NG Solutions v. Durian CA4/2

FACTS

In November 2011, defendant Delta Tech Industries, LLC (Delta) opened a

$300,000 line of credit with a bank by executing a “Stand-Alone Revolving Note.”

Durian signed the loan documents on behalf of Delta. Although Delta’s assets secured

the loan, Durian also personally guaranteed payment.

Delta, Durian, and the bank agreed to amend the loan in November 2012 and again

in February 2013. Under the February 2013 amendments, the loan—by then a “Demand

Line of Credit Note”—was reduced to $150,000, with interest payments due monthly and

the principal payable on demand. Durian also reaffirmed his personal guaranty.

Delta ceased operations at the end of 2016. At about that time, defendant

Durimex, Inc. (Durimex), another entity Durian controlled, began using Delta’s

remaining inventory and assets, including the Delta name.

When Delta ceased operations, it also ceased making loan payments. Durian made

an interest payment using a Durimex check on December 29, 2017. The bank also

credited three later, similar payments—on April 10, 2018, May 11, 2018, and June 17,

2019—toward Delta’s loan. According to Durian, those three later payments should have

been applied to a…