El Corte Ingles, S.A. v. City Lights, LLC

          ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT OR PARTIAL SUMMARY ADJUDICATION (DOC. NO. 20)

         INTRODUCTION

         Plaintiff El Corte Ingles, S.A. (“ECI”) filed this action on February 12, 2019 alleging breach of contract against City Lights, LLC (“City Lights”) and MarkChris Investments, LLC (“MarkChris” and with City Lights, “Defendants”) in connection with a real estate transaction in Bakersfield, California. MarkChris alleged affirmative defenses in its Answer to the Complaint (the “MarkChris Answer”). City Lights did not do so.

         ECI now moves for summary judgment on its claim for breach of contract and on the affirmative defenses set forth in the MarkChris Answer. For the reasons set forth below, the Court will grant the motion in part and deny the motion in part, in addition to striking two of MarkChris's affirmative defenses.

         FACTUAL BACKGROUND

         ECI has set forth sworn statements and documentary evidence in support of this Motion that show the following:

         On or about December 23, 2016, ECI sold real property located in a mall in Bakersfield, California to City Lights and MarkChris. Doc. No. 22 ¶ 2. The acquisition price for the property included a promissory note (the “Note”) issued by Defendants to ECI in the principal amount of $208, 823.50. Id. ¶ 2; Doc. No. 22-1. The Note provides for interest at 5% per annum and contains the following provisions regarding late payments:

The undersigned and Lender agree that it is extremely difficult and impracticable to fix actual damages for failure to make payments when due; therefore, the undersigned agrees to pay as liquidated damages a late charge of four percent (4%) of any installment which does not reach Lender within five (5) business days after the due date. The late charges that accrue shall be payable on the next installment due date. Anything herein to the contrary notwithstanding, if a late charge is assessed hereunder, such amount shall not exceed the maximum amount permitted by law. Additionally, the amount of any interest payment that is not paid on or before the date which is five (5) business days after the date on which it becomes due, as set forth above, shall bear interest from said date until paid at the rate charged from time to time on the principal owing hereunder.^[1]

Doc. No. 22-1.

         The “Maturity Date” for the Note is defined as the date on which “[t]he full amount of all interest and principal then remaining unpaid, and any other amounts then owing [under the Note], shall be due and payable.” Doc No. 22-1. The original Maturity Date for the Note was December 23, 2017, but the Note contained a provision stating that Defendants could extend the Maturity Date to June 23, 2018 by making a principal paydown of at least $25, 000 on or before December 23, 2017. Doc. No. 22 ¶ 3; Doc. No. 22-1.

         Defendants made a $25, 000 principal payment on December 20, 2017, thereby extending the Maturity Date to June 23, 2018. Doc. No. 22 ¶ 4; Doc. No. 22-2. This $25, 000 payment- which is the only payment of principal that has been made on the Note-reduced the principal balance of the Note to $183, 823.50. Doc. No. 23 ¶4. At the request of Defendants, ECI later agreed to extend the Maturity Date for the Note from June 23, 2018 to December 23, 2018, as confirmed in a letter from MarkChris to ECI's attorney, Thomas McPeters. Doc. No. 22 ¶5; Doc. No. 22-3.

         Defendants made monthly interest payments, as required by the Note, on the principal balance through October 28, 2018, but have not made payments on the Note of any kind since October 2018. Doc. No 22 ¶ 6; Doc. No. 22-4.

         ECI calculates that the amount owed on the Note following the December 23, 2018 Maturity Date was $193, 444.46, including the principal balance of $183, 823.50, unpaid interest through December 23, 2018 in the amount of $2, 119.38, and liquidated damages for late payments (i.e., late fees) in the amount of $7, 440.17. Doc. No. 22 ¶ 8; Doc. No. 22-5. Further, ECI contends that interest on that $193, 444.46 balance accrues at a rate of 5% per annum-which, according to ECI, comes to $26.50 per day-until paid. Doc. No. 22 ¶ 8. As such, ECI contends that as of October 1, 2019, the amount payable on the Note was $200, 890.75. Doc. No. 22 ¶ 8; Doc. 22-5.

         ECI brings a claim for breach of contract and damages based on the foregoing allegations. Doc. No. 2 ¶¶ 8-16.

         City Lights admits in its Answer (the “City Lights Answer”) that Defendants issued the Note, as described by ECI, and made a single $25, 000 principal payment on the Note, extending the Maturity Date to June 23, 2018 and reducing the principal balance from $208, 823.50 to $183, 823.50. Doc. No. 6 ¶¶ 9-10 & 15; see also Doc. No. 26 at 2:20-22 (stating that “Defendant, City Lights, admits the core facts of the complaint”). City Lights did not allege any affirmative defenses in its Answer, see Doc. No. 6, and did not file an opposition to this Motion.

         MarkChris, for its part, admits that a principal payment of $25, 000 was made, which extended the Maturity Date to June 23, 2018.^[2] Doc. No. 19 ¶ 8. MarkChris also admits that ECI later agreed to extend the Maturity Date from June 23, 2018 to December 23, 2018 and that MarkChris sent a letter to ECI confirming that agreement. Id. ¶ 11. Further, MarkChris admits that “Defendants made monthly interest payments based on the outstanding principal balance [of the Note] until 2018, when the interest payments stopped.” Id. ¶ 12. MarkChris purports to allege eleven affirmative defenses in its Answer, including uncertainty, failure to state a claim, excuse, waiver, estoppel, release, accord and satisfaction, modification of contract, acts or omissions of third parties, failure to mitigate damages, and setoff. Doc. No. 19 at 3:5-5:5. Unlike City Lights, MarkChris filed an Opposition to ECI's Motion for Summary Judgment, but the Opposition is not supported by sworn statements or documentary evidence. See Doc. No. 25.

         PLAINTIFF'S MOTION

         ECI contends that the undisputed facts in this case show, as a matter of law, that the Defendants breached the terms of the Note and that ECI is entitled to recover damages equaling the total amount payable on the Note (in principal, interest and liquidated damages for late payments) as of December 23, 2018 (the final Maturity Date), plus all interest accruing on that amount through the date of payment. Doc. No. 21, Part III.B. Further, ECI asserts that the eleven affirmative defenses set forth in the MarkChris Answer are unsupported by evidence and should therefore be “summarily adjudicated and dismissed.” Id., Part III.C.

         Opposition to Plaintiff's Motion

         MarkChris filed an Opposition to ECI's Motion. City Lights did not. MarkChris asserts in its Opposition that the declaration submitted by ECI's attorney (the “McPeters Declaration”) is the “sole evidentiary support” for the Motion and that “[n]o further, material evidence is given in support of the [Motion], either by [ECI's attorney] or by anyone else.” Doc. No. 25 at 2:25-3:2. Further, MarkChris argues that the Motion must be denied as to the affirmative defenses set forth in the MarkChris Answer because ECI failed “to satisfy its threshold burden of presenting evidence which negates the[] affirmative defenses, or which shows that MarkChris lacks evidentiary support for [its] affirmative defenses.” Doc. No. 25 at 3:6-9 & Part II. MarkChris did not file a declaration or any other form of evidence in connection with its Opposition.

         SUMMARY JUDGMENT FRAMEWORK

         Summary judgment is proper when it is demonstrated “that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Fortyune v. American Multi-Cinema, Inc., 364 F.3d 1075, 1080 (9th Cir.2004). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying the portions of the declarations (if any), pleadings, and discovery that demonstrate an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir.2007). A fact is “material” if it might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); United States v. Kapp, 564 F.3d 1103, 1114 (9th Cir.2009). A dispute is “genuine” as to a material fact if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Anderson, 477 U.S. at 248; Freecycle Sunnyvale v. Freecycle Network, 626 F.3d 509, 514 (9th Cir.2010).

         Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the movant. Soremekun, 509 F.3d at 984. Where the non-moving party will have the burden of proof on an issue at trial, the movant may prevail by presenting evidence that negates an essential element of the non-moving party's claim or by showing that there is an absence of evidence to support an essential element of the non-moving party's claim. See James River Ins. Co. v. Herbert Schenk, P.C., 523 F.3d 915, 923 (9th Cir.2008); Soremekun, 509 F.3d at 984. If the moving party meets that burden, the burden then shifts to the non-moving party to designate specific facts demonstrating the existence of genuine issues for trial. Coomes v. Edmonds Sch. Dist. No. 15, 816 F.3d 1255, 1259 n.2 (9th Cir.2016) (quoting In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir.2010)); see also, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party cannot “‘rest upon the mere allegations or denials of [its] pleading' but must instead produce evidence that ‘sets forth specific facts showing that there is a genuine issue for trial.'” Estate of Tucker v. Interscope Records, 515 F.3d 1019, 1030 (9th Cir.2008) (citation and internal alterations omitted). Where, however, a moving party fails to carry its initial burden, then “the nonmoving party has no obligation to produce anything, even if the non-moving party would have the ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir.2000).

         In all events, the opposing party's evidence is to be believed, and all justifiable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. See Anderson, 477 U.S. at 255; Matsushita, 475 U.S. at 587; Narayan v. EGL, Inc., 616 F.3d 895, 899 (9th Cir.2010). While a “justifiable inference” need not be the most likely or the most persuasive inference, a “justifiable inference” must still be rational or reasonable. See Narayan, 616 F.3d at 899. Summary judgment may not be granted “where divergent ultimate inferences may reasonably be drawn from the undisputed ...