Judge Ronald F. Frank, Case 20TRCV00847 2023-03-06 Tentative Ruling

Judge: Ronald F. Frank, Case: 20TRCV00847, Date: 2023-03-06 Tentative Ruling

Case Number: 20TRCV00847 Hearing Date: March 6, 2023 Dept: 8

Tentative Ruling

HEARING DATE: March 3, 2023¿

CASE NUMBER: 20TRCV00847

CASE NAME: DRAKK Holdings, LLC v. PSIP SN Vermont, LLC .

TRIAL DATE: None set

MOTION:¿ (1) Motion for Attorneys’ Fees and Costs

(2) Motion in Support of Bond Amount

Tentative Rulings: (1) Grant PSIP’s motion for fees in the amount of $16,940.

(2) Deny Motion re bond in lieu of lis pendens

I. BACKGROUND¿

A. Factual

On November 17, 2020, Plaintiff DRAKK Holdings, LLC (“DRAKK”) filed this action against Defendant, PSIP SN Vermont, LLC (“PSIP”). On September 29, 2021, Plaintiff filed a Second Amended Complaint. On November 30, 2022, Plaintiff filed a Third Amended Complaint (“TAC”) alleging cases of action for: (1) Specific Performance/Express Written Contract; (2) Specific Performance/Promissory Estoppel; (3) Specific Performance/Breach of Implied Covenant of Good Faith and Fair Dealing; (4) Promissory Estoppel and Money Damages; (5) Fraud & Deceit; and (6) Negligent Misrepresentation.

Here, Plaintiff DRAKK made a request for the first time at the end of the expungement hearing on January 31, 2023, after the Court had made it clear that it intended to adopt its tentative ruling finding that DRAKK had not established by a preponderance of the evidence the probable validity of its real property claims pursuant to Code of Civil Procedure section 405.32. On January 31, 2023, the Court issued its Minute Order, providing that PSIP Vermont’s Motion to Expunge Lis Pendens is granted for the reasons repeated from the tentative ruling. To allow PSIP Vermont and the Court to address DRAKK’s belated request to post an undertaking as a condition of maintaining a lis pendens (the “Bond Issue”) the Court set a March 6, 2023 hearing date and briefing schedule to address the Bond Issue, not to reargue expungement. The Court, now, also addresses Defendant’s request for attorneys fees.

B. Procedural

On January 14, 2023, Defendant filed a motion for the Award of Attorneys Fees. On January 19, 2023, Plaintiff files an opposition. On January 24, 2023, Defendant filed a reply brief. On February 10, 2023, Plaintiff filed a supplemental brief in support of bond amount. On February 22, 2023, Defendant filed a response to the Plaintiff’s supplemental brief and declaration.

¿II. ANALYSIS

1. Motion for Attorneys Fees

The prevailing party on a special motion to strike is entitled to an award of reasonable attorney fees. (Code Civ. Proc., §¿425.16, subd. (c).)

A ‘reasonable’ attorney’s fee award generally falls “within the sound discretion of the trial judge.” (Church of Scientology v. Wollersheim (1996) 42 Cal. App. 4th 628, 659.) However, in making a determination on the reasonableness of attorney’s fees and costs, a trial court should consider (1) the nature of the litigation, (2) its difficulty, (3) the amount involved, (4) the skill required and the skill employed in handling the litigation, (5) the attention given, (6) the success of the attorney's efforts, (7) his learning and age, (8) his experience in the particular type of work demanded the intricacies and importance of the litigation, and (9) the labor and necessity for skilled legal training and ability in trying the cause, and (10) the time consumed. (Id. at pp. 638-39.)

Here, Defendants request attorneys fees in the amount of $16,940 for prevailing on the motion to expunge lis pendens. On January 31, 2023, this Court granted PSIP Vermont’s Motion to Expunge Lis Pendens. As such, Defendant is the prevailing party on that motion and is entitled to attorneys fees in a reasonable amount. Attorney for Defendant, Alan J. Droste, filed a declaration in support of attorneys fees. In his declaration, Droste explains that he is an attorney duly licensed to practice law in the State of California since 1982. (Droste Decl., ¶ 1.) He also notes that his biling rate for this matter is $440/hour, which is a substantial discount of his standard $650/hour in most cases. (Droste Decl., ¶ 2.) He claims that he has spent 38.2 hours with regard to the preparation of the Motion to Expunge the Lis Pendens recorded by Plaintiff, including review of the allegations of the Third Amended Complaint, interviewing his client's representatives and their transactional counsel, investigating and reviewing his client's file documents, researching the applicable law, preparing the Memorandum of Points and Authorities, preparing the Declarations submitted with this motion, and preparing, revising and finalizing the moving papers. (Droste Decl., ¶ 3.) At his hourly rate, Droste explains that to date he has incurred at least $16,940 in fees for the lis pendens expungement motion.

The Court Grants the motion for attorney’s fees in the amount of $16,940.

2. Motion in Support of Bond Amount

Pursuant to Code of Civil Procedure § 405.34, “[A]t any time after a notice of pendency of action has been recorded, and regardless of whether a motion to expunge has been filed, the court may, 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 maintaining the notice in the record title.”

Here, Plaintiff is requesting this Court to allow Plaintiff to give Defendant an undertaking as a condition of maintaining the notice in the record title. Plaintiff is offering a bond amount totaling $122,424.40. Plaintiff argues that this amount will effectively compensate Defendant for any loss suffered as a result of the maintenance of the pendency of action on record title. Plaintiff estimates the Fair Market Value of the Property to be approximately $9,713,885.33 (the “FMV”). Plaintiff reached this amount by utilizing Plaintiff’s monthly rent ($36,427.07), multiplied by 12 to determine Defendant’s annual income on the Property ($437,124.84). Then, using a 4.5% Cap Rate, the FMV is estimated as follows: ($437,124.84/.045) = $9,713,885.33. (See the Declaration of Sean O’Donnell (“O’Donnell Decl.”) filed In Support of Plaintiff’s Undertaking, ¶ 12, Exhibit H.)

Next, Plaintiff noted that given the FMV and utilizing a 5.5% Interest Rate (i.e., the Seller’s financing rate), the monthly interest on the Property that the Seller could make is $44,521.97 [($9,713,885.33*0.055)/12). Plaintiff notes that the amount of the undertaking was calculated based upon the hypothetical estimation that Defendant will sell the property on or about June 4, 2023, and trial in this case will occur on or about September 6, 2024. Plaintiff concludes that the Total Undertaking Amount would be $122,424.40, based on total interest of $673,320.40 minus a calculated total rent amount of $550,896.00.

In opposition, Defendant PSIP argues that the only authority that Plaintiff DRAKK relies upon is section 405.34 which provides that “as that pursuant to section 405.1, “Subject to the provisions of Sections 405.31 and 405.32, at any time after a notice of pendency of action has been recorded, and regardless of whether a motion to expunge has been filed, the court may, 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 maintaining the notice in the record title. . . .” (emphasis added.) Defendant contends that as the party recording the lis pendens, Plaintiff is the “claimant” but that Code of Civil Procedure section 405.1 also provides that Claimant is the party to an action who asserts a real property claim and records notice of the pendency of the action. However, here, Defendant argues that Plaintiff is improperly trying to take on the role of the “moving party” under Section 405.34, which if applied according to its provisions, would mean that Plaintiff seeks a bond from itself. Defendant argues that there is no authority for Plaintiff to be in the role of “moving party” under Section 405.34, and then act as though Defendant is the “moving party” to be required to accept an undertaking to allow Plaintiff to keep a lis pendens.

PSIP makes other arguments as week which the Court need not address at this time because the Court denies the implicit motion by Plaintiff to require Plaintiff to impose a bond requirement. The Court finds no published precedent enabling a party who filed a lis pendens to substitute a bond in lieu of the notice of pendency of action after a trial court has expunged a lis pendens. There is precedent for a supersedeas or appeal bond after an expungement motion has been granted and the non-prevailing party on the expungement motion intends to appeal the expungement, but that is not what DRAKK has argued here.