Opinion
Case No.: SACV 21-00831-CJC (JDEx)
2022-08-25
BALBOA CAPITAL CORPORATION, Plaintiff, v. SHAYA MEDICAL P.C. INC., and Wissam Shaya, Defendants. Shaya Medical P.C. Inc., and Wissam Shaya, Counter-Claimants, v. Balboa Capital Corporation, Counter-Defendant.
Glenn Roger Coffman, Isabelle R. Vidro, Neal S. Salisian, Salisian Lee LLP, Los Angeles, CA, Katherine S. Agbayani, Balboa Capital Corporation, Costa Mesa, CA, for Plaintiff/Counter-Defendant. Joshua D. Franklin, Paul John Leeds, Cheryl Dunn Soto, Franklin Soto Leeds LLP, San Diego, CA, for Defendants/Counter-Claimants Wissam Shaya, Shaya Medical P.C. Inc., Dr. Wissam Shaya.
Glenn Roger Coffman, Isabelle R. Vidro, Neal S. Salisian, Salisian Lee LLP, Los Angeles, CA, Katherine S. Agbayani, Balboa Capital Corporation, Costa Mesa, CA, for Plaintiff/Counter-Defendant. Joshua D. Franklin, Paul John Leeds, Cheryl Dunn Soto, Franklin Soto Leeds LLP, San Diego, CA, for Defendants/Counter-Claimants Wissam Shaya, Shaya Medical P.C. Inc., Dr. Wissam Shaya. ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF AND COUNTER-DEFENDANT'S RENEWED MOTION FOR SUMMARY JUDGMENT, OR, IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT [Dkt. 80] and GRANTING IN PART AND DENYING IN PART DEFENDANTS AND COUNTER-CLAIMANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT [Dkt. 83] CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
In this case, Plaintiff Balboa Capital Corporation ("Balboa") alleges that Defendants Shaya Medical P.C. Inc. ("Shaya Medical") and Wissam Shaya ("Dr. Shaya") (collectively, "Defendants") breached an Equipment Financing Agreement ("EFA") and Personal Guaranty (the "Guaranty"), respectively. (See Dkt. 1-1, Ex. A [Complaint, hereinafter "Compl."].) In turn, Defendants assert that the EFA is unenforceable because it is unconscionable and that Balboa violated California's Unfair Competition Law ("UCL") during the EFA's negotiation and execution. (See Dkt. 24 [Second Amended Counterclaim].) Balboa moves for summary judgment or, in the alternative, partial summary judgment on its claims for breach of the EFA, breach of the Guaranty, indebtedness, and recovery of the collateral pledged under the EFA. (See Dkt. 80 [Plaintiff's Motion for Summary Judgment, hereinafter "PMSJ"] at 1-2.) Balboa seeks recovery of $277,547.63 in debt and prejudgment interest. (See id. at 1.) Balboa also moves for summary judgement on Defendants' UCL claim as well as their declaratory relief claim concerning the EFA's unconscionability. (See id. at 2.) Defendants cross-move for partial summary judgment on their declaratory relief claim and defenses on unconscionability and, accordingly, Balboa's claims for breach of the EFA and of the Guaranty, as well as the element of their UCL claim that Balboa committed unlawful business practices by violating California Financial Code sections 22602 and 22603. (See Dkt. 83 [Defendants' Motion for Partial Summary Judgement, hereinafter "DMSJ"] at i.) For the following reasons, each motion is GRANTED IN PART and DENIED IN PART.
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for August 29, 2022, is hereby vacated and removed from the calendar.
II. BACKGROUND
Dr. Shaya is a physician who practices medicine in Florida through his company, Shaya Medical. (See Dkt. 85-1 [Defendants' Statement of Genuine Disputes of Material Facts in Support of Opposition to Plaintiff's Motion for Summary Judgment, hereinafter "DSGD"] ¶ 1.) In late July or early August 2019, employees from Cynosure, LLC ("Cynosure") contacted Dr. Shaya to sell him Cynosure's "SculpSure" product (the "Device"), a laser device for treating fat deposits. (Id. ¶¶ 1-2.) Kristopher Huston, a Cynosure employee, and other representatives of Cynosure paid Dr. Shaya numerous visits in an effort to execute the sale. (See id. ¶¶ 2-3.) When Dr. Shaya informed Huston that he could not afford the Device, Huston presented Dr. Shaya with Plaintiff's EFA as a means for paying for it. (See Dkt. 87-1 [Plaintiff's Response to Defendants' Statement of Additional Material Facts, hereinafter "PRAMF"] ¶¶ 25; Dkt. 84-4 [Plaintiff's Statement of Genuine Disputes of Material Fact in Opposition to Shaya Medical P.C. Inc.'s and Wissam Shaya's Motion for Partial Summary Judgment, hereinafter "PSGD"] ¶ 13.) Huston had received the EFA from MMP Capital, Inc. ("MMP"), an intermediary broker acting between Cynosure and Balboa that referred Shaya Medical to Balboa for financing. (See PSGD ¶¶ 5, 8.) Balboa approved financing for Shaya Medical's purchase on August 21, 2019, and the next day, MMP sent the EFA to Huston, who in turn presented the EFA to Dr. Shaya. (See id. ¶¶ 6, 8.)
Dr. Shaya executed the EFA on behalf of Shaya Medical on August 23, 2019. (See Dkt. 80-6, Ex. A [Copy of Equipment Financing Agreement, hereinafter "Copy of EFA"].) Dr. Shaya also signed the EFA on his own behalf as guarantor of the contract. (See id.) On August 22, 2019, Dr. Shaya, on behalf of Shaya Medical, signed a Payment Directive, which "authorize[d] and direct[ed] [Balboa] to pay on [Shaya Medical's] behalf" an amount of $214,802.50 to Cynosure. (Dkt. 80-6, Ex. B [hereinafter "Payment Directive"].) That amount represents the cost and tax associated with the Device. (See Copy of EFA, Ex. A1.) The EFA is repayable in six monthly installments of $99, followed by sixty monthly installments of $4,952.19. (See Copy of EFA.) Defendants made fifteen monthly payments until January 2021. (See DSGD ¶ 20.) Defendants do not dispute that they have ceased paying the amounts owed under the EFA.
By the Court's math, Defendants would have paid $297,725.40 over the loan's five and a half years.
III. LEGAL STANDARD
The Court may grant summary judgment on "each claim or defense—or the part of each claim or defense—on which summary judgment is sought." Fed. R. Civ. P. 56(a). Summary judgment is proper where the pleadings, the discovery and disclosure materials on file, and any affidavits show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Id.; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548. A factual issue is "genuine" when there is sufficient evidence such that a reasonable trier of fact could resolve the issue in the nonmovant's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" when its resolution might affect the outcome of the suit under the governing law, and is determined by looking to the substantive law. Id. "Factual disputes that are irrelevant or unnecessary will not be counted." Id. at 249, 106 S.Ct. 2505.
When the movant will bear 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 moving party." Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). In contrast, when the nonmovant will have the burden of proof on an issue at trial, the moving party may discharge its burden of production by either (1) negating an essential element of the opposing party's claim or defense, Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); or (2) showing that there is an absence of evidence to support the non-moving party's case, Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548. Once this burden is met, the party resisting the motion must set forth, by affidavit, or as otherwise provided under Rule 56, "specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. A party opposing summary judgment must support its assertion that a material fact is genuinely disputed by: (i) citing to materials in the record; (ii) showing the moving party's materials are inadequate to establish an absence of genuine dispute; or (iii) showing that the moving party lacks admissible evidence to support its factual position. Fed. R. Civ. P. 56(c)(1)(A)-(B). The opposing party may also object to the material cited by the movant on the basis that it "cannot be presented in a form that would be admissible in evidence." Fed. R. Civ. P. 56(c)(2). But the opposing party must show more than the "mere existence of a scintilla of evidence"; rather, "there must be evidence on which the jury could reasonably find for the [opposing party]." Anderson, 477 U.S. at 252, 106 S.Ct. 2505.
In considering a motion for summary judgment, the court must examine all the evidence in the light most favorable to the nonmoving party and draw all justifiable inferences in its favor. Id.; United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). The court does not make credibility determinations, nor does it weigh conflicting evidence. Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 456, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). But conclusory and speculative testimony in affidavits and moving papers is insufficient to raise triable issues of fact and defeat summary judgment. Thornhill Publ'g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). The evidence the parties present must be admissible. Fed. R. Civ. P. 56(c). "If the court does not grant all the relief requested by the motion, it may enter an order stating any material fact—including an item of damages or other relief—that is not genuinely in dispute and treating the fact as established in the case." Fed. R. Civ. P. 56(g).
IV. DISCUSSION
Balboa moves for summary judgment on its claims for breach of the EFA and of the Guaranty, for recovery of the Device, and for its common count of "indebtedness." It also moves for summary judgment on Defendants' UCL claim and their claim for declaratory relief concerning the purported unconscionability of the EFA. Defendants cross-move for partial summary judgment on their UCL and declaratory relief claims. They also move for partial summary judgment on their affirmative defenses concerning unconscionability and, accordingly, Balboa's claims for breach of the EFA and of the Guaranty.
A. Defendants' Unfair Competition Law Claim
Defendants move for partial summary judgment on the issue that Balboa engaged in statutory violations of the California Financial Code, amounting to a UCL violation. Balboa cross-moves for summary judgment based on the statutory violation and causation issues in Defendants' UCL claim.
1. Statutory Violations of the California Financial Code
The UCL prohibits, among other things, "unlawful" business practices. Cal. Bus. & Prof. Code § 17200. The unlawful prong of the UCL "borrows violations of other laws and makes those" separately actionable through the UCL. Klein v. Chevron U.S.A., Inc., 202 Cal.App.4th 1342, 137 Cal. Rptr. 3d 293, 326 (2012) (citation omitted). Generally, the violation of any law can serve as a predicate wrong under the UCL. See Kasky v. Nike, Inc., 27 Cal.4th 939, 119 Cal.Rptr.2d 296, 45 P.3d 243, 249 (2004).
Defendants allege that Balboa violated the UCL's unlawful prong by violating California Financial Code sections 22602 and 22603. Section 22602 sets conditions that must be met for a licensed finance lender to compensate an unlicensed person for referring a borrower to the licensee. See Cal. Fin. Code § 22602. Among other things, the licensee must "[p]erform[ ] underwriting and obtain[ ] documentation to ensure that the prospective borrower will have sufficient monthly gross revenue with which to repay the loan pursuant to the loan terms" and refrain from making the loan "if it determines through its underwriting that the prospective borrower's total monthly expenses, including debt service payments on the loan for which the prospective borrower is being considered, will exceed the prospective borrower's monthly gross revenue." Id. § 22602(a)(3)(B).
There is no genuine dispute of material fact to bar the Court from granting Defendants' motion for partial summary judgment with respect to the narrow issue of whether Plaintiff violated California Financial Code section 22602 and thereby committed unlawful acts under the UCL. The parties do not dispute that Balboa is a licensed lender and that Balboa compensated MMP for referring Shaya Medical. Balboa has not presented any evidence to rebut that MMP was not a licensed lender in California in August 2019 when MMP referred Shaya Medical to Balboa. And Balboa did not perform the type of due diligence envisioned by section 22602(a).
Balboa's attempt to dispute that MMP was unlicensed at the time of the financing at issue here fails. "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by" either "(A) citing to particular parts of materials in the record" or "(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1). But Balboa only says "that the evidence does not conclusively establish that MMP was unlicensed in August 2019," with no explanation of how the evidence fails to establish that proposition or citation to conflicting evidence in the record. (PSGD ¶ 10.) That is not enough to create a genuine dispute. In any event, the deposition transcript that Defendants cite to support the proposition does indicate that Balboa was unlicensed at the time of the financing. (See Dkt. 83-6, Ex. E [Deposition of John-Paul Smolenski for MMP Capital, Inc.] 20:15-23:4.) Balboa's apparent objection during the deposition on relevancy, moreover, is meritless—when MMP became licensed is obviously pertinent to the violation that Defendants allege. Further support comes from the California Department of Financial Protection and Innovation's website, which lists the date that MMP was originally licensed as a finance lender as October 19, 2019—months after the financing at issue—and which the Court judicially notices. (See id. at Ex. E, Exs. 28-29.) A court "may judicially notice a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). For instance, a court may take judicial notice of government-provided information on its official website. See, e.g., Stoyas v. Toshiba Corp., 896 F.3d 933, 946 n.17 (9th Cir. 2018). While Balboa claims that the accuracy of the webpage is disputable, it says no more than that, and in truth, the information on the webpage "is not subject to reasonable dispute." Fed. R. Evid. 201(b)(2).
Specifically, Balboa's Vice President of Portfolio Management, James Grant, attests that Balboa conducted a credit check on Defendants and decided to lend to them based on "their creditworthiness." (Dkt. 80-3 [Declaration of James Grant] ¶¶ 8-9.) Indeed, Mr. Grant testified at his deposition that Balboa's analysis centered on Defendants' credit but that Balboa does not review "stupid stuff" like "revenues and, you know, financial statements and personal financial statements," because "[t]hat's all irrelevant." (Dkt. 83-6, Ex. D [Grant Deposition] 69:17-70:1.) Defendants' expert Robert Wenger reviewed the documents that Balboa produced in response to Defendants' request for documents reflecting Shaya Medical's monthly revenue, and he opines that monthly revenue cannot be gleaned from the documents. (See Dkt. 83-3 [Declaration of Robert Wenger] ¶ 15.) Mr. Grant may think that the revenue information required by section 22602(a)(3)(B) is "stupid," but that requirement is the law, and Balboa failed to obtain this information.
The Court overrules Balboa's objections to Mr. Wenger's qualifications as an expert. (See Dkt. 84-7 [Balboa Capital Corporation's Evidentiary Objections to Declaration of Robert W. Wenger, Jr. in Support of Shaya Medical P.C. Inc.'s and Wissam Shaya's Motion for Partial Summary Judgment].) When evaluating proffered expert testimony, the Court must determine "whether the expert is proposing to testify to (1) scientific [or technical] knowledge that (2) will assist the trier of fact to understand or determine a fact in issue," which includes "a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically [or technically] valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592-93, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). Balboa seems to assume that Mr. Wenger cannot be qualified as an expert on the issues presented here because his experience with equipment financing occurred while either at banks or a government-sponsored entity. (See id. at 2.) The Court disagrees. Working in equipment financing is sufficient, and sufficiently relevant, experience, and in any event, Mr. Wenger's testimony is invoked in this Order solely for propositions on financing practices in general. The Court also disagrees that Mr. Wenger has not "articulated any reliable principle or method upon which his purported opinions are based." (Id. at 4.) As noted, Mr. Wenger appears to have years of experience in financing, and his responsibilities included equipment financing, so he may opine on the consistency of Balboa's practices regarding the review of borrowers' financial information with the industry practices that he has become aware of through his experience. Finally, the Court disagrees that Mr. Wenger lacks sufficient information to form an opinion because he "simply reviewed Balboa's document production." (Id.) Experts regularly review documents in this manner, and Balboa has proffered no documents that Mr. Wenger failed to review but should have.
There also is no genuine dispute to bar the Court from granting Defendants' motion for partial summary judgment with respect to the issue of whether Plaintiff violated California Financial Code section 22603 and thereby committed unlawful acts under the UCL. Section 22603 instructs a licensed finance lender to "provide a prospective borrower who has been referred by an unlicensed person" a specified disclosure statement "at the time the licensee receives an application for a commercial loan," as well as "require the prospective borrower to acknowledge receipt of the statement in writing." See Cal. Fin. Code § 22603. No genuine dispute exists that Balboa failed to notify Shaya Medical or Dr. Shaya that MMP had referred Shaya Medical to Balboa and that Balboa might pay MMP a fee for the referral. (See PSGD ¶¶ 9-11.) The Court therefore GRANTS Defendants' motion for partial summary judgment on the issue of whether Balboa violated California Financial Code sections 22602 and 22603, amounting to unlawful business practices for their UCL claim.
2. Causation
Balboa moves for summary judgment on Defendants' UCL claim, arguing that Defendants have not presented any evidence of an injury caused by these predicate statutory violations. The Court disagrees. Balboa is correct that a UCL claim requires a causal link between the predicate violation and the victim's injury. See Hall v. Time Inc., 158 Cal.App.4th 847, 70 Cal. Rptr. 3d 466, 471 (2008). And Defendants have adduced some evidence of causation—namely, a declaration by Dr. Shaya stating that he would have been skeptical had he been informed pursuant to section 22603 of the fee that Balboa paid MMP for the referral and thus would have declined to purchase the Device. (See PRAMF ¶ 82; Dkt. 85-3 [Declaration of Wissam Shaya] ¶ 37.) The Court therefore DENIES Balboa's motion for summary judgment on Defendants' UCL claim.
B. Unconscionability
The parties next cross-move for summary judgment on the purported unconscionability of the EFA. The unconscionability of a contract is analyzed under the elements of procedural unconscionability and substantive unconscionability. See Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669, 690 (2000). Procedural unconscionability "focus[es] on 'oppression' or 'surprise' " in how the contract was formed, while substantive unconscionability entails " 'overly-harsh' or 'one-sided' results" based on the terms of the agreement. Id. While both the procedural and substantive elements are necessary, they need not be present in the same degree, and a "sliding scale" is used to evaluate unconscionability. Id. Thus, "the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa." Id. The Court is empowered, however, to sever or limit unconscionable provisions. See id., 99 Cal.Rptr.2d 745, 6 P.3d at 695. In deciding whether to sever terms or strike down an agreement entirely, "the overarching inquiry is whether the interests of justice would be furthered by severance." Ajamian v. CantorCO2e, L.P., 203 Cal.App.4th 771, 137 Cal. Rptr. 3d 773, 799 (2012). "[T]he strong preference is to sever unless the agreement is 'permeated' by unconscionability." Id. (emphasis omitted). One of the main purposes of severance is to "prevent parties from gaining undeserved benefit or suffering undeserved detriment as a result of voiding the entire agreement—particularly when there has been full or partial performance of the contract." Armendariz, 99 Cal.Rptr.2d 745, 6 P.3d at 696.
It is undisputed that there is at least some degree of procedural unconscionability surrounding the EFA. The EFA is a contract of adhesion. "An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power 'on a take-it-or-leave-it basis.' " OTO, L.L.C. v. Koh, 251 Cal.Rptr.3d 714, 447 P.3d 680, 690 (2019) (citation omitted). The EFA is a standard form. (See Copy of EFA.) Balboa does not rebut that Dr. Shaya received the EFA pre-filled. (See PSGD ¶ 17.) Balboa has disclaimed any relationship with Huston, who presented the EFA to Dr. Shaya, and so Dr. Shaya could not have negotiated the terms of the EFA with Huston. (See id. ¶¶ 13-15.) That a contract is adhesive "establish[es] some degree of procedural unconscionability. See Sanchez v. Valencia Holding Co., LLC, 61 Cal.4th 899, 190 Cal.Rptr.3d 812, 353 P.3d 741, 751 (2015). In addition, the EFA was written in extremely small font with a lot of information crammed into less than a page of text. (See Copy of EFA); see also OTO, 251 Cal.Rptr.3d 714, 447 P.3d at 685 n.4, 691 (finding procedural unconscionability in the form of surprise where, as here, "[t]he agreement is a paragon of prolixity, only slightly more than a page long but written in an extremely small font").
It is unnecessary, however, to do a deep dive into whether the EFA is substantively unconscionable. The type of contractual term at issue here—the obligation to repay a loan with interest—is substantively fair. Indeed, the entire system of credit in this country is built upon that basic premise. The repayment terms are clearly legible at the top of the EFA, which states that Shaya Medical is responsible for six monthly payments of $99, and then sixty additional payments of $4,952.19. And Defendants confirm that "Dr. Shaya could see that the proposed financing term was 66 months [f]or payments, with the first 6 payments being $99.00 and the remainder of payments being $4,952.19, there was a documentation fee of $350.00, and the 'Total due in Advance' was $449.00." (PSGD ¶ 19.)
Defendants point to other terms in the EFA that they contend are substantively unconscionable, (see DMSJ at 13-18), but—save for one—Balboa is not seeking to enforce any of those terms. Even if all those terms were substantively unconscionable, the Court would simply sever those terms and enforce the repayment terms. Again, "the strong preference is to sever unless the agreement is 'permeated' by unconscionability." Ajamian, 137 Cal. Rptr. 3d at 799 (emphasis omitted). Put simply, the EFA is not so rotten to the core to require tossing out Defendants' obligation to repay their loan. The exchange of financing for a promise to repay constitutes the basic purpose of this contract, and these terms are far from unconscionable. The procedural unconscionability of the contract is not terribly great. And Balboa has performed its side of the bargain. "[V]oiding the entire agreement" would mean Defendants get to borrow money for cents on the dollar, giving them an "undeserved benefit" while inflicting on Balboa an "undeserved detriment." Armendariz, 99 Cal.Rptr.2d 745, 6 P.3d at 696. That result would hardly further "the interests of justice." Id. (citation omitted). Thus, the Court GRANTS Balboa's motion for summary judgment on Defendants' claim for declaratory relief concerning the EFA's purported unconscionability. The Court DENIES Defendants' motion for partial summary judgment on their claim for declaratory relief, on their affirmative defenses concerning unconscionability, and accordingly, on Balboa's claims for breach of the EFA and of the Guaranty.
C. Balboa's Breach of Contract Claim
Balboa also moves for summary judgment on its causes of action against Shaya Medical for breach of contract, in which Balboa seeks damages and recovery of the Device. Because Balboa's asserted right to recover either type of relief is premised on the remedies provision of the EFA, the Court considers these causes of action together as a claim for breach of contract. The Court also considers these causes of action in conjunction with the claim against Dr. Shaya pursuant to the Guaranty, "since the liability of a surety is commensurate with that of the principal," U.S. Leasing Corp. v. duPont, 69 Cal.2d 275, 70 Cal.Rptr. 393, 444 P.2d 65, 75 (1968), and Defendants offer no defenses on the Guaranty distinct from those on the EFA.
"[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811, 124 Cal.Rptr.3d 256, 250 P.3d 1115, 1121 (2011). On all but damages, the Court finds that summary judgment in favor of Balboa is warranted.
Balboa has presented evidence proving the first three elements of the breach of contract claim. Save for the unconscionability defense discussed (and rejected) above, the parties appear to agree that the EFA and the Guaranty create valid contractual obligations. Balboa asserts, and Defendants do not meaningfully dispute, that the parties executed the EFA, which entailed Balboa financing the purchase of the Device, Shaya Medical repaying the loan on a defined schedule, and Dr. Shaya acting as guarantor. (See DSGD ¶¶ 12-13; Copy of EFA.) Balboa's performance and Defendants' breach is likewise not in dispute. Balboa funded Shaya Medical's purchase of the Device from Cynosure, so it performed as it promised under the EFA. (See DSGD ¶27.) Defendants concede that the last payment that they made towards the loan was in January 2021—despite the EFA's prescribed repayment schedule lasting many months more. (See DGSD ¶¶ 20, 30-31; Copy of EFA.) That failure to repay Balboa was a breach. See, e.g., Tesco Controls, Inc. v. Monterey Mech. Co., 124 Cal.App.4th 780, 21 Cal. Rptr. 3d 751, 764-65 (2004) (concluding that contractor breached agreement by failing to pay supplier by due dates for progress payments). The Court accordingly GRANTS Balboa's motion on the breach-of-contract elements of (1) existence of a contract, (2) plaintiff's performance, and (3) defendant's breach.
The Court can resolve a few issues on damages as well. No genuine dispute exists on the fact that Balboa suffered some degree of harm. Balboa was supposed to, but did not, receive monthly loan repayments pursuant to the EFA. (See DSGD ¶¶ 12-13; 20.) There is no genuine dispute that Balboa funded the purchase of the Device, though Defendants appear to dispute the amount Balboa funded. The parties also do not dispute that the EFA obligated repayment at $99 per month for the first six months and $4,952.19 per month for the next sixty months of the loan term and that Defendants have repaid only $45,163.71. (See DSGD ¶¶ 30, 44.) And there is no dispute that the EFA's remedies provision authorizes accelerated repayment, with a 3% discount on all future installments, upon Defendants' breach. (See PRAMF ¶ 60; Copy of EFA.) The Court therefore GRANTS Balboa's motion on these narrow factual issues.
The Court also concludes that, contrary to Defendants' contention, Balboa does not seek to "profit more from the breach of an obligation than from its full performance." Bramalea Cal., Inc. v. Reliable Interiors, Inc., 119 Cal.App.4th 468, 14 Cal. Rptr. 3d 302, 305 (2004) (citation omitted). To support their argument, Defendants claim that Balboa seeks recovery of personal property, the Device, in addition to the outstanding amount of the loan. But Balboa has clarified that it "does not seek a double or 'cumulative' recovery, but has these remedies in order to be made whole, or as close to whole as possible, in different scenarios.' " (Dkt. 87 [Balboa Capital Corporation's Reply Brief in Support of Motion for Summary Judgment, or, in the Alternative, Partial Summary Judgment] at 7.) This clarification, coupled with the EFA's remedies provision being the source for recovery of damages and the Device, leads the Court to conclude that Balboa may recover pursuant to its first two causes of action either money damages, the Device, or a combination not to exceed the outstanding value on the loan pursuant to the EFA.
But the Court cannot resolve several other damages issues. Among these issues are the applicable interest rate of the loan and the propriety under California law of the interest rate and prejudgment interest. For example, Defendants appear to argue that the interest rate is unclear from the face of the EFA and may be usurious. (See DMSJ at 16-17.) Defendants also argue that Balboa improperly seeks to recover prejudgment interest upon the unpaid interest under the loan. (See id.) Also unclear from the motions are the pure mechanics of calculating the appropriate sum for damages from the amount borrowed, the amount outstanding, the 3% discount on accelerated future installments, and so on. The parties offer confusing arguments on these points and often neglect to address each other directly (or entirely). The Court therefore DENIES WITHOUT PREJUDICE Balboa's motion with respect to the sum of damages. Should a party later wish to file a motion on the appropriate sum of damages, the Court admonishes the party not only to address these issues clearly but to show—and explain—the work in calculating the sum.
D. Balboa's Common Count
Finally, Balboa seeks summary judgment on its "common count of indebtedness." (PMSJ at 10.) The "essential allegations of a common count are '(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.' " Farmers Ins. Exch. v. Zerin, 53 Cal. App.4th 445, 61 Cal. Rptr. 2d 707, 715 (1997) (citation omitted). "A common count is not a specific cause of action, however; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness . . . ." McBride v. Boughton, 123 Cal. App.4th 379, 20 Cal. Rptr. 3d 115, 127 (2004). "When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, . . . [the] common count must stand or fall with his first cause of action . . . ." Id. Balboa's common count is premised on the breach of contract, and since the Court cannot resolve all the damages issues as discussed above, the Court DENIES WITHOUT PREJUDICE summary judgment on the common count.
V. CONCLUSION
For the foregoing reasons, Balboa's Motion for Summary Judgment, or, in the Alternative, Partial Summary Judgment is GRANTED IN PART and DENIED IN PART, and Defendant's Motion for Partial Summary Judgment is GRANTED IN PART and DENIED IN PART. Accordingly, resolved by this Order are (1) Defendants' liability under Balboa's causes of action for breach of the EFA and of the Guaranty and for recovery of personal property, but not the damages or other remedies issues identified above, (2) Balboa's common count of "indebtedness" to the same extent as the breach claims, (3) the element of an unlawful business practice for Defendants' UCL claim, (4) Defendants' claim for declaratory relief, and (5) Defendants' affirmative defenses asserting unconscionability.