United States District Court, E.D. California
CAROLYN K. DELANEY, UNITED STATES MAGISTRATE JUDGE
motion for summary judgment came on regularly for hearing on
August 20, 2016. David Rose appeared for plaintiff. Armando
Mendez appeared for defendants. Upon review of the documents
in support and opposition, upon hearing the arguments of
counsel, and good cause appearing therefor, THE COURT FINDS
case predicated on diversity jurisdiction, plaintiff alleges
that defendants breached their obligation to repay a
promissory note in the amount of $150, 000. See ECF
No. 18 at p. 10, Plaintiff’s Exh 2. The money was
originally loaned to defendants in May, 2005 with a maturity
date five years later, with the agreement that the note could
be extended for five years. In lieu of paying simple interest
at 4% per annum ($500 per month), defendants had the option
of waiving training fees for two of plaintiff’s horses.
Plaintiff alleges that defendants failed to timely repay the
moves for summary judgment. Summary judgment is appropriate
when it is demonstrated that there “is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a). A
party asserting that a fact cannot be disputed must support
the assertion by “citing to particular parts of
materials in the record, including depositions, documents,
electronically stored information, affidavits or
declarations, stipulations (including those made for purposes
of the motion only), admissions, interrogatory answers, or
other materials. . .” Fed.R.Civ.P. 56(c)(1)(A).
judgment should be entered, after adequate time for discovery
and upon motion, 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. See Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). “[A] complete
failure of proof concerning an essential element of the
nonmoving party’s case necessarily renders all other
facts immaterial.” Id.
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. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586 (1986). In attempting to establish the
existence of this factual dispute, the opposing party may not
rely upon the allegations or denials of their 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 or show
that the materials cited by the movant do not establish the
absence of a genuine dispute. See Fed.R.Civ.P.
56(c); Matsushita, 475 U.S. at 586 n.11. 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, see Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec.
Serv., Inc. v. Pacific Elec. Contractors Ass’n,
809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is
genuine, i.e., the evidence is such that a reasonable jury
could return a verdict for the nonmoving party, see Wool
v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir.
endeavor to establish the existence of a factual dispute, the
opposing party need not establish a material issue of fact
conclusively in its favor. It is sufficient that “the
claimed factual dispute be shown to require a jury or judge
to resolve the parties’ differing versions of the truth
at trial.” T.W. Elec. Serv., 809 F.2d at 631.
Thus, the “purpose of summary judgment is to
‘pierce the pleadings and to assess the proof in order
to see whether there is a genuine need for
trial.’” Matsushita, 475 U.S. at 587
(quoting Fed.R.Civ.P. 56(e) advisory committee’s note
on 1963 amendments).
resolving the summary judgment motion, the evidence of the
opposing party is to be believed. See Anderson, 477
U.S. at 255. All reasonable inferences that may be drawn from
the facts placed before the court must be drawn in favor of
the opposing party. See Matsushita, 475 U.S. at 587.
Nevertheless, inferences are not drawn out of the air, and it
is the opposing party’s obligation to produce a factual
predicate from which the inference may be drawn. See
Richards v. Nielsen Freight Lines, 602 F.Supp. 1224,
1244-45 (E.D. Cal. 1985), aff’d, 810 F.2d 898,
902 (9th Cir. 1987). Finally, to demonstrate a genuine issue,
the opposing party “must do more than simply show that
there is some metaphysical doubt as to the material facts . .
. . Where the record taken as a whole could not lead a
rational trier of fact to find for the nonmoving party, there
is no ‘genuine issue for trial.’”
Matsushita, 475 U.S. at 587 (citation omitted).
contends that under the unambiguous terms of the note,
defendants are in default because they failed to pay $150,
000 to plaintiff when the note matured on May 1, 2015.
Plaintiff contends that this interpretation of the note is
confirmed by subsequent conduct of the parties because
defendant’s accounting manager, David Chang, in an
email to plaintiff in 2009, tried to modify the terms of the
note by proposing that the monthly credits for training fees
be used to amortize the note. David Chang also conceded in an
email in June, 2009 that the amount due on the note was still
$150, 000 despite the fact that defendants had been waiving
training fees since inception of the note and those fees
exceeded the simple interest of 4%.
argue that the terms of the note are subject to an
interpretation that if defendants waived monthly training
fees for two horses, the value of the training fees which
exceeded $500 would reduce the principal amount. This
argument is unavailing. The plain language of the promissory
note nowhere suggests that training fees can be used to
reduce the principal. The note specifically requires payment of
a lump sum principal of $150, 000 upon maturity of the note.
The language of the note also states that “in lieu of
simple interest payment” defendants have the
“option to waive the monthly training fees for two (2)
of [plaintiff’s] horses.” In interpreting the
language of the note, both of these terms must be given
meaning. Defendants submit their own declarations regarding
their intent in entering into the promissory note. The
extrinsic evidence submitted by defendants, however, must
“support a meaning to which the language of the
instrument is reasonably susceptible.” See Pacific
Gas & Electric Co. v. Zuckerman, 189 Cal.App.3d
1113, 1141 (1987). Given the plain language of the note, it
is not reasonably susceptible to the meaning advanced by
also argue that because the value of the training far
exceeded the $500 simple interest,  the note was unlawful
because defendants were paying an effective 18 % interest
rate and that such a rate is usurious and unlawful under the
California Constitution, article XV, section 1. There is no
dispute that defendants had the option of paying a simple
interest rate of 4%, which is far below the usurious rate.
Where the excessive interest is caused by a contingency under
the debtor’s control, the transaction will not be
deemed usurious. See Sharp v. Mortgage Security
Corp., 215 Cal. 287, 291 (1932); Southwest Concrete
Products v. Gosh Construction Corp., 51 Cal.3d 701, 714
(1990); see also Lakeview Meadows Ranch v. Bintliff,
36 Cal.App.3d 418, 423 (1973) (“if a contract is
subject to two constructions, one of which will render it
usurious and one which will render it lawful, the courts will
give the contract such construction as will render it lawful,
in the absence of evidence requiring the contract to be
construed as usurious.”). The promissory note is
accordingly not usurious.
IT IS HEREBY ORDERED that:
Plaintiffs motion for summary judgment (ECF No. 14) is
Judgment is entered for plaintiff in the amount of $150, ...