Legendary Investors Group No. 1, LLC v. Niemann

Filed 3/25/14 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

LEGENDARY INVESTORS GROUP B245620 NO. 1, LLC, (Los Angeles Country Plaintiff and Appellant, Super. Ct. No. BC435774)

v.

DANIEL J. NIEMANN et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles Country, Susan Bryant-Deason, Judge. Reversed and remanded with directions. The Soni Law Firm, M. Danton Richardson and Leo E. Lundberg, Jr., for Plaintiff and Appellant. Zimmerman, Axelrad, Meyer, Stern & Wise, Brian W. Zimmerman (Pro Hac Vice), Law Office of Ernesto F. Aldover, Ernesto E. Aldover, for Defendants and Respondents. ______________________________

Legendary Investors Group No. 1, LLC, appeals from a judgment of nonsuit in favor of respondents Daniel J. Niemann, NPI Century City, LLC, and Niemann Properties, Inc., in an action for breach of commercial guaranty agreements. We agree with appellant that the motion for nonsuit was improperly granted. The judgment is reversed and the case remanded for a new trial.

FACTUAL AND PROCEDURAL SUMMARY In 2007, DB NPI Century City, LLC (DB NPI) obtained a construction line of credit for over $9.3 million from East West Bank. DB NPI’s primary members are Drawbridge Special Opportunity Fund (Drawbridge) and respondent NPI Century City, LLC. The latter is managed by respondent Niemann through respondent Niemann Properties, Inc. (Niemann Properties). The loan was secured by a deed of trust and guaranteed by respondents. The guaranties included various waivers, such as a waiver of all rights and defenses arising by reason of “the cessation from any cause whatsoever[,] other than payment in full, of the indebtedness” or “any act of omission or commission by Lender which directly or indirectly results in or contributes to the discharge of Borrower . . . or the indebtedness.” Due to project changes, East West Bank obtained an updated appraisal, which showed a significant decrease in the value of the construction project. As a result, the bank conditioned the disbursement of future loan advances on DB NPI’s putting up $1.7 million in additional equity. After further negotiations, Niemann Properties eventually deposited over $114,000, and Drawbridge applied for a letter of credit in the amount of $841,280. On Drawbridge’s application in May 2008, Wells Fargo Bank issued an irrevocable standby letter of credit for that amount, “as security for credit facilities which [East West Bank] will grant to [DB NPI].” Construction was delayed for various reasons, and the project was not completed by the time the loan matured in May 2009. When the loan came due and was not paid, East West Bank drew on the deposit and letter of credit. As required by the letter of credit, the bank’s draft on it included the following language: “We hereby claim