Judge Michael Small, Case Number: 20STCV12024, Date: 2024-04-02 Tentative Ruling

Judge: Michael Small, Case: 20STCV12024, Date: 2024-04-02 Tentative Ruling

Case Number: 20STCV12024 Hearing Date: April 2, 2024 Dept: 57

This action concerns an alleged agreement for the sale of real property located at 3339 West 8th Street, Los Angeles, California 90005 (the “Property”). Plaintiff AMKO, LLC (“AMKO”) contends that it entered into a Commercial Property Purchase Agreement and Joint Escrow Instructions (“Purchase Agreement”) with Defendant Maganda Corporation (“Maganda”) through which Maganda promised to sell the Property to AMKO. (Complaint, ¶¶ 12, 17, 26, Ex. A.) Attached to AMKO’s complaint is a document that appears to be the Purchase Agreement. AMKO alleges in its complaint that Maganda has failed and refused to perform the conditions of the Purchase Agreement in that it has refused to execute the necessary real estate, escrow and title forms and disclosures. (Id., ¶ 24.) Based on its complaint against Maganda, AMKO filed a Notice of Pendency of Action (“the Lis Pendens”) recorded against the Property and a proof of service of the Lis Pendens on Maganda.

Pending before the Court is Maganda’s Motion for an Order Expunging the Notice of Lis Pendens (“the Motion”). Maganda also requests attorney’s fees and costs in the amount of $8,060.00 for having to file the Motion. For the reasons set forth below, the Court is granting the Motion and entering an order expunging the Lis Pendens, but is declining to award Maganda its attorney’s fees incurred in connection with the Motion.

Sections 405.31 and 405.32 of the Code of Civil Procedure provide that a recorded lis pendens may be expunged on the ground that the pleading on which the notice of lis pendens rests does not contain a real property claim, (Code of Civil Procedure Section § 405.31), or that the claimant cannot show by the preponderance of the evidence the probable validity of a real property claim, (id. § 405.32). While the Code of Civil Procedure does not explicitly authorize expungement because of defects in service of the notice of lis pendens, case law recognizes that such defects also furnish a ground for expungement. (J & A Mash & Barrel, LLC v. Superior Court (Tower Theater Properties) (2022) 74 Cal.App.5th 1, 29. [“J&A Mash & Barrel”] Section 405.22 provides that service of a notice a lis pendens must be sent through registered or certified mail, return receipt requested, to all known addresses of parties adverse to, and record owners of, the real property. In turn, Section 405.23 provides that “[a]ny 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.” (§ 405.23.)

Here, Maganda’s Notice of Motion states that Maganda is seeking to expunge the Lis Pendens on the grounds that it was recorded without proper service and that AMKO will not be able to prove the probable validity of its claim to the Property. (In its reply brief in support of the Motion, Maganda argues that AMKO’s complaint does not contain a real property claim. Because this argument was advanced by Maganda for the first time on reply, the Court as not considered it.)

As to service defects, AMKO’s proof of service of the notice of the Lis Pendens states that the notice was sent by regular mail to Maganda. It does not state that the notice was sent, as required under Section 405.22, by certified or registered mail with return receipt requested. The Court is nevertheless declining to expunge the Lis Pendens on the ground of this service defect. That is because caselaw instructs that (1) substantial compliance with service of a notice of lis pendens is all that is required, and (2) a trial court risks reversal on appeal for expunging a notice of lis pendens based on a technical defect in service when the party seeking expungement received actual notice of the recording of a lis pendens. (J.A. Mash & Barrel, supra, 74 Cal.App.5th at 29; Biddle v. Superior Court (Paulson) 170 Cal.App.3d 135, 137.) In the Court’s view, substantial compliance with service requirements was achieved. AMKO served the notice via regular mail and Maganda received the notice.

The Court is, however, granting the Motion on the ground that AMKO has failed to show by a preponderance of the evidence the probable validity of its claim related to the Property. The following considerations have informed the Court’s consideration.

First, there is no dispute that the signature and initials of Maganda’s agent, Faramarz Fred Faramarzi, on the Purchase Agreement, were forged by Sylvie Merzian, who is also a Defendant in this action. Second, AMKO offered insufficient proof that Merzian, who told AMKO that she was Maganda’s real estate broker, had actual authority to sign the Purchase Agreement for Maganda and receive money from AMKO for the sale and purchase of the Property. Third, AMKO offered insufficient proof that Merzian had ostensible authority to sign the Purchase Agreement for Magana and receive money from AMKO for the sale and purchase of the Property. Fourth, AMKO offered insufficient proof as to what the payments it made to Maganda actually were for. Fifth, as Maganda pointed out, there is an addendum to the Purchase Agreement, which AMKO failed to attach to its complaint, and the addendum indicates that any deal for the Property was to include an exchange for another piece of real estate (apparently in AMKO’s hands), which has since been sold.

The prevailing party on an expungement motion is entitled to reasonable attorney’s fees and costs incurred in connection with the motion, unless the court finds that the there was substantial justification for the nonprevailing party’s position, or other circumstances indicate that an award of fees and costs against the nonprevailing party would be unjust. (§ 405.38.) In the Court’s view, AMKO had substantial justification in recording the Lis Pendens. Accordingly, the Court is declining to award Maganda its attorney’s fees and costs incurred in connection with the Motion.