J.A. Todd Management Corporation, Gassaway Paraprofessional Services, Inc. v. Xinos Enterprises Inc., Sydney S. Xinos, Robert A. Audia Construction
Published: Mar. 13, 1999 | Result Date: Nov. 25, 1998 | Filing Date: Jan. 1, 1900 |Case number: 709644 Verdict – $371,160
Judge
Court
San Diego Superior
Attorneys
Plaintiff
Thomas M. Monson
(Miller, Monson, Peshel, Polacek & Hoshaw)
Defendant
Facts
Suit for the enforcement of written Continuing Guaranties on a Promissory Note with a $150,000 balance, in default since Dec. 2, 1990. Through their attorney, the owners of certain commercial real property in El Cajon entered into a contract for the sale of property in Nov. 13, 1986 for $750,000 for a cash down payment of $150,000 and the balance of $600,000 under a Promissory Note from the buyer secured by a Deed of Trust on the property, and, within three years of upon obtaining a construction loan, if earlier, payment of $450,000 on the Note on the recording of such construction loan. Buyer reserved the right to assign the contract to a limited partnership upon the seller's approval, the buyer to personally guaranty the Note. Both the contract and note contained a subordination clause stating only that the sellers would subordinate the balance of $150,000 to a construction loan. No other details related to the terms of the proposed subordination were described or negotiated. Escrow was amended numerous times and the parties engaged in negotiations related to the buyer's failure to secure the required $100,000 down payment to timely close escrow. Attorneys for the sellers understood the sellers would receive personal guaranties from each of the principals of the proposed entity-buyer. The sale closed on Dec. 2, 1987, to the buyer's assignee, "Greenfield Drive Storage Park, a California Limited Partnership" (GDSP). GDSP executed the Promissory Note in favor of seller Todd. Nine months later, GDSP obtained a committment for a $1.99 million construction loan, and that escrow forwarded a proposed form CTLA Subordination Agreement to Todd for signature. Todd demanded guaranties from the individual principals of GDSP. Upon execution of the guaranty by, among other, defendants Todd permitted recordation of the subordination agreement, and escrow released $450,000 to Todd, leaving the $150,000 balance under the note, the balloon payment of principal and interest on which was due Dec. 2, 1990. Minimal interest was paid on the note for the year 1989. GDSP defaulted under the note on Dec. 2, 1990, also defaulting under the $1.99 milliion construction loan. The sellers, as well as the lending institution, filed suit in June 1991 and GDSP filed bankruptcy under Chapter 11 and developed a reorganization plan. In early 1995, the property was sold through a trustee foreclosure and, despite opposition by GDSP and defendants, the bankruptcy was converted in 1996 to Chapter 7, upheld by the Ninth Circuit in 1997. In re Greenfield Drive Storage Park, 97 Daily Journal, D.A.R. 7511 (June 17, 1997).
Settlement Discussions
On Aug. 25, 1997, the plaintiff made a first settlement demand for $200,000 under the following terms: unsercured note in the principal amount of $200,000, with a reduced interest rate of 7 percent per annum, payable under the following terms: $1,250 per month from Sept. 15, 1997 forward, and on the 15th of each month therefter, all remaining amount due is 15 years). On April 2, 1998, the plaintiff made a second settlement demand for $250,000 cash. On April 1, 1998, the defendant made an offer of $50,000.
Damages
$362,077.23 (economic injury) comprised of $150,000 principal balance on note plus 10% simple interest of $128,342.45 through April 24, 1998 (Proposed Judgment and Statement of Decision). Total damages awarded at trial $278,342.45. Costs, expenses and attorney fees pursuant to separate motion and cost bill, judgment entered thereon on Nov. 25, 1998, Total $83,734.78 (79,412.75 attorney fees and $4,322.03 costs).
Other Information
Plaintiff Todd sued Xinos Enterprises, Inc. (XEI) and Sydney S. Xinos individually (defendants), to enforce a "General Continuing Guaranty," the third such action of the Guaranty since 1991. Plaintiff CPPS, the current holder of the Nov. 30, 1987 promissory note (note), sued Greenfield Ltd.'s general partner XEI. DEMURRER: The court sustained the general partner's demurrer to CPPS's action on the note on the grounds that only the bankruptcy trustee has standing to pursue such claims against the general partner. Defendants answer pursued 17 affirmative defenses. MOTION FOR SUMMARY JUDGMENT: The plaintiffs' motion for summary adjudication disposed of eight affirmative defenses, laches, statute of limitations, economic duress, 'removal from default'/"cured" default of note based on acceptance of debtor GDSP's plan of reorganization, anti-deficiency statutes and "purported"/"sham guarantee."
Length
four days
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