Judge Christopher K. Lui, Case Number: 24STCV09552, Date: 2024-10-02 Tentative Ruling

This is an action for declaratory relief and to quiet title following Plaintiff’s purchase of the subject property at a nonjudicial foreclosure sale.

Defendant Walid Wasifi moves to expunge lis pendens and for attorneys’ fees and costs.

Defendant Walid Wasifi’s motion to expunge lis pendens and for attorneys’ fees and costs is DENIED.

The hearing on the amount of undertaking pursuant to Civ. Proc. Code, § 405.33 is CONTINUED to December 13, 2024 at 8:30 a.m. The parties are to simultaneously exchange and file their supplemental briefs by November 15, 2024. The parties supplemental responses are simultaneously due by December 2, 2024.

Because § 405.33 does not provide for recovery of attorney’s fees, Wasifi’s request for attorney’s fees is DENIED. Moreover, because Wasifi acted with substantial justification in making his alternative request for expungement upon giving of an undertaking, Plaintiff’s request for attorney’s fees pursuant to Civ. Proc. Code, § 405.38 is also DENIED.

No. 1: OVERRULED. This does not go to admissibility, but rather the Court’s discretion to consider new evidence.

Plaintiff requests that the Court take judicial notice of the following: (1) “Walid Wasifi’s Opposition to Marine Amirkhanyan’s Motion to Intervene and Consolidate Cases,” filed on or about August 9, 2024, in the case entitled Paladar Capital Investments, LP v. Marine Amirkhanyan, et al., Case No. 24STCV09552, in the Superior Court of California, County of Los Angeles; (2) “Deed of Trust,” recorded as Instrument Number 20240404585 in the Official Records of Los Angeles County on June 21, 2024.

Request No. 1 is GRANTED per Evid. Code, § 452(d)(court records). Request No. 2 is GRANTED. The Court may take judicial notice of recorded documents. (Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549, overruled on other grounds in Black Sky Capital, LLC v. Cobb (2019) 7 Cal.5th 156, 165; Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 263, 274).

Defendant Walid Wasifi moves to expunge lis pendens and for attorneys’ fees and costs on the ground that Plaintiff cannot establish the probable validity of any of its claims.The motion to expunge lis pendens is not rendered moot by the filing of a first amended complaint. On a motion to expunge lis pendens, the court shall order the notice of lis pendens expunged if the court finds that the pleading on which the notice is based does not contain a real property claim (Civ. Proc. Code§ 405.31) or if claimant has not established by a preponderance of the evidence the probable validity of the real property claim (Civ. Proc. Code, § 405.32). A real property claim means the cause of action in a pleading would, if meritorious, affect title to, or the right to possession of, specific real property or the use of an easement. (Civ. Proc. Code, § 405.4.)

The motion to expunge lis pendens is not rendered moot by the filing of a first amended complaint. On a motion to expunge lis pendens, the court shall order the notice of lis pendens expunged if the court finds that the pleading on which the notice is based does not contain a real property claim (Civ. Proc. Code§ 405.31) or if claimant has not established by a preponderance of the evidence the probable validity of the real property claim (Civ. Proc. Code, § 405.32). A real property claim means the cause of action in a pleading would, if meritorious, affect title to, or the right to possession of, specific real property or the use of an easement. (Civ. Proc. Code, § 405.4.)

On or about April 16, 2024, the Property sold at a foreclosure trustee sale to Plaintiff. However, California Civil Code section 2924m amends the foreclosure sale process to permit qualified parties, such as Defendant, to bid on a foreclosed property after the trustee sale where the property was sold to an investor or other non-eligible bidder at the trustee sale. Because Plaintiff was an investor/non-eligible bidder, Defendant and other eligible bidders were permitted to submit an intent to bid and outbid Plaintiff for the Property. Defendant is an eligible bidder because he is prospective-owner occupant under California Civil Code section 2924m(a)(1). Defendant therefore submitted an intent to bid, and thereafter a bid on the Property. On June 3, 2024, Defendant was declared the highest bidder on the Property and recorded the Property’s Trustee Deed Upon Sale (“TDUS”) on June 11, 2024, perfecting his title to the Property.

Because Plaintiff was the winning bidder for the Property at the initial trustee sale, and Plaintiff did not want an eligible bidder to outbid him via the post-foreclosure auction pursuant to California Civil Code section 2924m, Plaintiff brought this Complaint seeking declaratory relief and quiet title on the basis that all persons and/or entities that submitted an intent to bid on the Property do not qualify for post auction bidding under Civil Code Section 2924m. Plaintiff cannot demonstrate the probable validity of its claims because Plaintiff’s allegations are fabricated. Indeed, Plaintiff brought this lawsuit on the same day he purchased the Property, before even knowing that Defendant or anyone else would be submitting an intent to bid on the Property.

The evidence will show that Defendant, who has no previous real estate experience, hired defendant Zeyad Elalami (“Mr. Elalami”) to assist him with purchasing the Property as a prospective owner occupant under California Civil Code section 2924m. Defendant complied with all requirements under Civil Code Section 2924m because he is not acting as an agent for anyone else in purchasing the Property, intends to make the Property his primary residence, and meets the other requirements of California Civil Code section 2924m(a)(1).

As such, Plaintiff’s abuse of the lis pendens procedure has placed Defendant in the untenable position of not receiving the benefits of purchasing the Property as Defendant does not own title to the Property free and clear as a result of the Lis Pendens. Accordingly, this Court should expunge Plaintiff’s Lis Pendens. Further, even if Plaintiff’s Lis Pendens was proper (which it undoubtedly is not because Plaintiff’s claims have no probable validity), it should still be expunged because Plaintiff’s claims can be adequately compensated with money damages and a lis pendens is unnecessary.

First and most importantly, Paladar’s claims have probable validity because Wasifi’s recent judicial admission that if this case were consolidated with his unlawful detainer case, he would have been harmed by his continued inability to immediately sell, rent, or lease the property, firmly establishes that he was not an “Eligible Bidder” under Civil Code section 2924m¿exactly as Paladar alleged. This is because Civil Code section 2924m requires an Eligible Bidder to state under oath that within 60 days after the trustee’s deed upon sale is recorded, he will reside at the property as his primary residence for at least one year, and that he is not acting as the agent for another. (Civ. Code §2924m(a)(1)(A), (B).)

Wasifi’s judicial admissions demonstrate that Paladar’s allegations are spot-on. Based on the judicial admissions, Paladar’s likelihood of success on each of its three real property claims is high, to put it mildly. (Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1272 [regarding judicial admissions, “a judgment may rest in whole or in part upon the admission without proof of the fact.”].) Specifically, Wasifi admitted in his opposition to the motion to consolidate (which he personally executed and filed with this Court) that he would be prejudiced by consolidation due to the delay in obtaining possession of his property” because he “is receiving absolutely no value from the Subject Property or any return on his investment” and because he “is unable to rent or lease the Subject Property . . . or to sell the Subject Property.” (Request for Judicial Notice (“RFJN”) Ex. 1, emphasis added.)

Wafisi’s assertion that he would sustain such harm is wholly inconsistent with both the requirement that he reside in the Subject Property as his principal residence for at least one year and with his affidavit under oath stating that he will do so. The evidence alone establishes Paladar’s probable validity, notwithstanding the additional evidence set forth herein. (Civ. Code §2924m.) Indeed, because Wasifi was successful in asserting this position by having the Court deny the motion to consolidate based on his assertions, he is now judicially estopped from presently taking an alternative position (i.e., that he intends to live at the Subject Property). (See, e.g., Daar & Newman v. VRL International (2005) 129 Cal.App.4th 482, 490-91 [“‘Judicial estoppel, sometimes referred to as the doctrine of preclusion of inconsistent positions, prevents a party from “asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding.”‘”].) For these reasons, and the reasons set forth below, the motion should be denied and Paladar awarded its fees.

The Court will not consider Defendant’s “Supplemental Memorandum of Points and Authorities in Support of Defendant’s Motion to Expunge Lis Pendens and For Attorneys’ Fees and Costs” which was filed on September 9, 2024 before the Opposition was filed on September 18, 2024. This supplemental brief is not authorized by code, and would result in an over-sized brief.

Defendant does not seek to expunge the lis pendens on the ground that the pleading on which the notice is based does not contain a real property claim (Civ. Proc. Code, § 405.31), so the Court will not address that argument as presented by Plaintiff in the Opposition.

In proceedings under this chapter, the 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. The court shall not order an undertaking to be given as a condition of expunging the notice if the court finds the claimant has not established the probable validity of the real property claim.

On a motion to expunge, the burden is on the claimant to prove the probable validity of the real property claim under Civ. Proc. Code, § 405.32: “Evidence or declarations may be filed with the motion to expunge the notice. The court may permit evidence to be received in the form of oral testimony, and may make any orders it deems just to provide for discovery by any party affected by a motion to expunge the notice. The claimant shall have the burden of proof under Sections 405.31 and 405.32.” (Civ. Proc. Code, § 405.30.) “ ‘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.” (Civ. Proc. Code, § 405.3.) “If conflicting evidence is presented, the judge must weigh the evidence in deciding whether plaintiff has sustained its burden.” (Weil & Brown et al., Cal. Prac. Guide: Civ. Pro. Before Trial [The Rutter Group 2018], § 9:436.2.)

The first cause of action in the Complaint is for declaratory relief, and alleges in pertinent part:

12. Plaintiff was the winning bidder at the foreclosure sale and tendered cashier’s checks to Trustee for the full amount of Plaintiff’s winning bid.

13. On information and belief, Trustee is treating this sale as one that is governed by Civil Code section 2924m.

14. On information and belief, in doing so, Trustee is entertaining post-auction bids and notices of intent to bid from individuals and entities that do not qualify for post-auction bidding under Civil Code section 2924m. This practice is wrongfully depriving Plaintiff of the benefit of its winning bid. The identities of those defendants are not presently known to Plaintiff but will be added once discovered.

15. There exists, present and actual disputes as to whether the bids received and accepted by Trustee are bona fide under Civil Code section 2924m, which may supplant Plaintiff’s winning bid previously mentioned. As such, Plaintiff requests a judicial declaration that (1) none of the individuals or entities that have submitted a post-auction bid to Trustee are entitled to utilize the procedures set forth in Civil Code section 2924m; and (2) that Plaintiff is the present owner of the Subject Property based on its winning bid at the foreclosure sale held on or about April 16, 2024, with superior claim to legal title to the Subject Property over defendants Marine Amirkhanyan and Anahit Amirkhanyan, in addition to any DOE defendants who have submitted false bids to Trustee under Civil Code section 2924m.

17. Plaintiff, by way of its winning bid at the foreclosure sale held on or about April 16, 2024, is the present legal owner of the Subject Property with superior claim to title thereto.

18. On information and belief, the lien that was foreclosed on or about April 16, 2024, was the senior priority lien on title to the Subject Property, and thus, no other encumbrances or liens exist on title to the Subject Property.

19. Plaintiff seeks to quiet title to the Subject Property against any other claimant to title and any other lienholder purporting to have a claim or lien against the Subject Property as of April 16, 2024.

20. No other defendant, person, or entity has a superior claim to title to the Subject Property.

(1) “Prospective owner-occupant” means a natural person who presents to the trustee an affidavit or declaration, pursuant to Section 2015.5 of the Code of Civil Procedure, that:

(A) They will occupy the property as their primary residence within 60 days of the trustee’s deed being recorded.

(iii) The grantor of a living trust that was named in the title to the property when the notice of default was recorded.

(v) A person with an ownership interest in the mortgagor, unless the mortgagor is a publicly traded company.

(D) They are not acting as the agent of any other person or entity in purchasing the real property.

(c) A trustee’s sale of property under a power of sale contained in a deed of trust or mortgage on real property containing one to four residential units pursuant to Section 2924g shall not be deemed final until the earliest of the following:

(1) If a prospective owner-occupant is the last and highest bidder at the trustee’s sale, the date upon which the conditions set forth in Section 2924h for the sale to become final are met. The prospective owner-occupant shall submit to the trustee the affidavit or declaration described in paragraph (1) of subdivision (a) at the trustee’s sale or to the trustee by 5 p.m. on the next business day following the trustee’s sale.

(2) Fifteen days after the trustee’s sale unless at least one eligible tenant buyer or eligible bidder submits to the trustee either a bid pursuant to paragraph (3) or (4) or a nonbinding written notice of intent to place such a bid. . . .:

Here, the Court considers the statements of Walid Wasifi in his August 8, 2024 opposition to Marine Amirkhanyan’s motion to intervene and to consolidate cases. Interestingly, that Opposition was filed after the motion to expunge was filed on June 14, 2024 (when Wasifi was still represented by counsel). On August 5, 2024, Walid Wasifi substituted into the case to act as his own attorney, i.e., as a self-represented party. As such, the Court gives much credibility to Wasifi’s admission made in propria persona directly to the Court, without secondhand spin provided by counsel. Wasifi argued in that Opposition as follows:

This Civil Action should not be consolidated with the UD Action because first, WASIFI, a bona fide party purchaser of the Subject Property, would be prejudiced by consolidation due to the delay in obtaining possession of his property from Intervenor, Plaintiff, and the other Defendants in the UD Action. WASIFI, as the purchaser of the Subject Property, is receiving absolutely no value from the Subject Property or any return on his investment. He is unable to rent or lease the Subject Property, inspect the Subject Property, repair the Subject Property, or sell the Subject Property. The accumulated holding costs continue to increase every day.

(Opposition to Motion to Intervene, Pages 2:24-3:3 [bold emphasis and underlining added].)

Nonetheless, the Court agrees with Defendant that the doctrine of judicial estoppel or judicial admissions does not apply to the above statements because they were made in a memorandum of points and authorities and were not included in Wasifi’s Declaration.

“ ‘ “Judicial estoppel precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position. [Citations.] The doctrine’s dual goals are to maintain the integrity of the judicial system and to protect parties from opponents’ unfair strategies. [Citation.] Application of the doctrine is discretionary.” ‘ [Citation.] The doctrine applies when ‘(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.’ [Citations.]” (Citations omitted.)

The motion to consolidate and intervene was denied on procedural grounds, not because of the arguments presented in Wasifi’s opposition. (See August 22, 2024 minute order.) As such, there has been no successful prior assertion of an inconsistent position, and the third element of judicial estoppel is not met.[1]

Moreover, judicial admissions are not found in memoranda of points and authorities.

Not every document filed by a party constitutes a pleading from which a judicial admission may be extracted. Code of Civil Procedure section 420 explains that pleadings serve the function of setting forth “the formal allegations by the parties of their respective claims and defenses, for the judgment of the Court.” (Code Civ. Proc., § 420.) “The pleadings allowed in civil actions are complaints, demurrers, answers, and cross-complaints.” (Code Civ. Proc., § 422.10.) When these pleadings contain allegations of fact in support of a claim or defense, the opposing party may rely on the factual statements as judicial admissions. (St. Paul Mercury, supra, 111 Cal.App.4th at p. 1248.)

Nonetheless, the arguments presented in Wasifi’s Reply suggest that he is fabricating this argument in support of this motion to expunge. In his Reply, Wasifi argues:

Defendant cannot sell or rent the property he is currently living in, if he so chooses, due to the previous owners’ possession of the Property. Indeed, Defendant is “fitting the bill” [sic] while the previous owners reside there.

Wasifi’s attempt to change his story is not persuasive. As noted above, in the Opposition to the motion to consolidate/intervene, Wasifi argued that he could not rent, lease or sell the “Subject Property” which he had purchased, and was accumulating “holding costs” every day. (See Opposition to Motion to Intervene, Pages 2:24-3:3 [bold emphasis added].)

Moreover, the Court notes that the property in which Wasifi currently lives is his mother’s. (Wasifi Decl ISO Motion to Expunge, ¶ 2.) It is not credible that Wasifi would seek to sell or rent his mother’s property, as he now claims in his Reply. In his Declaration, Wasifi did not indicate his mother would be moving in with him to the newly-purchased Subject Property.

The Court also notes that Wasifi argues that the property contains “multiple residential units,” and he would be entitled to rent the units in which he does not live. (Reply, Page 5:22-23.) If this is true, then Wasifi would be entitled to rent the unit(s) in which he does not live. This would explain his prior statement about being unable to rent the property, but not his prior statement that he intended to sell the property.

However, pursuant to Evid. Code, § 452(h)[2], the Court takes judicial notice that, per a Zillow listing, 8202 Rhea Ave, Reseda, CA 91335[3] is a single family home, containing 2,517 square feet, with 3 bedrooms and 2 bathrooms. This does not constitute “multiple residential units.” As such, this gives the Court further reason to find that Wasifi’s arguments or declaration are not credible.

In light of the foregoing, the Court finds that Wasifi’s statement that he intends to occupy the property for at least a year is not credible, and thus, the preponderance of the evidence suggest that Wasifi does not qualify as a “prospective owner-occupant” for purposes of Civil Code, § 2924m(a)(1). As such, the motion to expunge and for attorney’s fees on this basis is DENIED.

The Court does not find Plaintiff’s argument regarding the legitimacy of Wasifi’s loan to be persuasive. The Court agrees with Wasifi’s argument that the absence of conventional loan documentation, and the legality of any purported loan to Defendant, does not mean that Plaintiff is not the purchaser of the property if Plaintiff presents the necessary funds.

Moreover, Defendant claims that he would be able to take out money on the property if the lis pendens was removed so that he could pay Elalami the $630k he owes Elalami/Luxor Funding Group (Wasifi Decl, ¶ 13.) Plaintiff admits that he signed a promissory note in favor of Luxor Funding Group, Elalami’s corporation, which would be accompanied by a recorded lien on the property. (Id., ¶ 9.) The Court finds to be credible that Defendant intended to refinance the property to pay off Elalami/Luxor Funding Group, which is a common practice.

Defendant has explained that he arranged for the $630k loan through his cousin Tony Nasim—a mortgage broker—with a private lender, Elalami and his corporation, Luxor Funding Group, Inc. (Wasifi Decl., ¶ 3.) Elalami is a long-time friend of Nasim, so it is conceivable Elalami would extend this $630k loan to Wasifi as a favor to Nasim. (Id.)]

Although the real property claims have probable validity, Wasifi also requests that the Court order an undertaking pursuant to Cal Code Civ Proc § 405.33, which provides:

In proceedings under this chapter, the court shall order that the notice be expunged if the court finds that the real property claim has probable validity, but adequate relief can be secured to the claimant by the giving of an undertaking. The expungement order shall be conditioned upon the giving of the undertaking of such nature and in such amount as will indemnify the claimant for all damages proximately resulting from the expungement which the claimant may incur if the claimant prevails upon the real property claim. In its order conditionally expunging the notice, the court shall set a return date for the moving party to show fulfillment of the condition, and if the moving party fails to show fulfillment of the condition on the return day, the court shall deny the motion to expunge without further notice or hearing. Recovery may be had on the undertaking pursuant to Section 996.440.

For purposes only of determining under this section whether the giving of an undertaking will secure adequate relief to the claimant, the presumption of Section 3387 of the Civil Code that real property is unique shall not apply, except in the case of real property improved with a single-family dwelling which the claimant intends to occupy.

Because Plaintiff is a corporation whose name—Paladar Capital Investments, LP—indicates it purchased the subject property solely as an investment, the Court finds that adequate relief can be secured to Plaintiff/claimant by the giving of the undertaking, which mandates that the Court order the lis pendens expunged if Defendant gives the undertaking ordered.

Neither party has briefed the amount of such undertaking. As such, the Court requests further briefing from the parties as to the amount. The Court finds that the “amount as will indemnify the claimant for all damages proximately resulting from the expungement which the claimant may incur if the claimant prevails upon the real property claim” (Civ. Proc. Code, § 405.33) is the greater of: (1) the rental value of the subject property for the estimated duration of litigation to judgment; or (2) the difference between the market value of the Subject Property on this date for which Plaintiff could sell the Subject Property, and the estimated value of the Subject Property for which Plaintiff could sell it once judgment is anticipated to be entered in favor of Plaintiff.

The Court will consider the parties’ arguments in this regard, then set the amount of the undertaking, which Wasifi will be required to post as a condition to expungement of the lis pendens.

[1] “Absent success in a prior proceeding, a party's later inconsistent position introduces no ‘risk of inconsistent court determinations,’ ... and thus poses little threat to judicial integrity.” (Jogani v Jogani (2006) 141 Cal.App.4th 158, 171 (quoting New Hampshire v. Maine (2001) 532 U.S. 742, 750-751, 121 S.Ct. 1808, 1814).)

[2] The Court may take judicial notice of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452(h).)

[3] Per ¶ 9 of the Complaint, this is the address of the subject property.