Judge Christian R. Gullon, Case Number: 24PSCV00506, Date: 2024-09-05 Tentative Ruling

Judge: Christian R. Gullon, Case: 24PSCV00506, Date: 2024-09-05 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling.

Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

DEFENDANT JULIA ANNE BODOH’S MOTION TO EXPUNGE NOTICE OF PENDENCY OF ACTION AND FOR ATTORNEYS’ FEES AND COSTS is GRANTED; attorney fees are not granted.

This is a real property case. Plaintiff RENOVATE PROPERTIES, LLC alleges the following against Defendants JULIA ANNE BODOH, as trustee of THE BRAD CHARLES BODOH AND JULIA ANNE BODOH LIVING TRUST, DATED MARCH 21, 2014 (“Defendant”); THE HEIRS, DEVISEES, AND SUCCESSORS, KNOWN AND UNKNOWN, TESTATE AND INTESTATE, OF BRAD CHARLES BODOH: On December 13, 2023, Plaintiff, as buyer, and Defendants, as seller, entered into a written contract for the purchase and sale of the Property, for the purchase price of $910,000 (“agreement”). The purchase and sale of the property was to close on February 17, 2024. However, despite opening escrow and paying Defendants a $20,000 advance toward the purchase price, Defendants anticipatorily repudiated the agreement by refusing to sell the property. Plaintiff seeks specific performance of the agreement as well as a preliminary injunction preventing Defendants from selling the property to anyone else during the pendency of this action. (Complaint ¶17.)

On August 28, 2024, Defendant filed a reply along with a response to Plaintiff’s evidentiary objections.[1]

A¿lis¿pendens¿is a¿recorded instrument¿(“Notice of Pending Action”), recorded in the office of the county recorder where land is located, that gives¿constructive notice¿of a pending lawsuit affecting title to described real property. (Gale v. Superior Court¿(2004) 122 Cal.App.4th 1388, 1395.)

“A party to an action who asserts a¿real property claim¿may record a notice of pendency of action in which that real property claim is alleged.” (Code of Civ. Proc., § 405.20.) Anyone having an interest in the property affected by a lis pendens, whether or not a party to the pending lawsuit, may move to expunge the lis pendens any time after it is recorded. (CCP § 405.30.) A lis pendens may be expunged on any of the following grounds:

(3) the claimant cannot prove the probable validity of the real property claim by a preponderance of the evidence; or

(4) “adequate relief” can be “secured to the claimant by the giving of an undertaking.” (CCP §§ 405.23, 405.31, 405.32, 405.33; McKnight v. Sup.Ct. (Faber)¿(1985) 170 Cal.App.3d 291, 303 [recognizing defective servicing and filing requirements as grounds for expungement].)

“‘Probable validity,’ with respect to a real property claim, means that it is more likely than not that the claimant will obtain a judgment against the defendant on the claim.” (CCP § 405.32.) The burden to make such a showing is on the lis pendens claimant. (See e.g., J&A Mash & Barrel, LLC v. Superior Court (2022) 74 Cal.App.5th 1, 32-33.) If conflicting evidence is presented, the trial court must weigh the evidence in deciding whether the plaintiff has sustained its burden. (Rutter Group, Motion to Expunge Lis Pendens, Cal. Prac. Guide Civ. Pro. Before Trial Ch. (9:436.2).)

If a showing is made that there is no probable validity of a real property claim, expungement of the lis pendens is mandatory, not discretionary. (Code of Civ. Proc., § 405.32 [“[T]he court shall order that the notice be expunged if the court finds that the claimant has not established by a preponderance of the evidence the probable validity of the real property claim.”].) In such a case, no undertaking is required. (Ibid.)

As for attorney fees, Code of Civil Procedure section 405.38 provides that: “The court shall direct that the party prevailing on any motion under this chapter be awarded the reasonable attorney’s fees and costs of making or opposing the motion unless the court finds that the other party acted with substantial justification or that other circumstances make the imposition of attorney’s fees and costs unjust.”

Defendant moves to expunge the lis pendens on the grounds that the Plaintiff cannot establish the probable validity of the real property claim (i.e., Plaintiff cannot seek specific performance). (Motion p. 2.)[4]

For reasons to be discussed below, though Plaintiff offered adequate consideration for the property, Plaintiff has failed to meet its burden that it monetary compensation is an inadequate remedy.

A. Whether $900,000 is Fair and Reasonable Considering the Circumstances That Defendant Needed Money and Was Unable to Pay the Mortgage?

The applicable legal principles, which neither party disputes, is summarized by the court in Lundgren v. Lundgren (1966) 245 Cal.App.2d 582 (which both parties cite to):

In determining whether consideration was fair and adequate, all circumstances surrounding the transfer of the property as they existed at that time, must be considered. [internal citation omitted.] The fairness or adequacy of the consideration cannot be judged or estimated in relation to events which transpired subsequent to the time of the conveyance; if the consideration was adequate at the time, it is immaterial that subsequent events such as a change in the property value make it inadequate later. [internal citation omitted.] Further, the consideration to be adequate need not amount to the full value of the property. [internal citation omitted.] ‘An adequate consideration does not necessarily mean a price measuring fully up to the value of the property. Such comparison is but a factor to be considered with all of the other facts and circumstances. [internal citations omitted.] The finding of the trial court should not be set aside unless it is clear that it has no sufficient support in the evidence. (Id. at pp. 589-590, emphasis added.)

Defendant argues that the price was “not just, reasonable or supported by adequate consideration.” (Motion p. 4:5-10, citing Civil Code Section 3391 [specific performance cannot be enforced absent adequate consideration].) In support of its position, Defendant relies upon the appraised value of the property at the time of the sale which was $1.2 million[5] whereas the purchase price was for $910,000; a purchase price $300,000 below market value is insufficient purchase price. However, in opposition, Plaintiff maintains that adequate consideration does not require “that the seller receive fair market value for the property, but rather the consideration be fair and reasonable under the circumstances.” (Opp. p. 12:8-10.)

- Plaintiff told Defendant that she would “save money” by not having to pay the commission from the sale proceeds (Bodoh Decl)

- Plaintiff’s representative, Russell Nelson, went to Defendant’s residence “on several occasions in an attempt to have [Defendant] sign a sales contract.” (Bodoh Decl. p. 2)

- “At the appointment on October 9, 2023 at Defendant’s Property, Defendant explained that she needed to sell the Property due to recent life changes” (Opp. p. 5:27-28)

- “At the appointment, Plaintiff also extended an offer to purchase the Property for $900,000 and for a cash advance of the purchase price to assist with immediate financial need” (Opp. p. 6:2-4)

- Plaintiff spent three hours at Defendant’s home to obtain a signature (Reply p. 2)

- On November 20, 2023, more than one month after the October 9, 2023 appointment, Defendant called Mr. Nelson and advised that she would like to proceed with the sale of the Property to Renovate Properties after the holidays. (Troy Lines Decl., ¶5.)

- At the appointment at Defendant’s Property on December 13, 2023, Defendant advised of the other home sale options she had been evaluating over the past weeks, including another offer that she received for the Property from OpenDoor, but that she was pleased with Plaintiff’s offer. (Lines Decl., ¶ 6.)

Here, the foregoing evidences adequate consideration. Defendant wanted to sell her home; Defendant needed to sell her home; Defendant entertained other offers; and Defendant took over one month thinking about the offer. Neither party addresses the facts of Lundgren, but the case is more instructive than Grief. In Lundgren, the trial court determined that the son was a bona fide purchaser for value without notice of his mother’s prior quitclaim deed to his sister. (Id. at p. 585.) The appellate court agreed with the trial court that “[t]he evidence more than establishes [the son’s] status as a bone fide purchaser for fair and adequate consideration by focusing on the following evidence: the mother was in serious financial distress and had no place to live; she had no funds; she was deeply in debt; her car was about to be repossessed; the property could not be rented in its dilapidated condition and expensive repairs were needed; she could not the make the payments on her home or pay the taxes; no one else wanted the property/she would lose the property anyway; and the son took out a loan and refinanced the property and repaired the property. (Id. at p. 590, emphasis added.) Similarly, here, Defendant is in financial distress and states she cannot afford the mortgage.

To the extent that Defendant heavily focuses on the FMV, as laid out in the rules above, the issue is not whether Plaintiff offered the FMV but whether the offer was fair and reasonable in light of the circumstances. And even if she received below FMV, the other benefits such as a cash advance to assist with immediate financial needs and the ability to quickly sell the property support adequate consideration. (See Opp. p. 13 citing Meyer v. Benko (1976) 55 Cal.App.3d 937, 945 [where the seller testified he signed the contract at the identified sale price to sell the property more quickly, and thus the seller’s desire to quickly consummate a sale explains the difference between the sale price agreed to and the alleged value of the property, the appellate court determined that the trial court’s finding of inadequate consideration to be erroneous.].)

To obtain specific performance after a breach of contract, a plaintiff must generally show: ‘(1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract. [Citations.].’” (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472, quoting Tamarind Lithography Workshop, Inc. v. Sanders (1983) 143 Cal.App.3d 571, 575.)

Defendant argues that monetary compensation is an adequate legal remedy. According to Civil Code section 3387, “[i]t is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation. In the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive. In all other cases, this presumption is a presumption affecting the burden of proof.” The Real Estate Analytics, LLC court explained the statute:

By imposing a conclusive presumption for certain residential transactions, the Legislature decided that monetary damages can never be satisfactory compensation for a buyer who intends to live at a single-family home, regardless of the circumstances. But by establishing a rebuttable presumption with respect to other property, the Legislature left open the possibility that damages can be an adequate remedy for a breach of a real estate contract. The rebuttable presumption shifts the burden of proof to the breaching party to prove the adequacy of the damages. By so doing, the Legislature intended that a damages remedy for a nonbreaching party to a commercial real estate contract is the exception rather than the rule. (Id. at p. 474, emphasis added.)

Here, the court determines that Defendant has met its burden of proof to prove the adequacy of damages. As explained by Defendant, Plaintiff “is a professional homebuyer and buys property at or below market prices for profit” such that it is buying the property for profit or economic gain. (Motion pp. 5, 7.) But, as noted by Plaintiff, the fact that Plaintiff is motivated solely to make a profit does not overcome the strong statutory presumption that all land is unique and therefore damages are inadequate to make a potential buyer whole for the breach. (Id. at p. 476.) Notwithstanding, the appellate court in Real Estate Analytics, LLC determined that damages would be inadequate. There, the property was “unique in terms of its size [14.13 acres], location [Carlsbad near Pacific Coast Highway], and existing use—near the Pacific Ocean and contains an established mobile home community…has ocean views and is close to several desirable local beaches, two major vacation resorts, the Del Mark racetrack, expensive neighborhoods, and major transportation routes…and unique in terms of the potential profits….” (Id. at pp. 474-475.) Here, however, this property is like most other single-family homes in the City of Glendora. “[A] seller [must] show not only abstract replaceability but concrete availability of reasonably interchangeable property at terms within the buyer's means.” (Id. at p. 475.) And here, Defendant’s submissions indicate that there is nothing special about this property.

Therefore, Defendant has made an evidentiary showing that there is not a probable validity of winning on the merits as specific performance because a damages remedy would provide Plaintiff with adequate relief.

[1] All of Plaintiff’s evidentiary objections are overruled namely as Defendant is making statements based upon her personal knowledge; thus, the statements are not speculative/not assuming facts not in evidence.

[2] The motion is largely dedicated to the third element, but the motion briefly references this second element. However, in Reply, Defendant “acknowledges that Plaintiff’s complaint concerns real property and may be sufficient o consider a real property claim….” (Reply p. 2:5-6.) Thus, the court will only focus on whether Plaintiff has met its burden by a preponderance of the evidence that Plaintiffs claim for specific performance will prevail.

[3] As a preliminary matter, Defendant makes clear that for purposes of this motion, Defendant is not contesting the validity of the agreement. (See Motion p. 5:5-7 [“Although Defendant Homeowner reserves the right to contest the validity of the Contract at trial, for purposes of this motion Defendant Homeowner is not asserting the Contract is void or invalid….”].) But the motion and reply largely speak to defenses to contract formation, which go to the validity of a contract. (See e.g., Brawley v. Crosby Research Foundation (1946) 73 Cal.App.2d 103; § 56:4. Inadequate consideration, 3 Cal. Affirmative Def. § 56:4 (2d ed.) See e.g., California Civil Practice Real Property Litigation (2024) Circumstances defeating formation of valid contract, § 1:37; see also § 55:1. Unconscionability—In general, 3 Cal. Affirmative Def. § 55:1, fns. 16, 17 (2d ed.).)

[4] There is no separate COA for specific performance as it is a remedy. (See e.g., Green Valley Landowners Assn v. City of Vallejo (2015) 241 Cal.App.4th 425, 433.)

[5] See Steven J. Wood declaration [licensed Certified Residential Appraiser]. (Motion p. 10 of 46 of PDF.)