UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
December 22, 2009
NFT PARCEL A LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, PLAINTIFF,
MICHAEL S. MARIX, ET AL., DEFENDANTS.
The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge
[Motion filed on October 8, 2009]
ORDER GRANTING SUMMARY JUDGMENT
In 2006, NFT Parcel A LLC sold a parcel of land secured by a purchase money mortgage. After amendments were made to the original loan agreement, Michael Marix and the Marix Family Trust signed guarantees for the loan, made to a non-party limited liability company apparently under their control. That entity eventually defaulted on its debt.
NFT Parcel A LLC brought this action seeking to enforce the guarantees of Mr. Marix and the Marix Family Trust, and now seeks summary judgment on its claim for breach of guaranty. After reviewing and considering all papers filed in support of, and in opposition to, as well as the arguments advanced by counsel at the hearing on, the Motion, the Court GRANTS the Motion.
A. Uncontroverted Facts
The following material facts are supported adequately by admissible evidence and are uncontroverted. They are "admitted to exist without controversy" for the purposes of this Motion. See Local Rule 56-3.
On January 18, 2006, NFT Parcel A LLC ("Plaintiff") and Desert Wells 237 LLC ("Desert Wells") entered into an agreement whereby Desert Wells purchased approximately 36 acres of land in the city of Palm Desert, California, (the "Property") from Plaintiff. The purchase was financed in part by a promissory note (the "Note") in the amount of $4,367,674 secured by a deed of trust (the "Original Deed") creating a first lien on the Property. (See Decl. of Thomas Noble ("Noble Decl.") Exs. A, B; Opp'n at 2:4--7.) The maturity date of the Note was February 1, 2007, and the annual interest rate was eight percent. (Noble Decl. Ex. A ¶ 1.)
On March 6, 2006, Palm Desert 31 LLC ("Palm Desert") assumed Desert Wells's obligations under the Note and Original Deed. (Noble Decl. Ex. C.)
At an unspecified time, Palm Desert obtained a loan from La Jolla Bank, FSB ("La Jolla") in the amount of $9,720,000 (the "La Jolla Loan") which was secured by a deed of trust executed in favor of La Jolla.*fn1 On April 18, 2006, Plaintiff and Palm Desert entered into a subordination agreement whereby Plaintiff agreed to subordinate the Original Deed to the La Jolla Deed. (Noble Decl. Ex. D.) On April 21, 2006, Defendants Michael Marix and the Marix Family Trust ("Defendants") executed a guaranty (the "Original Guaranty") whereby they guaranteed the debt of Palm Desert under the Note. (Noble Decl. Ex. E.)
On April 18, 2007, Plaintiff and Palm Desert agreed to an amendment of the terms of the Note ("Amendment One"). (Noble Decl. Ex. F.) As a result of Amendment One, the maturity date of the debt became January 31, 2008, the interest rate became 9.5 percent, and Palm Desert was required to make a payment of $367,674 to reduce the principal amount of the debt to $4,000,000. (Id. at ¶¶ 1--3.) Palm Desert made the required payment. (Noble Decl. ¶ 9(c).)
On June 3, 2008, Plaintiff and Palm Desert agreed to a second amendment of the Note ("Amendment Two"). (Noble Decl. Ex. G.) As a result of Amendment Two, the maturity date of the debt became January 15, 2009, Palm Desert was required make a payment of $2,000,000 to reduce the principal amount of the debt to $2,000,000, and Palm Desert was required to pay all accrued but unpaid interest as of June 30, 2008. (Id. at ¶¶ 1(a--b).) Palm Desert made these required payments. (Noble Decl. ¶ 10(b).) Also on June 3, 2008, Defendants executed a guaranty of the debt evidenced by Amendment Two (the "Guaranty").
On January 15, 2009 - the maturity date set forth in Amendment Two - Palm Desert failed to pay the outstanding principal and interest due under the Note. (Noble Decl. ¶ 13.) To date, these amounts remain unpaid. (Id.)
Plaintiff claims total damages in the amount of $2,336,837.93, calculated as follows: (1) principal in the amount of $2,000,000; (2) interest accrued as of the maturity date of $56,472.22; (3) late charges pursuant to paragraph 6 of the Note in the amount of $102,823.61; and (4) interest accrued after the maturity date in the amount of $177,542.10 as of October 1, 2009.
B. Procedural History
Plaintiff filed its Complaint on March 30, 2009 in the Superior Court of the State of California for the County of Riverside, alleging causes of action for (1) breach of guaranty; (2) "for money due;" and (3) for account stated. (Compl. ¶¶ 18--31.) On April 28, 2009, Defendants removed this action to this Court. (Doc. No. 1.)
On October 8, 2009, Plaintiff filed this Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment (the "Motion") and supporting papers.*fn2
Plaintiff moves for summary judgment solely as to its first claim for breach of guaranty. Accordingly, the Court does not address Plaintiff's second and third claims for relief.*fn3 Defendants' Opposition and Plaintiff's Reply were timely filed. The Motion came before the Court for a hearing on November 16, 2009.
II. LEGAL STANDARD
A motion for summary judgment shall be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. Plaintiff. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party must show that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson, 477 U.S. at 250.
Generally, the burden is on the moving party to demonstrate that it is entitled to summary judgment. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998); Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033 (9th Cir. 1983). The moving party bears the initial burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Where the non-moving party has the burden at trial, however, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. Celotex, 477 U.S. at 325. Instead, the moving party's burden is met by pointing out that there is an absence of evidence supporting the non- moving party's case. Id. The burden then shifts to the non-moving party to show that there is a genuine issue of material fact that must be resolved at trial. Fed. R. Civ. Plaintiff. 56(e); Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 256. The non-moving party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 252. See also William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial § 14:144. A defendant has the burden of proof at trial with respect to any affirmative defense. Payan v. Aramark Mgmt. Servs. Ltd. P'ship, 495 F.3d 1119, 1122 (9th Cir. 2007).
A genuine issue of material fact will exist "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248. In ruling on a motion for summary judgment, the Court construes the evidence in the light most favorable to the non-moving party. Barlow v. Ground, 943 F.2d 1132, 1135 (9th Cir. 1991); T.W. Electrical Serv. Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987).
Plaintiff argues that summary judgment with respect to its claim for breach of guaranty is appropriate because Defendants do not have sufficient evidence to create a genuine issue of fact as to any of their affirmative defenses. Defendants argue that genuine issues of fact exist with respect to their affirmative defenses, specifically as to whether or not they are entitled to the protections of California's antideficiency laws, (see Opp'n at 6:18--17:24), and whether or not the Guaranty is supported by adequate consideration. (See Opp'n at 17:26--19:3.)*fn4 Defendants do not dispute that no genuine issue of fact exists as to the elements of Plaintiff's breach of contract claim. The Court addresses each argument in turn.
A. There Is No Genuine Issue of Fact as to Whether or Not Defendants Are Protected by California's Antideficiency Laws
The primary issue raised by the Motion is whether or not Defendants are protected from liability by California's antideficiency laws. "When interpreting state law, federal courts are bound by decisions of the state's highest court. In the absence of such a decision, a federal court must predict how the highest state court would decide the issue using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance." Arizona Elec. Power Co-op., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995) (citations omitted). With these guidelines in mind, a summary of relevant California law is appropriate.
California's antideficiency laws provide purchasers in certain types of real estate transactions with protection from deficiency judgments in the event they default on their loan. In relevant part, section 580b of the California Code of Civil Procedure provides that "[a] vendor is barred from obtaining a deficiency judgment against a purchaser in a purchase money secured land transaction." DeBerard Props., Ltd. v. Lim, 20 Cal. 4th 659, 663 (1999). A deficiency judgment is defined as "a personal judgment against a debtor for a recovery of the secured debt measured by the difference between the debt and the net proceeds received from the foreclosure sale." Dreyfuss v. Union Bank of Cal., 24 Cal. 4th 400, 407 (2000). A purchase money loan is "a seller-financed loan for real property." Ghirardo v. Antonioli, 14 Cal. 4th 39, 49 (1996); see also Cal. Civ. Proc. Code § 580b. Section 580b thus limits sellers' remedies against buyers in purchase money loan transactions to foreclosure on the underlying property. A purchaser in such a transaction cannot be held personally liable for the difference between the value of the foreclosed property and the amount outstanding on the loan. Furthermore, a purchaser may not waive the protections of section 580b. DeBerard, 20 Cal. 4th at 670--71.
The protections of section 580b, however, do not directly apply to guarantors. Cadle Co. II v. Harvey, 83 Cal. App. 4th 927, 932 (2000); Consolidated Capital Income Trust v. Khaloghli, 183 Cal. App. 3d 107, 112--13 (1986); Roberts v. Graves, 269 Cal. App. 2d 410, 415 (1969). California courts have identified one instance in which guarantors may indirectly enjoy protection under the antideficiency laws, however. Where a lender elects to pursue a non-judicial foreclosure against a secured property, the lender may be estopped from seeking a deficiency judgment against the guarantor. See Khaloghli, 183 Cal. App. at 113; Union Bank v. Gradsky, 265 Cal. App. 2d 40, 46--47 (1968). This indirect protection, however, is waivable. Cal. Civ. Code § 2856(a)(3).
In order to collect a deficiency judgment against a guarantor, the guarantor "must be a true guarantor and not merely the principal debtor under a different name" - i.e., the guaranty cannot be a "sham." Cadle Co., 83 Cal. App. 4th at 932. As the Ninth Circuit has recognized, "California law does not define 'sham' guaranties." Paradise Land & Cattle Co. v. McWilliams Enters., Inc., 959 F.2d 1463, 1467 (9th Cir. 1992). To determine whether guarantors are actually principal debtors under different names, California courts "look to the purpose and effect of the agreements to determine whether they are attempts to recover deficiencies in violation of [the antideficiency laws]." Torrey Pines Bank v. Hoffman, 231 Cal. App. 3d 308, 320 (1991); see also Commonwealth Mortgage Assurance Co. v. Super. Ct., 211 Cal. App. 3d 508, 515 (1989). Although California courts have not enunciated a clear test of whether an agreement constitutes an attempt to recover in violation of the antideficiency statutes, they have considered a variety of factors in making such a determination, including whether or not the guarantor was also personally obligated under the underlying loan agreement, see, e.g., River Bank America v. Diller, 38 Cal. App. 4th 1400, 1422 (1995); Torrey Pines, 231 Cal. App. 3d at 321; whether or not the primary debtor, if a corporate entity, was created for the sole purpose of entering into the underlying loan, see, e.g., Union Bank v. Brummell, 269 Cal. App. 2d 836, 838 (1969); whether or not the vendor insisted on structuring the transaction so as to substitute a corporate entity as a borrower in place of individuals, see, e.g., River Bank, 38 Cal. App. 4th at 1423; the ownership interests of the primary debtor, if a corporate entity, see, e.g., Roberts, 269 Cal. App. 2d at 416; and whose financial information was reviewed by the vendor before entering into the loan. See, e.g., River Bank, 38 Cal. App. 4th at 1423; Torrey Pines, 231 Cal. App. 3d at 320. The parties cite no authority - and the Court has located none - characterizing any of these factors as essential to the analysis or as sufficient or insufficient, standing alone, to create a genuine issue of fact.
Here, Plaintiff seeks to hold Defendants liable as guarantors for the outstanding balance of the Note. Defendants, having raised unenforceability of the Guaranty as a defense to Plaintiff's claim, have the burden of establishing either that the Guaranty is a sham or alternatively that, as guarantors of the Note, they are entitled to and did not waive the protections of section 580b. The question before the Court, therefore, is whether Defendants have adequately raised a genuine issue of fact as to (1) whether or not the Guaranty is a sham, and, if not, (2) whether or not Defendants have waived the protections of section 580b. For the reasons set forth below, the Court finds that Defendants have failed to carry their burden, and that Plaintiff is entitled to summary judgment on its claim for breach of guaranty.*fn5
1. The Court May Resolve Factual Issues on a Motion for Summary Judgment
Relying on Meade v. Cedarapids, Inc., 164 F.3d 1218 (9th Cir. 1999), Defendants first argue that because the question of whether they are true guarantors is factual, the issue cannot be decided on a motion for summary judgment. (Opp'n at 5:25--7:4.) This misstates both the holding of Meade and the standard for summary judgment.
Meade did not announce a per se rule that factual issues cannot be resolved at the summary judgment stage. Rather, the Ninth Circuit in Meade simply restated the standard applicable to a motion for summary judgment, namely that a court reviewing a motion for summary judgment "must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact." Meade, 164 F.3d at 1221. A party cannot escape summary judgment merely by characterizing a dispute as "factual;" rather, a party seeking to avoid summary judgment has the burden of coming forward with evidence demonstrating that a genuine issue of material fact exists. See Celotex, 477 U.S. at 324.
Here, Plaintiff has argued that Defendants lack sufficient evidence to create a genuine issue of fact with respect to their affirmative defenses. As Defendants bear the burden at trial of establishing their affirmative defenses, the burden has now shifted to them to come forward with evidence sufficient to create a genuine issue of fact as to those defenses. See Celotex, 477 U.S. at 325. If they cannot, summary judgment in Plaintiff's favor is appropriate.
2. There Is No Genuine Issue of Fact as to Whether or Not Defendants Are True Guarantors
Defendants argue that the following alleged facts create a genuine issue of fact as to whether or not they are true guarantors: (1) Palm Desert is merely an instrumentality of Defendants, (see Opp'n at 9:24--10:25); and (2) Plaintiff only investigated the financial status of Defendants, and not Palm Desert. (See Opp'n at 10:27--12:5.) For the reasons discussed below, Defendants have failed to raise a genuine issue of fact as to whether or not Defendants are true guarantors.
Defendants' argument that Palm Desert was merely their instrumentality fails for two reasons. First, Defendants rely entirely on assertions that Mr. Marix owned and controlled Palm Desert in support of this claim yet fail to provide admissible evidence in support of these naked assertions. "[A] party cannot manufacture a genuine issue of material fact merely by making assertions in its legal memoranda." S.A. Empresa De Viacao Aerea Rio Grandense v. Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th Cir. 1982). Defendants allege the ownership interests of the various entities involved in the Loan and Original Loan, but cite no evidence whatsoever in support of those allegations. (See Opp'n at 4:3--7, n. 1, 2).
Defendants further rely on the Marix Declaration for the propositions that (1) Palm Desert was a "shell holding entity established as a 'place marker' and an instrumentality controlled and directed by Michael Marix," (Opp'n at 10:3--5); (2) Mr. Marix was the "primary owner" of Palm Desert and Desert Wells, (Opp'n at 10:7--9); and (3) Mr. Marix "controlled and managed" Palm Desert. Mr. Marix's declaration with respect to these matters, however, consists solely of conclusory statements concerning his ownership and control of Palm Desert and various other limited liability companies along with general citations to more than one hundred pages of operating agreements of those limited liability companies. (See Marix Decl. ¶¶ 3--6.) Mr. Marix's conclusory assertions regarding ownership and control lack specific facts demonstrating such ownership and control and thus are insufficient to create a genuine issue of fact. See F.T.C. v. Publ'g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1997) ("A conclusory, self-serving affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine issue of material fact.").*fn6 Mr. Marix's general citation to more than one hundred pages of operating agreements, without specifying the portions of those documents on which he relies, is also insufficient. "'Judges are not like pigs, hunting for truffles buried in briefs.'" Greenwood v. F.A.A., 28 F.3d 971, 977 (9th Cir. 1994), quoting United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991).*fn7
Second, even assuming that Defendants' assertions were supported by admissible evidence, California law requires a demonstration of more than mere ownership and control of a primary debtor to show that a guaranty is a sham. In determining whether a primary debtor is a mere instrumentality used as an attempt to evade the antideficiency laws, California courts have held that the "correct inquiry . . . is whether the purported debtor is anything other than an instrumentality used by the individuals who guaranteed the debtor's obligation, and whether such instrumentality actually removed the individuals from their status and obligations as debtors." Torrey Pines, 231 Cal. App. 3d at 320 (emphasis added). The question, then, is not merely whether a purported debtor is an instrumentality of an individual guarantor, but also whether the use of that instrumentality actually removed any primary liability of the individual debtor.
Here, Palm Desert, the primary debtor, is admittedly a limited liability company; its members therefore are not personally liable for its debts. Cal. Corp. Code § 17101(a). Accordingly, assuming that Palm Desert is an instrumentality of Defendants, it is one that actually removes Defendants from their status as debtors. See Talbott v. Hustwit, 164 Cal. App. 4th 148, 153 (2008). Defendants provide no evidence to the contrary - for example, they offer no evidence Palm Desert was inadequately capitalized, was created for the sole purpose of entering into the Note,*fn8 or that Plaintiff insisted that Palm Desert take title to the property in lieu of Defendants.
Defendants' second assertion in support of its argument that a genuine issue of fact exists with respect to whether or not they are true guarantors presents a closer question. Defendants argue that Plaintiff was only concerned with the financial status of Defendants, and did not inquire into the financial status of Palm Desert when considering the Loan and the Guaranty. (Opp'n at 10:27--11:14; Marix Decl. ¶ 8.) This assertion is adequately supported by the Marix Declaration and is uncontroverted, as Plaintiff does not dispute it in its Reply. Plaintiff's failure to inquire into the financial status of Palm Desert is thus the only fact properly relied upon by Defendants in support of their argument that a genuine issue of fact exists as to whether or not the Guaranty is a sham.
Neither party has identified any authority, California or otherwise, that addresses the question of whether or not, where a defendant is a purported guarantor who is protected from personal liability by the corporate form of the primary debtor, that defendant may create a genuine issue of fact as to whether or not it is a true guarantor solely by establishing that the lender examined only the financial information of the purported guarantors, and not the primary debtor. This Court finds that if it were presented with the question, the California Supreme Court would likely find that this is insufficient to create a genuine issue of material fact, and that no reasonable fact-finder could find in favor of the defendants under such circumstances.
Although a lender's inquiry only into the financial status of a guarantor has been one factor among many considered by California courts in evaluating sham guaranty defenses, see, e.g., River Bank, 38 Cal. App. 4th at 1423; Torrey Pines, 231 Cal. App. 3d at 320, cases in which it is considered generally either do not involve a limited liability corporation or similar corporate entity, or involve significant additional indicia of intent to circumvent the antideficiency laws beyond a failure to examine financial records of the borrower. A guarantor's protection from personal liability is a weighty factor in considering whether or not they are, in fact, the primary debtor. See Talbott, 164 Cal. App. 4th at 153. The Ninth Circuit came to a similar conclusion in upholding a grant of summary judgment in favor of a lender against a defendant-guarantor, recognizing that one of the two primary concerns behind the enactment of section 580b "is not as strong where the guarantor is a corporation whose owners are protected by the central feature of corporations: limited liability." Paradise Land & Cattle Co. v. McWilliams Enterprises, Inc., 959 F.2d 1463, 1467 (9th Cir. 1992). Where a guarantor is effectively protected from personal liability for the underlying debt, that guarantor has a greater burden of demonstrating that the guaranty is a sham.
Accordingly, the Court concludes that where, as here, the corporate form of the borrower effectively removes the guarantor from the role of primary debtor and the guarantor does not offer any other evidence that the guaranty is a sham, the fact that the lender did not review the financial status of the borrow is insufficient to create a genuine issue of fact as to whether the guaranty is a sham. Under such circumstances, failure to review the financial information of the borrower, standing alone, is insufficient to allow a fact-finder to conclude that the parties' intent was to circumvent the protections of the antideficiency laws because the guarantors were not personally liable for the underlying debt absent the guaranty, and thus were never protected by the antideficiency laws. The parties could not have intended to circumvent protections that did not exist.
3. Defendants' Argument That They Have Not Waived Their Rights Is Moot
The parties dispute whether or not the Defendants have waived their rights under the antideficiency laws pursuant to section 2856(c) of the California Civil Code. (See Mot. at 12:1--14:17; Opp'n at 16:15--17:24.) These arguments are moot, however, as Defendants here have no such rights to waive. As discussed above, guarantors have no direct rights under the antideficiency laws. The only indirect protection that a guarantor may have by operation of the antideficiency laws is the Gradsky defense - i.e., the guarantor may assert estoppel against a lender who executes a non-judicial foreclosure on the underlying property. See Khaloghli, 183 Cal. App. 3d at 113. The purpose of section 2856(c) was to clarify the ability of a guarantor to waive the Gradsky defense. See WRI Opportunity Loans II LLC v. Cooper, 154 Cal. App. 4th 525, 544 (2007). Here, neither party has indicated that Plaintiff has conducted a non-judicial foreclosure of the Property; therefore the Gradsky defense is unavailable to Defendants. As there is no genuine issue of fact that Defendants are true guarantors and no allegation that Plaintiff has conducted a non-judicial foreclosure of the Property, Defendants have no rights to waive.
B. The Guaranty Is Supported By Adequate Consideration
Having concluded that Defendants have failed to raise a genuine issue of fact as to whether or not they are entitled to the protections of California's antideficiency laws, the Court now turns to Defendants' alternative argument that the Guaranty is unenforceable because it is not supported by adequate legal consideration. For the reasons discussed below, the Court concludes that there is no genuine issue of fact as to whether or not adequate consideration for the Guaranty exists.
Defendants argue that no consideration exists for the Guaranty because Mr. Marix did not personally receive any benefit as a result of its execution. As Plaintiff points out, however, California law does not support this position, as it holds that "consideration for a contract is equally valuable whether it move[s] to the other party or a third party. Consideration does not have to move to the promisor." City of Los Angeles v. Anchor Cas. Co., 204 Cal. App. 2d 175, 181--82 (1962) (citations omitted). It therefore is immaterial whether Mr. Marix personally received any benefit as a result of the Guaranty, so long as some party, whether a party to the contract or a third party, received an intended benefit. Defendants do not argue that Palm Desert received no benefit as a result of the Guaranty, and thus fail to meet their burden of establishing a lack of consideration for the Guaranty.
Moreover, when a "guaranty is made coincidentally with the promissory note, the guaranty is supported by the same consideration as the note and is enforceable." Rancho Santa Fe Pharmacy Inc. v. Seyfert, 219 Cal. App. 3d 875, 878 (1990); see also Mortgage Guarantee Co. v. Chotiner, 8 Cal. 2d 110, 112 (1936). Here, the Guaranty and Amendment Two were executed on the same day. (See Noble Decl. Exs. G, H.) Accordingly, the Guaranty is supported by adequate consideration so long as the Note is also supported by consideration. Defendants do not argue that the Note itself is unsupported by consideration, and thus fail to meet their burden of establishing that the Guaranty is unsupported by consideration.
For the foregoing reasons, the Court GRANTS Plaintiff's Motion and finds that Plaintiff is entitled to judgment as a matter of law on its claim for breach of guaranty. Plaintiff's second and third claims for relief are DISMISSED. Plaintiff may submit a Proposed Judgment setting forth damages in the amount of $2,336,837.93 plus any interest, late fees, or penalties accrued as of the date the Proposed Judgment is submitted.