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General Electric Capital Orporation; Cef Funding Ii L.L.C. and Cef Funding V, LLC v. Ten Forward Dining

October 3, 2011

GENERAL ELECTRIC CAPITAL ORPORATION; CEF FUNDING II L.L.C. AND CEF FUNDING V, LLC,
PLAINTIFFS,
v.
TEN FORWARD DINING, INC.; DELIGHTFUL DINING, INC.; KOBRA RESTAURANT PROPERTIES, L.L.C., ET AL DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on plaintiffs, General Electric Capital, CEF Funding II, L.L.C., and CEF Funding V, L.L.C.'s (collectively "plaintiffs") motion for summary judgment or, in the alternative, partial summary judgment against defendants Ten Forward Dining, Inc. ("Ten Forward"), Delightful Dining, Inc. ("Delightful Dining"), TGIA Restaurants ("TGIA"), Kobra Restaurant Properties, LLC ("Kobra"), and Abolghassem Alizadeh ("Alizadeh") (collectively, "defendants"). Defendants Alizadeh and Kobra oppose the motion. For the reasons set forth below,*fn1 plaintiff's motion is GRANTED.

BACKGROUND

This action involves defendants attempt to seek redress for alleged breach of several loan documents consummated by plaintiff and the above named defendants. Defendants Ten Forward, Delightful Dining, TGIA and Kobra each entered into at least one "Equipment Loan and Security Agreement" with plaintiffs. (Pls.' Stmt. of Uncontroverted Facts [UF], filed Aug. 09, 2011, [Docket # 85-2], ¶¶ 1, 12, 21, 32, 45, 56.) To secure the loan, defendants granted plaintiffs a security interest in a wide variety of defendants' property, including, but not limited to: inventory, equipment, goodwill, furniture, machinery and appliances, among others.*fn2 (UF ¶¶ 3, 14, 23, 34, 47, 58.) Plaintiffs perfected their security interests in the various collateral by either (1) filing a UCC Financing Statement with the California Secretary of State or (2) filing the deed of trust with the relevant county.*fn3 (UF ¶¶ 4, 15, 24, 35, 49, 60.)

As an inducement to plaintiffs to make the aforementioned loans, Alizadeh executed and delivered to plaintiffs an unconditional guaranty of payment and performance, personally guaranteeing the obligations owed under the loans described above.*fn4 (UF ¶¶ 5, 16, 25, 36, 50, 61.) To secure the Ten Forward and Ten Forward/Delightful Dining Loans, Alizadeh executed a security agreement, granting plaintiffs a security interest in a wide variety of Alizadeh's property, including, but not limited to: equipment, furniture, property, and raw materials. (UF ¶¶ 6, 26.) Plaintiffs perfected their interest in the Alizedah collateral by filing a UCC Financing Statement with California Secretary of State. (UF ¶¶ 7, 27.)

Defendants, and each of them, failed to make scheduled payments of principal and interest due pursuant to the loan terms.*fn5 (UF ¶¶ 9, 18, 29, 42, 52, 63.) As of the date of plaintiffs' motion for summary judgment, each defendant remained in default on the loan obligations. (Id.) Plaintiffs have accelerated the obligations owing under the loan documents, thus, the amounts owing under the various loans are currently due in full, pursuant to the terms of the loan documents. (Id,)

In November 2009, plaintiffs filed this action alleging breach of the various loan documents. (Compl., filed Nov. 25, 2009, [Docket # 1].). The corporate defendants, along with defendants Kobra and Alizadeh, filed an answer in January 2010 through counsel, Patricia Lee. (Answer, filed Jan. 11, 2010, [Docket # 11].) In October 2010, Patricia Lee filed a Motion to Withdraw as Attorney. (Mot. to Withdraw, filed Oct. 15, 2010, [Docket # 60].) On October 29, 2010, the court granted the motion to withdraw and informed defendants that corporations cannot appear in the action without legal counsel. (Order, filed Oct. 29, 2010, [Docket # 64].) The court directed the corporate defendants to retain alternate counsel within 30 days of the court order. ( Id.)

In May 2011, the court permitted defendants Kobra and Alizadeh to substitute Paul Anthony Warner as their attorney of record. (Order, filed May 13, 2011,[Docket ## 70--71].) However, the corporate defendants Ten Forward, Delightful Dining, and TGIA failed to retain alternate counsel, despite the court's order directing them to do so. (Pl.'s Mot. to Strike [Docket # 72], filed May 24, 2011, at 4). Accordingly, the court granted plaintiffs' motion to sanction those corporate defendants by striking their answer. (Order, filed May 24, 2011, [Docket # 72].)*fn6

STANDARD

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

Under summary judgment practice, the moving party always bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the 'pleadings, depositions, answers to interrogatories, and admissions on file.'" Id. at 324. Indeed, summary judgment should be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Id. at 322. In such a circumstance, summary judgment should be granted, "so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied." Id. at 323.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-289 (1968). In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Fed. R. Civ. P. 56(e). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, ...


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