Opinion
A150600
09-19-2017
SUSAN L. UECKER, as Trustee, etc., Plaintiff and Respondent, v. BARNEY J. NG et al., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. C14-02082)
In 2016, plaintiff Susan L. Uecker filed a motion for summary judgment to collect on a note and guaranty executed by defendants Barney J. Ng and Wild Game Ng, LLC (Wild Game). The parties did not dispute that Ng and Wild Game executed the note and guaranty, or that the $1 million amount had not been repaid. Instead, Ng and Wild Game submitted evidence demonstrating the note and guaranty were part of a scheme to avoid licensing requirements by the Nevada Gaming Commission and, in fact, represented an equity investment in Wild Game rather than a loan.
The trial court excluded evidence offered by Ng and Wild Game related to the scheme to avoid Nevada licensing requirements, and granted summary judgment in favor of Uecker. Ng and Wild Game argue the trial court erred in excluding this evidence and rejecting their unclean hands and offset affirmative defenses. We agree that evidence related to the scheme to avoid Nevada licensing requirements was improperly excluded. While this evidence is insufficient to raise a triable issue as to defendants' offset defense, we conclude it raises a triable issue as to defendants' unclean hands defense. We therefore reverse.
I. BACKGROUND
A. Factual Background
In November 2000, Wild Game executed a promissory note in the principal amount of $1 million in favor of "Pensco Pension Services FBO, Dr. Bruce Horwitz." The note had a maturity date of November 16, 2002. Ng also executed a guaranty of the promissory note in November 2000. On or around the date that Wild Game executed the note, Horwitz provided $1 million to Wild Game. This amount has never been repaid.
During this time, Wild Game and Ng were in the process of obtaining a gaming license from the Nevada Gaming Commission in order to operate a hotel and casino. Wild Game obtained this license in July 2001.
Horwitz did not ask for repayment prior to 2009. In October 2009, Horwitz filed a complaint against Wild Game and Ng for breach of the note and guaranty. In 2011, the trial court dismissed the 2009 complaint without prejudice after Wild Game went into bankruptcy. The parties have since entered into various agreements tolling the statute of limitations.
In November 2014, Horwitz executed an assignment, conveying to Uecker his right, title, and interest in the note and guaranty. B. Procedural Background
In November 2014, Uecker filed the instant action in Contra Costa County Superior Court. She asserted two causes of action: breach of promissory note and breach of guaranty. In July 2016, Uecker moved for summary judgment on the grounds that there is no defense to the action and no triable issue of material fact regarding her right to collect on the note and guaranty.
In November 2016, Ng and Wild Game filed their opposition to Uecker's summary judgment motion. The opposition was supported primarily by a declaration from Ng, who characterized the note as part of a scheme between himself and Horwitz to avoid casino licensing requirements of the Nevada Gaming Commission. Specifically, Ng's declaration states Horwitz was interested in making an equity investment in Ng's hotel/casino venture. Ng informed Horwitz of the intensive licensing process required by the Nevada Gaming Commission, and that a minority partner may be required to go through this licensing process. Ng also told Horwitz lenders were exempt from the licensing process. Because Horwitz did not want to be subject to these licensing requirements, Ng and Horwitz agreed Ng would treat the $1 million as an equity investment in the hotel/casino venture, regardless of how the transaction was actually structured. Horwitz subsequently prepared, and Ng signed, the note and guaranty at issue.
Ng's declaration also identified a subsequent $689,000 loan from him to Horwitz in July 2001. In July 2004, Horwitz repaid the principal amount to Ng, but did not repay the associated interest.
Three other declarations and documentary evidence were offered to corroborate Ng's declaration. Two declarations stated Horwitz introduced himself as an owner of the hotel/casino venture. The third declarant stated Horwitz had told him the $1 million was for an ownership interest in the hotel/casino venture. Ng and Wild Game also submitted a "Grand Opening Guest List" for the hotel/casino venture that identified Horwitz as a "Principal."
Based on this evidence, Ng and Wild Game raised three arguments. First, Ng and Wild Game argued the note and guaranty were intended to disguise the true nature of Horwitz's investment to avoid Nevada's licensing requirements. Because of this purpose, Ng and Wild Game argued Horwitz had unclean hands and was in pari delicto, and the note and guaranty should not be enforced. Second, Ng and Wild Game argued there was a failure of consideration because the agreement to receive an equity interest was illegal. Finally, Ng and Wild Game argued they were entitled to offsets based on the unpaid interest from the $689,000 loan. Ng and Wild Game also argued Uecker, as the assignee of the note and guaranty, stood in Horwitz's shoes and was subject to these same defenses.
The trial court sustained Uecker's objections to the four declarations and the "Grand Opening Guest List," granted her motion for summary judgment, and denied Ng and Wild Game's oral motion for leave to amend their answer. The trial court concluded the evidence regarding the purpose of the note and guaranty was not relevant because it related to a sham contract defense, which had not been pled in defendants' answer and could not be pleaded against an innocent third party assignee, and was not encompassed by defendants' unclean hands defense. The trial court further concluded the declarations contained allegations involving hearsay, improper opinions, legal conclusions or legal argument, and lacking foundation. The trial court also concluded the offset defense was not supported by competent evidence and could not be based on a loan unrelated to the note. That same day, the trial court entered judgment in favor of Uecker and against Ng and Wild Game.
II. DISCUSSION
A. Summary Judgment Standard of Review
We review the trial court's decision to grant Uecker's motion for summary judgment de novo. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) Summary judgment must be granted if all the papers and affidavits submitted, together with "all inferences reasonably deducible from the evidence" and uncontradicted by other inferences or evidence, show "there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) Where, as here, the plaintiff is the moving party, he or she may meet the burden of showing there is no defense to a cause of action by proving each element of the cause of action entitling the party to judgment. (See id., subd. (p)(1).) Once the plaintiff has met that burden, the burden shifts to the defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. (Ibid.) We must consider all evidence in the light most favorable to the nonmoving party, which in this case are defendants. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) B. Defendants' Unclean Hands Affirmative Defense
The primary issue on appeal is whether Ng and Wild Game's argument regarding the validity of the note and guaranty is encompassed by their unclean hands defense. If it is not, then the evidence offered by Ng and Wild Game, regardless of admissibility, is not relevant. The trial court held that Ng and Wild Game's argument was not subsumed within the unclean hands defense, and instead must be pled as a sham contract defense. We disagree.
Under the doctrine of unclean hands, "[o]ne who comes into equity must come with clean hands. A court will neither aid in the commission of a fraud by enforcing a contract, nor relieve one of two parties to a fraud from its consequences, where both are in pari delicto." (13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 9, p. 289.) In accordance with this general rule, parties to an unlawful contract who are in pari delicto may be denied relief. (Norwood v. Judd (1949) 93 Cal.App.2d 276, 283.) An unlawful contract is one contrary to an express provision of law, contrary to the policy of express law, or otherwise contrary to good morals. (Civ. Code, § 1667.) Such contracts are considered void. (Id., § 1598.)
While the parties do not contest whether the unclean hands defense applies to contract disputes, we note " 'the doctrine of unclean hands may apply to legal as well as equitable claims [citation] and to both tort and contract remedies.' " (Jacobs v. Universal Development Corp. (1997) 53 Cal.App.4th 692, 699.)
Ng and Wild Game argue the note and guaranty are unlawful because they have an illegal purpose—i.e., to defraud the Nevada Gaming Commission. Nevada licensing laws require that every member, director, and manager of a limited liability company, such as Wild Game, be either licensed or registered. (Nev. Rev. Stat., § 463.5735.) It is unlawful to conduct gaming activities without obtaining such licenses. (Id., § 463.160.) Because of this unlawful purpose, Ng and Wild Game argue the note and guaranty are void, and Uecker is not entitled to relief. Ng and Wild Game's argument falls directly under the mandate that parties to an unlawful contract who are in pari delicto will be denied relief under the doctrine of unclean hands. (Norwood v. Judd, supra, 93 Cal.App.2d at p. 283.)
In Rosenfeld v. Zimmer (1953) 116 Cal.App.2d 719 (Rosenfeld), for example, two companies entered into a written contract that purported to have one company pay the other $300,000 for construction of a building. (Id. at p. 720.) The parties executed this contract for the sole purpose of obtaining a $300,000 loan from a third party. Separately, the parties made an oral agreement to construct the building for a lower cost and return the remaining funds from the $300,000 to the paying company. (Ibid.) The plaintiffs subsequently filed suit to enforce this oral agreement. (Id. at pp. 720-721.) The court concluded the plaintiffs were subject to the doctrine of unclean hands because they "intended to and actually did misrepresent the facts to the Massachusetts Mutual Life Insurance Company in obtaining a loan from it, by which they hoped to benefit." (Id. at p. 723.) The current dispute is comparable. Ng and Wild Game argue the note and guaranty were intended to misrepresent Horwitz's investment in the casino/hotel venture in order for him to avoid Nevada's licensing requirements. Ng and Wild Game are entitled to present an unclean hands defense based on this improper purpose.
The instant action is distinguishable from FPI Development Inc. v. Nakashima (1991) 231 Cal.App.3d 367, which was relied upon by the trial court. In that case, the defendants entered into a promissory note with the understanding the repayment terms would be delayed and the note not enforced during that period. (Id. at p. 379.) When the plaintiffs sought repayment, the defendants asserted various affirmative defenses, including they were " 'fraudulently induced' " to enter into the note. (Id. at p. 377.) The court concluded that the defendants' argument that the note was actually a sham transaction—i.e., not intended as a jural act—was not encompassed by their fraud-in-the-inducement defense—i.e., they were induced into a jural act. (Id. at p. 402.) FPI Development did not, however, address the defense of unclean hands, which is an equitable doctrine " ' given broad application' " and, as illustrated by Rosenfeld, has been applied to unlawful transactions. (See 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 9, p. 289; Seymour v. Cariker (1963) 220 Cal.App.2d 300, 305.) That Ng and Wild Game could have potentially pled a sham transaction defense does not negate the viability of their asserted unclean hands defense.
Having determined that Ng and Wild Game's allegations are encompassed by their unclean hands defense, we now address whether they have offered any admissible evidence in support of their defense that would give rise to a triable issue of material fact.
1. Evidentiary Issues
The trial court uniformly sustained all of Uecker's objections to Ng and Wild Game's evidence. We review the trial court's evidentiary rulings on summary judgment for abuse of discretion. (Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 852.) However, we review the applicability of the parol evidence rule de novo to the extent no evidentiary conflict exists. (EPA Real Estate Partnership v. Kang (1992) 12 Cal.App.4th 171, 176.) We conclude the trial court erred in sustaining Uecker's objections to the Ng declaration. We do not need to reach the admissibility of the remaining evidence because the Ng declaration is sufficient to create a triable issue of material fact.
At issue is the admissibility of exhibit C and paragraphs 8-12, 14, and 15 of the Ng declaration, paragraphs 2 and 3 of the declaration of Janel Walsh, and paragraph 4 of the declaration of Luann Cunningham. To the extent other evidence was subject to objection, those materials are not part of this appeal.
a. Hearsay Objection
Uecker asserted, and the trial court sustained, hearsay objections to those sections of the Ng declaration that recounted conversations between Ng and Horwitz related to Horwitz's desire to invest in the hotel/casino venture but avoid the Nevada licensing requirements. Ng and Wild Game argue the hearsay objection does not bar the statements at issue because they involve requests and instructions, show the hearer's state of mind and conduct in conformity thereto, or show the declarant's state of mind and conduct in conformity thereto. In response, Uecker asserts these statements are not subject to the state-of-mind exception and, if these statements are not being offered for the truth of the matter asserted, then they are not relevant.
Specifically, paragraphs 8-12 and 15 of the Ng declaration.
Hearsay is evidence of a statement made by a declarant outside of court and offered in court for its truth. (Evid. Code, § 1200, subd. (a).) As a rule, it is inadmissible. (Id., subd. (b).) Exceptions, however, exist. One such exception covers statements offered to prove the declarant's state of mind or to prove or explain acts or conduct of the declarant in conformity with that state of mind. (Id., § 1250, subd. (a).) Statements that a declarant intends " 'to do certain acts or engage in certain conduct is admissible to prove that he did those acts or did engage in that conduct.' " (People v. Karis (1988) 46 Cal.3d 612, 636, fn. 17, quoting 1 Jefferson, Cal. Evidence Benchbook (2d ed. 1982) § 14.1, p. 384.) Likewise, evidence is admissible if offered to prove the hearer's state of mind and action in conformity therewith. (Holland v. Union Pacific Railroad Co. (2007) 154 Cal.App.4th 940, 947.) Such evidence is not hearsay because " 'it is the hearer's reaction to the statement that is the relevant fact sought to be proved—not the truth of the matter asserted in the statement.' " (Ibid.)
The statements in Ng's declaration are either not hearsay or subject to the state-of-mind exception. For example, the statements in paragraphs 8, 9, 10, 11, and 12 of Ng's declaration involve statements by Horwitz regarding his interest in becoming an equity investor, but avoiding the licensing process. These paragraphs also reflect statements by Horwitz regarding his desire to "paper" the $1 million investment as a loan, but still have it be treated as an investment. Such statements are admissible to show Horwitz's state of mind regarding his intent to invest in the hotel/casino venture but avoid licensing requirements, as well as circumstantial evidence that Horwitz then acted with such intent. Similarly, the statements in paragraphs 9, 10, 11, and 15 of Ng's declaration set forth Ng's understanding of the licensing process and how he would treat Horwitz's investment, even if "papered" as a loan. These statements are admissible to show Ng's state of mind regarding Horwitz's interest in investing and circumstantial evidence that Ng then acted with such intent. Finally, Horwitz's statements to Ng in paragraphs 9 through 12, and the statement from attorney William Bachrach to Horwitz, regarding the structure of the $1 million are admissible nonhearsay to show Ng's and Horwitz's reactions to those statements and subsequent actions in conformity therewith.
We also reject Uecker's claim that these statements are not trustworthy under Evidence Code section 1252. Uecker's only support for this argument is the fact they are "self-serving." "Modern courts have recognized that all evidence proffered by a party is intended to be self-serving in the sense of supporting the party's position, and it cannot be discounted on that basis." (Oiye v. Fox (2012) 211 Cal.App.4th 1036, 1050.) " 'If a statement with a self-serving aspect falls within an exception to the hearsay rule, the judgment underlying the exception that the assurances of trustworthiness outweigh the dangers inherent in hearsay should be taken as controlling, and the declaration should be admitted despite its self-serving aspects.' " (Ibid., quoting 2 McCormick, Evidence (6th ed. 2010) Hearsay, § 270, p. 248.) The statements are corroborated by the lengthy delay between 2002, when the note matured, and 2009, when Horwitz first attempted to collect on the note and guaranty. We also note these statements do not appear to contradict any other positions taken by Ng and Wild Game and, in fact, match similar allegations asserted by them in 2009 as part of a separate legal matter.
The statements contained in Ng's declaration represent the type of hearsay evidence that typically qualifies under the state of mind exception, and the trial court's order excluding these statements was an abuse of discretion.
Uecker also objected to certain statements as lacking personal knowledge, calling for a legal conclusion, speculative, and constituting improper opinion testimony. However, to the extent these statements reflect discussions involving Ng and Wild Game and their perceptions, these objections are not applicable and should have been overruled. (Cal. Law Revision Com. com., 29B pt. 2 West's Ann. Evid. Code (1995 ed.) foll. § 702, p. 300 [" 'Personal knowledge' means a present recollection of an impression derived from the exercise of the witness' own senses."]; Schmidt v. Macco Construction Co. (1953) 119 Cal.App.2d 717, 734 [where "parol evidence is properly admissible, and such evidence is conflicting, the question of interpretation becomes one of fact and not of law"]; People v. Sanchez (2016) 63 Cal.4th 411, 456 [lay witness may express opinion based on his or her perception where helpful to a clear understanding of the witness's testimony].) Nor do we need to reach the question of whether the secondary evidence rule applies. The statements in Ng's declaration are sufficient to create a triable issue of fact, and we affirm the trial court's holding as to offset. (See part II.C., post.)
b. Parol Evidence Rule
Ng and Wild Game's evidence also is not barred by the parol evidence rule. "Where the validity of the agreement is the fact in dispute, this section does not exclude evidence relevant to that issue." (Code Civ. Proc., § 1856, subd. (f).) This broad exception "rests on the principle that the parol evidence rule, intended to protect the terms of a valid written contract, should not bar evidence challenging the validity of the agreement itself." (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1174.) " 'Evidence to prove that the instrument is void or voidable for mistake, fraud, duress, undue influence, illegality, alteration, lack of consideration, or another invalidating cause is admissible. This evidence does not contradict the terms of an effective integration, because it shows that the purported instrument has no legal effect.' (2 Witkin, Cal. Evidence (5th ed. 2012) Documentary Evidence, § 97, p. 242; see id., §§ 66, 72, pp. 206, 211.)" (Id. at pp. 1174-1175.) The court erred in sustaining this objection.
Uecker asserts that Ng and Wild Game waived any such argument by failing to adequately reference the evidence at issue. However, Ng and Wild Game identify the evidence at issue in their statement of facts and more broadly in their argument. We find that Ng and Wild Game adequately identified the evidence at issue.
2. Relevance of Evidence to Unclean Hands Defense
Evidence is relevant if it has "any tendency in reason" to prove a disputed material fact. (Evid. Code, § 210.) Here, evidence regarding Ng and Horwitz's state of mind and intent while negotiating, and subsequently executing, the promissory note and guaranty, is directly relevant to the validity of the note and that transaction, and their unclean hands defense. " 'It is an accepted principle of circumstantial evidence that a person's conduct or acts may be inferred from proof of that person's state of mind.' " (People v. Karis, supra, 46 Cal.3d at p. 636, fn. 17.) Reasonable inferences from this state of mind evidence raises a triable question as to whether Ng, Wild Game, and Horwitz sought to violate Nevada licensing laws by avoiding mandatory licensing and registration requirements.
Uecker argues Ng and Wild Game's position does not create a triable issue of material fact because courts may enforce an unlawful contract where the party seeking enforcement is less morally blameworthy than the other party, and there is no overriding public interest to be served by voiding the agreement. However, where the record contains conflicting evidence regarding the potential culpability of each party, the question of relative wrong is one of fact and inappropriate for summary judgment. (McIntosh v. Mills (2004) 121 Cal.App.4th 333, 351, 352; 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 446, p. 486 ["The question of relative wrong is often one of fact."].)
We also note that such evidence would be relevant to an illegality defense. One of the fundamental elements to the creation of a contract is the requirement that the object of the contract be lawful. (Civ. Code, § 1550, subd. 3.) Ng and Wild Game have offered sufficient evidence to raise a triable issue regarding Horwitz and Ng's intent in negotiating and executing the note and guaranty. Although such a defense has not been asserted in defendants' answer, the failure to include an affirmative defense of illegality does not waive it. (Yoo v. Robi (2005) 126 Cal.App.4th 1089, 1103 ["a defense of illegality based on public policy is not waived by the defendant's failure to include it as an affirmative defense in the answer to the complaint"].) Uecker argues the evidence does not demonstrate any illegality by Horwitz, show Horwitz had an illegal intent, or show Horwitz engaged in illegal conduct. However, the evidence contained in the Ng declaration, discussed above, and the reasonable inferences derived therefrom, are sufficient to create a triable issue of material fact as to whether Horwitz sought to become an equity investor while, at the same time, avoiding Nevada licensing requirements.
We find the evidence, and the reasonable inferences derived from such evidence, are sufficient to create a triable issue of material fact as to Ng and Wild Game's unclean hands defense. For these reasons, we conclude the trial court erred in granting summary judgment in favor of Uecker as to defendants' unclean hands affirmative defense. C. Defendants' Offset Affirmative Defense
We do not consider these facts in connection with any alleged defense of lack of consideration for the note and guaranty because that defense was not pled in Ng and Wild Game's answer. (California Concrete Co. v. Beverly Hills Savings & Loan Assn. (1989) 215 Cal.App.3d 260, 273 [barring defendant from raising affirmative defense that was not pled in its answer]; Code Civ. Proc., § 431.30, subd. (b)(2).)
The trial court granted Uecker's motion as to the offset defense, noting in part that "defendants may not claim an offset based on a loan unrelated to the promissory note." In response, Ng and Wild Game assert the note and guaranty were not properly transferred to Uecker in accordance with the California Uniform Commercial Code and, therefore, she is not a holder in due course and the California Uniform Commercial Code does not apply.
To qualify as a holder in due course, the holder must take the instrument "without notice that the instrument is overdue." (Cal. U. Com. Code, § 3302, subd. (a)(2).) The fact that a purchaser of a note acquired it after its maturity date is prima facie evidence he or she is not a holder in due course. (Landreth v. Ducommun (1937) 8 Cal.2d 694, 699.) Here, Uecker does not qualify as a holder in due course because Horwitz transferred the promissory note and guaranty to Uecker in 2014—approximately 12 years after the note's maturity date.
Although Uecker is not a holder in due course, she is subject to California Uniform Commercial Code section 3305, subdivision (a)(3), which governs claims in recoupment—i.e., offset claims—against transferees. (See Cal. U. Com. Code, § 3305, subd. (b) [excluding only holders in due course from subd. (a)(2) & (3)].) Pursuant to subdivision (a)(3), an obligor may enforce a claim in recoupment "if the claim arose from the transaction that gave rise to the instrument." (Cal. U. Com. Code, § 3305, subd. (a)(3).) "Subsection (a)(3) is based on the belief that it is not reasonable to require the transferee to bear the risk that wholly unrelated claims may also be asserted." (Cal. U. Com. Code com., 23A pt. 2 West's Ann. Cal. U. Com. Code (2002 ed.) foll. § 3305, com. 3, p. 329.)
Ng and Wild Game's offset defense is based on an alleged loan provided by Ng to Horwitz in July 2001. The parties appear to agree this loan was unrelated to the prior $1 million transaction between Horwitz and Wild Game. As such, Ng and Wild Game cannot maintain their offset defense because the July 2001 loan did not arise from the transaction that gave rise to the promissory note and guaranty.
Ng and Wild Game also argue more broadly that the entirety of chapter 3 of the California Uniform Commercial Code should not apply. But chapter 3, which is part of division 3 of the California Uniform Commercial Code, is not triggered by the holder's status, but rather by the instrument at issue. A promissory note is a form of negotiable instrument, subject to "the established rules governing negotiable instruments contained in [division] 3 of the California Uniform Commercial Code." (Saks v. Charity Mission Baptist Church (2001) 90 Cal.App.4th 1116, 1132; Cal. U. Com. Code, § 3104.) As such, division 3 of the California Uniform Commercial Code applies. Moreover, the alternative interpretation promoted by Ng and Wild Game runs counter to the express statutory language stating: "This division applies to negotiable instruments." (Cal. U. Com. Code, § 3102, subd. (a).) When interpreting statutory language, we look to the Legislature's chosen language as "the most reliable indicator of its intent." (MacIsaac v. Waste Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1082.) Where, as here, the statutory language is clear and unambiguous, our task is at an end. (California School Employees Assn. v. Governing Board (1994) 8 Cal.4th 333, 340.)
We conclude the trial court correctly held that defendants' offset defense lacked merit. D. Motion for Leave to Amend
At the hearing on Uecker's motion for summary judgment, Ng and Wild Game made an oral motion for leave to amend their answer to comport with the evidence presented in their opposition papers. The court denied this request. We need not resolve whether Ng and Wild Game's motion was properly denied because we conclude that Uecker was not entitled to summary judgment in her favor on defendants' unclean hands defense. This issue is thus moot, and we therefore affirm.
III. DISPOSITION
The judgment is reversed. The matter is remanded to the trial court with directions to vacate its order granting summary judgment, and to enter a new order denying summary judgment on Uecker's two causes of action because there is a triable issue regarding defendants' unclean hands defense. However, there is no triable issue as to defendants' offset defense. The trial court's order denying defendants' oral motion for leave to amend is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)
/s/_________
Margulies, Acting P.J. We concur: /s/_________
Dondero, J. /s/_________
Banke, J.