Valley National Bank v. J H B Trucking Inc

• Court: District Court, E.D. California
• Decided: March 19, 2025
• Docket: 2:21-cv-01285
• Status: Unknown

Opinion

6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 VALLEY NATIONAL BANK, No. 2:21-cv-01285-DJC-CKD 12 Plaintiff, 13 v. ORDER GRANTING MOTION FOR SUMMARY JUDGMENT 14 J H B TRUCKING INC, 15 Defendant. 16 17 Plaintiff moves for summary judgment on its claim for breach of contract. 18 Defendant argues that summary judgment is inappropriate for substantive and 19 procedural reasons. The Court disagrees, finding that there is no genuine dispute of 20 material fact. Accordingly, for the reasons set forth below, the Court GRANTS 21 Plaintiff’s Motion for Summary Judgment. 22 BACKGROUND 23 The Court need not recount all background facts set forth in its prior order. 24 (See August 23, 2022 Order, ECF No. 32.) Instead, the Court states the facts 25 necessary to reach its decision, which unless noted are undisputed. (See Plaintiff’s 26 Separate Statement of Undisputed Material Facts, ECF No. 36-2; Defendant’s 27 Separate Statement of Genuine Disputes of Material Fact, ECF No. 42.) 28 Plaintiff Valley National Bank is a national banking association that, through its 1 division Agile, provides loans to businesses for purchasing insurance policies.

2 (Przespolewski Decl. ¶ 4, ECF No. 36-4.) Defendant J H B Trucking Inc. is a trucking

3 business. (Id. ¶ 5.) Plaintiff and Defendant entered into a Commercial Insurance

4 Premium Finance Agreement and Disclosure Statement (“the PFA”), through which

5 Plaintiff loaned the principal amount of $288,000 to Defendant for Defendant to

6 purchase insurance. (Id. ¶ 8, Ex. 1.) Under the PFA, Global Hawk Insurance Company 7 Risk Retention Group (“Global Hawk”) provided insurance to Defendant. (Id. Ex. 1.) 8 Defendant agreed to repay the loan in monthly payments to Plaintiff. (Id.) The PFA 9 provided if Defendant did not make a monthly payment and thereby defaulted, 10 Plaintiff could then “demand agreement be paid in full.” (Id.) Moreover, under the 11 agreement, Plaintiff was not “liable for any loss or damage to the Insured or any other 12 person or company resulting from the cancellation of financed policies except in the 13 event of willful or intentional misconduct by Agile Premium Finance.” (Id.) The PFA 14 also stated that it was “governed by and interpreted in accordance with the laws of the 15 state of the Insured’s address of record,” and it listed Defendant’s address as being in 16 California. (Id.) 17 Upon entering the PFA, Plaintiff loaned Defendant the full principal amount, 18 and Defendant agreed to repay Plaintiff, inclusive of principal and finances charges, 19 the total amount of $297,656.50 in ten monthly installment payments. (Przespolewski 20 Decl. ¶ 12.) Defendant made two payments, but after Global Hawk went out of 21 business Defendant failed to make any further installment payments as required by 22 the PFA. (Id. ¶¶ 14, 18, Ex. 2.) 23 Plaintiff brought its complaint with two causes of action: (1) breach of contract 24 and (2) implied-in-fact contract. (Compl. ¶¶ 26–41, ECF No. 1.) Defendant then 25 brought three counterclaims against Plaintiff, including breach of contract. 26 (Defendant’s Counterclaim and Third-Party Complaint ¶¶ 9–35, ECF No. 13.) 27 Simultaneously, Defendant brought six claims against Third-Party Defendants MST 28 Insurance Services Inc. and Global Century Insurance Brokers, Inc., who were the 1 brokers for the PSF. (Id. at 1, ¶¶ 3–4, 10.) Upon Plaintiff’s motion, this Court dismissed

2 all three of Defendant’s counterclaims against Plaintiff. (See August 23, 2022 Order.)

3 Plaintiff now moves for summary judgment on its breach of contract claim,

4 stating that should the Court grant its motion, its implied-in-fact contract claim can be

5 dismissed. (See Mot. for Summary Judgment at 10, ECF No. 36-1.) The matter is fully

6 briefed and was submitted without oral argument pursuant to Local Rule 230(g). (ECF 7 No. 46.) 8 LEGAL STANDARD 9 Summary judgment is appropriate when the record, read in the light most 10 favorable to the non-moving party, indicates “that there is no genuine dispute as to 11 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 12 Civ. P. 56(a). A genuine dispute of fact exists only if “there is sufficient evidence 13 favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. 14 Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If the nonmoving party fails to make this 15 showing, “the moving party is entitled to judgment as a matter of law.” Celotex Corp. 16 v. Catrett, 477 U.S. 317, 323 (1986). 17 It is not a court’s task “to scour the record in search of a genuine issue of triable 18 fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (internal citation omitted). 19 Rather, a court is entitled to rely on the nonmoving party to “identify with reasonable 20 particularity the evidence that precludes summary judgment.” See id. (internal citation 21 omitted). 22 DISCUSSION 23 I. Breach of Contract 24 California law applies to this action. In addition to the PFA requiring it, see 25 Przespolewski Decl. Ex. 1, the Ninth Circuit held that district courts sitting in diversity 26 jurisdiction should apply “the law that would be applied by state courts in the State in 27 which the federal diversity court sits.” See Semtek Int’l Inc. v. Lockheed Martin Corp., 28 531 U.S. 497, 508 (2001). Neither party suggests that California law does not apply. 1 In California, to establish a claim for breach of contract, a plaintiff must show:

2 “(1) the existence of the contract, (2) the plaintiff’s performance or excuse for

3 nonperformance, (3) the defendant’s breach, and (4) resulting damages to the

4 plaintiff.” Maxwell v. Dolezal, 231 Cal. App. 4th 93, 97–98 (2014). As outlined above

5 in the Court’s review of the undisputed facts, Plaintiff has provided evidence

6 supporting each of these material elements.1 Plaintiff and Defendant entered a 7 contract. (Przespolewski Decl. ¶ 8, Ex. 1.) Plaintiff performed by loaning the full 8 principal amount to Defendant. (Id. ¶ 11.) Defendant then breached by failing to 9 make the monthly payments required under the PFA. (Id. ¶ 19.) Plaintiff was thereby 10 damaged because it has not received the amount it is owed under the PFA. 11 Defendant offers no evidence disputing any of these elements. Instead, it 12 presents two arguments as to why the Court should dismiss Plaintiff’s motion. First, 13 Defendant argues that Plaintiff and Third-Party Defendants “acting in concert, 14 breached the PFA with defendant by obtaining a worthless insurance policy for 15 defendant to enter.” (See Opp’n at 3, ECF No. 41.) These allegations were at the 16 center of Defendant’s counterclaims, which the Court dismissed. The Court 17 concluded that Defendant did not allege “sufficient facts to establish an agency 18 relationship” between Plaintiff and Third-Party Defendants, nor did Defendant 19 plausibly state that these parties conspired against Defendant. (See August 23, 2022 20 Order at 6–7.) 21 Defendant offers no evidence that Plaintiff and Third-Party Defendants acted in 22 concert, nor does it adequately explain why that would excuse its non-performance 23 under the PFA. Instead, Defendant argues that “if the allegations of defendant were 24 to be accepted as true, specifically that [Plaintiff] and [Third-Party Defendants] acted in 25 concert to fraudulently assign a worthless insurance policy to defendant, then the 26 1 The Court may rely on Przespolewski’s sworn declaration in granting summary judgment. See Fed. R. 27 Civ. P. 56(c)(4); Hughes v. United States, 953 F.2d 531, 543 (9th Cir. 1992) (holding that an affidavit could be considered on summary judgment because the facts underlying the affidavit were of the type 28 that would be admissible evidence even though the affidavit itself might not be admissible). 1 provision of the PFA which [Plaintiff] relies upon could be revoked under varying legal

2 doctrines, such as unconscionability or fraud.” (See Opp’n at 3–4.) But that is the

3 standard for a motion to dismiss. To survive summary judgment, Defendant would

4 have to show that “there is sufficient evidence favoring the nonmoving party for a jury

5 to return a verdict for that party.” See Anderson, 477 U.S. at 249. Defendant offers no

6 evidence for a jury to find that Defendant was excused from performance. As such, 7 this argument fails. 8 Second, Defendant argues that summary judgment is inappropriate because it 9 has not yet deposed Plaintiff’s “person most knowledgeable to determine the extent 10 of the relationship between” Plaintiff and Third-Party Defendants. (See Opp’n at 4.) 11 To support this position, Defendant cites Federal Rule of Civil Procedure 56(f). (Id.) 12 As Plaintiff points out, Defendant likely meant to cite Rule 56(d), which contains the 13 rule formerly stated in 56(f). (See Reply at 5, ECF No. 45.) Rule 56(d) provides, “If a 14 nonmovant shows by affidavit or declaration that, for specified reasons, it cannot 15 present facts essential to justify its opposition, the court may: (1) defer considering the 16 motion or deny it; (2) allow time to obtain affidavits or declarations or to take 17 discovery; or (3) issue any other appropriate order.” Fed. R. Civ. P. 56(d). To satisfy 18 this Rule, the requesting party must show: “(1) it has set forth in affidavit form the 19 specific facts it hopes to elicit from further discovery; (2) the facts sought exist; and (3) 20 the sought-after facts are essential to oppose summary judgment.” Fam. Home & Fin. 21 Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008). 22 As an initial matter, the Court need not consider this argument because 23 Defendant fails to satisfy the requirements of Rule 56(d). “References in memoranda 24 and declarations to a need for discovery” are insufficient under Rule 56(d), which 25 “requires affidavits setting forth the particular facts expected from the movant’s 26 discovery. Failure to comply with the requirements of Rule [56(d)] is a proper ground 27 for denying discovery and proceeding to summary judgment.” Brae Transp., Inc. v. 28 Coopers & Lybrand, 790 F.2d 1439, 1443 (9th Cir. 1986). Because Defendant did not 1 submit an affidavit or declaration, it failed to comply with the requirements of Rule

2 56(d). As such, the Court may deny its request and proceed to summary judgment.

3 See id.

4 But even if Defendant submitted a sworn statement that laid out the reasoning

5 in its opposition, it still would not satisfy Rule 56(d) because it does not explain what

6 facts “exist” regarding a conspiracy between Plaintiff and Third-Party Defendants. See 7 Fam. Home & Fin. Ctr., Inc., 525 F.3d at 827. It has not presented any evidence 8 suggesting that these parties conspired. Moreover, Defendant has not served a 9 deposition notice or any written discovery on Plaintiff. (See Cadoppi Decl. ¶¶ 2–3, 10 ECF No. 45-2.) Defendant thus “cannot complain if it fails to pursue discovery 11 diligently before summary judgment.” See Brae Transp., Inc., 790 F.2d at 1443 12 (internal citation omitted). As such, the Court rejects this argument. 13 Because the Court is entitled to rely on Defendant to “identify with reasonable 14 particularity the evidence that precludes summary judgment,” it need not “scour the 15 record” for other evidence creating a genuine dispute. See Keenan v. Allan, 91 F.3d at 16 1279 (internal citation omitted). Accordingly, Plaintiff “is entitled to judgment as a 17 matter of law.” See Celotex Corp., 477 U.S. at 323. 18 II. Amount Owed 19 Having concluded that Plaintiff is entitled to summary judgment, the Court 20 needs to determine the amount it is owed. Plaintiff states that through November 14, 21 2022—the day it filed the present motion—the amount due under the PFA was 22 $262,696.89, excluding legal fees and other collection costs. (See Mot. at 10; 23 Przespolewski Decl. ¶¶ 20–31.) Plaintiff requested that judgment “include interest at 24 the rate provided in the PFA (per diem rate of $64.16) from November 15, 2022 25 through the date of the entry of judgment.” (See Mot. at 10.) Defendant does not 26 address this issue. 27 The PFA provides, “In cases of default Agile Premium Finance may charge 28 interest on the outstanding principal balance at the maximum rate permitted by the 1 law from the date of the default until the balance is paid in full.” (Przespolewski Decl.

2 Ex. 1.) For the time following default (when the loan matured), Plaintiff seeks to

3 increase the interest rate from 7.25 percent to 10.25 percent. (Id. ¶ 28.) Plaintiff

4 argues that default interest is appropriate because of the expenses incurred with

5 collecting its debt. (Id. ¶ 31.) Plaintiff represents that an increase of 3 percent is on

6 the low side of industry practice. (Id. ¶ 34.) 7 “[A]mounts in default may bear a higher interest rate from the date of the 8 default.” Garrett v. Coast & S. Fed. Sav. & Loan Assn., 9 Cal. 3d 731, 736 (1973). 9 Moreover, “interest payments on overdue commercial accounts are not subject to the 10 usury law,” which limit interest rates to 10 percent. See Sw. Concrete Prods. v. Gosh 11 Constr. Corp., 51 Cal. 3d 701, 704 (1990); Cal. Const. art. XV, § 1. Based on these 12 rules, the California Supreme Court upheld a default interest rate of 18 percent. See 13 Sw. Concrete Prods., 51 Cal. 3d at 706. Other courts in this Circuit have upheld 14 default interest rate increases exceeding 3 percent. See East West Bank v. Altadena 15 Lincoln Crossing, LLC, 598 B.R. 633 (C.D. Cal. 2019) (enforcing a default interest 16 provision of 5 percent); In re 3MB, LLC, 609 B.R. 841 (Bankr. E.D. Cal. 2019) (enforcing 17 a default interest provision of 4 percent). 18 Here, the Court holds that a 3 percent increase for default interest is permitted 19 by California law and therefore the PFA. Finding good cause to apply default interest, 20 and because Defendant does not object, the Court applies Plaintiff’s requested 21 default interest and calculates the amount owed accordingly. Plaintiff correctly 22 calculates that the per diem at the 10.25 percent rate is $64.16. (Przespolewski Decl. 23 ¶ 29, Ex. 4). As of March 19, 2025, it has been 855 days since Plaintiff brought this 24 motion. Using the $64.16 per diem rate, Plaintiff is therefore entitled to $54,856.80 of 25 interest while this motion has been pending. Finally, adding this amount to the 26 $262,696.89 that Plaintiff was owed at the time it filed this motion, Plaintiff is entitled 27 to a total amount of $317,553.69. 28 1 CONCLUSION 2 For the reasons set forth above, the Court holds that there is no genuine 3 dispute of material fact as to Plaintiff's claim for breach of contract. Accordingly, the 4 Court GRANTS Plaintiff's Motion for Summary Judgment (ECF No. 36). Upon Plaintiff's 5 motion, the Court dismisses Plaintiff's claim for implied-in-fact contract. (See Mot. at 6 10.) Defendant shall pay Plaintiff in the amount of $317,553.69. As requested in its 7 motion, Plaintiff may bring a motion for attorney's fees. (See id.) 8 9 IT IS SO ORDERED. 10 | Dated: _March 19, 2025 Donal J CoD bra Hon. Daniel alabretta " UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28