Opinion
G055458
12-03-2018
NADER & SONS LLC et al., Plaintiffs and Respondents, v. DAN SHAVOLIAN, Defendant and Appellant.
Law Offices of David Yerushalmi and David Yerushalmi for Defendant and Appellant. Hill, Farrer & Burrill and Neil D. Martin for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2012-00546130) OPINION Appeal from a judgment of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed. Law Offices of David Yerushalmi and David Yerushalmi for Defendant and Appellant. Hill, Farrer & Burrill and Neil D. Martin for Plaintiffs and Respondents.
* * *
Defendant Dan Shavolian appeals from a judgment in favor of plaintiffs Nader & Sons, LLC (Nader) and Sisko Enterprises, LLC (Sisko) (collectively Nader/Sisko or plaintiffs), who prevailed on a motion for summary judgment. While arising from a complex set of facts, the motion for summary judgment centered around one legal issue: the validity of the assignment of a guaranty, and whether an appellate court decision in New York precludes further action in California with respect to that assignment. We conclude that the New York courts have never decided the particular issue relevant here, and that the guaranty was properly assigned. Accordingly, we affirm the judgment.
I
FACTS
As mentioned, the facts in this case are quite complex; we summarized them in our prior opinion in this matter, Nader & Sons, LLC, et al. v. Jack Hazan, et al. (Jan. 21, 2014, G048276 [nonpub. opn.]) (Nader I). In Nader I, we described the case as follows: "Two limited liability companies entered into an agreement to develop property, and the key players in each company personally guaranteed the agreement. One of the companies then assigned its interest, despite an anti-assignment clause in the agreement, to two different entities. After demanding and failing to receive money they claimed was due under the agreement, those companies then sued the principals of the other company, in California, for breach of the guaranty. All of the plaintiffs and defendants, both individuals and entities, are New York residents, and all of the other companies involved, with one exception, are also based in New York." (Nader I, supra, G048276.) We agreed with the trial court in Nader I that the California action should be stayed pending further action in the New York courts. Now the time has come to address the California action, and it becomes necessary for us to develop the facts further.
The 241 Fifth Agreement
As we noted in Nader I: "241 Fifth Ave Hotel, LLC (241 Fifth) is a limited liability company which owned the property at 241 Fifth Avenue in New York City (the property). The only members of 241 Fifth are Beshmada LLC, a California limited liability company, and Hazak Associates LLC (Hazak), a New York limited liability company. Hazak's principals were defendants Jack Hazan and Dan Shavolian, both New York residents, and Beshmada's managing member was Ezri Namvar." (Nader I, supra, G048276.) Hazan, according to Shavolian, filed for bankruptcy and is no longer a party to this action. (Nader I, supra, G048276.)
"Beshmada and Hazak entered into the limited liability company agreement on March 20, 2007. The purpose of the agreement was to operate the property as an investment. The governing law was Delaware and 241 Fifth's principal place of business was New York City. Under a choice of venue clause, the proper jurisdiction for any legal action was New York." (Nader I, supra, G048276, fn. omitted.) No members were to be admitted to the company and no additional interests were to be issued without the approval of both Beshmada and Hazak.
The 241 Fifth agreement included the following clause, entitled "No Transfer." "Except as expressly permitted or contemplated by this Agreement, no Member may sell, assign, give, hypothecate, pledge, encumber or otherwise transfer . . . all or any portion of its Interest, whether directly or indirectly, without the written consent of the other Members. Except as expressly permitted or contemplated by this Agreement, each Member agrees not to permit any Transfer of any equity interest in such Member, or in its managing member. Any Transfer in contravention of this Article . . . shall be null and void."
"When 241 Fifth was formed, Beshmada provided 80 percent of the capital and Hazak provided 20 percent. The 241 Fifth agreement included a clause entitled 'True-Up Provision.' It stated that 48 months after the closing date, Hazak was to contribute additional funds so that its capital contribution would be the same as Beshmada's." (Nader I, supra, G048276.)
The Shavolian Guaranty
Critical to this case, the 241 Fifth agreement was supported by personal guarantys on both sides. Hazan and Shavolian, for Hazak, and Namvar, for Beshmada, agreed to personally guarantee certain obligations of their respective entites. Only the guaranty signed by Hazan and Shavolian is relevant here, and they executed the guaranty for Beshmada's benefit on July 19, 2007. The guaranty stated: "[Shavolian] unconditionally guarantees and promises (i) to pay to [Beshmada] . . . on demand after the default by [Hazak] in the performance of its obligations under the [241 Fifth agreement] . . . any and all Obligations . . . consisting of payments due to [Beshmada]. . . . For purposes of this Guaranty, the term 'Obligations' shall mean and include all payments, liabilities and obligations, however arising, owned by [Hazak] to [Beshmada] arising out of or in connection with the [241 Fifth agreement] . . . ." The guaranty also stated that it was "in no way conditioned on or contingent upon any attempt to enforce in whole or in part any of [Hazak's] Obligations to [Beshmada] . . . ."
The guaranty also included an assignment provision, which stated: "[Beshmada] may, at any time and from time to time, without the consent of or notice to [Shavolian], except such notice as may be required by applicable statute which cannot be waived . . . assign its rights and interests under this Guaranty, in whole or in part." It further stated: "This guaranty shall be binding upon and inure to the benefit of [Beshmada] and [Shavolian] and their respective successors and assigns; provided, however, that without the prior written consent of [Beshmada], [Shavolian] may not assign his rights and obligations hereunder." The guaranty designated California for both venue and choice of law.
The Namco Capital Loans
In 2008, Nader/Sisko lent $12.5 million to Namco Capital Loans (Namco Capital), an affiliate of Beshmada, which were secured by a document entitled "Loan, Pledge and Security Agreement" (the pledge agreement). Beshmada's interest in 241 Fifth was named in these agreements as collateral for the loan. Also named were the assets of NY 18, another entity related to Namco Capital and Namvar.
As relevant here, more specifically, the collateral included "all rights of [Beshmada] to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the [241 Fifth] Interests." Thus, in the view of Nader/Sisko, part of the collateral for the loans it made to Beshmada in 2008 was Shavolian's personal guaranty. In Shavolian's view, giving any interest in 241 Fifth to a third party without the express consent of the members violated the 241 Fifth agreement.
The Bankruptcy and Partial Settlement Agreement
Namco Capital, Namvar, and Beshmada were forced into involuntary bankruptcies in 2008 and 2009. In 2010, Nader/Sisko reached a partial settlement agreement (PSA) with the bankruptcy trustee concerning the $12.5 million in loans it had made to Namco Capital, Namvar, and Beshmada. Nader/Sisko paid $250,000 to the bankruptcy estates in return for an agreement not to oppose or contest the validity of the pledge agreement, which specifically named, as collateral for the Namco Capital, all of Beshmada's interest in 241 Fifth. The PSA also specified: "Beshmada agrees not oppose or contest the validity of the Pledge Agreement. Beshmada acknowledges that the Collateral includes . . . any and all rights of Beshmada with respect to [241 Fifth] including Beshmada's rights as a member of [241 Fifth] (including its rights pursuant to [the LLC agreement] of [241 Fifth] made and entered into as of March 20, 2007), Beshmada's rights pursuant to the 'True-Up Provision' . . . and any and all rights available to Beshmada against Shavolian, [Hazak], and other interested parties, if any." The PSA further stated that to the extent not conveyed by the language above, all rights to the collateral were conveyed to Nader/Sisko "on an AS IS basis."
The bankruptcy court approved the PSA in July 2010, subject to a change not relevant here. Nader/Sisko, the trustee, and the bankruptcy court were aware that some of the assignments in the pledge agreement might be voided. Various legal actions followed.
2011 Damages Action
In 2011, Nader/Sisko filed an action entitled Nader & Sons, LLC, et al. v. Shavolian (N.Y.App.Div. 2014) 113 A.D.3d 432 (the 2011 damages action), in the Supreme Court of the state of New York. In that action, Nader/Sisko sought a judgment against Shavolian pursuant to a note owed by him (Shavolian note) to NY 18, one of the two Namco Capital related companies named in the pledge agreement. This note is expressly mentioned as being assigned to Nader/Sisko in the PSA. The New York trial court awarded over $ 3.3 million plus fees and costs to Nader/Sisko on its motion for summary judgement. The New York trial court specifically rejected the argument that the PSA could not assign that note. The judgment was affirmed by the Appellate Division. (Id at p. 433.)
For those unfamiliar, the Supreme Court is New York's trial court. To avoid confusion, we will generally refer to this court as the "New York trial court." The intermediate appellate court is called the Supreme Court, Appellate Division, or, as we shall refer to it, the Appellate Division.
2011 Declaratory Relief Action
Hazak and 241 Fifth, also in 2011, commenced a declaratory relief action in New York seeking a declaration that any assignment by Beshmada of its "membership interest" in 241 Fifth to Nader/Sisko was void. Nader/Sisko moved to dismiss; the New York trial court notified the parties it intended to convert the motion to dismiss into one for summary judgment, and allowed the submission of supplemental briefs.
During argument on the motion, Nader/Sisko made it clear that its concern was not with the assignment of Beshmada's "membership interest" but "the liability of the two principals of Hazak on the Guaranty." Nader/Sisko's counsel argued that the assignment of the membership interest was "of no actual consequence . . . . Because the legal result would then . . . mean that, as he said, the interest in the entity was not transferred. [¶] . . . [¶] However, independently of that, the Guaranty, which, parenthetically, said it had to be litigated in California, that Guaranty is assignable, right directly on its face is assignable. [¶] So as a practical matter, regardless of whether the interest itself, the membership interest, is assignable, the guarantee of the economic rights is assignable. The Guaranty says so directly. [¶] So in our view, the Guarantors, Mr. Shavolian and Mr. Hazak, would be liable on their guarantees."
The New York trial court eventually granted summary judgment, entering an order stating: "the transfer by Beshmada of its membership interest in the 241 Fifth Avenue Hotel, LLC is unauthorized and therefore any purported assignment is null and void . . . ." During its statement from the bench, the court clarified the limits of its ruling: "The court having ruled with respect to the question as to whether or not the transfer could be made of the interest in the LLC, is limited to just that. The court's decision in no way is intended to be a finding that the Guaranty, which is a separate contract, cannot be transferred or assigned. That's a separate and distinct issue, and the court is not deciding that question. Presumably that issue may or may not be litigated out in California, but that's not before me, and nothing that I say here should be construed as limiting in any way the ability to transfer ownership of a guaranty and taking whatever action a party might want to take with respect to their rights thereunder."
Beshmada Chapter 7 and 2012 Damages Case
In June 2009, Beshmada filed for bankruptcy in the Central District of California. In June 2011, the property went into foreclosure. 241 Fifth filed an amended proof of claim seeking over $33 million in damages, alleging that Beshmada's assignment of its interest prevented it from refinancing the property, resulting in the foreclosure. In 2015, the bankruptcy court concluded that while entering into the pledge agreement was a breach of the 241 Fifth operating agreement, it was not the legal or proximate cause of the foreclosure and did not damage 241 Fifth or Hazak. The court further found that entering into the PSA was not a breach of the operating agreement and was not the legal or proximate cause of any damage to 241 Fifth or Hazak. It made numerous additional factual findings, including that Shavolian "was not a credible witness." The court disallowed the claim in its entirety.
In 2012, 241 Fifth and Hazak sued Nader/Sisko and related parties for damages in the New York trial court, alleging, essentially, the same actions that had been the subject of the bankruptcy claim. Although this case sought damages rather than a declaration regarding the assignment, this is the case that was pending when the California action was originally stayed. In 2016, the New York trial court granted summary judgment to the defendants, concluding the bankruptcy court's finding a lack of causation collaterally estopped 241 Fifth and Hazak from asserting the same facts in an action for damages.
2012 California Action
In 2012, Nader/Sisko began the instant action to collect on the guaranty. That case was stayed by the trial court while the 2012 damages case was pending, a decision this court affirmed. (See Nader I, supra, G048276.)
2014 Declaratory Relief Action
In 2012, after the stay in the California action was affirmed by this court, Nader/Sisko brought a new declaratory relief action in New York, seeking a declaration that Hazak had defaulted as to the true-up payment. In September 2015, the New York trial court granted summary judgment in Nader/Sisko's favor, issuing a declaration that "defendant Hazak . . . defaulted on its obligation under the terms of the 241 Fifth Ave. Hotel, LLC Operating Agreement . . . to make a True-Up Distribution to [Nader/Sisko] as assignees of Beshmada LLC under the terms of the [PSA] . . . and 2) assignment to the plaintiffs of the personal Guaranties given by [Shavolian] . . . regarding the obligation of Hazak Associates LLC to make the True-Up Distribution is valid . . . ." Hazak appealed (the 2017 appeal), and we will discuss the court's findings after a brief return to bankruptcy court.
Further Bankruptcy Proceedings
In 2016, Hazak, Shavolian, and the bankruptcy trustee returned to the bankruptcy court and filed a proposed motion to compromise, settlement and release. In the proposed settlement, Hazak and Shavolian sought to obtain Beshmada's interests in 241 Fifth.
At a hearing on the motion, the court indicated it would not approve the proposed settlement if it would impact Nader/Sisko's claims against Hazak for the true-up distribution or against Shavolian under his written guaranty (which was the subject of the instant case, stayed at that time). Nader/Sisko, in a status report to the court, argued that if Hazak and Shavolian acquired Beshmada's rights in 241 Fifth, they would seek to thwart the true-up payment Nader/Sisko argued was due.
If Shavolian and Hazak acquired Beshmada's interest in 241 Fifth, they would have full control of that company, and could, for example, revoke their prior demand that Shavolian pay the true-up payment.
The bankruptcy court stated flatly that "I'm not going to approve any compromise that in any way affects one way or the other that, you know, the right to the true ups." The court stated that it wished to "make it clear on this record, that there is nothing being transferred as part of this compromise that could in any way conceivably at all affect that true up, then I have no problem with it."
In a later hearing, Hazak and Shavolian's counsel stated that his understanding was that as "long as the true-up provision and the personal guarantees are carved out, that your Honor is willing to approve the settlement agreement," and stated that he had spoken to his clients and had the "authority to accept those two carve-outs." Later in the hearing, counsel stated: "So we all agree to carving out the true-up provision and the personal guarantee, subject to what the New York court rules, and we all agree that this order of this Court will not be used in order to argue on either side that our claims or defenses are waive[d] or in any way affecting the ruling of the appellate court in New York."
Thereafter, the bankruptcy court approved the proposed settlement. We quote the pertinent part of the order in its entirety: "Notwithstanding anything contained in the [bankruptcy settlement] Agreement, the property and/or rights and/or interests and/or privileges, if any, being transferred by the Trustee and/or the Beshmada Liquidating Trust, as successor to Beshmada, LLC (collectively 'Beshmada'), to the Settling Parties [Hazak and Shavolian], or any of them, pursuant to the [bankruptcy settlement] Agreement, shall not include and shall specifically exclude: (a) the claims, rights, interests and privileges concerning that Guaranty, dated as of July 19, 2007, executed by Dan Shavolian in favor of Beshmada, LLC (the 'Guaranty'), and (b) the claims, rights, interests and privileges, pursuant to that Limited Liability Company Agreement of 241 Fifth . . . dated as of March 20, 2007, (the 'Operating Agreement'), of the 'Investor' (as such term is defined by the Operating Agreement), only with respect to and concerning the 'True-Up Contribution' (as such term is defined by the Operating Agreement), including any right to rescind, revoke or otherwise impair the elections by Nader and Sisko and Beshmada, LLC, to the 'True-Up Contribution' under the Operating Agreement (collectively, the 'Excluded Property'). The foregoing has been agreed to by the Trustee, the Settling Parties and Nader and Sisko with the understanding, approved by this Court, that (a) the Settling Parties believe and shall have the right to and hereby reserve the right to argue that such elections concerning the 'True-Up Contribution' were invalid, that Nader and Sisko, and/or Beshmada had no standing or right to make any such elections, and that such elections made were defective, untimely and improper, and (b) Nader and Sisko believe and shall have the right to and hereby reserve the right to argue that such elections concerning the 'True-Up Contribution' were valid, that Nader and Sisko, and/or Beshmada had standing and the right to make any such elections, and that such elections made were valid, timely and proper. Notwithstanding the foregoing, unless a Court of competent jurisdiction adjudicates, decrees, rules or determines, pursuant to an order, decree or judgment, the operation or effect of which has not been reversed, stayed, modified or amended, and as to which order, decree or judgment (or any revision, modification or amendment thereof), the time to appeal or seek review or rehearing has expired and as to which no appeal or petition for review or rehearing has been taken or is pending, that the Excluded Property, or any part thereof, is owned or held by Nader and Sisko, or any of them, then such Excluded Property shall be deemed transferred, pursuant to the terms and conditions of the Agreement, to Hazak Associates, LLC."
In short and as relevant to this case, until a court had determined Shavolian's guaranty was owned by Nader/Sisko, it was owned by Hazak.
The 2017 Appeal
As mentioned above, Hazak appealed the trial court's ruling in the 2014 declaratory relief action.
In a short opinion filed in April 2017, the Appellate Division affirmed in part and reversed in part. First, the Appellate Division held that the trial court had correctly entered declaratory judgment finding that Hazak had defaulted on the true-up payment, and upheld that part of the order. (Nader & Sons, LLC, et al. v. Hazak Associates, LLC (N.Y.App.Div. 2017) 149 A.D.3d 503.)
As to the New York trial court's statement that Nader/Sisko were "assignees of Beshmada LLC under the terms of the [PSA]," the Appellate Division held the "assignment in the [PSA] null and void" for lack of the consent of all parties, referring to the assignment of Beshmada's interest in 241 Fifth and the assignment of the true-up provision in the 241 Fifth Operating Agreement. (Nader & Sons, LLC, et al. v. Hazak Associates, LLC, supra, 149 A.D.3d at pp. 504-505.)
Finally, with regard to the New York trial court's apparent dicta regarding the assignment of Shavolian's personal guaranty to Nader/Sisko (which is separate from the assignment of the true-up provision), the Appellate Division held the court's declaration was improper because it had not been raised by the parties previously. "Because neither the complaint nor the moving papers sought a declaration as to the validity of the assignment of the guaranties, and because that issue involves different questions and rights than at issue here, it was error for the [trial] court to grant that relief sua sponte . . . ." (Nader & Sons, LLC, et al. v. Hazak Associates, LLC, supra, 149 A.D.3d at p. 505.)
Thus, in summary, Nader/Sisko prevailed on their request for a determination that Hazak had defaulted. The New York trial court additionally found that the assignment of Beshmada's interest in 241 Fifth in the PSA was invalid, and took no position on the assignment or enforcement of Shavolian's personal guaranty, except to say that the court could not make a declaration about it sua sponte.
The Instant Action
At long last, we return to the instant action. The New York proceedings concluded, Nader/Sisko returned to Orange County Superior Court to attempt to enforce Shavolian's guaranty. They moved for summary judgment. While that motion was pending, Shavolian moved for judgment on the pleadings, arguing that the 2017 New York appeal had decided that Shavolian's guaranty was not assigned to Nader/Sisko. The court denied Shavolian's motion, disagreeing with Shavolian that the New York appeal had decided the issue of the assignment of Shavolian's guaranty. The court also rejected his collateral estoppel argument.
In due course, the summary judgment was heard and granted, determining the assignment of Shavolian's guaranty was valid and finding no other issue of triable fact. The court consequently entered judgment for Nader/Sisko for a total of $4,414,362.87 plus costs and attorney fees.
II
DISCUSSION
Standard of Review and General Principles
Summary judgment is appropriate "if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) To prevail on this motion, a plaintiff seeking summary judgment must establish there is no defense to the cause of action. (Aguilar v. Atlantic Richfield Company et al. (2001) 25 Cal.4th 826, 843; Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241.) This requirement can be satisfied if the plaintiff "has proved each element of the cause of action entitling the party to judgment on the cause of action." (§ 437c, subd. (p)(1).)
All further statutory references are to the Code of Civil Procedure.
"[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact." (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.) "A prima facie showing is one that is sufficient to support the position of the party in question." (Id. at p. 851.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Id. at p. 850, fn. omitted.)
To meet the burden of a prima facie case, the litigant may not rely on mere "allegations or denials of [the] pleadings." (§ 437c, subd. (p)(2); see Maltby v. Shook (1955) 131 Cal.App.2d 349, 355.) Further, "[a]fter-the-fact attempts to reverse prior admissions are impermissible because a party cannot rely on contradictions in his own testimony to create a triable issue of fact." (Thompson v. Williams (1989) 211 Cal.App.3d 566, 573-574.)
"'On appeal after a motion for summary judgment has been granted, we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained.'" (Biancalana v. T.D. Service Co. (2013) 56 Cal.4th 807, 813; see § 437c, subd. (c).)
Nader/Sisko's Burden on Summary Judgment
As noted above, as the party moving for summary judgment, Nader/Sisko was required to present a prima facie showing as to each element of the cause of action. (§ 437c, subd. (p)(1).) In order to make this determination, we review the law and evidence relevant to the circumstances underlying the single cause of action for enforcement of the written guaranty.
Nader/Sisko's second amended complaint (the complaint) seeks damages for the enforcement of Shavolian's personal guaranty. The relevant portion of the 241 Fifth agreement stated that "Shavolian unconditionally guarantees and promises (i) to pay to [Beshmada] . . . on demand after the default by [Hazak] in the performance of its obligations under the [241 Fifth agreement] . . . any and all Obligations . . . consisting of payments due to [Beshmada] . . . . For purposes of this Guaranty the term 'Obligations' shall mean and include all payments, liabilities and obligations, however arising, owned by [Hazak] to [Beshmada] arising out of or in connection with the terms of the [241 Fifth agreement] . . . ." The complaint alleged the guaranty was properly assigned to Nader/Sisko by Beshmada.
"A guarantor is one who promises to answer for the debt or perform the obligation of another when the person fails to pay or perform." (Gramercy Investment Trust v. Lakemont Homes Nevada, Inc. (2011) 198 Cal.App.4th 903, 911.) "A guaranty is a separate and independent obligation from that of the principal debt." (United Central Bank v. Superior Court (2009) 179 Cal.App.4th 212, 215.) "A lender is entitled to judgment on a breach of guaranty claim based upon undisputed evidence that (1) there is a valid guaranty, (2) the borrower has defaulted, and (3) the guarantor failed to perform under the guaranty." (Gray1 CPB, LLC v. Kolokotronis (2011) 202 Cal.App.4th 480, 486.)
As to the first element, the validity of the guaranty, Nader/Sisko offers the guaranty itself, which stated: "[Shavolian] unconditionally guarantees and promises (i) to pay to [Beshmada] . . . on demand after the default by [Hazak] in the performance of its obligations under the [241 Fifth agreement] . . . any and all Obligations . . . consisting of payments due to [Beshmada] . . . . For purposes of this Guaranty, the term 'Obligations' shall mean and include all payments, liabilities and obligations, however arising, owned by [Hazak] to [Beshmada] arising out of or in connection with the terms of the [241 Fifth agreement] . . . ." The validity of the guaranty itself is not disputed, and it is presumptively valid.
As to the assignment, "An assignment carries with it all the rights of the assignor. [Citations.] 'The assignment merely transfers the interest of the assignor. The assignee "stands in the shoes" of the assignor, taking his rights and remedies, subject to any defenses which the obligor has against the assignor prior to notice of the assignment.' [Citation.] Once a claim has been assigned, the assignee is the owner and has the right to sue on it." (Johnson v. County of Fresno (2003) 111 Cal.App.4th 1087, 1096.) On its face, the guaranty was assignable: "[Beshmada], may at any time and from time to time, without the consent of or notice to [Shavolian], except such notice as may be required by applicable statute which cannot be waived . . . assign its rights and interests under this Guaranty, in whole or in part." The guaranty further stated it "shall be binding upon and inure to the benefit of [Beshmada] and [Shavolian] and their respective successors and assigns."
The pledge agreement Nader/Sisko entered into with Beshmada's affiliate Namco Capital in 2008 is important to recall here. Nader/Sisko's $12.5 million loan to Namco Capital was secured by that agreement, which listed Beshmada's interest in 241 Fifth as collateral for the loan, specifically: "all rights of [Beshmada] to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the [241 Fifth] Interests." (Italics added.)
Later, the PSA with the bankruptcy trustee specified: "Beshmada agrees not oppose or contest the validity of the pledge agreement. Beshmada acknowledges that the Collateral includes . . . any and all rights of Beshmada with respect to [241 Fifth] including Beshmada's rights as a member of [241 Fifth] (including its rights pursuant to [the LLC agreement], Beshmada's rights pursuant to the 'True-Up Provision' . . . and any and all rights and remedies available to Beshmada against Shavolian, [Hazak], and other interested parties, if any." In the context of presenting a prima facie case on summary judgment, this is sufficient to establish the assignment.
The facts relating to second and third elements are undisputed. In their separate statements, the parties agreed that Hazak had a true-up payment due in 2011 and failed to make payment. There is also no dispute that Shavolian failed to make the payment. Taken together, Nader/Sisko met its burden to demonstrate it was entitled to judgment.
Shavolian's Evidence Demonstrating Triable Issues of Material Fact
The burden then shifted to Shavolian to demonstrate a triable issue of material fact. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.) All of Shavolian's arguments are variations on a theme: the purported lack of a valid assignment of the guaranty.
1. Import of Nader I
We first address Shavolian's attempts to quote language from Nader I back to us as if it decides the very different issues in this case. Our decision in Nader I has very limited applicability here. That decision, as we noted in our lengthy factual recitation, affirmed the trial court's grant of a stay of this case on forum non conveniens grounds while one of the New York cases was pending. (Nader I, supra, G048276.)
Our standard of review was abuse of discretion, and any statements we made that did not squarely address the propriety of the court's exercise of its discretion were dicta. Moreover, we had a limited record before us, and accordingly, our understanding of the background was somewhat constrained. At the time, it seemed that the New York courts might decide the assignability of the Shavolian guaranty in the context of ongoing litigation - as we will discuss in a moment, however, that did not happen. Thus, Nader I barely informs our decision here, much less dictates the outcome.
2. The New York Decisions
Shavolian next contends the Appellate Division in New York has already decided how we must rule on this case. As we alluded to above, however, we disagree. The Appellate Division, in separate cases, has made numerous findings. The appeal from the 2011 damages action upheld a judgment for Nader/Sisko against Shavolian on a note owed to NY 18, one of the two Namco Capital entities named in the pledge agreement. That decision rejected the argument that the PSA could not assign that note. (Nader & Sons, LLC, et al. v. Shavolian, supra, 113 A.D.3d at p. 433.)
In the 2017 appeal, which was an appeal from Nader/Sisko's declaratory relief action, the Appellate Division held the "assignment in the [PSA] null and void" for lack of the consent of all parties, referring to the assignment of Beshmada's interest in 241 Fifth and the assignment of the true-up provision in the 241 Fifth Operating Agreement. (Nader & Sons, LLC, et al. v. Hazak Associates, LLC, supra, 149 A.D.3d at p. 505.)
The 2017 appeal, however, makes it clear that the court was not referring to the assignment of the Shavolian guaranty, only to the portion of the PSA regarding Beshmada's interest in 241 Fifth and the true-up provision in the Operating Agreement. In holding the trial court went too far in granting declaratory relief as to the guaranty, the court's reasoning was only that relief was improper because the issue had not been raised previously. "Because neither the complaint nor the moving papers sought a declaration as to the validity of the assignment of the guaranties, and because that issue involves different questions and rights than at issue here, it was error for the [New York trial] court to grant that relief sua sponte . . . ." (Nader & Sons, LLC, et al. v. Hazak Associates, LLC, supra, 149 A.D.3d at p. 505.) Thus, the New York courts have never issued an appellate decision on the assignability of the Shavolian guaranty, or on the validity of the assignment in the pledge agreement or the PSA.
Accordingly, we find no issue or claim preclusion that dictates the result in this case. As we said, the New York courts have never squarely addressed whether the guaranty, standing alone, is assignable or that it was properly assigned. The assignment of Beshmada's interest and the true-up under the agreement are separate provisions from the assignment of the guaranty, and we, therefore, reject Shavolian's claim that the decision in the 2017 appeal has any impact here.
3. New York as the Proper Forum
Shavolian argues "the PSA purported to transfer the 'Collateral' as a single bundle, which was defined quite simply by the singular rubric of 'any and all rights of Beshmada with respect to Fifth Ave. LLC.' There can be little doubt that if the New York courts had already invalidated as void ab initio the central pillar of that assignment . . . based upon New York law and a New York Operating Agreement arising from a New York real estate investment deal involving New York entities and individuals as the primary actors, the New York courts were in the best position to evaluate Nader/Sisko's claim that the assignment of the Guaranty was somehow severed and saved from the 'null and void' assignment of the 'Collateral' under the PSA."
This claim requires some unpacking. We do not doubt that this entire case would have been better served, from the perspective of all the parties on both sides, by being litigated in a single forum. However, that is not what the parties chose to do. The guaranty, for whatever reasons, had California choice of law and choice of forum provisions. While the parties have chosen New York to litigate other parts of this seemingly unending dispute, with respect to the guaranty, they are stuck here. We, therefore, interpret the guaranty under California law.
4. Severability
Contrary to Shavolian's claim to the contrary, we also do not need not find that the "PSA was somehow severable into three separate assignments." All we need to find is that the guaranty itself was assignable, and, in fact, assigned to Nader/Sisko. The guaranty was clearly separately assignable, under its express terms: "[Beshmada], may at any time and from time to time, without the consent of or notice to [Shavolian] . . . assign its rights and interests under this Guaranty, in whole or in part." The guaranty further stated it "shall be binding upon and inure to the benefit of [Beshmada] and [Shavolian] and their respective successors and assigns." Unlike, for example, the 241 Fifth agreement, the guaranty included no limits on its assignability; indeed, it included a clause stating it was expressly assignable.
"[G]uaranty contracts are construed according to the same rules as those used for other contracts, with a view to ascertaining the intent of the parties." (River Bank America v. Diller (1995) 38 Cal.App.4th 1400, 1415.) The language quoted above, stating that the guaranty was binding on the parties and their "successors and assigns" could not be more clear, especially when viewed in light of the 241 Fifth agreement, which included a provision requiring consent to assign. "'Where the language of a contract is clear and not absurd, it will be followed.'" (Templeton Development Corp. v. Superior Court (2006) 144 Cal.App.4th 1073, 1085.) The guaranty was freely assignable. Shavolian concedes as much.
Shavolian, however, argues that the assignments in the PSA were not "severable," and the guaranty, therefore, was not validly assigned to Nader/Sisko. He claims if the assignments of Beshmada's interests and the true-up provision were not assignable in the PSA, as the decision in the 2017 appeal stated, the assignment of the guaranty could not be "severed." This argument is ill-conceived. The PSA is not the only document relevant here; the pledge agreement identified as collateral for the applicable loans "all rights of [Beshmada] to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the [241 Fifth] Interests." The pledge agreement does include a severability clause. Thus, even if a severability clause was strictly required, one exists, and it is sufficient to sever Nader/Sisko's rights under the guaranty from any other provision.
Whether Shavolian, as a third party nonbeneficiary of the PSA, has standing to raise whether its provisions are severable is unclear. This issue was not raised by the parties, and we assume, without deciding, that there is no standing issue.
5. Lack of Triable Issues of Material Fact
Shavolian's arguments here are simply unavailing, and he has failed to point to any triable issues of material fact. The guaranty is valid. The assignment clause is valid, and the guaranty was validly assigned to Nader/Sisko. Accordingly, summary judgment was properly granted.
III
DISPOSITION
The judgment is affirmed. Nader/Sisko is entitled to its costs on appeal.
MOORE, J. WE CONCUR: BEDSWORTH, ACTING P. J. ARONSON, J.