Judge John J. Kralik, Case Number: 20BBCV00001, Date: 2023-07-21 Tentative Ruling

Counsel who wish to submit on the tentative ruling may do so by emailing BURDeptB@lacourt.org

PLEASE WRITE THE CASE NUMBER AND PARTY YOU REPRESENT. YOU MAY ONLY SUBMIT ON BEHALF OF THE PARTY YOU REPRESENT. YOU MAY NOT SUBMIT ON BEHALF OF ANOTHER PARTY.Counsel are directed to cc all other counsel if you are submitting on the tentative ruling.

IF YOU HAVE QUESTIONS OR NEED CLARIFICATION ON THE TENTATIVE, YOU MUST APPEAR AND ADDRESS YOUR QUESTIONS TO THE COURT.

IF BOTH SIDES SUBMIT ON THE TENTATIVE RULING, THE TENTATIVE RULING THEN BECOMES THE ORDER OF THE COURT ON THE MOTION DATE AND NO APPEARANCES ARE NECESSARY.

Superior Court of California

County of Los Angeles

Department B

Plaintiff Lisa Ross Hughes (“Plaintiff”) alleges she holds a 50% undivided interest as a tenant in common in the real property located at 1307 North Avon Street, Burbank, CA 91505. Plaintiff alleges that Defendant Linda Louise Ross, as Trustee of the Linda Louise Revocable Living Trust, dated 10-29-18 (“Ross Trust”) has an interest in the property pursuant to a grant deed against the property on November 2, 2018. Upon this basis, Plaintiff alleges that Defendant Linda Ross (“Ms. Ross”) has a 50% undivided interest as a tenant in common in the subject property. Plaintiff alleges that Defendants Christopher W. McKee (“Mr. McKee”) and Evelyn McKee (“Ms. McKee”) are the first and secondary beneficiaries of the loan secured by the deed of trust recorded against the property on August 16, 2018, respectively. Defendant Michelle Garcia (“Ms. Garcia”) is alleged to be in possession of the property.

The complaint, filed January 2, 2020, alleges causes of action for: (1) partition and (2) ejectment.

On August 24, 2020, the dismissals with prejudice of Mr. McKee, Ms. McKee, and Ms. Garcia were entered.

On August 25, 2020, the dismissal without prejudice of the Linda Louise Ross, as Trustee of the Linda Louise Revocable Living Trust was entered.

On September 8, 2020, the Court entered the Stipulation and Order regarding Sale of the Property and Dismissal of Complaint (“Stipulation”). The stipulation provides the following terms:

· Plaintiff shall not move for default judgment against Defendants while they work to resolve their dispute. (¶1.)

· The parties agree to list and sell the subject property with an agreed-upon broker or co-list the property for sale with their respective brokers. (¶2.)

· The parties agree that any proposed expenses to prepare the property for sale must be approved by all parties, in writing, prior to such expenditure. (¶3.)

· The proceeds from the sale of the property shall be disbursed to Ms. Ross’ counsel. Defense counsel shall neither disburse nor transfer any of the proceeds without the prior written agreement of the parties, or court order. (¶4.)

· The property must be vacated within 30 days of signing the Stipulation. Plaintiff shall bear responsibility for vacating the premises, including payment of any costs, if necessary. Plaintiff will evict the tenant who has possession of the property. The parties understand and acknowledge that this may take longer than 30 days due to COVID-19. Plaintiff shall work as quickly as possible to evict through the process of unlawful detainer action, including filing any necessary eviction paperwork within 30 days of signing the Stipulation. (¶5.)

· The parties will enter into a Settlement Agreement and Mutual Release with a CCP § 664.6 term. (¶6.)

· The parties agree that this Court shall retain jurisdiction pursuant to CCP § 664.6 to reopen the case following dismissal and enforce the terms of the Settlement Agreement until the Settlement has been fully performed. (¶7.)

· In the event that any party fails to comply with the Stipulation such that another party retains an attorney to enforce the terms or litigate the matter, the prevailing party shall be entitled to reasonable attorney’s fees and costs. (¶8.)

· Upon sale of the property, the parties further agree that the complaint shall be dismissed as to all parties and causes of action with prejudice with the Court retaining jurisdiction over the distribution of the proceeds from the sale of the property under CCP § 664.6. (¶9.)

· For clarification purposes, Linda Louise Ross as trustee of the Ross Trust and Linda Ross correspond to the same natural person. Linda Louise Ross as trustee of the Ross Trust has been dismissed. Linda Ross remains the sole defendant. (¶10.)

On June 17, 2022, Plaintiff dismissed the action without prejudice as to the entire action of all parties and all causes of action.

On April 5, 2023, Defendant Linda Louise Ross filed a motion to reopen the case.

On May 11, 2023, Ross filed a notice of non-opposition to the motion, stating she was not in receipt of an opposition brief and requesting that the Court disregard any untimely opposition.

The matter came for hearing on June 16, 2023. The Court ordered the parties to file and serve supplemental briefs regarding their positions on the correct distribution of the net proceeds from the sale of the property. Plaintiff was ordered to submit her brief by July 14, 2023 and Ross was ordered to submit her brief by July 20, 2023.

Ross moves to reopen the case so that the Court may determine the distribution of the net proceeds from the sale of the subject property. Ross moves pursuant to paragraphs 7 and 8 of the September 8, 2020 Stipulation and based on Plaintiff’s purported criminal conduct, fraud, unreasonable delay, and loss of money regarding the sale of the property. Ross argues that Plaintiff has not complied with the Court’s September 8, 2020 order, Plaintiff has claimed that she intended to sell the property as her own (though Plaintiff and Ross are 50/50 owners), and Plaintiff prematurely filed a request for dismissal on June 17, 2022 which was 3 months prior to the sale of the property. Ross argues that various violations of the Stipulation occurred, including Plaintiff unilaterally hiring a broker as opposed to the parties hiring an agreed upon broker, Plaintiff’s broker designated Plaintiff as the sole seller, Plaintiff’s daughter Michelle Garcia were conducting illegal activities at the property, other tenants were living at the property and paying rent to Michelle Garcia, and Plaintiff delayed in filing unlawful detainer actions to evict the tenants. As such, Ross argues that the net proceeds from the sale were $923,817.56 and that she has requested distribution of the net proceeds by which she receives $815,854.72 and Plaintiff receives $107,962.84, which Ross argues would account for: (a) the rent collected by Plaintiff’s daughter (487 months x $3,995 = $191,760, or 50% of which would amount to $95,880) + (b) loss of net proceeds from the sale of the property for failure to sell the property to buyers who were potentially willing to buy at a higher price ($150,000) + (c) compensation for legal fees and costs ($49,074.95) + (d) interest at the rate of 10% per annum from May 27, 2021 (filing date of the second UD action, in the sum of $58,990.99). (Mot. at p.20.)[1]

In opposition, Plaintiff argues that the drop in the sales price was due to Ross’s delay in cooperating with the necessary steps to complete the transaction, such that Ross thwarted the $998,000 offer and Ross and her counsel orchestrated a sale of their own for a lesser value at $923,817.56. Plaintiff argues that though the sales price was lower, Plaintiff complied with the process, but Ross and her counsel again sought to thwart the process. Plaintiff argues that Ross’s calculation of how the sale proceeds should be divided fails to account for Plaintiff bearing the cost of the home upkeep, maintenance, and eviction of tenants. Plaintiff argues that Ross lacks standing to bring this motion because she has already absconded with the funds from the sale and is now seeking the Court’s permission to keep the funds.

The Court will reopen the case and determine the issue of distribution of funds and interest by way of this motion. The parties each submitted supplemental briefs stating their positions on how the net proceeds should be distributed between the parties.

In her supplemental brief, Plaintiff proposes that the proceeds should be distributed so that Plaintiff receives $526,160.39 and Ross receives $397,657.17. She argues that the first purchase agreement was for $1,050,000 (the price Plaintiff initiated but Ross allegedly thwarted), and thus resulted in a lower second purchase agreement of $998,000 (based on the sale by Ross). She argues the difference between the higher price they could have received and the price they ultimately received is $52,000 (= $1,050,000 - $998,000). Plaintiff states that the net proceeds from the sale of the property based on second purchase agreement was $923,817.56, and that a 50/50 distribution would amount to $461,908.78. Plaintiff states that she incurred expenses in the amount of $24,503.21 for homeowner’s insurance and taxes, security cameras, cleaning/repair materials and repairs, break-in, moving labor, court filing fees, process serving, locksmith, sheriff, and legal fees. If shared by both parties equally, this would amount to $12,251.61. Thus, Plaintiff argues that the loss of value due to the frustration of the first sale ($52,000) and the shared costs ($12,251.61) amount to a total share of costs/liabilities owed to Plaintiff from Defendant in the amount of $64,251.61. Thus, Plaintiff argues she should be entitled to $526,160.39 ($461,908.78 + $64,251.61) and Ross should receive $397,657.17 ($461,908.78 - $64,251.61).

In response, Ross argues that Plaintiff was required to work with Ross in selling the home, but Plaintiff tried to secretly sell the property without her consent and represented that Plaintiff was the sole owner of the property. Ross argues that the eventual sale of the property in the amount of $998,000 is directly attributable to Plaintiff’s delay for failing to evict Plaintiff’s daughter and subtenants and for trying to improperly sell the property in secret. Ross also argues that it may be Plaintiff’s decision not to collect rent from her daughter, but that this decision should not have affected Ross’s right to collect 50% of the rental value of the property at the agreed rental rate of $120/day or $3,995/month. In total, Ross now argues that she is entitled to an additional $300,880 (= $95,800 in loss of rental income + $150,000 in loss of net proceeds from the sale of the property + $55,000 for legal fees and court costs), plus interest at interest at 10% per annum from September 8, 2021 ($56,224.63), for a total sum of $357,104.63. Thus, Ross argues that she should be awarded $819,013.41 (= $461,908.78 + $357,104.63) and Plaintiff should be awarded $104,804.15 (= $461,908.78 - $357,104.63).

Based on the papers before the Court, the Court cannot make a full determination regarding the proper distribution of the funds. Plaintiff has provided some receipts that substantiate several of the costs, the receipts are provided in a random manner so that it is difficult to understand which receipts are attributed to the particular costs claimed by Plaintiff. Further, it is unclear if all receipts have been provided (such as for the security cameras or the “break in”). Further, Ross argues that she should be entitled to her share of the rental payments from the tenants and claims that the rental amount is $120/day or $3,995/month and vaguely cites to three unlawful detainers, but does not provide the case numbers or documentation showing that this was the agreed upon rental rate or from what date this particular rate began. (See Def.’s Suppl. Reply at p.7.) At most, the Court is in receipt of Ross’s Exhibit 12 to the motion papers showing that the Residential Agreement between Michelle Garcia/Lisa Hughes/Linda Ross and Michael K. McNeil and Clifford Costa showing that rent was for $850/month and that the landlord “may” increase the rent upon providing the tenant at least 90 days of notice. (Ross Mot., Ex. 12 [May 1, 2020 Lease for Property].)

In the Court’s June 16, 2023 order on this motion to reopen the case, the Court stated it would reopen the case in order to determine the issue of distribution of funds and interest by way of this motion. The Court also stated: “At the continued hearing date [of July 21, 2023], the Court will determine whether the distribution can be determined based on the papers or whether the issue of the distribution of funds should be set for trial.” (June 16, 2023 Order at p.5.) As discussed above, the Court cannot make a full determination on the distribution of the net proceeds and will thus set trial for the limited purpose of determining this distribution. CONCLUSION AND ORDER

Defendant Linda Louise Ross’s motion to reopen the case is granted. The Court sets a trial limited to the issue of the distribution of the net proceeds from the sale of the property. At the hearing, the Court will discuss setting a trial date and hear counsels’ estimate on the length of trial on this limited issue.

[1] If the $923,817.56 net sale proceeds were divided in half, Plaintiff and Ross would each receive $461,908.78. Based on the above calculations proffered by Ross, she seeks an additional $353,945.94 from Plaintiff, which would amount to $815,854.72. A subtraction of $353,945.94 from the $461,908.78 amount would leave $107,962.84 to Plaintiff based on Ross’s proposed distribution.