Judge: Mark C. Kim, Case: 22LBCV00049, Date: 2022-10-11 Tentative Ruling

Case Number: 22LBCV00049    Hearing Date: October 11, 2022    Dept: S27

 SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - SOUTH DISTRICT

Moving Party:               Plaintiff, SEJ Properties, L.P.

Opposition:                  Defendants, 1801-1899 Willow, LLC and Defendants, Escrow L.A., Inc., et al.

Notice:                         OK

1.     22LBCV00049

On 2/01/22, SEJ Properties, L.P. filed 22LBCV00049 against Defendants, 1801-1899 Willow, LLC and Alma D. Barnes for specific performance and related claims arising out of Defendants’ alleged refusal to close escrow on Plaintiff’s purchase of a commercial property.

On 3/29/22, the Court denied Defendants’ motion to expunge lis pendens, finding Plaintiff had established the probable validity of its claims against Defendants. 

2.     22SMCV00217

On 2/16/22, SEJ Properties, L.P. filed 22SMCV00217 against Defendants, Escrow L.A., Inc. and Sharon L. Sharp for breach of fiduciary duty and related claims arising out of Defendants’ refusal to release the funds that were deposited into the escrow account in connection with the transaction at issue in 22LBCV00049.

On 3/17/22, the Court heard and denied Plaintiff’s ex parte application to order Defendants to release the subject funds.  On 3/23/22, Plaintiff filed a noticed motion for release of the subject funds.  On 4/26/22, the Court denied the motion, finding all parties necessary to the motion were not before the Court, as the seller of the property was not a party to the action.  The Court, Honorable Mark H. Epstein presiding, noted that, on 4/21/22, Plaintiff filed an amended complaint that named the seller as a party defendant; however, the Court has reviewed the amended complaint, and does not see where the seller of the property is named as a defendant.  The operative complaint in the Santa Monica action is the SAC, filed on 9/26/22, and only Escrow L.A., Inc. and Sharon L. Sharp are named as defendants in the operative SAC. 

On 6/08/22, Plaintiff filed a second motion for order releasing funds from escrow.  The motion was scheduled for hearing on 6/30/22, but on 6/22/22, the Court found the two cases related, and the Santa Monica action was reassigned to the Long Beach Courthouse for all further proceedings. 

3.     8/26/22 Order

On 8/26/22, the Court heard SEJ’s ex parte application to advance hearing on motion for appointment of receiver and motion to release funds on deposit in escrow.  The Court granted the application and scheduled the hearing on the motions for hearing on 10/11/22.   

4.     Motion for Appointment of a Receiver

Plaintiff seeks an order appointing a receiver to take over all aspects of managing Defendants’ property while this action is pending.  Plaintiff contends it has already established the probable validity of its claims, and Defendants have failed to pay the last two installments of their property taxes and will likely take steps to diminish the value of the subject property because they know they will ultimately lose the property in this litigation.  Plaintiff supports its motion with the declaration of its attorney, Neil C. Evans, who declares he will attach as Exhibit A a document showing Defendants are in default on their property tax obligations, as Exhibit B a showing that two loans on the property must be paid every month, and as Exhibit C a document showing the rental income Defendants are receiving every month.

Defendants, with their opposition to the motion, filed objections to Evans’s declaration.  The objections are sustained.  Notably, Exhibit A (which was not included with the original moving papers, but instead was later filed as an Errata), which purports to show Defendants have failed to pay their last two installments of their property taxes, actually shows Defendants have a zero balance due on their taxes.  The remainder of Plaintiff’s evidence amounts to nothing but speculation about what Defendants may do in the future.  Absent actual evidence that Defendants are in default on their obligations, the Court will not impose the extremely harsh remedy of receivership.    

5.     Motion to Release Funds

a.     Initial Note re: Scheduling of Motion

Plaintiff filed this motion in the Santa Monica case.  The SM case was later related to the Long Beach case.  The cases are not, however, consolidated.  Plaintiff sought ex parte relief in the LB case to specially set the hearing on this motion.  The motion should, however, remain pending in the SM case, not the LB case.  Plaintiff’s filing of its ex parte papers in the LB case instead of the SM case created substantial confusion, as there are now papers for this motion in both case numbers.  The Court has read and considered all papers in ruling on the motion, but admonishes the parties that the cases are only related, which means they are assigned to the same department, but are not consolidated, which would be the only occasion where it is appropriate to file papers in the lead case, instead of the original case.

b.     Analysis

The motion to release funds is denied for numerous reasons.  First, it should be a “renewed” motion for relief under CCP §1008, which would need to be heard by Judge Epstein, despite the transfer of the action to Judge Kim for all purposes. 

Second, again, the SM case remains its own case, and is not consolidated with the LB case.  Thus, Judge Epstein’s prior stated reason for denial, which was that the seller is not a party to the action, remains the case here.  Despite the fact that the sellers filed opposition to the motion, they are not actually parties to the case and therefore their opposition is a nullity.

Third, the notice of motion and moving papers do not set forth any authority for the relief sought.  The motion is entitled one for “release of funds,” but appears to be a motion for mandatory injunctive relief.  Plaintiff has not provided authority concerning mandatory injunctive relief, and has not provided points and authorities showing such relief is proper under the circumstances. 

The Court notes that the escrow defendants and the seller defendants both contend that a substantial portion of the money in escrow is not actually Plaintiff’s money, but instead the money of third parties.  The Court is not making a determination concerning whose money is in escrow, because the motion is denied on the three grounds detailed above. 

6.     Conclusion

Plaintiff’s motion for appointment of a receiver is denied.  Plaintiff’s motion to release funds is likewise denied.

Plaintiff is ordered to give notice. 

Parties who intend to submit on this tentative must call the court at 562-256-2227 indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive a phone call indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If the parties do not submit on the tentative, they should arrange to appear remotely.

DATED:  October 11, 2022                     _____________________________________

                                                            MARK C. KIM                                                                                                                                        Judge of the Superior Court