Court Opinion

ID: 3178576
Source: CourtListenerOpinion
Date Created: 2016-02-18 19:11:34.909774+00
Date Added: 2024-06-11T08:38:20.887642
License: Public Domain

Filed 2/18/16 Bank of Southern California v. D&D Goryoka CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA

BANK OF SOUTHERN CALIFORNIA,                                        D068093
N.A.,

      Plaintiff, Cross-defendant and
Respondent ,                                                        (Super. Ct. No.
                                                                     37-2011-00101423-CU-OR-CTL)

         v.

D&D GORYOKA, LLC et al.,

      Defendants, Cross-complainants and
Appellants.

         APPEAL from a judgment of the Superior Court of San Diego County, Katherine

A. Bacal, Judge. Affirmed.

         Franklin & Franklin and J. David Franklin for Defendants, Cross-complainants

and Appellants.

         Mulvaney Barry Beatty Linn & Mayers and Everett G. Barry, Jr., John A. Mayers

and Christopher B. Ghio for Plaintiff, Cross-defendant and Respondent.
       Defendants, cross-complainants and appellants D&D Goryoka, LLC, Ghassan

Goryoka, Amir Goryoka, Izik Aziz Goryoka, D&D Goryoka, Inc. and Goryoka, Inc. 1

appeal from a judgment in favor of plaintiff, cross-defendant and respondent Bank of

Southern California, N.A. (Bank), on Bank's claims for breach of guaranties and common

counts. The trial court had granted summary judgment in Bank's favor on appellants'

cross-complaint for fraud, in which appellants alleged Bank induced them to enter into a

loan and guaranties by providing a grossly inflated profit and loss projection for purposes

of an appraisal of property on which they sought to operate a gas station and convenience

store. Following a bench trial on the merits of Bank's complaint, the court entered

judgment in Bank's favor against Ghassan, Amir, Izik and GI, finding they were

guarantors jointly and severally liable for the deficiency on the loan, and Bank had

proved it was owed a deficiency plus interest. The court rejected appellants' defense that

the guaranties executed by Ghassan, Amir, Izik and GI were invalid or unenforceable

"sham" guaranties.

       Appellants contend the trial court erred by granting summary judgment in Bank's

favor because the evidence raised triable issues of fact as to whether Bank's

representatives honestly believed the value statements in the profit and loss projection or

had superior knowledge about the valuation. They ask us to reverse the trial court's order

striking their seventh affirmative defense for fraud if we conclude summary judgment

1       We refer to the individual appellants by their first names to avoid confusion. We
refer to D&D Goryoka, LLC as LLC, D&D Goryoka, Inc. as DGI, and Goryoka, Inc. as
GI.
                                             2
was improperly granted. Appellants further contend there was insufficient evidence to

support the court's finding that Ghassan, Amir, Izik and GI were true guarantors, and thus

liable for the deficiency on the loan under California's antideficiency laws. We affirm the

judgment.

                  FACTUAL AND PROCEDURAL BACKGROUND

       In September 2007, Bank made an $880,000 loan to LLC as an eligible passive

company2 for DGI, doing business as Yucca Valley Gas & Mini Mart, for the purchase

of real property in Yucca Valley, California on which there is a gas station and

convenience store (the gas station property or property). The loan was evidenced by a

United States Small Business Administration (SBA) note and business loan agreement,

and secured by a deed of trust encumbering the property. Ghassan and Amir executed the

deed of trust on LLC's behalf. Ghassan, Amir, Izik, DGI and GI (at times collectively

guarantors) each executed SBA unconditional guaranties of the loan under which they

guaranteed payment of LLC's indebtedness. Each of the guaranties contains a waiver of

anti-deficiency protection, which in part states: "This is an unconditional and irrevocable

waiver of any rights and defenses the guarantor may have because the debtor's debt is

2       An eligible passive company, which can be in any ownership structure or legal
form, may qualify for small business financing if it owns assets used in the conduct of a
related active small business. (See 13 C.F.R. § 120.111 (2016).) Under federal
regulations governing small business loans, such a company "must use loan proceeds to
acquire or lease, and/or improve or renovate, real or personal property (including eligible
refinancing), that it leases to one or more Operating Companies for conducting the
Operating Company's business." (Ibid.) Among other requirements (13 C.F.R.
§ 120.111(a) (2016)), each holder having at least a 20 percent ownership interest in the
eligible passive company and the operating company must guarantee the loan. (13 C.F.R.
§ 120.111(a)(6) (2016).)
                                             3
secured by real property. These rights and defenses include, but are not limited to, any

rights and defenses based upon Sections 580a, 580b, 580d or 726 of the Code of Civil

Procedure.

       In or about August 2011, LLC defaulted on the note by failing to make the August

2011 payment and subsequent payments. Thereafter Bank made a demand on each of the

guarantors for payment of the loan according to the terms of the guaranties.

       In November 2011, Bank filed a verified complaint against appellants asserting,

inter alia, claims for judicial foreclosure of the deed of trust securing the property, quiet

title to the property, possession of personal property on which Bank alleged it had a

secured interest and judicial foreclosure to enforce that security interest, breach of the

note and the guaranty agreements, appointment of a receiver, and certain common counts.

Appellants' verified answer to the complaint alleged numerous affirmative defenses

including that the guaranties were unenforceable due to fraud and/or mistake. Appellants

alleged that before consummation of the loan documents, Bank presented them with an

appraisal that intentionally substantially overstated the gas station property's value,

thereby inducing appellants to enter into the guaranties. They alleged that had they

known the true value of the property, they would not have entered into the guaranty

agreements.

       Concurrently with their answer, appellants cross-complained against Bank for

fraud in the inducement. Appellants alleged that they had become interested in

purchasing the property in 2006 at a negotiated price of $750,000, but when the property

owners fell into bankruptcy, the property's price rose to $990,000. They alleged they

                                               4
were arranging financing with Bank in May 2007 but were concerned about overpaying

for the property, so Bank hired an appraisal firm to determine the property's market

value. According to appellants, then Bank vice-president Gabriele Distler had a profit

and loss projection prepared showing $450,000 in monthly gas sales and $50,000 in

monthly store sales. Appellants alleged that though Bank was not obligated to do so,

Distler and another Bank representative at that time, Dale Smith, informed Ghassan of

the results of the appraisal, telling him that the gas station property had been appraised at

$720,000 as of June 2007. Appellants alleged that when they informed Distler they were

not interested in purchasing the property for $990,000, Distler and Smith informed them

that the appraiser had appraised the property at $1,760,000 as of August 1, 2008, after

one year of operation. Appellants alleged Distler and Smith repeatedly told Ghassan to

proceed with the deal knowing that the information was false because Distler and Smith

had created a profit and loss protection that did not use actual sales history of the gas

station property under its former owners.

       In August 2013, Bank purchased the property at a trustee's sale on a credit bid in

the amount of $310,000. Following that sale, Bank elected to proceed only on its cause

of action for breach of guaranty and two common counts for money lent and account

stated, dismissing its remaining causes of action.

Bank's Motion for Summary Judgment

       Bank moved for summary judgment or alternatively summary adjudication of

issues on appellants' cross-complaint for fraud in the inducement. It argued appellants

could not establish the elements of an actionable misrepresentation, justifiable reliance or

                                              5
knowledge of falsity. Specifically, Bank argued that any statement by Distler and Smith

about the property's August 2008 value concerned the future value of the market and was

not actionable as a matter of law; appellants could not rely on predictions regarding

future events, and any reliance was unjustified absent an independent review of both the

appraisal and profit and loss projection before closing the loan. Bank further argued

appellants could not present evidence that Bank knew the statements were false at the

time they were made because they concerned future events. Bank pointed to various

assumptions and limiting conditions contained in the appraisal report, including that the

income and expense estimates were for purposes of estimating value only; that the

prospective value estimates were forecasts subject to considerable risk and uncertainty;

and that actual results could materially vary from the estimates. It pointed out that the

appraisal report stated it was "prepared for the exclusive benefit of the client . . . [and]

may not be used or relied upon by any other party. All parties who use or rely upon any

information in the report without our written consent do so at their own risk." (Some

capitalization and emphasis omitted.)

       Appellants opposed the motion, submitting declarations from Ghassan and Amir,

as well as the declaration of their counsel, J. David Franklin. Asserting Bank's summary

judgment motion pointed to their cross-complaint's allegations, they argued that the

issues raised by Bank had all been previously rejected by another superior court judge—

Judge Gonzalo Curiel—who overruled Bank's demurrer brought on the same grounds.

They also relied on authorities holding that an expression of opinion, if not honestly

made by the person making it or if made by a person with superior knowledge, could be

                                               6
actionable fraud. Appellants further argued that whether they reasonably relied on Bank's

misrepresentations was a question of fact, as the evidence showed they did not receive

the appraisal report and see its conditions until after they had entered into the various

loan agreements, security agreements and guaranties.

       Excluding the Franklin declaration in its entirety,3 the trial court granted Bank's

motion, ruling that statements regarding the appraised value of property are not

actionable fraudulent misrepresentations. It relied on this court's opinion in Graham v.

Bank of America, N.A. (2014) 226 Cal.App.4th 594, which reasoned in part that because

an appraisal is performed in the usual course and scope of a loan process to protect the

lender, there was no representation of fact on which a buyer could reasonably rely even if

it was foreseeable that the borrower might consider the appraisal in deciding whether to

take the loan. The trial court pointed out that appellants were relying on the fact Bank

had provided an inflated profit and loss projection to the appraiser, which was not

actionable as it was an opinion on a future projection or prediction regarding future

events.

3       The trial court excluded attorney Franklin's declaration on grounds it was filed
under seal without a motion to seal, and violated rules of court prohibiting parties from
filing sealed documents based solely on their stipulation. The court directed the clerk to
return his declaration unfiled. Though in their opening brief appellants refer to exhibits
attached to Franklin's declaration, appellants do not challenge the court's evidentiary
ruling or attempt to demonstrate it abused its discretion in those rulings. (See Powell v.
Kleinman (2007) 151 Cal.App.4th 112, 122 [applying abuse of discretion standard to
court's final rulings on evidentiary objections on a motion for summary judgment].) We
therefore disregard Franklin's declaration and its attached exhibits in our review, as well
as the other evidence excluded by the trial court. (Code Civ. Proc., § 437c, subd. (c)
[court shall consider all evidence set forth in summary judgment papers except that to
which objections have been made and sustained].)
                                              7
Trial Proceedings

       The matter proceeded to trial on Bank's claim for breach of guaranty and common

counts against Ghassan, Amir, Izik, DGI and GI.4 At the outset, the court granted

appellants' request to file an amended answer to assert what they characterized as

affirmative defenses of sham guaranty and the absence of legal separation between LLC

and the remaining appellants.

       Bank presented testimony from Bank manager Richard Marquez, former Bank

employees Distler, Brown and Smith, and appellants Ghassan, Amir and Izik. Appellants

additionally presented testimony from former Bank employees Jason Willman and Gerald

Widasky, managing director of the appraisal company Jeff Greenwald, and commercial

real estate broker Mary Bier.

       In March 2015, the trial court issued its statement of decision based on the

testimony and evidence.5 In part, the court found Ghassan, Amir, Izik, DGI and GI had

4      At some point, Bank dismissed with prejudice all of its claims against LLC.

5       The statement of decision indicates that following the court's tentative decision,
appellants sought a formal statement of decision, which the court directed Bank to
prepare. Appellants objected to the proposed statement of decision and the court
considered those objections in a February 2015 hearing. Appellants do not address the
effect, if any, of their objections on our appellate review. " ' "The court's statement of
decision is sufficient if it fairly discloses the court's determination as to the ultimate facts
and material issues in the case." ' " (Pannu v. Land Rover North America, Inc. (2011)
191 Cal.App.4th 1298, 1314, fn. 12.) The trial court is not required to make an express
finding of fact on every factual matter controverted at trial, where the statement of
decision sufficiently disposes of all the basic issues in the case. (In re Marriage of
Burkle (2006) 139 Cal.App.4th 712, 736-737, fn. 15.) Appellants do not challenge the
sufficiency of the statement of decision on appeal, and have not given us any basis to
conclude it did not sufficiently address the ultimate facts and material issues. We
                                               8
entered into SBA unconditional guaranties in which they guaranteed payment of the

LLC's indebtedness to the Bank; the guaranties contained the waiver of rights and

defenses set forth above; Bank performed all obligations on its part under the terms of the

note, business loan agreement, deed of trust, guaranties and all other documents executed

in connection with the loan; LLC breached the terms of the note and Bank made a

demand on the guarantors for payment of the loan; and Ghassan, Amir, Izik, DGI and GI

admittedly breached the terms of the guaranties. It found no credible evidence supported

appellants' sham guaranty defense and that the guaranties were valid and enforceable.

Specifically, it found the evidence established LLC's status as the borrower and Ghassan,

Amir, and Izik's status as guarantors; LLC adhered to corporate formalities and enjoyed

complete legal separation from Ghassan, Amir and Izik; Ghassan and Amir formed LLC

for the specific purpose of acquiring and holding title to the property; and there was no

evidence Bank subverted the purpose of the antideficiency statute by making a related

entity the debtor while relegating the principal obligors to the position of guarantors. It

ruled that as guarantors, Ghassan, Amir, Izik and GI were not protected by the

antideficiency statute and were jointly and severally liable for any deficiency following

the trustee's sale of the property. However, it found evidence to support the sham

guaranty defense against DGI, and ruled that DGI was a "true borrower" on the loan

because Bank viewed it as a principal obligor under a different name.

accordingly imply findings to support the judgment where appropriate. (Heaps v. Heaps
(2004) 124 Cal.App.4th 286, 292; In re Marriage of Arceneaux (1990) 51 Cal.3d 1130,
1133.)
                                              9
       The court entered judgment in Bank's favor jointly and severally against Ghassan,

Amir, Izik and GI in the total amount of $602,907.70, which included $488,270.97 in

principle and accrued interest. It ordered Bank to recover nothing on its complaint

against DGI. The court entered judgment in Bank's favor on appellants' cross-complaint.

       Following unsuccessful motions to vacate the judgment and for new trial,

appellants filed this appeal from the judgment.

                                       DISCUSSION

I. The Trial Court Properly Granted Summary Judgment in Bank's Favor on Appellants'

                      Cross-Complaint for Fraud in the Inducement

A. Standard of Review

       A defendant is entitled to summary judgment " 'only if "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." [Citation.] To determine whether triable

issues of fact do exist, we independently review the record that was before the trial court

when it ruled on defendants' motion. [Citations.] In so doing, we view the evidence in

the light most favorable to plaintiffs as the losing parties, resolving evidentiary doubts

and ambiguities in their favor.' " (Elk Hills Power, LLC v. Board of Equalization (2013)

57 Cal.4th 593, 605-606; see also Schachter v. Citigroup, Inc. (2009) 47 Cal.4th 610, 618

[review is de novo].) This court "consider[s] all the evidence set forth in the moving and

opposing papers except that to which objections have been made and sustained.

[Citation.] Under California's traditional rules, we determine with respect to each cause

of action whether the defendant seeking summary judgment has conclusively negated a

                                             10
necessary element of the plaintiff's case, or has demonstrated that under no hypothesis is

there a material issue of fact that requires the process of trial, such that the defendant is

entitled to judgment as a matter of law." (Guz v. Bechtel National Inc. (2000) 24 Cal.4th

317, 334-335.)

B. Prior Demurrer Ruling

       Appellants repeat their contention below that the trial court should have denied

Bank's motion for summary judgment in view of Judge Curiel's prior demurrer ruling.

We reject the contention for several reasons. First, as it was below, the claim is made

without cogent legal analysis or citation to authority. (See Cal. Rules of Court, rule

8.204(a)(1)(B), (C).) We therefore treat it as waived or abandoned. (Sims v. Department

of Corrections & Rehabilitation (2013) 216 Cal.App.4th 1059, 1081; Berger v. Godden

(1985) 163 Cal.App.3d 1113, 1119-1120.) "An appellate court is not required to consider

alleged errors where the appellant merely complains of them without pertinent

argument." (Strutt v. Ontario Sav. & Loan Assn. (1972) 28 Cal.App.3d 866, 873.)

       The contention is meritless in any event. Judge Curiel's prior demurrer ruling

concerned the pleadings, and "is not binding on subsequent summary judgment motions."

(Aerojet-General Corp. v. Commercial Union Ins. Co. (2007) 155 Cal.App.4th 132, 139;

see also Doe v. California Lutheran High School Assn. (2009) 170 Cal.App.4th 828, 834-

835 ["[P]laintiffs argue that the trial court's ruling conflicts with [a prior ruling overruling

a demurrer on grounds the school was not a business enterprise under the Unruh Civil

Rights Act.] . . . However, because the demurrer concerned the pleadings, whereas the

motion for summary judgment concerned the evidence, the two rulings were not

                                              11
inconsistent"].) In short, the fact Judge Curiel found appellants' pleadings sufficient to

state a cause of action is immaterial to whether Bank is entitled to summary judgment on

appellants' claim for fraud in the inducement.

C. Actionable Misrepresentation for Purposes of Fraud in the Inducement

       1. Legal Principles

       The elements of fraud are (1) the defendant made a false representation as to a past

or existing material fact; (2) the defendant knew the representation was false at the time it

was made; (3) in making the representation, the defendant intended to deceive the

plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff

suffered resulting damages. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638; West v.

JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792.) " 'It is hornbook law

that an actionable misrepresentation must be made about past or existing facts; statements

regarding future events are merely deemed opinions.' " (Public Employees' Retirement

System v. Moody's Investors Service, Inc. (2014) 226 Cal.App.4th 643, 662; Cansino v.

Bank of America (2014) 224 Cal.App.4th 1462, 1469.) And it is settled that expressions

of opinion—particularly representations of value that are quintessentially a matter of

opinion—are not generally treated as factual representations for purposes of maintaining

a fraud claim. (Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells (2000) 86

Cal.App.4th 303, 308, 310.)

       However, " '[u]nder certain circumstances, expressions of professional opinion are

treated as representations of fact. When a statement, although in the form of an opinion,

is "not a casual expression of belief" but "a deliberate affirmation of the matters stated," it

                                               12
may be regarded as a positive assertion of fact. [Citation.] Moreover, when a party

possesses or holds itself out as possessing superior knowledge or special information or

expertise regarding the subject matter and a plaintiff is so situated that it may reasonably

rely on such supposed knowledge, information, or expertise, the defendant's

representation may be treated as one of material fact.' " (Public Employees' Retirement

System v. Moody's Investors Service, Inc., supra, 226 Cal.App.4th at p. 662, quoting Bily

v. Arthur Young & Co. (1992) 3 Cal.4th 370, 408.) Also, "if a person advances an

opinion in which he does not honestly or cannot reasonably believe, then an action for

affirmative fraud will lie if the remaining elements of the tort are present." (Cooper v.

Jevne (1976) 56 Cal.App.3d 860, 866; see Hobart v. Hobart Estate Co. (1945) 26 Cal.2d

412, 430.) These exceptions may pertain to an expression of value. (See Hobart, at pp.

430-433.)

       When there is a reasonable doubt as to whether a particular statement is an

expression of an opinion or an affirmation of fact, the determination should rest with the

trier of fact. (Hobart v. Hobart Estate Co., supra, 26 Cal.2d at p. 431.) On a summary

judgment, when a plaintiff raises exceptions to the general rule precluding reliance on an

opinion, "it is appropriate to review the evidence to determine if, as a matter of law,

summary judgment is appropriate, or conversely if there are disputed factual issues that

must be resolved by trial." (Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells, supra,

86 Cal.App.4th at p. 308.)

       In Graham v. Bank of America, N.A., this court addressed a complaint's allegations

that a bank had made certain representations to the plaintiff concerning the appraised fair

                                             13
market value of a home, the effect of an increasing fair market value as to the security of

the purchase and profitable future sale, and whether a loan was "good" for the plaintiff.

(Graham v. Bank of America, N.A., supra, 236 Cal.App.4th at p. 606.) The plaintiff

alleged the statements regarding the appraised value were false because the appraisal was

an " 'artificially inflated and engineered rate' " and that the comparable sales on which the

appraiser justified the valuation were tainted by industry-wide fraud. (Ibid.) On the

bank's demurrer, we held the alleged statements concerning appraised value, which

encompassed predictions about the home's future value, were not actionable fraudulent

misrepresentations. (Id. at pp. 606, 607.) In part, we reasoned that "[a]n appraisal is

performed in the usual course and scope of the loan process to protect the lender's

interest to determine if the property provides adequate security for the loan. Since the

appraisal is a value opinion performed for the benefit of the lender, there is no

representation of fact upon which a buyer may reasonably rely." (Id. at p. 607.) Further,

we held: " ' "[A]bsent special circumstances . . . a loan transaction is at arm's length and

there is no fiduciary relationship between the borrower and lender. [Citations.]"

[Citation.] A commercial lender pursues its own economic interests in lending money.'

[Citation.] A loan agreement does not require the lender to protect the success of a

borrower's investment. [Citation.] A borrower must rely on his or her own judgment and

risk assessment to decide whether to accept a loan." (Id. at pp. 607-608.)

       2. Contentions

       Appellants contend summary judgment was improper because they presented

evidence demonstrating that the representations within the profit and loss projection

                                             14
created by Bank employees fall outside the general rule that an opinion is not actionable

for purposes of fraud. According to appellants, the evidence shows Bank's profit and loss

projection was not an expression of an honest opinion, but was provided by Bank

representatives who knew the information was false so as to induce appellants to enter

into the loan. In making these arguments, appellants acknowledge our holding in

Graham v. Bank of America, N.A., supra, 236 Cal.App.4th 594 and those of other courts

regarding a buyer's justifiable reliance on an appraisal, but point to the court's statement

in Nymark v. Heart Federal Sav. & Loan Assn. (1991) 231 Cal.App.3d 1089, suggesting

that where an appraisal was intended to induce a person to enter into a loan transaction or

to assure the person that his collateral was sound, a lender may act outside its role as a

conventional lender. Appellants argue that unlike the situation in Nymark, the evidence

here shows Bank employees "intentionally created a fraudulent and grossly inflated profit

and loss projection which said employees knew would cause the 'going concern' appraisal

to be fraudulently inflated in value for the purpose of inducing the Appellants to purchase

the real property and to enter into a loan agreement with . . . Bank." They argue Bank

would never have relied on the fraudulent appraisal value to ascertain the sufficiency of

the collateral as security for the loan.

       3. Analysis

       Our role is not to resolve these issues, but to first independently assess Bank's

evidence to determine whether it met its "initial burden of production to make a prima

facie showing of the nonexistence of any triable issue of material fact." (Aguilar v.

Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851; Dollinger DeAnza Associates v.

                                             15
Chicago Title Ins. Co. (2011) 199 Cal.App.4th 1132, 1144 [appellate court reviews trial

court's ruling not its rationale].) We then look to appellants' showing to decide whether

the evidence presents material factual issues for a fact finder at trial. "[A] party 'cannot

avoid summary [adjudication] by asserting facts based on mere speculation and

conjecture, but instead must produce admissible evidence raising a triable issue of fact.' "

(Dollinger DeAnza Associates, at pp. 1144-1145.)

       Here, Bank pointed out that appellants' fraud claim was entirely based on the

representations made in connection with the June 2007 appraisal and profit and loss

projections about the future 12-month income stream of the gas station and convenience

store, and the property's future value after one year of operation. Bank assumed the truth

of appellants' assertion concerning the future August 2008 valuation statement by Distler

and Smith, and relied on the general rule that such representations of future value were

merely nonactionable opinions on which appellants could not actually or justifiably rely.

We agree with Bank. Our conclusions in Graham v. Bank of America, N.A. are apt: the

evidence shows the appraisal was prepared for the benefit of Bank as the lender, the other

asserted representations are as to future projections and opinions of value, and thus "there

is no representation of fact upon which [appellants] may reasonably rely." (Graham v.

Bank of America, N.A., supra, 236 Cal.App.4th at p. 607.) We conclude Bank's showing

that its representations were future value opinions was sufficient to show the

nonexistence of triable issues as to the misrepresentation and justifiable reliance elements

of fraud.

                                              16
        In opposing Bank's motion for summary judgment, appellants raised the

exceptions discussed above as to nonactionable opinions. They argued that the following

facts established that Bank representatives knew the profit and loss projection underlying

the appraisal was grossly overstated and intended to so overstate the projections to induce

them to enter into the loan: (1) the representatives knew the property's prior owners had

closed the gas station and store because they could not make a profit and were failed

businesses, yet projected a net profit of $396,000 after one year of operation; (2)

appellants' actual gasoline and store sales after one year averaged $46,000 and $15,000

per month respectively, substantially less than the Bank's projections, permitting an

inference of fraudulent intent; (3) Bank's manager Jocelyn Brown knew appellants had no

experience in operating a gas station; (4) Distler had the ability to contact the prior

property owners to obtain their financial information, but Bank did not provide any such

information to the appraisal firm; (5) Bank declined to give appellants a copy of the

written appraisal report until they had signed all of the loan documents; and (6) the

amount of projected gross revenue for the gas station and store was exactly $6 million,

coincidentally the amount of the gross revenue limit under which Bank could do an SBA

loan.

        Some of these assertions—namely, Brown's asserted knowledge of appellants' gas

station operation experience, Bank's failure to provide the appraisal firm with any of the

prior owners' financial information, and the gross revenue limit for an SBA loan—were

supported by documents appended to the declaration of attorney Franklin, which, as we

have pointed out above (footnote 3, ante) was excluded by the trial court in its entirety.

                                              17
We do not consider that evidence in assessing whether appellants demonstrated triable

issues of fact concerning Bank's asserted knowledge of the falsity of its value projections.

       The remaining asserted facts, according to appellants' opposing separate statement,

are supported by the declarations of Amir and Ghassan. However, those declarations do

not permit a rational trier of fact to conclude any Bank representative knew its future

value projections were false at the time they were made, an essential element of fraud.

(West v. JPMorgan Chase Bank, supra, 214 Cal.App.4th at p. 792.) The fact that actual

gasoline and store sales one year later were substantially less than Bank's projection

cannot establish that Bank representatives knew their projections were false when they

made them in or around June of 2007. Nor can such a conclusion be drawn by the

asserted fact that Bank did not show Ghassan or Amir the written appraisal report until

after they signed the loan and guaranty documents. The evidence shows Bank made both

Ghassan and Amir aware of its value projections well before they closed the loan

transaction in September 2007; Ghassan averred in his declaration that he had signed

Bank's profit and loss projection form on June 11, 2007, and Distler and Smith had

informed him of the appraisal results "[w]ithin a day or two" after June 16, 2007, months

before the loan transaction closed in September 2007. The fact the same appraisal

information, along with its limiting conditions, was not given to appellants in written

form before the loan closed is not only inconsequential, but it does not permit a

reasonable inference that Bank knew its projections were assertedly false or inflated.

       Nothing in the declarations of Ghassan or Amir demonstrates that any Bank

representative had the sort of specialized knowledge or expertise in the valuation of gas

                                            18
station or convenience store businesses so as to reflect inequality of knowledge. (Cf.

Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells, supra, 86 Cal.App.4th at pp. 310-

311 [testimony that the defendant accountant, who allegedly made misrepresentations in

connection with a proposed ice or roller hockey arena project, had experience in securing

financing for projects but not in financing of ice or roller hockey rinks, against testimony

that plaintiff had a graduate degree in business, worked as a corporate financial analyst,

and previously proposed an ice rink project elsewhere, did not establish the accountant's

superior knowledge or inequality of knowledge].) Nor is there anything in them showing

the representations made as to future value were intended by Bank as affirmations of fact.

(Compare, Gagne v. Bertran (1954) 43 Cal.2d 481, 484, 488 [defendant test hole driller

who had tested plaintiffs' soil and informed them he "did not find any evidence of fill

other than on the surface for about 12[] to 16 [inches]" in depth was not an opinion but a

"deliberate affirmation of the matters stated"; even if it was an opinion, plaintiffs

justifiably relied on it because the defendant held himself out as an expert, and his

unequivocal statement implied he knew facts that justified it].) Indeed, appellants do not

dispute the fact the appraisal report contains limiting conditions expressly and

specifically negating any intent to make such an affirmation.6 Whether appellants saw or

6       The appraisal report states in part: "1. An appraisal is inherently subjective and
represents our opinion as to the value of the property appraised. [¶] 2. The conclusions
stated in our appraisal apply only as of the effective date of the appraisal, and no
representation is made as to the effect of subsequent events. [¶] . . . [¶] 12. Any income
and expense estimates contained in the appraisal report are used only for the purpose of
estimating value and do not constitute predictions of future operating results. [¶] . . . [¶]
17. The analyses contained in the report necessarily incorporate numerous estimates and
                                              19
read those limiting conditions before closing the loan transaction is not relevant to Bank's

intent or lack thereof, or the nature of its assertions. We conclude summary judgment

was properly granted on plaintiffs' cross-complaint for fraud in the inducement.

                II. Sufficiency of the Evidence of Sham Guaranty Defense

1. Standard of Review

       " ' "In general, in reviewing a judgment based upon a statement of decision

following a bench trial, 'any conflict in the evidence or reasonable inferences to be drawn

from the facts will be resolved in support of the determination of the trial court decision.

[Citations.]' [Citation.] In a substantial evidence challenge to a judgment, the appellate

court will 'consider all of the evidence in the light most favorable to the prevailing party,

giving it the benefit of every reasonable inference, and resolving conflicts in support of

the [findings]. [Citations.]' [Citation.] We may not reweigh the evidence and are bound

by the trial court's credibility determinations. [Citations.] Moreover, findings of fact are

liberally construed to support the judgment." ' " (Axis Surplus Ins. Co. v. Reinoso (2012)

208 Cal.App.4th 181, 189.) "However, when the [trial court's findings of] decisive facts

are undisputed, the reviewing court is confronted with a question of law and is not bound

assumptions regarding property performance, general and local business and economic
conditions, the absence of material changes in the competitive environment and other
matters. Some estimates or assumptions, however, inevitably will not materialize, and
unanticipated events and circumstances may occur; therefore, actual results achieved
during the period covered by our analysis will vary from our estimates, and the variations
may be material. [¶] . . . [¶] 19. The appraisal report is prepared for the exclusive
benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon
by any other party. All parties who use or rely upon any information in the report
without our written consent do so at their own risk. [¶] . . . [¶] 27. All prospective
value estimates presented in this report are estimates and forecasts which are prospective
in nature and are subject to considerable risk and uncertainty."
                                             20
by the findings of the trial court. [Citation.] In other words, the appellate court is not

bound by a trial court's interpretation of the law based on undisputed facts, but rather is

free to draw its own conclusion of law." (San Diego Metropolitan Transit Development

Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 528.)

2. Legal Principles

       Our Division Three colleagues summarized the relevant principles relating to

California's antideficiency legislation (Code Civ. Proc., §§ 580a-580d, 726) and the sham

guaranty defense in California Bank & Trust v. Lawlor (2013) 222 Cal.App.4th 625:

" 'The courts have repeatedly recognized that the antideficiency laws embodied in [Code

of Civil Procedure] sections 580a through 580d and 726 reflect a legislative policy that

strictly limits the right to recover deficiency judgments for the amount the debt exceeds

the value of the security.' [Citation.] Indeed, these provisions, 'enacted during the

Depression, limit or prohibit lenders from obtaining personal judgments against

borrowers where the lender's sale of real property security produces proceeds insufficient

to cover the amount of the debt.' [Citation.] These antideficiency statutes 'bar[ ] a

deficiency judgment following nonjudicial foreclosure of real property [citation] or

following foreclosure of a purchase money deed of trust on a residence [citation].'

[Citation.] [¶] . . . Because the antideficiency legislation was established for a public

purpose '[t]he debtor cannot be compelled to waive the antideficiency protections in

advance . . . and [the protections] cannot be contravened by a private agreement.' "

(California Bank & Trust v. Lawlor, at p. 632.)

                                             21
       " 'To be subject to a deficiency judgment, however, a guarantor must be a true

guarantor, not merely the principal obligor under a different name. [Citations.] Indeed,

Civil Code section 2787 defines a guarantor as 'one who promises to answer for the debt,

default, or miscarriage of another . . . .' [Citations.] Where the principal obligor purports

to take on additional liability as a guarantor, the guaranty adds nothing to the principal

obligation and the antideficiency legislation bars a deficiency judgment based on the

guaranty because it is not a promise to answer for the debt of another." (California Bank

& Trust v. Lawlor, supra, 222 Cal.App.4th at p. 632.)

       "To decide whether a guarantor is a true guarantor or merely the principal obligor

under a different name, '[t]he correct inquiry set out by the authority is whether the

purported debtor is anything other than an instrumentality used by the individuals who

guaranteed the debtor's obligation, and whether such instrumentality actually removed the

individuals from their status and obligations as debtors. [Citation.] . . . [T]he legislative

purpose of the antideficiency law may not be subverted by attempting to separate the

primary obligor's interests by making a related entity the debtor while relegating the true

principal obligors to the position of guarantors. [Citation.] [¶] To determine whether the

[purported guarantors] as individuals were primary obligors . . . such that their guaranties

must be considered ineffective, we . . . look to the purpose and effect of the agreements to

determine whether they are attempts to recover deficiencies in violation of [the

antideficiency law]. Similarly, . . . we may look to the contract between the parties to

find the relationship of these individuals to the entire enterprise.' " (California Bank &

Trust v. Lawlor, supra, 222 Cal.App.4th at p. 633.)

                                             22
       More recently, in CADC/RADC Venture 2011-1 LLC v. Bradley (2015) 235

Cal.App.4th 775, the court explained that "California law does not define a sham

guaranty, and California courts have yet to enunciate a bright-line test." (Id. at p. 784.)

Discussing authorities involving varying claims of unenforceable sham guaranties, it

distilled the following principles: "A guaranty is an unenforceable sham where the

guarantor is the principal obligor on the debt. This is the case where either (1) the

guarantor personally executes underlying loan agreements or a deed of trust, or (2) the

guarantor is, in reality, the principal obligor under a different name by operation of trust

or corporate law or some other applicable legal principle. The legislative purpose against

deficiency judgments may not be subverted by use of a borrowing entity with the true

principal obligor relegated to the position of guarantor. Thus, courts may find a sham

guaranty where a lender structures a transaction to avoid antideficiency protections, even

though the borrowing entity is a properly formed corporation that observes the necessary

formalities. However, a sham guaranty defense generally will not lie where there is

adequate legal separation between the borrower and the guarantor, e.g., through the

appropriate use of the corporate form." (Id. at pp. 786-787.)

       In CADC, the court concluded that the record lacked substantial evidence to

support the defendants' sham guaranty defense where the individual defendants had

decided on the corporate structure and chose to borrow money through an LLC owned by

a Washington corporation. (CADC/RADC Venture 2011-1 LLC v. Bradley, supra, 235

Cal.App.4th at pp. 789-790.) The court held that the guarantors could not disclaim their

antideficiency waivers if they decided to borrow through a shell entity and there was

                                             23
adequate legal protection between the guarantors and borrower: "Where individuals

purposefully take advantage of the benefits of borrowing through a corporate entity, they

must also assume the risks that come with it." (Id. at p. 792.)

3. Analysis

       Appellants contend the evidence is insufficient to support the trial court's rejection

of their sham guaranty defense, and specifically its statement of decision findings that (1)

LLC was the true borrower on the loan; (2) the remaining appellants were guarantors not

protected by antideficiency statutes; (3) LLC adhered to corporate formalities and had

complete legal separation from the remaining appellants; or (4) Amir and Ghassan

formed LLC for the specific purpose of acquiring and holding title to the property.

According to appellants, the evidence is "overwhelming" that the guaranties were sham

under several theories, including on grounds Distler admitted in a credit memorandum

that Ghassan, Amir, Izik and GI were the true borrowers on the loan, Bank was involved

in selecting the form of entity that became the primary obligor, and LLC failed to observe

the necessary formalities that usually protect owners from corporate liabilities.

       In addressing these contentions, we look to the relevant facts supporting the trial

court's findings from the evidence in the record and from the trial court's final statement

of decision. (See In re Marriage of Schmir (2005) 134 Cal.App.4th 43, 49-50 [appellate

court is not limited to facts or evidence cited in trial court's statement of decision but

review extends to the entire record].) Our review of the briefing compels us to point out

that though appellants correctly recite the standard of review, they have not summarized

all of the material trial evidence relevant to the trial court's findings and conclusions.

                                              24
(Mendoza v. City of West Covina (2012) 206 Cal.App.4th 702, 713-714 [under the

substantial evidence standard, "appellants were required to present and discuss all the

evidence, both favorable and unfavorable, and show why it was insufficient"].)

Appellants point only to evidence that they claim supports different theories as to why

their guaranties are unenforceable, ignoring the fact that the court rejected this evidence

as not "credible." This includes Ghassan's and Amir's trial testimony concerning

communications with Bank personnel. We observe also that appellants cite to deposition

transcripts submitted in support of their motion for new trial, without any indication that

the trial court considered or admitted those transcripts for purposes of trial. Finally, some

of appellants' assertions in their brief are made entirely without supporting references to

the record.7 We disregard such unsupported assertions. (Cal. Rules of Court, rule

7        For example, in their brief appellants assert: "The credit memorandum was
written by . . . Distler, the bank's loan officer. In this credit memorandum, there were
many admissions made by Distler that the actual and true borrowers with respect to the
$800,000 loan were the Appellants. [¶] Trial Exhibit 38 is the first amendment to
Distler's credit memorandum. The purpose of the first amendment was to change the
name of the borrower from Ghassan and Amir Goryoka partnership as an [eligible
passive investor] to . . . LLC as an [eligible passive investor]. The first amendment was
executed on September 18, 2007. Trial Exhibit 39 is the second amendment to Distler's
credit memorandum. It was executed on September 27, 2007, the day the $800,000 loan
closed. There are multiple admissions by bank employees in Exhibit 39 that the
individual Goryokas are the borrowers, and not . . . LLC. These multiple admissions
occurred 9 days after the bank had changed the name of the borrower to . . . LLC.
Obviously, the name change that occurred in Trial Exhibit 38 did not affect in any way
the continued multiple admissions of the bank that the Appellants were the borrowers and
not . . . LLC. [¶] The bank sent monthly statements for loan repayment to the address for
Appellant [GI] and not to the address for . . . LLC. The evidence showed that the bank
knew that the loan payments were being made by Amir . . . from his personal bank
account and from the bank account of . . . [GI]." The sole reference to evidence in these
statements and arguments are to trial exhibits, but appellants do not provide a record
                                             25
8.204(a)(1)(B) & (C) [appellants must provide record citations and citation to authority];

Miller v. Superior Court (2002) 101 Cal.App.4th 728, 743 [failure to provide record

citations waives the issue].) Appellants do little to assist us in reviewing whether the trial

evidence was sufficient or insufficient to support the highly fact-specific sham guaranty

defense.

       Bank complains about appellants' failure to discuss the evidence on which the

court relied and argues they waived their right to substantial evidence review. It

maintains appellants are asking this court to give more weight or credibility to appellants'

testimony, which "reveals they were aware of the terms of the Loan." Bank asserts that

"[b]ased on [appellants'] own admissions and testimony at Trial, the Court concluded that

their contentions concerning the sham guaranty defense lacked credibility" and as such,

the court "largely rejected the evidence offered by Appellants with respect to the sham

guaranty defense."

       Appellants have indeed forfeited substantial evidence review by failing to set out a

fair summary of all the material evidence on the point, but instead citing the evidence in

their favor and interpreting it in the light most favorable to them. (Clark v. Superior

Court (2011) 196 Cal.App.4th 37, 52-53; see also Stewart v. Union Carbide Corp. (2010)

reference as to where those exhibits are located. Appellants also assert: "The bank
falsely and fraudulently represented to the SBA that . . . LLC had averaged sales of
$718,767 for the past 3 years, when in fact, those sales figures were actually compiled by
. . . [GI]. There was never any lease from . . . LLC as the [eligible passive investor] and
alleged owner of the . . . real property and . . . [DGI], the Operating Company as required
by SBA regulations. Under such circumstances, . . . Brown stated that SBA requirements
were not met and . . . LLC was not eligible for an SBA loan." These assertions are
wholly without record support.
                                             26
190 Cal.App.4th 23, 34.) Appellants " 'cannot shift this burden onto [Bank],' " nor can it

require the reviewing court to " 'undertake an independent examination of the record.' "

(Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409-410.)

       We are compelled to nevertheless conclude that appellants' sufficiency of the

evidence challenge fails on its merits. At trial, Marquez testified that the loan was an

SBA term loan, and the business agreement entered into by appellants reflected the

responsibilities and obligations between the parties to the lending relationship. That

agreement outlined the identity of the borrowers and guarantors, and reflected that the

borrower was a validly existing and authorized LLC. Marquez testified that none of the

individual Goryokas ever told him they believed the LLC was not the true borrower, or

that the individuals were the true borrowers. They never told him that the borrower did

not receive the loan funds. Distler testified that the individuals suggested that title to the

property be in the name of LLC; Bank did not insist title be vested in LLC because it was

strictly against Bank policy to give that kind of advice. Both Distler and Brown, Bank's

SBA manager, explained that the loan documents and not initial letters from Bank would

control the loan terms and conditions. Distler confirmed that SBA standard operating

procedure dictated the required guarantors: DGI was the operating company, GI was a

like-kind business, and Ghassan, Amir and Izik were more than 20 percent owners.

Distler testified that none of the Goryokas objected to having LLC as the borrower. She

testified that the SBA only made loans to businesses, including sole proprietorships, not

to individuals.

                                              27
       As Bank points out, appellants ignore Ghassan's testimony that LLC was a "real

company" formed by the Goryokas' own attorney. Appellants focus on Ghassan's

testimony, not believed by the trial court and contradicted by Distler, that Bank

representatives told them they needed to form an LLC in order to process the loan. We

do not resolve such conflicts in our review for substantial evidence (Rufo v. Simpson

(2001) 86 Cal.App.4th 573, 622), we look only to evidence supporting the trial court's

factual findings and legal conclusions.

       The question is not whether evidence shows that LLC was not the true borrower

on the loan or that Ghassan, Amir, Izik and GI were the true guarantors. It is whether the

evidence and inferences drawn therefrom demonstrates that appellants were not somehow

obligated as primary borrowers. (Compare Riddle v. Lushing (1962) 203 Cal.App.2d

831, 832-833 [guaranties were sham where defendants took out loan as partners under a

partnership making them primary obligors and also guaranteed the loan as individuals;

"[t]he purported guaranty added nothing to the primary liability which arose when they as

partners executed the note in the name of the partnership"]; Torrey Pines Bank v.

Hoffman (1991) 231 Cal.App.3d 308, 321 [under trust law principles applicable at the

time, husband and wife were primary obligors on a loan along with their family trust,

which the court deemed a " 'mere instrumentality' "; appellate court concluded the

husband and wife were therefore entitled to the protection of the antideficiency laws].)

Here, Distler explained that the loan documents governed, and Bank did not insist LLC

be the borrower or title holder. The evidence shows Bank had no involvement in

structuring the loan so as to avoid the purpose of antideficiency laws. (Compare Union

                                            28
Bank v. Brummell (1969) 269 Cal.App.2d 836, 837-838 [lender "advised or required"

defendants to transfer title to the property given as security to a preexisting corporation

solely owned by the defendants] and River Bank America v. Diller (1995) 38 Cal.App.4th

1400, 1423 [evidence created a triable issue of fact where the lender engineered the

transaction by requiring the borrower to form a limited partnership with a developer and

his corporation as the guarantors; the lender relied exclusively on the financial condition

of the developer and corporation because it considered them the true borrowers].)

       We reject appellants' assertion that overwhelming evidence compels a conclusion

that appellants were the true borrowers because LLC failed to observe necessary

corporate formalities, never held annual meetings, did not have a bank account, had no

lease agreement with DGI, and never received rent from DGI. Appellants argue it is

undisputed that LLC and appellants were alter egos of one another and that appellants

were liable for LLC's debts. " '[A]lthough a corporation is usually regarded as an entity

separate and distinct from its stockholders, both law and equity will, when necessary to

circumvent fraud, protect the rights of third persons and accomplish justice, disregard this

distinct existence and treat them as identical.' The issue is not so much whether, for all

purposes, the corporation is the 'alter ego' of its stockholders or officers, nor whether the

very purpose of the organization of the corporation was to defraud the individual who is

now in court complaining, as it is an issue of whether in the particular case presented and

for the purposes of such case justice and equity can best be accomplished and fraud and

unfairness defeated by a disregard of the distinct entity of the corporate form." (Kohn v.

Kohn (1950) 95 Cal.App.2d 708, 718; see Mesler v. Bragg Management Co. (1985) 39

                                              29
Cal.3d 290, 300-301; Webber v. Inland Empire Investments, Inc. (1999) 74 Cal.App.4th

884, 900; Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993-994;

see also Robbins v. Blecher (1997) 52 Cal.App.4th 886, 892.) " 'Thus, alter ego is used to

prevent a corporation from using its statutory separate corporate form as a shield from

liability only where to recognize its corporate status would defeat the rights and equities

of third parties; it is not a doctrine that allows the persons who actually control the

corporation to disregard the corporate form.' " (Webber, at p. 901, italics added.) The

corporate form will be disregarded "only in narrowly defined circumstances and only

when the ends of justice so require." (Mesler, at pp. 510-511.)

       Even if we were to consider the evidence of appellants' disregard of LLC's

corporate form, we decline to conclude such disregard should inure to appellants' benefit.

Disregard of a corporate entity must benefit a third party injured by the corporation, not

appellants as the controlling individuals, and thus evidence assertedly supporting

application of the alter ego doctrine does not compel us to conclude the record lacks

substantial evidence to support the trial court's findings. But there is evidence in any

event that permitted the court to conclude appellants properly formed and observed the

required formalities in creating LLC, and it was not a mere instrumentality. Ghassan

testified he signed articles of organization for LLC, a real company formed by appellants'

counsel, which also was the entity on the purchase and sale agreement for the property

and took title to it. Ghassan sent the LLC documents, including a certificate of members,

to Bank. He testified about the initial meeting of LLC's members, and that its minutes

reflected that LLC had agreed to acquire the property for $990,000, and Amir and

                                             30
Ghassan each contributed 50 percent of the capital for escrow. We conclude substantial

evidence supports the court's finding that LLC adhered to corporate formalities and

enjoyed complete legal separation from Ghassan, Amir and Izik.

                             III. Fraud Affirmative Defense

      Appellants point out that before trial, the trial court struck their seventh

affirmative defense of fraud, ruling it was "the same argument or assertions" on which it

granted summary judgment on appellants' cross-complaint for fraud in the inducement.

They ask that if we reverse the summary judgment and remand for a trial on their cross-

complaint, we must likewise reverse the order striking the fraud affirmative defense.

Having upheld the summary judgment, we do not disturb the court's ruling.

                                             31
                                  DISPOSITION

      The judgment is affirmed.

                                                O'ROURKE, J.

WE CONCUR:

HALLER, Acting P. J.

McDONALD, J.

                                      32