Filed 10/27/26 QBN Capital v. Gonzalez CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
QBN CAPITAL, LLC B338158
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 22STCV18474)
v.
EUGENIO GONZALEZ et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Thomas D. Long, Judge. Affirmed.
Robinson Markevitch & Parker, Damion D.D. Robinson,
and David Markevitch for Defendants and Appellants.
MK Smith and Mark Kearney for Plaintiff and Respondent.
__________________________
Eugenio, Theresa, and Monica Gonzalez appeal after the
trial court granted summary judgment in favor of QBN Capital,
LLC (QBN) on QBN’s claims for breach of contract.1 QBN based
its claims on two promissory notes executed by Eugenio and
related personal guaranties executed by Theresa and Monica, his
mother and wife.
QBN (and its predecessor) and Eugenio were in business
together in the cannabis industry. QBN put up the capital to
purchase an existing cannabis company; it contends Eugenio
agreed to repay a portion of that capital contribution, resulting in
one of the promissory notes. The other promissory note was
based on Eugenio’s agreement to repay QBN for the costs of
litigation with another partner in the cannabis industry.
The Gonzalezes assert Eugenio did not agree to repay QBN
for any portion of the capital contributions and litigation
expenses and that Eugenio was fraudulently induced to sign the
promissory notes and subjected to undue influence. They contend
triable issues of fact remain on these defenses and on whether
the notes were properly issued with mutual consent and valid
consideration and whether QBN performed its obligations under
the notes.
Because no triable issue of material fact remains, we
affirm.
1 Because the Gonzalezes share the same last name, we refer
to them individually using their first names.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. The Parties Execute the Promissory Notes and Personal
Guaranties
The following facts are drawn from the undisputed
evidence submitted by the parties:
In January 2020, Eugenio executed two written promissory
notes in favor of QBN with respective principals of $1 million
(Recapitalization Note) and $1,463,800.26 (Gonzalez Note). The
Recapitalization Note provided it would accrue interest at a rate
of 7.5 percent per year and that Eugenio must pay $250,000 by
April 23, 2020, make interest payments monthly, and pay all
outstanding principal and accrued interest by the maturity date
of January 23, 2021. The Gonzalez Note stated that it amended a
promissory note Eugenio executed in 2018 and “memorialize[d]
an existing debtor-creditor relationship” that had been in effect
since March 2016.2 The Gonzalez Note provided that as of
March 1, 2020, the outstanding balance of principal and accrued
interest on the note would be $1,713,800. The Gonzalez Note
further provided it would accrue interest at a rate of 10 percent
per year and that Eugenio must make interest payments monthly
and pay all outstanding principal and accrued interest by the
maturity date of February 1, 2021.
On the same day Eugenio executed the Recapitalization
Note and the Gonzalez Note, Theresa and Monica each executed
a written personal guaranty in favor of QBN regarding Eugenio’s
2 The 2018 promissory note was made in favor of FEM
Ventures, LLC. In January 2020, FEM Ventures assigned to
QBN its right, title, interest, and remedies with respect to money
lent to Eugenio.
3
payment obligations under the notes. In their guaranties,
Theresa and Monica agreed they were executing the guaranties
“for the purpose of inducing [QBN] to maintain the Loans on the
terms set forth in the Notes.”
B. The Parties Execute the Amendment and Waiver Agreement
In May 2020, QBN and the Gonzalezes, with attorney
representation, negotiated, executed, and had notarized a written
agreement titled “Amendment and Waiver Agreement.” The
Amendment and Waiver Agreement identifies the Gonzalezes as
the “Obligors” and QBN as the “Lender.” It also identifies
Eugenio’s notes and Theresa’s and Monica’s guaranties as part of
the “Gonzalez Restructuring Loan Documents.”
In the Amendment and Waiver Agreement, the Gonzalezes
acknowledged Eugenio had defaulted on the notes by failing to
make the $250,000 prepayment on the Recapitalization Note and
monthly interest payments on both notes. QBN accepted
Eugenio’s requests to waive the specific defaults and to amend
the notes to eliminate the requirement for monthly interest
payments, with all principal and interest due on the notes’
maturity dates. Each of the Gonzalezes “ratifie[d] and
reaffirm[ed] all of his [or her] payment and performance
obligations … under the Gonzalez Restructuring Loan
Documents.” The Gonzalezes agreed that “all indebtedness,
obligations and liabilities” in the notes and guaranties
“constitute[d] legal, valid and binding obligations”; that “no
offsets, defenses or counterclaims” to their obligations under the
notes and guaranties existed; and that no portion of the
obligations “[wa]s subject to avoidance, disallowance, reduction or
subordination pursuant to any requirement of law.” The
Gonzalezes further agreed to release “any and all … defenses …
4
relating to, arising from, or arising in connection with: (i) the
loans evidenced by the Gonzalez Restructuring Loan Documents;
(ii) the Gonzalez Restructuring Loan Documents; (iii) any
provision of this Agreement; or (iv) any claims or defenses
relating to the Gonzalez Restructuring Loan Documents.”
Aside from the $250,000 prepayment and a single interest
payment of $20,532, no payments were made on the
Recapitalization Note by the maturity date of January 23, 2021.
Besides a single interest payment of $14,164, no payments were
made on the Gonzalez Note by the maturity date of February 1,
2021.
C. QBN Sues the Gonzalezes, and the Trial Court Grants
QBN’s Motion for Summary Judgment
In June 2022, QBN filed a complaint alleging four causes of
action for breach of contract based on the notes and guaranties.
QBN alleged the Gonzalezes failed to perform on their promises
to pay all money due on the notes by their maturity dates. The
Gonzalezes generally denied the complaint’s allegations and
asserted 33 affirmative defenses, not including fraudulent
inducement or undue influence.
In June 2023, QBN moved for summary judgment. QBN
argued undisputed evidence showed it had performed its
obligations under the notes and guaranties and the Gonzalezes
had not paid all money due under the notes. QBN emphasized
the Gonzalezes ratified their obligations in the Amendment and
Waiver Agreement, which granted Eugenio’s request for
additional time to make all required payments under the notes.
Among other evidence, QBN supported its motion with a
declaration from its sole member and manager, Benjamin
5
Bequer, as well as copies of the notes, the guaranties, and the
Amendment and Waiver Agreement.
In his declaration, Bequer explained that Eugenio, a
longtime friend, approached him in 2017 with an opportunity to
purchase a medical cannabis dispensary (California Patients
Alliance). Eugenio claimed to not have the financial resources at
the time, so Bequer contributed the entire $2.5 million to
purchase the dispensary and partner with another legal cannabis
entity (LA Kush), with Eugenio’s agreement to “repay [Bequer]
his portion in the future.” In 2018, after Bequer had contributed
no less than $8 million toward the venture, Eugenio executed a
promissory note for $1,463,800.26 to repay a portion of his share.
This was the note that the Gonzalez Note amended in January
2020 to provide Eugenio with more time to repay the amount
owed.
Also in 2018, Bequer and Eugenio sued LA Kush after
problems arose with the LA Kush investors, and LA Kush
countersued Bequer and Eugenio. Bequer agreed to fund the
litigation, and Eugenio agreed to repay half of the bill, which
included Eugenio’s attorney’s fees. Bequer ended up paying more
than $2 million in litigation expenses.
During a mediation in the LA Kush lawsuit, Bequer
informed Eugenio that he was willing to settle with LA Kush but
that he and Eugenio needed to formalize Eugenio’s obligation to
repay his portion of the attorney’s fees in another promissory
note. They did that with the Recapitalization Note, which
confirmed Eugenio’s obligation to repay $1 million toward the
attorney’s fees paid on his behalf.
After Eugenio, who was in default on the notes, asked for
more time to pay, the parties amended the Recapitalization Note
6
and the Gonzalez Note by executing the Amendment and Waiver
Agreement on May 22, 2020. Bequer presented emails between
himself, Eugenio, and their respective counsel that show the
parties’ negotiations regarding the Amendment and Waiver
Agreement. In a May 15, 2020 email to Eugenio, Bequer
provided instructions for Eugenio to wire the $250,000
prepayment on the Recapitalization Note to QBN and stated:
“You have till end of business today to fund the $250k and
execute the amendments to the promissory notes. After today, I
will not be amending the promissory notes and will be moving
forward with [LA Kush], [California Patients Alliance] in a
different direction. Also, will start the collection process.” The
Amendment and Waiver Agreement indicated it was effective
May 22 and Eugenio’s signature on the agreement was notarized
on May 27.3
In their summary judgment opposition, the Gonzalezes did
not dispute they executed the notes and guaranties. They
contended, however, that the January 2020 notes and guaranties
were procured by fraud and undue influence and that triable
issues of material fact remained as to these affirmative defenses.
The Gonzalezes argued Bequer made misrepresentations that the
notes and guaranties would “go away” after the sale of California
Patients Alliance’s assets and Bequer applied undue influence on
Eugenio. They contended that although he had a fiduciary duty
to Eugenio as his business partner, Bequer had California
Patients Alliance’s attorney draft the 2020 notes that were
unfavorable to Eugenio and gave the Gonzalezes only 48 hours to
3 In October 2021, Bequer sold his interest in California
Patients Alliance to Eugenio and a third party.
7
sign under threat that otherwise Bequer would not agree to settle
the litigation with LA Kush.4 The Gonzalezes supported their
opposition with a declaration from Eugenio.
Eugenio stated in his declaration that his arrangement
with Bequer was that Bequer would contribute all investment
capital towards the cannabis business and receive a 70 percent
ownership interest while Eugenio was to contribute “business
operational skills” and receive a 30 percent ownership interest.
Eugenio asserted QBN and Bequer “never once loaned me any
money. The money [Bequer] claims to be owed are his own
investments in the company.” Although Eugenio acknowledged
receiving money from Bequer, he contended he received it “only
to immediately transfer it to escrow in order to complete [an
investment] transaction” for California Patients Alliance.
Eugenio stated, “Bequer also advised me that after all the assets
held by [California Patients Alliance] were sold, all the notes and
documents would go away.” Eugenio did not state he continued
to believe this at the time the Gonzalezes executed the
Amendment and Waiver Agreement.
In their response to QBN’s separate statement, the
Gonzalezes relied on these statements in Eugenio’s declaration to
dispute QBN’s alleged undisputed facts that QBN had performed
its obligations and was due money under the promissory notes.
The Gonzalezes did not dispute QBN’s facts that it had performed
its obligations under Theresa’s and Monica’s personal guaranties.
4 The Gonzalezes also argued the 2018 promissory note—
which the Gonzalez Note amended but was not itself a subject of
one of QBN’s breach of contract causes of action—was
fraudulently procured by misrepresentations from Bequer that it
was a “tax document meant for tax purposes.”
8
The Gonzalezes also did not argue in in their opposition to
summary judgment that a triable issue existed regarding
whether QBN performed under the notes and guaranties.
In its reply, QBN noted the Gonzalezes did not challenge
that it had met its summary judgment burden to support each
element of its causes of actions. With respect to the Gonzalezes’
argument that there were triable issues on their affirmative
defenses of fraudulent inducement and undue influence, QBN
argued the Gonzalezes forfeited these affirmative defenses by not
pleading them in their answer or establishing good cause for not
raising the defenses until summary judgment. QBN
alternatively argued undisputed evidence showed that in the
Amendment and Waiver Agreement the Gonzalezes agreed that
all obligations in Eugenio’s January 2020 notes were “legal, valid
and binding,” that “no offsets, defenses or counterclaims” to those
obligations existed, and that no portion of the obligations was
“subject to avoidance, disallowance, reduction or subordination
pursuant to any requirement of law.”
In October 2023, after a hearing at which only QBN
appeared, the court granted QBN’s motion. In February 2024,
the court entered judgment in QBN’s favor and against the
Gonzalezes, jointly and severally, in the amount of $4,224,569.47,
plus interest to accrue at a rate of 15 percent from October 2023
forward.
The Gonzalezes timely appealed from the judgment.
DISCUSSION
A. Standard of Review
“ ‘A motion for summary judgment ... is properly granted
only when “all the papers submitted show that there is no triable
9
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” ’ ” (Campbell v. FPI
Management, Inc. (2024) 98 Cal.App.5th 1151, 1161; see Code
Civ. Proc., § 437c, subds. (c) & (f); Regents of University of
California v. Superior Court (2018) 4 Cal.5th 607, 618.) When a
plaintiff moves for summary judgment, the plaintiff meets its
“burden of showing that there is no defense to a cause of action if
the [plaintiff] has proved each element of the cause of action
entitling the party to judgment on the cause of action.” (Code
Civ. Proc., § 437c, subd. (p)(1); see Aguilar v. Atlantic Richfield
Co. (2001) 25 Cal.4th 826, 849-850.) Once done, “the burden
shifts to the defendant ... to show that a triable issue of one or
more material facts exists as to the cause of action or a defense
thereto.” (Code Civ. Proc., § 437c, subd. (p)(1).)
We review a summary judgment ruling de novo. (Gonzalez
v. Mathis (2021) 12 Cal.5th 29, 39.) In so doing, we “ ‘liberally
construe the evidence in support of the party opposing summary
judgment and resolve doubts concerning the evidence in favor of
that party.’ ” (Ibid.)
B. Applicable Law
A promissory note is “an unconditional promise to pay
money signed by the person undertaking to pay, payable on
demand or at a definite time.” (Saks v. Charity Mission Baptist
Church (2001) 90 Cal.App.4th 1116, 1132.) Unlike a standard
contract, a promissory note “is one sided: it tells us what the
promisor is obligated to do (pay a certain sum of money on
demand or by a certain date) but does not indicate what the
payee has done or undertaken to entitle it to the promised
payment.” (Ibid.)
10
A guaranty is “ ‘a promise to answer for the debt, default,
or miscarriage of another.’ ” (Everts v. Matteson (1942) 21 Cal.2d
437, 446; see Pearl v. General Motors Acceptance Corp. (1993)
13 Cal.App.4th 1023, 1028; Civ. Code, § 2787 [defining
“guarantor” as “one who promises to answer for the debt, default,
or miscarriage of another, or hypothecates property as security
therefor”].) “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.)
Promissory notes and personal guaranties are contracts.
(Nicholson v. Smith (1950) 98 Cal.App.2d 163, 164; Anderson v.
Fidelity Union Casualty Co. (1934) 137 Cal.App. 37, 41; see G &
W Warren’s, Inc. v. Dabney (2017) 11 Cal.App.5th 565, 574 [“a
contract of a … guarantor ‘ “is to be interpreted by the same rules
used in construing other types of contracts, with a view towards
effectuating the purposes for which the contract was
designed” ’ ”]; Poseidon Development, Inc. v. Woodland Lane
Estates., LLC (2007) 152 Cal.App.4th 1106, 1112 [“A cause of
action for nonpayment on a promissory note is one for breach of
contract.”].) The elements of a breach of contract cause of action
“are (1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the
resulting damages to the plaintiff.” (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 821.)
“ ‘ “A promissory note is presumed to have been given for a
sufficient consideration ... and in an action to recover [on a
promissory note], the introduction of the note in evidence
establishes a prima facie right to recover according to its terms.”
(Saks v. Charity Mission Baptist Church, supra, 90 Cal.App.4th
at p. 1133, italics omitted.) The party seeking to avoid payment
11
on the promissory note has the burden of proving a defense to its
enforcement. (Ibid.)
“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.) To be enforceable,
a guaranty must be given for some consideration, such as “the
contemporaneous or subsequent loaning of money, or the
forbearance to collect on an obligation previously incurred.”
(Beverly Hills Nat. Bank v. Glynn (1968) 267 Cal.App.2d 859,
867; see Levine v. Tobin (1962) 210 Cal.App.2d 67, 69
[“Forbearing suit or extending time for performance which
suspends a legal right constitutes a sufficient consideration.”];
see also Rancho Santa Fe Pharmacy, Inc. v. Seyfert (1990)
219 Cal.App.3d 875, 879-880 [when a personal guaranty of a
promissory note is made at same time as note, which itself is
given for consideration, “the guarant[y] is supported by the same
consideration as the note and is enforceable”].)
C. The Trial Court Properly Granted QBN’s Summary
Judgment Motion
1. No triable issue of material fact remains as to the
Gonzalezes’ fraud and undue influence defenses
QBN satisfied its summary judgment burden by presenting
the subject notes and guaranties along with evidence showing the
Gonzalezes failed to perform according to the terms of the notes
and guaranties. The burden then shifted to the Gonzalezes to
establish a triable issue of material fact remained. The
Gonzalezes argued triable issues existed as to the affirmative
defenses of fraudulent inducement and undue influence.
12
QBN argues the Gonzalezes forfeited these defenses by
raising them for the first time in opposition to summary
judgment. Although an affirmative defense is ordinarily waived
if not alleged in the answer, “courts generally have allowed an
affirmative defense to be asserted for the first time ... [at]
summary judgment ‘absent a showing of prejudice,’ ” that is, “ ‘so
long as the opposing party has adequate notice and opportunity
to respond.’ ” (Atkins v. St. Cecilia Catholic School (2023)
90 Cal.App.5th 1328, 1341; accord, Cruey v. Gannett Co. (1998)
64 Cal.App.4th 356, 367.) QBN had the opportunity to respond to
the defenses in its summary judgment reply and has not shown it
was prejudiced by consideration of the belatedly asserted
defenses. Like the trial court, we decline to treat the defenses as
forfeited.
However, the Gonzalezes waived these defenses in the
Amendment and Waiver Agreement. In that agreement, the
Gonzalezes agreed the obligations reflected in the earlier notes
and guaranties were “legal, valid and binding” and not subject to
any “offsets, defenses or counterclaims” or “avoidance,
disallowance, reduction or subordination pursuant to any
requirement of law.” The Gonzalezes do not assert any
fraudulent misrepresentations or undue influence in connection
with or otherwise challenge the validity of the Amendment and
Waiver Agreement, which they admit was negotiated, entered,
and notarized while they were independently represented by
counsel.5
5 The Gonzalezes also released all defenses relating to the
notes and guaranties and the loans evidenced by the notes. At
oral argument, the Gonzalezes argued for the first time that the
Amendment and Waiver Agreement excluded their fraudulent
13
Moreover, even without the express waiver term in the
Amendment and Waiver Agreement, the Gonzalezes impliedly
waived the defenses by ratifying and reaffirming their obligations
in the notes and guaranties after their discovery of the alleged
fraud and undue influence.
Fraudulent inducement occurs where the promisor knows
what he or she is signing but his or her consent is induced by
fraud. (Village Northridge Homeowners Assn. v. State Farm Fire
& Casualty Co. (2010) 50 Cal.4th 913, 921; Orozco v. WPV San
Jose, LLC (2019) 36 Cal.App.5th 375, 402-403.) Under those
circumstances, mutual assent is present and a contract is formed,
but the contract is, by reason of the fraud, voidable. (Village
Northridge, at p. 921; Orozco, at pp. 402-403.) To escape the
contract’s obligations, the defrauded party may seek to void the
inducement defense from any waiver or release of defenses. The
Gonzalezes forfeited this argument by not raising it earlier. (See
Kinney v. Vaccari (1980) 27 Cal.3d 348, 356, fn. 6 [“An appellate
court is not required to consider any point made for the first time
at oral argument.”]; accord, Goldstein v. Superior Court (2023)
93 Cal.App.5th 736, 746, fn. 8.) But even if we consider the
argument, we are not persuaded it has merit. The Gonzalezes
point to the final line in the Amendment and Waiver Agreement’s
broad release paragraph, which states: “Notwithstanding the
foregoing, the releases set forth above shall not … release any
released person from fraud.” (Italics added.) While this language
appears to exclude the release of a fraud defense from the
releases described in the release paragraph, it does not foreclose
waiver of a fraud defense elsewhere in the agreement. As
discussed, such waiver is found in the agreement’s separate
paragraphs in which the Gonzalezes both reaffirmed their
obligations under the notes and guaranties and stated “no offsets,
defenses or counterclaims to the … Obligations … exist.”
14
contract and escape its obligations through the contract’s
recission. (Village Northridge, at p. 921; Orozco, at p. 403.) But
“[t]he right to avoid for fraud ... is lost if the injured party, after
acquiring knowledge of the fraud, manifests an intention to
affirm the contract.” (Bowmer v. H.C. Louis, Inc. (1966)
243 Cal.App.2d 501, 503; accord, Oakland Raiders v. Oakland-
Alameda County Coliseum, Inc. (2006) 144 Cal.App.4th 1175,
1186 (Oakland Raiders) [“one who, after discovery of an alleged
fraud, ratifies the original contract by entering into a new
agreement granting him substantial benefits with respect to the
same subject matter, is deemed to have waived his right to claim
damages for fraudulent inducement”]; Smith v. Roach (1975)
53 Cal.App.3d 893, 898-899 [a party claiming fraud in the
inducement waives his right to such a claim “if, after he discovers
the fraud, he makes a ‘new agreement or engagement’ with the
other party to the original contract (the contract allegedly
procured by the fraud of that party), and such new agreement or
engagement results in a compromise and adjustment of the
[party’s] rights under the original contract, thereby superseding
that contract”].)
The Gonzalezes claim Bequer fraudulently induced them to
enter the notes and guaranties by telling them in January 2020
that the notes and guaranties would “go away” once California
Patients Alliance’s assets were sold. However, in May 2020, the
Gonzalezes admitted Eugenio was in default on the notes and
requested QBN’s waiver of the defaults and amendment of the
notes to provide more time for payment. The parties then
negotiated the Amendment and Waiver Agreement, and Bequer
told Eugenio that he would “start the collection process” if
Eugenio did not sign the agreement. In the Amendment and
15
Waiver Agreement, the Gonzalezes “ratifie[d] and reaffirm[ed]”
all payment and performance obligations under the notes and
guaranties. Then, after signing the Amendment and Waiver
Agreement, Eugenio made some payments on the notes.
Collectively, this undisputed evidence shows that, at least
by the signing of the Amendment and Waiver Agreement, the
Gonzalezes knew Bequer did not intend to make the notes and
guaranties simply “go away.” In other words, the Gonzalezes had
“full knowledge of the [alleged] fraud” and were not still relying
on that fraud in executing the Amendment and Waiver
Agreement. (Cf. Channell v. Anthony (1976) 58 Cal.App.3d 290,
305 [no waiver of fraud when “at the time of the ‘second
transaction’ the [appellants] still hoped (buoyed by the further
assurances of respondents) that the original promises of the
respondents would still be carried out, and therefore, although
they admittedly now entertained grave doubts as to appellants’
truthfulness, they still were relying in part upon the original
fraud”].) The Gonzalezes recognize as much on appeal,
explaining “[t]he fact that Bequer promptly declared a default
without any attempt to await a sale … is strong evidence that he
did not intend to abide by his promise—i.e., fraudulent intent.”
Yet, despite their knowledge of the alleged fraud, the Gonzalezes
did not thereafter seek to rescind the notes and guaranties.
Instead, they ratified and reaffirmed their obligations in the
notes and guaranties by executing the Amendment and Waiver
Agreement and partially performing under its terms.6
6 The Gonzalezes argue the theory of ratification does not
apply to show a party’s waiver of a fraudulent inducement
defense, but rather provides only that “a party cannot ratify a
transaction in exchange for additional consideration and then sue
16
The Gonzalezes argue they could not impliedly waive their
fraudulent inducement defense because the Amendment and
Waiver Agreement did not grant them “substantial benefits” as
the allegedly defrauded party. (See Oakland Raiders, supra,
144 Cal.App.4th at pp. 1186, 1193 [waiver by reaffirmation of
original contract terms requires a new agreement granting
“substantial benefits” or “significant concessions” with respect to
the same subject matter].) The Gonzalezes rely on Storage
Services v. Oosterbaan (1989) 214 Cal.App.3d 498 (Storage
Services). In that case, the buyer purchased property based on
false representations. (Id. at pp. 504-506.) After discovering the
fraud, the buyer and seller executed a settlement agreement in
which the buyer acquired the property and the seller’s right to
compensation related to a state eminent domain claim. (Id. at
pp. 506-507.) Despite settling with the seller, the buyer
successfully pursued a fraud claim against the real estate agent
and broker who made and ratified the false representations. (Id.
at pp. 507-508.) On appeal, the agent and broker argued the
buyer had waived its fraud claim in executing the settlement
agreement with the seller. (Id. at p. 512.) The appellate court
for damages on the grounds that the original transaction was
fraudulent.” While the bulk of the cases may focus on a plaintiff
losing the ability to seek damages on a fraudulent original
contract after ratifying the contract’s terms upon discovering the
fraud (see, e.g., Oakland Raiders, supra, 144 Cal.App.4th at
p. 1186), cases postured like this one also exist (see, e.g., Oil Tool
Exchange v. Schuh (1944) 67 Cal.App.2d 288, 294-295
[defendants waived fraud defense against a personal guaranty
where evidence showed defendants, with knowledge of the
claimed fraud, subsequently executed a promissory note and
mortgage as additional security]).
17
rejected the argument, concluding the buyer had not received
substantial concessions under the settlement agreement but
rather had been placed “in essentially the same position[] as the
original contract,” merely with “an extension of time to close.”
(Id. at p. 513.)
The Gonzalezes argue that, like the buyer in Storage
Services, they did not gain substantial benefits from the
Amendment and Waiver Agreement, which they suggest “merely
deferred certain payments under the [Recapitalization and
Gonzalez] Notes.” But focusing solely on the elimination of
monthly interest payments understates the benefits the
Amendment and Waiver Agreement provided to the Gonzalezes.
In the agreement, QBN also identified and agreed to waive
specific defaults on the notes, thus relinquishing legal rights to
collect on the notes for those defaults. In the context of this
particular contractual arrangement—which was premised
entirely on the Gonzalezes’ timely repayment of money QBN had
loaned to Eugenio—this concession of collection rights was
substantial.7
7 The settlement agreement in Storage Services also specified
that “it was not intended to constitute a release of any of [the
buyer’s] claims against [the real estate agent or broker].”
(Storage Services, supra, 214 Cal.App.3d at p. 507.) The opposite
is true here. As discussed, in the Amendment and Waiver
Agreement, the Gonzalezes expressly waived any fraud defense
against the notes and guaranties and the loans evidenced by the
notes.
18
Thus, whether by express or implied waiver, we agree with
QBN that the Amendment and Waiver Agreement forecloses the
Gonzalezes’ fraudulent inducement defense.8
The Gonzalezes’ undue influence defense is undone by the
same reasoning. The Gonzalezes expressly waived and released
this defense by executing the Amendment and Waiver
Agreement. Moreover, like fraudulent inducement, undue
influence makes a contract voidable based on a want of mutual,
free consent, and a party claiming undue influence must seek to
rescind the contract. (See Magee v. Brenneman (1922) 188 Cal.
562, 568 [promissory note that “is found to have been given as a
result of undue influence … is merely voidable and not void”];
Fallon v. Triangle Management Services, Inc. (1985)
169 Cal.App.3d 1103, 1106 [“deed obtained … by use of undue
influence by the grantee may be rescinded by the grantor,” but
“[u]ntil a voidable deed is declared void it is fully operative”]; Civ.
Code, §§ 1565-1567; see also Rest.2d Contracts, § 177, subd. (2)
[“If a party’s manifestation of assent is induced by undue
influence by the other party, the contract is voidable by the
victim”], italics added.) If the party instead enters a new contract
or ratifies the terms of the original contract without conditions of
undue influence, the party effectively waives any claim of undue
8 The Gonzalezes contend the trial court sua sponte raised
the implied waiver theory to reject their fraudulent inducement
defense. As an initial matter, QBN’s ability to fully raise this
theory was hampered by the Gonzalezes’ first raising the defense
in their summary judgment opposition. Regardless, contrary to
the Gonzalezes’ contention, QBN emphasized in its summary
judgment motion and reply that, in signing the Amendment and
Waiver Agreement, the Gonzalezes confirmed and ratified their
payment obligations under the notes and guaranties.
19
influence related to the original contract. (See Civ. Code, § 1588
[“A contract which is voidable solely for want of due consent, may
be ratified by a subsequent consent.”]; Bancroft v. Bancroft (1895)
110 Cal. 374, 379 (conc. opn. of Beatty, C.J.) [“The contract by
which plaintiff parted with his stock was not void, but merely
voidable at his option. He had the choice to affirm it or to rescind
it, and it appears that he affirmed it, by failing to rescind
promptly when freed from the undue influence by which his
consent was obtained.”]; Fulmele v. Los Angeles Inv. Co. (1921)
51 Cal.App. 417, 423 [“ ‘If the party originally possessing the
remedial right has obtained full knowledge of all the material
facts involved in the transaction, has become fully aware of its
imperfection and of his own rights to impeach it, or ought, and
might with reasonable diligence, have become so aware, and all
undue influence is wholly removed so that he can give a perfectly
free consent, and he acts deliberately, and with the intention of
ratifying, the voidable transaction, then his confirmation is
binding, and his remedial right, defensive or affirmative, is
destroyed.’ ”].) As discussed, the Gonzalezes do not contend the
Amendment and Waiver Agreement, which they negotiated and
entered with independent counsel, was a product of undue
influence. They therefore waived their undue influence defense
to the earlier notes and guaranties.9
9 The trial court determined there was no triable issue as to
the defense because the Gonzalezes’ allegations of undue
influence were precluded by the mediation confidentiality
provisions of Evidence Code section 1119 and premised on
Bequer’s threat to exercise a valid legal right (i.e., to not
participate in resolving the LA Kush litigation), which could not
be construed as an act of duress. We need not address this issue
20
2. The Gonzalezes forfeited their arguments regarding
the elements of QBN’s breach of contract causes of
action
The Gonzalezes also argue for the first time on appeal that
there are triable issues on QBN’s breach of contract causes of
action based on Eugenio’s declaration statements that QBN
never loaned him the money reflected in the notes. They contend
this evidence shows valid contracts were not formed for want of
consideration and agreement on the nature of the transactions,
and even if they were, QBN did not perform its own obligations
under the notes and guaranties.
The Gonzalezes forfeited these arguments by not raising
them in the trial court. (Kime v. Dignity Health, Inc. (2024)
101 Cal.App.5th 708, 721 [arguments not raised in opposition to
summary judgment motion are forfeited and need not be
considered on appeal]; Jackpot Harvesting Co., Inc. v. Superior
Court (2018) 26 Cal.App.5th 125, 155 [“arguments not raised in
summary judgment proceedings” are forfeited].)
Even if we excuse this forfeiture, the arguments are
meritless. The Gonzalezes waived these challenges in the
Amendment and Waiver Agreement by acknowledging that
Eugenio was in default on the notes and that “all indebtedness,
obligations and liabilities” in the notes and guaranties
“constitute[d] legal, valid and binding obligations” that were not
subject to any “offsets, defenses or counterclaims” or “avoidance,
disallowance, reduction or subordination pursuant to any
requirement of law.” The Gonzalezes also released all defenses
relating to the notes and guaranties, as well as “the loans
given the undisputed evidence showing the Gonzalezes waived
their defense.
21
evidenced by” those instruments. In other words, the Gonzalezes
agreed the payments required in the notes were enforceable
obligations that were not subject to the legal defenses they now
raise. As discussed, the Gonzalezes do not challenge the validity
of the Amendment and Waiver Agreement, which they admit was
notarized and entered while they were represented by an
attorney.10
The Gonzalezes also argue that QBN failed to submit
evidence establishing the specific amount of its damages. Not
only did the Gonzalezes fail to raise this argument in the trial
court, they also did not object to or present evidence challenging
QBN’s calculations of the total principal and interest owed on the
notes based on Bequer’s declaration and its supporting exhibits.
Moreover, in response to QBN’s separate statement, the
Gonzalezes did not dispute these specific totals or their
underlying calculations and instead merely claimed no money
was loaned in the first instance. In sum, the Gonzalezes forfeited
10 With his summary judgment declaration, Eugenio attached
a document purporting to show a handwritten list of capital
investments that Bequer provided to Eugenio during the LA
Kush litigation, with no record of any loans having been made to
Eugenio. The trial court sustained QBN’s objection to the
exhibit, determining it lacked foundation and authentication.
Even if the Gonzalezes are correct that the trial court abused its
discretion in excluding the evidence, the error would be harmless
in light of the Gonzalezes’ waivers of their defenses. (Lewis v.
City of Benicia (2014) 224 Cal.App.4th 1519, 1538 [“When
evidence is improperly excluded, ‘the error is not reversible
unless “ ‘it is reasonably probable a result more favorable to the
appellant would have been reached absent the error.’ ” ’ ”]; accord,
Saxena v. Goffney (2008) 159 Cal.App.4th 316, 332.)
22
their damages argument. (Kime v. Dignity Health, Inc., supra,
101 Cal.App.5th at p. 721; Jackpot Harvesting Co., Inc. v.
Superior Court, supra, 26 Cal.App.5th at p. 155.)
DISPOSITION
The judgment is affirmed. QBN is entitled to its costs on
appeal.
STONE, J.
We concur:
SEGAL, Acting P. J.
FEUER, J.
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