Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County. Patricia L. Collins, Judge. Affirmed. Los Angeles County Super. Ct. No. SC083982
Horvitz & Levy, Barry R. Levy, Jeremy B. Rosen; Lipsitz Green Scime Cambria, Paul J. Cambria, Jr.; LaBowe, LaBowe & Hoffman and Mark S. Hoffman, for Plaintiff and Appellant.
No appearance for Defendant.
Knapp, Petersen & Clarke and Mitchell B. Ludwig for Third Party Claimants and Respondents.
OPINION
ASHMANN-GERST, J.
L. Flynt, Ltd.-8484, Inc. (Flynt) sued JAC Capital Fund, LLC (JAC) for breach of promissory note and attached a $1 million payment owed to JAC by Finova Capital Corporation (Finova). The trial court found that the $1 million belonged to third party claimants David Litt and Teresa Litt, cotrustees of the David and Teresa Litt Family Trust, and Litt Mortgage, Inc. doing business as Select Mortgage (collectively the Litts) because they held prior assignments from JAC of the right to receive that sum. Flynt appeals, arguing that the assignments were invalid on two grounds: the Litts did not receive them in good faith because they knew that Finova’s consent was required but not obtained, and because the assignments were not supported by sufficient consideration. We disagree and therefore affirm.
FACTS
Finova’s loan to LFP, Inc.
In 1999, Finova loaned money to LFP, Inc. In exchange, LFP, Inc. executed a promissory note (LFP, Inc. Note) that required LFP, Inc. to make a lump sum payment of approximately $3 million in January 2006.
Flynt’s loan to JAC
Flynt loaned JAC $3 million and took back a promissory note, which was later amended (JAC Note). JAC defaulted on its payments.
The participation contract
In 2004, Finova and JAC entered into a contract (JAC/Finova contract) which assigned JAC the rights to $1 million in proceeds from the LFP, Inc. Note. The JAC/Finova contract provided that JAC “shall not sell, pledge, assign, sub-participate, or otherwise transfer all or any part of its interest hereunder without [Finova’s] prior written consent, except that [JAC] may, without [Finova’s] consent, sub-participate its interest hereunder to any financial institution affiliated with [the Litts], so long as [the Litts] give[] written notice of such sub-participation to [Finova] and [the Litts] remain[] obligated hereunder.”
The assignments of JAC’s interest in the JAC/Finova contract to the Litts
The Litts loaned $250,000 and $150,000 to JAC. JAC assigned to the Litts the right to receive the first $450,000 in proceeds from the JAC/Finova contract. JAC borrowed an additional $90,000 and $125,000 from the Litts and executed a new assignment. It gave the Litts the right to receive the first $650,000 payable under the JAC/Finova contract. The assigned amounts in excess of the loaned amounts were designed to cover interest.
In exchange for a $350,000 loan from Plastic Dress-Up Company Employee’s Profit Sharing Plan (Plastic Dress-Up), JAC assigned to Plastic Dress-Up the right to receive $350,000 under the JAC/Finova contract. After the Litts funded a $1 million loan to a third party, the Litts gave Plastic Dress-Up a 35 percent interest in the third party loan in exchange for all rights to the $350,000 loan to JAC and the assignment of the $350,000 in proceeds from the JAC/Finova contract. In other words, the Litts and Plastic Dress-Up negotiated a swap of $350,000 interests. The total value of the JAC assignments was $1 million.
This action
Flynt sued JAC for breach of the JAC Note. In an application for writ of attachment, Flynt claimed that LFP, Inc. was about to pay Finova $3 million, which would require Finova to pay JAC $1 million pursuant to the JAC/Finova contract. Flynt sought to attach the $1 million payment. The application for writ of attachment was granted.
The Litts filed a verified third party claim contending that they had a superior right to the $1 million due to assignments that were prior in time. Flynt filed an objection and argued that the nonassignment clause in the JAC/Finova contract rendered each of the assignments void and unenforceable because JAC never requested nor obtained consent from Finova.
At a hearing on the third party claim, the parties litigated whether the assignments were invalid under the nonassignment clause, and whether the assignments were supported by valid consideration. The trial court stated: “I . . . find that these assignments of the [proceeds] from the [JAC/Finova contract] are valid, that the non-assignability language does not void the assignments, and that I don’t find any evidence of an attempt to defraud creditors or that these were sham assignments.” Further, the trial court found that the assignments “relate to what appear to be legitimate loans totaling a million dollars.” The trial court ordered that judgment be entered in favor of the Litts.
Judgment was entered.
This timely appeal followed.
After oral argument, we requested briefing regarding whether the Litts received the assignments in good faith, and whether the assignments were valid despite Finova’s lack of consent. We informed the parties that we intended to consider Klamath Land & Cattle Co. v. Roemer (1970) 12 Cal.App.3d 613 (Klamath), Johnston v. Landucci (1942) 21 Cal.2d 63 (Johnston), Drukker v. Howe & Haun Invest. Co. (1934) 136 Cal.App. 437 (Drukker), Flood v. Petry (1913) 165 Cal. 309 (Flood) and FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367 (FPI). Each of the parties provided supplemental letter briefs.
DISCUSSION
Flynt argues that the assignments do not have priority over the attachment because they were not made in good faith, and because they were not supported by adequate consideration. We disagree. The following is our independent analysis of legal issues and our application of the substantial evidence rule to findings of fact. (Committee for Responsible School Expansion v. Hermosa Beach City School Dist. (2006) 142 Cal.App.4th 1178, 1184.)
1. Flynt’s good faith argument is unavailing.
In its supplemental letter brief, Flynt avers that “[i]n order to be entitled to priority here over Flynt, the Litts had the burden to prove their purported assignments from JAC were both not void and taken in ‘good faith.’ . . . When the Litts took the assignments, the Litts knew they had been assigned them in violation of the JAC/Finova contract since there was no prior approval by Finova. Thus, even if the assignments ultimately are not void ab initio as between JAC and the Litts, the Litts nonetheless took them knowing that they could be set aside at any time. An acceptance of assignments under these circumstances cannot constitute ‘good faith’ and provide the basis for a claim of priority against an innocent third party who was uninvolved in the purported assignments.” But the law does not support Flynt’s position.
a. The assignments are valid.
The initial question presented is whether the nonassignment clause invalidated the assignments that are held by the Litts. If not, there is no basis for holding that the assignments were void.
In Klamath, the court explained that a nonassignability clause in a contract “is for the benefit of the vendor only.” (Klamath, supra, 12 Cal.App.3d at p. 619.) As applied, this rule establishes that the nonassignability clause in the JAC/Finova contract benefits Finova only, not Flynt. Subsuming this case into the apt text of Klamath, we conclude that the nonassignability clause “in no way affects the validity of an assignment without [Finova’s] consent as between [JAC] . . . and [the Litts]; the interest of [JAC] in the contract passes to [the Litts] subject only to the rights of [Finova]. [Citations.]” (Ibid.) Klamath is consistent with Johnston, supra, 21 Cal.2d 63, a case from our highest court which held that a nonassignment clause does not affect the validity of an assignment between an assignor and assignee. Only the person with consent rights can defeat the assignment. (Id. at p. 68.)
In our view, Klamath and Johnston compel the conclusion that there is no basis for finding the assignments invalid. In its supplemental letter brief, Flynt does not disagree with this proposition.
Flynt cites a series of cases which hold that if appropriate language is used, an assignment of money can be barred. But none of those cases—Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, Fairbanks v. Crump Irr. Etc., Inc. (1930) 108 Cal.App. 197, Parkinson v. Caldwell (1954) 126 Cal.App.2d 548, Benton v. Hofmann Plastering Co. (1962) 207 Cal.App.2d 61, and Johnson v. First Colony Life Ins. Co. (C.D. Cal. 1998) 26 F.Supp.2d 1227—examine how a nonassignment clause affects a third party assignee’s interests. These cases do not deter us from our conclusion that Finova’s consent is moot.
b. The assignments have priority over the attachment.
“A valid assignment has priority over a subsequent levy; the attaching creditor’s notice of the assignment or lack of it is immaterial.” (Fount-Wip, Inc. v. Golstein (1972) 29 Cal.App.3d 751, 757 (Fount-Wip).) Fount-Wip did not define what constitutes a valid assignment. However, it cited Northern Counties Bank v. Earl Himovitz & Sons Livestock Co. (1963) 216 Cal.App.2d 849 (Northern Counties) and stated that good faith and adequate consideration are required. Northern Counties held that an assignment is valid if it was “a bona fide agreement for a sufficient consideration and without intent to defraud creditors. [Citation.] (Id. at p. 855.) Thus, in our view, a prior assignment is valid and has priority over a subsequent attachment if the assignment was supported by adequate consideration, and if there was no intent by the parties to defraud the assignor’s creditors. This latter element defines the good faith identified and required by Fount-Wip.
This is consistent with Smith v. Harris (1954) 127 Cal.App.2d 311, 316 [the “essential element is the bona fide agreement between the assignor and assignee, for a sufficient consideration and without intent to defraud creditors”], one of the cases that Flynt relies upon. To the degree Flynt implies that good faith requires something more, the implication lacks support.
In general, we note that a bona fide transaction involves payment of value, in good faith, and without actual or constructive notice of another’s rights. (Melendrez v. D&I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1251.) A bona fide transaction has been described as one where “the parties operate ‘[i]n or with good faith; honestly, openly, and sincerely; without deceit or fraud.’” (Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295, 1301.) Fount-Wip and Northern Counties are merely specific applications of these general rules.
After a review of the record in a light most favorable to the Litts, we conclude that JAC’s assignments have priority. As discussed in part 2, post, the assignments were supported by ample consideration. Additionally, the trial court found that the assignments were made without intent to defraud JAC’s creditors. That finding has not been challenged by Flynt. Also, it is supported by substantial evidence, namely that the Litts paid adequate consideration, and their interest in the proceeds predated the writ of attachment filed by Flynt.
Flynt suggests that in order for the Litts to have priority, they must qualify as holders in due course, and that to do so they must demonstrate that they took the assignments in good faith. Under the California Uniform Commercial Code, good faith means “honesty in fact and the observance of reasonable commercial standards of fair dealing.” (Cal. U. Com. Code, § 1201, subd. (a)(20).) But “holder in due course” status only applies to certain people who possess negotiable instruments. (Cal. U. Com. Code, §§ 3104, subds. (a) & (b), 3302, subd. (a).) A negotiable instrument is one which is payable to the bearer at the time it is issued or first comes into possession of the holder. (Cal. U. Com. Code, § 3104, subd. (a).) That is not true of the assignments of JAC’s proceeds from the JAC/Finova contract. Nothing was payable until proceeds were actually obtained; and if the proceeds were not obtained, then nothing was payable on the assignments. Additionally, to be negotiable, the assignments had to be payable on demand or at a definite time. (Ibid.) They were not. Thus, we have no cause to determine whether the Litts were holders in due course. Further, the trial court’s finding of no intent to defraud supports the conclusion that the Litts acted honestly and within the standards of fair dealing.
Next, Flynt argues Drukker and Flood shed light on why the Litts did not act in good faith. Drukker explained that it “is the rule that knowledge by an indorsee that the note was given in consideration of an executory contract by the payee does not deprive the indorsee of his character as a holder in due course if he had no notice of a previous breach of the contract [citations].” (Drukker, supra, 136 Cal.App. at pp. 442–443.) Flood viewed the rule as a failure of consideration defense to payment by a promisor. (Flood, supra, 165 Cal. at pp. 315–317.) In its supplemental letter brief, Flynt posits that “since the Litts knew that the assignments they received were in violation of [the JAC/Finova contract] and subject to being voided at any time in the future by Finova, as a matter of law, they should not be entitled to the protection afforded to a holder in due course.”
Drukker and Flood do not assist Flynt. As we already explained, the JAC/Finova contract is not a negotiable instrument, so holder in due course status is not germane. Moreover, if consideration for the JAC/Finova contract failed, then Finova had the option of seeking rescission pursuant to Civil Code section 1689, subdivision (b)(2). In other words, any failure of consideration made the contract voidable rather than void. Thus, even if the assignments permitted Finova to rescind the JAC/Finova contract, the assignments were still valid unless and until Finova rescinded it and returned all consideration. That did not happen.
FPI supports a ruling that the Litts’ knowledge of JAC’s breach does not defeat the assignments and therefore does not defeat their priority. In FPI, the plaintiff obtained an option to purchase and develop a golf course from Earp and assigned the option to defendants in exchange for a promissory note. When defendants did not pay, the plaintiff sued. As one of their defenses, defendants argued that there was a failure of consideration because the plaintiff breached a promise to pursue development of the property, and because the option stated that it could not be assigned without Earp’s consent. The plaintiff obtained summary judgment, and the defendant appealed. (FPI, supra, 231 Cal.App.3d 367.)
In rejecting defendants’ first failure of consideration argument, the court concluded that the relevant law pertained to frustration of purpose. (FPI, supra, 231 Cal.App.3d at p. 398.) The court parsed the issue thusly: “We assume for the sake of argument that defendants showed a triable issue of fact concerning the breach of the [plaintiff’s contract with Earp] by [the plaintiff] and a potential defense of Earp to performance under that contract. The fact that [the plaintiff] was in breach of its contract with Earp does not amount to a frustration of the purpose of the agreement. This fact would be material to such a defense if it were related to a refusal by Earp to perform, a repudiation by Earp, or, perhaps, a demonstration that defendants’ ability to exercise the [plaintiff’s] option was or likely would have been prevented because of the prospect of such conduct by Earp.” (Id. at p. 399, fn. omitted.) The court rejected the idea that the option was worthless because “the mere existence of a potential justification for Earp to refuse to perform that was not invoked would not establish a defense of frustration of purpose.” (Id. at p. 399, fn. 17.)
Following this, the court analyzed the defendant’s second argument. “Defendants say the assignment was worthless because the failure to obtain Earp’s consent enabled him to refuse to perform under the [the parties’] option contract. Once again, defendants proffered a potential justification for Earp’s refusal to perform. As related, this is evidence of a triable issue of material fact only if coupled with evidence that Earp refused to perform or that defendants failed to exercise their option because of a reasonable perception that Earp would so refuse. The only available inferences in the record are to the contrary. The trial court did not err in granting summary judgment as to this claim.” (FPI, supra, 231 Cal.App.3d at p. 400.)
The FPI defendants relied on a suggestion in a treatise that “where there is an assignment contrary to a prohibition the obligor ‘probably can declare a breach of the contract and pursue his remedies to terminate the agreement.’ [Citation.]” (FPI, supra, 231 Cal.App.3d at p. 400.) The court dispensed with this argument thusly: “The suggestion is based upon analogy to case law which allows a lessor to terminate a lease where there is such an assignment. [Citation.] We assume for the sake of discussion that defendants’ evidence did show a potential legal justification on this ground for Earp to refuse to perform. [¶] However, as with the justification discussed previously, this does not show that the assignment was worthless.” (Ibid.)
In FPI, a third party was not permitted to declare that an assignment was worthless based on the assignor’s breach of the initial contract, or its failure to obtain consent for the assignment. FPI, Drukker and Flood support the conclusion that if an assignment is given without approval of a person with consent rights, the lack of consent is a personal defense owned solely by that person. The defense cannot be raised by a third party who was a stranger to the original contract.
Last, Flynt cites a ruling from a Massachusetts trial court which denied summary judgment in Proteon, Inc. v. Digital Equipment Corp., No. CA 98-1535-F, 2000 Mass. Super. LEXIS 201, at *1 (Middlesex, Mass., Mar. 3, 2000) (Proteon). In Proteon, the plaintiff entered into a license agreement with Digital Equipment. Digital Equipment was not permitted to assign the license agreement without consent but did so anyway. The plaintiff sued the assignee, claiming that it knew about the antiassignment provision, so it did not take the assignment in good faith and, further, that it was unjustly enriched when it received the plaintiff’s proprietary information. The defendant argued that it was insulated by law from the claim of unjust enrichment because it purchased the license agreement in good faith and for value. The trial court concluded that there was a triable issue as to whether the defendant was a bona fide purchaser of the license agreement. (Proteon, supra, at **8–11.)
Proteon is not persuasive. It did not apply California law, it did not examine whether the assignment was valid, and it involved an objection to the assignment by the party with consent rights. Each of these points dissuades us from following Proteon and rejecting FPI, Drukker and Flood. Further, Proteon dealt with summary judgment and triable issues. Here, all factual issues were resolved and we cannot second guess them in the presence of substantial evidence.
2. The assignments were supported by adequate consideration.
Flynt argues that JAC gave the Litts assignments of $250,000 and $100,000 for no consideration. Also, Flynt argues that there is no evidence that the 35 percent participation in a $1 million loan that was given to Plastic Dress-Up by the Litts in exchange for the assignment of $350,000 of the proceeds from the JAC/Finova contract qualifies as adequate consideration. Flynt argues it has a right to at least $700,000 of the money being held for the Litts.
Our analysis of consideration heeds the following: “Consideration sufficient to support a contract is defined as: ‘Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.’ [Citations.]” (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 176–177.) The adequacy of consideration is a question of fact to be determined in light of the conditions existing at the time the contract was made, and a trial court’s finding will not be disturbed unless substantial evidence is absent. (Loeb v. Wilson (1967) 253 Cal.App.2d 383, 388; Cubic Corp. v. Marty (1986) 185 Cal.App.3d 438, 448.) As the court concluded in Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 652, the ultimate test for substantial evidence “is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record.” Substantial evidence has “ponderable legal significance” and “is reasonable, credible and of solid value.” (Id. at p. 651.) The testimony of a single witness may suffice to constitute substantial evidence. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614.)
As we discuss below, each of the assignments at issue was supported by adequate consideration.
a. The first assignment.
Flynt argues that the Litts only paid $150,000 in exchange for the assignment of $450,000 of the JAC/Finova contract proceeds. But Teresa Litt’s deposition testimony, when coupled with the documents submitted by the parties below, demonstrated that the Litts loaned JAC $250,000 and $150,000, and that the Litts typically charged a $5,000 loan fee. As a result, the evidence suggests that the first assignment related to JAC’s obligation to pay $400,000 in principal, $10,000 in loan fees, and anticipated interest. The evidence was this:
The Litts included loan fees as part of loan obligations.
In 2003, the Litts loaned $263,000 (2003 loan) to Jeffrey Stover, Angela Stover and Christie Stover (Stovers) for the purchase of property in Florida. Because interest payments on the 2003 loan were not due for a year, and because the Litts were owed a $50,000 participation fee for the sale of the property, the Stovers gave the Litts a promissory note for $344,000. On July 1, 2004, the Litts loaned money (2004 loan) to the Stovers, Wilhem R. Dimpflmaier and Angela M. Dimpflmaier in exchange for a $255,000 promissory note.
The Litts loaned $250,000 to JAC. To fund the loan, the Litts used proceeds from the payoff of the 2003 loan. They had $250,000 sent directly to JAC after it was paid into escrow with True Title Agency. The remaining $142,000 from the payoff of the 2003 loan was sent to the Litts. Subsequently, the Litts loaned JAC $150,000 in exchange for a $155,000 note. The extra $5,000 in the promissory note covered the loan fee. JAC assigned $450,000 of the proceeds from the JAC/Finova contract to the Litts. At that point, the outstanding balance of the principal owed by JAC was $410,000. The assignment provided a cushion to cover interest. The trial court reasonably concluded that this evidence was sufficient to establish adequate consideration. As a result, this evidence qualifies as substantial evidence.
b. The second assignment.
On September 1, 2004, the Litts loaned JAC $85,000 in exchange for a $90,000 promissory note. At this point, the principal owed by JAC on its loans added up to $500,000. The assignment was updated. As a result, the Litts were entitled to $550,000 of the proceeds from the JAC/Finova contract. The extra $50,000 was designed to cover interest.
Flynt leave this assignment unchallenged.
c. The third assignment.
Flynt contends: “JAC assigned an additional $100,000 of its interest in the [JAC/Finova contract] to [the Litts] in consideration for a $125,000 loan made by [the Litts] to JAC. . . . However, the $125,000 loan did not come from [the Litts]; rather[,] the money was wired directly to JAC from Ruth Litt. . . . Teresa Litt testified that there is a separate note between Ruth Litt and [the Litts], but no such note was ever introduced into evidence.” Because Ruth Litt loaned the money instead of the Litts, Flynt argues that when the assignment was updated to increase the amount to $650,000, the consideration was inadequate.
This argument is unavailing.
As we discussed above, consideration is any benefit conferred upon the promisor by any other person, or any prejudice suffered by such person, as an inducement to the promisor. Teresa Litt testified that the Litts loaned JAC $120,000 on October 18, 2004. The funds came from Ruth Litt’s family trust, which is managed by David Litt, who has power of attorney to invest Ruth Litt’s money. According to Teresa Litt, the money was advanced on the Litts’ behalf, and the Litts have an obligation to repay Ruth Litt’s family trust for the advance of the funds. Due to this loan to JAC, the assignment was updated to $650,000. At the time, the principal owed by JAC to the Litts had grown to $625,000. Thus, the updating of the assignment to $650,000 was supported by adequate consideration. Teresa Litt’s testimony qualifies as substantial evidence and negates Flynt’s arguments.
d. The fourth assignment.
The fourth assignment was originally made to Plastic Dress-Up for $350,000. Plastic Dress-Up gave the assignment to the Litts in exchange for a $350,000 interest in a $1 million loan to a third party. In common parlance, Plastic Dress-Up and the Litts swapped $350,000 interests.
Flynt posits that “[t]he Litts secured the final $350,000 assignment of JAC’s interest in the [JAC/Finova contract] by swapping Plastic Dress-Up’s $350,000 loan to JAC for a $350,000 loan to an unidentified individual or entity. . . . Plastic Dress-Up also assigned its interest in the [JAC/Finova contract] to the Litts. . . . The Litts must show that this unidentified $350,000 loan was adequate consideration for a $350,000 loan to JAC with personal guarantees plus an assignment of Plastic Dress-Up’s interest in the [JAC/Finova contract]. The Litts put forth no evidence to evaluate the relative values of any of these separate transactions.” In sum, Flynt contends that there is no evidence that the third party loan was as solid a risk as the initial Plastic Dress-Up loan. Flynt invites us to speculate that perhaps, of the two, there was a less chance that the third party loan would be paid off.
If Plastic Dress-Up loaned JAC $350,000, then the assignment of a $350,000 in proceeds from the JAC/Finova contract was supported by adequate consideration when the assignment was made. Flynt has not cited any law requiring us to make any further inquiry. Specifically, Flynt has not established that for JAC’s assignment of $350,000 to be valid and have priority over Flynt’s attachment, the swap of $350,000 interests by Plastic Dress-Up and the Litts also had to be supported by adequate consideration. “It is not our responsibility to develop an appellant’s argument.” (Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11.) Because the original assignment was supported by consideration, we fail to see why it matters to Flynt whether Plastic Dress Up or the Litts are the ones who appeared in court to enforce JAC’s assignment.
Regardless, there is substantial evidence that the assignment from Plastic Dress-Up to the Litts was supported by adequate consideration. Each purports to be a $350,000 interest, and they are facially equal.
Beyond that, we note that Teresa Litt testified that Plastic Dress-Up was one of the Litt’s investors. David Litt approved the $350,000 loan from Plastic Dress-Up to JAC, and then Teresa Litt prepared the loan file. JAC received $189,307.78 from the loan proceeds. The rest of the proceeds went to the Litts to pay down $125,000 of principal on JAC’s debt, to pay interest, and to recover wire fees and other items. At that point, JAC owed a total of $850,000 in principal to the Litts and Plastic Dress-Up. The Litts were servicing both Plastic Dress-Up’s loan and their own loans to JAC. JAC gave the Litts an assignment of $350,000 of the proceeds from the JAC/Finova contract to secure Plastic Dress-Up’s loan. Added together, the assignments were for $1 million.
Subsequently, the Litts loaned JAC $150,000. This brought the total principal owing up to $1 million. After the Litts funded a $1 million loan to a third party, the Litts gave Plastic Dress-Up a 35 percent interest in that third party loan in exchange for all rights to the $350,000 loan to JAC and the assignment of the $350,000 in proceeds from the JAC/Finova contract. The Litts submitted documents supporting the swapping of loans.
The foregoing evidence supports the inference that the swap of the loans was fair and even. Nonetheless, Flynt complains that the borrower on the $1 million loan was not identified. But during the proceeding, when the Litts’ did not want to reveal the identity of the borrower, Flynt’s attorney stated that he would accept the Litts’ offer of proof that the borrower was not one of the Stovers. It is too late in the game for Flynt to reverse field and contend that the identity of the borrow is somehow material to the issue of adequate consideration.
Flynt filed a motion under Code of Civil Procedure section 909 and California Rules of Court, rule 8.252(c) for us to take evidence on appeal as to whether the Litts knew they had no right to take an assignment from JAC. Because the Litts’ knowledge does not impact our analysis, we deny the motion.
DISPOSITION
The order releasing the proceeds to the Litts is affirmed. The Litts are entitled to their costs on appeal.
We concur: BOREN P., J., CHAVEZ, J.