Mark Jacobs et al vs William W Nicholson et al

Case Number

20CV03026

Case Type

Hearing Date / Time

Mon, 03/24/2025 - 10:00

Nature of Proceedings

Motion: Summary Adjudication

Tentative Ruling

Mark Jacobs, et al., v. William W. Nicholson, et al.,

Case No.  20CV03026 

Hearing Date: 3/24/2025                                                    

HEARING:    Defendants’ motion for summary adjudication of the third through twelfth causes of action.

           

ATTORNEYS:          Craig S. Granet / Claire K. Mitchell of Rimon, PC for plaintiffs Mark Jacobs and Trisha Blake, as co-trustees of the Trust of Irwin L. Jacobs, as Personal Representatives of the Estate of Irwin L.Jacobs, and as Personal Representatives of the Estate of Alexandra Jacobs

                                    A. Barry Cappello / David L. Cousineau / Mandy Duong Moua of Cappello & Noël LLP for defendants William W. Nicholson and Sandra Shinn Nicholson

TENTATIVE RULING:  For the reasons more fully articulated below, the motion is denied in its entirety.

BACKGROUND: This is an action to a promissory note given in exchange for a 14.4% equity interest in real property located at 256 Eucalyptus Hill Drive, Santa Barbara, California, and to enforce additional promissory notes secured by that same property, which defendants agreed would be paid upon sale of the property. Plaintiffs are Mark Jacobs and Trisha Blake as Co-Trustees of the Trust of Irwin L. Jacobs, Mark Jacobs and Trisha Blake as Personal Representatives of the Estate of Irwin L. Jacobs, and Mark Jacobs and Trisha Blake as Personal Representatives of the Estate of Alexandra Jacobs. Defendants are William Nicholson and Sandra Shinn Nicholson, the now-former owners of the Property.

On July 24, 2020, defendants sold the Property for $30,800,000. Plaintiffs allege that defendants have failed to pay them, as the decedent’s Personal Representatives, 14.4% of the sale proceeds or any portion of the principal and interest due and owing on the promissory notes.

Under the operative First Amended Complaint (FAC), the first cause of action is for breach of the written promissory note in which Irwin L. Jacobs had made two $1,000,000.00 payments to defendants in 2001, in exchange for a 14.4% interest in the property, under which Jacobs would receive 14.4% of the gross proceeds of the sale of the property, after deducting normal selling expenses and repayment of any balance remaining on what had in 2001 been a $2,000,000.00 first mortgage. It alleges that, after selling the property, defendants failed and refused to make the payments due under the note. The second cause of action is a common count claim arising from the same debt.

The third cause of action is for breach of secured written promissory note, executed by defendants on January 6, 2014, and delivered to Irwin L. Jacobs, in the principal amount of $120,000, payable on demand with interest at the rate of 6% from the date of the Note. It alleges that in 2019, defendants agreed with David Mahler, a representative of the Irwin Jacobs Personal Representative plaintiffs, that the note would be paid upon sale of the property. However, after the property was sold, defendants failed and refused to pay the note. The fourth cause of action is a common count claim arising from the same debt.

The fifth cause of action is for breach of secured written promissory note, executed by defendants on July 21, 2014, and delivered to Irwin L. Jacobs, in the principal amount of $100,000, payable on demand, with interest at the rate of 6% from the date of the Note. It alleges that in 2019, defendants agreed with David Mahler, a representative of the Irwin Jacobs Personal Representative plaintiffs, that the note would be paid upon sale of the property. However, after the property was sold, defendants failed and refused to pay the note. The sixth cause of action is a common count claim arising from the same debt.

The seventh cause of action is for breach of secured written promissory note, executed by defendants on September 8, 2014, and delivered to Irwin L. Jacobs, in the principal amount of $80,000, payable on demand, with interest at the rate of 6% from the date of the Note. It alleges that in 2019, defendants agreed with David Mahler, a representative of the Irwin Jacobs Personal Representative plaintiffs, that the note would be paid upon sale of the property. However, after the property was sold, defendants failed and refused to pay the note. The eighth cause of action is a common count claim arising from the same debt.

The ninth cause of action is for breach of secured written promissory note, executed by defendants on July 25, 2013, and delivered to Alexandra Jacobs, in the principal amount of $275,000, payable on demand, with interest at the rate of 6% from the date of the Note. It alleges that in 2019, defendants agreed with David Mahler, a representative of the Irwin Jacobs Personal Representative plaintiffs, that the note would be paid upon sale of the property. However, after the property was sold, defendants failed and refused to pay the note. The tenth cause of action is a common count claim arising from the same debt.

The eleventh cause of action is for breach of oral promissory note, and alleges that on or about November 30, 2003, defendants made an oral promissory note to Dan Lindsay in the principal amount of $700,000, with interest, payable on demand. On or before January 2, 2005, Irwin L. Jacobs acquired the note from Dan Lindsay. On that date, defendants paid $500,000 of the principal and interest then due. On several occasions between January 2, 2005 and the death of Irwin Jacobs on April 10, 2019, defendants agreed with Irwin Jacobs that the balance due on the note would be paid upon sale of the property. In 2019, defendants confirmed with David Mahler, a representative of the Irwin Jacobs Personal Representative plaintiffs, that the note would be paid upon sale of the property. However, after the property was sold, defendants failed and refused to pay the note. The twelfth cause of action is a common count claim arising from the same debt.

In their answer to the FAC, filed on May 3, 2021, defendants generally denied the allegations of the FAC, and asserted as their twelfth affirmative defense to all causes of action, that as a result of the negligence, breach of contract, breach of fiduciary duties, and other wrongful conduct by plaintiffs or their predecessors in interest, including Irwin Jacobs, that they have suffered damages in an amount believed to be equal to or exceeding the amounts prayed by plaintiffs in their complaint, or to which plaintiffs might otherwise be entitled.

Motion: On June 12, 2024, defendants filed the current motion, through prior counsel. The motion seeks to summarily adjudicate the third through twelfth causes of action (i.e., the claims related to all promissory notes other than the one in return for which Irwin Jacobs was to receive a 14.4% equity interest in the property), based upon a claimed offset arising from a completely unrelated series of transactions between defendant William Nicholson and Irwin Jacobs.

The separate statement identifies each “issue” to be adjudicated by, for example, stating: “ISSUE NO. 1: DEFENDANTS ARE ENTITLED TO JUDGMENT ON THE THIRD CAUSE OF ACTION ON A WRITTEN PROMISSORY NOTE BECAUSE THE AMOUNT ALLEGEDLY OWED IS FULLY OFFSET BY AMOUNTS OWED TO NICHOLSON.” The same language is used for each cause of action that is the subject of the motion, and the same facts are set forth within each claim, except that the final fact is directed to the specific amount which plaintiff Jacobs contends was owed to him on the obligation which formed the basis for that cause of action.

The common facts alleged for each cause of action include:

In last 2004 or early 2005, Irwin L. Jacobs asked Nicholson to invest, for a second time, in Genmar Holdings, Inc. (Material Fact 1) This investment in Genmar contemplated that Nicholson would pay a portion of the purchase price by a promissory note, as well as cash, payable to RDV Genmar Holdings LLC. (MF 2) Nicholson expressly predicated any agreement to invest in Genmar on Jacobs promising to pay all obligations in connection with the promissory note, including paying in the first instance any interest. (MF 3) Absent Jacobs’ agreement to pay Nicholson’s obligations under the promissory note, Nicholson was unwilling to make the investment in Genmar. (MF 4) On multiple occasions before July 1, 2005, including early March 2005, April 2005, May 2005 and June 2005, and at times thereafter up to 2012, Jacobs agreed to pay all obligations in connection with the promissory note that was part of this investment in Genmar, including interest payments on the note. (MF 5) In reliance on Jacobs’ promises that he would pay the obligations on the note, Nicholson agreed to the investment on July 1, 2005, purchasing Genmar stock in exchange for, among other things, a promissory note of $4,250,861.40. (MF 6)

Jacobs failed to honor his promises to Nicholson regarding the Genmar Promissory Note, including his promise to make interest payments on the note. (MF 7) As a result of Jacobs’s failure to honor his promises to Nicholson regarding the Genmar Promissory Note, Nicholson made interest payments between December 2005 and September 2013, totaling more than $1 million. (MF 8)

Argument The motion asserts that Jacobs’ third through twelfth causes of action seek a total of $775,000 from defendants. Since the amounts he contends he is owed from Jacobs totals more than $1 million, he is entitled to judgment on those causes of action, because the amount he is owed far exceeds the amount he owes.

The motion asserts that the right to setoff is based on the equitable principle that when parties in litigation hold cross-demands for money, one demand should be applied against the other and the plaintiff may recover the balance due, if any. (Morris Cerullo World Evangelism v. Newport harbor Offices & Marina, LLC (2021) 67 Cal.App.5th 1149, 1159.) Further, a set-off is an affirmative defense, not an affirmative claim with a right to an affirmative recovery. (Ibid.)

Evidence The motion is supported by a request for judicial notice of plaintiff’s First Amended Complaint, and the declaration of William W. Nicholson, who sets forth the history of Jacobs’ solicitation of his investment in Genmar, Jacobs’ promise to pay the obligations on the note, Genmar’s demands for payment on the obligations, Nicholson’s demands that Jacobs make the payments he had promised, Jacobs’ explanations that he could not make the payments or pay off the note, the resulting extension of the note to allow time to pay off the obligations, and Nicholson’s making of the payments. He articulates specific payments he made between December 2005 and September 2013, and asserts that none of those payments were offset by other obligations that he may have had to Jacobs at the time, outside those alleged in this case. He declares he obtained no benefit from the investment, and did not receive any actual stock in Genmar, since it was pledged as part of the transaction and the note was not paid off at the time. As of 2013, Genmar’s stock was worthless as the company declared bankruptcy. He declares that he did not make an affirmative claim against plaintiffs for the money owed to him on the investment because he was informed by plaintiff Mark Jacobs, after his father killed his wife and shot himself, that there were about $110 million in claims in excess of their available assets. The declaration attaches exhibits, including Exhibit A (Jacobs’ Guaranty of the Promissory Note, dated July 1, 2005; the Amendment to the Promissory Note and Affirmation of Obligations, dated March 27, 2008; the Second Amendment to Promissory Note and Affirmation of Obligations, dated May 30, 2008, and the Third Amendment to Promissory Note and Affirmation of Obligations, dated December 31, 2008, each of which was signed by Jacobs, whose signature he was familiar with); Exhibit B (the Genmar Promissory Note that he executed); Exhibit C (copies of payment demands declarant received from RDV Genmar); and D (copies of records of payments that he has for interest paid to RDV Genmar and taken against his bank account, including checks he wrote on the date and documentation of wires against his account).

Opposition: Plaintiffs oppose the motion, contending both that the motion failed to meet its initial burden of production, and that there exist disputes of material fact regarding defendants’ set-off claims.

Response to separate statement. With respect to each cause of action, plaintiffs did not dispute MFs 1-2. With respect to MFs 3-8, plaintiffs interposed evidentiary objections to the evidence submitted in support of the MFs, and disputed each such fact, asserting that each of the four investors in Genmar was to pay his own interest payments on his respective promissory note. The Guaranty that Jacobs gave regarding Nicholson’s promissory note was a guarantee to Genmar that Nicholson would make his payments to Genmar, not a guarantee to Nicholson that Jacobs would pay Nicholson’s interest payments owed to Genmar.

With respect to MF 8, plaintiffs’ dispute also included reference to evidence that the actual amount of interest payments made by Nicholson was $938,377.65, and no interest payments were made by Nicholson after Jacobs executed the Forbearance Agreement in November 2010. As a result of the Forbearance Agreement, Jacobs’ payments under that agreement relieved Nicholson of a $5,000,000 that he still owed on his promissory note. Neither of the other two investors who gave promissory notes as part of the Genmar investments have claimed that Jacobs was obligated to reimburse them for the interest payments they made prior to the Forbearance Agreement.

With respect to MF 9 for each of the ten causes of action that are the subject of the motion, plaintiffs dispute each such MF, as follows:

With respect to the third cause of action (breach of note), plaintiffs dispute that their complaint alleges that Nicholson owes them $120,000 in compensatory damages on the promissory note dated January 6, 2014, by asserting that they contend Nicolson also owes them interest at 6% per annum from January 6, 2014, which totals approximately $200,000, and with respect to the fourth cause of action (common counts) that Nicholson also owes them 10% per annum from January 6, 2014, which totals approximately $250,000.

With respect to the fifth cause of action (breach of note), plaintiffs dispute that their complaint alleges that Nicholson owes them $100,000 in compensatory damages on the promissory note dated July 21, 2014, by asserting that they contend Nicolson also owes them interest at 6% per annum from July 21, 2014, which totals approximately $165,000, and with respect to the sixth cause of action (common counts) that Nicholson also owes them 10% per annum from July 21, 2014, which totals approximately $200,000.

With respect to the seventh cause of action (breach of note), plaintiffs dispute that their complaint alleges that Nicholson owes them $80,000 in compensatory damages on the promissory note dated September 8, 2014, by asserting that they contend Nicolson also owes them interest at 6% per annum from September 8, 2014, which totals approximately $130,000, and with respect to the eighth cause of action (common counts) that Nicholson also owes them 10% per annum from July 21, 2014, which totals approximately $165,000.

With respect to the ninth cause of action (breach of note), plaintiffs dispute that their complaint alleges that Nicholson owes them $275,000 in compensatory damages on the promissory note dated July 25, 2013, by asserting that they contend Nicolson also owes them interest at 6% per annum from July 25, 2013, which totals approximately $465,000, and with respect to the tenth cause of action (common counts) that Nicholson also owes them 10% per annum from July 25, 2013, which totals approximately $600,000.

With respect to the eleventh cause of action (breach of note) and twelfth cause of action (common counts), plaintiffs dispute that their complaint alleges that Nicholson owes them $200,000 in compensatory damages on an oral promise to repay a loan in November 2003, in the principal amount of $700,000, of which only $500,000 was repaid in 2005, by asserting that they contend Nicolson also owes them interest at 10% per annum from January 2, 2005, which totals approximately $600,000.

Argument In explaining the factual background, plaintiffs explain that in about July 2005, Jacobs identified what he believed to be a good investment opportunity in RDV Genmar Holdings LLC (RDV Genmar). He contacted two of his business associates, defendant Nicholson and Nasser Kazaminy, and all three decided to purchase stock in RDV Genmar. Jacobs gave a promissory note in the amount of $25,505,16840, Nicholson gave a promissory note in the amount of $4,250,861.40, and Kazaminy, through his company, Navis Investors LLC (Navis) gave a promissory note in the amount of $5,376,292.10. In connection with the Promissory Notes given by Nicholson and Navis, Jacobs executed Guaranties to RDV Genmar to guarantee that Nicholson and Navis would make their payments to the company. They were given by Jacobs to RDV Genmar, and they were not guarantees to either Nicholson or Navis that Jacobs would make the interest payments due on those notes on their behalf. In January 2008, Jacobs made another investment in RDV Genmar, and executed another promissory note in the amount of $6,376,292.10. After doing so, he transferred that note to a business associate, John Goodman.

Following the execution of those promissory notes, Jacobs, Nicholson, Navis, and Goodman each made the interest payments due under their respective notes through November 2010. Jacobs made interest payments of $5,630,265.92, Nicholson made interest payments of $938,377.65, Navis made interest payments of $1,407,566.48, and Goodman made interest payments of $1,407,566.48.

Nicholson made his interest payment well before November 2010, but his motion claims he made only $260,000 in interest payments prior to that date, and made all of the additional interest payments for which he is claiming reimbursement after that point in time. By November 2010, when the investments turned out not to be good ones, Jacobs decided to execute a Forbearance Agreement, under which he agreed to pay RDV Genmar a sum sufficient to pay off all of the Promissory notes he owed personally, as well as those owed by Nicholson, Navis, and Goodman. Under the Forbearance Agreement, Jacobs paid approximately $15,500,000 to RDV Genmar, and all promissory notes were marked paid in full. Jacobs’ payment therefore relieved approximately $5,000,000 of obligation that Nicholson still had to RDV Genmar at that time. No interest payments were made by any of the investors after the Forbearance Agreement was executed in November 2010. Even so, Nicholson claims that most of the interest payments he is claiming are due him were paid after November 2010.

Jacobs’ files contain no documents to suggest that he was responsible to reimburse Nicholson for all of the interest payments that Nicholson had made prior to the time of the forbearance Agreement, or to even suggest any such obligation. Neither Kazaminy (for Navis) nor Goodman, both of whom also made interest payments due on their respective Promissory Notes prior to the Forbearance Agreement, has claimed that Jacobs was obligated to reimburse them for the interest payments they made prior to the Forbearance Agreement.

Proceeding to the legal argument, Plaintiffs argue that the court need look no further than the separate statement to deny the motion, since by including nine separate statement facts, defendants have conceded that each one is material, and a single dispute will require denial of the motion. Plaintiffs dispute 7 of the 9, and object to 6.

Claiming that defendants did not meet their initial burden of production, plaintiffs note that the only evidence defendants submit to support their set-off claims are inadmissible hearsay statements which Nicholson claims were made by Jacobs, who is deceased and cannot rebut them. Pursuant to Evidence Code section 1261(a), statements made by Nicolson as to what Jacobs said is only permitted if the statements were made at a time when the matter had been recently perceived by him, but each of the statements relied on were made in 2004 and 2005. Further, Nicholson makes self-serving statements about what he was told by Jacobs, without any supporting documentation. Nicholson’s statements lack trustworthiness because they are attempts to excuse himself form liability for the claims made against him by plaintiffs, on behalf of a decedent who cannot rebut the claims himself. There is no admissible evidence to meet the initial burden.

Even if the statements were admissible, they do not demonstrate that defendants’ set-off claims dispose of the 10 causes of action at issue. Defendants contend that their set off claims outweigh the claims made in the 10 causes of action, because the amount sought in those causes of action is only $775,000. However, each of the causes of action also seeks interest on the amounts, due at various applicable interest rates. When interest is considered, the amount sought by plaintiffs ranges from approximately $1,600,000 to approximately $1,800,000. Consequently, defendants’ set-off claims do not completely eliminate any obligations from those causes of action, even if defendants could prove they are entitled to the set-off claims. Defendants did not attempt to match their set-off claims to any particular cause of action, and simply argue that all 10 are barred, which is not true.

Claiming that there are also triable issues of material fact which preclude entry of summary adjudication of the causes of action, plaintiffs contend that seven of the nine material facts for each cause of action are disputed. With respect to MF 8 alone [“As a result of Jacobs’s failure to honor his promises to Nicholson regarding the Genmar Promissory Note, Nicholson made interest payments between December 2005 and September 2013, totaling more than $1 million”], plaintiffs contend they raise the following triable issues of material fact:

1. As reflected in the company’s business records, each of the four investors in Genmar was to pay his own interest payments on his respective Promissory Note.

2. The Guaranty that Mr. Jacobs gave regarding Mr. Nicholson’s Promissory Note was a guarantee to Genmar that Mr. Nicholson would make his payments to Genmar, not a guarantee that Mr. Jacobs would pay Mr. Nicholson’s interest payments owed to Genmar.

3. The actual amount of interest payments made by Mr. Nicholson was $938,377.65, and no interest payments were made by Mr. Nicholson after Mr. Jacobs executed the Forbearance Agreement in November 2010.

4. As a result of the Forbearance Agreement executed by Mr. Jacobs, Mr. Jacobs’s payments under that Agreement relieved Mr. Nicholson of a $5,000,000 obligation that he still owed on his Promissory Note.

5. Neither of the other two investors who gave Promissory Notes as part of the Genmar investment have claimed that Mr. Jacobs was obligated to reimburse them for interest payments they made prior to the Forbearance Agreement.

Plaintiffs conclude that, as a result of these disputes of material fact, the motion must be denied.

Evidence The opposition is supported by the declaration of Dave Mahler, who declares that he is the Vice President and Treasurer of Jacobs Management Corporation and the Treasurer of Jacobs Industries, Inc., and has been in those positions since April, 1985. He is also Chief Financial Officer and Secretary of ILJ Enterprises, and has been in that position since January 2010. He articulates his training and experience in accounting. For the last 40 years he has been a principal business advisor to the various Jacobs corporate entities founded by Irwin L. Jacobs and to Irwin L. Jacobs personally until his death in April 2019. He is familiar with the business transactions involving Jacobs and those entities, and the documentation related to those transactions.

The declaration recites the facts which were set forth in the opposition points and authorities, including that in about July 2005, Jacobs identified what he believed to be a good investment opportunity in RDV Genmar Holdings LLC. He contacted two of his business associates, defendant Nicholson and Nasser Kazaminy, and all three decided to purchase stock in RDV Genmar. Jacobs gave a promissory note in the amount of $25,505,16840, Nicholson gave a promissory note in the amount of $4,250,861.40, and Kazaminy, through his company, Navis Investors LLC (Navis) gave a promissory note in the amount of $5,376,292.10. In connection with the Promissory Notes given by Nicholson and Navis, Jacobs executed Guaranties to RDV Genmar to guarantee that Nicholson and Navis would make their payments to the company. They were given by Jacobs to RDV Genmar, and were not guarantees to either Nicholson or Navis that Jacobs would make the interest payments due on those notes on their behalves. In January 2008, Jacobs made another investment in RDV Genmar, and executed another promissory note in the amount of $6,376,292.10. After doing so, he transferred that note to a business associate, John Goodman.

Following the execution of those promissory notes, Jacobs, Nicholson, Navis, and Goodman each made the interest payments due under their respective notes through November 2010. The declaration attaches as Exhibit A, a copy of Mr. Jacobs’s business records reflecting the interest payments made by the four investors pursuant to their respective Promissory Notes through November 2010. Jacobs made interest payments of $5,630,265.92, Nicholson made interest payments of $938,377.65, Navis made interest payments of $1,407,566.48, and Goodman made interest payments of $1,407,566.48.

By November 2010, when the investments turned out not to be good ones, Jacobs determined to execute a Forbearance Agreement, under which he agreed to pay RDV Genmar a sum sufficient to pay off all of the Promissory notes he owed personally, as well as those owed by Nicholson, Navis, and Goodman. Under the Forbearance Agreement, Jacobs paid approximately $15,500,000 to RDV Genmar, and all promissory notes were marked paid in full. Jacobs’ payment therefore relieved approximately $5,000,000 of obligation that Nicholson still had to RDV Genmar at that time. A copy of the Forbearance Agreement by which Mr. Jacobs paid all of the obligations that all four investors had to RDV Genmar is attached as Exhibit B, and includes all of the Promissory Notes and Guaranties which were referenced in the declaration.

Nicholson declared that Mr. Jacobs was somehow responsible to reimburse him for all interest payments he had made prior to the time of the Forbearance Agreement, but there is no documentation in Mr. Jacobs’ files to even suggest any such obligation. Neither Kazaminy (for Navis) nor Goodman, both of whom also made interest payments due on their respective Promissory Notes prior to the Forbearance Agreement, has claimed that Jacobs was obligated to reimburse them for the interest payments they made prior to the Forbearance Agreement.

Evidentiary objections Plaintiffs interpose objections to statements made in the Nicholson declaration submitted in support of the motion, located in ¶¶ 4, 5, 7, 9, and 10 of the declaration, asserting that the statements are hearsay in violation of Evidence Code section 1261(a) and (b).

Reply: Defendants’ reply, filed by their current counsel, who substituted into the action on their behalf after the motion was filed, addresses several issues. First, contrary to plaintiffs’ objections, defendants’ evidence is admissible and establishes the elements necessary to carry defendants’ burden. Plaintiffs objected to statements made by Nicholson in his declaration, on the ground they did not satisfy Evidence Code section 1261(a). That section that evidence of a statement is not made inadmissible by the hearsay rule when offered in an action upon a claim or demand against the estate of the declarant if the statement was made upon the personal knowledge of the declarant at a time when the matter had been recently perceived by him and while his recollection was clear. The declarant whose statements are governed by that provision are clearly those of the deceased—Mr. Jacobs—and not Mr. Nicholson, who is not deceased. The hearsay rule does not apply to statements made by Mr. Nicholson. Further, his recitation of statements made by Mr. Jacobs reflects that they were made at the time they were discussing Nicholson’s investment in RDV Genmar, and so were made at a time when the matter had been recently perceived by Jacobs and while Jacobs’ recollection was clear, sufficient to satisfy the hearsay exception.

Further, with respect to plaintiffs’ claims with respect to Evidence Code section 1261(b), they do not argue that Mr. Jacobs’ statements were made under circumstances such to indicate lack of trustworthiness, so as to be excludable under subdivision (b). Rather, they are attacking Nicholson’s trustworthiness, but Nicholson’s statements are not hearsay.

Second, defendants contend that plaintiffs have offered nothing other than inadmissible hearsay to support their opposition. The Mahler declaration offers no evidence that he has personal knowledge as to the facts he is discussion, and he admitted at deposition that he had no knowledge of the facts surrounding the investments in RDV Genmar. Further, Mahler claims that Exhibit A consists of business records from Jacobs, but fails to lay the foundation required for business records. (Evid. Code, §§ 1270-1271.) Since business records are only admissible as an exception to the hearsay rule if evidence is offered within those statutes (i.e., that they were made in the regular course of business, at or near the time of the act, condition or event, that he is the custodian or an otherwise qualified witness, how they were prepared, and that the sources of information and method and time of preparation establish the information contained therein is trustworthy), the documents are inadmissible. Finally, defendants contend that even if admissible, they do not raise an inference that Nicholson was to pay his own interest payments and, at best show that Jacobs was tracking payments made on the notes, not who was making the payments or who was responsible for them. Nicholson testified that he had to make the payments because Jacobs was not able to, and the records support that testimony.

Third, nothing in the Guaranty creates an inference that Nicholson would make his payments to Genmar. The Guaranty states that if payments re not made on Nicholson’s note, RDV can recover from Jacobs without having to seek recourse from Nicholson. Jacobs would have no reason to guaranty Nicholson’s payments unless he was the one responsible for the payments. Nicholson had no incentive to make payments under the note, because recourse was against Jacobs. Therefore, defendants conclude that the guaranty confirms Nicholson’s testimony that Jacobs would be responsible for the payments.

Fourth, defendants assert that plaintiffs’ claim that interest calculations exceed the set-off is demonstrably false. Plaintiffs claimed that the default on the notes exceeded the amount that Nicholson paid RDV to cover Jacobs’ obligations, but do not state what the interest amount is. As a result, they failed to present evidence to raise a triable issue. Defendants further argue that a simple analysis shows plaintiffs are wrong. The motion is based on payments Nicholson paid totaling $1,533,594.07. Interest on the alleged notes is at 6%, which defendants argue is the maximum plaintiffs can recover, arguing that since the common counts claims are based on notes that contain an interest rate, the maximum plaintiff can receive is 6% in the notes, or 7% on the alleged oral note from 2003. Defendants present a chart which reflects the available interest on each note, which totals $682,346.58. Combined with the principal amounts of the notes ($775,000), the total amount due on the notes is $1,456,346.58—less than the $1,533,594.07 paid by Nicholson in interest on the RDV investment.

Evidence The reply is supported by the declaration of attorney Cousineau, who authenticates the excerpts from the transcript of the deposition of Mr. Mahler.

Evidentiary objections Defendants interposed objections to various statements made by declaration Dave Mahler in opposition to the motion, as well as the exhibits he attached to his declaration as Exhibit A, on a variety of grounds.

Supplemental Declaration of Dave Mahler: On January 22, 2025 (5 days before the original hearing date on this motion), plaintiffs submitted the supplemental declaration, in an apparent attempt to address the interjections which defendants had interposed to his original declaration. Mr. Mahler declared that the documents attached as Exhibits A and B to his original declaration are regularly and currently maintained in the offices of Jacobs Management Corporation, and as the Vice President and Treasurer of Jacobs Management Corporation, the documents are under his control, he is the custodian of the documents, and there is no one more knowledgeable about the documentation than he is. With respect to the Chart (Ex. A) reflecting interest payments made by the various RDV Genmar investors, that chart is maintained under his control, and he is its custodian. The information was provided to him from RDV Genmar, the payor under the Promissory Notes owed by Nicholson and the other RDV investors, at the time the Forbearance Agreement was executed by Irwin L. Jacobs, and that Forbearance Agreement is attached as Exhibit B to his initial declaration.

He was asked in his deposition whether he knew whether or not Irwin Jacobs ever had a personal conversation with Nicolson in which he told Nicholson that he would reimburse him for any interest payments made under Mr. Nicholson’s RDV Genmar loan, and he answered that he did not know one way or another. That does not mean he is not familiar with Mr. Jacobs’ execution of the Forbearance Agreement and the effect it had on the obligations owed by the four RDV Genmar investors.

Mahler declared that he spoke with Mr. Nicholson on the telephone on July 12, 2019. In that conversation, Mr. Nicholson did not deny that he owed Irwin Jacobs the amounts due on the Promissory Notes at issue, and that he intended to pay of those Notes when the house referred to in this litigation as the “Solana” house was sold. At no time did he claim any set-offs to the obligations under the Promissory Notes. It was not until more than a year later, on September 8, 2020, that Nicholson for the first time notified declarant that he was asserting a set-off claim to his obligations under the Promissory Notes. He never filed a claim against the Estate of Irwin Jacobs for the set-off claims he is now making; declarant is the person designated by the Estate to document any claims against the Estate.

As he previously stated, neither of the other two RDV Genmar investors have claimed that Mr. Jacobs was obligated to reimburse them for the interest payments they had made on their RDV Genmar loans prior to the Forbearance Agreement.

In ¶ 10 of his declaration, Mr. Nicholson lists nine interest payments he claims to have made on his RDV Genmar loan, but provides no supporting documents for either the amounts paid or the dates on which they were paid. Only the first two interest payments mentioned were prior to the Forbearance Agreement executed on November 30, 2010. Under that agreement, there were no further interest payments due by Mr. Nicholson on his RDV Genmar loan after November 30, 2010. Finally, Mr. Mahler declares that to the extent Nicholson claims that he has set-offs against obligations owed to Irwin Jacobs, he has no set-off claims against the obligation owed to Alexandra Jacobs, the subject of the Ninth and Tenth causes of action.

Objection to Supplemental Declaration of Mahler: Also on January 22, 2025, defendants object to the supplemental declaration of Dave Mahler, and requests that the court decline to consider it in ruling on the motion, on the basis that it constitutes a “sur-reply” for which there is no authority unless leave of court is sought and granted. Defendants contend considering the sur-reply violates principles of fairness and the framework outlined in Section 437c, in that it ‘unfairly rebuts Defendants’ reply arguments denying Defendants the ability to adequately respond.”

Court response: Given the existence of authority that it may be an abuse of discretion for a trial court to refuse to permit a party opposing a motion for summary judgment to remedy perceived evidentiary failings before ruling against them on a dispositive motion, and given that defendants objected that considering the supplemental declaration would violate their right to respond, the Court continued the hearing on the motion, and permitted defendants to file a response to the supplemental Mahler declaration.

Defendants’ Response to the Supplemental Declaration of Mahler: In compliance with the Court’s directive, defendants filed a response to the supplemental declaration. The response sets forth objections to the supplemental declaration, contending if failed to satisfy the business records objection for the hearsay spreadsheets of purported payments, which was created based on information of which the Jacobs entities had no knowledge, with no indication of whether REV Genmar got the information, how it was created, hoe it was maintained, or any other indication it is trustworthy. It contends Ex. A does show that Nicholson, and not Jacobs, was supposed to make the payments; the motion is based on the fact that Nicholson made payments that Jacobs promised to make but didn’t, and defendants contend nothing in Ex. A disputes that.

Defendants further contend none of Mahler’s other points support plaintiffs’ positions. The Nicholson’s were not required to file a claim against the estate in order to assert an offset against the estate’s claim. Further, the timing of Nicholson’s payments does not impact the salient point, that he made payments that Jacobs promised to pay but did not. Mahler submits no evidence that Jacobs actually made the payments due after the Forbearance was signed.

ANALYSIS:  For the reasons more fully articulated below, the motion is denied.

1.         Standards for summary judgment and summary adjudication motions.

A defendant’s motion for summary judgment asks the court to determine that the entire action has no merit, and to terminate the action without the necessity of a trial. (Code Civ. Proc., § 437c, subd. (a).) The procedure enables the court to look behind the pleadings to determine whether the party against whom the motion is directed has evidence to back up the claims. The court must determine from the evidence presented that there is no triable issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).)

Similarly, a party may move for summary adjudication as to one or more causes of action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff of plaintiffs. (Code Civ. Proc., § 437c, subd. (f)(1).) A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty. (Ibid.) Further, a motion for summary adjudication is procedurally identical to a motion for summary judgment. (Code Civ. Proc., § 437c, subd. (f)(2); Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 859.) As a result, the standards recited below apply to both summary judgment and summary adjudication motions.

Where a plaintiff seeks summary judgment, its burden is to produce admissible evidence on each element of a cause of action entitling it to judgment. (Code Civ. Proc., § 437c, subd. (p)(1); S.B.C.C., Inc. v. St. Paul Fire & Marine Ins. Co. (2010) 186 Cal.App.4th 383, 388.) The plaintiff must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 841.) The plaintiff need not disprove any affirmative defenses in order to meet its initial burden on summary judgment. (Code Civ. Proc., § 437c, subd. (p)(1); Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468.) If the plaintiff meets its initial burden, the burden then shifts to the defendant to show that a triable issue of one or more material facts exists as to that cause of action or to a defense thereto. (Code Civ. Proc., § 437c, subd. (p)(1).) To meet that burden, the party opposing the motion must produce admissible evidence showing a triable issue of fact exists. (Id.; Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 72.) 

The pleadings play a key role in a summary judgment motion. (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493.) It is the allegations of the complaint to which the summary judgment must respond (Todd v. Dow (1993) 19 Cal.App.4th 253, 258), and the pleadings serve as the measure of materiality for the motion. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258.) The moving party’s evidence must therefore be directed to the claims or defenses raised in the pleadings. (Keniston v. American National Insurance Co. (1973) 31 Cal.App.3d 803, 812.) Neither party can rely on its own pleadings, even if verified, as evidence to support or oppose a motion for summary judgment or summary adjudication. (See College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 720, fn. 7; Roman v. BRE Properties, Inc. (2015) 237 Cal.App.4th 1040, 1054.) The moving party bears the burden of persuasion that that there is no triable issue of material fact, and that it is entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 235 Cal.4th 826, 850.)

All facts that could make a difference in the disposition of the motion must be set forth in the separate statement of material facts which is required to accompany the motion. (Cal. Rules of Court, rule 3.1350(c)(2) and (d)(1).) The separate statement serves two important functions in a summary judgment proceeding: it notifies the parties which material facts are at issue, and it provides a convenient and expeditious vehicle permitting the trial court to hone in on the truly disputed facts (Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal.App.5th 865, 875), and quickly determine whether the motion is supported by sufficient undisputed facts. (Ducksworth v. Tri-Modal Distribution Services (2020) 47 Cal.App.5th 532, 540, reversed on other grounds by Pollock v. Tri-Modal Distribution Services, Inc. (2021) 11 Cal.5th 918.) Facts which are stated in a place other than the separate statement need not be considered by the court in resolving the motion. (Fleet v. CBS, Inc. (1996) 50 Cal.App.4th 1911, 1916, fn. 3.)

On a motion for summary adjudication, the separate statement must tie each undisputed material fact to the particular claim, defense, or issue sought to be adjudicated. It must be stated specifically in the notice of motion, and must be repeated verbatim in the separate statement of undisputed facts. (Cal. Rules of Court, rule 3.1350, subd. (b).) When multiple causes of action, issues, or defense are presented for summary adjudication in one motion, each cause of action, issue, or defense to which the motion is directed must have a separate section heading indicating the issue number and specify the issues. (Cal. Rules of Court, rule 3.1350, subd. (d).) Further, when the separate statement separately identifies a cause of action or affirmative defense, each material fact necessary to support the requested adjudication of that cause of action or affirmative defense must be separately set forth within that separate identification. (Cal. Rules of Court, rule 3.1350, subd. (d)(1)(B).) Consequently, where “undisputed facts” pertain to more than one claim, issue, or defense, they should be repeated for each issue. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2024) ¶ 10:96.7.) “Material facts” are facts that relate to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion and that could make a difference in the disposition of the motion. (Cal. Rules of Court, rule 3.1350(a)(2).)

A separate statement should include only those facts which are truly material to the claims or defense involved, because the “separate statement effectively concedes the materiality of whatever facts are included. Thus, if a triable issue is raised as to any of the facts in your separate statement, the motion must be denied!’” (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252, quoting Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2009) ¶ 10:95.1, p. 10-35 (rev. # 1, 2009).)

In ruling on a motion for summary judgment, the trial court must consider all of the evidence and all of the inferences reasonably drawn therefrom (Code Civ. Proc., § 437c, subd. (c)), and must view the evidence and inferences in the light most favorable to the opposing party. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at 843.) In examining the sufficiency of the affidavits filed in connection with a summary judgment motion, those filed by the moving party are strictly construed, and those of the opposing party are liberally construed. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21.)

In resolving the motion, the court may not weigh the evidence. (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.) Rather, the role of the trial court in resolving a summary judgment motion is to determine whether issues of fact exist, not to decide the merits of the issues. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107; see also Weil & Brown, Civil Procedure Before Trial (The Rutter Group) § 10:270.) A triable issue of material fact exists only if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar v. Atlantic Richfield, supra, 25 Cal.4th at 850.) Any doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. (Molko v. Holy Spirit Assn., supra.)

Pursuant to Code of Civil Procedure section 437c(e), if a party is otherwise entitled to summary judgment it shall not be denied on grounds of credibility or for want of cross-examination of witnesses furnishing affidavits or declarations in support of the summary judgment, except that summary judgment may be denied in the discretion of the court if the only proof of a material fact offered in support of the summary judgment is an affidavit or declaration made by an individual who was the sole witness to that fact, or if a material fact is an individual’s state of mind, or lack thereof, and that fact is sought to be established solely by the individual’s affirmation thereof.

2.         Analysis

            A.        Consideration of the Nicholson declaration in support of the motion

Plaintiffs objected to the supporting Nicholson declaration, pursuant to Evidence Code section 1261, which provides:

(a) Evidence of a statement is not made inadmissible by the hearsay rule when offered in an action upon a claim or demand against the estate of the declarant if the statement was made upon the personal knowledge of the declarant at a time when the matter had been recently perceived by him and while his recollection was clear.

(b) Evidence of a statement is inadmissible under this section if the statement was made under circumstances such as to indicate its lack of trustworthiness.

Plaintiffs contend that certain statements made by Mr. Nicholson are inadmissible by 1261(a) because they were not made at a time when the matter had been recently perceived by him, in referring to statements he said were made by Jacobs in 2004 and 2005. Plaintiffs further contend that other statements made by Mr. Nicholson are inadmissible under 1261(b), because they were made under circumstances that indicate a lack of trustworthiness, specifically the making of self-serving statements about what he was told by decedent, without any supporting documents.

In their reply papers, defendants respond that Section 1261 is inapplicable, in that it applies only when the hearsay statement is offered on a claim or demand against the estate of the declarant. Here, the declarant at issue is Jacobs, not Nicholson, and the section has no relevance to statements made by Nicholson. The fact that Jacobs’ statements were made decades before Nicholson signed his declaration does not render his declaration statements inadmissible under this provision.

Section 1261 does not preclude the Court from considering the Nicholson declaration. The time between when Mr. Jacobs allegedly made the statements (2004 and 2005) and when Mr. Nicholson signed his declaration, does not render Mr. Nicholson’s recitation of Mr. Jacobs’ statements inadmissible. The statute’s reference to personal knowledge at a time when the matter had been recently perceived and while the declarant’s recollection is clear, refers to the statements made by Mr. Jacobs, not those made by Mr. Nicholson in his declaration. Mr. Jacobs is the “declarant” within the meaning of Section 1261, not Mr. Nicholson. That plaintiffs believe the fact that Mr. Nicholson has only recently made known his claims about Mr. Jacobs’ promises make all payments required for the investment, and that Mr. Nicholson’s declaration statements are therefore untrustworthy, does not bring the Nicholson declaration within Section 1261(b). Once again, the “statement” at issue in that subdivision is the statement allegedly made by Mr. Jacobs.

            B.        Application

1.         Defendants’ motion failed to meet its initial burden, requiring that it be denied.

As alleged in plaintiff’s FAC, the written Promissory Notes at issue in the third through tenth causes of action are for $120,000 (third and fourth causes of action), $100,000 (fifth and sixth causes of action), $80,000 (seventh and eighth causes of action), and $275,000 (ninth and tenth causes of action). Each of those notes is alleged to provide for an interest rate of 6% from the date of the Note. At this time, each of those notes is between 10.5 and 11.75 years old. The oral promissory note (eleventh and twelfth causes of action), was alleged to have been entered into on November 30, 2003, in the amount of $700,000 plus interest, payable on demand. On January 2, 2005 (approximately 13 months later), the amount of $500,000 was paid of the principal and interest then due. No further payments were made, and the debt is currently 20 years old.

Defendants’ motion for summary adjudication of these causes of action, claiming an offset, does not include any material facts related to these notes, other than a single material fact for each cause of action, which simply states that plaintiffs allege that Nicholson owes them compensatory damages for the amount of the note, and sets forth the date of the note (see Material Fact 9 for adjudication of the 3rd through 10th causes of action), or, with respect to the oral note states that plaintiffs allege that Nicholson owes them $200,000 in compensatory damages on an oral promise to repay a $700,000 loan, of which $500,000 was repaid in 2005. With respect to the RDV Genmar transaction, defendants’ separate statement sets forth Nicholson’s contention that he conditioned his investment in RDV Genmar on Jacobs paying all obligations connected with the promissory note and was otherwise unwilling to make the investment (Material Facts 3, 4, 6), that Jacobs on multiple occasions agreed to pay all of Nicholson’s obligations on the note (Material Fact 5), that Jacobs failed to honor his promises (Material Fact 7), and simply concludes that “as a result of Jacobs’s failure to honor his promises to Nicholson regarding the Genmar Promissory Note, Nicholson made interest payments between December 2005 and September 2013, totaling more than $1 million. (Material Fact 8.)

Defendants’ points and authorities then simply added up the face value of each note underlying plaintiffs’ third through twelfth causes of action ($775,000), and concluded that he is entitled to summary adjudication of each of those causes of action because the amount they sought ($775,000) is less than the interest payments he made, which totaled more than $1 million.

In opposition to the motion, plaintiffs argue that each of the causes of action also seek interest on the notes. Because each note is the subject of different theories of liability, there are different interest rates which could be applied to them. When interest is taken into consideration, however, plaintiffs assert that the amount they seek on the causes of action range from $1,600,000 to $1,800,000, which is more than the $1 million offset which defendants’ motion claims. Further, since defendants merely claimed an overall offset of all claims and that all such claims are therefore barred, and did not attempt to match their set-off claims to any specific cause of action, the motion as a whole fails to meet its initial burden, and must be denied.

In reply, defendants attempt to address the interest issue for the first time, arguing that plaintiffs’ claim that the default on the notes exceeds the amount Nicholson paid to cover Jacobs’ obligations, but do not state what the amount is. Defendants then proceed to acknowledge that interest on each of the notes is set at 6%, argue that this is the maximum that plaintiffs can recover, and then proceed to provide calculations to contend that the total amount due, including interest, would be $1,457,346.58, whereas defendants contend that their motion is based on payments they made which total $1,533,594.07.

Defendants’ complete failure to address the issue of interest in their moving papers renders the motion fatally defective by failing to meet its initial burden, requiring that it be denied in its entirety. The motion never mentioned the clearly alleged interest obligation for any of the notes, never made any attempt to establish the rate of interest which should legally be applied to each note, never made any calculation of what the amount of interest would be on each note, and never made any calculation of what the total obligation would be on each note when interest is considered. Further, the separate statement upon which the motion relied contained no facts to support defendants’ sudden reply arguments.

Everything required to entitle a party to entry of summary judgment or adjudication must be submitted with the moving papers, and this includes the fact that the separate statement must contain all material facts necessary to entitle the party to the requested adjudication or judgment. As noted above an important purpose of the separate statement is to provide a convenient and expeditious vehicle to permit the trial court to home in on the truly disputed facts. (Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal.App.5th 865, 875.) The Golden Rule of Summary Adjudication is that if it is not set forth in the separate statement, it does not exist. (United Comm. Church v. Garcin (1991) 231 Cal.App.3d 327, 337, superseded by statute on other grounds.) Facts which are stated in a place other than the separate statement need not be considered by the court in resolving the motion. (Fleet v. CBS, Inc. (1996) 50 Cal.App.4th 1911, 1916, fn. 3.)

Further, with respect to the oral note, defendants’ reply calculation fails to account for the fact that plaintiffs’ complaint alleges that the $500,000 payment which was made on the $700,000 obligation on January 2, 2005 (>13 months after the initial obligation was incurred on November 30, 2003), was a payment not solely of principal, but of the principal and interest then due. In other words, interest had accrued on the obligation in the 13+ months that the $700,000 obligation had existed prior to the time the $500,000 payment was made, and the $500,000 payment included that amount of interest, as well as an amount of principal. That payment therefore did not simply reduce the principal amount of the debt to $200,000, the figure which formed the sole basis for defendants’ calculation of the interest due on the oral note. Defendants’ failure to properly calculate the interest due would preclude entry of summary adjudication, even if it were permissible to raise and address the issue for the first time in reply papers. It is not the court’s obligations to make any calculations on its own, or to correct defendants’ erroneous calculations, made in support of its improperly made reply argument.

Because of the complete failure to address the interest issue in the moving papers, the motion failed to meet its initial burden, requiring that it be denied. The arguments made for the first time in reply are insufficient to correct that defect, as a matter of basic summary judgment law. Even if it were permissible to belatedly correct the motion’s defects and failures via reply papers, the reply herein does not do so. The Court will therefore deny the motion in its entirety.

2.         Code of Civil Procedure section 437c(e) provides additional basis for denial of the motion, under the peculiar circumstances present in this case.

As noted above, Section 437c(e) provides:

If a party is otherwise entitled to summary judgment pursuant to this section, summary judgment shall not be denied on grounds of credibility or for want of cross-examination of witnesses furnishing affidavits or declarations in support of the summary judgment, except that summary judgment may be denied in the discretion of the court if the only proof of a material fact offered in support of the summary judgment is an affidavit or declaration made by an individual who was the sole witness to that fact; or if a material fact is an individual’s state of mind, or lack thereof, and that fact is sought to be established solely by the individual’s affirmation thereof. [Emphasis added.]

Until the filing of this motion, the issue of the RDV Genmar investment, and defendant Nicholson’s contention that he is entitled to a setoff in the amount of the interest payments he made on that investment, were not part of this litigation. Certainly, Nicholson had alleged as an affirmative defense that he was entitled to a set-off, but the affirmative defense was only generically pleaded, and no facts supporting his claim of entitlement to a set-off were alleged.

Once definitively brought into the litigation by the filing of this motion, Nicholson presented only his own declaration testimony in support of his contention that Irwin Jacobs approached him about making this second investment in RDV Genmar in late 2004 or early 2005, but that Nicholson was not interested in making the investment unless Irwin Jacobs agreed to pay all amounts Nicholson would be obligated to make under the Promissory Note which was given as part of the investment, and that he conditioned his participation in the investment on Jacobs agreeing to do so. That declaration contended further that Jacobs agreed on multiple occasions that Jacobs would pay all of Nicholson’s obligations in connection with the promissory note. Nicholson declared that he agreed in 2005 to make the investment, in reliance on those representations, and would not otherwise have made the investment. His current claim for an offset is based upon his contention that Jacobs failed to comply with his promises, and that Nicholson was forced to make interest payments in connection with the promissory note up into 2013; the amount of those payments is the amount he is now using to seek an offset on the amounts plaintiffs contend he owes to Jacobs on the promissory notes which form the basis of the third through twelfth causes of action in plaintiff’s FAC.

Irwin Jacobs died in 2019. There is no evidence before the court to suggest that Nicholson ever broached the issue of Jacobs’ reimbursement of the interest payments which Nicholson had made while Jacobs was still alive, i.e., from the time of his allegedly last payment in 2013 (plaintiffs dispute that Nicholson made any payments after 2010), until Irwin Jacobs’ death in 2019.

Given Irwin Jacobs’ death, the only existing witness to the representations Nicholson contends that Jacobs made, is Nicholson himself. No documentation making or confirming the making of any such representations has been presented to the Court. The only evidence of the alleged statements is Nicholson’s own declaration.

It is clear to the Court from the plaintiffs’ opposition papers, that they do not believe that Irwin Jacobs made any such representations. Certainly, because of Irwin’s death, and the complete lack of any documentation of any such obligation, they have no ability to directly refute Nicholson’s contention. They have attempted to present circumstantial evidence which casts doubt on Nicholson’s contentions (e.g., (a) that none of the other investors who were in identical circumstances to that of Nicholson, including with respect to Jacobs’ execution of a Guaranty to RDV Genmar with respect to each investor’s obligations under their respective promissory notes made to RDV Genmar as part of their investment, have made any claim that Jacobs in fact was responsible for and should reimburse them for the interest payments they made on their notes to RDV Genmar; (b) that the effect of the Forbearance Agreement executed by Irwin Jacobs in 2010 was to eliminate the obligations of all of the investors for whom he had executed Guaranties, and that none of them made any payments to RDV Genmar after 2010; (c)  that none of the Jacobs business entities have any business records to confirm that Jacobs ever made any such representations; and (d) that the terms of the Guaranty are consistent with their position that the Guaranty was given to RDV Genmar, and not to Nicholson, etc.), but, certainly, they are hampered in doing so by the fact that Irwin Jacobs has died, and cannot directly answer any relevant questions or authenticate documents.

The critical issue underlying the motion is Nicholson’s claim that Jacobs agreed that he would pay all amounts which Nicholson would be obligated to pay under the Promissory Note he signed in favor of RDV Genmar. Nicholson is the only living witness to those supposed representations. Principles of summary judgment law generally preclude a trial court from denying a motion for summary judgment or adjudication on grounds of credibility, except if the only proof of a material fact offered in support of the summary judgment is an affidavit or declaration made by an individual who was the sole witness to that fact. (Code Civ. Proc., § 437c, subd. (e).)

Under the unusual circumstances present here, the Court will exercise its discretion and deny the motion, based upon the fact that moving defendant Nicholson is the sole witness to the critical material fact underlying his claims, i.e., that Irwin Jacobs represented that he would be responsible for all of Nicholson’s obligations under the Promissory Note which Nicholson executed in favor of RDV Genmar, as one part of Nicholson’s investment in that entity.

Further, the second most crucial fact which underlies Nicholson’s claim is that, had Irwin Jacobs not agreed to pay all of Nicholson’s obligations under Nicholson’s Promissory Note to RDV Genmar, Nicholson would not have made the investment, i.e., an issue of Nicholson’s state of mind. Pursuant to Section 437c(e), a trial court also has the discretion to deny a motion for summary judgment or adjudication if a material fact is an individual’s state of mind, or lack thereof, and that fact is sought to be established solely by the individual’s affirmation thereof.

Based upon this additional provision of Section 437c(e), the Court will also exercise its discretion, and deny the motion.

Under the unusual circumstances present in this case, the Court has determined that this action would best be determined by the jury. While this Court is prohibited from weighing credibility in resolving a motion for summary judgment or adjudication, the jury would be free at trial to hear and evaluate Mr. Nicholson’s testimony, and assess whether they believe his testimony is credible.