Judge Kerry Bensinger, Case Number: 24STCV13447, Date: 2024-08-15 Tentative Ruling

MOVING PARTY: Interested Parties Hartman 2020 Investments, W. Robert Kohorst, Ernest M. Posey as Trustee of the Ernest Posey Business rust, Peter Richter, Peter Sigfried Derbonne, and Sonya Keillor and Deborah Keillor as Trustees of The Keillor Family Trust, dated 1-10-13

Plaintiff Nivo 1, LLC brings this action against Defendants Eric Keillor and Keillor Capital Inc. arising from mortgage transaction. Plaintiff obtained a loan which was secured by real property commonly known as 5958 Carlton Street, Los Angeles, California (the “Property”). Defendants served as the loan broker and syndicator of the loan. Eric Keiller Keillor and Deborah Keillor, Trustees of The Keillor Family Trust, dated 1-10-13, Hartman 2020 Investments, dated October 13, 2021, W. Robert Kohorst, Ernest M. Posey, Trustee of the Ernest Posey Business Trust, Peter Richter, Peter Sigfried Derbonne and Sonya Marie Derbonne, as Trustees of the Derbonne Family Trust dated June 15, 1998 (collectively, “Lender”) were the lenders. Plaintiff alleges that Defendants breached their fiduciary obligations as a broker. After trying to rescind the contract, Defendants retaliated by filing a notice of default and notice of sale of the Property. The Lender proceeded with a foreclosure sale of the Property, which was scheduled for June 4, 2024.

On May 29, 2024, Plaintiff filed this action against Defendants. Thereafter, Plaintiff set an ex parte hearing for June 3, 2024, for a temporary restraining order (“TRO 1”). When the hearing on TRO 1 did not go forward, Plaintiff filed a second ex parte application for a TRO set for June 4, 2024 (“TRO 2”). On June 4, 2024, the Parties agreed that the hearing on TRO 2 would be continued to June 17, 2024, and the foreclosure sale would be postponed to June 18, 2024.

On June 10, 2024, Plaintiff recorded a Notice of Pendency of Action as Instrument No. 2024-0376970.

On June 17, 2024, the court denied TRO 2 finding that (1) Plaintiff failed to name Lender as a necessary party to the litigation and (2) even if Lender had been named as Defendants, Plaintiff failed to demonstrate a probability of success on the merits. On June 18, 2024, Lender proceeded with their foreclosure sale, and ownership of the Property reverted to Lender.

Lender now moves to expunge the lis pendens recorded by Plaintiff on the Property. Lender seeks attorney’s fees and costs.

Under CCP § 405.30, at any time after a notice of pendency of action has been recorded, any party with an interest in the real property may apply to the Court to expunge the notice. A Lis Pendens may be expunged either under CCP § 405.31 if the pleadings do not contain a real property claim; or under CCP § 405.32 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. Under CCP § 405.30, the party claiming the Lis Pendens has the burden of proof under sections 405.31 and 405.32. The moving party has the burden of demonstrating 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.

Lender requests judicial notice of four documents. The unopposed request is GRANTED. (Evid. Code, § 452, subd. (d)(1).)

Lender seeks to expunge the lis pendens for two reasons: (1) Plaintiff failed to properly serve notice of the lis pendens and failed to serve the Lenders as required by CCP § 405.22; and (2) Plaintiff cannot show any reasonable probability of success on the merits of the case.

The court finds that Plaintiff failed to provide proper notice. A notice of pendency of action is void and invalid unless the requirements of CCP section 405.22 are met and service has been recorded with the notice of pendency of action per CCP section 1013a. (CCP § 405.23.) Prior to recordation of the notice, the claim shall 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. If there is no known address for service on an adverse party or owner, then as to that party or owner a declaration under penalty of perjury to that effect may be recorded instead of the proof of service required above, and the service on that party or owner shall not be required. 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. (CCP § 405.22.)

Here, it is undisputed that Plaintiff failed to observe the foregoing requirements. This is fatal to the validity of the lis pendens. Having so concluded, the court does not address Lender’s second argument.

Lender seeks attorney’s fees in the sum of $4,000 for bringing this motion. “Section 405.38 changed the law by requiring (as opposed to merely authorizing) a court to award attorney's fees and costs to the party prevailing on a motion to expunge, unless the other party acted with substantial justification or other circumstances would make such an award unjust.” (Shoker v. Superior Ct. of Alameda Cnty. (2022) 81 Cal.App.5th 271, 280, italics in original.) Here, Lender is the prevailing party. An award of attorney’s fees is therefore required. Lender does not submit a declaration detailing the rate at which fees were incurred. Accordingly, the court awards attorney’s fees of $2,500.

The motion to expunge the lis pendens is Granted. Lender is awarded attorney’s fees in the sum of $2,500 to be paid by Plaintiff within 30 days of this order.

Kerry Bensinger

Judge of the Superior Court