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ORIX CREDIT ALLIANCE v. HORTEN

May 19, 1997

ORIX CREDIT ALLIANCE, INC., Plaintiff,
v.
STEVEN C. HORTEN, JENNIE HORTEN, ROBERT LAZOVICH, LOUISE LAZOVICH, HARRY W. JESSUP, and HELEN JESSUP, Defendants.



The opinion of the court was delivered by: SAND

 SAND, J.

 Plaintiff Orix Credit Alliance, Inc. ("Orix") sues to enforce a guaranty arising from an equipment lease. Plaintiff now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, we deny Plaintiff's motion for summary judgment, and instead grant summary judgment in favor of Defendants.

  I.

 BACKGROUND

 The following statement of facts is taken from Orix's complaint and from the decision of the California Court of Appeal in U.S Roofing, Inc. v. Credit Alliance Corp., 228 Cal. App. 3d 1431, 279 Cal. Rptr. 533 (Ct. App. 1991), a prior lawsuit involving the leasing arrangement at issue in this litigation.

 In 1983, U.S. Roofing, Inc. ("U.S. Roofing") was awarded a contract to perform roofing work at the Alameda Naval Air Station in Oakland, California. U.S. Roofing, 279 Cal. Rptr. at 536. U.S. Roofing determined that a crane would be needed to perform the work, and thus contacted Liquid Asphalt Systems ("LAS"), an equipment supplier, to discuss the acquisition of a crane. Id. Eventually, a leasing arrangement was established in which LAS sold a crane to an entity called Leasing Service Corporation ("LSC"), which in turn leased the crane to U.S Roofing. Id. On July 19, 1983, Defendants Steven C. Horten, Jennie Horten, Robert Lazovich, Louise Lazovich, Harry W. Jessup, and Helen Jessup ("Defendants" or "Guarantors") executed a personal guaranty (the "Guaranty") of all obligations of U.S. Roofing to LSC. See Compl. P 11 & Ex. B. This Guaranty forms the basis for the current suit. *fn1"

 U.S. Roofing began to experience problems with the crane's performance soon after its delivery in August 1983. U.S. Roofing, 279 Cal. Rptr. at 537. After attempts were made to repair the crane, U.S. Roofing stopped making lease payments in November 1983 and sent letters to LSC and LAS seeking to revoke the lease. Id. LSC responded by treating the nonpayment as a breach of the lease, invoking the lease's acceleration clause, and repossessing the crane. Id. LSC then held a public sale, at which LSC purchased the crane. Id.

 In March 1984, U.S Roofing brought suit in California state court against LSC, LAS, and the crane's manufacturer, alleging breach of warranty. Id. LSC filed a cross-complaint against U.S. Roofing for breach of the lease, id., but the Guarantors were not made parties to the suit. Following trial, the California Court of Appeal upheld a jury verdict in favor of U.S. Roofing against LAS on the issue of liability for breach of warranty, and remanded for a new trial as to damages. Id. at 536. However, the court reversed a verdict in favor of U.S. Roofing against LSC, and instead granted judgment to LSC against U.S. Roofing in the amount of $ 125,354.60, representing the balance due under the lease. Id. The judgment in favor of LSC against U.S. Roofing was executed in July 1991, and subsequently increased to $ 190,154.48 with the addition of fees and costs. See Compl. P 9 & Ex. A.

 The 1991 judgment against U.S. Roofing was never paid. Id. P 12. Orix, as successor in interest to LSC, filed this lawsuit in 1996 against the Guarantors in an attempt to collect the $ 190,154.48 amount of the judgment. Id. P 13. On the instant motion, Orix contends that there are no material issues of fact concerning its right to collect on the Guaranty and therefore judgment should enter in its favor as a matter of law. No cross-motion has been filed by the Guarantors; however, the Guarantors have asserted several defenses in opposition to Orix's motion, including statute of limitations, collateral estoppel, and unconscionability.

 II.

 DISCUSSION

 A. Summary Judgment Standard


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