California Court of Appeal

Plaintiff brought this deficiency action to enforce commercial guaranty agreements executed by defendants. Defendants contend that the guaranties were shams, and therefore unenforceable, due to their close relationship with the borrower (Nohea) on the subject loan. Defendants thereafter brought a counterclaim against plaintiff, asserting that plaintiff's attempts to enforce the guaranties constituted an unfair business practice in violation of the Unfair Competition Law (UCL, Business & Professions Code section 17200 et seq.). Here, the jury found in favor of defendants on the sham guaranty issue, but the trial court rejected defendants’ UCL counterclaim. The judgment is reversed as to the sham guaranty issue and affirmed as to the trial court's ruling on the UCL counterclaim, where: 1) substantial evidence does not support the jury's finding that the guaranties were shams, as defendants and Nohea are legally distinct, separate entities; and 2) defendants' UCL claim is without merit.

Appellate Information

• Decided 04/02/2015
• Published 04/02/2015

Judges

• Dondero

Court

• California Court of Appeal

Counsel