US Bank Nat. Assn. v.
Cesare
Filed 6/28/12
US Bank Nat. Assn. v. Cesare CA4/2
See Concurring Opinion
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opinion has not been certified for publication or ordered published for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.
IN THE COURT OF APPEAL OF THE STATE OF
FOURTH APPELLATE DISTRICT
DIVISION TWO
US BANK NATIONAL ASSOCIATION,
Plaintiff
and Respondent,
v.
ANTHONY CESARE, as Trustee, etc. et al.,
Defendants
and Appellants.
E052204
(Super.Ct.No.
RIC10009557)
OPINION
APPEAL
from the Superior Court
of
County. Mark E.
Johnson, Judge. Affirmed in part;
reversed in part with directions.
William
L. Conti for Defendants and Appellants.
Barry,
Gardner & Kincannon, Jeffrey B. Gardner, and Laura J. Petrie for Plaintiff
and Respondent.
I. INTRODUCTION
Plaintiff
and respondent US Bank National Association (US Bank) sued Rico Retail, LP
(Rico Retail), Ron Hirji,
name="_ftnref1" title="">[1] and defendants and appellants Anthony Cesare
as Trustee of the Solomon Trust dated 3/19/98 (Solomon Trust)
and Stamegna for breach of guaranty.
Defendants appeal the trial court’s orders granting US Bank’s
applications for a right to attach order and order for issuance of a
property. Defendants contend the trial
court erred by (1) concluding US Bank had established the probable validity of
its claim because the guaranties on which it sued were sham and void, and (2)
failing to order US Bank to post a bond as a condition of issuing the writ.
We
conclude the trial court erred in failing to require US Bank to post a
bond. We find no other error.
II. FACTS AND PROCEDURAL BACKGROUND
Given
the procedural posture of this case, our statement of facts is taken primarily
from the allegations of the complaint and the documents and declarations
submitted in support of and in opposition to the applications for
issuance of a writ of attachment.
Parties
Rico Enterprises,
Inc. (Rico Enterprises) is the sole general partner of Rico Retail, a limited
liability partnership. Hirji is the
president and Stamegna the vice-president of Rico Enterprises. The limited partners of Rico Retail are (1)
the Solomon Trust, of which Cesare is trustee; (2) Carnegie Holdings, LLC
(Carnegie), of which Hirji is the manager; and (3) Fidelity Family Holdings, LP
(Fidelity), of which Stamegna is the general partner. US
Bank is the “successor in interest to the FDIC as Receiver for PFF” Bank &
Trust (PFF).
The Loan, Partnership Authorization, and Guaranties
In August 2006,
PFF loaned Rico Retail $900,000 to refinance a previously existing loan, which
had been entered into for the purpose of constructing a commercial center on
property Rico Retail owned in Hemet. In exchange for the loan, Rico Retail executed
a promissory note to PFF in the amount of $900,000 and a deed of trust on the
property. Hirji and Stamegna, as
president and vice-president of Rico Enterprises, respectively, signed the
note.
In
connection with the loan, PFF required the limited partners of Rico Retail to
execute a document entitled “Partnership Authorization,” the terms of which are
set forth at length in the discussion below.
In addition, Stamegna, as an individual; Hirji, as an individual; and
Cesare, as trustee of the Solomon Trust, each executed a guaranty of the loan.
PFF distributed the entire
$900,000 to Rico Retail. Ultimately,
Rico Retail defaulted on the loan. In
November 2008, the FDIC, as receiver, took over the loan. Subsequently, US Bank purchased the loan, as
well as all rights, title, and interest thereto. In January 2010, US Bank sent letters to
Stamegna, Hirji, and the Solomon Trust reminding them they had guaranteed the
loan, stating that the loan was in default, demanding payment of the
outstanding balance, and providing notice of intent to “immediately commence
exercising its rights and remedies” if payment was not made within 10 days.
C. The Lawsuit
On July 2, 2010, US Bank filed a verified
first amended complaint (the complaint) against Rico Retail; Hirji, Cesare, and
Stamegna. The complaint alleged causes
of action for judicial foreclosure of a deed of trust against all defendants
and for breach of guaranties against Hirji, Cesare, and Stamegna. US Bank alleged that Hirji, Stamegna, and the
Solomon Trust (the guarantors) were guarantors of the loan; that each had
guaranteed repayment of Rico Retail’s debt to PFF; and that Rico Retail and the
guarantors were in default. US Bank
alleged it had the right to foreclose on the property, and that costs and
expenses related to the loan continued to accrue. US Bank alleged that the guaranties provided
for it to be reimbursed for the costs and expenses incurred in resolving the
default.
D. US Bank’s Applications
On July 20, 2010, US Bank
filed applications for right to attach orders and orders for issuance of writs
of attachment against the property of the Solomon Trust, Cesare as trustee of
the Solomon Trust, Hirji, and Stamegna.
US Bank provided the declaration of Gregory Hahn, a former
vice-president of PFF and currently a vice-president of US Bank. Hahn declared that Rico Retail was in default
on its loan from PFF and the guarantors had failed to pay any amount owing on
the promissory note. Hahn declared that
the attachment orders were being sought for the purpose of “recovery upon the
breach of guarantee claims . . . .”
In opposition to
the applications, defendants argued their guaranties were unenforceable. They contended they were primary obligors
under the promissory note and deed of trust because in the Partnership
Authorization they had become jointly and severally liable for Rico Retail’s
obligations. Following a hearing, the
trial court concluded that US Bank had established the probable validity of its
claim and ordered that US Bank had the right to attach the property of Stamegna
and Cesare in the amount of $1,072,455.80.
III. DISCUSSION
Defendants contend
the trial court erred in concluding that US Bank had established the probable
validity of its claim because the guaranties on which it sued were a sham and
void.
Standards of Review
We review the
trial court’s implied findings that US Bank established the probable validity
of its claims in its applications for right to attach orders under the
substantial evidence standard. (
175 Cal.App.3d 532, 535.) However, we
interpret the parties’
contracts de novo. (Global Packaging, Inc. v. Superior Court (2011) 196 Cal.App.4th
1623, 1628.) Whether a contract
is ambiguous is also a question of law which we determine de novo. (E.g., Galardi
Group Franchise & Leasing, LLC v. City of El Cajon (2011) 196
Cal.App.4th 280, 287.)
B. Showing Required for Right to
Attach Order
For
a trial court to issue a right to attach order, it must find, among other
things, that “[t]he plaintiff has established the probable validity of the
claim upon which the attachment is based.”
(Code Civ. Proc., § 485.220, subd. (a)(2).) In other words, the trial court must find
that “‘it is more likely than not that the plaintiff will obtain a judgment
against the defendant on that claim.’” (
Antideficiency Statutes and Sham Guaranties
“In California, a
creditor secured by a trust deed on real property must rely on the security
before enforcing the underlying debt.
([Code Civ. Proc.,] §§ 580a, 725a, 726.) Even if the security is insufficient, the
antideficiency statutes ([Code Civ. Proc.,] § 580a, 580b, 580d) may limit
or bar a judgment against the debtor for a deficiency. [Citation.]”
(Bank of America v. Graves (1996)
51 Cal.App.4th 607, 611 [Fourth Dist., Div. Two].) However, “the protections afforded to debtors
under the antideficiency legislation do not directly protect guarantors from
liability for deficiency judgments. [Citation.]
Accordingly, if a guarantor expressly waives the protections of the
antideficiency laws, a lender may recover the deficiency judgment against the
guarantor even though the antideficiency laws would bar the lender from
collecting that same deficiency from the primary obligor. [Citation.]
[¶] However, to collect a deficiency
from a guarantor, he must be a true guarantor and not merely the principal
debtor under a different name. The
protections afforded debtors under the antideficiency laws cannot be subverted
by artifice [citation], and a substantial body of law has developed to protect
the principal debtor against personal liability in cases in which the principal
debtor purports to take on additional liability as a guarantor. Under these circumstances, the courts have
concluded the guaranty adds nothing to the primary obligation. [Citation.]”
(Cadle Co. II v. Harvey (2000)
83 Cal.App.4th 927, 932.)
A
“guarantor is one who promises to answer for the debt, default, or miscarriage
of another . . . .”
(Civ. Code, § 2787.) A
guaranty is a sham guaranty when the guarantors are also the primary obligors
on the loan. (River Bank America v. Diller (1995) 38 Cal.App.4th 1400, 1420.) “It is a factual question whether a person is
a true guarantor or a principal obligor in guarantor’s guise. [Citation.]”
(Id. at p. 1422.) “[I]f the guarantor is actually the principal
obligor, he is entitled to the unwaivable protection of the antideficiency
statutes . . . which prohibit[] a deficiency judgment after
nonjudicial foreclosure of real property under a power of
sale . . . .
[Citations.]” (
Cesare and Stamegna Did Not Become Primary Obligors Under the
Partnership Authorization
Cesare
and Stamegna’s principal argument is that in the Partnership Authorization,
they assumed joint and several liability for the loan to Rico Retail; thus,
their subsequent guaranties were a sham because one may not guarantee one’s own
debt. US Bank counters that the
Partnership Authorization created no such liability. In other words, if defendants did not in fact
assume joint and several liability in the partnership agreement, the subsequent
guaranties were not sham. As noted
above, we examine the meaning of the Partnership Authorization de novo. (Global Packaging, Inc.
v. Superior Court, supra, 196
Cal.App.4th at p. 1628.)
Provisions of the Partnership Authorization
The
opening paragraph of the Partnership Authorization states, “IN CONSIDERATION OF
the existing or proposed lending or banking relationship between RICO RETAIL,
LP, A CALIFORNIA PARTNERSHIP (‘the Partnership’
and PFF Bank & Trust(‘Lender’
, the persons signing below jointly and severally and on behalf ofthe Partnership represent and certify to Lender that:” A series of representations about the
partnership’s existence and good standing follows. The third paragraph, entitled “AUTHORIZATIONS
ADOPTED,” states: “At a meeting of the
partners of the Partnership, duly called and held, or by other duly authorized
action in lieu of a meeting, the agreements and authorizations set forth in
this Authorization were adopted.”
The fourth paragraph headed
“PARTNER,” states: “The following named
entity is a partner of RICO RETAIL, LP, A CALIFORNIA PARTNERSHIP:” Rico Enterprises is identified as the general
partner in the following line. The fifth
paragraph, entitled “ACTIONS AUTHORIZED,” lists the actions the authorized
entity, Rico Enterprises, may enter into on behalf of Rico Retail. The sixth paragraph represents that Rico
Retail does not do business under any assumed names.
The seventh
paragraph, headed “JOINT AND SEVERAL LIABILITY,” states: “Each partner agrees to be jointly and
severally liable for all of the Partnership’s present and future obligations to
Lender.” The eighth paragraph concerns
notices to the lender. The ninth
paragraph, headed “CERTIFICATION CONCERNING PARTNERS AND AUTHORIZATIONS,”
states: “The partner named above is duly
elected, appointed, or employed by or for the Partnership, as the case may be,
and occupies the position set opposite its respective name. This Authorization now stands of record on
the books of the Partnership, is in full force and effect, and has not been
modified or revoked in any manner whatsoever.”
The tenth paragraph concerns continuing validity of authorizations.
The closing
paragraph states: “IN TESTIMONY WHEREOF,
we have hereunto set our hand. [¶] We each have read all the provisions of this
Authorization, and we each jointly and severally and on behalf of the
Partnership certify that all statements and representations made in this
Authorization are true and correct.” In
the following section headed, “CERTIFED AND ATTESTED BY:” Cesare signed the
document on behalf of the Solomon Trust, identified as a limited partner, and
Stamegna signed the document on behalf of Fidelity, also identified as a
limited partner. Immediately below that
section was the following note: “If the
partner signing this Authorization is designated by the foregoing document as
one of the partners authorized to act on the Partnership’s behalf, it is
advisable to have this Authorization signed by at least one non-authorized
partner of the Partnership.”
Effect of Partnership Authorization
In arguing that
the Partnership Authorization created joint and several liability on their
parts for Rico Retail’s debt, defendants rely on the seventh paragraph, in
which “[e]ach partner” agreed to be jointly and severally liable for Rico
Retail’s obligations, and on the fact that they signed the Partnership
Authorization on behalf of the Solomon Trust and Fidelity, who were identified
as limited partners.
The term “partner”
is defined in the fourth paragraph to mean only Rico Enterprises, the general
partner, and US Bank contends that definition applied to the seventh paragraph
as well. However, as the above-quoted
language shows, the Partnership Authorization uses the words “partner” and
“partners” in several places, and the meanings of the words vary with the context. Taking all the provisions of the Partnership
Authorization together, we conclude the document is ambiguous as to whether it
imposes joint and several liability on Cesare and Stamegna for the loan to Rico
Retail.
In determining the
meaning of a contract, “the language of a contract should be interpreted most
strongly against the party who caused the uncertainty to exist.” (Civ. Code, § 1654; Schram Construction, Inc. v. Regents of University of California (2010)
187 Cal.App.4th 1040, 1060, fn. 14.) US Bank’s predecessor in interest drafted
the document, and the contract must therefore be interpreted most strongly
against US Bank. In other words, if US
Bank had attempted to enforce liability for Rico Retail’s loan against Cesare
and Stamegna under the Partnership Authorization, we would have been required
to rule against US Bank. We conclude the
Partnership Authorization did not create liability on defendants’ parts, and we
therefore reject their arguments that their separately executed guaranties were
sham. US Bank has sued to enforce those
guaranties, and we conclude they have established the probable likelihood of
success on their claims.
E. Bond
Defendants contend
the trial court erred in failing to order US Bank to post a bond and request
this court to remand the matter to the trial court with instructions that US
Bank must post a bond in the statutory minimum of $10,000 as a condition to the
issuance of a writ of attachment. US
Bank concedes error and asserts the appropriate amount for a bond is $10,000.
Code of Civil
Procedure section 489.210 provides, “Before issuance of a writ of attachment
. . . the plaintiff shall file an undertaking to pay the defendant
any amount the defendant may recover for any
the action.” Based on that statute, we
agree that the trial court erred by failing to order US Bank to post a
bond. We will direct the trial court to
order US Bank to file an undertaking, in an amount the trial court determines
to be appropriate under the statutory guidelines. (Code Civ. Proc., § 489.220.)
IV. DISPOSITION
The
trial court is directed to enter an order requiring US Bank to file an
undertaking in an amount the trial court deems appropriate. (Code Civ. Proc., §§ 489.210,
489.220.) In all other respect, the
judgment is affirmed. Respondent is
awarded its costs on appeal.
NOT
TO BE PUBLISHED IN OFFICIAL REPORTS
HOLLENHORST
J.
I concur:
RAMIREZ
P.J.
[US Bank National Association v. Anthony Cesare, as Trustee, etc.,
E046531]
MILLER, J., concurring.
I
agree with my colleagues’ reasoning and conclusion as it relates to the
obligation of plaintiff and respondent US Bank National Association (US Bank)
to post a bond. In regard to the writ of
attachment issue, I concur with the disposition reached by my colleagues but
respectfully disagree with their analysis.
A.
MAJORITY OPINION
The
majority provides the following reasoning for affirming the writ of attachment
ruling: the Partnership Authorization
construed against US Bank, but since US Bank is not relying on the Partnership
Authorization to create liability, any argument relating to the Partnership
Authorization is essentially meaningless, so the appeal of defendants and
appellants Anthony Cesare as Trustee of the Solomon Trust, and Stamegna
(collectively, “defendants”
, fails. Idisagree with this reasoning because defendants relied on the Partnership
Authorization as their defense, and thus, the document is important even if US
Bank is not relying upon it. (See Code
Civ. Proc., § 484.060 [opposing a writ of attachment]; see also
(1985) 166 Cal.App.3d 1110, 1120 [a court must consider whether a defendant has
raised a successful defense]; see also Blastrac,
N.A. v. Concrete Solutions & Supply (C.D. Cal. 2010) 678 F.Supp.2d
1001, 1005 [“plaintiff must also show that the defenses raised are ‘less than
fifty percent likely to succeed.’”].)
For
example, in defendants’ opposition to US Bank’s application for a writ of
attachment, defendants argued the writ should not issue because the Partnership
Authorization, which was one of the documents in the loan package, caused the
guarantees to be shams, and therefore the guarantees were void. If my colleagues believe the Partnership
Authorization is ambiguous, and therefore must be construed against US Bank,
then it seems the result should be that defendants prevail because they
presented a successful defense—they showed US Bank failed to establish the
probable validity of its claim, and therefore, the writs of attachment should
not have issued. In sum, I respectfully
cannot agree with my colleagues’ analysis that since US Bank is not relying on
the Partnership Authorization, the document and any argument related to the
document are of no importance; the document is critical to defendants’
case. Nevertheless, I would reach the same
disposition for different reasons.
B. PROBABILITY OF PREVAILING
1. CONTENTION
Defendants
contend the trial court erred by finding US Bank had established a probability
of prevailing on its claims because the guaranties were shams. I disagree.
2. LAW: WRITS OF ATTACHMENT
“Attachment
is a prejudgment remedy which requires a court to make a preliminary
determination of the merits of a dispute.
It allows a creditor who has applied for an attachment following the
statutory guidelines and established a prima facie claim to have a debtor’s
assets seized and held until final adjudication at trial. [Citations.]”
(Lorber Industries v. Turbulence,
Inc. (1985) 175 Cal.App.3d 532, 535 (Lorber).)
A
trial court “shall issue a right to attach order, which shall state the amount
to be secured by the attachment, and order a writ of attachment to be issued
upon the filing of an undertaking . . . if it finds all of the following: [¶] (1) The claim upon which the attachment
is based is one upon which an attachment may be issued. [¶] (2) The plaintiff has established the
probable validity of the claim upon which the attachment is based. [¶] (3) The attachment is not sought for a
purpose other than the recovery upon the claim upon which the attachment is
based. [¶] (4) The affidavit
accompanying the application shows that the property sought to be attached, or
the portion thereof to be specified in the writ, is not exempt from
attachment. [¶] (5) The plaintiff will
suffer great or irreparable injury . . . if issuance of the order is delayed
until the matter can be heard on notice.
[¶] (6) The amount to be secured by the attachment is greater than
zero.” (Code Civ. Proc., § 485.220,
subd. (a).)
In
regard to the “probable validity” factor, the question that must be answered is
whether “‘it is more likely than not that the plaintiff will obtain a judgment
against the defendant on that claim.’” (
3. LAW: SHAM GUARANTIES
A
“guarantor is one who promises to answer for the debt, default, or miscarriage
of another.” (Civ. Code, § 2787.) A guaranty is a “‘sham guaranty’” when the
guarantors are also the primary obligors on the loan. (River
Bank America v. Diller (1995) 38 Cal.App.4th 1400, 1420.) The mere fact that the names of the primary
obligor and the guarantor are different is not dispositive, because the
guarantor could be the primary obligor under a different name. “[I]f the guarantor is actually the principal
obligor, [then] he is entitled to the unwaivable protection of the
antideficiency statutes, . . . which prohibit[] a deficiency
judgment after nonjudicial foreclosure of real property under a power of sale.”
“It
is a factual question whether a person is a true guarantor or a principal
obligor in guarantor’s guise.
[Citation.]” (
purported debtor is anything other than an instrumentality
used by the individuals who guaranteed the debtor’s obligation, and whether
such instrumentality actually removed the individuals from their status and
obligations as debtors. [Citation.] Put another way, are the supposed guarantors
nothing more than the principal obligors under another name [Citation.]”
(Id. at pp. 1422-1423.)
4. LAW: LIMITED PARTNERSHIPS
“The
form of business association known as a ‘limited partnership’ was not
recognized at common law and is strictly a creature of statute. [Citations.]
It can generally be described as a type of partnership comprised of one
or more general partners who manage the business and who are personally liable
for partnership debts, and one or more limited partners who contribute capital
and share in the profits, but who take no part in running the business and
incur no liability with respect to partnership obligations beyond their capital
contribution. [Citations.]” (Evans
v. Galardi (1976) 16 Cal.3d 300, 305-306.)
The key factors of being a limited partner are “(1) limitation of
liability of the limited partner to his investment, in return for which (2) the
limited partner relinquishes all right of business management.” (Kazanjian
v. Rancho Estates Ltd. (1991) 235 Cal.App.3d 1621, 1629.)
“Like
a shareholder in a corporation, ‘[t]he limited partner is, primarily, an
investor, who contributes capital and thereby acquires the right to share in
the business profits [Citation.]” (Sacramento
Sun Creek Apartments, LLC v. Cambridge Advantage Properties II, L.P. (2010)
187 Cal.App.4th 1, 13.) “‘[A] limited
partnership is viewed as an entity separate and apart from the limited partners
for purposes of suing and being sued.’
[Citation.]” (
5. STANDARD
OF REVIEW
I
apply the substantial evidence standard when reviewing the trial court’s
finding that US Bank established the probable validity of its claims. (Lorber,
In reviewing the sufficiency of the evidence on appeal, all conflicts
must be resolved in favor of the trial court’s ruling, and all legitimate and
reasonable inferences must be indulged to uphold the ruling, if possible. This court’s power begins and ends with the
determination as to whether there is any substantial evidence to support the
trial court’s finding. This court does
not have the power to weigh the evidence, to consider the credibility of
witnesses, or to resolve conflicts in the evidence. (Canadian
Commercial Bank v. Ascher Findley Co. (1991) 229 Cal.App.3d 1139,
1157.)
6. SOLOMON
TRUST
The
first part of my analysis on this issue will concern the Solomon Trust; after
completing that analysis I will address the matter as it relates to
Stamegna. The Solomon Trust is a limited
partner in Rico Retail. The Solomon
Trust contributed $1,000 to Rico Retail.
The PFF promissory note and deed of trust were signed by Rico
Retail. In connection with the PFF loan,
the Rico Retail partners executed a Partnership Authorization, in which they
agreed to be “jointly and severally liable for all of the Partnership’s present
and future obligations to Lender [PFF].”
The Solomon Trust was one of the parties that signed the Partnership
Authorization. The Partnership
Authorization identified the Solomon Trust as a limited partner.
It
is unclear from the Partnership Authorization whether the limited partners’
liability for the PFF debt is meant to be limited to their contribution to the
partnership; or whether it is meant to turn the limited partners into general
partners for purposes of the PFF debt, and therefore cause the limited partners
to be liable for the entire PFF debt, which would vastly exceed the Solomon
Trust’s $1,000 contribution to the partnership.
For example, it is unclear if Solomon Trust’s liability for Rico
Retail’s debt would be the $1,000 contribution as a limited partner, or whether
Solomon Trust became a general partner for purposes of this transaction.
Civil
Code section 1432 provides, “Except as provided in Section 877 of the Code of
Civil Procedure, a party to a joint, or joint and several obligation, who
satisfies more than his share of the claim against all, may require a
proportionate contribution from all the parties joined with him.” Given this law, joint and several liability
does not necessarily equate with responsibility for an entire debt. Thus, in light
of Civil Code section 1432 and the law related to restricting limited partners’
liabilities for partnership debts, the limited partners in Rico Retail have a
strong argument for limiting their liability to the amount of their original
investments in the Rico Retail partnership, e.g., the Solomon Trust would be liable
for only $1,000 of the over $1,000,000 owed by Rico Retail, because the
Partnership Authorization does not specifically express that the limited
partners will be considered to be general partners for purposes of the PFF
debt, or that they will be jointly and severally liable for the PFF debt beyond
the amount originally contributed to the Rico Retail partnership. Without such specific terms, it is unclear
what exact amount of liability the limited partners have undertaken for the PFF
debt. Put differently, “jointly and
severally liable” does not necessarily translate into being liable for the
complete amount owed on the PFF debt, when limited partnership laws and joint
debt laws are taken into account.
In
Solomon Trust’s guaranty, it guaranteed “full and punctual payment and
satisfaction of the indebtedness of Borrower [Rico Retail] to Lender [PFF], and
the performance and discharge of all Borrower’s obligations under the Note and
Related Documents.” Solomon Trust
promised that it would “make any payments to Lender [PFF] . . . , on demand . .
. and will otherwise perform Borrower’s obligations under the Note and Related
Documents.” Thus, Solomon Trust
guaranteed the entire loan amount.
When
viewing the evidence in this light, Solomon Trust’s guaranty is not a sham,
because it is answering for the debt of another. Put differently, if Solomon Trust is only
responsible for $1,000 of the debt, then the remaining debt, of nearly
$1,000,000, belongs to another, and Solomon Trust has guaranteed that other
party’s or parties’ portion of the debt.
(Civ. Code, § 2787.)
I
find further support for this interpretation of the evidence in a portion of
the guaranty that reads, “Guarantor represents and warrants to Lender that (A)
no representations or agreements of any kind have been made to Guarantor which
would limit or qualify in any way the terms of this Guaranty; . . . (D) the
provisions of this Guaranty do not conflict with or result in a default under
any agreement or other instrument binding upon Guarantor and do not result in a
violation of any law, regulation, court decree or order applicable to Guarantor
. . . .”
The
foregoing representations can be interpreted as Solomon Trust representing that
the guaranty did not conflict with the Partnership Authorization, and that the
Partnership Authorization would not limit the terms of the guaranty. If those representations were accurate, then
that lends credence to the interpretation that the Partnership Authorization
was only creating a $1,000 liability on the part of Solomon Trust, as opposed
to a million dollar liability on the part of Solomon Trust, because if Solomon
Trust were obligated to pay the entire amount of the PFF loan as a primary
obligor, then the guaranty is limited and the Partnership Authorization
conflicts with the provisions of the guaranty.
In
sum, substantial evidence supports the trial court’s finding that US Bank has
established the probable validity of its claim, because the guaranty may be
valid, i.e., it may not be a sham guaranty.
Defendants
argue that Solomon Trust “has already agreed to be liable to the lender as if
it were the borrower for ‘all present and future obligations’ of RICO. . .
. There can be no dispute that the
written guarant[y] adds nothing to the liability of Solomon Trust as it is
already primarily responsible for the debt and the guaranty is in fact a ‘mere
sham.’” Contrary to defendants’
position, as set forth ante, Solomon
Trust’s Partnership Authorization agreement to be jointly and severally liable
for the obligations of Rico Retail does not specify whether that responsibility
extends only to the responsibility of a limited partner, or whether it extends
the responsibility of a general partner.
Without such details, the Partnership Authorization is open to
interpretation. Thus, the evidence can
be interpreted as the guaranty adding significant liability to Solomon Trust,
because the guaranty could result in nearly $1,000,000 of liability, while the
Partnership Authorization and loan documents could result in only $1,000 of
liability. In sum, I am not persuaded
“the written guarant[y] adds nothing to the liability of Solomon Trust.”
7. STAMEGNA
Stamegna
is a general partner in Fidelity Family Holdings, L.P. (Fidelity). Fidelity is a limited partner within Rico
Retail. Stemegna is also the vice
president of Rico Enterprises, Inc. Rico
Enterprises, Inc. is the general partner of Rico Retail. I discuss Stamegna’s limited partner status,
and then his corporate general partner status.
As
the general partner of Fidelity, a Rico Retail limited partner, the evidence
involving Stamegna is the same as that of the Solomon Trust. Fidelity contributed $1,000 to the Rico
Retail limited partnership. It is
unclear from the Partnership Authorization whether Fidelity’s liability extends
only to that of a limited partner, i.e., it is capped at $1,000, or whether it
extends to that of a general partner, i.e., it could reach $1,000,000. Since the Partnership Authorization is unclear,
the guaranty executed by Stamegna could be interpreted as placing a much larger
liability on Stamegna than the loan documents and Partnership
Authorization. Thus, Stamegna would have
guaranteed the debt of another. Since
the evidence can be interpreted in a light favorable to the trial court’s
ruling, I must follow that interpretation—that the guaranty places a much
larger liability on Stamegna—and thus conclude that substantial evidence
supports the trial court’s ruling to the extent it relates to Stamegna’s role
in Fidelity, i.e., his limited partner status.
Now
I address Stamegna’s role as vice president of the corporation that is the
general partner within Rico Retail.
“‘Directors and officers are not personally liable on contracts signed
by them for them and on behalf of the corporation unless they purport to bind
themselves individually . . . .’” (
Cal.App.4th 681, 684.) Stamegna signed
the Partnership Authorization as “Ivano Stamegna, Vice President of RICO
ENTERPRISES, INC., A CALIFORNIA CORPORATION.”
It appears from the signature line that Stamegna only intended to bind
Rico Enterprises, Inc., not himself, since he signed on behalf of the
corporation. Stamegna signed the
guaranty as an individual. Thus, there
is substantial evidence that the guaranty Stamegna signed is not a sham,
because Stamegna may not be principally obligated, as an individual, for the
full amount of the PFF loan.
In
sum, when looking at the evidence in the light most favorable to the trial
court’s ruling, there is substantial evidence the guaranties are not shams,
because the guaranties created a liability vastly greater than the liabilities
Stamegna and the Solomon Trust could face by virtue of the Partnership
Authorization, e.g., $1,000,000 liability versus $1,000 liability. Therefore, Solomon Trust and Stamegna
guaranteed the debt of another.
Defendants
contend Stamegna executed the Partnership Authorization as the general partner
of Fidelity, and general partners are personally liable for the financial
obligations of a limited partnership.
Therefore, defendants reason, Stamegna is “personally liable for ‘all
present and future obligations’ of RICO.”
As set forth ante, the flaw in
this argument is that Stamegna is a general partner in Fidelity, but
Thus, while Stamegna may be responsible for Fidelity’s financial
liabilities, he arguably only has $1,000 of liability in regard to Rico
Retail’s debts. As a result of this
limited partner status, there is substantial evidence the guaranty executed by
Stamegna is not a sham.
8. CONCLUSION
In
sum, I would affirm the trial court’s writ of attachment ruling, but for
different reasons than the majority.
NOT
TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER
name="_ftn1" title=""> [1] As of the time of the orders that are the
subject of this appeal, service had not been effected on Hirji, and he is not a
party to this appeal.
name="_ftn2" title=""> [2] References to Cesare hereafter will be to
Anthony Cesare as trustee of the Solomon Trust unless the context indicates
otherwise.
