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Cross v. Radden

California Court of Appeals, Second District, First Division
Jul 25, 2008
No. B201947 (Cal. Ct. App. Jul. 25, 2008)

Opinion


WILLIAM GARRY CROSS, Plaintiff and Respondent, v. CRAIG RADDEN, Defendant and Appellant. B201947 California Court of Appeal, Second District, First Division July 25, 2008

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

APPEAL from a judgment of the Superior Court of Los Angeles County No. LC 073941. James A. Kaddo, Judge.

Mark S. Branner for Defendant and Appellant.

William Garry Cross, in pro. per., for Plaintiff and Respondent.

ROTHSCHILD, J.

Plaintiff William Garry Cross brought this action against defendant Craig Radden alleging breach of contract and related claims. Following a bench trial, the court ordered Radden to pay $135,000 in damages to Cross. We affirm.

FACTS AND PROCEEDINGS BELOW

On August 27, 2003, Radden and Cross entered into a limited partnership agreement in which Cross, as the limited partner, made available $500,000 for Radden, as the general partner, to invest in the commodities market. Under the agreement, Radden was required to pay Cross a 2 percent monthly return on Cross’s $500,000 investment, and Radden would keep all other profits made from the investment. If losses from Radden’s trading activities reached $50,000, the agreement required Radden to “terminate trading activity and disburse remaining capital contributions.” The agreement was for a period of one year commencing on August 27, 2003 and ending on August 26, 2004.

Radden and Cross also entered into a separate security agreement pursuant to which Radden was required to deposit $50,000 into a trust account with Cityvest Financial Corporation (Cityvest) to be used “as indemnity against any losses of principal and income guarantee [sic] that may occur as a result of the trading activity which is the subject of [the] limited partnership agreement.” The duration of this security agreement was one year, from August 27, 2003 to August 26, 2004. In October 2003, Radden and Cross agreed to increase both the amount of losses that would require Radden to terminate trading activity and the amount of the security in the trust account to $150,000.

In March 2004, Cross and Radden agreed to reduce Cross’s investment to $250,000, which reduced Radden’s monthly 2 percent payments from $10,000 to $5,000. Some time after August 26, 2004, a representative from Cityvest orally informed Cross that Radden was withdrawing assets from the trust account. Radden stopped making the 2 percent monthly payments in June 2005. In December 2005, Cross terminated the limited partnership agreement and closed the trading account, which then had a balance of $135,000. Radden never indemnified Cross for the $115,000 of losses (i.e., the difference between Cross’s $250,000 investment and the $135,000 remaining in the trading account when Cross closed it).

Cross filed this suit against Radden seeking $115,000 under the security agreement and additional damages for the unpaid 2 percent monthly payments. In the trial court, Radden argued that Cross could not seek damages under the security agreement because they had orally agreed to terminate it. Radden also argued that the limited partnership agreement was in reality a usurious loan.

The trial court disagreed. The court found that the parties had agreed to extend both the partnership agreement and the security agreement beyond their initial one-year term, and the court did not find that thereafter the parties orally terminated the security agreement while leaving the limited partnership agreement in place. The court also concluded that the limited partnership agreement was not a usurious loan but a business contract. The court awarded Cross $115,000 under the security agreement and $20,000 for the unpaid 2 percent monthly payments.

Radden appeals the court’s judgment based on the two defenses he raised at trial.

DISCUSSION

I. RADDEN’S ORAL TERMINATION DEFENSE.

Radden does not challenge the trial court’s finding that he initially agreed with Cross to extend the security agreement, but he contends that they later orally agreed to terminate it. Radden concludes that the trial court erred in awarding damages under the security agreement despite this “oral modification.” The record does not support Radden’s argument.

The only evidence that Radden cites to show that Cross orally agreed to terminate their security agreement is this excerpt from Cross’s testimony on cross-examination regarding the phone call Cross received from a Cityvest employee informing him that Radden had been withdrawing assets from the trust account:

“[DEFENSE COUNSEL]: And did you understand that to mean you would no longer have an indemnification arrangement that would cover you?

“[CROSS]: That was what [Cityvest] was suggesting to me.

“[DEFENSE COUNSEL]: And what was your response to that?

“[CROSS]: I didn’t do anything. My relationship with Craig had been long established.

“[DEFENSE COUNSEL]: And Craig was continuing to pay you the monthly payments

“[CROSS]: Yes.

“[DEFENSE COUNSEL]: -- under the agreement?

“[CROSS]: Yes.

“[DEFENSE COUNSEL]: So after you were informed of that by [Cityvest] that the indemnification portion was ending, you continued . . . the authorization that Mr. Radden would be able to make trades on the account?

“[CROSS]: Yes.” (RT 53.)

This testimony does not show that Cross agreed with Radden to terminate their security agreement. Cross testified only that a Cityvest employee was “suggesting” that Cross “would no longer have an indemnification arrangement that would cover [him].” The most reasonable inference is that, although the security agreement was still in force, there were insufficient assets in the trust account to “cover” Cross. (See Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633 [in reviewing the sufficiency of the evidence, we must draw all reasonable inferences in favor of the judgment].) In effect, the Cityvest employee was informing Cross that Radden was breaching the security agreement, but that does not show that Cross and Radden agreed to terminate the agreement. On the contrary, Cross testified on redirect that it was his understanding that the security agreement was never terminated: “My relationship with [Radden] was that he was indemnifying me. The fact that he chose Cityvest as a vehicle to do that, that’s another—that’s another deal, but our agreement is that he would indemnify me as long as it was within the boundaries of the down—the stop loss [i.e., the amount of losses that would require Radden to terminate trading activity].” Again, drawing all reasonable inferences in favor of the judgment, Cross’s testimony constitutes substantial evidence supporting the trial court’s implied finding that Cross and Radden did not orally agree to terminate the security agreement. (See In re Marriage of Mix (1975) 14 Cal.3d 604, 614 [the testimony of a single witness can be sufficient to constitute substantial evidence].)

II. RADDEN’S USURY DEFENSE.

Radden also contends that the trial court erred in finding that the limited partnership agreement was a business transaction and not a usurious loan. We independently review a trial court’s interpretation of a contract where, as here, there is no conflicting extrinsic evidence. (Bill Signs Trucking, LLC v. Signs Family Limited Partnership (2007) 157 Cal.App.4th 1515, 1521.)

One of the elements of a usurious loan is that “the loan and interest must be absolutely repayable by the borrower.” (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 798.) Radden cannot establish that element. He does not cite any contract provision requiring him to repay the entire $500,000 Cross invested (later reduced to $250,000), and our own review of the parties’ agreements reveals that no such requirement existed. The limited partnership agreement required Radden to “terminate trading activity” when losses reached $150,000, but it did not prohibit losses from exceeding $150,000. And if the partnership did sustain losses greater than $150,000, nothing in the parties’ agreements required that Cross be made whole: Radden was required only to “disburse remaining capital contributions” and indemnify Cross pursuant to the security agreement, which covered only $150,000 of losses. Indeed, Cross himself testified that he understood there was no contractual requirement that he be repaid for losses in excess of $150,000: “[O]ur agreement is that he would indemnify me as long as it was within the boundaries of . . . the stop loss [i.e., no more than $150,000],” but “beyond the stop loss number . . . then that’s my responsibility.”

For all of these reasons, we conclude that Cross’s investment was not absolutely repayable. It therefore was not a loan, so Radden’s usury defense fails.

DISPOSITION

The judgment is affirmed. Respondent shall recover his costs of appeal.

We concur: MALLANO, P. J. NEIDORF, J.

Retired Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.


Summaries of

Cross v. Radden

California Court of Appeals, Second District, First Division
Jul 25, 2008
No. B201947 (Cal. Ct. App. Jul. 25, 2008)
Case details for

Cross v. Radden

Case Details

Full title:WILLIAM GARRY CROSS, Plaintiff and Respondent, v. CRAIG RADDEN, Defendant…

Court:California Court of Appeals, Second District, First Division

Date published: Jul 25, 2008

Citations

No. B201947 (Cal. Ct. App. Jul. 25, 2008)