Filed 6/12/14 IMV 11 Palm v. Pinn CA2/7
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                DIVISION SEVEN


IMV 11 PALM,                                                          B246323

         Plaintiff and Appellant,                                     (Los Angeles County
                                                                      Super. Ct. No. GC046072)
         v.

ALAN R. PINN, et al.,

         Defendants and Respondents.




                   APPEAL from a judgment of the Superior Court of Los Angeles County,
C. Edward Simpson, Judge. Reversed.


                   Shumener, Odson & Oh, Robert J. Odson and Adam C. Doupe for Plaintiff
and Appellant.


                   Saied Kashani for Defendants and Respondents.

                             ______________________________________
        IMV 11 Palm LLC (appellant) filed a lawsuit for breach of guaranty and money
had and received against respondents Alan Pinn and David Pinn (individually referred to
by their first names, collectively referred to as the Pinns). After the trial court granted the
Pinns’ motion for summary judgment, appellant appealed. We reverse the judgment
(order granting summary judgment).
                      FACTUAL & PROCEDURAL BACKGROUND
1. Summary of the Case
        Appellant’s predecessor in interest, IndyMac Bank F.S.B. (IndyMac) financed a
real estate loan (the Marseilles Loan) to a California limited partnership named PBP,
Limited Partnership (hereinafter PBP LP).1 The general partners of PBP LP were the
Pinns. In February 2005, the Pinns executed a promissory note on behalf of PBP LP in
the amount of $45 million (the Note). Pursuant to a document entitled “Building Loan
Agreement” the obligation was secured by a parcel of land in Contra Costa County (the
Property) which PBP LP was to develop as residential housing. Alan and David, as
individuals, executed a General Guaranty (Guaranty), also dated February 17, 2005,
pursuant to the Building Loan agreement. The Guaranty contained detailed waiver
provisions, which stated, inter alia, “The Guarantor waives all rights and defenses that the
Guarantor may have because the Borrower’s debt is secured by real property. . . . These
rights and defenses include, but are not limited to, any rights or defenses based upon
Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.”
        In 2007, the Pinns requested that PBP LP be replaced as borrower on the Note by
two new entities, Brentwood Investors I Inc., a California corporation (Brentwood), and
PBP Union LLC, a limited liability company, (PBP Union). IndyMac agreed, but in
order to protect its lien position on the real estate, drew up a number of agreements,
including an Assumption Agreement, which provided, inter alia, that Brentwood and PBP


1       The loan is also referred to by the parties as the Brentwood loan or the Palmilla
loan.

                                              2
Union agreed to assume all of PBP LP’s obligations as if they “had originally executed
and delivered the Loan Documents instead of Existing Borrower.” The Pinns also
executed a document entitled “Consent and Reaffirmation Agreement of Guarantor”
which provided that their obligations under the Guaranty “shall remain unaffected by the
Assumption Agreement.”
       IndyMac only disbursed approximately $18 million to PBP LP. IndyMac also
made another loan to a corporation called Bay Colony Investors II, Inc. (the Bay Colony
loan). The Pinns executed the promissory note as officers of Bay Colony Investors II,
Inc. The Pinns also executed a guaranty as individuals in connection with the Bay
Colony loan.
       In July 2008, IndyMac closed and the Federal Deposit Insurance Corporation
appointed a receiver. The Marseilles loan was assigned to IndyMac Venture, LLC and
then to appellant. For ease of reference, we shall refer to IndyMac, IndyMac Venture
LLC and appellant collectively as Lenders.
       Brentwood and PBP Union failed to make payments due under the Note. The
Pinns did not make any payments pursuant to the Guaranty. Lenders commenced an
action against Brentwood, PBP Union and the Pinns for inter alia, judicial foreclosure,
and breach of the Guaranty. Lenders ultimately pursued a trustee’s sale or nonjudicial
foreclosure against the Property, received a credit bid of approximately $2.4 million, and
amended the complaint to add causes of action against the Pinns for breach of the
Guaranty and money had and received for the amount of the deficiency remaining after
the sale.
       The Pinns moved for summary judgment asserting that the waivers contained in
the Guaranty were not effective and that Lenders could not pursue them for any
deficiency judgment after the nonjudicial foreclosure. Their argument was based on case
law which holds that although a guarantor may waive statutory anti-deficiency
protections, those waivers are invalid if the guarantors are essentially the individuals
liable for the underlying obligation. The Pinns asserted that as general partners of PBP

                                              3
LP, they were obligated under the Note and thus could not be liable for any deficiency
judgment.
       In opposition to the motion, Lenders asserted that because of the Assumption
Agreement, the Consent and Reaffirmation of Guarantor, and other documents entered
into after the loan was made, the Pinns reaffirmed they were liable under the Guaranty.
Lenders argued that because the principal borrowers of the Note were Brentwood, a
corporation and PBP Union, a limited liability company, the Pinns cannot assert they
were personally obligated under the note and thus their waivers of anti-deficiency
protection were valid and enforceable.
       The trial court granted the Pinns’ summary judgment motion and appellant
appealed.
       We now examine the documents and proceedings in detail.
2. The Guaranty
       The Guaranty stated, in pertinent part: “The Guarantor absolutely and
unconditionally guarantees the punctual and complete payment and performance when
due . . . of the following (the Guaranteed Obligations”): (a) all present and future
indebtedness evidenced by the Note . . . in the face principal amount of $45,000,000.00
. . . and (b) all other present and future obligations of the Borrower to the Lender under
the Loan Documents . . . ; in each case as such indebtedness and other obligations may
from time to time be supplemented, modified, amended, renewed and extended, whether
evidence by new or additional documents. . . . This Guaranty is a guaranty of payment
and performance and not of collection and applies to all Guaranteed Obligations, whether
existing now or in the future. . . . Guarantor waives all rights and defenses arising out of
any election of remedies by the Lender, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation, has
destroyed the guarantor’s rights of subrogation and reimbursement against the principal
by the operation of Section 580d of the California Code of Civil Procedure or otherwise.
[¶] The Guarantor waives all rights and defenses that the Guarantor may have because

                                              4
the Borrower’s debt is secured by real property. The means, among other things: [¶]
1. The Lender may collect from the Guarantor without first foreclosing on any real or
personal property collateral pledged by the Borrower. [¶] 2. If the Lender forecloses on
any real property collateral pledged by the Borrower: [¶] (a) The amount of the debt
may be reduced only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price. [¶] (b) The Lender may collect
from the Guarantor even if the Lender, by foreclosing on the real property collateral, has
destroyed any right the Guarantor may have to collect from the Borrower. [¶] This is an
unconditional and irrevocable waiver of any rights and defenses the Guarantor may have
because the Borrower’s debt is secured by real property. These rights and defenses
include, but are not limited to, any rights or defense based upon Section 580a, 580b,
580c or 726 of the California Code of Civil Procedure. [¶] The Guarantor further
waives: (i) any defense to the recovery by the Lender against the Guarantor of any
deficiency or otherwise to the enforcement of this Guaranty or any Security for this
Guaranty after a nonjudicial sale . . . (ii) any rights, defenses or benefits that are or may
be available to the Guarantor by reason of Section 2787 to 2855, inclusive, or the
California Civil Code. . . . [¶] THE GUARANTOR HEREBY ACKNOWLEDGES
THAT (A) THE GUARANTOR HAS CONSULTED WITH LEGAL COUNSEL TO
UNDERSTAND THE FULL IMPACT OF THE WAIVERS MADE BY THE
GUARANTOR PURSUANT TO THIS GUARANTY; . . . (B) THE GUARANTOR
UNDERSTANDS THE FULL IMPACT OF SUCH WAIVERS; AND (C) SUCH
WAIVERS HAVE BEEN KNOWINGLY AND WILLINGLY MADE BY THE
GUARANTOR.” (Italics added.)
3. The Assumption Agreement and subsequent reaffirmations
       In October 2007, IndyMac and PBP LP signed an “Assumption Agreement” which
provided that Brentwood and PBP Union assumed the role of the borrowers under the
Marseilles loan and replaced PBP LP. The Assumption Agreement stated that
Brentwood and PBP Union agreed to assume all of PBP LP’s obligations under the loan

                                              5
as if they “had originally executed and delivered the Loan Documents instead of Existing
Borrower. . . . Lender and New Borrower acknowledge and agree that the Guaranty, the
Environment Guaranty and the Environmental Indemnity continue to not be secured by
the Deed of Trust.” The Assumption Agreement also provided that it did not create a
new loan, but was the “Same Indebtedness.”
       In December 2007, a “Fourth Letter Agreement” was signed by Alan on behalf of
Brentwood and Alan and David on behalf of PBP Union which extended the maturity
date of the loan. The Pinns signed an addendum page to the Fourth Letter Agreement
which stated “Guarantor hereby reaffirms the full force and effectiveness of its General
Guaranty . . . dated February 17, 2005, as well as its acknowledgement that its obligations
under these guaranties are separate and distinct from those of the Borrower on the Loan.”
       In May 2008, a document entitled “Second Modification Agreement” was signed
by Alan on behalf of Brentwood, and Alan and David on behalf of PBP Union. 2 This
agreement, inter alia, extended the maturity date of the loan and changed the face amount
of the loan to $17.9 million. On the same date, a separate document entitled “Consent
and Reaffirmation of Guarantor” was signed by the Pinns which provided in pertinent
part: “Guarantor further hereby (a) reaffirms the full force and effectiveness of the
General Guaranty . . . (b) agrees that Guarantor’s obligations under the Guaranties shall
remain unaffected by the Modification Agreement, and . . . (c) agrees that Guarantor’s
obligations under the Guaranties are separate and distinct from those of Borrower with
respect to the loan, and (d) agrees that the Guaranties continue to not be secured by the
Deed of Trust.”
4. The Breach, Lawsuit and Foreclosure
       In December 2008, Brentwood and PBP Union failed to make payments of interest
due, and failed to make payments of principal due in January 2009. The Loan matured



2      Alan signed individually and as Trustee for the David R. Pinn Ultra Trust. David
signed individually and as Trustee for the Montalvo Trust.
                                            6
on February 15, 2010, and was not repaid. The amount owing was approximately $17
million.
        The Pinns did not make any payments pursuant to the Guaranty.
        A notice of default with respect to the Property was recorded on September 8,
2010.
        On September 20, 2010, Lenders filed a lawsuit against Brentwood, PBP Union
for specific performance, appointment of receiver, judicial foreclosure, and recovery of
personal property. It also named as defendants Alan and David and their wives, in causes
of action for breach of guaranty for the Marseilles loan as well as the Bay Colony loan.
        On May 6, 2011, Lenders conducted a trustee’s sale of the Property. The Property
was sold for approximately $2.4 million.
        A First Amended Complaint contained causes of action against the Pinns only for
(1) breach of guaranty under the Marseilles loan, (2) breach of guaranty under the Bay
Colony loan, and (3) money had and received for $17 million.
5. The Summary Judgment Motion
        In June 2012, Alan and David filed a motion for summary judgment. The motion
contended that the waivers in the Guaranty of the one-action rule and anti-deficiency
judgment protections were ineffective since Alan and David were general partners of
PBP LB and that their obligations were unaffected by the assumption agreement. They
also claimed that they were not liable under the third cause of action for money had and
received because the money was not lent for the benefit of appellant.3        In support of
their motion, Alan and David submitted discovery responses and declarations from Alan
and Saied Kashani, their attorney.
        In Alan’s declaration, he stated that at all times he and David were the general
partners of PBP LP, and included a certificate of limited partnership for PBP LP. He


3     The second cause of action had to do with the Bay Colony loan so we do not
address the summary judgment motion as to that cause of action.

                                              7
stated after the loan closing, they were never asked to execute a new guaranty and that all
of the agreements related to the Marseilles Loan and Assumption Agreement were
drafted by Lenders without any input. The Pinns did not have the opportunity to change
any of the wording.
       Kashani’s declaration included various pleadings from this and a related case, and
discovery responses. The related case, Sean William Co., Inc. v. Pinn Brothers
Construction, Inc., was brought in the Superior Court of Contra Costa County, No. MSC-
08-03282. In that case, Daris Buckler declared he was a Senior Vice President at One
West Bank, which acquired loans from the Federal Deposit Insurance Company as the
Receiver of IndyMac and appellant, including the Marseilles loan. Appellant is a
subsidiary of One West Bank. Buckler was formerly employed by IndyMac and had
personally worked with Alan and David in the administration of the Marseilles loan. He
attached and authenticated the various loan documents and discussed the loan
disbursements. He did not provide any evidence of oral negotiations in entering into the
loan or the subsequent Assumption Agreement.
       Lenders objected to the declarations of Alan and Kashani on numerous grounds.
       In opposition, Lenders argued that Alan and David reaffirmed the Guaranty on
three separate occasions. They point to Alan’s deposition testimony that he understood
that he was to “step into the feet of the borrower” when he signed the Guaranty.
       Lenders submitted the declarations of Kenneth D. Fox and Staci Tomita in
opposition to the summary judgment motion.
       Fox, an attorney of Lenders, participated in the negotiations regarding the
Marseilles loan in 2010. Tomita, also an attorney for Lenders, submitted various
documents and discovery responses. She submitted the deposition testimony of Alan
Pinn in which he stated that Brentwood was formed for the purpose of developing real
estate. Its shareholders are Alan and David. Alan stated that PBP Union was formed in
2003 for the purposes of holding a small apartment building and is in the business of real
estate development. PBP Union’s members are Alan and David and it never took out any

                                             8
other loan besides the Marseilles loan. Alan said he had spoken to someone at IndyMac
about the change to Brentwood and PBP Union as early as 2005.
       The trial court granted summary adjudication as to the first cause of action for
breach of guaranty and the third cause of action for money had and received. It stated in
its minute order: “The original borrower was PBP, LP, a limited partnership of which
David and Alan Pinn were the general partners. Defendants executed a general guaranty.
. . but because of their status as general partners they were personally liable regardless. If
plaintiff had proceeded with a nonjudicial foreclosure sale while PBP, LP was the
borrower, such sale would have exonerated defendants from further liability pursuant to
the unwaivable protection of the anti-deficiency statutes, notwithstanding the language of
the guaranty. . . . [¶¶] The legal issue raised by this motion is whether defendants’
obligation was affected by the Assumption and Modification Agreement, in which new
borrowers were substituted for PBP, LP. The court answers this legal question in the
negative. Plaintiffs assert that the phrase contained in the Consent and Reaffirmation
Agreement, ‘Borrower here[af]ter shall mean new Borrower’ has the effect of replacing
the new borrowers for PBP, LP as if PBP, LP never existed. Under this reading of the
document, defendants would be guaranteeing the debt of a corporation (rather than a
limited partnership) and therefore be liable for the deficiency. This argument is
unpersuasive and unsupported by any reference to the document itself. [¶] In the
Consent and Reaffirmation Agreement, defendants agreed that their obligations under the
guaranties remained unaffected by the Assumption Agreement. The court finds the word
‘unaffected’ to be significant. Defendants were personally obligated for the original loan
but were also protected by the anti-deficiency statutes. To find that they lost such
protection in signing the consent and Reaffirmation Agreement would render the word
‘unaffected’ meaningless.”
       Judgment was entered in favor of Alan and David on December 17, 2012. This
appeal followed.



                                              9
                               CONTENTIONS ON APPEAL
       Appellant contends that the trial court erred in granting the summary judgment
motion because (1) the Consent and Reaffirmation Agreement was not intended to
discharge the Guaranty; (2) the Pinns repeatedly reaffirmed the Guaranty; (3) the Pinns’
waivers of the anti-deficiency statutes are enforceable; and (4) in order to prevail on the
money had and received cause of action there was no need to establish that money be
provided for the benefit of Lenders.
                                        DISCUSSION
1. Summary Judgment Rules
       “The purpose of a motion for summary judgment is to discover whether the parties
possess evidence which requires the fact-weighing procedures of a trial. [Citations.]”
(Gramercy Investment Trust v. Lakemont Homes (2011) 198 Cal.App.4th 903, 908.)
       A defendant’s motion for summary judgment should be granted if the admissible
evidence in the papers submitted by the parties “show[s] that there is no triable issue as to
any material fact and that the moving party is entitled to a judgment as a matter of law.”
(Code Civ. Proc., § 437c, subd. (c); Kahn v. East Side Union High School Dist. (2003) 31
Cal.4th 990, 1002-1003.)
       Initially, a moving defendant has the “burden of showing that a cause of action has
no merit,” such as by showing “that one or more elements of the cause of action . . .
cannot be established,” or that there is a complete defense to the cause of action. (Code
Civ. Proc., § 437c, subds. (o), (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 849.) If the moving defendant meets that burden, “the burden shifts to the plaintiff
. . . to show that a triable issue of one or more material facts exists as to that cause of
action” or as to the defense proffered by the defendant. (Code Civ. Proc., § 437c, subd.
(p)(2); Aguilar, supra, 25 Cal.4th at p. 849.)
       We review an order granting summary judgment de novo. (Aguilar v. Atlantic
Richfield Co., supra, 25 Cal.4th at p. 860.) We consider “all of the evidence the parties
offered in connection with the motion (except that which the court properly excluded)

                                              10
and the uncontradicted inferences the evidence reasonably supports.” (Merrill v.
Navegar, Inc. (2001) 26 Cal.4th 465, 476.) When, as here, the plaintiff is the losing
party, “‘we view the evidence in the light most favorable to plaintiff[]’ [citation], and we
‘liberally construe’ plaintiff's evidence and ‘strictly scrutinize’ that of defendant ‘in order
to resolve any evidentiary doubts or ambiguities in [plaintiff's] favor’ [citation].”
(O'Riordan v. Federal Kemper Life Assurance Co. (2005) 36 Cal.4th 281, 284.) “The
summary judgment procedure, inasmuch as it denies the right of the adverse party to a
trial, is drastic and should be used with caution.” (Mann v. Cracchiolo (1985) 38 Cal.3d
18, 35.)
2. Anti-deficiency legislation and waiver
       Code of Civil Procedure section 726, known as the one-action rule, provides that a
creditor may not obtain a personal deficiency judgment against a debtor without first
exhausting the security for the debt. (Pacific Valley Bank v. Schwenke (1987) 189
Cal.App.3d 134, 140.) The only action available to enforce a debt secured by a real
property mortgage or deed of trust is by foreclosure on the real property. (Ghirardo v.
Antonoli (1996) 14 Cal.4th 39, 47.) After a judicial foreclosure sale, the creditor is
entitled to a judgment against the debtor for the difference between the amount of debt
and the greater of the fair value of the property or sales price. (Ibid.) If the creditor
proceeds by way of a private trustee’s sale, or nonjudicial foreclosure, it is not entitled to
a deficiency judgment. (Code Civ. Proc., § 580d.)
       A guarantor may waive anti-deficiency protections but a debtor may not.
(Gramercy v. Lakemont, supra, 198 Cal.App.4th at p. 911.) Civil Code section 2856
expressly allows guarantors to waive the one-action rule and anti-deficiency protections
for real property loans.4 “Analogous waivers have withstood challenge and are
enforceable.” (Gray1 CPB LLC v. Kolokotronis (2011) 202 Cal.App.4th 480, 491.)


4       Civil Code section 2856 provides: “(a) A guarantor or other surety, including a
guarantor of a note or other obligation secured by real property . . . may waive any or all
of the following: . . . (3) Any rights or defense the guarantor or other surety may have
                                              11
       Where the parties executing the guaranties are sophisticated business persons with
expertise in real estate development, a finding of waiver of anti-deficiency protections is
appropriate where the language of the waiver evinces such an intention. (River Bank
America v. Diller (1995) 38 Cal.App.4th 1400, 1417; Gramercy, supra, 198 Cal.App.4th
at p. 911.)
       In order to collect a deficiency judgment from a guarantor, the guarantor must be a
true guarantor and not merely the principal debtor under a different name. The anti-
deficiency laws cannot be waived under these circumstances. (The Cadle Company II v.
Harvey (2000) 83 Cal.App.4th 927, 932, citing Passansi v. Merit-McBride Realtors, Inc.
(1987) 190 Cal.App.3d 1496, 1508.)
       “Courts have recognized a distinction between true, independent contracts of
guaranty and guaranties executed by the primary obligor. [Citation.]” (Talbott v.
Hustwitt (2008) 164 Cal.App.4th 148, 152.) “It is well established that where a principal
obligor purports to take on additional liability as a guarantor, nothing is added to the
primary obligation. [Citations.] The correct inquiry set out by the authority is whether
the purported debtor is anything other than an instrumentality used by the individuals
who guaranteed the debtor’s obligation, and whether such instrumentality actually
removed the individuals from their status and obligations as debtor.” (Torrey Pines Bank
v. Hoffman (1991) 231 Cal.App.3d 308, 319-320.)
       In River Bank America v. Diller (1995) 38 Cal.App.4th 1400, a bank made two
construction loans to a limited partnership formed for the specific purpose of obtaining
the construction loans. Although the limited partners of the partnership were a
corporation and a limited partnership, two individuals, husband and wife had effective
control over the entire partnership. The two individuals executed four guaranties, two as
individuals, and two on behalf of their own revocable trust. The bank commenced


because the principal’s note or other obligation is secured by real property. . . These
rights or defenses include, but are not limited to any rights or defense that are based upon
directly or indirectly, the application of Section 580a, 580b, 580d or 726 of the Code of
Civil Procedure to the principal’s note or other obligation.”
                                              12
nonjudicial foreclosure proceedings after the loan was in default and the property was
sold, leaving a $12.9 million deficiency. The bank then sued on the guaranty agreements.
After summary judgment motions were filed by all parties, the trial court entered
judgment in favor of the guarantors on the causes of action to enforce the guaranty. (Id.
at p. 1409.) On appeal, the Court of Appeal reversed the judgment in favor of the
guarantors. It affirmed in part and reversed in part the order denying the bank’s motion
for summary adjudication and affirmed the order granting summary adjudication against
the guarantors on their cross-claim. The court considered that the purpose and effect of
the guaranty agreements were to recover deficiencies and there was a triable issue of fact
concerning the sham guaranty defense. (Id. at pp. 1423-1424.)
       In Torrey Pines v. Hoffman (1991) 231 Cal.App.3d 308, a bank made a
construction loan to a family trust. The trust was a revocable living trust that a husband
and wife had created for estate planning purposes. The trust, together with a third party,
entered into an agreement with the bank to develop an apartment complex. The trust and
the third party signed a promissory note for the loan, which was secured by a deed of
trust on the property. The husband and wife each signed a personal guaranty of the loan.
The guaranty contained a waiver of anti-deficiency protections. The borrowers defaulted
on the note and the bank commenced both judicial and nonjudicial foreclosure
proceedings. Because it received additional security, the bank agreed to forbear
foreclosure proceedings, but did not agree to amend or modify the note. The bank then
followed through with nonjudicial foreclosure proceedings. The bank sold the property
and then proceeded against the husband and wife on the personal guaranties. The bank
dismissed the third party and the trust as defendants. (Id. at p. 315.) The trial court
entered judgment in favor of the husband and wife because the bank had proceeded under
its power of sale clause to nonjudicially foreclose on the property and the bank appealed.
       On appeal, the court discussed the ability of a guarantor to waive the anti-
deficiency protections. It held that the nature of the trust as an obligor posed an obstacle
to the ability of the individuals to effectively waive these protections. It determined that

                                             13
a principal obligor may not waive those provisions, so if the guarantor is in effect the
principal obligor, any waiver is ineffective. It set forth the following inquiry: whether the
debtor of the note is an instrumentality used by the individual guarantors and whether that
instrumentality actually removed the individuals from their status as obligors and debtors.
“Put another way, are the supposed guarantors nothing more than the principal obligors
under another name? [Citation.]” (Torrey Pines v. Hoffman, supra, 231 Cal.App.3d at p.
320.) The court determined that the debt incurred by the trust imposed obligations on the
individual husband and wife trustees. (Id. at p. 321.) It held that this particular trust did
not separate the interests of the individuals from the trust and that the guaranties were not
“true guaranties” and therefore the husband and wife must be treated as primary obligors.
(Id. at p. 323.)
       The Torrey Pines court then went on to consider the effect of the post-default
forbearance agreement, which we will discuss infra.
       In The Cadle Company II v. Harvey, supra, 83 Cal.App.4th 927, an inter vivos
revocable trust purchased real property. The promissory note was signed by the trust and
secured by a deed of trust encumbering the property. The individual settlor and trustee of
the trust signed a personal guaranty of the note. The guaranty contained a waiver of any
defense based on the bank’s election of remedies under Code of Civil Procedure sections
580d and 726. After the trust defaulted in 1992, the parties entered into a forbearance
agreement and restructured the debt. The individual, Harvey, agreed the guaranty
remained binding notwithstanding the modifications. The trust defaulted on the modified
note and the bank nonjudicially foreclosed on the property. After the trustee’s sale, there
was an excess balance due of over $1 million. The bank’s assignee sued Harvey for
breach of the guaranty. Harvey filed a demurrer, alleging the guaranty was a sham under
Torrey Pines. On appeal, the court held that Harvey’s guaranty was ineffective because
he was the settlor and trustee of the trust and was essentially the principal obligor on the




                                              14
note. The creditor could therefore not pursue Harvey for a deficiency judgment. (Id. at
p. 933.)5
3. The provisions of the initial loan and the guaranty
       Looking at the initial loan agreements, we see that the Pinns were the only
partners in PBP LP, the principal obligor. The partnership agreement, submitted as an
exhibit to Kashani’s declaration, indicated that Alan and David were the only general
partners, each with a 1 percent interest in the profits and losses, and the only limited
partners, each with a 49 percent share of the profits and losses. The partnership of PBP
LP was formed in 1992, long before the Marseilles loan was made.
       In Torrey Pines, supra, 231 Cal.App.3d 308 and Cadle, supra, 83 Cal.App.4th
927, the debtors on the promissory notes were trusts formed by the debtors as
instrumentalities for the purposes of the loan. The trusts were effectively controlled by
the individuals and there was no separation between the trusts and individuals. The River
Bank case (supra, 38 Cal.App.4th 1400), involved a limited partnership, but it was
formed for the express purpose of entering into the loan agreement. River Bank
considered evidence of the purpose and effect of the guaranty and determined there were
triable issues of fact whether the individuals in the partnership were true guarantors. In
Torrey Pines, the court made a factual inquiry into the particular trust.
       Here, there must also be a factual determination of whether the guaranties were
“true guaranties.” (River Bank, supra, 38 Cal.App.4th at p. 1422.) While there is
evidence which demonstrates that the Pinns had effective control over PBP LP, there is
no evidence that PBP LP was simply an instrumentality for the express purpose of
obtaining the loan as in River Bank, nor was there evidence that there was a separation
between the partnership and the individuals as in Torrey Pines, supra, 231 Cal.App.3d
308 and Cadle, supra, 83 Cal.App.4th 927.


5      The court also discussed the effect of the post-origination waiver, which we also
discuss infra.

                                             15
       We now examine the relationship of the parties after the Assumption Agreement
was signed.
4. The effect of the Assumption Agreement
       Alan executed a declaration which stated that neither he nor David were asked to
sign a new or different guaranty agreement in connection with the Assumption
Agreement. He also stated that all the loan documents were drafted by Lenders without
any input from Alan or David.
       Alan testified in his deposition that they asked Lenders to change the borrower on
the Note in order for a “1031 exchange”6 to the Pinns’ benefit. It was their idea to form
Brentwood. David also testified it was part of a property exchange; although he did not
remember whether it was a 1031 exchange, he agreed that it was made at their behest as
borrowers.
       PBP Union was formed to hold a small apartment building. Alan testified he and
David were “the only members of PBP Union” but they signed the loan documents for
PBP Union as individuals and on behalf of two trusts. PBP Union did not take out any
other loans.
       The Assumption Agreement provided that the assumption of the loan would
backdate to the loan inception “as if New Borrower had originally executed and delivered
the Loan Documents instead of Existing Borrower.”
       The Consent and Reaffirmation Agreements reaffirmed the “full force and
effectiveness” of the Guaranty and the agreed that their obligations are “separate and
distinct from those of Borrower with respect to the Loan” and that the guaranties
“continue to not be secured by the Deed of Trust.”
       Alan and David signed at least two additional affirmations after the Assumption
Agreement in December 2007 and May 2008. In each of those documents, they


6      This presumably refers to 26 U.S. Code section 1031, an exchange of investment
property to defer capital gains taxes. (McGuire v. More-Gas Investments (2013) 220
Cal.App.4th 512, 516, fn. 2.)
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acknowledged that the obligations under the Guaranty were separate and distinct from the
borrower on the Note.
       In Torrey Pines, because the forbearance agreement specifically did not amend or
modify the note or deed of trust, it did not result in a renewal of the loan. There was also
no reference in the forbearance agreement to a waiver of the anti-deficiency protections
and the agreement was not so ambiguous that parol evidence would aid in its
interpretation. (Torrey Pines Bank v. Hoffman, supra, 231 Cal.App.3d at pp. 324-325.)
       In Harvey, the plaintiff argued that because the guarantor’s waiver at the loan
origination is unenforceable, the guarantor’s subsequent agreement to the loan
modification was a knowing and intelligent post-origination waiver. The court held the
modification agreement did not serve as an effective waiver of Code of Civil Procedure
section 580b, citing DeBerard Properties Ltd. v. Lim (1999) 20 Cal. 4th 659, which holds
that a principal obligor cannot validly waive the protections of Code of Civil Procedure
section 580b even by post-origination agreements.
       In Torrey Pines and Harvey, however, the principal obligor under the note
remained the same. In this instance, the obligor changed to a completely different entity.
We thus must examine the effect of this change and the subsequent loan agreements on
the Guaranty.
       “Guaranty contracts are construed according to the same rules as those used for
other contracts, with a view to ascertaining the intent of the parties. [Citations.]
Guaranty contracts ‘may be explained by reference to the circumstances under which
they were made and the matter to which they relate, the main object being to ascertain
and effectuate the intention of the parties.’ (Bank of America v. Waters (1962) 209
Cal.App.2d 635, 638.)” (River Bank, supra, 38 Cal.App.4th at p. 1415.)
       When a guaranty agreement incorporates another contract, the two documents are
read together and construed fairly and reasonably as a whole according to the intention of
the parties. (Central Building v. Cooper (2005) 127 Cal.App.4th 1053, 1058, quoting
Cates Construction Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 39-40.) “Even without

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the express term in the guaranty allowing modification, a modification of the underlying
obligation generally does not revoke a continuing guaranty, but only modifies the
guaranty in the same way that the underlying obligation is modified. The guarantor is
only discharged if the modification creates a substituted contract or imposes risks on the
secondary obligor fundamentally different from those imposed pursuant to the transaction
prior to modification.” (Central Building, supra, 127 Cal.App.4th at p. 1061, citing
Restatement 3d on Suretyship and Guaranty.)
       “When any of the terms or provisions in a contract are ambiguous or uncertain, it
is the duty of the trial court to construe it after the parties are given a full opportunity to
produce evidence of the facts, circumstances and conditions surrounding its execution as
well as the conduct of the parties to the contract. [Citations.] [¶] When two equally
plausible interpretations of the language of a contract may be made, as in our case, parol
evidence is admissible to aid in interpreting the agreement, thereby presenting a question
of fact which precludes summary judgment if the evidence is contradictory. [Citations.]
Moreover, ‘[t]he foregoing of a legal right constitutes a consideration for the contract if
the minds of the parties meet on the relinquishment of the right as a consideration.’
[Citations.]” (Walter E. Heller Western, Inc. v. Tecrim (1987) 196 Cal.App.3d 149, 158.)
       The language of the documents reflecting the change in borrower demonstrates an
intent that the terms of the Guaranty remain valid. The clauses used in the Assumption
Agreement, the Fourth Letter Agreement, and the Consent and Reaffirmation of
Guarantor to the effect of “the Guarantor’s obligations under the Guaranties are separate
and distinct obligations from those of the Borrower” and “the Guaranties continue not to
be secured by the Deed of Trust” directly contradict an intent by the parties to release the
Pinns from any deficiency judgment.
       Obviously, a number of factual questions remain in order to ascertain if the
Guaranty was a true or sham guaranty after the Assumption Agreement and subsequent
documents were signed. The finder of fact needs to evaluate the conflicting statements
contained in the documents and examine the extrinsic evidence offered by the parties.

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Once the parties produce evidence of the facts and circumstances surrounding the
execution of all the loan documents, then there can be a determination of whether the
obligations under the Guaranty were affected by the change in the borrower and the
subsequent loan documents.
       Thus there are triable issues of fact as to whether the obligation became
transformed into a new obligation and whether the Guaranty was a true guaranty under
which Alan and David could waive the anti-deficiency protections.
       The Pinns’ moving papers do not provide uncontroverted evidence the two parties
mutually understood the effect of the Assumption Agreement on the original Guaranty.
We conclude the trial court made a factual determination not supported by the evidence
when it decided that the term “unaffected” meant that the Guaranty was a sham. Because
so many factual issues needed to be resolved before the court could conclude that the
anti-deficiency waivers in the Guaranty were invalid, summary judgment on the breach
of guaranty count should not have been granted.
5. Money Had And Received
       The Pinns argued in their motion for summary judgment that the cause of action
for money had and received requires that money must be received for the benefit of the
plaintiff and there was no benefit to the Lenders in this case.
       “Money had and received” is a common count. “The common counts are in
theory based on express or implied promises to pay money. [Citations.]” (Moya v.
Northrup (1970) 10 Cal.App.3d 276, 281.) “The only essential elements of a common
count are ‘(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e.,
goods sold, work done, etc., and (3) nonpayment.’” (Farmers Insurance Exchange v.
Zerin (1997) 53 Cal.App.4th 445, 460.) “[W]here one person pays out money for the
benefit of another, at the latter’s request, a common count for money paid, laid out and
expended will lie. [Citations.]” (Deicher v. Corkery (1962) 205 Cal.App.2d 654, 661.)
       “A cause of action is stated for money had and received if the defendant is
indebted to the plaintiff in a certain sum ‘for money had and received by the defendant

                                             19
for the use of the plaintiff.’ [Citations.]” (Schultz v. Harney (1994) 27 Cal.App.4th
1611, 1623.)
       Lenders’ evidence established an indebtedness, consideration and nonpayment.
Because the Note provided for interest and fees and the Pinns guaranteed that debt, there
was a benefit provided to Lenders. Summary judgment should not have been granted in
favor of the Pinns in this count.
                                      DISPOSITION
       The judgment is reversed. The matter is remanded to the trial court to deny the
motion for summary judgment and reinstate the action. Appellant shall recover its costs
on appeal.




                                                                      WOODS, J.


We concur:




               PERLUSS, P. J.                                         ZELON, J.




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