Fanucchi & Limi Farms v. United Agri Products

Opinin by Judge WILLIAM A. FLETCHER. Opinion concurring in judgment by Judge BEEZER.

Fanucchi & Limi Farms, Larry Fanuc-chi, and Richard Limi (collectively “Fanuc-chi”) sued United Agri Products Financial Services, Inc. (“United”) for breach of contract and promissory fraud. The district court granted summary judgment to United. Fanucchi appeals from the grant of summary judgment, and from an associated grant of attorneys’ fees. We conclude *1078 that the novation theory providing one basis for Fanucchi’s breach of contract claim should have survived summary judgment. Accordingly, we reverse and remand to allow the breach of contract claim to go forward on a novation theory. We otherwise affirm the summary judgment. Because we reverse part of the summary judgment, we vacate the order granting attorneys’ fees.

I. Background

Larry Fanucchi, Richard Limi, and Linda Limi were general partners in Fanucchi & Limi Farms, in Kern County, California. Fanucchi financed its farming operations by borrowing against its future crop proceeds. In December 1994, United lent money to Fanucchi to finance its operating costs for 1995 (“the 1994 Loan”). The 1994 Loan was memorialized in several…

concurring in judgment.

I concur in the result reached by the court. I write separately to express my understanding of novation under California law, and how that law applies in this case. In my view, California law instructs that the rejection of plaintiffs’ (“Fanucchi”) no-vation theory was not proper on summary judgment, but that Fanucchi faces a substantial burden at trial to demonstrate that such a novation actually occurred.

I

As the opinion of the court recounts, Fanucchi received a loan from United in 1994 for crop financing. Language in the loan documents prohibited oral amendments to the agreement. The “Notice of Final Agreement” also specifically provided that the contract “may not be contradicted by evidence of any prior, contemporaneous, or subsequent oral agreements or understandings of the parties.” Fanucchi now attempts to do just that. To get around these agreed-upon provisions, Fan-ucchi argues that a novation occurred, completely extinguishing the old contract in favor of a new agreement between the same parties. Fanucchi relies on California Civil Code § 1698(d), which enábles courts to give effect to a true novation despite its inconsistency with the prior…

I. Background

Larry Fanucchi, Richard Limi, and Linda Limi were gen- eral partners in Fanucchi & Limi Farms, in Kern County, Cal- ifornia. Fanucchi financed its farming operations by borrowing against its future crop proceeds. In December 1994, United lent money to Fanucchi to finance its operating costs for 1995 (“the 1994 Loan”). The 1994 Loan was memo- rialized in several documents, including an Agricultural Loan Agreement, a Promissory Note, an Agricultural Security Agreement, separate Commercial Guarantees personally exe- cuted by Larry Fanucchi, Richard Limi, and Linda Limi, and a Notice of Final Agreement.

These documents set out the terms of the loan in consider- able detail. The Agricultural Loan Agreement outlines the dis- bursement schedule, repayment terms, and circumstances under which the loan may be renewed in future years. The Agricultural Security Agreement establishes United’s security interest in Fanucchi’s crops. The Commercial Guarantees are individual loan guarantees by Larry Fanucchi, Richard Limi, and Linda Limi in the event United’s security interest in the crops fails to cover the loan. The Notice of Final Agreement provides that the 1994 Loan…