VIDEO SYMPHONY, LLC VS CHRIS VICARI

Tentative Rulings

Case Number: 18CHLC22097    Hearing Date: November 21, 2019    Dept: 94

MOTION FOR SUMMARY JUDGMENT OR ADJUDICATION

(CCP § 437c)

TENTATIVE RULING:

Defendant Chris Vicari’s Motion is DENIED AS TO THE REQUEST FOR SUMMARY JUDGMENT, AND GRANTED AS TO THE REQUEST FOR SUMMARY ADJUDICATION OF THE EIGHTH AFFIRMATIVE DEFENSE IN HIS ANSWER.

SUMMARY OF COMPLAINT: Action for breach of student loan promissory note.

REQUEST FOR RELIEF: Grant Defendant summary judgment on the grounds that the action is barred by the statute of limitations, or alternatively, that the loan agreement fails to include all the information mandated for a retail installment contract by the Unruh Act.

OPPOSITION: The cause of action for breach of an installment contract arises separately for each installment, and the statute of limitations for breach of a promissory note is six years. Also, where a note is acquired by a party who does not know of the note’s non-compliance with the Unruh Act, recovery by the acquiring party is not barred.

REPLY: The agreement at issue is a retail installment contract, not a promissory note, and subject to a four year statute of limitations. The Unruh Act is a strict liability statute and the accruing party’s ignorance is no defense.

ANALYSIS:

Plaintiff Video Symphony, LLC (“Plaintiff”) filed the instant action for breach of a student loan agreement against Defendant Chris Vicari (“Defendant”) on July 31, 2018. On January 3, 2019, the Court overruled Defendant’s demurrer to the Complaint. On August 2, 2019, the case was reassigned from Department 43 of the Chatsworth Courthouse to Department 94 of the Stanley Mosk Courthouse. Plaintiff filed the instant Motion for Summary Judgment, or in the alternative, Summary Adjudication, on September 3, 2019. On November 12, 2019, Plaintiff filed a “Reply to Plaintiff’s Opposition.” Although the Court’s file does not reflect the filing of any opposition to the Motion, Plaintiff has demonstrated to the Court’s satisfaction that it was unable to electronically file the document despite multiple attempts starting on November 5, 2019. Plaintiff has provided the Court with an electronic copy.

Defendant moves for summary judgment, or in the alterative, summary adjudication, on the grounds that the action is barred by the statute of limitations, and he has an undisputed defense under the Unruh Act.

Statute of Limitations

Defendant relies on the four-year statute of limitations for a breach of contract cause of action, set forth at Code of Civil Procedure section 337. In opposition, Plaintiff contends the six-year statute of limitations under Commercial Code section 3118 applies. The chapter of the Commercial Code on which Plaintiff relies defines a “negotiable instrument” as an unconditional promise to pay a fixed amount of money that “[d]oes not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money . . . .” (Cal. U. Com. Code, § 3104, subd. (a)(3).) A promise is not unconditional if it states it is subject to any other agreement. (Cal. U. Com. Code, § 3106, subd. (a).)

Defendant presents evidence that the agreement at issue here is subject to the terms and conditions provided by any other written agreement between the parties. (Motion, Separate Statement Fact No. 6; Vicari Decl., ¶5; Compl., Exh. C, ¶ “Promise to Pay.”) Defendant, therefore, has shown that the loan agreement is not a negotiable instrument under the Commercial Code and instead, subject to the four year statute of limitations set forth at Code of Civil Procedure section 337. The last installment date under the agreement was December 2, 2014.

However, Plaintiff is correct that the “[w]hen an instrument is payable in installments, the cause of action on each installment accrues on the day following the date the installment is due.” (White v. Moriarty (1993) 15 Cal.App.4th 1290, 1299.) Plaintiff’s cause of action, therefore, is not time barred as to installments that came due on July 31, 2014 (four years after this action was filed) or thereafter.) As Defendant offers no evidence as to whether any installments came due after July 31, 2014 or thereafter, he has not carried his burden of proof regarding entitlement to summary judgment.

Affirmative Defense Pursuant to the Unruh Act

Defendant also contends, in moving for summary adjudication, that the agreement’s failure to comply with the provisions of the Unruh Act are an affirmative defense to recovery beyond the principal of the loan. Civil Code section 1803.2, subdivision (b) provides that the agreement must state, in 12-point font, (2) the words “Retail Installment Contract.” (Civ. Code, § 1803.2, subd. (b)(2).) However, this limitation on recovery applies only to “any person who acquires a contract or installment account with knowledge of such noncompliance.” (Civ. Code, § 1812.7.) In Morgan v. Reasor Corp. (1968) 69 Cal.2d 881, the California Supreme Court explained that “the requirement of section 1812.7 as to knowledge is satisfied if the holder possesses knowledge of facts sufficient to put a reasonable man on inquiry. (Morgan v. Reasor Corp. (1968) 69 Cal.2d 881, 893.)

In his Motion, Defendant presents evidence that the agreement does not state the words “Retail Installment Contract” in 12-point font. (Motion, Separate Statement Fact No. 8; Kingston Decl., Exhs. A and B; Compl., Exh. C.) He also argues that the entity that created the agreement, Video Symphony EnterTraining, Inc. (“VSE”), was owned by Michael Flanagan, who is the sole shareholder of the entity that now owns the debt (Plaintiff). As the Motion points out, Common ownership between VSE and Plaintiff is alleged in the Complaint. (Motion, Separate Statement Fact Nos. 1, 3; Compl., ¶3.) This demonstrates that Plaintiff possessed sufficient knowledge of the agreement’s compliance with the Unruh Act to put a reasonable person on notice.

Plaintiff’s opposition further confirms a relationship between VSE and Plaintiff that would give Plaintiff knowledge of facts sufficient to put a reasonable man on inquiry regarding whether the agreement included the words “Retail Installment Contract.” (Opp., Separate Statement Fact Nos. 1, 3; Flanagan Decl., ¶¶3-4.) Nor does Flanagan’s declaration disavowing knowledge of the Unruh Act and its “technical formatting” requirements assist Defendant. It is knowledge of the inclusion of the relevant language itself, not that their inclusion is required by statute, that is relevant. Plaintiff’s opposition does not create a triable issue of material fact regarding the request for summary adjudication.

Conclusion

Defendant Chris Vicari’s Motion is DENIED AS TO THE REQUEST FOR SUMMARY JUDGMENT, AND GRANTED AS TO THE REQUEST FOR SUMMARY ADJUDICATION OF THE EIGHTH AFFIRMATIVE DEFENSE IN HIS ANSWER.

Moving party to give notice.