Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

This case arises out of a failed real estate deal.  Non-party HSK Properties, LLC is the predecessor in interest to Plaintiff Benzene LB Prop, LLC (Buyer).  HSK entered into two purchase agreements (the “Purchase Agreement”) with Defendant Sky Vintage LLC (Seller) whereby HSK agreed to buy real property located at 1235 S. Beverly Glen Blvd (“1235 Property”) and the adjacent property located at 1241 S. Beverly Glen Blvd (“1241 Property,” and together with the 1235 Property, the “Property”).  (Chao Decl., ¶2, Ex. 1.)  The Property consists of sixteen rental units.  (Id.) 

Addendum No. 1 to the Purchase Agreement provided for a 45-day due diligence period and for closing to take place 90 days after the expiration of due diligence, making the initial closing date for the sale of the Property June 18, 2024 (the “Closing Date”). (Id., ¶ 3, Ex. 1, at Addendum No. 1.) Addendum No. 1 also provided that Buyer could obtain two extensions of the Closing Date, by depositing a $25,000 non-refundable deposit into escrow for each extension, and specifically stated that such deposits would apply to the purchase price if Buyer proceeded to closing. (Id.)  

On January 21, 2024, the parties entered into the first Amendment to the Purchase Agreement (the “Amendment”). (Id., ¶ 4, Ex. 2.) The Amendment provided that all references to the term “Buyer” included HSK Properties, LLC and/or its assignee, and further clarified that the “Closing Extensions” referenced in Addendum No. 1 to the Purchase Agreement were to be thirty (30) days each. (Id., Ex. 2 at §§ 5-6.)  Because Buyer planned to redevelop the Property, the Amendment also added the following provision: “Seller will cooperate with buyer in its efforts to achieve its business plans by signing required documents that a city, county, state, or other governmental agency may require to be signed by seller so long as any and all associated with such requests costs are to be paid for by buyer.” (Id., Ex. 2, at § 2 (emphasis added).)  Finally, the Amendment provided that Seller cannot terminate or cancel the Purchase Agreement for any reason except in in the event that Buyer defaults under the Purchase Agreement, Seller delivers to Buyer written notice of such default, and Buyer fails to cure such default within ten (10) days after notice. (Id., Ex. 2 at § 4.)  

Buyer exercised both of its options to extend the closing date by thirty days each, and as a result, the new closing date for the transaction became August 18, 2024. (Id., ¶ 6.)  On August 16, 2024, because Buyer needed additional time to close, the parties entered into a Second Amendment to the Purchase Agreement (the “Second Amendment”). (Karns Decl., ¶ 3., Ex. 3.) The Second Amendment provided that the new Closing Date would be “no later than November 7, 2024.” (Id., Ex. 3 at § 3 (emphasis added).)  The Second Amendment also stated that, in consideration for Sky Vintage’s agreement to extend the closing date, Plaintiff agreed to pay a fee of $1,081 for each calendar day that the current Closing Date was extended. (Id., Ex. 3 at § 3.2) 

On November 30, 2024, the parties entered into a Third Amendment to the Purchase Agreement (“Third Amendment,” and together with the first Amendment and Second Amendment, the “Amendments”) because, once again, Plaintiff could not close on the Closing Date and needed more time. (Id., ¶ 4, Ex. 4.)  The Third Amendment was structured to provide three additional extensions of one month each, upon payment of a fee. (Id., Ex. 4 at § 4.) Following the execution of the Third Amendment and delivery of an extension fee, the new closing date became December 31, 2024. (Id.)  

Plaintiff failed to deliver the extension fee within the period required by the Third Amendment. (Id., ¶ 6.) And Plaintiff failed to exercise its second closing date extension option by December 26, 2024, as also required by the Third Amendment. (Id.)  Plaintiff was again not ready or able to close on December 31, 2024 – the then-set Closing Date. (Id.)  

Accordingly, on December 29, 2024, counsel for Seller, sent an email to Buyer’s representative, Michael Goldstein, reminding him of Buyer’s past and upcoming obligations pursuant to the Third Amendment. (Id., ¶ 7, Ex. 5.) Though late, Buyer eventually made all outstanding payments relating to the first two extension options. (Id., ¶ 8.)  However, Buyer continued its practice of failing to meet deadlines and make timely payments, as required under the Purchase Agreement and its Amendments. (Id., ¶ 9.)  

Around the same time, Buyer asked Seller to sign a form “Letter of Authorization” (“LOA”) and have it notarized. (Id., ¶ 10, Ex. 6.)  The LOA authorized Buyer to act as an “authorized agent” of Seller, and authorizes Buyer to execute application forms on behalf of Seller in connection with the development of the Property. (Id., Ex. 6.)  Seller refused to sign the document but asked if there were any specific documents that Buyer sought to file with the City, and if so, to provide them to the Seller. (Id., ¶ 11, Ex. 7.)   

In response, Buyer took the position that the LOA falls under § 2 of the Amendment to the Purchase Agreement, and requires Seller to “cooperate with Plaintiff by signing required documents that a city, county, state, or other governmental agency may require to be signed by seller (as the property owner).” Based on this language, Buyer argued that Seller was required to sign the LOA. (Id., ¶ 12, Ex. 8.)  Seller countered that the LOA is not a required document that a government agency requires to be signed by Seller, but rather a document that Buyer would like to have signed so that Buyer’s representative could sign any development documents on behalf of Seller, which is not what the Purchase Agreement calls for. (Id.)  

When January ended, Buyer had failed to extend the closing date or pay its extension fee. (Id., ¶ 14.) As a result, the agreed closing date was January 31, 2025. (Id.)  Seller repeatedly asked Buyer to confirm that Buyer was exercising its option to extend the closing date, even though the deadline to do so had passed on January 26, 2025 and the parties had still not closed the sale. (Id., ¶ 15, Ex. 10.)  In response, Buyer and its representatives would continuously claim that the issues would be resolved the next day, but they never were. (Id.)   

Seller advised Buyer that the transaction was at risk, and it was imperative that Buyer respond and deliver the required extension payments into escrow. (Id.)  On February 11, 2025, Seller informed Buyer it was seriously considering terminating the Purchase Agreement as a result of Plaintiff’s failure to close on the agreed upon date, failure to deliver the extension notice or payment, and failure to communicate. (Id., ¶ 18, Ex. 12.)  Receiving no response, Seller sent notice of its election to terminate on February 20, 2025. (Id., ¶ 19, Ex. 13.)  

Less than eight hours later, Buyer filed the instant action, and a few days later, it recorded a lis pendens on the Property.  The Complaint alleges that Seller breached the Amendment to the Purchase Agreement by refusing to sign the LOA.   

This hearing is on Seller’s motion to expunge lis pendens.  Seller argues that Buyer’s claims lack probable validity because it was Buyer (not Seller) who defaulted on the Purchase Agreement, resulting in the cancellation of the contract.      

LEGAL STANDARD 

“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 Civ. Proc., § 405.20.) The purpose of lis pendens is to “give notice that a lawsuit has been filed which may, if that person prevails, affect title to or possession of the real property described in the notice.”¿(Fed. Deposit Ins. Corp. v. Charlton (1993) 17 Cal.App.4th 1066, 1069.) 

“The lis pendens procedure¿[is] susceptible to serious abuse, providing unscrupulous Plaintiffs with a powerful lever to force the settlement of groundless or malicious suits.”¿(Malcolm v. Superior Court (1981) 29 Cal.3d 518, 524.) “In order to alleviate potential abuses in the filing of lis pendens claims, the Legislature created prejudgment procedures for their expungement.”¿(Id.¿at 524-25.) Therefore, “[a]t any time after notice of pendency of action has been recorded, any party, or any nonparty with an interest in the real property affected thereby, may apply to the court in which the action is pending to expunge the notice.”¿(Code Civ. Proc., § 405.30.) 

A court shall order expungement of a lis pendens if the pleading on which it is based does not state a real property claim, if the claimant fails to establish the probable validity of the real property claim, or if the giving of an undertaking would secure adequate relief to the claimant.¿ (Id.¿§§ 405.31,¿405.32,¿405.33.)  ¿“Probable validity ‘means that it is more likely than not that the claimant will obtain a judgment against the defendant on the claim.’” (De Martini, 98 Cal.App.5th at 1279.) 

DISCUSSION 

Seller argues that the lis pendens should be expunged because Buyer cannot establish the probable validity of its claim.  The Court agrees.   

In order to avoid expungement, Buyer must prove that it is more likely than not that it will prevail on its sole claim for breach of contract. To do so, Plaintiff must show all of the following: (1) the existence of a contract, (2) the plaintiff’s performance or a valid excuse for nonperformance, (3) the defendant’s breach of the contract, and (4) resulting damages to the plaintiff. (Salami v. Los Robles Regional Medical Center (2024) 103 Cal.App.5th 1023, 1027; see also Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)  

Here, Buyer cannot prove it performed all of its obligations under the Purchase Agreement and its Amendments.  As detailed above, Buyer breached the terms of the Purchase Agreement and its Amendments, by failing to close within the closing date or providing notice of an extension of the closing date and paying the required extension fee.   

Buyer also cannot prove by a preponderance of the evidence that Seller breached the Purchase Agreement.  Buyer claims Seller breached in two ways, by (1) refusing to sign the LOA and (2) terminating the Purchase Agreement.   

As to the first alleged breach, Seller’s refusal to sign the LOA was not a breach of the Purchase Agreement or any of its Amendments. The Amendment to the Purchase Agreement provided that Seller would sign any documents that a government entity required a property owner to sign, in connection with Buyer’s development applications.  But the LOA itself is not a document that any city, county, state, or other governmental agency requires a property owner to sign in connection with a Department of City Planning Application.  

To commence the development process, the City requires that a “Property Owner Affidavit” be signed and notarized by the owner(s) of the property that is the subject of the City Planning Application. (Id., ¶ 20, Ex. 14 at § 7.) The purpose is to ensure that the application is filed with the property owner’s knowledge. (Id., Ex. 14 at § 7.)  In the case when the applicant is not the property owner, the City will require proof of the applicant’s authority to submit the application on behalf of the property owner of record. (Id., Ex. 14 at § 7.)  

The City Planning Application Filing Instructions provide three (3) different ways in which this can be accomplished. (Id.) First, if the property is owned by a partnership, corporation, LLC, or trust – as is the case here – an Ownership Disclosure identifying an officer of the ownership entity may be submitted, and the Disclosure must identify the signatory on the City Planning Application Form as a principal owner with 25% interest or more. (Id.)  Under this method, Buyer could have asked Seller to have an officer with at least a 25% interest in Seller sign the City Planning Application Form as the property owner, and provide an Ownership Disclosure that reflects the same.  Seller claims it would have done so.   

The LOA is a second option to show proof of ownership. The City Planning Application Filing Instructions states that, “Occasionally, an LOA from a Property Owner granting someone else permission to sign the City Planning Application Form may be provided.” (Id. (emphases.) A third way of showing proof of ownership is through providing a Grant Deed, with names that exactly correspond with the names listed in the City Planning Application Form. (Id.)  Thus, the LOA is not a document that is required by a city, county, or other government agency to be signed by the property owner.  It is just one of three options that Buyer had available to show proof of its authority to submit the development application, and Buyer could have proceeded with option one, which the Seller claims it would have satisfied.  

Further, the LOA Buyer asked Seller to sign is not a required document because it does not comport with the LOA language required by the City.  The City Planning Application Form provides that a LOA must include various specific items in order to be considered for acceptance, including the language from items A-D:  

a. I hereby certify that I am the owner of record of the herein previously described property located in the City of Los Angeles which is involved in this application or have been empowered to sign as the owner on behalf of a partnership, corporation, LLC or trust as evidenced by the documents attached hereto. 

  

b. I hereby consent to the filing of this application on my property for processing by the Department of City Planning;  

 

c. I understand if the application is approved, as a part of the process the City will apply conditions of approval which may be my responsibility to satisfy, including, but not limited to, recording the decision and all conditions in the County Deed Records for the property. 

  

d. By my signature below, I declare under penalty of perjury under the laws of the State of California that the foregoing statements are true and correct. (Id., Ex. 15 at Property Owner Affidavit (emphasis added).)  

The LOA that Buyer sent Seller and demanded it sign omitted item c, above. (Id., ¶ 23, Ex. 6.)  Buyer quoted terms a, b, and d verbatim, but omitted the terms of c.  By failing to include c, the LOA the Buyer asked Seller to sign, was not a required document.  

As to the second alleged breach, Seller did not breach the Purchase Agreement or any of its Amendments when it terminated the Purchase Agreement following Buyer’s ongoing and repeated breaches.  Buyer failed to close the deal before the Closing Date, and failed to exercise its option to extend the closing date and pay the required extension fee.  Seller provided written notice to Plaintiff of its numerous ongoing defaults for more than 10 days as required under the Purchase Agreement.  (Id., Ex. 2, § 4.)  Having failed to provide the necessary extension fee, Buyer appears to be attempting to tie up the Property with a meritless lawsuit filed for the sole purpose of recording a lis pendens.  

In sum, Buyer has not shown by a preponderance of the evidence that Seller committed any breaches of the Purchase Agreement. In contrast, Seller can prove by a preponderance of the evidence that Buyer committed many breaches of the Purchase Agreement and the Amendments thereto.  As such, Plaintiff’s single cause of action fails as a matter of law, and its lis pendens must be expunged.   

Seller seeks attorneys’ fees and costs in connection with the filing of its motion to expunge.  Code of Civil Procedure section 450.38 provides for an award of reasonable attorneys’ fees and costs incurred in making a motion to expunge a lis pendens: “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.”  Here, Seller has not specified the amount of fees and costs it is seeking, and there is therefore no basis to determine whether the unspecified fees and costs are reasonable.  Accordingly, the Court denies the request for fees and costs, without prejudice to a later, properly supported motion.   

CONCLUSION 

Based on the foregoing, the Court GRANTS Defendant’s motion to expunge lis pendens.   

 

IT IS SO ORDERED. 

 

DATED: April 29, 2025 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court