Setareh v. Elyaszadeh

• Decision Date: 25 June 2020
• Docket Number: B286643
• Court: California Court of Appeals Court of Appeals
• Parties: KAYVAN SETAREH, Individually and as Trustee, etc., Plaintiff and Appellant, v. SHAHRAM ELYASZADEH, Defendant and Appellant.

KAYVAN SETAREH, Individually and as Trustee, etc., Plaintiff and Appellant, v. SHAHRAM ELYASZADEH, Defendant and Appellant.

B286643

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE

June 25, 2020

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC598172)

APPEALS from a judgment of the Superior Court of Los Angeles County, William Fahey, Judge. Affirmed.

Law Offices of Nicholas A. Siciliano and Nicholas A. Siciliano for Plaintiff and Appellant.

The Leichter Firm, Kevin J. Leichter and Andrew E. Hewitt for Defendant and Appellant.

____________________ Defendant borrowed $500,000 from plaintiff's parents in 2007. Defendant made periodic interest payments on the loan, but never repaid the principal. After plaintiff's parents' deaths, plaintiff, as the executor of his parents' estate and the trustee of his parents' trust, brought the present action against defendant for breach of contract and account stated to recover the unpaid loan principal and interest. The court found that plaintiff's breach of contract claim was barred by the statute of frauds, but plaintiff had proved an account stated. It therefore entered a judgment for plaintiff in the amount of $757,933—the unpaid loan balance of $500,000, plus pretrial interest of 10 percent per year.

Both parties appealed from the judgment. Plaintiff contends his breach of contract claim was not barred by the statute of frauds, and thus he was entitled to breach of contract damages—i.e., 16 percent compound interest, plus late fees of 10 percent of the principal balance. Defendant contends the trial court properly found the statute of frauds barred the breach of contract claim, but erred in permitting plaintiff to proceed on his account stated claim.

We find no error. As to plaintiff's appeal, we conclude that the breach of contract claim was barred by the statute of frauds, and the trial court did not err by precluding the testimony of plaintiff's handwriting expert. As to defendant's appeal, we conclude that the trial court did not err in permitting plaintiff to try claims for both breach of contract and account stated, and there was not a material variance between the claim pled and proved. We therefore affirm the judgment in full.

FACTUAL AND PROCEDURAL BACKGROUND

Consistent with our standard of review, we state the facts established by the record in the light most favorable to the judgment. (McPherson v. EF Intercultural Foundation, Inc. 47 Cal.App.5th 243; Los Angeles Unified School Dist. v. Casasola (2010) 187 Cal.App.4th 189, 194, fn. 1.)

A. The Parties

Plaintiff Kayvan Setareh is the son of Rabi Setareh (Rabi) and Jalalet Setareh, who died in 2012 and 2010, respectively. Plaintiff is the executor of his parents' estate and is the trustee of his parents' trust, the Pacific Capital Trust.

Prior to his death, Rabi was engaged in the business of making short-term, high-interest loans. Rabi met defendant Shahram Elyaszadeh, also a lender, in 2001 or 2002, and sometime thereafter Rabi began to loan money to defendant.

B. The 2006 Loan of $600,000

In October 2006, Rabi loaned defendant $600,000. The loan was memorialized by a check, dated September 18, 2006, and a promissory note, dated October 1, 2006 (the promissory note). The promissory note provided that defendant would make monthly interest payments of $4,500 (simple interest of nine percent on the principal balance), and would repay the outstanding principal balance and any unpaid interest within 12 months. In the event of a default, a default interest rate of nine percent "plus seven percent . . . compounded monthly" would apply. Defendant had the option to extend the term of the note beyond the maturity date for an additional 12 months at no additional cost.

C. The 2007 Loan of $500,000

On August 6, 2007, Rabi wrote a check to defendant for $500,000. The check bore the notation "Loan." Defendant did not execute a promissory note in connection with the $500,000 check.

Plaintiff testified that the $500,000 check was a loan, and that he was present when Rabi agreed to make this additional loan to defendant " 'under the same terms of the note for $600,000.' " Rabi demanded security for the two loans, and defendant assigned Rabi a $1.1 million deed of trust, which was received in evidence at trial.

Defendant testified that the $500,000 was not a loan, but instead was part of a transaction with a third party, Edvin Yeroomian. According to defendant, he loaned Yeroomian $1.1 million and assigned Rabi a $500,000 interest in the loan. When Yeroomian repaid the loan in May 2008, Rabi told defendant to place the $500,000 with another company, Namco, which filed for bankruptcy in 2009.¹

D. Payoff of the $600,000 Loan; Default on the $500,000 Loan

Through mid-2008, defendant made monthly interest payments of $8,250—i.e., payments of nine percent interest on $1.1 million. ($1,100,000 x .09 = $99,000; $99,000/12 = $8,250.) In May 2008, defendant paid off the $600,000 loan. Thereafter, through the end of 2008, defendant made monthly interest payments of $3,750, i.e., nine percent interest on $500,000. ($500,000 x .09 = $45,000; $45,000/12 = $3,750.)

For the next several years, defendant made periodic past-due interest payments on the outstanding $500,000 loan. In addition, on several occasions defendant gave Rabi checks for $500,000, but those checks were dishonored for insufficient funds.

Defendant made a final past-due interest payment in August 2012, shortly after Rabi's death. In a January 2013 telephone call, defendant acknowledged to plaintiff the unpaid $500,000 debt and said he was " 'still working on it.' " As of the time of trial, the $500,000 debt had not been repaid.

Michelle Mangan, plaintiff's accounting expert, testified that the unpaid debt, including interest and late charges, was $1,807,559. Mangan explained that she arrived at this number by applying a nine percent simple interest rate through October 1, 2008, and a default 16 percent interest rate, compounded monthly, as of November 1, 2008. She also added a 10 percent late charge of $50,000 on the outstanding principal, and subtracted defendant's regular and default interest payments.

E. Present Action

Plaintiff, individually and as executor of his parents' estate and trustee of their trust, filed the present action against defendant² on October 19, 2015. The operative first amended complaint (complaint) asserted nine causes of action, including breach of contract and account stated.

F. Trial; Statement of Decision

The case was tried to the court over four days in February and March 2017. At the conclusion of trial, the court issued a statement of decision indicating its intention to enter judgment for plaintiff in the amount of $1,807,559. The court credited plaintiff's testimony that Rabi's $500,000 payment to defendant in August 2007 was a loan made on the same terms as the prior $600,000 loan. The court found defendant's contrary testimony "incredible" and "not believable." The court also gave "substantial weight" to a ledger showing defendant made interest payments of $8,250 per month (i.e., nine percent on a $1.1 million loan) to Rabi during the first part of 2008, before the $600,000 was repaid, and that defendant continued to pay Rabi interest of $3,750 per month on the then-outstanding $500,000 loan during the second half of 2008. Finally, the court found that plaintiff "persuasively testified" that when pressed, Elyaszadeh continued to make payments for past due interest in later years and acknowledged the $500,000 debt in a telephone call in 2013.

Based on the foregoing, the court concluded that the $500,000 loan was made on the same terms as the $600,000 loan, and that plaintiff therefore was entitled to damages for breach of contract in amount of $1,807,559.³ In the alternative, the courtfound plaintiff was entitled to recover on his claim for account stated based on defendant's repeated admissions of the $500,000 debt.

On July 13, 2017, the court entered judgment for plaintiff in the amount of $1,807,559, plus costs according to proof.

G. Motion for New Trial; Amended Judgment

Defendant filed a motion for new trial, contending that because no writing set forth all the essential terms of the $500,000 loan, the judgment for breach of contract should not have been granted because it was barred by the affirmative defense of the statute of frauds. Defendant further contended that plaintiff's damages for the account stated claim were limited to $500,000 plus interest. Defendant thus urged the court to grant a new trial or reduce the judgment to $500,000 plus interest.

Plaintiff opposed the motion for new trial. He urged (1) defendant forfeited his statute of frauds claim, (2) the $500,000 check satisfied the writing requirement of the statute of frauds, and (3) defendant was equitably estopped to assert the statute of frauds.

On September 29, 2017, the trial court entered an order amending the statement of decision. It stated as follows:

"Having considered the papers and the argument of counsel, the Court concludes that its Final Statement of Decision was incorrect and that a new and different judgment should be entered. Specifically, the Court failed to consider defendant's statute of frauds argument as to plaintiff's breach of contractclaim. As defendant argues, the statute of frauds applies to business loans over $100,000. [Civ. Code, § 1624, subd. (a)(7).] The statute requires the writing to state 'the essential contract terms with reasonable certainty.' [Sterling v. Taylor (2007) 40 Cal.4th 757, 766.] While extrinsic evidence is admissible to resolve ambiguous terms, such evidence ...