Korman v. United Language Group CA2/7 ( 2023 )

Filed 5/19/23 Korman v. United Language Group CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
B313271
YEUN KORMAN et al.,
(Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. 19BBCV00538)
v.
UNITED LANGUAGE GROUP,
INC., et al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, William D. Stewart, Judge. Dismissed in part
and affirmed in part. ORIGINAL PROCEEDING in mandate.
Petition denied.
Prospera Law, Albert T. Liou and Victor T. Fu for Plaintiffs
and Appellants.
McBreen & Senior, David A. Senior and Ann K. Tria;
Fredrikson & Byron, Terrence J. Fleming, Christopher D. Pham
and Rachel L. Dougherty for Defendants and Respondents.
INTRODUCTION
Yeun Korman, Yong Korman, Claudio Federico, Alen
Keshishyan, and Eugene Du (the Korman parties) founded a
company called Language Select, LLC. United Language Group,
Inc. (ULG) purchased Language Select from the Korman parties
for $65 million: $60 million in cash and a $5 million promissory
note. This lawsuit is about the $5 million note.
To obtain the funds for the purchase, ULG borrowed money
from two senior lenders. The senior lenders, in turn, required the
Korman parties to sign subordination agreements to ensure ULG
paid back the senior lenders before ULG paid the $5 million it
owed the Korman parties.
Among the many terms of the promissory note and
subordination agreements were two in particular that ultimately
gave rise to the parties’ dispute. First, ULG could not pay the
Korman parties any principal owed on the $5 million promissory
note until ULG repaid all of the debt it owed to the senior lenders
(the Senior Debt). Second, ULG in the meantime had to make
quarterly, interest-only payments on the promissory note to the
Korman parties; however, ULG could only make interest
payments if it was not in default on its borrowing obligations to
the senior lenders (a Senior Default).
ULG made some of the interest payments on the $5 million
promissory note, but eventually stopped. The Korman parties
filed a lawsuit against ULG; its holding company, United
Language Group Holdings, LLC; and six of ULG’s officers and
directors (Douglas Bergeron, Kristen Giovanis, Scott M. Honour,
Peter R. Offenhauser, Michael Furey, and Marcy A. Haymaker)
(collectively, the ULG parties). That lawsuit settled. But after
ULG again stopped making interest payments on the promissory
2
note, the Korman parties filed this action, asserting a cause of
action against ULG and Language Select for breach of the
promissory note and a cause of action against all of the
ULG parties for breach of the settlement agreement on the
theory the ULG parties agreed to pay back the promissory note
as part of the settlement. The Korman parties also claimed the
ULG parties breached the settlement agreement by filing it in
court.
The ULG parties and Language Select moved for summary
adjudication on each cause of action and for summary judgment.
On the Korman parties’ cause of action for breach of the
promissory note, they argued they were entitled to judgment as a
matter of law for two reasons. First, they argued that, because it
was undisputed ULG had not paid off the Senior Debt it owed to
the senior lenders, the subordination agreements precluded ULG
from making any principal payments. Second, they argued that,
because it was undisputed there was a Senior Default on ULG’s
obligations to the senior lenders, the subordination agreements
precluded ULG from making interest payments on the
promissory note. On the Korman parties’ cause of action for
breach of the settlement agreement, the ULG parties argued
there was no breach of the settlement agreement because the
settlement agreement did not modify the terms governing
payment of the promissory note.
The trial court granted the motion and subsequently
entered judgment on the Korman parties’ complaint, although
not on a cross-complaint ULG and Language Select had filed
against the Korman parties (more on that later). On the cause of
action for breach of the promissory note, the court ruled there
was no breach because it was undisputed ULG had not paid off
the Senior Debt. The Korman parties contend the subordination
3
agreements were no longer binding because, after the Korman
parties and ULG’s senior lenders entered into the subordination
agreements, ULG borrowed money from a new lender, which
ULG used to pay off its debt to one of the two senior lenders and
to acquire a new company. As we explain, the Korman parties
are incorrect; ULG had not paid off the Senior Debt to the other
senior lender, and the subordination agreements permitted ULG
to incur additional debt. In addition, ULG and Language Select
met their burden to show there was a Senior Default on ULG’s
obligations to that same senior lender, and the Korman parties
did not submit sufficient evidence to create a triable issue of
material fact.
On the cause of action for breach of the settlement
agreement, the trial court agreed with the ULG parties that
there was no breach of that agreement. We conclude that the
Korman parties’ claim for breach of the settlement agreement
based on a breach of the promissory note fails because there was
no breach of the latter agreement and that the ULG parties’ filing
of the settlement agreement did not cause the Korman parties
any damages. Therefore, we affirm the judgment in favor of
those ULG parties for whom there is an appealable judgment.
We dismiss the appeal from the judgment in favor of ULG and
Language Select, for whom there is no appealable judgment;
treat that part of the appeal as a petition for writ of mandate;
and deny the petition.
4
FACTUAL AND PROCEDURAL BACKGROUND
A. The Korman Parties Sell Language Select to ULG and
United Language Group Holdings
The Korman parties founded Language Select, which
provides language interpretation services, in 2009. In 2016 they
sold the company to ULG and its holding company, United
Language Group Holdings, for $60 million in cash, a $5 million
promissory note, and equity in United Language Group Holdings.
The promissory note provided that interest on outstanding
principal would accrue annually at 6 percent and that ULG and
Language Select would make quarterly interest-only payments
on the note.1 The promissory note provided that, if ULG and
Language Select did not make a required interest payment, they
would be in default, after which any unpaid principal or interest
would “become immediately due and payable.”
B. The Korman Parties Enter into Subordination
Agreements with the ULG’s Senior Lenders
To obtain funding for the purchase, the ULG entities2
borrowed money from two lenders: Bell Bank and Yukon Capital
Partners II, L.P. Both Bell Bank and Yukon required the
1 The promissory note specifically listed only Language
Select as the promisor, but the Korman parties alleged in their
operative complaint that both ULG and Language Select were
responsible for the payments Because the issue is not relevant
to the appeal, we assume, without deciding, ULG and Language
Select were jointly obligated to make payments on the note.
2 We refer to ULG, United Language Group Holdings, and
Language Select collectively as the ULG entities.
5
Korman parties to enter into subordination agreements, which
included the following terms:
“The payment of all of the [promissory note] is hereby
expressly subordinated to the payment in full of the Senior Debt
to the extent and in the manner hereinafter set forth in this
Agreement. Until the Senior Debt has been Paid in Full, [the
Korman parties] shall not demand, receive or accept any payment
in respect of the [promissory note], . . .; provided, that so long as
no Senior Default has occurred and is continuing or would occur
as a result of or immediately following any such payment . . . ,
[Language Select and ULG] may pay and the [Korman parties]
may accept regularly scheduled payments of accrued interest (but
not principal) on the [promissory note] . . . on the dates on which
they are required to be paid under the [promissory note].”
The subordination agreements defined the terms “Senior
Debt” and “Senior Default.” They defined Senior Debt as “each
and every debt, liability and obligation of every type and
description which [ULG and Language Select] may now or at any
time hereafter owe to [Bell Bank or Yukon] under the Senior
Credit Documents, whether such debt, liability or obligation now
exists or is hereafter created or incurred, . . . all renewals,
extensions, modifications and refinancings thereof and any notes
issued in whole or partial substitution for any notes issued in
connection therewith.” They defined Senior Default as “a Default
or Event of Default” under the ULG entities’ lending agreements
with Bell Bank and Yukon.
When the Korman parties and Bell Bank and Yukon
entered the subordination agreements, the ULG entities’ lending
agreement with Yukon was also subordinate to their lending
agreement with Bell Bank. The Bell Bank-Yukon subordination
agreement generally prohibited the ULG entities from making
6
payments to Yukon before paying off their debt to Bell Bank,
while permitting certain payments.
C. After the Sale, the Parties Sue Each Other and Settle
After the sale ULG and United Language Group Holdings
filed a complaint against the Korman parties for fraud and
breach of contract arising from the sale. The Korman parties
filed a cross-complaint against the ULG parties for breach of the
promissory note, alleging the ULG parties failed to make
quarterly interest payments required under the note. The
Korman parties and the ULG parties ultimately executed a
settlement agreement resolving that lawsuit.3
D. ULG Again Stops Making Interest Payments on the
Note, and the Korman Parties File This Action
After the parties settled the prior action, ULG made two
interest payments on the note. ULG, however, did not make the
third scheduled interest payment due in April 2019, believing the
ULG entities “were in default of their senior lending agreements
or, at the very least . . . would be in default immediately after
paying the Seller Note.” In response, the Korman parties filed
this action.
In their operative complaint, the Korman parties asserted a
cause of action against ULG and Language Select for breach of
the promissory note and a cause of action against the
ULG parties for breach of the settlement agreement. In support
of their first cause of action, the Korman parties alleged “ULG
and Language Select materially breached the [promissory note],
by failing to remit timely payment of interest in the amount of
3 Language Select was not a party to that lawsuit.
7
$75,000.00 . . . without justification.” Therefore, the Korman
parties claimed, “an Event of Default has occurred . . . such that
the entire outstanding principal amount of the [note]
($5,000,000.00), as well as all accrued but unpaid interest, is
immediately due and payable . . . .”
In support of their second cause of action, the Korman
parties alleged the ULG parties “breached the Settlement
Agreement, without justification, by allowing and/or causing
ULG and Language Select to default on the [promissory note]
. . . .” The Korman parties also alleged that the settlement
agreement was confidential, that the parties agreed they “would
disclose only those terms needed” if necessary to enforce the
agreement, and that the ULG parties breached the
confidentiality provision by filing the entire settlement
agreement in the lawsuit without the Korman parties’ consent.4
Finally, the Korman parties asserted a cause of action
against the ULG parties and Language Select for declaratory
relief. The Korman parties alleged there was a dispute whether
the promissory note was “in default and . . . payable by
Defendants” and whether “ULG’s alleged noncompliance
with certain quarterly financial covenants contained in its senior
debt agreement and ULG’s alleged senior defaults” were “valid
reasons to avoid making payments” on the promissory note. The
Korman parties requested various declarations that there was no
default and that the ULG parties and Language Select had to pay
back the note.
4 The ULG parties filed the settlement agreement when they
demurred to the Korman parties’ initial complaint. The Korman
parties filed an amended complaint that included the breach-of-
confidentiality claim.
8
E. The ULG Parties and Language Select File a Motion
for Summary Adjudication on Each Cause of Action
and for Summary Judgment
The ULG parties and Language Select filed a motion for
summary adjudication on each cause of action and for summary
judgment. On the first cause of action for breach of the
promissory note, ULG and Language Select argued there were
“two unmet conditions precedent that bar [the Korman parties’]
breach of contract cause of action: (1) at all relevant times, a
Senior Default had occurred and was continuing or would occur
as a result of or immediately following any payment of interest on
the Seller Note, and (2) the Senior Debt has not been paid in
full.”
To show that a Senior Default had occurred and was
continuing, ULG and Language Select attached the ULG entities’
senior lending agreement with Yukon.5 Under that agreement,
ULG was required to meet certain financial covenants each fiscal
quarter. The agreement defined a failure “to perform or observe”
a financial covenant as an “Event of Default.”
ULG and Language Select submitted a declaration from
Giovanis, ULG’s chief executive officer, who stated that, “[a]t the
end of March 2019, the ULG Entities had an unusually large
amount of unpaid collections and were facing liquidity
challenges.” She said that, after reviewing ULG’s financial
information, she and other company management “determined
5 ULG and Language Select also attached the ULG entities’
lending agreement with Crescent Direct Lending, LLC—a new
lender the ULG entities borrowed money from to pay off the debt
owed to Bell Bank. In their motion, however, ULG and Language
Select focused on the lending agreement with Yukon.
9
that it was very likely the ULG Entities would not meet the
required covenants . . . .” Therefore, she explained, ULG did not
make the interest payment under the promissory note that was
due in April 2019. Giovanis stated: “Over the course of the next
month, the ULG Entities collected documents and information
reflecting collections, revenues, and expenses for the quarter . . .
and confirmed their covenant noncompliance at the end of April.”
Giovanis further stated that, at all times during 2019 and
2020, the ULG Entities did not comply with “the financial
covenants necessary to make interest payments on the
[promissory] Note.” ULG and Language Select submitted
compliance certificates prepared by ULG’s chief financial officer
for each quarter of 2019 and 2020 that reflected ULG did not
satisfy financial covenants required under its lending agreement
with Yukon to make payments on the promissory note.
To show ULG had not paid off the Senior Debt to Yukon,
ULG and Language Select relied on Giovanis’s declaration, as
well as a declaration by Andrew Walker, an officer of Yukon.
Walker and Giovanis stated that the Yukon lending agreement
had “not been terminated” and that debt incurred under the
agreement remained outstanding.
On the cause of action for breach of the settlement
agreement, the ULG parties argued that the settlement
agreement “did not create an independent obligation on behalf of
the signatories” to pay the note and that the note “remain[ed]
payable” under the same terms and conditions, including those
imposed by the subordination agreements. The ULG parties
cited a provision in the settlement agreement stating the
promissory note “remains due and payable in full, according to its
terms” and “subject to all applicable subordination agreements
related to the” note. Therefore, the ULG parties contended, the
10
claim failed for the same reasons the breach-of-promissory-note
claims failed.
To defeat the Korman parties’ other claim for breach of the
settlement agreement, the ULG parties argued the Korman
parties “have not suffered any damages as a result of the filing of
the Settlement Agreement.” The ULG parties submitted the
Korman parties’ response to a special interrogatory asking them
to describe their damages from the ULG parties’ public filing of
the settlement agreement. In response, the Korman parties
stated they were seeking damages, but did not provide any facts
explaining what those damages were or how they were
calculated. Finally, the ULG parties and Language Select argued
the Korman parties’ cause of action for declaratory relief failed
for the same reasons as their cause of action for breach of the
promissory note.
F. The Korman Parties Oppose the Motion
In opposition to the motion for summary adjudication on
the cause of action for breach of the promissory note, the Korman
parties primarily argued there was a triable issue of material fact
regarding whether the subordination agreements were still valid
and binding. The Korman parties submitted evidence that in
2018 the ULG entities borrowed money from a new lender,
Crescent Direct Lending, LLC, to acquire a company called VIA,
Inc. and to pay off the senior debt owed to Bell Bank. After the
VIA acquisition, the ULG entities owed Crescent over $20 million
more than they had owed Bell Bank before the acquisition.
According to the Korman parties, there was a triable issue of
material fact regarding whether the new loan “was a permitted
‘refinancing’ under the Bell Bank Subordination Agreement [and]
the Yukon Subordination Agreement” and therefore whether the
11
subordination agreements were still binding. The Korman
parties also contended ULG and Language Select did not show
there was a Senior Default, objecting to the admissibility of the
statements by Giovanis and Walker that the ULG entities had
not met the financial covenants necessary to make interest
payments on the promissory note. The Korman parties argued
the statements were hearsay, improper legal conclusions,
conclusory, and lacked foundation.
In opposition to the motion for summary adjudication on
the second cause of action, the Korman parties argued the
ULG parties “agreed to ensure that the [promissory note] would
be paid according to its terms,” but did not cite any terms of the
settlement agreement that supported their argument or submit
any extrinsic evidence. The Korman parties also did not submit
any evidence they suffered damages from the ULG parties
publicly filing the settlement agreement.
G. The Trial Court Grants the Motion
The trial court granted the motion for summary
adjudication on each of the Korman parties’ causes of action and
the motion for summary judgment. On the cause of action for
breach of the promissory note, the court addressed only the
Korman parties’ argument the subordination agreements were no
longer binding after the ULG entities borrowed additional money
to acquire VIA. The court ruled that “[t]he terms of the
subordination agreements . . . expressly allow[ed] [Bell Bank and
Yukon] to increase the amount of the Senior Debt” and that the
Korman parties had not created a triable issue of material fact
regarding whether “the subordination agreements were no longer
in effect” after the acquisition. The trial court did not address
whether, even if the subordination agreements were still binding,
12
ULG and Language Select met their burden to show they could
not make interest payments on the promissory note because
there was a Senior Default. The court, however, did overrule the
Korman parties’ objections to the evidence submitted by ULG and
Language Select showing there was a Senior Default.
On the cause of action for breach of the settlement
agreement, the court agreed with the ULG parties that “the plain
language of the Settlement Agreement . . . create[ed] no further
obligation to make payments” on the note beyond the note’s
original terms and ruled that there was no breach of the
settlement agreement for the same reason there was no breach of
the promissory note. The court did not address the Korman
parties’ claim the ULG parties breached the agreement by
publicly filing it. On the cause of action for declaratory relief, the
court ruled there were “no remaining issues” in the case. The
trial court entered judgment in favor of the ULG parties and
Language Select, and the Korman parties timely appealed from
the judgment.
DISCUSSION
A. We Treat the Appeal from the Judgment in Favor of
ULG and Language Select as a Petition for Writ of
Mandate
When the court entered judgment, a cross-complaint by
ULG and Language Select against the Korman parties was still
pending. ULG and Language Select asserted a cause of action for
breach of the promissory note, alleging the Korman parties
breached the note by “demanding payment” of the promissory
note, notwithstanding that “Senior Defaults exist” and that “the
Senior Debt has not been paid in full.” ULG and Language Select
13
sought as damages their attorneys’ fees incurred in defending
this action. After entering judgment on the complaint the trial
court, based on the parties’ stipulation, (1) stayed the cross-
complaint pending resolution of this appeal and (2) ordered that,
if this court affirmed the judgment, the court would resolve the
cross-complaint by way of a motion for attorneys’ fees.
Generally, where “a complaint and cross-complaint
involving the same parties have been filed, there is no final,
appealable judgment until both have been resolved.” (ECC
Construction, Inc. v. Oak Park Calabasas Homeowners Assn.
(2004) 122 Cal.App.4th 994, 1002; see Westamerica Bank v. MGB
Industries, Inc. (2007) 158 Cal.App.4th 109, 132; American
Alternative Energy Partners II v. Windridge, Inc. (1996)
42 Cal.App.4th 551, 556-557.) That the trial court agreed to
resolve the cross-complaint on a motion for attorneys’ fees, rather
than a trial, does not change the facts that the cross-complaint
remains pending and that there is no final judgment between the
parties to the cross-complaint. (See Kurwa v. Kislinger (2013)
57 Cal.4th 1097, 1107 [“The one final judgment rule does not
permit parties ‘to separate [their] causes of action into two
compartments for separate appellate treatment at different
points in time.’”]; Morehart v. County of Santa Barbara (1994)
7 Cal.4th 725, 743 [“an appeal cannot be taken from a judgment
that fails to complete the disposition of all the causes of action
between the parties even if the causes of action disposed of by the
judgment have been ordered to be tried separately, or may be
characterized as ‘separate and independent’ from those
remaining”].)
We asked the parties to submit supplemental briefing on
whether this court “should dismiss all or part of the appeal
because causes of action remain pending between some of the
14
parties to the judgment.” In response, the Korman parties asked
us to treat part of the appeal as a petition for writ of mandate.6
We agree that, under the unusual circumstances of this case, it is
appropriate to do so.
The briefs and the record satisfy the requirements for an
original proceeding in mandate, and the superior court has not
indicated it wants to participate in these proceedings. (See
Morehart v. County of Santa Barbara, supra, 7 Cal.4th at
pp. 745-746 [the “functional equivalents of any necessary
verifications [citation] are supplied . . . by the certifications of the
clerk’s transcript by the clerk of the trial court and of the
reporter’s transcript by the clerk and the reporter”].) Deferring
resolution of the issues in this appeal until after resolution of the
cross-complaint would not advance the interest of judicial
economy: If we dismissed part of the appeal, the parties, after
briefly litigating the issue of attorneys’ fees, undoubtedly would
appeal again and present almost the exact same arguments. (See
id. at p. 746.) Indeed, most of the briefing in this appeal would be
recyclable.
In addition, because there are no causes of action pending
between the Korman parties and the ULG parties who did not
file the cross-complaint (i.e., United Language Group Holdings
and the six ULG officers and directors), there is a final,
appealable judgment for those parties. The Korman parties
asserted their causes of action for breach of the settlement
agreement and declaratory relief against some of the ULG parties
who have pending cross-claims and some who do not; affirming or
6 The ULG parties and Language Select took no position on
whether we should hear any part of the appeal.
15
reversing the orders granting summary adjudication on those
causes of action would not accomplish much and would preclude
some of the parties from participating in the appeal. (See County
of Orange v. Superior Court (2007) 155 Cal.App.4th 1253, 1257
[exercising discretion to treat an appeal as a petition for writ of
mandate where “[t]he merits of the issue have been fully briefed
by the parties” and “failure to consider the issue at this juncture
would be a dereliction of our duties as a reviewing court”].7 And
no party claims it will suffer any prejudice if we address the
merits of the parties’ dispute. (See People v. AWI Builders, Inc.
(2022) 80 Cal.App.5th 248, 266.)
Moreover, ULG and Language Select’s cross-complaint
depends on the merits underlying the Korman parties’ first and
third causes of action: whether the relevant agreements required
ULG and Language Select to pay principal or interest on the
promissory note. Requiring the trial court to proceed without the
benefit of a decision on these issues would not further resolution
of this litigation. (See Olson v. Cory (1984) 35 Cal.3d 390, 401
[“[t]o dismiss the appeal rather than exercising our power to
reach the merits through a mandate proceeding would, under the
unusual circumstances before us, be ‘“unnecessarily dilatory and
circuitous”’”]; ViaView, Inc. v. Retzlaff (2016) 1 Cal.App.5th 198,
7 Similarly, the issues relating to whether the court erred in
granting summary adjudication on the cause of action for breach
of the settlement agreement and the cause of action for
declaratory relief (asserted against all the ULG parties) overlap
with the issues relating to whether the court erred in granting
summary adjudication on the cause of action for breach of the
promissory note (asserted against only ULG and Language
Select).
16
213 [“treating the appeal as a petition for writ of mandate avoids
piecemeal litigation and further delay, and allows for an orderly
examination of the issues presented”].)
B. Applicable Law and Standard of Review
“A court may grant a motion for summary judgment only
when all the papers submitted show that there is no triable issue
as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” (Fajardo v. Dailey (2022)
85 Cal.App.5th 221, 225, internal quotation marks omitted;
see Code Civ. Proc., § 437c, subd. (c);8 Regents of University of
California v. Superior Court (2018) 4 Cal.5th 607, 618; Randle v.
Farmers New World Life Ins. Co. (2022) 85 Cal.App.5th 53, 61.)
“A defendant moving for summary judgment has the initial
burden of presenting evidence that a cause of action lacks merit
because the plaintiff cannot establish an element of the cause of
action or there is a complete defense.” (Sabetian v. Exxon Mobil
Corp. (2020) 57 Cal.App.5th 1054, 1068; see § 437c,
subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 850 (Aguilar); Randle, at p. 61.)
“Where, as here, the defendant moves for summary
judgment on the grounds that one or more elements of
the plaintiff’s [cause of action] cannot be established, the
defendant must present evidence that either ‘conclusively
negate[s] an element of the plaintiff’s cause of action’ or ‘show[s]
that the plaintiff does not possess, and cannot reasonably obtain,’
evidence needed to establish an element . . . .” (White v. Smule,
Inc. (2022) 75 Cal.App.5th 346, 354; see Aguilar, supra,8 Undesignated statutory references are to the Code of Civil
Procedure.
17
25 Cal.4th at pp. 853-855; Doe v. Roman Catholic Archbishop of
Los Angeles (2021) 70 Cal.App.5th 657, 668.) “‘Only after the
defendant carries that initial burden does the burden shift to the
plaintiff “to show that a triable issue of one or more material
facts exists as to the cause of action . . . .”’” (Fajardo, supra,
85 Cal.App.5th at pp. 225-226; see § 437c, subd. (p)(2); Aguilar, at
pp. 849-850; Roman Catholic Archbishop of Los Angeles, at
pp. 668-669.) “There is a triable issue of material fact if, and only
if, the evidence would allow a reasonable trier of fact to find the
underlying fact in favor of the party opposing the motion in
accordance with the applicable standard of proof.” (Aguilar, at
p. 850; see Lemm v. Ecolab Inc. (2023) 87 Cal.App.5th 159, 169.)
“‘“‘“We review the trial court’s decision de novo, considering
all the evidence set forth in the moving and opposing papers
except that to which objections were made and sustained.”’
[Citation.] We liberally construe the evidence in support of the
party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.”’” (Hampton v. County of
San Diego (2015) 62 Cal.4th 340, 347; see Lemm v. Ecolab Inc.,
supra, 87 Cal.App.5th at pp. 168-169.)
C. The Trial Court Did Not Err in Granting the Motion
for Summary Adjudication on the Cause of Action for
Breach of the Promissory Note
Under Minnesota law,9 “[t]he elements of a breach
of contract claim are ‘(1) formation of a contract, (2) performance
9 The subordination agreements contain a Minnesota choice-
of-law provision that states: “THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS
18
by plaintiff of any conditions precedent to his right to demand
performance by the defendant, and (3) breach of the contract by
defendant.’” (Lyon Financial Services, Inc. v. Illinois Paper and
Copier Co. (Minn. 2014) 848 N.W.2d 539, 543; see Park Nicollet
Clinic v. Hamann (Minn. 2011) 808 N.W.2d 828, 833; Glacier
Park Iron Ore Properties, LLC v. United States Steel Corp.
(Minn.Ct.App. 2020) 948 N.W.2d 686, 697.) “A breach of contract
is a failure, without legal excuse, to perform any promise that
forms the whole or part of the contract.” (Lyon, at p. 543; see
Moore v. City of New Brighton (Minn.Ct.App. 2019) 932 N.W.2d
317, 324; see also Park, at p. 837 [“Failure to perform under a
contract when performance is due establishes an immediate
breach.”].)
ULG and Language Select made two relevant promises in
the promissory note: first, to make quarterly, interest-only
payments on the note; second, to pay all outstanding principal on
the note if they failed to timely make a required interest
payment. The subordination agreements, however, conditioned
these promises. (See Crossroad Church of Prior Lake MN v.
County of Dakota (Minn. 2011) 800 N.W.2d 608, 615 [“Under
general contract law, unfulfilled conditions prevent enforcement
of a contract.”]; R.A., Inc. v. Anheuser-Bsuch, Inc. (Minn.Ct.App.
1996) 556 N.W.2d 567, 570 [“‘A conditional promise prevents a
party from acquiring any rights under the contract unless those
conditions occur.”].) As discussed, they stated: “Until the Senior
AGREEMENT SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.”
ULG and Language Select argue Minnesota law governs the
scope and enforceability of the agreements; the Korman parties
do not dispute that Minnesota law applies.
19
Debt has been Paid in Full, [the Korman parties] shall not
demand, receive or accept any payment in respect of the
[promissory note], . . .; provided, that so long as no Senior Default
has occurred and is continuing or would occur as a result of or
immediately following any such payment . . . , [Language Select
and ULG] may pay and the [Korman parties] may accept
regularly scheduled payments of accrued interest. . . .” Thus,
ULG and Language Select’s first promise to make interest-only
payments was conditioned on the absence of a Senior Default (or
a Senior Default resulting from an interest payment); if a Senior
Default had occurred or would occur, ULG and Language Select
did not have to perform. And ULG and Language Select’s second
promise to pay outstanding principal in the event they failed to
make a required payment was conditioned on the absence of the
Senior Debt; i.e., the ULG entities having paid off the Senior
Debt.
The trial court ruled ULG and Language Select met their
burden to show the second condition that triggered their duty to
pay—that the ULG entities had paid off the Senior Debt—did not
exist. The court, however, did not rule on whether ULG and
Language Select met their burden on the first condition: the
absence of a Senior Default. ULG and Language Select contend
that they met their burden to show both conditions did not exist
and that the Korman parties failed to raise any triable issues of
fact. ULG and Language Select are correct.
1. The Undisputed Facts Showed ULG and
Language Select Had Not Paid Off the Senior
Debt
As discussed, both Giovanis (ULG’s chief executive officer)
and Walker (an officer of Yukon) submitted declarations stating
20
ULG had not paid the balance of the outstanding Senior Debt
owed to Yukon. No more was required for ULG and Language
Select to meet their burden on summary judgment. (See Aguilar,
supra, 25 Cal.4th at p. 851 [“A prima facie showing is one that is
sufficient to support the position of the party in question.
[Citation.] No more is called for.”].) Indeed, the Korman parties
do not dispute the ULG entities have not paid off the Senior Debt
owed to Yukon.10 Instead, they offer several reasons why, in
their opinion, the Yukon subordination agreements are no longer
enforceable (which, if correct, would require ULG and Language
Select to make principal and interest payments on the note
regardless of the two conditions). The Korman parties’ reasons
do not withstand scrutiny.
2. The Yukon Subordination Agreement Is
Enforceable
The Korman parties first contend they “never agreed to
subordinate” the promissory note to a 2018 amended lending
10 The parties do dispute whether the ULG entities paid off
the Senior Debt owed to Bell Bank under the Korman parties’
separate subordination agreement with Bell Bank. As discussed,
the ULG entities obtained funding from a new lender, Crescent,
in part to pay off the debt owed to Bell Bank. We assume,
without deciding, the ULG entities paid off the Senior Debt under
the Bell Bank subordination agreement. As the ULG entities and
Language Select contend, however, the promissory note stated it
was subject to both the Bell Bank subordination agreement and
the Yukon subordination agreement. Therefore, even if the
ULG entities paid off the Senior Debt owed to Bell Bank, ULG
and Language Select could not make any payments on the
promissory note if prohibited by the Yukon subordination
agreement.
21
agreement the ULG entities and Yukon entered into after the
ULG entities acquired VIA. The Korman parties are incorrect.
The Korman parties’ subordination agreement with Yukon stated
the “payment of all of the [promissory note] is hereby expressly
subordinated to the payment in full of the Senior Debt . . . .” The
subordination agreement defined “Senior Debt” as “each and
every debt, liability and obligation of every type and description
which [the ULG entities] may now or at any time hereafter owe
to [Yukon] under the Senior Credit Documents, whether such
debt, liability or obligation now exists or is hereafter created or
incurred . . . .” (Italics added.) In addition, the subordination
agreement defined “Senior Credit Documents” not only as the
existing lending agreement between the ULG entities and Yukon,
but also as “all other loan documents or note documents . . . now
or hereafter existing or executed in connection with or related to
the Senior Debt, as the same may be amended, supplemented,
replaced, refinanced, restated or otherwise modified from time to
time.” (Italics added.) The language of these provisions in the
subordination agreement made clear “Senior Debt” included any
new debt or obligation to Yukon the ULG entities incurred and
“Senior Credit Documents” included any new lending agreements
the ULG entities entered with Yukon. Thus, the Korman parties
agreed to subordinate the promissory note to the 2018 lending
agreement between the ULG entities and Yukon.
Second, the Korman parties contend they “never agreed to
subordinate” the promissory note to “the substantially increased
indebtedness resulting from the VIA Acquisition . . . .” Again,
they are incorrect. The Korman parties’ subordination
agreements with both Bell Bank and Yukon provided Bell Bank
or Yukon “may, at any time and from time to time, without the
consent of or notice to [the Korman parties] and without
22
incurring responsibility to [the Korman parties] . . . increase or
change the amount of the Senior Debt . . . .” In addition, the
Korman parties did not submit any evidence the ULG entities’
Senior Debt to Yukon increased after the VIA acquisition. The
evidence showed that, when the ULG entities acquired VIA, they
owed Bell Bank slightly more than $31 million. The ULG entities
obtained a $53 million loan from Crescent in part to acquire VIA
and in part to pay off the debt owed to Bell Bank. The Korman
parties did not show the ULG entities borrowed any additional
funds from Yukon when they acquired VIA or when the
ULG entities and Yukon executed the 2018 amended lending
agreement. As the ULG parties correctly argue, even if the
ULG entities increased their debt to Crescent, there was no
evidence the ULG entities’ Senior Debt to Yukon increased.
Finally, the Korman parties argue the Yukon subordination
agreement is not enforceable because the ULG entities and
Yukon materially modified the terms of their lending agreement,
thereby adversely affecting the Korman parties’ rights. The
argument, though hard to follow, goes something like this: When
the Korman parties entered their subordination agreement with
Yukon, the separate subordination agreement between Bell Bank
and Yukon—the one that subordinated the ULG entities’ lending
agreement with Yukon to the ULG entities’ lending agreement
with Bell Bank—included a provision setting the “Maximum
Senior Debt” at $41.8 million. This provision stated that the
ULG entities’ debt to Yukon (i.e., the Yukon Senior Debt) could
be subordinate to no more than $41.8 million of the ULG entities’
debt to Bell Bank (i.e., the Bell Bank Senior Debt). After the
ULG entities acquired VIA and entered a new lending agreement
with Yukon, however, the Yukon Senior Debt, according to the
Korman parties, was subordinate to $53 million in debt the
23
ULG entities owed to Crescent. Citing Gluskin v. Atlantic
Savings & Loan Assn. (1973) 32 Cal.App.3d 307 (Gluskin) and
Citizens Business Bank v. Gevorgian (2013) 218 Cal.App.4th 602(Citizens Business Bank), the Korman parties contend the new
agreements between Crescent, Yukon, and the ULG entities
“constituted a material modification” to the Korman parties’
subordination agreement with Yukon that “rendered [it]
unenforceable.” (See Gluskin, at p. 314 [under “public policy
which requires protection of subordinating sellers . . . a lender
and a borrower may not bilaterally make a material modification
in the loan to which [a] seller has subordinated, without the
knowledge and consent of the seller to that modification, if the
modification materially affects the seller’s rights”]; see also
Citizens Business Bank, at p. 617 [same].)
The problem for the Korman parties is that, even if Gluskin
and Citizens Business Bank are not distinguishable (more on that
later), the subordination agreement between the Korman parties
and Yukon is governed by Minnesota law, not California law.
The Korman parties do not cite any Minnesota authority similar
to Gluskin or Citizens Business Bank that would prohibit the
ULG entities and Yukon from agreeing to subordinate their
lending agreement to the ULG entities’ agreement with a new
lender. Nor do the Korman parties offer a compelling reason
why, even if Minnesota were to adopt a public policy limitation
similar to the one described in Gluskin and Citizens Business
Bank, that public policy should apply here.
Instead, the Korman parties state (in their reply brief) only
that ULG and Language Select “cite no legal authority to support
their conclusion that Minnesota law does not require junior
lender notification or consent . . . .” The Korman parties
misunderstand their burden. Because there is no express
24
limitation in the Korman parties’ subordination agreement with
Yukon prohibiting the ULG entities and Yukon from agreeing to
subordinate the Yukon Senior Debt to any other ULG debt, it was
the Korman parties’ burden to show the agreements between the
ULG entities, Yukon, and Crescent violate public policy in a way
that renders the subordination agreement unenforceable. (See
James Quirk Mill. Co. v. Minneapolis & St. L. R. Co. (Minn.
1906) 107 N.W. 742, 742 [“the party who asserts that a
particular contract is against public policy has the burden of
proving the same”]; see also In re Estate of Kinney (Minn. 2007)
733 N.W.2d 118, 127 [where an agreement is supported by
adequate consideration, “[p]lacing the burden of proof on the
party challenging the agreement is . . . consistent with general
principles of contract law”].) The Korman parties did not meet
(or even attempt to meet) that burden.
And Gluskin and Citizens Business Bank are
distinguishable. Neither case involved a situation where the
subordinated lender (like the Korman parties) expressly agreed
the borrower and senior lenders (like the ULG entities and
Yukon and Bell Bank) could increase the amount, and change the
payment terms, of the senior debt without notice to the
subordinated lender. Gluskin and Citizens Business Bank
involved situations where (1) a seller sold real property to a
developer (or developers) for a promissory note and deed of trust
on the property; (2) the developer(s) obtained construction loans
also secured by deeds of trust on the property; and (3) the seller
agreed to subordinate its promissory note and deed of trust to the
construction lender’s loans and deeds of trust. (See Citizens
Business Bank, supra, 218 Cal.App.4th at pp. 605-607; Gluskin,
supra, 32 Cal.App.3d at pp. 309-310.) In Gluskin the
construction lender and developer subsequently modified the
25
terms of the construction loans, including shortening the loan
term and requiring the developer to make a balloon payment.
The developer then defaulted on the loan, and the construction
lender purchased the property at a foreclosure sale. (Gluskin, at
p. 312.) The court in Gluskin held the construction lender’s deeds
of trust no longer had priority over the seller’s deeds of trust
because the modifications “clearly enhanced the likelihood of a
default . . . and the consequent foreclosure.” (Id. at p. 317.)
In Citizens Business Bank, after the seller entered the
subordination agreement, the developers and construction lender
signed a letter of understanding that “contradicted” the terms of
the original construction loan agreement on which the seller had
relied. (Citizens Business Bank, supra, 218 Cal.App.4th at
pp. 618-619.) In particular, the letter of understanding permitted
the developers to use the purported construction loans to pay off
portions of the purchase price, thereby reducing the equity the
developers had to invest in the project, and to build the planned
units on the property in phases, rather than at one time. (Id. at
p. 620.) An expert for the seller explained that the “lack of
borrower cash equity and phasing were primary factors which
cause greater risk in a construction loan.” (Ibid.) The court in
Citizens Business Bank held that, because the modifications
“materially impaired [the seller]’s security,” the construction
lender was “not entitled to priority over [the seller’s] deed of
trust.” (Id. at p. 618.)
Unlike the agreements in Gluskin and Citizens Business
Bank, the subordination agreements between the Korman parties
and Yukon and Bell Bank permitted the very modification to the
senior lending agreements that purportedly increased the risk of
default on the promissory note—namely, increasing the Senior
Debt. (See North Star Universal, Inc. v. Graphics Unlimited, Inc.
26
(Minn.Ct.App. 1997) 563 N.W.2d 73, 75 [“a subordination
agreement is nothing more than a contractual modification of lien
priorities and must be construed according to the expressed
intention of the parties and its terms”].) The Korman parties
agreed to subordinate the promissory note to both the Yukon
Senior Debt and the Bell Bank Senior Debt and knew the Yukon
Senior Debt, in turn, was subordinate to the Bell Bank Senior
Debt. The Korman parties agreed Yukon and Bell Bank could
not only “increase or change the amount of the Senior Debt,” but
could “extend the time for payment or renew or otherwise alter
the terms of any Senior Debt” without giving the Korman parties
notice. Unlike the sellers in Gluskin and Citizens Business Bank,
the Korman parties understood the borrowers (the ULG entities)
could enter into new agreements with their senior lenders that
increased, or delayed repayment of, the senior debt, and the
Korman parties nevertheless agreed to subordinate the
promissory note to any existing and future debt the ULG entities
might owe to the senior lenders (in all likelihood to obtain the
$60 million in cash, plus the ownership interests, they received
from ULG as part of the Language Select deal). The Korman
parties cannot now seek to void the subordination agreement
because they no longer like a term they agreed to. (See Hart v.
Bell (Minn. 1946) 23 N.W.3d 375, 379 [“‘the power of courts to
declare a contract void for being in contravention of sound public
policy is a very delicate and undefined power, and, like the power
to declare a statute unconstitutional, should be exercised only in
cases free from doubt’”]; see also United Steelworkers of America,
Local 6115 v. Quadna Mountain Corp. (Minn.Ct.App. 1989)
435 N.W.2d 120, 123; Kelley as Trustee for PCI Liquidating Trust
v. Boosalis (8th Cir. 2020) 974 F.3d 884, 894.)
27
3. The Undisputed Facts Showed There Was a
Senior Default
As discussed, the trial court did not rule whether there was
a Senior Default that would prohibit ULG and Language Select
from making interest-only payments on the promissory note.
ULG and Language Select argue we should affirm the order
granting their motion for summary adjudication on the cause of
action for breach of the promissory note because “[t]he
undisputed facts show that, at all relevant times, Senior Defaults
had occurred and were continuing or would occur as a result of
payment of interest on the seller note.” We agree that ULG and
Language Select met their burden to show there was a Senior
Default and that the Korman parties did not meet their burden to
raise a triable issue of fact.11
As discussed, the lending agreement between the
ULG entities and Yukon required the ULG entities to meet
certain financial covenants each fiscal quarter and provided that
the ULG entities’ failure to meet a financial covenant was an
Event of Default. The financial covenants included maintaining
11 Section 437c, subdivision (m)(2), provides that, “[b]efore a
reviewing court affirms an order granting . . . summary
adjudication on a ground not relied upon by the trial court, the
reviewing court shall afford the parties an opportunity to present
their views on the issue by submitting supplemental briefs.” The
Korman parties addressed this issue in their opening and reply
briefs, as well as in the trial court. Therefore, we can affirm the
order granting the motion for summary adjudication on this
ground, even though the trial court did not rely on it, because the
parties have fully briefed it. (See Hooked Media Group, Inc. v.
Apple Inc. (2020) 55 Cal.App.5th 323, 336, fn. 1; Goddard v.
Department of Fish & Wildlife (2015) 243 Cal.App.4th 350, 359,
fn. 5; Bains v. Moores (2009) 172 Cal.App.4th 445, 471, fn. 39.)
28
a “consolidated senior funded debt ratio” and a “consolidated total
funded debt ratio” below specified maxima and maintaining a
“consolidated fixed charge coverage ratio” above a specified
minimum. In her declaration, Giovanis explained that during the
first quarter of 2019 the ULG entities had a large amount of
unpaid collections and liquidity problems, prompting her and
other ULG executives to review the ULG entities’ financial
results and determine the results did not meet the covenants.
Giovanis stated the ULG entities continuously failed to meet the
“financial covenants necessary to make interest payments on the
[promissory note]” during each quarter of 2019 and 2020, and she
attached to her declaration compliance certificates prepared by
ULG’s chief financial officer for each quarter of 2019 and 2020.
The compliance certificates attested to the ULG entities’
consolidated senior funded debt ratio, consolidated total funded
debt ratio, and consolidated fixed charge coverage ratio, and
confirmed the ULG entities did not meet the debt and coverage
ratios required by their lending agreements with Yukon to make
the interest-only payments on the promissory note.
The Korman parties do not meaningfully address the
evidence ULG and Language Select submitted showing a Senior
Default on the ULG entities’ lending agreement with Yukon. The
Korman parties simply state, without explanation, ULG and
Language Select “relied on conclusory statements and hearsay
without providing any facts . . . .” To the extent the Korman
parties are arguing the trial court erred in overruling their
objections to ULG and Language Select’s evidence, they have
forfeited the argument by failing to support it with pertinent
authority or analysis. (See Taylor v. Financial Casualty &
Surety, Inc. (2021) 67 Cal.App.5th 966, 980 [on appeal from an
order granting summary judgment, “the burden is on the
29
objecting party to renew any relevant [evidentiary] objections by
arguing the issue with relevant authority and legal analysis”];
Ghazarian v. Magellan Health, Inc. (2020) 53 Cal.App.5th 171,
183 [“overruled objections” to evidence submitted in support of a
motion for summary judgment “may be raised on appeal, but the
burden is on the objecting party to renew any relevant objection
by arguing the issue in its brief; citation to the record alone is
insufficient”].)
Nor do we agree the ULG entities’ evidence was
“conclusory” or otherwise insufficient. The lending agreements
between the ULG entities and Yukon explained the financial
covenants, and the compliance certificates prepared by ULG’s
chief financial officer attested to ULG’s debt and coverage ratios
during each quarter of 2019 and 2020, demonstrating which
financial covenants the ULG entities failed to comply with. No
more was required for ULG and Language Select to meet their
burden on summary adjudication.
The Korman parties also contend, again without
explanation, the ULG entities and Yukon “made significant
changes to the financial covenants and debt ratios, without [the
Korman parties’] knowledge or consent, when compared to the
loan agreements from the Language Select Acquisition.” While it
is true the ULG entities’ new lending agreements with Yukon
modified the covenants, the modifications do not advance the
Korman parties’ position. The 2016 lending agreement—the
lending agreement in effect when the Korman parties entered the
subordination agreement with Yukon—set the maximum
consolidated senior funded debt ratio at 2.20 to 1.00 for each
quarter in 2019 and 2020 and the maximum consolidated total
funded debt ratio at 4.95 to 1.00 or 4.68 to 1.00 (depending on the
quarter). The compliance certificates showed the ULG entities’
30
debt ratios in each quarter of 2019 and 2020 exceeded the
maximum debt ratios permitted under both the 2016 agreement
and the amended agreements.12 Under any version of the
ULG entities’ lending agreements with Yukon, there was a
Senior Default.
D. The Trial Court Did Not Err in Granting the Motion
for Summary Adjudication on the Korman Parties’
Cause of Action for Breach of the Settlement
Agreement
As stated, the Korman parties alleged the ULG parties
breached the settlement agreement in two ways: first, by
“allowing and/or causing” ULG and Language Select to default on
the promissory note; second, by publicly filing the settlement
agreement.
On the first claim, the trial court ruled the ULG parties
met their burden to show there was no breach of the settlement
agreement because the agreement did not create any “further
obligation to make payments” on the promissory note beyond its
original terms and because the Korman parties failed to raise a
triable issue on whether there was a breach of the promissory
note. The Korman parties argue the ULG parties (including
ULG’s officers and directors, who were not obligors under the
promissory note) “agreed to ensure that the [promissory note]
payment obligations would be met,” but the Korman parties do
not argue or explain how the settlement agreement otherwise
changed the terms of the promissory note. As discussed, the
12 Indeed, the new lending agreements between Yukon and
the ULG entities increased the maximum debt ratio ULG and
Language Select had to maintain in order to pay interest on the
promissory note.
31
undisputed facts showed there was no breach of the promissory
note. Therefore, even under the Korman parties’ theory the ULG
officers and directors personally guaranteed the promissory note,
there was no breach of the settlement agreement.
The trial court did not address the Korman parties’ second
claim—that the ULG parties breached the settlement agreement
by publicly filing it. Nevertheless, the ULG parties argue they
were entitled to summary adjudication on this claim because they
met their burden to show it lacked merit and the Korman parties
did not submit evidence to create a triable issue of material fact.
The ULG parties are correct again.13
In the trial court the ULG parties argued the Korman
parties did not possess and could not reasonably obtain evidence
they suffered damages. The ULG parties submitted one of the
Korman parties’ interrogatory responses. The ULG parties asked
the Korman parties to “[d]escribe in detail any damages [they]
suffered as a result of [the ULG parties’] public filing of the
Settlement Agreement.” The Korman parties responded only
that they were “seeking damages of at least $5,075,000 [which
was the principal and interest due on the promissory note], as
well as fees and costs incurred” from the breach. They did not
state any facts showing a connection between the damages they
sought and the filing of the settlement agreement. By showing
the Korman parties did not meaningfully respond when asked to
describe the damages they suffered from the alleged breach, the
13 Because the Korman parties addressed this issue in their
opening and reply briefs, as well as in the trial court, we can
affirm the order granting the motion for summary adjudication
on this ground, even though the trial court did not rely on it. (See
ante, fn. 11)
32
ULG parties met their burden to show the Korman parties did
not possess and could not reasonably obtain such evidence. (See
Chavez v. Glock, Inc. (2012) 207 Cal.App.4th 1283, 1302
[“[a] defendant can satisfy its initial burden to show an absence
of evidence . . . through discovery responses that are factually
devoid”]; Simmons v. Superior Court (2016) 7 Cal.App.5th 1113,
1124 [same].)
Therefore, the burden shifted to the Korman parties to
create a triable issue of material fact regarding whether and how
they suffered damages. By failing to submit any such evidence,
the Korman parties did not meet their burden. (See Villalobos v.
City of Santa Maria (2022) 85 Cal.App.5th 383, 388 [if a
defendant meets his or her burden to show the plaintiff cannot
establish an element of his or her cause of action, the “plaintiff
must present evidence that would allow a reasonable trier of fact
to find the underlying material fact more likely than not”];
Bushling v. Fremont Medical Center (2004) 117 Cal.App.4th 493,
507 [same].)
E. The Trial Court Did Not Err in Granting the ULG
Parties and Language Select’s Motion for Summary
Adjudication on the Korman Parties’ Cause of Action
for Declaratory Relief
The trial court granted the motion for summary
adjudication on the cause of action for declaratory relief on the
ground there were “no remaining issues” after granting summary
adjudication on the other causes of action. The Korman parties
contend the trial court erred because “actual controversies exist
that affect the parties’ future conduct and that require a judicial
declaration.” The only controversies the Korman parties alleged,
however, were whether the promissory note was “in default” and
33
“payable” and whether “ULG’s alleged noncompliance with
certain quarterly financial covenants contained in its senior debt
agreement and ULG’s alleged senior defaults” were “valid
reasons to avoid making payments under the Seller Note.” (See
White v. Smule, supra, 75 Cal.App.5th at p. 354 [“‘the burden of a
defendant moving for summary judgment only requires that he or
she negate the theories of liability as alleged in the complaint’”];
St. Myers v. Dignity Health (2019) 44 Cal.App.5th 301, 313
[because “[t]he pleadings delimit the issues to be considered on a
motion for summary judgment,” a “defendant moving for
summary judgment need address only the issues raised by the
complaint,” internal quotation marks omitted].) Each judicial
declaration the Korman parties sought was a variation of a
declaration that the ULG entities and Language Select had to
repay the principal due on the note, notwithstanding any Senior
Default. For the reasons discussed, the ULG entities and
Language Select met their burden to show they did not have to
make payments on the promissory note, and the Korman parties
did not submit evidence to create a triable issue of material fact.
The trial court did not err in granting summary adjudication on
the declaratory relief cause of action.
DISPOSITION
The appeal by the Korman parties from the judgment in
favor of ULG and Language Select is dismissed. The petition by
the Korman parties for writ of mandate directing the trial court
to vacate its order granting ULG and Language Select’s motion
for summary judgment on the Korman parties’ complaint is
denied. The judgment in favor of United Language Group
Holdings, Bergeron, Giovanis, Honour, Offenhauser, Furey, and
34
Haymaker is affirmed. ULG, Language Select, United Language
Group Holdings, Bergeron, Giovanis, Honour, Offenhauser,
Furey, and Haymaker are to recover their costs in these
proceedings.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
35