On 05/01/2018 SAM SEGAL filed a Contract - Other Contract lawsuit against BIDDING UNLIMITED INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is DANIEL S. MURPHY. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
DANIEL S. MURPHY
BIDDING UNLIMITED INC.
KRASHENNY DANIELLA S.
DOES 1 TO 50
HORN STEVEN J. ESQ. ESQ.
HORN STEVEN JEFFRY ESQ.
ACKERMAN WHITNEY D.
HORN STEVEN JEFFRY ESQ.
9/23/2019: Declaration - DECLARATION DELCARATION OF WHITNEY D. ACKERMAN IN SUPPORT;
10/1/2019: Declaration in Support of Ex Parte Application
10/2/2019: Order - ORDER [PROPOSED] ORDER ON EX PARTE APPLICATION TO SHORTEN TIME ON MOTION TO CONTINUE TRIAL
10/15/2019: Separate Statement
10/15/2019: Motion for Summary Judgment
11/1/2019: Declaration - DECLARATION PLAINTIFFS' DECLARATION RE: DEFENDANTS' REQUEST TO CONTINUE THE TRIAL DATE
7/11/2019: Proof of Service (not Summons and Complaint)
5/8/2019: Clerk's Application to Vacate and Order
3/27/2019: Proof of Service by Substituted Service
1/25/2019: Order - Order re Demurrer tot he First Amended Complaint
12/27/2018: Opposition - Plaintiffs Sam Segal and Bella Seagal's Opposition to Defendants Bidding Unlimited and Garry Itkin's Demurrer to Plaintiffs' First Amended Complaint
9/25/2018: CASE MANAGEMENT STATEMENT -
10/5/2018: Summons -
12/12/2018: Case Management Order
10/23/2018: Demurrer - without Motion to Strike - BIDDING UNLIMITED AND ITKIN'S NOTICE OF DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES; MEET AND CONFER DECLARATION OF WHITNEY D. ACKER
10/1/2018: PLAINTIFFS NOTICE OF RULING RE: DEFENDANTS BIDDING UNLIMITED AND GARRY ITKIN'S DEMURRER TO PLAINTIFFS' COMPLAINT AND CASE MANAGEMENT CONFERENCE
8/31/2018: Minute Order -
8/3/2018: PROOF OF SERVICE SUMMONS -
Hearing07/07/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Non-Jury TrialRead MoreRead Less
Hearing06/25/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Final Status ConferenceRead MoreRead Less
Hearing02/28/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Summary JudgmentRead MoreRead Less
Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Non-Jury Trial - Not Held - Advanced and Continued - by CourtRead MoreRead Less
Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Hearing on Motion to Continue Trial - Not Held - Advanced and Continued - by CourtRead MoreRead Less
Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Final Status Conference - Not Held - Advanced and Continued - by CourtRead MoreRead Less
Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Hearing on Motion to Continue Trial - HeldRead MoreRead Less
DocketMinute Order ( (Hearing on Motion to Continue Trial)); Filed by ClerkRead MoreRead Less
DocketNotice (of Court Order on November 4, 2019 Hearing); Filed by Bidding Unlimited Inc. (Defendant)Read MoreRead Less
DocketDeclaration (Plaintiffs' Declaration Re: Defendants' Request to Continue the Trial Date); Filed by Bella Segal (Plaintiff); Sam Segal (Plaintiff)Read MoreRead Less
DocketRequest for Entry of Default / Judgment; Filed by Plaintiff/PetitionerRead MoreRead Less
DocketRequest for Entry of Default / Judgment; Filed by Plaintiff/PetitionerRead MoreRead Less
DocketREQUEST FOR ENTRY OF DEFAULTRead MoreRead Less
DocketREQUEST FOR ENTRY OF DEFAULTRead MoreRead Less
DocketREQUEST FOR ENTRY OF DEFAULTRead MoreRead Less
DocketNOTICE OF CASE MANAGEMENT CONFERENCERead MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
DocketComplaint; Filed by Sam Segal (Plaintiff); Bella Segal (Plaintiff)Read MoreRead Less
DocketCOMPLAINT-CONTRACTRead MoreRead Less
DocketSUMMONSRead MoreRead Less
Case Number: BC704544 Hearing Date: February 28, 2020 Dept: 32
SAM SEGAL and BELLA SEGAL
BIDDING UNLIMITED, INC., et. al.
Case No.: BC704544
Hearing Date: February 28, 2020
[TENTATIVE] order RE:
Motion for Summary judgment or, in the alternative, summary adjudication
Plaintiffs Sam Segal and Bella Segal commenced this action against Defendants Bidding Unlimited, Inc. (“BUI”), David Zinberg (“Zinberg”), Gary Itkin (“Itkin”), and Daniella S. Krashenny (“Krashenny”) (collectively, “Defendants”) on May 1, 2018. The operative pleading is the Second Amended Complaint (“SAC”) filed on January 31, 2019. The SAC asserts causes of action for (1) breach of contract against Defendants, (2) breach of contract re: guaranty against Zinberg and Itkin, (3) fraud against Defendants, (4) common count against Defendants, (5) breach of contract against BUI, Zinberg, and Itkin, (6) fraud against BUI, Zinberg, and Itkin, and (7) common count against Defendants. The SAC alleges in pertinent part as follows
On August 30, 2016, the parties entered into a written agreement (“Note”) whereby Defendants borrowed $500,000 from Plaintiffs. By the terms of the Note, Defendants agreed to repay Plaintiffs the $500,000 plus interest on or before September 15, 2017. In addition, Defendants Zinberg and Itkin personally guaranteed the loan’s repayment. Defendants breached the Note by failing to provide full repayment by September 15, 2017. Further, Defendants defrauded Plaintiffs into executing the Note by setting a usurious interest rate in order to create a defense to repayment of the loan.
Apart from the Note, in August 2016, Plaintiffs and Defendants BUI, Zinberg, and Itkin entered into an oral contract whereby Plaintiffs agreed to consign jewelry owned to them to these Defendants for sale through their online jewelry auction business. These Defendants agreed to sell Plaintiffs’ jewelry and pay Plaintiffs a portion of the sale proceeds within a reasonable time. Said Defendants breached the oral agreement by selling the consigned jewelry and keeping the sales proceeds.
B. Course of Proceedings
On July 11, 2019, default was entered against Defendant Zinberg.
CCP section 437c(c) states: “The motion for summary judgment shall be granted 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.” A material fact is one that “must relate to some claim or defense in issue under the pleadings, and it must also be essential to the judgment in some way.” (Riverside County Community Facilities District v. Bainbridge 17 (1999) 77 Cal.App.4th 644, 653.) The court may not weigh the evidence. (Mann v. Cracchiolo (1985) 38 Cal.3d 18, 39.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (CCP § 437c(f)(2).) The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-51.)
Defendants BUI and Itkin (hereinafter, “Defendants”) move for summary summary of the SAC or, in the alternative, summary adjudication of each cause of action asserted therein. Defendants claim that Plaintiffs’ first through fourth causes of action fail because the Note is usurious and therefore void. Defendants claim that Plaintiffs’ fifth through seventh causes of action fail as moot because the parties have stipulated to the amount of monies owed by BUI to Plaintiffs for the jewelry items sold.
A. Procedural Defect
As a procedural matter, Plaintiffs claim that Defendants are not entitled to summary adjudication of any portion of this action because their notice of motion fails to identify the cause of action to which summary adjudicated is directed in violation of CRC Rule 3.1350(b). That CRC Rule states in pertinent part: “If summary adjudication is sought, whether separately or as an alternative to the motion for summary judgment, the specific cause of action … must be stated specifically in the notice of motion and be repeated, verbatim, in the separate statement of undisputed material facts.”
Defendants’ notice of motion requests “summary judgment or, alternatively, for summary adjudication” in their favor. Defendants explain in their notice that they “are entitled to judgment as a matter of law on the entire case, and thereby entitled to Summary Judgment, because all remaining causes of action under the operative pleadings are either completely defeated or rendered moot. Alternatively, [Defendants] are entitled to Summary Adjudication of all causes of action arising under the August 30, 2016 Loan Agreement subject to the action.”
The Court agrees with Plaintiffs in part. CRC Rule 3.1350 requires the movant to “state specifically in the notice of motion” the causes of action for which summary adjudication is sought. Common and obvious means of specifying such causes of action is identifying the causes of action by number or by some clear defining feature. Defendants have not clearly identified each cause of action for which summary adjudication is sought, so such summary adjudication of each cause of action is not available to them.
Still, this conclusion does not mean that Defendants are wholly precluded from summary adjudication. In their notice of motion, Defendants requested “Summary Adjudication of all causes of action arising under the August 30, 2016 Loan Agreement.” A review of the SAC indicates that this is a request for summary adjudication of Plaintiffs’ first through fourth causes of action. As such, the Court concludes that Defendants have properly asked for summary judgment of the SAC and summary adjudication of the SAC’s first through fourth causes of action.
Defendants argue that this conclusion unjustifiably elevates form over substance. The Court disagrees. “The purpose of the notice requirements ‘is to cause the moving party to “sufficiently define the issues for the information and attention of the adverse party and the court.” ’ ” (Kinda v. Carpenter (2016) 247 Cal.App.4th 1268, 1277.) In the Court’s view, a notice of motion serves its purpose when it allows the Court and Plaintiffs to reasonably comprehend what relief is being sought. Defendants’ failure to specify each cause of action for which summary adjudication is sought precluded the Court and Plaintiffs from making this assessment and sowed some degree of confusion about the relief sought in this action.
B. Prima Facie Showing
1. First Through Fourth Causes of Action
Defendants argue that Plaintiffs’ first through fourth causes of action relating to the Note fail because the Note is usurious. Among other things, Defendants present a stipulation executed by the parties, reflecting that (1) the parties entered into the Note on August 30, 2016 (Ackerman Ex. A, ¶ 1), (2) the Note entailed the loan of the principal sum of $500,000 from Plaintiffs to BU (Ibid.), and (3) the interest rate set forth in the Note is 15% per annum (Ackerman Decl. Ex. A, ¶ 3).
The Court agrees that Defendants have made a prima facie showing of usury. The essential elements of usury are: (1) the transaction must be a loan or forbearance; (2) the interest to be paid must exceed the statutory maximum; (3) the loan and interest must be absolutely repayable by the borrower; and (4) the lender must have a willful intent to enter into a usurious transaction. (Creative Ventures, LLC v. Jim Ward & Associates (2011) 195 Cal.App.4th 1430, 1449.)
Each element is present. First, the Note is clearly a loan agreement as, pursuant to its provisions, Plaintiffs agreed to provide BUI with $500,000 and BUI agreed to repay this principal sum plus interest. (Civ. Code § 1912 (“A loan of money is a contract by which one delivers a sum of money to another, and the latter agrees to return at a future time a sum equivalent to that which he borrowed.”).) Second, the Note’s interest rate of 15% per annum exceeds the statutory maximum of 10% per annum. (Hardwick v. Wilcox (2017) 11 Cal.App.5th 975, 978.) Third, the loan is absolutely repayable to Plaintiffs. The Note provides for no contingencies excusing repayment. Fourth, the Note reflects Plaintiffs’ intent to take the amount of interest which Defendants are required to pay. This is willful intent for purposes of usury. (WRI Opportunity Loans II, LLC v. Cooper (2007) 154 Cal.App.4th 525, 533 (“ ‘[T]he intent sufficient to support the judgment [of usury] does not require a conscious attempt, with knowledge of the law, to evade it. The conscious and voluntary taking of more than the legal rate of interest constitutes usury and the only intent necessary on the part of the lender is to take the amount of interest which he receives; if that amount is more than the law allows, the offense is complete.’ ”).)
However, the Court disagrees with Defendants that the presence of usury in the Note thereby voids the Note. California law is plainly to the contrary. Usury voids only the interest provisions of the loan; the lender is still entitled to repayment of principal. (See, e.g., Hardwick, supra, 11 Cal.App.5th at 979 (“When a loan is usurious, the creditor is entitled to repayment of the principal sum only. He is entitled to no interest whatsoever.”); WRI, supra, 154 Cal.App.4th at 542 (“The usurious provisions of a loan are void on the grounds of illegality or unlawfulness because they violate express provisions of law.”); Gibbo v. Berger (2004) 123 Cal.App.4th 396, 403 (“When a loan is usurious, the creditor is entitled to repayment of the principal sum only. He is entitled to no interest whatsoever.”); 11 Miller & Starr, Cal. Real Estate (4th ed. 2019) § 37:43 (“A usurious obligation is not completely void; the Usury Law only invalidates the interest portion of the debt.”).) The Note remains a valid instrument. (Paillet v. Vroman (1942) 52 Cal.App.2d 297, 305 (“The entire instrument does not become void because of its usurious feature.”); 11 Miller & Starr, Cal. Real Estate (4th ed. 2019) § 37:43 (“[T]he lender is only entitled to collect the principal, which is payable according to the terms of the note.”).) And any interest payments made at the usurious rate are credited against the principal balance. (Hardwick, supra, 11 Cal.App.5th at 979.)
Accordingly, Plaintiffs’ first cause of action for breach of contract, second cause of action for breach of guarantee, and fourth cause of action for common counts are not invalidated simply because the Note contains a usurious interest provision. Moreover, because Defendants concede that they made total payments against the Note of approximately $188,000 to $192,750, Defendants cannot claim that they have not breached the Note by fully repaying the principal. (DUMF 7-8.)
Defendants cite one non-binding authority — Development Acquisition Group, LLC v. ea Consulting, Inc. (E.D. Cal. 2011) 776 F.Supp.2d 1161, 1164 — to support the proposition that usurious transactions are void. There, the district court stated: “An interest rate in excess of 10% is usurious, and if a lender negotiates a loan at a usurious rate absent a qualified exemption, the agreement shall be void and the lender will have no action at law to recover any interest. Cal. Civ. Code § 1916-2.” Defendants misread this case. The district court was simply providing a terse paraphrase of Civil Code section 1916-2. That statute provides in pertinent part: “Any agreement or contract of any nature in conflict with the [usury laws] shall be null and void as to any agreement or stipulation therein contained to pay interest and no action at law to recover interest in any sum shall be maintained….” (Emphasis added.) The text of the statute (and case law addressing this issue ante) make clear that usury voids the interest payment provisions of a promissory note, not the promissory note in its entirety.
This leaves Plaintiffs’ third cause of action for promissory fraud. “An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) The essence of this type of fraud “is the existence of an intent at the time of the promise not to perform it.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.) “[T]he intent element of promissory fraud entails more than proof of an unkept promise or mere failure of performance.” (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1183.) Defendants claim that this cause of action cannot stand because BUI paid between $188,000 to $193,000 in interest under the Note. (Ackerman Ex. A, ¶ 7.) Defendants claim that they had no reasonable basis to make these payments if their actual intent was to “use the unlawful and usurious interest rate as [a] defense against repaying the loan.” (SAC ¶ 21.) Defendants’ point is well-taken. Defendants have shifted the burden to Plaintiffs to establish a triable issue of fact in this respect.
2. Fifth Through Seventh Causes of Action
Defendants claim that Plaintiffs’ fifth through seventh causes of action based on the alleged sale of consigned jewelry fail as moot. Defendants point out that the parties stipulated that BUI owes Plaintiffs the sum of $21,117 for the music jewelry boxes sold. (Ackerman Ex. A, ¶ 8.)
The Court agrees in part. The parties’ stipulation moots these causes of action as to BUI. However, as Plaintiffs point out (Opp. at 22), these causes of action are also asserted against Itkin, who is not held personally liable for this alleged misconduct under the parties’ stipulation. These causes of action are therefore not moot as against Itkin. Because Defendants’ notice of motion has failed to request summary adjudication of these causes of action, such relief is not available to either Defendant.
C. Triable Issue of Material Fact
The Court has determined that Defendants have made a prima facie showing that (1) the Note contains usurious interest provisions and (2) Plaintiffs’ third cause of action lacks merit. Plaintiffs must establish a triable issue of material fact as to these points in order to avoid summary adjudication of the same.
1. Choice of Law Analysis
Plaintiffs argue that Defendants’ motion fails in its entirety under choice of law principles. According to Plaintiffs, this action involves the interests of two states: (1) California, a place of business for BUI and locale of the parties, and (2) Delaware, the place of BUI’s incorporation. Plaintiffs claim that there is a conflict of laws between the two states. Delaware disallows a corporation and a personal guarantor from using usury as a defense. (6 Del Code § 2306 (“No corporation … shall interpose the defense of usury in any action.”); Bank of Delaware v. NMD Realty Co. (Del. Super. Ct. 1974) 325 A.2d 108, 111 (“[T]he individual defendants as accommodation indorsers are not entitled to assert the defense of usury inasmuch as it was not an available defense for the corporate maker of the notes.”).) Conversely, California allows a corporation and a personal guarantor to assert such a defense. (See Corp. Code § 25118(e)(1).)
As a preliminary matter, Plaintiffs claim that Defendants bear the burden of establishing the undisputed facts necessary to this choice of law determination and that their failure to carry this burden results in a denial of this motion. Plaintiffs are incorrect. This burden rests with the litigant invoking the law of the foreign state. (See, e.g., Chen v. Los Angeles Truck Centers, LLC (2019) 42 Cal.App.5th 488, 495 (“ ‘As the forum state, California will apply its own law “unless a party litigant timely invokes the law of a foreign state.” ’ [Citation.] In that event, the party invoking a foreign state’s law … ‘must demonstrate that the [foreign state’s] rule of decision will further the interest of the foreign state and therefore that it is an appropriate one for the forum to apply to the case before it.’ ”); Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 919 (“[T]he foreign law proponent must identify the applicable rule of law in each potentially concerned state and must show it materially differs from the law of California.”).) Furthermore, “[a] defendant moving for summary judgment need address only the issues raised by the complaint.” (Soria v. Univision Radio Los Angeles, Inc. (2016) 5 Cal.App.5th 570, 585.) The issue of the application of Delaware law is nowhere raised in the SAC. Thus, Defendants had no obligation to make this showing in moving for summary judgment.
Plaintiffs claim, without much explanation, that the governmental interest test favors the application of Delaware law. The Court disagrees. As Defendants note in reply (Reply at 1), Plaintiffs “make no effort whatsoever to explain why a contract dispute over a contract that was created, executed, and performed in the State of California by California Citizens and brought in the Superior Court of the State of California involves any kind of choice of law issue.”
The governmental interest test involves three steps: (1) the court determines whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different, (2) if there is a difference, the court examines each jurisdiction’s interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists, and (3) if the court finds that there is a true conflict, it carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state. (Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, 107-08.)
The Court has already addressed the first step — California and Delaware have different laws with respect to whether a corporation and personal guarantor can use usury as a defense.
The second step is critical. In determining the interest of the involved state in the issues, “relevant contacts” are examined. (Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc. (1993) 14 Cal.App.4th 637, 645.) These relevant contacts are set forth in section 188(2) of the Restatement Second of Conflict of Laws: (1) the place of contracting, (2) the place of negotiation of the contract, (3) the place of performance, (4) the location of the subject matter of the contract, and (5) the domicile, residence, nationality, place of incorporation and place of business of the parties. (Id. at 646.) Notably, “California choice-of-law cases  continue to recognize that a jurisdiction ordinarily has ‘the predominant interest’ in regulating conduct that occurs within its borders [Citations], and in being able to assure individuals and commercial entities operating within its territory that applicable limitations on liability set forth in the jurisdiction’s law will be available to those individuals and businesses in the event they are faced with litigation in the future.” (McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68, 97-98.)
Here, the SAC provides several notable judicial admissions. According to the SAC, “Plaintiffs and Defendants are residents of the County of Los Angeles.” (SAC ¶ 1.) “The agreements entered into as alleged herein were entered into in the County of Los Angeles, State of California.” (SAC ¶ 1.) Defendant Itkin is a “natural person and resident of the County of Los Angeles, State of California.” (SAC ¶ 4.) BUI is “a corporation duly authorized and existing under the laws of the State of California.” (SAC ¶ 5.) The Note has a usurious rate “under California law.” (SAC ¶ 20.) Plaintiffs allegedly trusted Defendant Krashenny “to use her legal knowledge and skills as an attorney to draft an Agreement that was lawful, binding and which Agreement would conform to the laws of the State of California.” (SAC ¶ 21.) The Note attached to the SAC confirms several of these allegations. (SAC Ex. 1.) The Note lists BUI and Plaintiffs as having California addresses and states that the place of execution is Los Angeles, California. (Ibid.)
Given these judicial admissions and the lack of any evidence tying this case to Delaware, apart from that forum serving as BUI’s place of incorporation, the governmental interests test clearly favors application of California law to this dispute.
2. Internal Affairs Doctrine
Plaintiffs similarly argue that the internal affairs doctrine precludes Defendants from asserting usury as an affirmative defense. Plaintiffs are incorrect.
The internal affairs doctrine is codified in Corporations Code section 2116. That section states in full: “The directors of a foreign corporation transacting intrastate business are liable to the corporation, its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the making of unauthorized dividends, purchase of shares or distribution of assets or false certificates, reports or public notices or other violation of official duty according to any applicable laws of the state or place of incorporation or organization, whether committed or done in this state or elsewhere. Such liability may be enforced in the courts of this state.” (Emphasis added.)
Relying on the internal affairs doctrine, Plaintiffs assert that Defendants are liable to Plaintiffs, i.e., Defendants’ creditors, according to the laws of Delaware even if the purportedly wrongful conduct occurred in California. However, Plaintiffs overlook the fact that this doctrine applies to directors of the corporation. BUI is not a director of the corporation; BUI is the corporation. And, while Itkin once served as a BUI director, he resigned this position on August 22, 2016, a week before the execution of the Note. (Itkin Decl. Ex. B.) Itkin therefore was not acting as a director when the parties executed the Note.
Furthermore, as its name suggests, this doctrine applies to claims that “interfere with internal corporate affairs.” (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1195.) “Internal affairs” include “ ‘steps taken in the course of the original incorporation, ... the adoption of by-laws, the issuance of corporate shares, the holding of directors’ and shareholders’ meetings, ... the declaration and payment of dividends and other distributions, charter amendments, mergers, consolidations, and reorganizations, the reclassification of shares and the purchase and redemption by the corporation of outstanding shares of its own stock.’ ” (State Farm Mutual Automobile Ins. Co. v. Superior Court (2003) 114 Cal.App.4th 434, 442.) This doctrine does not reasonably extend to a promissory note between a corporation and third-party lenders.
3. Interest Contingency Rule
Plaintiffs claim that the Note is not usurious because of the interest contingency rule.
The interest contingency rule stems from the principle that “interest is usurious only when it is ‘absolutely repayable by the borrower.’ ” (WRI, supra, 154 Cal.App.4th at 534.) “According to this rule, a loan that will ‘give the creditor a greater profit than the highest permissible rate of interest upon the occurrence of a condition [ ]is not usurious if the repayment promised on failure of the condition to occur is materially less than the amount of the loan ... with the highest permissible interest, unless a transaction is given this form as a colorable device to obtain a greater profit than is permissible.’ [Citation.] Thus, interest that exceeds the legal maximum is not usurious when its payment is ‘subject to a contingency so that the lender’s profit is wholly or partially put in hazard,’ provided ‘the parties are contracting in good faith and without the intent to avoid the statute against usury.’ [Citation.] Under the rule, the hazard in question must be ‘something over and above the risk which exists with all loans ... that the borrower will be unable to pay.’ [Citation.]” (Ibid.)
Plaintiffs contend that the interest contingency rule applies because their recoupment of the loan’s principal and interest was placed in hazard by Krashenny who allegedly had no authority to sign the Note and therefore bind BUI thereto. This argument is unpersuasive and somewhat perplexing. This argument is unpersuasive because this rule does not apply to this sort of “hazard” going to the very existence of the contract. The sorts of hazards to which this rule applies are clearly those expressly contracted for and tied to external events in the course of business such as anticipated profits or appreciation value from contemplated housing developments. (See Thomassen v. Carr (1967) 250 Cal.App.2d 341 (illustration of rule); Schiff v. Pruitt (1956) 144 Cal.App.2d 493 (same); see also WRI, supra, 154 Cal.App.4th at 534 (noting that repayment must be “promised on failure of the condition to occur”).) This argument is perplexing because Plaintiffs are essentially positing that the Note is invalid and that their breach of contract claim based thereon is without merit. If this is Plaintiffs’ position, then their breach of Note claim ought to be summarily adjudicated.
Plaintiffs argue that Defendants should be estopped from asserting usury as a defense because Krashenny, acting as Defendants’ agent, (1) drafted the Note, including its usurious interest provision, (2) knew that Plaintiffs wanted a legal and valid instrument, and (3) failed to advise Plaintiffs that the Note was usurious. The Court disagrees.
“[U]nder proper facts, the defense of estoppel is applicable to a charge of usury in this state.” (Janisse v. Winston Inv. Co. (1957) 154 Cal.App.2d 580, 587.) However, “usury law does not place borrower and lender on the same footing. The fact that both go into the transaction willingly does not place them ‘in pari delicto.’ ” (McClung v. Saito (1970) 4 Cal.App.3d 143, 153.) Thus, “an estoppel does not arise simply because the borrower knew of the usurious nature of the transaction, took the initiative in seeking the loan, and paid usurious interest without protest.” (Janisse, supra, 154 Cal.App.2d at 587.) Estoppel requires a showing that the usurious provisions were fraudulently inserted by the borrower. (13A Cal.Jur.3d (2020) Protection Laws, § 685 (same); see White v. Seitzman (1964) 230 Cal.App.2d 756, 762 (noting that borrower “devised the means whereby the fraud on the statute was accomplished”); Stock v. Meek (1950) 35 Cal.2d 809, 818 (noting that fraudulent insertion of usurious interest provision may estop borrower from asserting usury defense).)
In this case, Plaintiffs have not established a triable issue of fact as to whether estoppel exists. Plaintiffs have not provided evidence showing that Defendants knew of the usurious nature of the transaction, nor would such a showing be sufficient. (Janisse, supra, 154 Cal.App.2d at 587.) Plaintiffs have also not presented evidence showing that Defendants proposed this interest rate with the specific intent to use usury as a defense to repayment of the loan. Indeed, as Defendants point out, their partial repayment of the Note’s interest is strongly inconsistent with such an intent.
Defendants BUI’s and Itkin’s motion for summary judgment of the SAC is DENIED.
Defendants BUI’s and Itkin’s motion for summary adjudication of the SAC’s third cause of action for promissory fraud is GRANTED. The Court further determines as a matter of law that the Note contains a usurious interest provision.
 Plaintiffs’ objections to the Ackerman and Itkin Declarations are overruled.
Defendants’ objections to the Sam Segal Declaration are sustained as to the third through fifth sentences of Paragraph 9. The remainder are overruled. Defendants’ objections to the Horn Declaration are overruled.
 Defendants’ requests for judicial notice are granted. (Evid. Code § 452(d).)