Judge: Joseph Lipner, Case: 24STCV08602, Date: 2024-07-18 Tentative Ruling

Case Number: 24STCV08602    Hearing Date: July 18, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendants Christina Ying Dong (“Dong”) and Sylmar Calvert LLC (“Sylmar”) (collectively, “Defendants”) move to expunge the notice of lis pendens currently recorded on the property located at 14401 Calvert Street, Van Nuys, California 91311 (the “Property”). Defendants additionally move for an award of attorney’s fees.

The Court GRANTS Defendants’ motion and ORDERS the expungement of Plaintiffs’ lis pendens on the Property.

Background

This case relates to failed negotiations between Plaintiffs Oren Ben Elisha and Yosef Ben Elisha (“Plaintiffs”) and Defendant Dong to purchase real property located at 14401 Calvert Street, Van Nuys, California 91311 (the “Property”) through Defendant Sylmar.

On July 27, 2023, Dong entered into a purchase agreement to purchase the Property and opened escrow. (Dong Decl. ¶ 5.)

In August of 2023, Dong offered Plaintiffs an opportunity to invest in an entity that would take title to the Property. (Dong Decl. 6.) On August 9, 2023, Dong filed the Articles of Organization for Sylmar for this purpose. (Dong Decl. ¶ 7, Ex. A.) The parties were scheduled to close escrow by February 28, 2024. (Dong Decl. ¶ 8.)

Plaintiffs filed this action on April 5, 2024, raising claims for (1) resulting trust; (2) constructive trust; (3) specific performance; (4) quiet title; (5) accounting; (6) breach of contract; (7) breach of fiduciary duty; and (8) dissolution of partnership.

Request for Judicial Notice

The Court takes judicial notice of Exhibits 1 and 3 to Plaintiffs’ opposition as public records. The Court does not take notice of the truth of their contents.

Evidentiary Objections

The Court overrules Plaintiffs’ evidentiary objections.

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. The notice may be recorded in the office of the recorder of each county in which all or part of the real property is situated. The notice shall contain the names of all parties to the action and a description of the property affected by the action.” (Code Civ. Proc., § 405.20.)

“Except in actions subject to Section 405.6, the claimant shall, prior to recordation of the notice, cause a copy of the notice to be mailed, by registered or certified mail, return receipt requested, to all known addresses of the parties to whom the real property claim is adverse and to all owners of record of the real property affected by the real property claim as shown by the latest county assessment roll. …. Immediately following recordation, a copy of the notice shall also be filed with the court in which the action is pending. Service shall also be made immediately and in the same manner upon each adverse party later joined in the action.” (Code Civ. Proc., § 405.22.)

“At any time after a notice of pendency of action has been recorded, any party. . . 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 lis pendens may be expunged either (1) if the pleadings do not contain a real property claim, or (2) if the court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim. (Code Civ. Proc., §§ 405.31, 405.32.) 

The party asserting the lis pendens has the burden of proof under Section 405.31 and Section 405.32.¿(Code Civ. Proc., § 405.30) The burden is to demonstrate that their pleadings contain a real property claim and that the probable validity of their real property claim can be established by a preponderance of the evidence. (Code Civ. Proc., §405.31; see also McKnight v. Superior Court (1985) 170 Cal. App. 3d 291, 298 [“the burden is upon the recording party to demonstrate by a preponderance of the evidence that the action was commenced and prosecuted for a proper purpose and in good faith”] .) “Probable validity” exists when “it is more likely than not that the claimant will obtain a judgment on the claim.” (Code Civ. Proc., § 405.3.)¿ 

Any time after a notice of pendency of action has been recorded the court may also “upon motion by any person with an interest in the property, require the claimant to give the moving party an undertaking as a condition of maintain the notice in the record title.” (Code Civ. Proc., § 405.34) 

Discussion

Procedural Defects

“Any notice of pendency of action shall be void and invalid as to any adverse party or owner of record unless the requirements of Section 405.22 are met for that party or owner and a proof of service in the form and content specified in Section 1013a has been recorded with the notice of pendency of action.” (Code Civ. Proc., § 405.23.)

Defendants contend that the lis pendens is subject to expungement under Code of Civil Procedure, section 405.23 because Plaintiffs did not immediately serve the notice on Defendants or file it with the Court. (Dong Decl., ¶¶ 20-21.)

On July 9, following Defendants’ filing of this motion, Plaintiffs filed a notice of lis pendens with this Court and served the notice on Plaintiffs’ counsel.

“The notice requirement is intended to assure that property owners receive prompt notice of the recording of a lis pendens.” (Biddle v. Superior Court (1985) 170 Cal.App.3d 135, 137.) However, where a plaintiff substantially complies with the notice statute and promptly conveys actual notice to the affected party, the purpose of the statute is satisfied. (Ibid.) In Biddle, the plaintiff filed a notice of lis pendens and mailed a copy to the defendant simultaneously, sent it to the wrong location and did not request a return receipt as required. (Id. at pp. 136-137.) The court found that the plaintiff had substantially complied with the notice statute. (Id. at p. 137.)

Here, the delay was longer. Plaintiffs served the notice roughly three months after filing it. However, Defendants had actual notice, and the method of Plaintiffs’ eventual service was otherwise proper. The Court therefore finds that Plaintiffs substantially complied with the notice statute.

Substantive Defects

A lis pendens may be expunged either (1) if the pleadings do not contain a real property claim, or (2) if the court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim. (Code Civ. Proc., §§ 405.31, 405.32.) 

Defendants contend that Plaintiffs’ claims for breach of contract, breach of fiduciary duty, accounting, and dissolution of partnership are not real property claims. Plaintiffs do not contest this. Plaintiffs rather contend that their claims for resulting trust, constructive trust, specific performance, and quiet title are real property claims that satisfy the test of probable validity.

The Court first notes that Plaintiffs’ Complaint is exceedingly short, with the factual allegations comprising slightly over one page. The factual allegations themselves only contain general statements that the parties had worked together on real estate opportunities as partners in the past, and that Dong owed Plaintiffs fiduciary duties as a result; that Dong and Plaintiffs agreed to form a partnership to purchase the Property; that Plaintiffs were involved in the negotiation and diligence process; and that Dong then purchased the Property herself under Sylmar’s name. The Complaint alleges that this purchase breached the parties’ agreement, as well as Dong’s alleged fiduciary duties to Plaintiffs. The Complaint does not expand on the terms of the parties’ agreement, what performance was obligated of each party, or whether it was oral or in writing. Further, the Complaint does not contain any allegations specific to each of the eight causes of action. Nor have Plaintiffs amended the Complaint in the three months since it was filed to fill out these allegations.

Plaintiffs attempt to expand on the allegations of the Complaint in their opposition brief, stating that the reason the Complaint is so threadbare is because Plaintiffs were in a rush to file the lis pendens and thereby prevent Defendants from selling the Property. (Opposition at p. 12:10-12.) While that may be so, Plaintiffs are certainly not still in a rush three months later.

Specific Performance

To state a cause of action for breach of contract, a plaintiff must be able to establish “(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.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

“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 [citation and quotation marks omitted].)

Defendants argue that Plaintiffs cannot satisfy the statute of frauds with respect to the alleged contract.

“A contract coming within the statute of frauds is invalid unless it is memorialized by a writing subscribed by the party to be charged or by the party's agent.” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552, citing Civ. Code, § 1624.) “An agreement for the sale of real property or an interest in real property comes within the statute of frauds.” (Ibid, citing Civ. Code, § 1624, subd. (a)(3).)

Although the parties dispute whether the alleged agreement was for the purchase of land, the Court assumes for the sake of the statute of frauds analysis that it is because the alternative would render Plaintiffs’ contract claims inappropriate for a lis pendens in any event.

Here, Plaintiffs have not provided evidence of a writing memorializing the contract. Plaintiffs contend that a series of text messages sent between Dong and Yosef Ben Elisha memorialize the contract. Yosef Ben Elisha declares that the text messages state as follows:

“Dong:

Hi Yossi, hope all is well. I made an appointment with Armin today to go to his office at 2pm. Thank you for introducing him and his firm. If you are still interested in the project. You are welcome to join me.

Plaintiff Yosef Ben Elisha:

Good morning Christina,

I can follow up with you around 12pm to try to show up. I do have meeting that I will need to schedule to make it happen. I will let you know around 12pm.

Dong:

Thanks so much Yossi. Sorry for the late notice. Just decided to meet with him for final DD before closing :)

Plaintiff Yosef Ben Elisha:

Yes

I will be there 2pm”

(Decl. Yosef Ben Elish ¶ 29 [emphasis in original].)

            There are two problems with Plaintiffs’ argument. First, these text messages hardly set forth the key terms of an agreement to purchase the Property. Second, “[a]n electronic message of an ephemeral nature that is not designed to be retained or to create a permanent record, including, but not limited to, a text message or instant message format communication, is insufficient under this title to constitute a contract to convey real property, in the absence of a written confirmation…” (Civ. Code, § 1624, subd. (d) [emphasis added].) The Court therefore concludes that the text messages that Plaintiff provides do not satisfy the statute of frauds.

“[F]ull performance takes a contract out of the statute of frauds has been limited to the situation where performance consisted of conveying property, rendering personal services, or doing something other than payment of money.” (Secrest, supra, 167 Cal.App.4th at p. 556.)

Plaintiffs argue that the contract does not fall under the statute of frauds because they substantially performed. (Opposition at p. 14:5-10.) Plaintiffs contend that this substantial performance consisted of completing due diligence, meeting and communicating with the prior agent of the Property, communicating with the Property’s prior owner, communicating with the contamination specialist, communicating with prospective investors, retaining an architect, putting together cost estimates, and putting together a timeline of development. The problem with Plaintiffs’ argument is that full performance, not substantial performance, is required. Plaintiffs do not provide any allegations in the Complaint or arguments in their brief indicating what performance was actually required of them. The Court is not prepared to jump to the conclusion that the list of actions Plaintiffs provide constituted the full performance of Plaintiffs’ obligations under the alleged contract.

The Court therefore finds that the statute of frauds is not satisfied. As a result, there Plaintiffs have not shown the probable validity of their claims for specific performance or breach of contract.

Resulting Trust

There are two problems with Plaintiffs’ resulting trust claim.

First, “[a] resulting trust does not arise from any oral agreement between the parties, but only as a result of the advancement of at least part of the consideration by the one claiming to be the beneficiary.” (Laing v. Laubach (1965) 233 Cal.App.2d 511, 517.) Plaintiffs have failed to allege or provide a written agreement.

Second, “[a] resulting trust cannot be enforced in favor of a person who has paid part of the consideration for the transfer of property unless it is possible to clearly establish the amount of money contributed by him [or her] or the proportion of his [or her] contribution to the whole purchase price …. One who claims a resulting trust in land must establish clearly, convincingly and unambiguously, the precise amount or proportion of the consideration furnished by him [or her] …. If the claimant does not, then the presumption of ownership arising from the legal title is not overcome and a resulting trust will not be declared.” (Lloyds Bank California v. Wells Fargo Bank (1986) 187 Cal.App.3d 1038, 1044–1045 [citations and quotation marks omitted].) Here, Plaintiffs do not allege that they paid any of the consideration for the Property, let alone part of it.

For both of these reasons, Plaintiffs have not shown the probable validity of their claim for resulting trust.

Constructive Trust

“[A] constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it. (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 990.)

As discussed above, Plaintiffs have not provided evidence of a contract giving them a right to the Property. Plaintiffs have not pled or argued a different basis for such a right, either. As a result, Plaintiffs have not shown that they can satisfy the second element, and therefore have not shown the probable validity of this claim.

Quiet Title

Code of Civil Procedure, section 761.020 sets forth the requirements for an action for quiet title:

“The complaint shall be verified and shall include all of the following:

(a) A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.

(b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession.

(c) The adverse claims to the title of the plaintiff against which a determination is sought.

(d) The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought.

(e) A prayer for the determination of the title of the plaintiff against the adverse claims.”

(Code Civ. Proc., § 761.020.)

            There are several problems. First, the Complaint is not verified. Second, at its most generous reading, the Complaint alleges that the parties formed a contract to purchase the Property together – but as discussed above, Plaintiffs have not satisfied the statute of frauds with respect to this contract, and therefore cannot show the basis for their title to the Property. For both of these reasons, the Court finds that Plaintiffs have not established the probable validity of their quiet title claim.

Conclusion

Plaintiffs have failed to show the probable validity of any of their claims sounding in real property. The Court therefore grants Defendants’ motion and orders the expungement of Plaintiffs’ lis pendens on the Property.