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Crestwood Capital Corp. v. Andes Industries, Inc.

United States District Court, D. Arizona

September 5, 2017

Crestwood Capital Corporation, Plaintiff,
v.
Andes Industries, Inc., Defendant. Devon Investment Inc., Plaintiff,
v.
Andes Industries, Inc., Defendant. Preston Collection Inc., Plaintiff,
v.
Steven Youtsey, Defendant. Andes Industries, Inc.; and PCT International, Inc., Plaintiffs,
v.
EZconn Corporation; and eGtran Corporation, Defendants. Andes Industries, Inc.; and PCT International, Inc., Plaintiffs,
v.
Cheng-Sun Lan; Kun-Te Yang; Chi-Jen Dennis) Lan; Polar Star Management Ltd., Defendants.

          ORDER RE NOS. CV-16-00600, CV-15-00604, CV-15-00607

          NEIL V. WAKE SENIOR UNITED STATES DISTRICT JUDGE

         Before the Court is Crestwood Capital Corporation's, Devon Investment Inc.'s, and Preston Collection Inc.'s Motion for Summary Judgment (Doc. 122 (redacted), 126 (sealed)).

         I. LEGAL STANDARD

         Summary judgment is proper if the evidence shows there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party must produce evidence and show there is no genuine issue of material fact. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000).

         The party seeking summary judgment bears the initial burden of identifying the basis for its motion and those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which demonstrate the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has carried its burden, the nonmoving party must produce evidence to support its claim or defense by more than simply showing “there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To defeat a motion for summary judgment, the nonmoving party must show that there are genuine issues of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A material fact is one that might affect the outcome of the suit under the governing law. Id. at 248. A factual issue is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         On summary judgment, the nonmoving party's evidence is presumed true, and all inferences from the evidence are drawn in the light most favorable to the nonmoving party. Eisenberg v. Ins. Co. of North America, 815 F.2d 1285, 1289 (9th Cir. 1987); Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1117 (9th Cir. 2001). But it is not the Court's task “to scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). The evidence presented by the parties must be admissible. LRCiv 56.1(a), (b); see Fed. R. Civ. P. 56(e). Conclusory and speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and to defeat summary judgment. Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). “If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion.” Fed. R. Civ. 56(e)(2).

         The Local Rules require that any party filing a motion for summary judgment file a statement, separate from the motion and memorandum of law, that sets forth each material fact on which the party relies in support of the motion. LRCiv. 56.1(a). Any party opposing a motion for summary judgment must file a separate controverting statement of facts that sets forth:

(1) for each paragraph of the moving party's separate statement of facts, a correspondingly numbered paragraph indicating whether the party disputes the statement of fact set forth in that paragraph and a reference to the specific admissible portion of the record supporting the party's position if the fact is disputed; and (2) any additional facts that establish a genuine issue of material fact or otherwise preclude judgment in favor of the moving party. Each additional fact must be set forth in a separately numbered paragraph and must refer to a specific admissible portion of the record where the fact finds support.

LRCiv 56.1(b). The Court does not consider any part of a controverting statement of facts or additional facts that does not refer to a specific admissible portion of the record that supports the party's position.

         II. UNDISPUTED MATERIAL FACTS

         Six related actions were consolidated in this case. The motion before the Court involves three of those actions in which a promise to repay loans was memorialized in a written document and the right to enforce each document was assigned to a wholly owned entity of the assignor for collection. Case No. CV-15-00604 is an action by Devon Investment Inc. to enforce a promissory note dated March 11, 2009, in which Andes promised to pay Dennis Lan the principal sum of $4, 700, 507.00, plus interest. Case No. CV-15-00600 is an action by Crestwood Capital Corporation to enforce a promissory note dated December 20, 2009, in which Andes promised to pay Cheng-Sun Lan the principal sum of $3, 000, 000.00, plus interest. Case No. CV-15-00607 is an action by Preston Collection Inc. to enforce a document dated December 29, 2009, and signed by Steven Youtsey on March 8, 2010, acknowledging a personal obligation to pay Kun-Te Yang $1, 142, 500.00.

         Andes Industries, Inc., is a corporation organized and existing under the laws of Nevada with a principal place of business in Mesa, Arizona. PCT International, Inc. is a wholly owned operating subsidiary of Andes. Steven Youtsey is a resident of Arizona and the founder, president, and CEO of Andes.

         A. Case No. CV-15-00604

         By a promissory note dated March 11, 2009 (“March 2009 Note”), Andes promised to pay Dennis Lan the principal sum of $4, 700, 507.00, with interest. Youtsey executed the March 2009 Note on behalf of, and with the authorization of, Andes. The March 2009 Note provides that Andes' promise to pay Dennis Lan was “for value received.” The purpose of the note was to document a series of prior transactions.

         The March 2009 Note provides that the note matured and became due and payable on March 11, 2011. It provides that interest accrues at a rate of 6% per annum, recorded monthly. It provides that Andes will pay all costs and expenses, including reasonable attorneys' fees and court costs, incurred in the collection or enforcement of all or any part of the note. It provides that Andes waived formalities in connection with the note, including but not limited to any requirement of demand or presentment for payment. It provides that the note shall be governed by and construed and enforced in accordance with the laws of the State of Arizona. It provides that the parties waived their rights to a trial by jury “in any court action pertaining to the obligations or the loan documents.” On December 6, 2012, Andes acknowledged that it had made no principal or interest payments toward the March 2009 Note. PCT's business records show that on February 28, 2013, PCT wired $97, 005.00 to Cheng-Sun Lan's account. The parties agree that $47, 005.00 of the wire transfer paid two months of interest on the March 2009 Note. Andes made no other principal or interest payments toward the March 2009 Note.

         The March 2009 Note provides that it inures to the benefit of Dennis Lan's successors and assigns as permitted by the parties' contemporaneous Security Agreement. Youtsey signed the Security Agreement on behalf of, and with the authority of, Andes. Andes agreed that the Security Agreement “shall be binding upon and inure to the benefit of the respective successors and assigns of the parties.” Devon Investment Inc. is incorporated and registered under the Business Companies Act of the British Virgin Islands, with its principal place of business outside of Arizona. Chi-Jen Lan (“Dennis Lan”) owns 100% of all equity interests in Devon. The sole director of Devon is Javert LLC.

         On March 19, 2015, Dennis Lan transferred to Devon all his rights, title, and interest in and to the March 2009 Note, including all rights to enforce the note and to recover and collect all amounts due thereunder. Although Andes disputed the amount it owes under the March 2009 Note, it did not assert a “payment” defense in its Answer to Devon's Complaint. In its response to Devon's interrogatory asking Andes to state the bases for any belief that it does not owe money pursuant to the March 2009 Note, Andes did not state that the note had been paid off.

         B. Case ...


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