Opposition Objections

Cal. Super. - 6th Dist.November 19, 2020

\OWQQUIhb-DNH NNNNNNNNNHHHHHHHHHH WQQMfiMNHGfiWQQMhMNH© 200V373765 Santa Clara - Civil Jennifer J. Hagan, CSB # 157127 HAGAN LAW, INC. 535 Middlefield Road, Ste 190 Menlo Park, CA 94025 Tel: (650) 322-8498 Email: Jhagan@Haganlaw.com Attorney for Defendants, RANDOLF F. LAMB, personally. Electronically Filed by Superior Court of CA, County of Santa Clara, on 6/23/2021 1:57 PM Reviewed By: L. Nguyen Case #20CV373765 Envelope: 6708150 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA ROBERT D. HALL, AS TRUSTEE OF THE ROBERT D. HALL AND PATRICIA A. HALL REVOCABLE DECLARATION OF TRUST DATED MAY 7, 2007, DAN HALL, an individual, TOM SOSINE, an individual, and JON GUNDERSEN, an individual, Plaintiffs, V. 405 ALBERTO WAY, LLC, a California Limited Liability Company, RANDOLFH F. LAMB, an individual, LAMB PARTNERS, LLC, a California Limited Liability Company, and DOES 1 through 25, inclusive, Defendants. N0. 20-CV-373765 LAMB SUPPLEMENTAL OPPOSITION TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT ORDERS DATE: July 15, 2021 TIME: 1:30 p.m. DEPT: 12 Hon. Cynthia Lie Trial Date: None Complaint Filed: Complaint Served: 1 1-19-2020 1-13-2021 COMES NOW, DEFENDANT, Randolph J. Lamb, for himself personally, and files this Supplemental Opposition which was authorized by the Court at the hearing on the matter dated June 3, 2021. The scope 0f the supplemental brief authorized by the Court is Whether 0r not the Court has the authority t0 compel the four (4) Plaintiff Investors (the “Investors”) t0 proceed 0n their writ applications against a particular defendant. The answer t0 that question is YES. The Court has statutory authority under Civil Code § 2845 to compel the Investors to exhaust all remedies under the Redemption Agreement as against 1 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT \OWQQUIhb-DNH NNNNNNNNNHHHHHHHHHH WQQMfiMNHGfiWQQMhMNH© Defendant, 405 Alberto Way, LLC, the Principle obligor under the Redemption Agreement, including attaching its property, before pursuing Randy Lamb, the guarantor. In fact, Civil Code § 2845, is an absolute statutory defense for Lamb to these writ applications. Civil Code § 2845 entitles Mr. Lamb to demand that the Plaintiff Investors proceed against 405 Alberto Way, LLC, on their respective writ applications first (or pursue any other remedy in their power)M attempting t0 obtain a writ order against the property 0fMr. Lamb. Investors’ failure to proceed according to the letter 0f the law as set forth in Civil Code § 2845 results in exoneration to the extent to Which the surety (Mr. Lamb) is prejudiced. In this case, if the Investors d0 not proceed according t0 Civil Code § 2845, and the Court improperly grants a writ against Mr. Lamb’s property, then Mr. Lamb will be entitled t0 the remedy of 100% exoneration of his personal guarantee. INTRODUCTION Mr. Lamb has already argued in his Opposition that this Court may not issue any writ orders against his property because “Under California law, the right t0 an attachment is governed by statutes that must be strictly construed. Nakasone v. Randall, 129 Cal. App. 3d 757, 761 (1982). And attachment may not be issued if any 0f the numerous procedural requirements are unsatisfied. Pacific Decision Corp. v. Sup. CL, 121 Cal App. 4th 1100, 1106 (2004).” Pursuant to CCP § 484.090, before a writ order may be issued by the Court, the Court must make a finding that “The plaintiff has established the probable validity 0f the claim upon Which the attachment is based.” The Investors simply cannot and have not demonstrated that it is probable that they will prevail on their claim against Mr. Lamb at trial because: 1. Mr. Lamb did not waive his rights under Civil Code § 2845 in the Redemption Agreement, and he is entitled t0mm that the Investors proceed first against 405 Alberto Way, LLC, on any remedy before pursuing Mr. Lamb. 2. The Investors have not attempted t0 proceed against 405 Alberto Way, LLC. 2 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT \OWQQUIhb-DNH NNNNNNNNNHHHHHHHHHH WQQMfiMNHGfiWQQMhMNH© 3. The Investors have violated Mr. Lamb’s statutory rights and Mr. Lamb’s remedy is exoneration 0f part or all 0f the guarantee. 4. At trial, Mr. Lamb will have the statutory defense provided by CCP § 484.090 and may be exonerated 0f the guarantee. Thus, the Investors cannot and have not demonstrated that it is probable that they Will prevail 0n their claim against Mr. Lamb at trial. As a result, this Court is prevented by CCP § 484.090 from issuing a writ order against Mr. Lamb’s property. ARGUMENTS 1. Mr. Lamb is entitled t0 the rights 0f Sureties under Civil Code S 2845. There is n0 longer any distinction in California between sureties and guarantors. (CiV.C0de, § 2787; Bloom v. Bender, 48 Cal.2d 793, 313 P.2d 568; American Guaranty Corp. v. Stoody, 230 Cal.App.2d 390,) Thus, the abolition of the distinction between sureties and guarantors abolished the rule in contracts 0f guaranty that the obligation of the principal debtor and that 0f the guarantor were entirely independent obligations. A continuing guaranty is now a form of suretyship obligation and is subject to all provisions 0f law relating to suretyship. (American Guaranty Corp. v. Stoody, supra; Hill and Morton, Inc. v. Coughlan, 214 Ca1.App.2d 545.) Pursuant t0 Civil Code § 2787, “the distinction between sureties and guarantors is hereby abolished. The terms and their derivatives, Wherever used in this code 0r in any other statute or law of this state now in force 0r hereinafter enacted, shall have the same meaning as defined in this section. A surety 0r guarantor is one Who promises t0 answer for the debt, 0r miscarriage 0f another, 0r hypothecates property as security therefor. Pursuant t0 Civil Code § 2845, “A surety may require the creditor, subj ect t0 Section 996.440 of the Code 0f Civil Procedure, t0 proceed against the principal, 01‘ t0 pursue any other remedy in the creditor‘ s power Which the surety cannot pursue, and Which would lighten 3 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT \OWQQUIhb-DNH NNNNNNNNNHHHHHHHHHH WQQMfiMNHGfiWQQMhMNH© the surety‘s burden; and if the creditor neglects to d0 so, the surety is exonerated to the extent t0 Which the surety is thereby prejudiced. Because the Redemption Agreement provided at Paragraph 3 therein a guaranty by Mr. Lamb personally, Which guarantee was defined as a “continuing guaranty,” Mr. Lamb has those rights afforded t0 sureties as provided by statutes. Section 3(d) 0f the Redemption Agreement is entitled “Waivers.” In that section, Mr. Lamb expressly waives any rights arising under Sections 2846, 2847, 2848 and 2849 of the California Civil Code. However, Mr. Lamb never waived his rights under Civil Code 8 fl. There is simply n0 language whatsoever in the Redemption Agreement whereby Mr. Lamb waives his statutory right to request that the Investors first proceed against the “borrower” (405 Alberto Way, LLC) and exhaust all remedies before pursuing him personally 0n the guaranty. Throughout the course 0f this litigation, Mr. Lamb has personally, and through his attorney, made repeated requests t0 the Investors to proceed against the real property owned by 405 Alberto Way, LLC, which has an appraised value reflecting a net equity 0f $5.2 million. (See Decl. 0fLamb ISO Opposition, Para. 15, 16, 17 and EX. “B”). The Investors have repeatedly rejected Mr. Lamb’s request. In fact, Investors have made numerous written and oral admissions and representations to this Court, Which violate their obligations under Civil Code § 2845 t0 “proceed against the principal, or to pursue any other remedy in the creditor‘ s power Which the surety cannot pursue, and Which would lighten the surety‘s burden.” The statutory remedy for refusing to proceed against the principle is exoneration of the guaranty t0 the extent to Which the surety is thereby prejudiced. Pursuant t0 Civil Code § 2787, "A surety is exonerated, except so far as he or she may be indemnified by the principal, if by any act 0f the creditor, Without the consent of the surety the original obligation 0fthe principal is altered in any respect, 0r the remedies 0r rights 0f the creditor against the principal, in respect thereto, in any way impaired or suspended." 4 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT \OWQQUIhb-DNH NNNNNNNNNHHHHHHHHHH WQQMfiMNHGfiWQQMhMNH© 2. The Redemption Agreement is Devoid 0f Kev Waiver Language 0f Suretv EE- The case 0f Cathay Bank v. Lee, 14 Cal. App. 4th 1533 (1993), Which is a loan guaranty case, is considered the leading case on surety waiver language. In overturning the bank’s trial court win against a guarantor, the Cathay Bank Court restated the traditional rule that an enforceable waiver must be intentional, explicit, and inform of its legal consequences. Thus, a valid waiver must explain the precise nature 0f the guarantor’s defense and the fact that it is being waived. Moreover, the Cathay Bank Court stated: (1) that the lender has the burden t0 prove by clear and convincing evidence that any waiver is informed; and (2) that ambiguities are construed against the drafter. Waiver is the intentional relinquishment of a known right. (BP Alaska Exploration, Inc. v. Superior Court (1988) 199 Cal. App. 3d 1240, 1252, (erroneous legal concession not waiver because not intentional and knowing.) "The burden is on the party claiming the waiver t0 prove it by clear and convincing evidence that ' "does not leave the matter doubtful 0r uncertain ...." ' " (Pacific Valley Bank v. Schwenke (1987) 189 Cal. App. 3d 134, 145 [234 Cal. Rptr. 298], quoting In re Marriage 0f Vomacka (1984) 36 Cal. 3d 459, 469 [204 Cal. Rptr. 568, 683 P.2d 248].) Waiver II requires kujficient awareness 0f the relevant circumstances and likely consequences.‘ " (In re Marriage ofPerkal (1988) 203 Cal. App. 3d 1198, 1203 [250 Cal. Rptr. 296], quoting In re Marriage ofMoore (1980) 113 Cal. App. 3d 22, 27 [169 Cal. Rptr. 619].) After the Cathay Bank was decided, the California legislature enacted Civil Code § 2856, as a Safe Harbor, that provided language allowing guarantors to waive surety rights. “The guarantor may waive the guarantor 0r other surety’s rights 0f subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are 0r may become available t0 the guarantor 0r other surety by reason of Sections 2787 t0 2855, inclusive. 5 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT \OWQQUIhb-DNH NNNNNNNNNHHHHHHHHHH WQQMfiMNHGfiWQQMhMNH© If the Court reviews the Redemption Agreement, it will discover that it lacks certain key language as follows: 1. It does not contain a waiver of all surety defenses. 2. It does not waive defenses provided in Civil Code § 2845. 3. It does not contain the Safe Harbor language 0f Civil Code § 2856 Which provides that a “guarantor may waive the guarantor 0r other surety’s rights 0f subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available t0 the guarantor 0r other surety by reason 0f Sections 2787 t0 2855, inclusive.” Based 0n the reasoning 0f the Cathay Bank decision, Mr. Lamb never waived his rights t0mm the Investors t0 proceed against 405 Alberto Way, LLCm seeking a writ of attachment against him personally. Furthermore, the Investors have failed t0 prove by clear and convincing evidence that any waiver by Mr. Lamb was informed. 3. Pursuant t0 Civil Code S 2845, Mr. Lamb is entitled t0 assert his Suretv defense against the demands 0f the Investors t0 pav the Redemption Amount. As a surety, Mr. Lamb has a specific un-waived statutory defense t0 demands by the Investors Which were not available 405 Alberto Way, LLC. Pursuant t0 Civil Code § 2845, "A surety may require the creditor, subject to Section 996.440 of the Code of Civil Procedure [motion t0 enforce liability 0n bond given in an action 0r proceeding], to proceed against the principal, or t0 pursue any other remedy in the creditor's power Which the surety can not [sic ] pursue, and which would lighten the surety's burden.” See Cadle C0. v. World Wide Hospitality Furniture, Inc. (2006) 144 Cal. App.4th 504, 514, fn. 7, 50 Cal.Rptr.3d 480.); and Morgan Creek Residential v. Kemp, 153 Cal. App. 4th 675, 63 Cal. Rptr. 3d 232 (Cal. App. 2007) There can be n0 question in this matter that Mr. Lamb has requested 0n numerous occasions that the Investors comply with the statutory law. Instead, the Investors have refused 6 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT \DwQQUIBMNH NNNNNNNNNHHHHHHHHHH MQ¢UIBMNHGWWQQUIBWNHG to comply and instead, elected t0 file four (4) separate writ applications to attachment Mr. Lamb’s personal property. The Court should not countenance such flagrant refusal t0 adhere t0 the statute. At trial, Mr. Lamb will defend the claim against him as a guarantor under the Redemption Agreement by asserting that the Investors, and each of them, violated his rights as provided by Civil Code § 2845. As a result, the Investors may be estopped from claiming that Mr. Lamb owes any amounts to them under the guaranty because such guaranty may be exonerated by operation of law. The proof 0fMr. Lamb’s claim 0f defense will be the Investor Writ Applications which expressly state, in each of the Declarations submitted in support of the application, that the Investors, and each ofthem, elect t0 proceed directly against Mr. Lamb instead 0fthe principle debtor under the Redemption Agreement. (See Declarations 0f Dan Hall, Para. 8 & 9, dated March 11, 2021, submitted ISO his application for writ 0f attachment.) PRAYER AND CONCLUSION As argued before in this matter, the Plaintiffs’ request for an attachment order against all of Randolph Lamb’s general property violates both statutory writ and surety defense laws and may not be granted by this Court. For all the reason and arguments set forth in this Supplemental Opposition, Defendant, Mr. Lamb, respectfully requests that Plaintiffs’ Application for an Order of Writ of Attachment be denied in its entirety as to all four (4) Investor Plaintiffs. Dated June 23, 2021 Respectfully Submitted, HAGAN LAW, INC. By: Jennifer Hagan Attorney for the Defendant, Randy Lamb 7 LAMB SUPPLEMENTAL OPPOSITION No. 20CV373765 TO INVESTOR APPLICATIONS FOR WRIT OF ATTACHMENT