Court Opinion

ID: 2818167
Source: CourtListenerOpinion
Date Created: 2015-07-17 18:11:59.726343+00
Date Added: 2024-06-11T11:30:47.465886
License: Public Domain

Filed 7/17/15 Huntington Pacifica-Monterey, Inc. v. Fox CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE

HUNTINGTON PACIFICA-MONTEREY,
INC.,
                                                                       G049680
     Plaintiff and Respondent,
                                                                       (Super. Ct. No. 30-2012-00608310)
         v.
                                                                       OPINION
STEVEN R. FOX,

     Defendant and Appellant.

                   Appeal from a judgment of the Superior Court of Orange County,
Craig L. Griffin, Judge. Affirmed.
                   Philip D. Dapeer for Defendant and Appellant.
                   Larry J. Lichtenegger and Everett L. Skillman for Plaintiff and Respondent.

                                             *               *               *
                                      INTRODUCTION
              Steven R. Fox guaranteed the rent payments from Health Essist, Inc.
(Health Essist), to a commercial lessor, Huntington Pacifica-Monterey, Inc. (Huntington).
Huntington sued Fox under the guaranty, and judgment was entered in Huntington’s
favor after a bench trial. On appeal, Fox argues the guaranty was not supported by
consideration because it was signed after the lease was executed. Fox’s contention is
without merit. There was substantial evidence that the lease and the guaranty were
signed at the same time; a presumption of consideration arises with respect to the
guaranty because it is in writing; the language of the guaranty makes the leasing of the
property consideration for the guaranty; Fox never raised lack of consideration as a
defense; and there was evidence Health Essist was not permitted to move into the office
space until after the guaranty was signed. We therefore affirm.

                    STATEMENT OF FACTS AND PROCEDURAL HISTORY
              Health Essist leased office space from Huntington. Fox, who was the
owner and chief executive officer of Health Essist, signed a personal guaranty of the
lease. Health Essist fell behind on its rent payments. Eventually, Huntington filed an
unlawful detainer action against Health Essist, and evicted it.
              Huntington sued Fox to recover the amounts due under the guarantee.
After a bench trial, the court issued a proposed statement of decision, in which it found
(1) Fox executed the guaranty, (2) there was consideration for the guaranty, and
(3) Huntington was due $97,249.19 from Fox. Judgment was entered in favor of
Huntington and against Fox; Fox timely appealed.

                                        DISCUSSION
              We review the evidence in the light most favorable to Huntington to
determine whether substantial evidence supports the trial court’s judgment. (Jameson v.
Five Feet Restaurant, Inc. (2003) 107 Cal. App. 4th 138, 143.)

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              Fox contends the guaranty was unenforceable because there was no
consideration for it. “Where a suretyship obligation is entered into at the same time with
the original obligation, or with the acceptance of the latter by the creditor, and forms with
that obligation a part of the consideration to him, no other consideration need exist. In all
other cases there must be a consideration distinct from that of the original obligation.”
(Civ. Code, § 2792.)
              Fox did not plead lack of consideration as an affirmative defense in his
verified answer to the complaint, and Fox’s claims on appeal fail for this reason alone.
(Elster’s Sales v. Longo (1970) 4 Cal. App. 3d 216, 221-222.) Further, the rule is well
settled that consideration for a written guaranty is presumed, even for a loan made after
the execution of the guaranty. (Civ. Code, § 1614; Elster’s Sales v. Longo, supra, at
p. 221; Bank of America v. Granger (1931) 115 Cal. App. 210, 219.) The burden of
showing lack of consideration for a guaranty contained in a written instrument is on the
party challenging the guaranty’s validity. (Challenge-Cook Bros., Inc. v. Lantz (1967)
256 Cal. App. 2d 536, 539.)
              According to Fox, the guaranty was signed after the lease, with no separate
consideration. As relevant to this issue, the proposed statement of decision reads: “The
evidence unmistakably established that Guaranty was an integral part of Huntington’s
decision to lease the property to Health Essist, Inc. The Lease at page iv specifically
referenced the Guaranty, and incorporated it by reference. More importantly, T[eresa]
Chakl[o]s testified that Huntington would not have leased the property to Health Essist
without Fox executing the Guaranty. Although Fox testified he did not sign the Guaranty
until a few days after he signed the Lease, this testimony was contradicted by more
credible testimony given by Chakl[o]s, who said both documents were signed on the
same day. Moreover, even if the two documents had been signed days apart, the
evidence demonstrates that Health Essist was not allowed to fully move in until
February [2]4, the day after Fox signed the Guaranty.”

                                              3
               The lease between Health Essist and Huntington does not have dates on the
signature page. The lease provides that it was “entered into this 20th day of February,
2009, by and between Landlord and Tenant.” (Underscoring omitted.) But the file
names and paths in the lease footers show a date of either February 23 or February 24.
               The guaranty, which was signed on February 23, 2009, specifies that it was
“a material inducement to and in consideration of Huntington . . . entering into a written
lease . . . with Health Essist . . . for the lease of that certain real property described in the
Lease.”
               Teresa Chaklos, the leasing director for Huntington in 2009, testified Fox
signed the lease and the guaranty on February 23, 2009. A document from Huntington’s
file regarding Health Essist shows a move-in date of February 24, 2009.
               Fox testified that he signed the lease on an unspecified date before he
signed the guaranty on February 23. Fox also testified (1) Chaklos allowed him to move
into the office space before the lease was signed,1 (2) there were no discussions of the
need for a guaranty before the lease was signed, and (3) Fox was never asked to submit
and never submitted any financial statements or other documents for the company or for
himself to Huntington.
               Substantial evidence supports the trial court’s finding that the lease and the
guaranty were signed at the same time. Even if the guaranty was signed after the lease,
substantial evidence supported the judgment because (1) there was evidence that Health
Essist was not permitted to move into the office space until the guaranty was signed;
(2) the guaranty is in writing, which creates a presumption of consideration; and (3) the

               1
                David Bradburne, the owner of the property management company for
Huntington, testified Fox would not have been given the keys to the office space before
the lease was signed and a check for a security deposit and the first month’s rent was
received.

                                                4
language of the guaranty makes clear that it was part of the consideration for Huntington
to lease the office space to Health Essist.
              Fox string-cites several cases which he contends support his position. Fox
fails to even cite us to the relevant pages of these cases, much less identify the holdings
or analyses that are relevant to the issue of this case. Unfortunately for Fox, all of the
cases he cites either support Huntington’s position, or are factually distinct; none
supports his contentions in this appeal.
              In Challenge-Cook Bros., Inc. v. Lantz, supra, 256 Cal.App.2d at page 539,
the guarantor contended there was no consideration for the guaranty, which he claimed
was executed three weeks after the lease was signed. The record was “silent” as to when
and how the lease and guaranty were signed. (Ibid.) Based on the lack of evidence, the
presumption of consideration arising from the guaranty being in writing, and the
guarantor’s failure to sustain his burden to prove a lack of consideration, the appellate
court concluded the trial court’s finding that the guaranty was supported by consideration
could not be reversed. (Id. at p. 540.)
              In Pierce v. Wright (1953) 117 Cal. App. 2d 718, 720-722, the defendant,
who had signed a personal surety bond for a construction loan, appealed from the
judgment against him, in part, on the ground that the bond was not supported by
consideration. Although the bond was executed after the loan was made, and even after
construction had begun, the appellate court concluded the bond was supported by valid
consideration because (1) the loan contract required the execution of the bond; (2) the
written bond was presumptive evidence of consideration; and (3) the defendant had failed
to meet his burden of overcoming the presumption that valid consideration existed. (Id.
at pp. 722-723.)
              In Rusk v. Johnston (1937) 18 Cal. App. 2d 408, 409, the appellate court
concluded substantial evidence supported the trial court’s factual finding that the
guaranty was not supported by consideration. Rusk v. Johnston differs from the present

                                              5
case because lack of consideration was pleaded by the defendant, and because there was
substantial evidence that the guaranty was not executed, and indeed was not even
requested, before the promissory note was signed. (Ibid.)
              In Oakland Bank of Commerce v. Washington (1970) 6 Cal. App. 3d 793, the
appellate court held, “[t]here was consideration for the guaranty, as a matter of law” (id.
at p. 797), although the guaranty was signed after the underlying agreement was signed,
because the evidence supported the presumption of consideration (id. at pp. 796-797).
              In Kafka v. Bellevue Corp. (7th. Cir. 1993) 999 F.2d 1117, the court
considered whether an alleged oral guaranty of a previously incurred debt was supported
by consideration. Because the alleged guaranty was oral, not written, the presumption of
consideration did not apply, making Kafka inapplicable to the issues presented by this
case.
              In Estate of Thomson (1913) 165 Cal. 290, 296-297, the court held there
was consideration for a guaranty of promissory notes, which were entered into before the
written guaranty was executed. Again, the appellate court’s focus was on the existence of
a written guaranty, the guaranty’s reference to the forbearance, and the burden on the
guarantor to disprove the existence of consideration.
              In Adler v. Sawyer (1919) 40 Cal. App. 778, 781, the appellate court
affirmed the trial court’s factual finding that the guaranty was supported by
consideration. Although the guaranty was not signed at the same time as the promissory
note it guaranteed (id. at p. 780), the defendant guarantor failed to raise the issue of lack
of consideration in the responsive pleading, and the evidence supported the trial court’s
finding that sufficient consideration was exchanged (id. at p. 781).

                                              6
                                   DISPOSITION
            The judgment is affirmed. Respondent to recover costs on appeal.

                                             FYBEL, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

IKOLA, J.

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