no triable issues of fact as to whether Assil had the authority to bind Olympic to the alleged oral agreement.

Accordingly, defendants’ request for summary adjudication of the first cause of action is GRANTED.

Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing

“There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.” (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.) “There is no obligation to deal fairly or in good faith absent an existing contract. If there exists a contractual relationship between the parties . . . the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract.” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1032.)

As discussed above, there is no triable issue of fact as to whether the parties entered into the alleged contract. Because there is no existing contractual relationship as to the loan pool purchase, defendants were not obligated to deal fairly or in good faith.

Accordingly, defendants’ request for summary adjudication of the second cause of action is GRANTED.

Third Cause of Action for Fraud

The elements of a fraud claim are: (1) misrepresentation of a fact (or intent to conceal in a fraudulent concealment case); (2) knowledge of falsity; (3) intent to defraud (to induce reliance); (4) justifiable reliance; and (5) resulting damage. (Buckland v. Threshold Enters., Ltd. (2007) 155 Cal.App.4th 798, 806-807.)

The third cause of action is only alleged against Assil and Hakakian. Defendants argue that this cause of action fails because there is no evidence of reliance or damages.

“Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff’s conduct which altered his or her legal relations, and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction. [Citations.] ‘Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a question of fact.’ ” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.)

Plaintiffs argue that Hassid relied on Assil’s representation that he would purchase the entire loan pool because Hassid stopped searching for investors. (See PMF 91.) This argument is not well taken because Hassid thereafter searched for and found more investors when Assil was unable to provide all of the funds. (See PMF 77-78.) It is unclear how Hassid’s initial cessation of the search for investors was detrimental since he resumed the search shortly thereafter and was able to convince enough investors to purchase the loan. Hassid argues that this resulted in a lowering of his anticipated share of the profits, but there is no evidence that the other investors would have agreed to a higher profit share had Hassid not made the initial agreement with Assil.

Plaintiffs also argue that Hassid relied on the representations by contributing $100,000.00 toward the purchase of the loan pool and another $300,000.00. (See PMF 21, 74.) As discussed above, the $100,000.00 actually came from Khorsandi, not Hassid. (See Pl. Exh. B, p. 313.) Moreover, Hassid admits that the $300,000.00 came from defendant Hakakian, and not from Hassid. (See PMF 21.)

Plaintiffs argue that Hassid suffered damages because he was not allowed to buy back his properties at cost and his properties were eventually foreclosed upon. (See PMF 89, 94.) However, it is undisputed that plaintiffs took out millions of dollars in loans which were secured by the property. (See DMF/PMF 1-3.) There is no showing that the properties would not have been foreclosed on had the loan pool not been purchased.

Therefore, there is no triable issue of fact that Hassid did not detrimentally rely on Assil’s representations and was not damaged. Accordingly, defendants’ request for summary adjudication of the third cause of action is GRANTED.

Fourth Cause of Action for Declaratory Relief

“To qualify for declaratory relief, [plainitffs] would have to demonstrate [their] action presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [Wilson’s] rights or obligations…. [Citation.]’ [Citation.]” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.)

Plaintiffs are seeking a judicial declaration as to the rights of the parties under their alleged agreements. (See SAC ¶¶ 69-73.) Therefore, the fourth cause of action is dependent upon the existence of a contractual relationship between the parties. As discussed above, the evidence does not show that the parties entered into the agreement alleged in the complaint.

Accordingly, defendants’ request for summary adjudication of the fourth cause of action is GRANTED.

Fifth Cause of Action for Specific Performance

“ ‘Specific performance of a contract may be decreed whenever: (1) its terms are sufficiently definite; (2) consideration is adequate; (3) there is substantial similarity of the requested performance to the contractual terms; (4) there is mutuality of remedies; and (5) plaintiff’s legal remedy is inadequate. [Citations.]’ [Citation.]” (Union Oil Co. of California v. Greka Energy Corp. (2008) 165 Cal.App.4th 129, 134.)

As discussed above, the evidence does not show that the parties entered into the alleged agreement. Therefore, there can be no specific performance.

Accordingly, defendants’ request for summary adjudication of the fifth cause of action is GRANTED.

Sixth Cause of Action for Accounting

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)

Plaintiffs seek an accounting of the money received and obtained relating to the performance of the loan pool. (SAC ¶¶ 81, 84.) The evidence shows that there is no relationship between the parties that would require an accounting because Hassid admitted he was never supposed to have a membership interest in Olympic. (DMF/PMF 45.) As discussed above, there is no evidence of a contract between Hassid and Olympic.

Accordingly, defendants’ request for summary adjudication of the sixth cause of action is GRANTED.

Moving Party: Defendant Canico Capital Group LLC (“Canico” or “defendant”)

Resp. Party: Plaintiffs Avraham Hassid, 4606 California LLC, 7621 Van Nuys LLC, and Olympic 2000 Investments Group LLC (“plaintiffs”)

Defendant’s motion for summary judgment is GRANTED in its entirety.

Plaintiffs’ Objections to the Declaration of Abraham Assil:

Objection
1 OVERRULED
2 OVERRULED
3 OVERRULED
4 SUSTAINED (Secondary Evidence)
5 SUSTAINED (Secondary Evidence)
6 SUSTAINED (Secondary Evidence)
7 SUSTAINED (Secondary Evidence)

Plaintiffs’ Objections to the Declaration of George Eshaghian:

Objection
1 OVERRULED
2 OVERRULED
3 SUSTAINED (Secondary Evidence)
4 SUSTAINED (Secondary Evidence)
5 SUSTAINED (Secondary Evidence)
6 SUSTAINED (Secondary Evidence)

ANALYSIS:

Defendants move for summary judgment, or in the alternative summary adjudication of the first, second, fourth, fifth, and sixth causes of action asserted in the SAC.

First Cause of Action for Breach of Contract

The existence of a contract requires (1) parties capable of contracting; (2) free, mutual, and communicated consent; (3) a lawful object; and (4) sufficient consideration. (Civ. Code, §§ 1550, 1565.) Defendant argues that there is no evidence of any mutual consent between Hassid and Canico, any consideration on the part of Hassid, or any oral contract between Hassid and an agent of Canico.

The following facts are undisputed. Plaintiffs entered into several promissory notes in 2003, 2004, and 2005 which were subsequently acquired by the FDIC. (See DMF/PMF 1-3; SAC ¶¶ 19-22.) In March 2009, Hassid learned that the FDIC was seeking to pool loans it had acquired, including plaintiffs’ loans which had a stated value of $29,000,000.00. (DMF/PMF 4-5; SAC ¶ 23.) Hassid asserts that he met with Assil in March 2009 regarding the purchase of the loan pool. (DMF/PMF 10.) Only Hassid and Assil were present at this meeting. (DMF/PMF 11.) Hassid alleges that at this meeting he and Assil agreed that if Hassid made the loan pool investment available to Assil, Assil would invest the complete $15 million to purchase the loan pool, Assil would be entitled to a return of 8% interest on the investment, Hassid and Assil would split the profits and losses equally, Hassid would pay off his loans in the loan pool at the cost of acquisition, and Hassid would not have to pay off his loans until the other loans in the loan pool were paid. (DMF/PMF 13.) On March 30, 2009, Galaxy Commercial Holdings LLC submitted a bid on behalf of the parties and on April 2, 2009, the FDIC notified Galaxy of its winning bid. (DMF/PMF 17-18.) Shortly thereafter, the FDIC notified Galaxy that the balance of the purchase price was due within 10 days, which differed from what Hassid had told Assil. (DMF/PMF 20-21.) Assil advised Hassid that he was unable to fund the remaining balance within 10 days. (DMF/PMF 222.) After learning that Assil would not be able to fund the entire $15 million, the parties did not further discuss the terms of their purported agreement or how the agreement would change as a result of the involvement of other investors. (DMF/PMF 23.) Hassid then brought in other investors to fund the purchase, and purportedly made other agreements with these investors. (DMF/PMF 24-33.) On April 16, 2009, the FDIC assigned its interest in the loan pool to Galaxy, who assigned its rights and obligations in the loan pool to Olympic. (DMF/PMF 34-35.) The ownership of Olympic was transferred to Assil. (DMF/PMF 36.) Hassid did not have any interest in Olympic and was not supposed to have any interest in Olympic. (DMF/PMF 40.) On April 17, 2009, Assil, Hakakian, Javdanfar, Yazdanpanah, and Nejathaim met and executed a letter confirming their investment in the loan pool. (DMF/PMF 41.) The letter states that the group would enter into a formal LLC operating agreement. (DMF/PMF 42.) Hassid’s name does not appear in the letter and he was not a party to this agreement. (DMF/PMF 43.) Canico was formed as a limited liability company on April 28, 2009. (DMF/PMF 46.) A dispute arose between Assil and the other investors. (See DMF/PMF 48, 51, 54.) This resulted in a lawsuit that was resolved through a memorandum of understanding dated July 8, 2009, and an attorney-client supplemental memorandum of understanding dated July 23, 2009. (DMF/PMF 55-56.) These settlement documents resulted in the investors becoming members of Canico and Assil and Eshaghian being appointed co-managers of Canico. (DMF/PMF 57, 58.) Thereafter, Olympic assigned its interest in the loan pool to Canico. (DMF/PMF 59.) Canico never had an interest in the loan pool prior to the settlement of the lawsuit. (DMF/PMF 60.) Hassid admits that he his not a member of Canico, has no interest in Canico, and never believed he was ever supposed to be a member of or have an interest in Canico. (DMF/PMF 62.)

This evidence establishes that Canico was formed after the alleged agreements were made and that Canico only obtained an interest in the loan pool as the result of a settlement agreement. Plaintiffs present no evidence showing that Hassid ever directly entered into an agreement with Canico.

Instead, plaintiffs argue that Canico is liable because it was expressly assigned all rights and liabilities associated with the loan pool, which included Olympic’s obligations to Hassid. (See Opp., pp. 9-11.) This argument is not well taken because, for reasons discussed above in the Court’s ruling on Assil and Olympic’s Motion for Summary Judgment, there is no showing of an agreement between Olympic and Hassid. Therefore, there were no contractual liabilities assigned to Canico.

Plaintiffs also argue that there was an oral agreement between Hassid and Canico because there was an oral agreement between Assil and Hassid, Assil was an agent for Olympic, and Olympic assigned its interests and obligations in the loan pool to Canico. This argument similarly fails because, as discussed above in the ruling on Assil’s Motion for Summary Judgment, there was no enforceable agreement with Assil and no triable issue of fact that Assil acted as an agent for Olympic since any agreement occurred before Assil had any interest in Olympic.

To the extent that plaintiffs argue that Canico is liable for the purported agreements with the individual investors, this argument fails because the Court has previously granted summary judgment or summary adjudication of plaintiffs’ contract claims against Hakakian, Yazdanpanah, Nejathaim, Javdanfar, and Eshaghian.

Defendant also argues that Hassid provided no consideration for the agreement. Consideration includes “[a]ny benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.” (Civ. Code, § 1605.) Plaintiffs do not address this argument in their opposition. This argument is well taken for the reasons discussed in the above ruling on Assil and Olympic’s Motion for Summary Judgment, and would form an independent ground for granting Canico’s Motion for Summary Judgment.

Accordingly, defendant’s request for summary adjudication of the first cause of action is GRANTED.

Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing

As discussed above, there is no triable issue of fact that the parties never entered into a contract. Because there is no existing contractual relationship, defendant was not obligated to deal fairly or in good faith.

Accordingly, defendant’s request for summary adjudication of the second cause of action is GRANTED.

Fourth Cause of Action for Declaratory Relief

“To qualify for declaratory relief, [plaintiffs] would have to demonstrate [their] action presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [Wilson’s] rights or obligations…. [Citation.]’ [Citation.]” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.) Plaintiffs are seeking a judicial declaration as to the rights of the parties under their alleged agreements. (See SAC ¶¶ 69-73.) Therefore, the fourth cause of action is dependent upon the existence of a contractual relationship between the parties. As discussed above, the evidence does not show that the parties entered into an enforceable agreement.

Accordingly, defendant’s request for summary adjudication of the fourth cause of action is GRANTED.

Fifth Cause of Action for Specific Performance

Accordingly, defendant’s request for summary adjudication of the fifth cause of action is GRANTED.

Sixth Cause of Action for Accounting

Plaintiffs seek an accounting of the money received and obtained relating to the performance of the loan pool. (SAC ¶¶ 81, 84.) The evidence shows that there is no relationship between the parties that would require an accounting because Hassid admitted he was not a member of Canico, has no interest in Canico, and never believed he was supposed to be a member of or have an interest in Canico. (DMF/PMF 62.) As discussed above, there is no evidence of a contract between Hassid and Assil, Olympic, or Canico.

Accordingly, defendant’s request for summary adjudication of the sixth cause of action is GRANTED.

Link to this page

Copy the code below to your web site.

Legal News

AVRAHAM HASSID VS. OLYMPIC CAPITAL VENTURE

Leave a Reply