Judge: Kristin S. Escalante , Case: 22STCV35939, Date: 2023-03-23 Tentative Ruling
Case Number: 22STCV35939 Hearing Date: March 23, 2023 Dept: 24
MOVING PARTY: Defendant Payman Ebrahimian
RESP. PARTY: Plaintiff North Start Lending LLC
SERVICE:
The
above-captioned matters are called for hearing.
The Court has
read the moving papers in the above-captioned motions and announces its
tentative rulings in open Court.
The Motion to Expunge Lis Pendens reservation no.:
121487930350 filed by Defendant Payam Ebrahimian on 1/12/2023 is GRANTED.
Plaintiff North Star Lending LLC has not demonstrated by a
preponderance of the evidence that it will prevail on the Civil Code
section 3439.04 claim. (See Code
Civ. Proc., §405.31.) However, finding the opposition substantially
justified, the court does not award Defendant Payam Ebrahimian attorneys’ fees.
(Code Civ. Proc., § 405.38)
Defendant Payman Ebrahimian
(“Payman”) moves for an order expunging the Notice of Pendency of Action (“lis
pendens”) recorded against the real property located at 10465 Eastboard Avenue,
No. 305, Los Angeles CA 90024 (“subject property”) on December 5, 2022 by Plaintiff North Star
Lending, LLC (“Plaintiff”). (Code Civ. Proc.
§§405.30-405.33.) Defendant also requests attorneys’ fees in the amount
of $14,560 against Plaintiff. (Code Civ. Proc., §405.38.)
Plaintiff’s 1/25/2023 request for judicial notice is granted
in part. The court grants the request as to the Exhibit 4, 9, 11, 12, 13, 16,
18, 19, 22, 23, 24 and the physical relationship between the commercial
property and the alleged open air oil well. (Evid. Code, §452.) The court
denies the requests for judicial notice as to Exhibits 25, 30, 31, 32, and 33,
and as to the impact of rising federal fund rates as not relevant to the
court’s ruling. (Evid. Code, §452)
The court sustains Payman’s objections numbered 1, 2, and 10
to Bobby Benjy’s declaration (“Benjy Decl.”). All other objections are
overruled.
By way of background, on November 14, 2022, North Star
Lending, LLC (“Plaintiff”) filed suit against Payam Ebrahimian (“P.
Ebrahimian”) individually, Lida Ebrahimian (“Lida”) individually, Lida as
trustee of the Manouchehr Ebrahimian unified credit trust (“Credit Trust”),
Lida as trustee of the Ebrahimian marital deduction trust (“Deduction Trust”),
and Lida as trustee of the Manouchehr and Lida Ebrahimian Family Trust (“Family
Trust”) (collectively “Defendants”). Plaintiff filed the operative first
amended complaint (“FAC”) a month later and added Payman Ebrahimian (“Payman”)
as a defendant. P. Ebrahimian and Payman are brothers. Lida is their mother.
Plaintiff alleged two causes of action for (1) breach of
continuing guaranty, and (2) violation of the Uniform Voidable Transactions Act
(“UVTA”), e.g., fraudulent conveyance. The complaint turns on a loan Plaintiff
made to non-party 152 West Pico, LLC (“152 West Pico”) in September 2021.
Plaintiff alleges the Ebrahimians are co-managers of 152
West Pico. The owners of 152 West Pico are Credit Trust, Deduction Trust,
Family Trust and P. Ebrahimian. 152 West Pico, in turn, owns the real property
commonly known as 152-154 West Pico Blvd., Los Angeles, California 90015, L.A.
County APN: 5133- 001-003 (“Commercial Property”). Plaintiff loaned 152 West
Pico $1,560,000.00 (the “Loan”) according to the loan agreement between
Plaintiff and 152 West Pico. 152 West Pico then executed and delivered to the
bank a promissory note (“Note”) for the Loan. Under the terms of the Note, 152
West Pico would repay Plaintiff the Loan plus interest in October 2022. The
Notes is secured by a trust deed lien against the Commercial Property.
Plaintiff recorded the Trust deed in the official records of the County of Los
Angeles. The trust deed is the second priority lien on the Commercial
Property—subject to the first priority lien by APSEC Resolution Trust LLC
(“APSEC”). APSEC was a successor in in interest to the original lender, Pacific
City Bank (“PCB”).
The parties also executed a continuing guaranty (“Guaranty”)
whereby P. Ebrahimian and Lida agreed to pay the credit, interest, and
attorney’s fees for on the Note amount Plaintiff advanced to 152 West Pico. In
September 2022 APSEC recorded a Notice of Default (“NOD”) and Election to Sell
Under Deed of Trust on the Commercial Property. 152 West Pico then defaulted on
Plaintiff’s loan. P. Ebrahimian and Lida have since failed to pay any sum to
Plaintiff under the Guaranty.
Separately, in November 2019, Lida executed a grant deed
transferring title of the residential property known as 10465 Eastbourne
Avenue, #305, Los Angeles, California 90024 (“Subject Property”) to her son,
Payman. She deemed the transfer a bona fide gift for which she did not receive
anything in return. However, Plaintiff alleges Lida made this transfer to
minimize her liability while assisting 152 West Pico in obtaining loans and
providing guaranties to 152 West Pico’s loans.
On December 5, 2022, Plaintiff filed a Lis Pendens on the
Subject Property. (Dec.
5, 2022, Notice of Lis Pendens.)
1. Legal Standard
“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 (i) if the pleadings do not contain a real property claim,
or (ii) 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 (Section 405.31), 405.32
(Section 405.32).)
The party claiming 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)
2. Background Evidence
In support of its motion to expunge lis pendens Payam provides
his own declaration, the declaration of Thomas J. Weiss, and the declaration of
Dale Donerkiel.
Payman declares that he is the owner and resident of the
Subject Property. The Subject Property was originally in a family trust, but
his mother—Lida—transferred the Subject Property in November 2019 at his
request. Plaintiff is trying to obtain a line of credit secured by the Subject
Property and Plaintiff’s notice of lis pendens is impacting his ability to do
so. He has chronic health problems which limit his ability to work, and he is
trying to obtain a home equity line of credit for this reason. The Subject
Property is a long-term investment by Payman’s family to help with him given
his disabilities. He was permanently disabled after he was struck by a car
outside his nursery school. He was three years old at the time. Payman’s father
used a part of the funds from Payman’s insurance settlement to fund the
purchase of the Subject Property. Finally, Payman declares he is not the
borrower of the Loan secured by the Commercial Property or a guarantor of the
Loan. P. Ebrahimian is Payman’s brother and has been in de facto control of the
family’s finances since their father died.
Donerkiel declares that he is a professional real estate
appraiser. At the request of Payman, Donerkiel conducted an appraisal of the
Commercial Property. He appraised the value of the Commercial Property as
$8,519,000.00. He also attaches his appraisals to his declaration.
Weiss declares that he researched the history of conveyances
on the Subject Property. Based on his research, Lida and Manouchehr Ebrahimian
acquired the Subject Property in 2012 and placed it in their family trust. In
2019, three items were recorded on the Subject Property: (i) the affidavit of
death of Manouchehr, (ii) Lida’s accession to trustee of the trust which held
the Subject Property, and (iii) Lida’s transfer to Payman. Weiss also declares
that his understanding of first lien is that there is $3,640,575.35 outstanding
on the first lien and that the underlying loan can be reinstated for $77,000.
Weiss attaches a transaction history report from the Subject Property from
DataTree.
In support of the lis pendens, Plaintiff attaches Bobby
Benjy’s declaration. Benjy declares that he is the sole manager of Plaintiff.
Plaintiff’s declaration restates the history of the Loan on the Commercial
Property as alleged in the complaint which the court incorporates here. Benjy
also declares that in March 2019, the Family Trust obtained a loan for
$3,675,000 from Recovco Mortgage Management, LLC d/b/a Sprout Mortgage (“Sprout
Loan”). Sprout secured the Sprout Loan with a Deed of Trust on the
single-family residence known as 127 Granville Ave, Los Angeles California
90049 (“Granville Property”). In May, a NOD was recorded against the Granville
Property. The amount of unpaid balance was $4,119,076 as of January 2021.
3. Probable Validity of the Claim
The issue is whether Plaintiff can establish by a preponderance of the
evidence the probable validity of a real property claim on the Subject
Property. The claim regarding the Subject Property is premised on
Plaintiff’s claim for violation of the UVTA—i.e. Lida’s transfer of the Subject
Property to her son, Payman. (Civ. Code § 3439.04, subd. (a)(2)(A) and (B)
(Section 343904).) Plaintiff has not proven by a preponderance of the evidence
that he will prevail on his UVTA claim.
The purpose of the UVTA is to “prevent debtors from placing
property which legitimately should be available for the satisfaction of demands
of creditors beyond their reach.” (Lo v. Lee (2018) 24 Cal.App.5th 1065, 1071
(Lo).) Under Section 3439.04, a transfer is voidable if: “[T]he debtor made the
transfer or incurred the obligation as follows: (1) With actual intent to
hinder, delay, or defraud any creditor of the debtor. (2) Without receiving a
reasonably equivalent value in exchange for the transfer or obligation, and the
debtor either: (A) was engaged or was about to engage in a business or
transaction for which the remaining assets of the debtor were unreasonably
small in relation to the business or transaction. (B) Intended to incur, or
believed or reasonably should have believed that the debtor would incur, debts
beyond the debtors’ ability to pay as they became due.” (Civ. Code § 3439.04,
subd. (a)(2)(A).) “A creditor seeking to set aside a transfer as fraudulent
under section 3439.04 may satisfy either subdivision (a)(1) by showing actual
intent, or subdivision (a)(2) by showing constructive fraud.” (Lo, supra, 24
Cal.App.5th at p. 1071.)
Plaintiff states that its UVTA claim is only based on
constructive fraud, not actual fraud, and, thus, does not require Plaintiff
prove intent. (Opp. 12:19-21 [“Unlike Section 3439.04(a)(1), which is not at
play in this action. . . Section 3439.04(a)(2) – which is at play here - does
not include any intent element”].)
Thus, the first question before the court is whether there
was a transfer without receiving a reasonable equivalent value. Here, Lida
transferred the Subject Property to Payam as a bona fide gift without any
consideration. (Benjy Decl., ¶47, Ex. 19 at p. 3.) Plaintiff implicitly argues
this establishes Lida obtained no benefit of value. However, there are
occasions where the benefit to the transferor is less quantifiable. (see Lo,
supra,25 Cal.App.5th at p.1072 [finding no fraudulent conveyance in parent’s
college tuition payments for child where the parent receives an “economic
benefit” in exchange for the tuition payments—the child’s independent
well-being].)
Here, Lida’s transfer of the property to her disabled son
could amount to an economic benefit akin to the tuition payments in Lo; she is
helping secure her son’s independent economic well-being and security in
consideration of his disability. He obtains a home and an asset which he can
leverage towards a business he has the capacity to run. However, Payam does not
argue this; instead, Payam argues that since a part of his insurance proceeds
were used towards purchasing the Subject property there is consideration.
Payman’s asserted defense of consideration is not supported by evidence beyond
his declaration that his insurance proceeds were part of the basis of the
purchase. (Reply, at p. 8:21-25.) Additionally, while Lida may have obtained a
noneconomic benefit from the transfer, Plaintiff does not argue this or support
this proposition with evidence. Absent Payman’s disagreement or evidence as to
reasonable equivalent value, Plaintiff has shown the first element is met by a
preponderance. The transfer instrument on its face states there is no consideration—demonstrating
Lida gave the subject property to Payman for no reasonable equivalent value.
(Benjy Decl., ¶47, Ex. 19 at p. 2)
The next question is then whether one of the following
occurred: (i) the debtor “was engaged or was about to engage in a business or
transaction for which the remaining assets of the debtor were unreasonably
small in relation to the business or transaction” or (ii) the debtor
“[i]ntended to incur, or believed or reasonably should have believed that the
debtor would incur, debts beyond the debtors’ ability to pay as they became
due.” (Civ. Code § 3439.04, subd. (a)(2)(A).)
Plaintiff does not argue that Lida was about to engage in a
business transaction, but instead relies on the 2019 loans to establish that
Lida intended to incur, or reasonably should have believed she would incur
debts beyond her ability to pay. The Sprout Loan was for $3,675,000 in March
2019. (Benjy Decl., ¶52, Ex. 22 at p. 2.) The PCB Loan was for $3,500,000 in
April 2019. (Benjy Decl., ¶21, Ex 7. at p. 1.) The transfer to Payam of the
Subject Property occurred in November 2019. The Notice of Default (“NOD”) on
the Granville Property securing the Sprout Loan occurred almost six months
after the transfer in May 2020. The NOD states “The installment of principal
and interest and escrow amounts, if applicable, which became due on 8/1/2019.”
(Benjy Decl., Ex. 23, at p. 2.) Based on the language of the Notice of Default,
it is not clear whether this means the Family Trust stopped making payments on
8/1/2019 or if the note became due for some other reason. In either case,
Plaintiff argues the NOD demonstrates that by the time Lida transferred the
Subject Property in November 2019, she was already aware of debts beyond her
ability to pay.
However, as Payman points out, Plaintiff provides no
evidence that Lida’s debts were beyond her ability to pay at that time. The PCB
loan was not in default and Lida had other assets held in trust. Payam attaches
the trust allocation of assets for the trust as Exhibit 3 to his declaration.
The exhibit shows approximately $10,000,000 in assets comprised of an interest
in the Granville Property, the Subject Property, and two properties on Elm
Drive, and various bank accounts. (Payam Decl., Ex. 3) Thus, Plaintiff has
presented insufficient evidence to show he would more likely than not prevail
on this issue, in light of Plaintiff’s evidence of ability to pay.
Separately from the arguments that Plaintiff cannot satisfy the
requirements of Section 3439.04, Payman also argues that Plaintiff also cannot
prove a claim for fraudulent conveyance by a preponderance of the evidence
because (i) he cannot show actual injury and (ii) the debt sued upon was
sufficient secured by a second lien on the Commercial Property.
As to actual injury, Courts have affirmed that the actual
injury requirement is implied by the current statutory language of the UFTA.
(Mehrtash v. Mehrtash (2001) 93 Cal. App. 4th 75, 80.) Payman relies on
Mehrtash for the premise Plaintiff cannot show actual injury in the transfer of
the Subject Property from Lida to Payman. In Mehrtash, plaintiff creditor
sought to set aside a conveyance of the defendant debtor’s home to his
defendant stepsons as fraudulent. (Id. at p. 77.) At the time of the
conveyance, the home at issue was heavily mortgaged. (Id. at p. 81.) The court
granted summary judgment for defendants because plaintiff failed to prove the
value of the property exceed the encumbrances and senior liens. (Id. at p. 77.)
The home was subject to two trust deed encumbrances worth almost the entire
value of the purchase price. Assuming the property conveyance was fraudulent,
the property could not be sold without a court order because it was a dwelling,
and the sale would require a minimum bid of all the encumbrances. As such,
plaintiff could not show actual injury because the value of the property could
not support any net recovery for her in the event the conveyances were set
aside. (Ibid.)
Mehrtash is instructive on the present issues. Here, the
Subject Property is a residence. Defendants purchased the property in 2012 for
approximately $650,000. This is well below the current debt Plaintiff seeks
repayment of. Plaintiff attaches a Zillow evaluation of the Subject Property
estimating its value at $1,113,200.00. (Benjiy Decl., Ex 21.) This is not
evidence of the actual value of the Subject Property but provides some
parameters for the court to consider. If the Subject Property were worth 1
million that would still be well below the amount Plaintiff seeks repayment of.
Plaintiff estimates, without adequate foundation, that the Subject Property is
worth 1.4 million. This too is below the value of the lien. Thus, even if the
court were to set aside the conveyance as fraudulent, the Subject Property—by
Plaintiff’s own admission in the briefing—would be insufficient to pay off the
loan. Under the reasoning of Mehrtash, this means that Plaintiff cannot show
actual injury from the transfer. Plaintiff does not address this argument and
has not presented evidence that he more likely than not would prevail on this
issue.
Finally, the question is whether the Commercial Property
adequately secured the lien such that Plaintiff lacked the authority to place a
lien on the Subject Property.
Plaintiff argues that the Guaranty is unsecured and a
separate obligation for the underlying sum guaranteed by the Commercial
Property. Because the Guaranty is entire independent from the Commercial
Property, the value of the Commercial Property is irrelevant. If the Guaranty
is not tied to the Commercial Property, then Plaintiff may pursue Lida’s other
property—hence Plaintiff’s argument that it may place a lien on the Subject
Property for the Guaranty. However, Plaintiff’s reasoning presumes the Subject
Property is Lida’s Property and thus available under the Guaranty. That is a
subject of debate in the present case and does amount to evidence that
Plaintiff can place a lien on the Subject Property. Payman, in turn, argues
that principals of equity prevent Plaintiff from pursuing claims against
innocent third parties. In either case, Plaintiff argues that the value of the
Commercial Property is unlikely to satisfy the Loan.
The parties dispute the value of the Commercial Property and
whether it adequately secured Plaintiff’s lien.
Payman, on the one hand, argues Lida’s sufficient security
for the lien shows that Payman cannot obtain an avoidance the “transfer or
obligation to the extent necessary to satisfy the creditor’s claim.” (Civ.
Code, § 3439.07.) Payman’s obtained an appraisal of the Commercial Property at
approximately 8 million shows Plaintiff’s Loan of 1.5 million and the primary
loan of 3.5 million were both adequately secured. Relying on Kirkpatrick v.
Towers (1943) 60 Cal. App. 2d 251, 256, Payman argues “where reliance is had
upon a presumption of fraud from the making of a voluntary conveyance during or
in contemplation of insolvency, and the only debt is a secured debt, the
security must be shown to be insufficient to meet the obligation at the time
the conveyance was made.” (Ibid)
Plaintiff, on the other hand, argues the appraisal is
falsely inflated because it does not consider that the Commercial Property is
next to an open-air oil well and is already in foreclosure. Thus, any recovery
is likely to be diminished from the Commercial Property’s value under normal
sale conditions. Plaintiff also submits a Broker’s Opinion of Value and
Marketing Proposal from CBRE commercial brokerage. (Benjy Decl., Ex. 15.) CBRE
valued the Commercial Property at approximately 4 million. Benjy attaches this
opinion to his declaration. CBRE does not provide any foundation for the report
to explain their skill or expertise around real estate.
At the time Plaintiff made the loan, the Commercial Property
was not in foreclosure. The Commercial Property already had the first priority
lien. Plaintiff made the loan while aware of these conditions. This context
raises a query, if the loan were inadequately secured by the Commercial
Property at the time, why did Plaintiff agree to make the loan? There may be a
response, but the context of the loan coupled with the competing valuations of
the Commercial Property presents more questions than answers. Plaintiff has not
shown he is more likely than not to prevail on this issue.
Plaintiff argues the motion to expunge lis pendens is rushed
because Payam has moved before the parties have responded to discovery.
However, this issue of timing does not alleviate Plaintiff’s burden of proof.
Accordingly, the court does not find a continuance for further discovery
necessary.
The court grants the motion to expunge the lis pendens.
4. Attorneys’ Fees
The issue is whether Payman is entitled to attorneys’ fees
on the motion.
“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)
Here, Payman is the prevailing party and thus is entitled to
reasonable attorneys’ fees. Payman requests at total of $14,560 in attorneys’
fees for (i) $11,000 for 22 hours of attorney work at $500 per hour, (ii)
$3,500 for Donerkeil’s appraisal, and (iii) $60 for the motion fee. Plaintiff
does not argue Payman’s attorney’s fees request is unjust. Instead, he states
that he should prevail and be award attorneys’ fees of $12,293.00. This is an
implicit argument that he acted with substantial justification in bringing the
opposition to expungement of lis pendens. Finding the opposition substantially
justified, the court does not award attorneys’ fees.
The court denies the request for attorneys’ fees.