749 Fed.Appx. 510 (9th Cir. 2018), 16-16387, Nelson v. McFall

Docket Nº:16-16387
Citation:749 Fed.Appx. 510
Party Name:Sandra NELSON, Plaintiff-Appellee, v. Jennifer MCFALL and Earl McFall, Defendants-Appellants.
Attorney:David M. Rose, Attorney, Ashby Law, Walla Walla, WA, for Plaintiff-Appellee Armando S. Mendez, Attorney, Law Office of Armando S. Mendez, Modesto, CA, for Defendants-Appellants
Judge Panel:Before: BEA and MURGUIA, Circuit Judges, and SOTO, District Judge.
Case Date:September 12, 2018
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 510

749 Fed.Appx. 510 (9th Cir. 2018)

Sandra NELSON, Plaintiff-Appellee,

v.

Jennifer MCFALL and Earl McFall, Defendants-Appellants.

No. 16-16387

United States Court of Appeals, Ninth Circuit

September 12, 2018

Argued and Submitted August 13, 2018 San Francisco, California.

Editorial Note:

Governing the citation to unpublished opinions please refer to federal rules of appellate procedure rule 32.1. See also U.S.Ct. of App. 9th Cir. Rule 36-3.

Page 511

David M. Rose, Attorney, Ashby Law, Walla Walla, WA, for Plaintiff-Appellee

Armando S. Mendez, Attorney, Law Office of Armando S. Mendez, Modesto, CA, for Defendants-Appellants

Appeal from the United States District Court for the Eastern District of California, Carolyn K. Delaney, Magistrate Judge, Presiding, D.C. No. 2:15-cv-02006-CKD

Before: BEA and MURGUIA, Circuit Judges, and SOTO,[*] District Judge.

Page 512

MEMORANDUM[**]

Earl and Jennifer McFall ("the McFalls") operated Dragonfire Farm ("Dragonfire"), a facility to train and board horses. Nelson owned several horses and contracted with the McFalls to train some of the horses.

In early 2005, Nelson loaned the McFalls $150,000. The parties executed a promissory note with the assistance of Jennifer McFall’s father, David Chang. The promissory note was signed by all parties and dated May 2005.1 The promissory note stated that: For value received, Earl and Jennifer McFall promise to pay Sandra Nelson or order at 242 Nevada Street, Nevada City, California 95959 the lump sum principal of One Hundred and Fifty Thousand Dollars ($150,000) on May 1, 2010. Upon maturity of this Note, Sandra Nelson agrees that Earl and Jennifer McFall have the option to extend the maturity for up to five (5) more years to May 1, 2015. Sandra Nelson further agrees that the repayment of this Note will not be accelerated before maturity even if this Note is extended to May 1, 2015. In lieu of simple interest payment of four percent (4%) per year fixed for the life of the loan and payable monthly ($500 per month) on the first day of the month, Earl and Jennifer McFall have the option to waive the monthly training fees for two (2) of Sandra Nelson’s horses. Earl and Jennifer McFall have the option to prepay this loan at any time without penalty.

From 2005 to 2009, the McFalls credited Nelson two training fees. Every month the McFalls sent Nelson an invoice, which either used the word "credit" or stated "Interest income paid on $150K Note in the form of two B&T credits" or "Interest Income paid to MAM,2 by Dragonfire, in the form of 2 Training Credits." At the time of contracting, the value of each training credit was $775, which resulted in a credit of $1550 to Nelson.3 The McFalls assert that they understood that any amount greater than $500 would be reduced from the principal of the loan. Nelson asserts that the credit only applied to interest and did not affect the principal, in effect charging up to 18% interest on the loan when the McFalls chose to pay interest in the form of credits.

In 2009, Mr. Chang contacted Nelson regarding the promissory note to "modify its terms" to amortize the loan. In August 2009, the McFalls began exercising the option to pay the $500 monthly interest payment and the option to extend the maturity of the loan for five years to May 1, 2015. Shortly thereafter, the parties ceased their business relationship.

The McFalls did not make a lump-sum payment of $150,000 on May 1, 2015. On September 22, 2015, Nelson filed a claim for breach of promissory note in the Eastern District of California based on diversity jurisdiction.4 Nelson filed a motion for

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summary judgment, which included a declaration with attachments. The McFalls objected to multiple parts of Nelson’s declaration.

The district court heard oral argument and later issued a written order. The district court summarily denied the McFalls relevant evidentiary objections. The district court found that the note was not reasonably susceptible to the meaning advanced by the...

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