Judge Salvatore Sirna, Case Number: 21PSCV00617, Date: 2023-07-20 Tentative Ruling

Judge: Salvatore Sirna, Case: 21PSCV00617, Date: 2023-07-20 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 21PSCV00617 Hearing Date: November 13, 2023 Dept: G

Defendants Fleet Capital, Inc., Sam Ostayan, and Inco Builders’ Motion for Dismissal and Monetary Sanctions

Respondent: Plaintiff Diana Culkin

TENTATIVE RULING

Defendants Fleet Capital, Inc., Sam Ostayan, and Inco Builders’ Motion for Dismissal and Monetary Sanctions is DENIED without prejudice.

BACKGROUND

This is a wrongful foreclosure action. On July 30, 2021, Plaintiff Diana Culkin, also known as Diana Jannette Marmolejo Corona, filed a complaint against Fleet Capital, Inc. (Fleet Capital), Best Alliance Foreclosure and Lien Services Corp. (Best Alliance), Inco Builders (Inco), and Does 1-25, alleging the following causes of action: (1) violation of California's non judicial foreclosure statutes, (2) wrongful foreclosure, (3) conversion, (4) unfair business practices, and (5) declaratory relief.

On February 9, 2022, Inco filed a cross-complaint against Culkin, Michael Culkin, and Roes 1-10, alleging the following causes of action: (1) trespass and (2) slander of title.

On February 23, 2022, Fleet Capital and Inco filed a motion for judgment on the pleadings as to Culkin’s complaint. On August 4, the court granted the motion with leave to amend.

On October 7, 2022, Culkin filed a First Amended Complaint (FAC) against the same defendants, as well as Sam Ostayan, alleging the following causes of action: (1) violation of California's nonjudicial foreclosure statutes, (2) wrongful foreclosure, (3) quiet title, (4) unfair business practices, and (5) declaratory relief. On January 5, 2023, the court sustained a demurrer by Fleet Capital, Inco, and Ostayan.

On February 24, 2023, the court denied Fleet Capital and Inco’s motion to dismiss Culkin’s action for failure to file a timely amended complaint and deemed Culkin’s Second Amended Complaint (SAC) filed as of that date. The SAC is against the same defendants and alleges the following causes of action: (1) violation of California's nonjudicial foreclosure statutes, (2) wrongful foreclosure, (3) quiet title, (4) promissory estoppel, (5) breach of the covenant of good faith and fair dealing, (6) violation of the Rosenthal Fair Debt Collection Practices Act, (7) unfair business practices, and (8) declaratory relief. On May 4, the court sustained a demurrer by Fleet Capital, Inco, and Ostayan in part and overruled it in part.

On August 4, 2023, Fleet Capital, Ostayan, and Inco (collectively, Defendants) filed the present motion. A hearing on the motion is set for November 13 along with a case management conference, OSC Re: Why this court should not assess Defendant reasonable attorney fees and costs, and a hearing on a motion to be relieved as counsel.

ANALYSIS

Defendants move for monetary and terminating sanctions against Culkin and Culkin’s counsel pursuant to Code of Civil Procedure section 128.7. For the following reasons, the court DENIES Defendants’ motion.

Legal Standard

Pursuant to Code of Civil Procedure section 128.7, “a court may impose sanctions if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually.” (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189.) “A claim is factually frivolous if it is ‘not well grounded in fact’ and is legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’” (Ibid, quoting Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.) The moving party bears the burden of showing the “the party’s conduct in asserting the claim was objectively unreasonable.” (Ibid.) “A claim is objectively unreasonable if ‘any reasonable attorney would agree that [it] is totally and completely without merit.’” (Ibid, quoting In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.)¿But this section “should be utilized only in ‘the rare and exceptional case where the action is clearly frivolous, legally unreasonable or without legal foundation, or brought for an improper purpose.’” (Kumar v. Ramsey (2021) 71 Cal.App.5th 1110, 1121 (Kumar), quoting Operating Engineers Pension Trust v. A-C Co. (9th Cir. 1988) 859 F.2d 1336, 1344.)

Code of Civil Procedure section 128.7 also includes a safe harbor provision that states a “[n]otice of motion shall be served as provided in Section 1010, but shall not be filed with or presented to the court unless, within 21 days after service of the motion, or any other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.” (Code Civ. Proc., § 128.7, subd. (c)(1); Li v. Majestic Industry Hills, LLC (2009) 177 Cal.App.4th 585, 590-591.) This safe harbor requirement is strictly enforced, and substantial compliance is not sufficient. (See Cromwell v. Cummings (1998) 65 Cal.App.4th Supp.10, 15.)

“If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney’s fees incurred in presenting or opposing the motion.” (Code Civ. Proc., § 128.7, subd. (c)(1).) An award of fees is not warranted unless the motion was “frivolous, unfounded, filed for an improper purpose, or otherwise unreasonable.” (Musaelian v. Adams (2011) 197 Cal.App.4th 1251, 1258.)

Discussion

Prior to the filing of this motion on August 4, 2023, Defendants’ counsel served a copy of the motion on Culkin’s counsel via email on July 11. Because Defendants’ original service of this motion was twenty-four days before it was filed, the court finds Defendants have complied with the safe harbor provisions of Code of Civil Procedure section 128.7.

In this case, Defendants’ motion is premature. Defendants argue sanctions are warranted because Culkin’s first, second, and seventh causes of action are based on “knowingly false allegations.” But because the issues raised here are more appropriately raised in a motion for summary judgment or adjudication, the court exercises its discretion and declines to find Culkin’s SAC is without merit.

Accordingly, the court DENIES Defendants’ motion without prejudice.

CONCLUSION

Based on the foregoing, Defendants’ motion for sanctions is DENIED without prejudice.