Umpqua Bank v. Sabet, et al.

A plaintiff has met his burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff has met that burden, the burden shifts to the defendant to show that a triable issue of one or more material facts exists 14 as to the cause of action or a defense thereto. CCP § 437c(p)(1). Plaintiff moves for summary adjudication on four of the five causes of action alleged against the Sabet Defendants.

First Cause of Action – Breach of Loan Agreement. To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” Richman v. Hartley (2014) 224 Cal. App. 4th 1182, 1186. Plaintiffs have submitted evidence that the Sabet Defendants entered into a contract with Plaintiff in which Plaintiff would provide money that would be paid back, that payments have not been made since April 15, 2024 (which is a breach of the contract), and that as a result of the breach, Plaintiff was damaged.

Based on the evidence before the Court, Plaintiff has fulfilled under the agreement and the Sabet Defendants have breached. Each of the essential elements have been proven by Plaintiff through both the loan documents and verified discovery responses made by the Sabet Defendants. The burden shifts to Defendants to show that a triable issue of material fact exists. While the Sabet Defendants argue a failure to mitigate and failure to make attempts to collect from other borrowers or guarantors, this does not absolve the Sabet Defendants of the obligation to pay under the Loan Agreement.

There is no triable issue of material fact as to the First Cause of Action.

Third Cause of Action – Money Lent. The elements of a Common Count for money lent are that the defendant is indebted in a certain sum for money loaned by plaintiff and the defendant has not repaid the money lent. Pleasant vs. Samuels (1896) 114 Cal.

34. The facts listed above are sufficient to constitute this cause of action, and the Sabet Defendants have failed to raise a triable issue of material fact.

Fourth Cause of Action – Account Stated. An account stated is ‘an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing. Professional Collection Consultants v. Lauron (2017) 8 Cal. App. 5th 958, 968; Maggio, Inc. v. Neal, supra, 196 Cal. App. 3d 745, 753. When an account stated is assented to, either expressly or impliedly, it becomes a new contract. Accordingly, an action on an account stated is not based on the parties' original transactions, but on the new contract under which the parties have agreed to the balance due.

Professional Collection Consultants v. Lujan (2018) 23 Cal. App. 5th 685. The elements are: 1) previous transactions between the parties establishing the relationship of debtor and creditor; 2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; 3) a promise by the debtor, express or implied, to pay the amount due. Zinn v. Fred R. Bright Co. (1969) 271 Cal. App. 2d 597, 600. When a statement is rendered to a debtor and no reply is made in a reasonable time, the law implies an agreement that the account is correct as rendered.

Maggio, Inc. v. Neal, supra, 196 Cal. App. 3d 745, 752. Plaintiff has not articulated this cause of action in a manner that would allow for summary adjudication. The Separate Statement does not include all necessary elements. Therefore, Plaintiff has not met its burden on the Fourth Cause of Action.

Sixth Cause of Action – Conversion. Plaintiff seeks recovery under a theory of conversion, which does not apply to this situation as discussed by the California Supreme Court.

Conversion is an “ancient theory of recovery” with roots in the common law action of trover. (Note, The Conversion of Intangible Property: Bursting the Ancient Trover Bottle with New Wine (1991) 1991 B.Y.U. L.Rev. 1681, 1683; see id. at pp. 1683–1685 [tracing early development of conversion].) “This action originated at an early date as a remedy against the finder of lost goods who refused to return them to the owner but instead ‘converted’ them to his own use.” (Rest.2d Torts, § 222A, com. a., p. 431.)

Over time, the action was extended to cases involving “dispossession, or ... withholding possession by others than finders.” (Id. at p. 432.) Today, the tort of conversion is understood more generally as “the wrongful exercise of dominion over personal property of another.” (5 Witkin, Summary of Cal. Law (11th ed. 2017) Torts, § 810, p. 1115; see, e.g., Steele v. Marsicano (1894) 102 Cal. 666, 669 [36 P. 920].) 15

As it has developed in California, the tort comprises three elements: “(a) plaintiff's ownership or right to possession of personal property, (b) defendant's disposition of property in a manner inconsistent with plaintiff's property rights, and (c) resulting damages.” (5 Witkin, supra, Torts, § 810, p. 1115; Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208 [166 Cal. Rptr. 3d 877].) Notably absent from this formula is any element of wrongful intent or motive; in California, conversion is a “strict liability tort.” (Moore v.

Regents of University of California (1990) 51 Cal.3d 120, 144 [271 Cal. Rptr. 146, 793 P.2d 479] (Moore); id. at p. 144, fn. 38 [“‘“conversion rests neither in the knowledge nor the intent of the defendant”’”]; accord, Poggi v. Scott (1914) 167 Cal. 372, 375 [139 P. 815] (Poggi) [“neither good nor bad faith, neither care nor negligence, neither knowledge nor ignorance, are of the gist of the action. ‘... [T]he tort consists in the breach of what may be called an absolute duty ... .’”].)

A successful plaintiff in a conversion action is entitled to recover “[t]he value of the property at the time of the conversion, with the interest from that time, or, an amount sufficient to indemnify the party injured for the loss which is the natural, reasonable and proximate result of the wrongful act complained of and which a proper degree of prudence on his part would not have averted” plus “fair compensation for the time and money properly expended in pursuit of the property.” (Civ. Code, § 3336; see also 5 Witkin, Summary of Cal.

Law, supra, Torts, § 1906, p. 1357.) Punitive damages are recoverable upon a showing of malice, fraud, or oppression. (Civ. Code, § 3294, subd. (a); accord, Haigler v. Donnelly (1941) 18 Cal.2d 674, 681 [117 P.2d 331] (Haigler); Krusi v. Bear, Stearns & Co. (1983) 144 Cal.App.3d 664 [192 Cal. Rptr. 793].) And the Courts of Appeal have held that emotional distress damages are also recoverable by the victim of conversion in appropriate circumstances. (Spates v. Dameron Hospital Assn. (2003) 114 Cal.App.4th 208, 221 [7 Cal.

Rptr. 3d 597]; Gonzales v. Personal Storage, Inc. (1997) 56 Cal.App.4th 464, 476 [65 Cal. Rptr. 2d 473].)

The particular question before us concerns the applicability of the conversion tort to a claim for money. Although the question was once the matter of some controversy, California law now holds that property subject to a conversion claim need not be tangible in form; intangible property interests, too, can be converted. (Payne v. Elliot (1880) 54 Cal. 339, 342 [recognizing conversion claim related to ownership interests and monetary value represented by stock shares, irrespective of the conversion of tangible stock certificates].)

But the law has been careful to distinguish proper claims for the conversion of money from other types of monetary claims more appropriately dealt with under other theories of recovery. Thus, although our law has dispensed with the old requirement that “each coin or bill be earmarked,” it remains the case that “money cannot be the subject of an action for conversion unless a specific sum capable of identification is involved.” (Haigler, supra, 18 Cal.2d at p. 681; see PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395 [58 Cal.

Rptr. 3d 516] (PCO).) “[W]here the money or fund is not identified as a specific thing the action is to be considered as one upon contract or for debt”—or perhaps upon some other appropriate theory—but “not for conversion.” (Baxter v. King (1927) 81 Cal.App. 192, 194 [253 P. 172] (Baxter); see Vu v. California Commerce Club, Inc. (1997) 58 Cal.App.4th 229, 231, 235 [68 Cal. Rptr. 2d 31] [rejecting conversion claim where the plaintiff could not identify specific sum but only approximate monetary losses]; PCO, at p. 397 [same].)

Equally important, the “specific thing” at issue (Baxter, supra, 81 Cal.App. at p. 194) must be a thing to which the plaintiff has a right of ownership or possession—a right with which the defendant has interfered by virtue of its own disposition of the property. This means that “[a] cause of action for conversion of money can be stated only where a defendant interferes with the 16 plaintiff's possessory interest in a specific, identifiable sum”; “the simple failure to pay money owed does not constitute conversion.” (Kim v.

Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284 [133 Cal. Rptr. 3d 774].) Were it otherwise, the tort of conversion would swallow the significant category of contract claims that are based on the failure to satisfy “‘mere contractual right[s] of payment.’” (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1041 [184 Cal. Rptr. 3d 517] (Sanowicz); see Imperial Valley L. Co. v. Globe G. & M. Co. (1921) 187 Cal. 352, 353–354 [202 P. 129].) Contractual provisions may, of course, determine whether the plaintiff has a possessory right to certain funds in the defendant's hands. (See, e.g., Fischer v.

Machado (1996) 50 Cal.App.4th 1069, 1072–1074 [58 Cal. Rptr. 2d 213] (Fischer) [agency agreement established principal sellers' legal entitlement to converted commissions].) But to put the matter simply, a “plaintiff has no claim for conversion merely because the defendant has a bank account and owes the plaintiff money.” (3 Dobbs et al., Law of Torts (2d ed. 2011) § 711, p. 807.) Voris v. Lampert (2019) 7 Cal. 5th 1141, 1150-1152.

The evidence presented by Plaintiff is a simple failure to pay money owed and does not constitute a cause of action for conversion. Plaintiff has not met its burden as to the Sixth Cause of Action.

Summary adjudication is GRANTED in favor of Plaintiff as to the First and Third Causes of Action. Summary adjudication is DENIED as to the Fourth and Sixth Causes of Action. The Sabet Defendants are not parties to the Second Cause of Action. Plaintiff did not seek summary adjudication as to the Fifth Cause of action, which names the Sabet Defendants.

While Plaintiff seeks a judgment that includes principal, interest, attorney fees and costs, a judgment will not issue because the Fourth, Fifth and Sixth Causes of Action remain against the Sabet Defendants. Additionally, the Court notes that under Costs and Expenses on page six in the Business Loan Agreement, Defendants are to pay “all reasonable out-of-pocket expenses incurred by the Lender” for enforcement of the agreement. However, Plaintiff has not filed a noticed motion for attorney fees and has not provided any evidence of attorney fees incurred other than a total dollar amount. A Motion for Attorney Fees will be needed in order for the Court to determine the reasonableness of any attorney fee request. A Memorandum of Costs has not been filed.

Plaintiff did not provide a proposed Order as required by Local Rule of Court 5.17(D). Plaintiff is to prepare an Order consistent with the Court’s Ruling. The matter will be on calendar on Monday, July 27, 2026 at 9:00 a.m. in Department 63 for status of the case. Prior to the next review hearing, the Court expects that Plaintiff will have made a decision if it wishes to move forward on the Fourth, Fifth, and Sixth Causes of Action against the Sabet Defendants.

IN RE: VAZQUEZ