SUPERIOR COURT OF CALIFORNIA,

COUNTY OF ORANGE
CENTRAL JUSTICE CENTER
MINUTE ORDER
Date: 06/29/2010 Time: 09:53:00 AM Dept: C19
Judicial Officer Presiding: Charles Margines
Clerk: Nanci Turner-Mitani
Reporter/ERM:
Bailiff/Court Attendant: None

Case No: 30-2008-00112660-CU-CO-CJC Case Init. Date: 09/30/2008

Case Title: Gray1 CPB, LLC vs. SCC Acquisitions, Inc

Case Category: Civil - Unlimited Case Type: Contract - Other

EVENT ID/DOCUMENT ID: 71016316

EVENT TYPE: Chambers Work

APPEARANCES

There are no appearances by any party.

Gray1 CPB, LLC vs. SCC Acquisitions, Inc., and related actions, No. 30-2008-00112660
TENTATIVE DECISION
Having received and considered all of the evidence in the trial, the arguments of counsel, and the jury's
advisory findings and verdict, the court finds and rules as follows on the first cause of action for
rescission based on sham guaranties in the first amended cross-complaint filed by SCC Acquisitions,
Inc. and Bruce Elieff:
Sun Cal is a "brand name" for some 150 business entities operating under the umbrella of SCC
Acquisitions, Inc. ("SCC"). At all relevant times, Bruce Elieff ("Elieff") owned and/or controlled SCC.
Fillmore Sun LLC ("Fillmore") is a single-purpose entity created by SCC more than two years before the
loan made by Central Pacific Bank ("loan" and "CPB," respectively) was negotiated and funded.
Fillmore's purpose was to acquire a parcel of raw land and develop it into "blue top" lots (i.e. buildable
lots), which it would then sell to home builders such as Lennar Homes. All parties involved in this lawsuit
are highly sophisticated in the area of commercial loans.
In negotiations for the loan between Fillmore and SCC, on the one hand, and CPB on the other hand,
Fillmore and SCC always took the position that the borrower under the loan was to be Fillmore. CPB
required that the loan be secured by a first deed of trust and looked to that security as the primary
source for satisfaction of the loan obligation in case of default. Put differently, CPB did not view SCC and
Elieff as the primary obligors. CPB required guaranties for its loan, which is a reasonable position to
have taken considering the nature and financial wherewithal of Fillmore. At no time did CPB require that
the loan and guaranties be restructured in any way. CPB did not take any action to avoid the applicability
of California's anti-deficiency statutes to the transaction. Because Fillmore was an independent business
entity, SCC and Elieff had no liability for the loan. Their role was solely as guarantors. SCC and Elieff
signed the loan guaranties with "open eyes," i.e. with the advice of able counsel and understanding of

Date: 06/29/2010 MINUTE ORDER Page: 1

Dept: C19 Calendar No.:
Case Title: Gray1 CPB, LLC vs. SCC Acquisitions, Inc Case No: 30-2008-00112660-CU-CO-CJC

what the guaranties entailed.

Notwithstanding the stronger financial position of SCC and Elieff, CPB was not obligated to frustrate the
desires of the parties by insisting that SCC and Elieff be the borrowers under the loan agreement.

Accordingly, the court finds against cross-complainants SCC and Elieff and in favor of cross-defendant
CPB on the first cause of action in the first amended cross-complaint.
Even if the court accepts as true all facts in defendants' offers of proof, the court's conclusion would be
the same: The guaranties at issue herein were not sham guaranties.

CPB's motion for judgment pursuant to CCP §631.8, which was taken under submission, is moot.
This Tentative Decision shall be the Statement of Decision unless any party specifies controverted
issues or makes proposals not covered in the Tentative Decision, as permitted by applicable statutes
and Rules of Court, in which case counsel for CPB shall prepare, circulate, and file a proposed
Statement of Decision.

Court orders Clerk to give notice.

Date: 06/29/2010 MINUTE ORDER Page: 2

Dept: C19 Calendar No.: