Fresno-Madera Fed'l Land Bank v. Aron Margosian

facts leave no room for a reasonable difference of opinion, the question of whether

a plaintiff's reliance is reasonable is a question of fact." Id. (quoting Blankenheim

v. E.F. Hutton & Co., 217 Cal. App. 3d 1463, 1475 (1984)). That is, summary

judgment is appropriate only when "reasonable minds can come to only one

conclusion based on the facts." Id.

Viewing the evidence in the light most favorable to the Margosians–as we

must at the summary judgment stage–the record leaves ample room for a

“reasonable difference of opinion” about whether they reasonably relied on the

Land Bank’s misrepresentations. Id.

According to the Margosians, in October or November 2008, Martha

Hugger, a Land Bank Vice President and Loan Documentation Manager, called the

Margosians unexpectedly on the pretense that she happened to be in the area and

needed to discuss a “simple formality” with them. Hugger arrived at the

Margosians’ home with Rob Frudden, a Land Bank Vice President and Senior 4 Loan Officer. Frudden had sent the Margosians two letters in July 2008 advising

them that ZM’s original loans–which the Margosians had personally

guaranteed–were or may be distressed. Perhaps…

dissenting:

I respectfully dissent from that portion of the disposition concluding that a material issue of fact exists regarding the Plaintiffs’ fraudulent misrepresentation claim.

In determining whether an adequate showing of justifiable reliance has been made, California courts distinguish between fraud in the inducement of a contract and fraud in the execution of a contract. See Riverisland Cold Storage, Inc. v. Fresno-Madera Prod. Credit Ass’n, 55 Cal.4th 1169 , 151 Cal.Rptr.3d 93 , 291 P.3d 316 , 325 n. 11 (2013); see also Duick v. Toyota Motor Sales, U.S.A., Inc., 198 Cal.App.4th 1316, 1320-21 , 131 Cal.Rptr.3d 514 (2011). “Fraud in the inducement occurs when the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.” Julius Castle Rest., Inc. v. Payne, 216 Cal.App.4th 1423, 1440 , 157 Cal.Rptr.3d 839 (2013) (citation, alteration *573 and internal quotation marks omitted) (emphases added). Fraud in the inducement addresses facts external to the terms of the contract. See id.

Fraud in the execution occurs when the alleged misrepresentation “induces conduct that…

*569 MEMORANDUM **

The Fresno-Madera Federal Land Bank Association, FCLA (“Land Bank”) sued Aron and Carrie Margosian for breaching their guaranty of a $4.8 million restructured loan made to ZM Fresh Special T’s, Inc. (“ZM”), formerly known as ZMC Fresh, Inc. The Margosians asserted cross claims alleging that the Land Bank (1) misrepresented that the guaranty would not expose the Margosians to personal liability for ZM’s indebtedness and (2) obtained their signatures on the guaranty by fraudulently concealing known facts about ZM’s precarious finances. The district court granted summary judgment for the Land Bank and entered a $8.4 million judgment against the Margosians. We reverse in part, affirm in part, and remand.

1. With regard to the fraudulent misrepresentation claim, the district court held that Bank of America v. Pendergrass, 4 Cal.2d 258 , 48 P.2d 659 (1935), “precludes the Margosians from introducing parol evidence of a promise directly at variance with the promise in the written agreement.” Onions Etc., Inc. v. Z & S Fresh, Inc., 880 F.Supp.2d 1092, 1108 (E.D.Cal.2012). The California Supreme Court has overruled Pendergrass , so our review takes full account of the…