Case Number: EC061967    Hearing Date: September 05, 2014    Dept: B

20. EC061967
MARDI A. RUSTAM vs BERNARD GOLDITCH, et al
Motion for Summary Judgment/Adjudication

The Complaint alleges that on December 8, 2008, Martin Yacoobian signed a note to obtain a loan of $500,000 from the Defendant, Ontario Development Partners, which was a fictitious business name for a general partnership formed by Defendants, Bernard Golditch, Michael Narvid. The note charged interest at 14% but increases to 19% per year if in default.
The note was secured by a deed of trust on real property. The Plaintiff purchased the real property from Martin Yacoobian, who promised to repay the note. After Mr. Yacoobian failed to repay the loan, a notice of default and election to sell was issued. The Plaintiff paid $916,000 to satisfy the obligation and to stop the foreclosure sale.
The Plaintiff claims that the interest rate of 19% per year was usurious because it exceeds the maximum allowable rate under the California Constitution. Further, the Defendants engaged in elder abuse by causing the Plaintiff to pay $916,000 to stop the foreclosure sale.
The Complaint contains causes of action for:1) Usurious Interest and
2) Elder Abuse

This hearing concerns the following motions:

1) the Plaintiff’s motion for summary adjudication of the first and second causes of action in his Complaint and for summary adjudication of the first, third, fifth, sixth, and seventh affirmative defenses in the Defendants’ answer;
2) the Defendant’s motion for summary judgment of the Complaint.

1. Plaintiff’s Motion for Summary Adjudication
Under CCP section 437c(f), a party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty. 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. The Legislative intent of CCP section 437c(f) was to stop the practice of adjudication of facts or adjudication of issues that do not completely dispose of a cause of action or a defense. Lilienthal & Fowler v. Superior Court (1993) 12 Cal. App. 4th 1848, 1854.

a. First Cause of Action for Usurious Interest and Second Cause of Action for Elder Abuse
Under CCP section 437c, the Plaintiff has the burden of producing evidence that demonstrates that he can establish each element of these two causes of action. An essential element of these causes of action is the amount of damages for which the Plaintiff seeks a judgment in his favor. This is necessary so that an order granting summary adjudication would completely dispose of the causes of action.
A review of the Plaintiff’s memorandum and separate statement reveals that the Plaintiff did not offer evidence to establish the amount of damages in each cause of action. For example, under the second cause of action for the financial abuse of an elder, the Plaintiff may recover remedies under Welfare and Institutions Code section 15657.5. In addition, the Plaintiff seeks an award of punitive damages in his Complaint. The Plaintiff did not discuss these remedies or offer any evidence regarding the amount of damages he seeks.
Accordingly, the Plaintiff did not meet his burden of proof because the Plaintiff did not offer evidence that establishes the element of damages in each cause of action. Further, the Plaintiff’s motion does not offer evidence that will completely dispose of the causes of action because the issue of damages remains unresolved.

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’s motion for summary adjudication of the first and second causes of action is defective because it does not address the element of damages. Accordingly, the Court denies the Plaintiff’s motion for summary adjudication of the first and second causes of action because the Plaintiff did not meet his burden of proof.

b. First, Third, Fifth, Sixth, and Seventh Affirmative Defenses
Summary adjudication of an affirmative defense is properly granted when there is no triable issue of material fact as to the defense, and the moving party is entitled to judgment on the defense as a matter of law. Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal. App. 4th 970, 977-978.
A review of the Plaintiff’s memorandum reveals that he does not meet his burden of proof.
The first affirmative defense is that the Plaintiff failed to state sufficient facts. The Plaintiff argues that he stated sufficient facts to constitute his two causes of action. However, the Plaintiff does not direct the Court to the specific allegations in his two causes of action that plead each essential element needed to constitute the first and second causes of action.
The third affirmative defense is waiver. The Plaintiff argues that the third affirmative defense of waiver cannot be established because the Plaintiff did not intend to release his claims in the settlement agreement between the parties. This does not address the pleadings because the affirmative defense is that the Plaintiff waived his claims and not that the Plaintiff released his claims. The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings. FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382. Since the pleadings delimit the issues, summary judgment cannot be granted or denied on grounds not raised by the pleadings. Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663. The Plaintiff’s evidence is not grounds for summary adjudication because it does not address the issues raised in the third affirmative defense of waiver.
The fifth affirmative defense is that the Plaintiff’s usury claim is barred because the loan at issue was arranged by a licensed real estate broker under CCP section 1916.1. The Plaintiff’s usury claim is in his first cause of action, in which the Plaintiff alleges that the promissory note was usurious because the Defendant charged 19% interest. The Plaintiff argues that the affirmative defense cannot be established because the forbearance and settlement agreement were not arranged by a licensed real estate broker. However, the usury claim is based on the promissory note. The Plaintiff’s evidence regarding the forbearance and settlement agreements does not address the pleadings in the Defendant’s fifth affirmative defense.
The sixth and seventh affirmative defenses are that Plaintiff lacks standing to bring his causes of action. The Plaintiff argues that these causes of action cannot be established because the Court overruled the Defendant’s demurrer that was based on arguments that the Plaintiff lacked standing. However, the Court’s order that overruled the demurrer is not a fact that the Plaintiff can offer at trial to establish his claims. Instead, the Court’s order was based on a review of the pleadings that assumed the truth of the allegations for the purpose of making a determination on the demurrer. The Court’s order is not a finding that there is evidence that the Plaintiff has standing. Instead, it is an order that the allegations in the Complaint, if assumed true, are sufficient to establish that the Plaintiff has standing. This is insufficient to meet the Plaintiff’s burden of proof on the motion for summary adjudication.
Accordingly, the Plaintiff does not meet his burden of proof under CCP section 437c(f) because he does not demonstrate that the Plaintiff is entitled to a judgment on each of these affirmative defenses.

Therefore, the Court denies the Plaintiff’s motion for summary adjudication of the first, third, fifth, sixth, and seventh affirmative defenses because the Plaintiff did not meet his burden of demonstrating that he is entitled to a judgment on any of them.

2. Defendants’ Motion for Summary Judgment
The Defendants seek summary judgment of the Plaintiff’s Complaint. The Plaintiff directs two causes of action against the Defendants: 1) usurious interest and 2) elder abuse. The Defendants have the burden under CCP section 437c of demonstrating that the Plaintiff’s causes of action lack merit. Under CCP section 437c(p)(2), the Defendants meet their burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action.

a) The First Cause of Action for Usury.

Under CCP section 437c, a plaintiff may move for summary judgment on a complaint and has the burden of proof to offer evidence establishing each element of the causes of action in the complaint. Section 437c(b)(1) requires the motion to be supported by a separate statement of undisputed facts, and any supporting declarations, admissions, depositions, among other things that may be submitted. Defendant has filed such supporting documents.
A review of the Plaintiff’s complaint reveals that it is brought under Article XV of the California Constitution , which precludes interest rates above 10% or
5% above the rate for loans established by the Federal Reserve Bank.

Defendant brings his motion for summary judgment based on the requirements of Civil Code Section 1916.1, which exempts for Article XV
“any loan or forbearance made or arranged by any person
licensed as a real estate broker by the State of California and
secured, directly or collaterally, in whole or in part by liens on real
property.”
The statute goes on by defining “arranged for’ as when a broker acts for compensation for soliciting, negotiating or arranging the loan for another.” The section applies broadly and if the broker does any of a broad range of services that falls within any of these disjunctive services, the loan is exempt. Del Mar v. Caspe (1990) 220 Cal App 3d 1316.
In further support of his motion, Defendant’s separate statement contains evidence of the following relevant facts, among others, that the underlying loan about which the plaintiff complains, was arranged by VIP Trust Deed Company (V.I.P) and is thus exempt from the usury law under C.C.Section 1916.1. This is supported by the Declarations of Cameron Kessinger, Vice President of V.I.P. and the documents he authenticates and attaches to his declaration, i.e. an engagement letter dated December 2, 2008, engaging V.I.P “to arrange a Blanket trust deed loan” on the subject property and signed by the original debtor, Martin Yacoubian. Mr. Kessinger declares in paragraphs 5-10 that Mr. Yacoubian approached V.I.P to do a loan; that VIP provided him with initial documents including the engagement letter, and a good faith estimate. They requested and obtained by the borrower the loan application, a W-9, a statement of information for the title company, a copy of the first trust deed Statement, existing fire insurance coverage, copies of certificates of limited partnership and other documents. V.I.P obtained a preliminary title report, interacted with lender and title company, and prepared all loan documents and disclosures. V.I.P. handled the closing of the loan and serviced it.
It is also uncontested that the Plaintiff was not the original borrower on the note claimed to be usurious. Instead it was Yacoupian Enterprises through Martin Yacoupian its general partner.
Defendants more for summary judgment on the grounds that Plaintiff has no standing to contest the rate of the underlying loan on the property. The law is clear that a usury claim is personal to the original borrower and is not transferred when the property subject to the loan is purchased or transferred to another. Roes v. Wong (1999) 69 Cal App 4th 375; Moe v. Transamerica Title (1971) 21 Cal App 3d 289; Sosin v. Richardson (1962) 210 Cal App 2d 258. When Plaintiff purchased the property, he purchased it subject to the promissory notes and trust deeds existing on the property, but he did not succeed to any claim for usury that the original borrower may have had.
Defendant has met its burden under §473c to demonstrate its entitlemebnt to judgment on the first cause of action, and the burden shifts to Plaintiff to dispute this.

Plaintiff contests that V.I.P arranged the loan, and supports it with the Declaration of Martin Yacoubian, who does not contest the engagement letter or the fact that V.I.P. was paid compensation for arranging the loan as that term is described in the statute. This declaration is insufficient to raise an issue of fact.

b) Second Cause of Action for Elder Abuse.
Plaintiff contends that Defendant is guilty of Elder abuse by wrongfully and fraudulently forcing him to pay $916,000 on a usurious loan to prevent foreclosure of the property.
Defendant contends in his motion that 1)Plaintiff’s elder abuse claim is dependent on his claim that the loan was usurious and thus fails, and 2) the loan was purchased by Plaintiff’s brother. Because his brother purchased the note, Plaintiff cannot be deemed to have been forced to pay the note.
In support of it motion, Defendant submits the settlement agreement in a lawsuit brought by Defendant against plaintiff and his brother Mohammod, on claims not before the court in this action. In that agreement, Mohammed Rustam, individually and doing business as Daya Investments, agreed to purchase the promissory note at issue in this action for $916,000, and Defendant agreed to assign the note without representations, or warrantees to Mohammed Rustam.
On or about September 7, 2012, at the same time he commenced the lawsuit against the brother Rustams, Defendant began nonjudicial foreclosure on the property on which the loan that is the subject of this action existed for failing to pay on the note Ex J to Golditch Declaration. The notice of Default commencing the foreclosure claimed at that time there was due and owing on the note, $755,181.72. A notice of Trustee sale was given on January 30, 2013. $818,569.97 was due at that time. It was after this that the settlement agreement, Ex P to the Golditch Declaration, was entered into. These facts demonstrate that Defendant’s exercise of his rights to commence foreclosure under the promissory note and deed of trust, was not wrongful and is not actionable. It was this exercise of rights, i.e. the pending foreclosure, that caused Mohammed Rustam to pay of the note.
The exercise of a valid right to foreclose on property by a trust deed holder where the promissory note is in default that precludes a claim for elder abuse.
This is sufficient to shift the burden to Plaintiff to demonstrate why his elder abuse claim may proceed.
Plaintiff brings her elder abuse claim under §15610.27 for financial elder abuse.
This requires a showing that defendant did any of the following:
1)Takes, secrets or obtains personal or real property of an elder for a wrongful use with intent to defraud
2) assists in this taking
3) takes, secretes, or obtains real or personal property of an elder by undue influence.
Plaintiff does not dispute the history of the Yacoubian note, the purchase of the property at issue in this litigation from Mr. Yacoubian subject to this note, the default on the note and the subsequent foreclosure action. He claims, that, paying of the note for $916,000 was a wrongful and fraudulent taking under the elder abuse statute because the amount was the result of a usury. The usurious interest on the note is the very underpinning of Plaintiff’s elder abuse claim.
Because the court finds that the note is exempt from Section XV of the California Constitution by Civil Code §1916.1, Plaintiff’s elder abuse claim must also fail.

Accordingly, the Court finds that there are no material facts in dispute and grants the Defendants’ motion for summary judgment. Defendant to prepare the order and judgment.