Judge: H. Jay Ford, III, Case: 24SMCV03137, Date: 2024-09-17 Tentative Ruling

Case Number: 24SMCV03137    Hearing Date: September 17, 2024    Dept: O

Case Name:   Burkle v. Azria

SUBJECT:                MOTION TO EXPUNGE LIS PENDENS

MOVING PARTY:   Defendant Lubov Azria, Trustee of the Azria Family Trust Dated August 11, 1995 as amended;

RESP. PARTY:         Plaintiff Ronald W. Burkle

TENTATIVE RULING

             Defendant Lubov Azria, Trustee of the Azria Family Trust Motion to Expunge Lis Pendens is GRANTED.  Plaintiff fails to reach their burden of proving by a preponderance of evidence that there is a probable validity to their claims. Plaintiff is ordered to pay Azria sanctions of $_______ within 20 days.

            Azria’s Objections are OVERRULED as to No. 1, and SUSTAINED as to Nos. 2 and 3.

REASONING

“At 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.”  (CCP §405.30.)  On a motion to expunge a notice of lis pendens, the claimant who filed the lis pendens has the burden of proof under CCP §§405.31 and 405.32.  (See CCP §405.30; Kirkeby v. Supr. Ct. (2004) 33 Cal.4^th 642, 648 [“Unlike most other motions, when a motion to expunge is brought, the burden is on the party opposing the motion to show the existence of a real property claim.”].) 

Thus, that claimant, in opposing the motion to expunge the lis pendens, must demonstrate the following: (1) the action affects title to or right of possession of the real property described in the notice; (2) in so far as the said notice is concerned, the party recording the notice has commenced the action for a proper purpose and in good faith; and (3) the probable validity of the real property claim by a preponderance of the evidence.  (See Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 70; see also CCP §§405.31 and 405.32.)  The court must order the notice expunged if it finds the pleading on which the notice is based does not contain a real property claim or the claimant has not established by a preponderance of the evidence the probable validity of the real property claim (CCP §§ 405.31, 405.32.)

I.                Probable Validity Of The Real Property Claim By A Preponderance Of The Evidence

            Plaintiff Ronald W. Burkle (“Plaintiff”) argues this motion should be denied because the plaintiff adequately alleged the breach of contract cause of action, and thus established the specific performance cause of action in turn.

The essential elements of breach of contract are “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." (D'Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)

“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.)

“It is, of course, basic hornbook law that the existence of a contract is a necessary element to an action based on contract, regardless whether the plaintiff seeks specific performance or damages for breach of contract.” (Roth v. Malson (1998) 67 Cal.App.4th 552, 557.)

The Complaint alleges in the factual background that on 5-9-24 Plaintiff submitted an “irrevocable bid for $30,000,000 to purchase” Defendant Lubov Azria’s (“Defendant”) Property located at 10250 West Sunset Boulevard, Los Angeles, CA (the “Property”). (Compl., ¶¶ 5, 13.) Plaintiff placed the bid on the Property via Concierge Auctions, LLC (the “Auction House”), and the Auction House “authorized the auction to be without reserve.”. (Id., ¶¶ 4, 12.) “Plaintiff’s bid was the successful bid to purchase the Property, and on May 23, 2024. shortly after the auction closed, the Auction House notified Plaintiff he was the successful bidder.” (Id., ¶ 14.)  Plaintiff alleges that he was and is now ready, willing able to consummate the purchase to his successful bid, notifying the Defendant as such through multiple attempts to reach agreement, however, Defendant “refused to complete the sale, except on unreasonable terms that were not part of, and were inconsistent with, the auction announcement and terms.” (Id., ¶¶ 15–18.)

            Plaintiff argues that these allegations establish an enforceable contract between Plaintiff and Defendant commencing immediately upon the conclusion of the auction for the purchase of the Property for $30,000,000 under California Commercial Code § 2328. (See Cal. U. Com. Code, § 2328 [“(1) In a sale by auction if goods are put up in lots each lot is the subject of a separate sale . . . . (2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner.”].)  However, California Commercial Code § 2328 governs auctions of goods, not auctions of real property, and thus has no bearing on the creation of an enforceable contract in this matter. Even assuming the commercial code does apply to this auction, the effect of provisions of the commercial code “may be varied by agreement.” (Cal. U. Com. Code, § 1302, subd., (a); see also Hester v. Public Storage (2020) 49 Cal.App.5th 668, 676 [parties can agree to additional grounds for voiding sale].)  Additionally, contracts for the sale of real property must be in writing subject to the statue of frauds. (See Reeder v. Specialized Loan Servicing LLC (2020) 52 Cal.App.5th 795, 801 [“An agreement for the sale of real property or an interest in real property comes within the statute of frauds.”].)

Defendant shows Plaintiff agreed to Terms & Services (“T&C”) prior to bidding that stated conditions Plaintiff was required to satisfy in order to close on the sale of the Property. Defendant submits admissible evidence from the Concierge Auctions, LLC custodian of records, Aaron Gordon (“Gordon”), providing the “T&C” that Concierge requires all bidders to execute as a condition of participating in a Concierge auction. (Gordon Decl., ¶ 1–2, 6.). Gordon declares that Plaintiff entered into the T&C on 5-3-24, prior to placing the 5-9-24 Property bid, and attached a copy of the T&C to the declaration. (Id., ¶ 7; Ex. C (“T&C”).). The T&C states the following:

1.     “You hereby acknowledge that you have reviewed the applicable Purchase and Sale Contract [“PSA”], you agree to execute the [PSA] upon request, to make any additional earnest money deposits required under the Purchase and Sale Contract, and further understand that the [PSA] will be legally binding once executed by you.” (T&C, p. 4.)

2.     “Once bidding is complete and the Buyer is identified by Concierge, Buyer will be required immediately to execute the [PSA]” (Ibid.)

3.     “A Buyer of Property shall initiate a wire transfer to Escrow Agent or applicable closing agent listed in the [PSA] for its earnest money deposit up to twelve percent (12.00%) of the Purchase Price (the “Deposit”), and the executed [PSA], Escrow Instructions and other documents reasonably required by the Escrow Agent must be received no later than 5:00 p.m. Local Time on the second business day following the Auction date and the Deposit must be received by the Escrow Agent no later than 5:00 p.m. Local Time two business days following the Auction date” (Ibid.)

4.     “Bidder acknowledges that its failure to execute the [PSA] or to pay the full Deposit is a material breach that will result in forfeiture of the Bidder’s Deposit, among other things.” (Ibid.)

5.     “Seller will convey good and marketable title to the Property free and clear of all liens and encumbrances, except as set forth in the Purchase and Sale Contract and subject to any Preliminary Title Report related to the Property. You are advised to review the Purchase and Sale Contract and the Preliminary Title Report/Commitment for the Property prior to participating in any Auction” (Id., p. 7.)

6.     “BUYER’S PURCHASE OF THE PROPERTY IS A CASH TRANSACTION AND IS NOT SUBJECT TO OR DEPENDENT UPON ANY CONTINGENCIES OR CONDITIONS OF ANY KIND, including, without limitation, a contingency for financing, due diligence or inspections.” (Id., p. 7.)

Defendant attaches a copy of the PSA, and Rider, at issue here, to the Gordon Declaration and declares that Plaintiff failed to sign the PSA or remit the earnest money deposit within the T&C allotted time, or anytime as of 6-19-24. (Gordon Decl., ¶¶ 10, 11; Ex. D (“PSA”), E (“Rider”); Worley Decl., ¶¶ 9–11; Ex. A [email conversations regarding Plaintiff’s failure to execute the PSA or the earnest money deposit].) Defendant argues the failure to timely execute the PSA and remit the earnest money deposit constitutes a material breach of the T&C and “obviates any obligation [Defendant] may have to had to sell the property. (Reply., p. 4; T&C, p. 4.)

            Plaintiff argues the intent of the parties was for an immediately enforceable contract for the purchase and sale of the Property, to arise upon the fall of the gavel at the auction without reserve. (Oppo., p. 8.)  Plaintiff does not provide any evidence of intent other than referring to the pleadings and the law applicable to the auction of goods, not real property.

            Plaintiff argues that the Auction House required Plaintiff to execute a copy of a Terms and Conditions (“T&C”) in order to bid on the property itself, but not “to set forth the terms of the agreement to purchase the Property.” (Oppo., pp. 8:12–28–9:4.) Plaintiff points to sections of the T&C which provide that “Seller may extend the closing date pursuant to PSA or other negotiations between Seller and Buyer”, and that “Seller will convey good and marketable title to the Property free and clear of all liens and encumbrances except as set forth in PSA,” to argue this point. Nevertheless, the T&C expressly states the winning bidder is subject to executing the PSA and remitting the Earnest Money Deposit by a specific date. These provisions are clear terms regarding the purchase of the property, and not just terms stated to bid on the property only.  

Plaintiff cannot meet his burden to show by a preponderance of evidence that he will succeed on their breach of contract claim, and in turn the specific performance claim. The only agreement Plaintiff can possibly allege the parties are bound by is the T&C. (See Compl., ¶ 27 [“Plaintiff and Azria understood and agreed to be bound by the terms of the contract.”].) Plaintiff provides no evidence of any other agreement entered into, nor does Plaintiff dispute entering into the T&C in the opposition. Azria has shown by a preponderance of evidence that Plaintiff breached the T&C, that Plaintiff has not entered into the PSA nor sent the earnest money deposit. Because the PSA was never executed, there is no contract for the sale of the property, and thus no specific performance of a real property contract can be ordered, nor can a breach of contract claim succeed.

            Plaintiff fails to reach their burden of proving by a preponderance of evidence that there is a probable validity to their claims.  The Motion To Expunge Lis Pendens is GRANTED.

II.             Defendant’s Request for Attorney’s Fees

            “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.”  (Code Civ. Proc., § 405.38.)  The prevailing party on a motion to expunge is entitled to an award only against the losing party. There is no provision for an award against the losing party's attorneys as sanctions or otherwise.  (See Doyle v. Sup.Ct. (Jacinth Develop., Inc.) (1991) 226 Cal.App.3d 1355, 1359.) 

            Plaintiff argues they brought the complaint and lis pendens with substantial justification that Defendant breached a contract when not transferring title to Plaintiff. The Court disagrees.  The evidence shows Plaintiff has not acted with substantial justification and that awarding Defendant reasonable attorney’s fees is not unjust.

            Azria requests an award of $53,590.00 in attorney’s fees and costs ($60 filing fee) as the prevailing party.  Azria claims to have incurred $45,030 to prepare and file the motion to expunge and supporting documents.  Mr. Casparian states he spent 30 hours “preparing and drafting” the motion and accompanying memorandum and declarations at his hourly rate of $860. Ms. Suchard (a 5^th year associate) also spent 30 hours “preparing and drafting” the same documents at an hourly rate of $525.00. Additionally,  Mr Posivak (1^st year associate) spent an additional 8 hours at $435 per hour for legal research in connection with the preparation of the motion. (See Casparian Decl., ¶¶ 5–8).  In addition, Defendant’s request attorney’s fees of $6,700 for the preparation of the reply memorandum, and finally an additional $1,720 to appear at the hearing. (Casparian Reply Decl., ¶¶ 8–12.)

            As the prevailing party, it is Azria evidentiary burden to show its claim for attorney fees is reasonable by demonstrating that the fees incurred were necessary for the conduct of the litigation and were reasonable in amount. (See, Mikhaeilpoor v. BMW of North America, LLC, (2020) 48 Cal.App.5th 240)  “[If the prevailing party fails to meet this burden, and the court finds the time expended or amount charged is not reasonable under the circumstances, “then the court must take this into account and award attorney fees in a lesser amount.” (citation.)” (Id, at 2467.  As the Court explained in Concepcion v. Amscan Holdings, Inc. (2014) 223 Cal.App.4th 1309, 1320:

“Of particular significance here, this initial calculation requires the court to determine the reasonable, not actual, number of hours expended by counsel entitled to an award of fees. (Citation.) Thus, class counsel “are not automatically entitled to all hours they claim in their request for fees. They must prove the hours they sought were reasonable and necessary.” (Citation) “The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended.” (Citation.) Indeed, “[a] fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.” ( errano v. Unruh (1982) 32 Cal.3d 621, 635, 186 Cal.Rptr. 754, 652 P.2d 985; accord, Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 990, 104 Cal.Rptr.3d 710, 224 P.3d 41; see Ketchum v. Moses, supra, 24 Cal.4th at p. 1132, 104 Cal.Rptr.2d 377, 17 P.3d 735[“[i]n referring to ‘reasonable ’ compensation, we indicated that trial courts must carefully review attorney documentation of hours expended; ‘padding’ in the form of inefficient or duplicative efforts is not subject to compensation”].

            Other than stating a loadstar calculation of the hourly rates and time spent, Defendant have not offered any evidence of why the extraordinary time spent was necessary, or the substantial hourly rates are reasonable.  In particular, as noted by Plaintiff, Azria has not explained why it was necessary or reasonable to have two experienced attorneys each spend 30 hours to prepare the motion and accompanying documents as well as duplicate hours for the drafting of the reply.  The Court finds Azria has failed to meet its burden and the Court finds the total time expended is not reasonable under the circumstances. Taking this into account, the Court finds the reasonable amount of attorney’s fees to be awarded to Azria is _______________________ to be paid by Plaintiff to Azria within 20 days.