Judge: Robert S. Draper, Case: 21STCV43991, Date: 2022-09-20 Tentative Ruling

Case Number: 21STCV43991    Hearing Date: September 20, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Plaintiff Caesar Capital, LLC’s Motion for Leave to File Lis Pendens is GRANTED.

Defendant PM Factors, Inc.’s Motion for Attorney Fees is GRANTED in the amount of $21,724.95.

FACTUAL BACKGROUND

This is an action relating to a commercial lease. The operative First Amended Complaint (“FAC”) alleges as follows.

In 2013, Plaintiff Caesar Capital (“Caesar”) entered into a commercial lease (the “Original Lease”) with Defendant PM Factors, Inc.’s (“PM Factor”) predecessor in interest for office space (the “Original Suite”) in property located at 9701 W. Pico Blvd., Los Angeles, CA (the “Subject Property”). (FAC ¶ 11.)  In February 2021, Caesar sent PM Factors a proposed lease (the “Proposed Lease”) for a new office suite (the “New Suite”) within the Subject Property. (FAC ¶ 12.) The Proposed Lease was for a five-year term, beginning in 2021 and ending in 2026. (FAC ¶ 13.) On March 1, 2021, Caesar sent PM Factors a revised lease (the “201A Lease”) incorporating the parties’ negotiated terms as to the Proposed Lease. (FAC ¶ 15; FAC Ex. 3.) Caesar signed the 201A Lease. (Ibid.) Believing that the 201A Lease was effective, Caesar continued repairs on the New Suite, and moved into the New Suite on March 8, 2021. (FAC ¶ 18.) Caesar repeatedly requested PM Factors’ signed copy of the 201A Lease, but PM Factors never provided it. (FAC ¶¶ 19-20.)

In early November 2021, Caesar became aware that PM Factors had placed the Subject Property for sale. (FAC ¶ 21.) Shortly thereafter, PM Factors informed Caesar that it would not sign the 201A Lease, and that instead Caesar was occupying the New Suite in a month-to-month tenancy subject to the terms of the old lease. (FAC ¶ 22.) Caesar is informed and believes that PM Factors is currently attempting to sell the Subject Property and is representing to potential buyers that Caesar only has a month-to-month lease in the New Suite. (FAC ¶ 26.)

PROCEDURAL HISTORY 

On December 2, 2021, Caesar filed the Complaint asserting four causes of action:

1.    Quiet Title to Real Property;

2.    Declaratory Relief;

3.    Breach of Contract; and,

4.    Specific Performance

On December 16, 2021, PM Factors filed a Motion to Expunge Lis Pendens.

On December 22, 2021, Caesar filed a Notice of Lis Pendens (the “Original NOP”) with the Court.

On January 21, 2022, the Court heard PM Factors’ Motion to Expunge Lis Pendens and took the matter under submission.

On February 7, 2022, the Court issued its order granting PM Factors’ Motion to Expunge Lis Pendens.

On February 24, 2022, PM Factors filed the instant Motion for Attorney Fees.

On April 5, 2022, Caesar filed the operative First Amended Complaint asserting the same four causes of action.

On June 1, 2022, PM Factors filed an Answer.

On August 15, 2022, Caesar filed the instant Motion for Order Authorizing Recordation of Lis Pendens.

On September 7, 2022, Caesar filed an Opposition to the Motion for Attorney’s Fees.

Also on September 7, 2022, PM Factors filed an Opposition to Caesar’s Motion for Order Authorizing Recordation of Lis Pendens.

On September 9, 2022, Caesar filed a Reply.

DISCUSSION 

I.               REQUEST FOR JUDICIAL NOTICE

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).)  

Evidence Code Section 452 provides that judicial notice may be taken for facts and propositions that are “not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Cal. Evid. Code § 452(h).) Further, “a court may take judicial notice of [recorded documents and] the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 745-755.)  

Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning. (Fremont Indem. Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-14 (citations and internal quotations omitted).) In addition, judges “consider matters shown in exhibits attached to the complaint and incorporated by reference.”  (Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 665.)  However, “[w]hen judicial notice is taken of a document . . . the truthfulness and proper interpretation of the document are disputable.” (Aquila, Inc. v. Sup. Ct. (2007) 148 Cal.App.4th 556, 569 (quoting StorMedia Inc. v. Sup. Ct. (1999) 20 Cal.4th 449, 457 n. 9).) 

Here, Caesar requests judicial notice of the following:

1.    Verified Complaint filed on December 2, 2021. (Ex. 1.)

2.    Original lis pendens recorded and filed with the Court on December 22, 2021. (Ex. 2.)

3.    The February 7, 2022, Court order expunging the recorded lis pendens. (Ex. 3.)

4.    The February 7, 2022, Court Nunc Pro Tunc Order expunging the lis pendens. (Ex. 4.)

5.    Verified First Amended Complaint filed on April 5, 2022. (Ex. 5.)

6.    Defendant's Motion to Expunge Lis Pendens filed on or about December 16, 2021. (Ex. 8.)

7.    Defendant's Reply to Motion to Expunge Lis Pendens filed on or about January 13, 2022. (Ex. 9.)

All of Caesar’s requests for judicial notice are GRANTED.

II.             EVIDENTIARY OBJECTIONS

Caesar’s objection numbers 1-5 to the Declaration of Stephen Perl are OVERRULED.

III.           MOTION FOR AN ORDER AUTHORIZING RECORDATION OF LIS PENDENS

Caesar moves for an order authorizing recordation of lis pendens.

A¿lis¿pendens¿is a¿recorded instrument¿(“Notice of Pending Action”), recorded in the office of the county recorder where land is located, that gives¿constructive notice¿of a pending lawsuit affecting title to described real property. (Gale v. Superior Court¿(2004) 122 Cal.App.4th 1388, 1395.)  

“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.” (CCP § 405.20.) Anyone having an interest in the property affected by a lis pendens, whether or not a party to the pending lawsuit, may move to expunge the lis pendens any time after it is recorded. (CCP § 405.30.) A lis pendens may be expunged on any of the following grounds: (1) defects in the statutory service and filing requirements; (2) the complaint does not contain a real property claim; (3) the claimant cannot prove the probable validity of the real property claim by a preponderance of the evidence; and (4) “adequate relief” can be “secured to the claimant by the giving of an undertaking.” (CCP §§ 405.23, 405.31, 405.32, 405.33; McKnight v. Sup.Ct. (Faber)¿(1985) 170 Cal.App.3d 291, 303 [recognizing defective servicing and filing requirements as grounds for expungement].)

“Once a notice of pending action has been expunged, the claimant may not record another notice of pending action as to the affected property without leave of the court in which the action is pending.” (C.C.P. § 405.36.) 

Here, as the Court previously expunged Caesar’s lis pendens (See RFJN Ex. 3), Caesar must obtain this Court’s approval before filing a new lis pendens on the subject property.

In ruling on the previous motion to expunge lis pendens, the Court stated:

The Court has accepted Plaintiff’s position and found that [it] is the 201A Lease rather than the Old Lease that is the operative lease agreement between the parties. Accordingly, Plaintiff’s rights must be measured by the rights given to it in the 201A lease, not the Old Lease, and those rights do not include a right of first refusal to purchase the property. (RFJN Ex. 3 at p. 7.)

Accordingly, the Court held that:

PM Factors is clearly entitled to an order expunging the Lis Pendens because Plaintiff has no valid real property claim to the ‘specific property’ at issue: the right to purchase the entire Property as opposed to the right to lease suite 201A. (Id. at p. 8.)

In amending its order, the Court stated:

In the Court’s Tentative Ruling the Court left open the possibility of that Plaintiff could file a more limited Lis Pendens. For the guidance of the parties, and based upon the above analysis, the Court believes the only way this could be done would be for Plaintiff to amend the complaint to eliminate any claim that it has a right of first refusal to purchase the property, asserting only its rights with respect to the 201A Lease. (RFJN Ex. 4 at p. 1.)

On April 5, 2022, Caesar filed a First Amended Complaint eliminating all references to a right of first refusal, pursuant to this Court’s guidance. Accordingly, Caesar argues, the Complaint now expresses only Caesar’s property interest in the New Suite rather than the whole property, and therefore a lis pendens is proper.

In Opposition, PM Factors argues that though the Complaint no longer contains allegations regarding a right of first refusal, the issue of property specificity still applies, as the lis pendens would be for the whole property, not solely Suite 201A. PM Factors notes that Caesar provides no authority demonstrating that a lis pendens can be properly filed against a portion of a property, rather than to the entirety of the property.

Next, PM Factors argues that Caesar’s right to possession of the property is not in dispute, as PM Factors acknowledges that Caesar maintains a month-to-month tenancy of Suite 201A and is still open to signing an amended lease reflecting the terms of the agreed upon lease, though some elements of that lease are in dispute. (Perl Decl., ¶ 2). Accordingly, PM Factors contends, the present dispute regards contractual questions compensable by damages, not the sort of property dispute over which a lis pendens is properly applied.

Finally, PM Factors notes that in Parker v. Superior Court (1970) 9 Cal.App.3d 397, the California Court of Appeal analyzed the dual character of a lease as it pertains to a lis pendens. There, the Court stated:

A lease has a dual character. It is a conveyance of an estate in the land and a contract between the lessee for the possession and use of the property in consideration of rent. [Citation]. It may be recorded as an instrument affecting title to or possession of real property. [Citation]. . .

Although not ‘real property’ or ‘real estate’ a leasehold is nevertheless an estate in land, an estate in real property. [Citations.] Thus, it would appear that under the broad language of Code of Civil Procedure s. 409, ‘an action concerning real property or affecting the title or the right of possession of real property’, a leasehold being an estate in real property would come within the statute even though a leasehold is, in a contemplation of law, personal property. To hold that a leasehold estate does not affect the right of possession of real property is unreasonable.

PM Factors argues that, under the Parker analysis, as the present dispute is about the terms of the lease rather than the efficacy of the lease itself, the leasehold estate is not in question.

PM Factors’ arguments are unavailing. First, while PM Factors is correct in noting that a lis pendens would be recorded on the entire property, rather than on Suite 201A specifically, any interested buyer can access Plaintiff’s First Amended Complaint, which now plainly states that the instant litigation regards the lease agreement to Suite 201A only. Whereas a prospective buyer who viewed the initial lis pendens would have found that Caesar has a right of first refusal to the Property, a position which this Court ruled was untenable, a prospective buyer would now see that Caesar claims to have an extended leasehold in Suite 201A. As the Court previously found that under the doctrine of equitable estoppel the 201A Lease is the operative agreement between the parties, this position is well taken.

Second, PM Factors’ willingness to sign an extended lease with terms like those of the 201A Lease is irrelevant to the instant discussion. As of now, no such lease has been signed, and absent either a lis pendens or a finalized lease, any prospective buyer of the property could terminate Caesar’s leasehold with thirty days’ notice; PM Factors’ willingness to sign an extended lease would have zero operative effect in this scenario.

Third, though PM Factors may consider the issue of duration of the lease to be a mere contractual dispute, here it essentially serves as the fundamental distinction between the presence and absence of interest in the property. Absent the protection of an extended leasehold, Caesar’s interest in the Subject Property would be subject to the whims of any prospective buyer and could be terminated before the instant litigation is resolved. Therefore, the duration of the lease is not just an issue of contractual dispute, but of the efficacy of Caesar’s leasehold altogether.

The purpose of a lis pendens is to inform prospective buyers over pending litigation regarding valid claims to the real property in question. Here, the Court has found that Caesar has a valid claim to the real property of Suite 201A. By removing references to any right of first refusal, the First Amended Complaint now accurately states Caesar’s interest in the property. Therefore, a lis pendens on the property is proper to protect both Caesar and any prospective buyers.

Accordingly, Caesar’s Motion for Leave to File Lis Pendens is GRANTED.

IV.          MOTION FOR ATTORNEY’S FEES

Next, PM Factors moves for attorney’s fees in relation to the initial Motion to Expunge Lis Pendens pursuant to Code of Civil Procedure section 405.38.

A prevailing party on a motion to expunge a lis pendens is entitled to recover “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.” (CCP § 405.38.) For purposes of attorneys’ fees and costs, a court’s ruling on a motion made pursuant to CCP Sections 405.31 and 405.32 necessarily decides who is the “prevailing party” since such motions place in issue whether the lis pendens was proper. The award of attorney’s fees is only against the losing party, not the losing party’s counsel. (Doyle v. Sup.Ct. (Jacinth Develop., Inc.) (1991) 226 Cal.App.3d 1355, 1359.) 

Here, PM Factors argues that Caesar did not file their initial lis pendens with substantial justification. PM Factors notes that in that order, the Court stated:

Although Plaintiff did establish the probable validity “a” real property claim, the Court finds that it did not have “substantial justification” to oppose this Motion to Expunge for two reasons. First, as a matter of law, any purchaser of the Property would purchase the Property subject to the 201A lease whether or not it had actual or constructive notice of the lease. Second the “real property claim” that Plaintiff established was solely a real property claim to lease one suite of the Property at an agreed rate for a term of five years. This is the “specific property” to which Plaintiff has a valid real property claim. Plaintiff did not act with substantial justification in filing a complaint falsely containing a claim that has a right of first refusal to purchase the entire Property, recording a lis pendens that gave notice to any potential buyer they could only purchase the Property subject to this claim, and then opposing the Motion to Expunge its lis pendens. (RFJN Ex. 3 at p. 8.)

While Caesar accurately notes that the Court left the door open for Caesar to file an amended lis pendens and acknowledged that Caesar has a valid property interest in the Subject Property, the Court explicitly held that Caesar did not have substantial justification in filing the lis pendens in that order. The Court sees no reason to revisit that holding now, therefore PM Factors is due attorney fees pursuant to section 405.38.

However, Caesar also argues that the declaration supporting PM Factors’ Motion is not properly authenticated, and that there is redundancy in the billing.

While the Court will not deny PM Factor’s Motion due to the presentment of only one attorney’s declaration, instead of all attorneys whose hours are billed, Caesar’s argument regarding the redundant billing is well-taken.

Most notably, attorney William E. Adams spent 3.2 hours reviewing the Complaint and Lis Pendens, Attorney Todd M. Lander spent 2.7 hours reviewing the Complaint and Lis Pendens, and then shortly thereafter, Todd M. Lander spent 7.3 hours to “Review complaint and attend conferences with client and buyers concerning implications of lis pendens and expungement.” (Adams Decl., ¶ 4.)

The Court finds that the above billed hours are excessive to review a brief Complaint, and accordingly reduces PM Factors’ request by three hours, or $1,770.

Accordingly, PM Factors’ Motion for Attorney Fees is GRANTED in the amount of $21,724.95. This amount accounts for PM Factors’ time spent drafting the instant motion and responding to Caesar’s Opposition.

DATED:  September 20, 2022                _____________________________ 

Hon. Robert S. Draper 

Judge of the Superior Court