Case Number: GC050062 Hearing Date: June 13, 2014 Dept: A

East West Bank v Jojozak Irrevocable Trust

MOTIONS FOR SUMMARY JUDGMENT (2)

Calendar: 23
Case: GC050062
Date: 6/13/14

RELIEF REQUESTED:
1. Plaintiff’s Motion for Summary Judgment
2. Defendant’s Motion for Summary Judgment

SUMMARY OF COMPLAINT:
The Defendant breached an agreement to guaranty the performance of Seeley Trust, which had obtained credit from the Plaintiff.

CAUSES OF ACTION IN COMPLAINT:
1) Breach of Guaranty
2) Recovery of Deficiency
3) Common Counts
4) Accounting

DISCUSSION:
Trial is set for July 21, 2014.

This hearing concerns the motion for summary judgment filed by the Plaintiff, East West Bank, and the motion for summary judgment filed by the Defendant, Michael Augustine, as trustee of the of the Jojazak Irrevocable Trust.

1. Plaintiff’s Motion for Summary Judgment
The Plaintiff seeks summary judgment on its Complaint with regards to its claims against the Defendant, Michael Augustine, as the trustee of the Jojazak Irrevocable Trust. Under CCP section CCP section 473c, the Plaintiff has the burden of providing evidence that demonstrates that it is entitled to summary judgment with evidence establishing each element of the causes of action in its Complaint. CCP section 437c is a complicated statute and there is little flexibility in the procedural imperatives of the section and, as a result, section 437c is unforgiving. Hawkins v. Wilton (2006) 144 Cal. App. 4th 936, 949-950. A failure to comply with any one of its myriad requirements is likely to be fatal to the offending party. Id.
Section 437c does not furnish the trial courts with a convenient procedural means, to which only “lip service” need be given, by which to clear the trial calendar of what may appear to be meritless or weak cases. Id. Any arbitrary disregard of the statutory commands in order to bring about a particular outcome raises procedural due process concerns. Id. The success or failure of the motion must be determined by application of the required step-by-step evaluation of the moving and opposing papers. Id. Because of the drastic nature of the remedy sought, the moving party is held to strict compliance with the procedural requisites. Id.

The Plaintiff identified the Defendant as DOE Defendant 1 on October 9, 2013. A review of the Complaint reveals that the Plaintiff directed all four causes of action against DOE Defendant 1. Accordingly, the Plaintiff has the burden of demonstrating that it can establish each element of all four causes of action.
The Plaintiff did not meet its burden of proof because it did not address the second, third, or fourth causes of action in the Complaint. The Plaintiff’s motion does not discuss the elements of the second, third, or fourth causes of action. The Plaintiff’s motion does not identify the evidence that establishes each element of the second, third, or fourth causes of action. The Plaintiff did not provide the arguments and evidence needed for the Court to engage in the step-by-step evaluation of the papers so that it can find that the Plaintiff can establish each essential element of each cause of action pleaded in the Complaint.
Accordingly, the Plaintiff is not entitled to summary judgment because it did not meet its burden of proof.

In the alternative, the Plaintiff sought summary adjudication of the first cause of action for breach of guaranty. The cause of action is a cause of action for breach of contract and it has the following four elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

The Plaintiff offers the following evidence in its Separate Statement of Facts (“SSF”):

1) the Plaintiff loaned money to the Seeley Family Trust, under two promissory notes (SSF 2, 3, 7, and 8);
2) as consideration for the loan, Capital Asset, as trustee for the Jojazak Trust, agreed to guaranty the performance of Seeley Family Trust. (SSF 11);
3) in August 2013, Capital Asset was replaced by Michael Augustine as the trustee of the Jojazak Trust (SSF 25);
4) the Plaintiff performed its duties by loaning the money (SSF 5 and 9);
5) the borrower, Seeley Trust, defaulted on the loans by failing to pay the monthly payments due (SSF 20);
6) the Defendant breached the guaranty by failing to pay the loan (SSF 23);
7) the Plaintiff’s damages are $68,741.25 (SSF 26).

These facts establish each element of the cause of action, i.e., there was an agreement, the Plaintiff performed its duties, the Defendant breached, and the resulting damages are $68,741.25. Accordingly, the Plaintiff has met its burden of proof.
Under CCP section 437c, the burden of offering evidence is shifted to the Defendant. This imposes the burden on the Defendant of offering evidence to demonstrate that there is a question of fact regarding the essential elements of the first cause of action.
The Defendant did not file any opposition papers. However, the Defendant filed its own motion for summary judgment. Therein Defendant offers evidence that the Plaintiff cannot establish the first element because there was no enforceable contract between the parties.
Under Civil Code section 1624, a guaranty agreement must be in writing and signed by the party or the party’s agent. The Defendant argues that the trustee who signed the guaranty agreement was not the agent for the Jojazak Trust.
The guaranty agreement was between the Plaintiff and the Jojazak Trust (see Plaintiff’s Documentary Evidence, exhibit C). The guaranty agreement identifies Capital Asset Management Associates, Inc. as the trustee for Jojazak Trust (see page 4 of guaranty).
The Defendant provides evidence that Capital Asset Management Associates, Inc. was not authorized or qualified to act as the trustee for the trust. First, the Articles of Incorporation for Capital Asset Management Associates, Inc. expressly stated that it could not engage in the trust business (Defendant’s Separate Statement of Facts, 19). Second, Capital Asset Management Associates, Inc. had not complied with Financial Code section 1550, which identifies the requirements for a corporation to engage in the trust business and is part of the statutory scheme for regulating trust companies at Financial Code sections 1550 to 1613. Financial Code section 115 defines “trust business” to mean the business of acting as trustee under the appointment of any court, by authority of law, or as trustee for any purpose permitted by law.
Section 1550 requires the corporation to possesses articles of incorporation that expressly state that its purpose is to engage in the trust business, to receive a certificate of authority or authorization from the Commissioner of Business Oversight to engage in the trust business, and to deposit with the State Treasure money or securities in amounts based on its place of business and the amount of trust funds. The Defendant provides evidence in the declaration of Michael Augustine that Capital Asset Management Associates, Inc. did not comply with any of the requirements of Financial Code section 1550.
This evidence indicates that Capital Asset Management Associates, Inc. was not authorized or qualified to act as the trustee for Jojazak Trust. Since this evidence indicates that Capital Asset Management Associates, Inc. was not an actual agent for Jojazak Trust, it creates a question of fact whether Jojazak Trust entered into an enforceable agreement to guaranty the loan.
Accordingly, the Defendant offers evidence that creates a question of fact whether the guaranty agreement is enforceable. Since the Defendant’s evidence indicates that there is a question of fact regarding the existence of an enforceable agreement between the parties, it is sufficient to meet the Defendant’s burden of proof.

Therefore, the Plaintiff is not entitled to summary adjudication of the first cause of action for breach of guaranty agreement because there is a dispute of fact whether the parties had an enforceable agreement. Further, the Plaintiff is not entitled to summary judgment on the Complaint because the Plaintiff did not address the second, third, and fourth causes of action.

2. Defendant’s Motion for Summary Judgment
The Defendant seeks summary judgment on the Complaint. Under CCP section CCP section 473c, the Defendant has the burden of providing evidence that demonstrates that it is entitled to summary judgment with evidence that the Plaintiff cannot establish an essential element in each cause of action in the Complaint.
The Plaintiff identified the Defendant as DOE Defendant 1 on October 9, 2013. A review of the Complaint reveals that the Plaintiff directed all four causes of action against DOE Defendant 1. Accordingly, the Defendant has the burden of demonstrating that the Plaintiff cannot establish an essential element in all four causes of action.
The Defendant did not meet its burden of proof because it did not identify an essential element that cannot be established in the second, third, or fourth causes of action. On pages 19 and 20, the Defendant mentioned the second, third, and fourth causes of action. However, the Defendant did not identify the essential element that cannot be established in each cause of action and did not identify the evidence that meets its burden of showing that an essential element of the second, third, and fourth causes of action cannot be established. The Defendant did not provide the arguments and evidence needed for the Court to engage in the step-by-step evaluation of the papers so that it can find that the Plaintiff cannot establish an essential element of each cause of action pleaded in the Complaint.
Accordingly, the Defendant is not entitled to summary judgment because it did not meet its burden of proof.

In the alternative, the Defendant sought summary adjudication. However, the Defendant’s notice of motion is procedurally defective because it did not identify any cause of action for which it sought the order granting summary adjudication. Under CRC rule 3.1350(b), when a motion for summary adjudication is made, the specific cause of action must be stated specifically in the notice of motion.
A review of the Defendant’s notice of motion reveals that the Defendant sought “in the alternative, summary adjudication”. However, the Defendant did not identify any specific cause of action for which it sought summary adjudication, as required under CRC rule 3.1350(b). Since the Defendant did not identify a specific cause of action, it is not entitled to summary adjudication.

Accordingly, the Defendant is not entitled to summary adjudication because its notice of motion is defective and does not comply with CRC rule 3.1350(b).

RULING:
1. DENY Plaintiff’s motion for summary judgment or summary adjudication.
2. DENY Defendant’s motion for summary judgment or summary adjudication.