Judge: Deborah C. Servino, Case: 30-2021-01195191, Date: 2022-07-22 Tentative Ruling

The court grants Defendants/Cross-Complainants Crystal Pak and Helen Pak’s (“Defendants”) motion to expunge the notice of pendency of action that was recorded and filed by Plaintiffs/Cross-Defendants Balubhai Patel, individually and as Trustee of the Balubhai Patel Separate Property Revocable Trust Dated March 14, 2007, as Wholly Amended and Restated on October 26, 2016, Rajanikant Naginbhai Patel and Alkakumari Patel, Trustees of the Patel Family Revocable Trust, Nitinkumar B. Patel, and KKR Investment Properties, LLC (“Plaintiffs”). 

Additional Papers Filed Without Leave of Court

The hearing on this motion was continued to allow Defendants and Plaintiffs to properly serve their moving, opposing, and reply papers on Cross-Defendants Sunnyside Group and Charles Roh.  Plaintiffs and Defendants have shown that the papers were provided to all parties.  Since the last hearing, Plaintiffs and Defendants served and filed supplemental papers without first obtaining leave of court.  Even though the parties did not first obtain leave of court, the court exercises its discretion to consider the additional papers.  The parties may also further address them at the hearing.    

Applicable Law

A notice of pendency of action or lis pendens is a recorded document giving constructive notice that an action has been filed affecting right or title to possession of the real property described in the notice.  (Park 1000 Investment Group II v. Ryan (2010) 180 Cal.App.4th 795, 807.)  It is a provisional remedy which is to be used sparingly, and only to advance the interests of litigant claimants.  (Formula Inc. v. Superior Court (2008) 168 Cal.App.4th 1455, 1462; BGJ Associates, LLC v. Superior Court (1999) 75 Cal.App.4th 952, 967.)  As often remarked in the cases, the practical effect of a lis pendens is to pour sand into the gears of a real estate transaction and render the property unmarketable.  (Gale v. Superior Court (2004) 122 Cal.App.4th 1388, 1394-1395.)

The purpose of a notice of pendency of action is to give notice of an adverse claim to persons who subsequently acquire an interest in that property.  Once a notice of pendency of action is filed, it clouds the title and effectively prevents the property’s transfer until the litigation is resolved or the notice of pendency of action is expunged.  Factual merit is necessary to the maintenance of a notice of pendency of action; a fortiori, the real property claims on which a notice of pendency of action is based must be finally adjudicated in favor of the party asserting the notice of pendency of action in order to confer the benefits provided in the statutory scheme.  The Legislature created expungement procedures to timely weed out groundless claims, and to mitigate against and control misuse of the notice of pendency of action procedure.  (Palmer v. Zaklama (2003) 109 Cal.App.4th 1367, 1375-1376; Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1023.)

Pursuant to Code of Civil Procedure section 405.30, anyone with an interest in real property may move a court for an order expunging a notice of pendency of action.  A court shall grant a motion to expunge if either of the following conditions exists:  (1) the pleading upon which the notice of pendency of action is based does not contain a real property claim (Code Civ. Proc.,  § 405.31); or (2) the claimant has not established by a preponderance of the evidence the probable validity of the real property claim (Code Civ. Proc., § 405.32).

A real property claim that properly supports a notice of pendency of action is one that would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading.  (Code Civ. Proc., § 405.4.)  The test to determine whether or not a cause of action is a real property claim turns on the adequacy of the pleadings and not evidence submitted for or against the issue.  In other words, trial courts engage in a demurrer-like review only.  (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 647-648; Campbell v. Superior Court (2005) 132 Cal.App.4th 904, 911.) 

The demonstration of probable validity requires a determination that it is more likely than not that the claimant will obtain a judgment against the defendant on the claim. (Code Civ. Proc., § 405.32.)  The court is required to weigh the evidence and make a preliminary determination based on the evidence submitted, of whether it is more probable than not, that the claimant will prevail on its real property claim. (Mix v. Superior Court (2004) 124 Cal.App.4th 987, 994-995.) This determination must be made based on a preponderance of evidence, with the claimant bearing the burden of proof. (Code Civ. Proc., § 405.32; see, Amalgamated Bank v. Superior Court (2007) 149 Cal.App.4th 1003, 1007; Shah v. McMahon (2007) 148 Cal.App.4th 526, 529.)

Merits

The first cause of action is for specific performance against Defendants, in efforts to enforce the commercial property purchase agreement for the Subject Property.  (Complaint, at ¶¶ 15-19.)  “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.’”  (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.)  A complaint seeking specific performance of a contract to purchase real property “concerns title and possession of real property.”  (Hilberg v. Superior Court (1989) 215 Cal.App.3d 539, 542.)  Accordingly, Plaintiffs’ Complaint includes a real property claim. 

However, Plaintiffs have not established by a preponderance of the evidence the probable validity of this real property claim.  They did not meet their burden to show the inadequacy of their legal remedy.  “It 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.”  (Civ. Code, § 3387.) 

The specific performance claim involves a transaction to purchase commercial real property.  Plaintiffs’ evidence shows they paid $905,026 in taxes because they were unable to timely purchase an investment property for their 1031 exchange.  (Supp. Opp., at Exh. 1, ¶ 10; Exh. 2, ¶ 9; and Exh. 3, ¶ 27 [ROA No. 90].)  Although Plaintiffs contend they entered into a lease for the Subject Property, Plaintiffs have not presented any evidence to show what damages arose or may arise from the lease.  Plaintiffs have not shown that monetary damages are insufficient.  Accordingly, the motion is granted. 

The parties did not provide the court with a copy of the recorded notice of pendency of action.  It appears that the parties have used a copy of the notice of pendency of action before it was recorded.  As a result, the court is unable to confirm the recording date of the notice of pendency of action and the County Recorder’s document number.  At the hearing, counsel should be prepared to address whether the notice of pendency of action was recorded on April 15, 2021, and whether the document number is 2021000254699.  The proposed order submitted by Defendants does not contain any legal description of the subject property.  Defendants shall electronically submit another proposed order that includes both the common address and the legal description of the property.  An abbreviated legal description will suffice. 

Defendants shall give notice of the ruling.