General Electric Capital Corporation et al v. Ten Forward Dining, Inc. et al

Filing 94

MEMORANDUM and ORDER signed by Judge Frank C. Damrell, Jr. on 10/3/2011 GRANTING 85 Motion for Summary Judgment against defendants Ten Forward Dining, Inc., Delightful Dining, Inc., TGIA Restaurants, Kobra Restaurant Properties, LLC, and Abolghassem Alizadeh. (Michel, G)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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GENERAL ELECTRIC CAPITAL
CORPORATION; CEF FUNDING II
L.L.C. and CEF FUNDING V, LLC,

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Plaintiffs,

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Civ. No. S-09-3296 FCD EFB

v.

MEMORANDUM AND ORDER

TEN FORWARD DINING, INC.;
DELIGHTFUL DINING, INC.; KOBRA
RESTAURANT PROPERTIES, L.L.C.,
et al

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Defendants.
____________________________

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----oo0oo---This matter is before the court on plaintiffs, General

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Electric Capital, CEF Funding II, L.L.C., and CEF Funding V,

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L.L.C.’s (collectively “plaintiffs”) motion for summary judgment

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or, in the alternative, partial summary judgment against

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defendants Ten Forward Dining, Inc. (“Ten Forward”), Delightful

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Dining, Inc. (“Delightful Dining”), TGIA Restaurants (“TGIA”),

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Kobra Restaurant Properties, LLC (“Kobra”), and Abolghassem

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Alizadeh (“Alizadeh”) (collectively, “defendants”).
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Defendants

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Alizadeh and Kobra oppose the motion.

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below,1 plaintiff’s motion is GRANTED.

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BACKGROUND

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For the reasons set forth

This action involves defendants attempt to seek redress for

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alleged breach of several loan documents consummated by plaintiff

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and the above named defendants.

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Delightful Dining, TGIA and Kobra each entered into at least one

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“Equipment Loan and Security Agreement” with plaintiffs.

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(Pls.’ Stmt. of Uncontroverted Facts [UF], filed Aug. 09, 2011,

Defendants Ten Forward,

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[Docket # 85-2], ¶¶ 1, 12, 21, 32, 45, 56.)

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defendants granted plaintiffs a security interest in a wide

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variety of defendants’ property, including, but not limited to:

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inventory, equipment, goodwill, furniture, machinery and

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appliances, among others.2

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Plaintiffs perfected their security interests in the various

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collateral by either (1) filing a UCC Financing Statement with

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the California Secretary of State or (2) filing the deed of trust

To secure the loan,

(UF ¶¶ 3, 14, 23, 34, 47, 58.)

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Because oral argument will not be of material
assistance, the court orders this matter submitted on the briefs.
E.D. Cal. L.R. 230(g).
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Defendants contend that UF 34 is “disputed” because
“Alizadeh was not involved in and has no knowledge of the account
during this time period.” (Defs.’ Resp., filed Sept. 02, 2011,
[Docket # 89-2], ¶ 34.) Plaintiff, however, provided a true and
correct copy of the loan agreement establishing the accuracy of
UF 34. Thus, UF 34 is undisputed. (Declaration of Mark Johnson,
filed Aug. 09, 2011, [Docket # 86], ¶ 35.); Fed. R. Civ. P.
56(e)(2) (“If a party fails to properly support an assertion . .
. the court may consider the fact undisputed for purposes of the
motion.”) The loan agreement was originally made between
plaintiffs and Capital City Restaurants, Inc; it was later
assigned to TGIA and guarantied by Alizadeh. (Id. ¶ 40, Ex. U.)
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with the relevant county.3

(UF ¶¶ 4, 15, 24, 35, 49, 60.)

As an inducement to plaintiffs to make the aforementioned

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loans, Alizadeh executed and delivered to plaintiffs an

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unconditional guaranty of payment and performance, personally

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guaranteeing the obligations owed under the loans described

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above.4

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Forward and Ten Forward/Delightful Dining Loans, Alizadeh

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executed a security agreement, granting plaintiffs a security

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interest in a wide variety of Alizadeh’s property, including, but

(UF ¶¶ 5, 16, 25, 36, 50, 61.)

To secure the Ten

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not limited to: equipment, furniture, property, and raw

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materials.

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in the Alizedah collateral by filing a UCC Financing Statement

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with California Secretary of State.

(UF ¶¶ 6, 26.)

Plaintiffs perfected their interest

(UF ¶¶ 7, 27.)

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Defendants, and each of them, failed to make scheduled

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payments of principal and interest due pursuant to the loan

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terms.5

(UF ¶¶ 9, 18, 29, 42, 52, 63.)

As of the date of

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Defendants “dispute” UF 35 for the same reason it
disputed UF 34. Defendants’ contentions in that regard are
unavailaing for the same reason as stated above —— plaintiff
submitted the security instrument to the court establishing the
accuracy of the statement. (See Declaration of Mark Johnson,
filed Aug. 09, 2011, [Docket # 86], ¶ 38.)
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Defendants contend that the UF 61 is “disputed” because
th loan was paid in full, and thus, the guaranty was dissolved.
However, while plaintiffs submitted admissible evidence of the
default, defendants have failed to set forth any evidence in
support of this contention, and thus, have failed to raise a
genuine issue of material fact. Moreover, the entire amount of
the debt was accelerated, and thus, the entire amount of the loan
is due and owing, not just the amount required to bring the loan
current.
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Defendants contend that the failure to make payments on
the Ten Forward and Kobra loans is “disputed” because the “time
frame is not clear.” This, however, is not a proper objection.
Plaintiffs submitted admissible evidence in the form of its
representative’s declaration that defendants failed to make
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plaintiffs’ motion for summary judgment, each defendant remained

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in default on the loan obligations.

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accelerated the obligations owing under the loan documents, thus,

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the amounts owing under the various loans are currently due in

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full, pursuant to the terms of the loan documents.

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(Id.)

Plaintiffs have

(Id,)

In November 2009, plaintiffs filed this action alleging

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breach of the various loan documents.

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2009, [Docket # 1].). The corporate defendants, along with

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defendants Kobra and Alizadeh, filed an answer in January 2010

(Compl., filed Nov. 25,

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through counsel, Patricia Lee.

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[Docket # 11].)

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Withdraw as Attorney.

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[Docket # 60].)

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motion to withdraw and informed defendants that corporations

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cannot appear in the action without legal counsel. (Order, filed

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Oct. 29, 2010, [Docket # 64].)

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defendants to retain alternate counsel within 30 days of the

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court order.

(Answer, filed Jan. 11, 2010,

In October 2010, Patricia Lee filed a Motion to
(Mot. to Withdraw, filed Oct. 15, 2010,

On October 29, 2010, the court granted the

The court directed the corporate

( Id.)

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In May 2011, the court permitted defendants Kobra and

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Alizadeh to substitute Paul Anthony Warner as their attorney of

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record.

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the corporate defendants Ten Forward, Delightful Dining, and TGIA

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failed to retain alternate counsel, despite the court's order

(Order, filed May 13, 2011,[Docket ## 70–71].)

However,

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required payments on the loans. Defendants failed to submit
admissible evidence to create a triable issue as to whether it
did fail to make scheduled payments on the various loans.
Indeed, defendants admit, in their opposition, that they missed
payments. (Pls.’ Opp’n, filed Sept. 02, 2011, [Docket # 89] at
2:21.); See Fed. R. Civ. P. 56(e)(2) (“If a party fails to
properly support an assertion . . . the court may consider the
fact undisputed for purposes of the motion.”)
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directing them to do so.

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filed May 24, 2011, at 4).

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plaintiffs’ motion to sanction those corporate defendants by

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striking their answer.

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72].)6

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(Pl.'s Mot. to Strike [Docket # 72],
Accordingly, the court granted

(Order, filed May 24, 2011, [Docket #

STANDARD
Summary judgment is appropriate when it is demonstrated that

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there exists no genuine issue as to any material fact, and that

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the moving party is entitled to judgment as a matter of law.

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Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144,

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157 (1970).

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Under summary judgment practice, the moving party

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always bears the initial responsibility of informing
the district court of the basis of its motion, and
identifying those portions of “the pleadings,
depositions, answers to interrogatories, and admissions
on file together with the affidavits, if any,” which it
believes demonstrate the absence of a genuine issue of
material fact.

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Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

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nonmoving party will bear the burden of proof at trial on a

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dispositive issue, a summary judgment motion may properly be made

“[W]here the

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Plaintiffs contend that the court should enter summary
judgment against defendants Ten Forward, Delightful Dining, and
TGIA, as their answer has been struck, and thus, the allegations
in the complaint are deemed admitted. “An allegation——other than
one relating to the amount of damages——is admitted if a
responsive pleading is required and the allegations is not
denied.” Fed. R. Civ. P. 8(b)(6). Where a party fails to deny
the allegations in the complaint, those allegations must be taken
as admitted. Fontes v. Porter, 156 F.2d 956, 957 (9th Cir.1945).
In this case, the answer of defendants Ten Forward, Delightful
Dining, and TGIA were stricken by the court for failure to obtain
counsel. None of these defendants either filed a renewed answer
or obtained corporate counsel. Thus, the allegations in the
complaint against these corporate defendants are deemed admitted.
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in reliance solely on the ‘pleadings, depositions, answers to

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interrogatories, and admissions on file.’”

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summary judgment should be entered against a party who fails to

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make a showing sufficient to establish the existence of an

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element essential to that party’s case, and on which that party

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will bear the burden of proof at trial.

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circumstance, summary judgment should be granted, “so long as

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whatever is before the district court demonstrates that the

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standard for entry of summary judgment, as set forth in Rule

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56(c), is satisfied.”

Id. at 324.

Id. at 322.

Indeed,

In such a

Id. at 323.

If the moving party meets its initial responsibility, the

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burden then shifts to the opposing party to establish that a

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genuine issue as to any material fact actually does exist.

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

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585-87 (1986); First Nat’l Bank v. Cities Serv. Co., 391 U.S.

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253, 288-289 (1968).

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this factual dispute, the opposing party may not rely upon the

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denials of its pleadings, but is required to tender evidence of

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specific facts in the form of affidavits, and/or admissible

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discovery material, in support of its contention that the dispute

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exists.

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demonstrate that the fact in contention is material, i.e., a fact

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that might affect the outcome of the suit under the governing

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law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986),

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and that the dispute is genuine, i.e., the evidence is such that

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a reasonable jury could return a verdict for the nonmoving party,

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Id. at 251-52.

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In attempting to establish the existence of

Fed. R. Civ. P. 56(e).

The opposing party must

In the endeavor to establish the existence of a factual
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dispute, the opposing party need not establish a material issue

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of fact conclusively in its favor.

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claimed factual dispute be shown to require a jury or judge to

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resolve the parties’ differing versions of the truth at trial.”

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First Nat’l Bank, 391 U.S. at 289.

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judgment is to ‘pierce the pleadings and to assess the proof in

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order to see whether there is a genuine need for trial.’”

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Matsushita, 475 U.S. at 587 (quoting Rule 56(e) advisory

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committee’s note on 1963 amendments).

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It is sufficient that “the

Thus, the “purpose of summary

In resolving the summary judgment motion, the court examines

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the pleadings, depositions, answers to interrogatories, and

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admissions on file, together with the affidavits, if any.

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56(c); SEC v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir.

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1982).

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all reasonable inferences that may be drawn from the facts placed

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before the court must be drawn in favor of the opposing party.

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Anderson, 477 U.S. at 255.

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drawn out of the air, and it is the opposing party’s obligation

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to produce a factual predicate from which the inference may be

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drawn.

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1244-45 (E.D. Cal. 1985), aff’d, 810 F.2d 898 (9th Cir. 1987).

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Rule

The evidence of the opposing party is to be believed, and

Nevertheless, inferences are not

Richards v. Nielsen Freight Lines, 602 F. Supp. 1224,

Finally, to demonstrate a genuine issue, the opposing party

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“must do more than simply show that there is some metaphysical

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doubt as to the material facts. . . . Where the record taken as a

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whole could not lead a rational trier of fact to find for the

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nonmoving party, there is no ‘genuine issue for trial.’”

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Matsushita, 475 U.S. at 586-87, 106 S. Ct. at 1356.

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ANALYSIS

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Defendants Alizadeh and Kobra do not dispute that they

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entered into the relevant loan agreements; they do not dispute

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that the agreements are valid; they do not dispute that they

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failed to make required payments; and, finally, they do not

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dispute that plaintiffs have a right to collect on the loan

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agreements.

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arguments concerning breach of an alleged “third-party agreement”

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and that the amounts plaintiff’s evidence avers are due under the

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Instead, defendants assert baseless, unsubstantiated

relevant agreements do not reflect the actual amounts due.
In this case, plaintiffs have met their initial burden in

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proving that they are entitled to summary judgment under the

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standard set forth in Celtox, 477 U.S. at 323.

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specifically, plaintiffs have provided the court with admissible

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evidence establishing the validity of the underlying loans and

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plaintiff’s rights thereunder —— namely, plaintiffs submitted

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each of the underlying loan and security documents and a thorough

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affidavit filed by plaintiff’s representative tasked with

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handling the various loans.

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defendants have not complied with the terms of the loans by

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failing to make scheduled payments7

More

This evidence establishes that the

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Defendant objects to the affidavit of plaintiff’s
representative. More specifically, defendants contend that the
amount the affidavit states defendants are currently indebted to
plaintiffs under the various loan agreements may be incorrect.
Defendants argue that the “[d]eclarations refer to amounts with
general inclusion of interest amounts without sufficient personal
knowledge or expertise on the part of its representative.”
(Pl.’s Opp’n., filed Sept. 02, 2011, [Docket # 89], at 5:26-28.)
Defendants contention is unpersuasive: declarant was plaintffs’
representative employee charged with administering the various
loan agreements at issue here. Thus, declarant’s submission of
the amount owing under each agreement was based specifically on
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Defendants, however, have failed to submit admissible

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evidence to create a triable issue of material fact that would

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preclude summary judgment in this instance.

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a single declaration, which relates only to plaintiffs’ damages.

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(See Decl. of Abolghassem Alizadeh, filed Sept. 02, 2011, [Docket

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# 89-4].)

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Defendants submitted

First, defendants dispute the amounts plaintiffs submit is

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owed under each loan because plaintiffs allegedly “withdrew $1.8

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million from Mechanics Bank account violating the Tri-Party

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agreement and in turn taking the funds and not applying them

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toward the loan.”

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Uncontroverted Facts, filed Sept. 02, 2011, [Docket # 98-2].)

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This argument lacks merit for a number of reasons.

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January 11, 2010, defendants filed a counterclaim against

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plaintiffs for breach of contract based on the exact same

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allegation.

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[Docket # 12].)

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dismiss the counterclaim under Federal Rule of Civil procedure

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12(b)(6).

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25].)

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court dismissed defendants’ counterclaim in May, 2010.

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Order, filed May 07, 2010, [Docket # 46].)

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Alizadeh’s unsupported and conclusory allegations in his

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declaration, defendants have failed to submit any evidence of the

(See Defs.’ Resp. to Pls.’ Statement of

First, on

(See Defs.’ Counterclaim, filed Jan. 11, 2010,
In response, plaintiffs filed a motion to

(Pls.’ Mot. to Dismiss, filed Feb. 04, 2010, [Docket #

After defendants filed a statement of non-opposition, the
(See

Moreover, apart from

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his personal knowledge of the loan agreements and
compliance therewith. Indeed, defendant Alizadeh
contacted the declarant via email when seeking an
amount owing under the various loans. (See Decl.
Alizadeh, filed Sept. 02, 2011, [Docket # 89-4].)
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defendants
personally
update on the
of Abolghassem

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existence of any such agreement or how plaintiffs allegedly

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breached it.

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Corp., 121 F.3d 496, 502 (9th Cir. 1997) (holding that conclusory

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statements without factual support are insufficient to defeat a

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motion for summary judgment.)

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See

National Steel Corp. v. Golden Eagles Ins.

Plaintiffs have submitted evidence establishing the exact

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amounts owed with respect to each of the loans at issue.

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Declaration of Mark Johnson, filed Aug. 09, 2011, [Docket # 86],

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¶¶ 13, 22, 33, 46, 56, 67.)

Defendants contend that these

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numbers may be inaccurate.

In support of this contention,

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defendants submitted two emails sent from plaintiffs’

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representative, Mark Johnson, to Alizadeh, “indicating different

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amounts than claimed in [p]laintiff’s motion.”

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Abolghassem Alizadeh, filed Sept. 02, 2011, [Docket # 89-4].)

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These emails, however, are irrelevant as they represent the

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amount owing at a different time than that represented by

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plaintiffs’ evidence.

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represent the amount owing as of August 2011, and September 2010,

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whereas the amount established by plaintiffs’ evidence is the

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amount owing as of June 2011.

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evidence is irrelevant, it does not create a triable issue of

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fact as to the amounts due under the various loans.

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(See

(See Decl. of

More specifically, the two emails

Therefore, because defendants’

Finally, defendants contend that the court should defer

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consideration of the motion because “further information

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regarding the application of funds received from various

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activities as well as the activities and sources as well as the

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determination of the resulting interest calculations is

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unavailable to [d]efendants.”

(Defs.’ Opp’n, filed Sept. 02,
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2011, [Docket # 89], at 6:15-18.)

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Procedure 56(d) provides that: [i]f a nonmovant shows by

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affidavit or declaration that, for specified reasons, it cannot

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present facts essential to justify opposition, the court may: (1)

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defer consideration of the motion or deny it; (2) allow time to

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obtain affidavits or declarations or to take discovery; or (3)

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issue any other appropriate order.”

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have failed to point to “specified reasons” as to why they have

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not been able to gather the specific facts, nor how those facts

Federal Rule of Civil

In this case, defendants

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would create a triable issue.

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complaint in this matter in November of 2009.

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defendants have failed since the filing of the complaint two

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years ago to conduct any written or oral discovery; these

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defendants cannot now invoke rule 56(d) in an attempt

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to circumvent their utter lack of diligence and continue to drag

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this matter out without justifiable cause.

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court declines to defer consideration of the motion.

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Moreover, plaintiffs filed the
Nevertheless,

To this end, the

CONCLUSION
For the foregoing reasons, plaintiffs’ motion for summary

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judgment is GRANTED.

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DATED: October 3, 2011

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FRANK C. DAMRELL, JR.
UNITED STATES DISTRICT JUDGE

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