Judge: Stephen P. Pfahler, Case: 21CHCV00303, Date: 2023-03-24 Tentative Ruling

Case Number: 21CHCV00303    Hearing Date: March 24, 2023    Dept: F49

Dept. F-49

Date: 3-24-23

Case #21CHCV00303

Trial Date: 1-18-22 c/f 11-15-21 c/f 10-25-21 c/f 10-18-21 c/f 10-4-21 c/f 9-13-21 c/f 9-7-21

ATTORNEY FEES

MOVING PARTY: Defendants, Edgrow, LLC, et al.

RESPONDING PARTY: Plaintiff, Barry Pressman

RELIEF REQUESTED

Motion for Attorney Fees

SUMMARY OF ACTION

On August 20, 2018, Plaintiff Barry Pressman, as trustee of the Barry Pressman Family Trust (Pressman) entered into a lease for commercial premises with Defendant Edgrow, LLC (Edgrow) for the operation of a cannabis business. The lease commenced on September 6, 2018 for 24 hours, then reverted to a month-to-month agreement. Notwithstanding the “month-to-month” terms, base rent began at $10,000 per month, but subject to abatement for six months upon Edgrow obtaining it’s cannbis business license. According to Plaintiff, Edgrow obtained its license on June 18, 2019, which entitled it to a rent abatement until December 18, 2019. The lease also contained a provision for payment of taxes, utilities, and insurance.

Plaintiff alleges Edgrow failed to pay rent from December 18, 2019 to December 2, 2020. On December 2, 2020, Defendant “surrendered” the property. Plaintiff alleges an outstanding balance of $196,380, which includes rent, taxes, utilities, and insurance.

The lease was personally guaranteed by Defendant Juan Granja.

Although Defendants “surrendered the property on December 2, 2020,” Defendants “forcibly re-entered and took unlawful possession.” [Comp., ¶¶ 24-25.] Plaintiff subsequently served a Three-Day Notice to Quit on April 13, 2021. Defendants failed to vacate the premises and continue to occupy the premises.

On April 21, 2021, Plaintiff filed a verified complaint for Unlawful Detainer. On June 30, 2021, the court overruled the demurrer to the complaint and denied the motion to strike. Defendants answered on July 12, 2021. On September 3, 2021, the court denied Plaintiff’s motion for summary judgment. On December 8, 2021, the court denied Pressman’s motion for summary adjudication.

On September 8, 2022, Plaintiff dismissed the entire complaint with prejudice. On October 19, 2022, the case was reassigned to Department 51. A 170.6 filed by Plaintiff on October 28, 2022, was rejected as moot given the dismissal of the action. On November 7, 2022, the court found the action was improperly transferred to Department 51 following the dismissal, and ordered the action returned. The court also deemed 22CHCV00841, Pressman v. Granja, et al. related to the instant action, and the later filed action was transferred to Department 49 as well.

On November 15, 2022, the court found Plaintiff properly filed a 170.6 preemptory challenge on 22CHCV00841, and ordered it transferred out of Department 49. The case was assigned to Department 51, and remains assigned there.

RULING: Denied

Defendants, Edgrow, LLC, Juan Granja, and Edgar Escobar moves for attorney fees, costs and sanctions in the amount of $143,461.21 against plaintiff Barry Pressman, as trustee of the Barry Pressman Family Trust (Pressman). Defendants bring the instant motion on grounds that the newly filed complaint, 22CHCV00841, Pressman v. Granja, et al. filed after the dismissal of the instant action constitutes improper conduct, such as forum shopping, and the newly filed action continues to allege frivolous allegations for purposes of harassment.

Plaintiff in opposition represents that the second case was filed, due to a potentially “fatal” error in the three day notice. Plaintiff was left with no alternative but to refile the action. Plaintiff additionally states that the current unlawful detainer seeks relief on a different basis than the prior action.

Defendants in reply cites to the “procedural history” in support of the request. Defendants also challenge the represented substantial basis for the refilling of the action due to the three day notice defect. More specifically, Plaintiff should have realized the error at an earlier date instead of forcing Defendants to incur additional fees.

Defendants bring the subject motion under Code of Civil Procedure section 128.5. The section provides for the recovery of sanctions on actions “made in bad faith, that are frivolous or solely intended to cause unnecessary delay.”

(1) “‘Actions or tactics’ include, but are not limited to, the making or opposing of motions or the filing and service of a complaint, cross-complaint, answer, or other responsive pleading. The mere filing of a complaint without service thereof on an opposing party does not constitute ‘actions or tactics’ for purposes of this section.

(2) ‘Frivolous’ means totally and completely without merit or for the sole purpose of harassing an opposing party.”

            …

e) This section shall not apply to disclosures and discovery requests, responses, objections, and motions.

(Code Civ. Proc., § 128.5, subds. (b, e).)

The section “authorizes trial courts to impose sanctions to check abuses in the filing of pleadings, petitions, written notices of motions or similar papers.” (Musaelian v. Adams (2009) 45 Cal.4th 512, 514.) A violation of any of these certifications may give rise to sanctions. (Eichenbaum v. Alon (2003) 106 Cal.App.4th 967, 976.) An objective standard of review applies to sections 128.5 and 128.7. (San Diegans for Open Government v. City of San Diego (2016) 247 Cal.App.4th 1306, 1318; Bockrath v. Aldrich Chemical Co., Inc. (1999) 21 Cal.4th 71, 82.) Whether a claim is meritless or for the sole purpose of harassment must be evaluated by examining whether the factual allegations of the claim had evidentiary support. (580 Folsom Associates v. Prometheus Development Co. (1990) 223 Cal.App.3d 1, 22.) “Code of Civil Procedure section 128.7 imposes a lower threshold for sanctions than is required under Code of Civil Procedure section 128.5. This is because Code of Civil Procedure section 128.7 requires only that the conduct be ‘objectively unreasonable,’ while Code of Civil Procedure section 128.5 also requires ‘a showing of subjective bad faith.’ (Citation.)” (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.)

The motion itself, as a function of seeking sanctions, fees and costs, finds proper jurisdiction following dismissal. (West Coast Development v. Reed (1992) 2 Cal.App.4th 693, 706.)

On a procedural level, defendants present a safe harbor letter dated February 3, 2023. [Declaration of Savannah Skelton, ¶ 2, Ex. A.] The letter itself only presents a demand for attorney fees itself and otherwise offers no meaningful course of correction following the filing of the second lawsuit other than a demand for payment of legal fees or the filing of the instant motion. (Code Civ. Proc., § 128.5, subd. (f)(1)(B).) Such a demand letter fails to demonstrate compliance with the statutory requirements. The purpose of the sanctions motion is to allow the offending party to avoid sanctions through withdrawal of an action or improper pleading, thereby rendering the motion with a remedial purpose, rather than a punitive recovery. (CPF Vaseo Associates, LLC v. Gray (2018) 29 Cal.App.5th 997, 1003-1004; Nutrition Distribution, LLC v. Southern SARMs, Inc. (2018) 20 Cal.App.5th 117, 129-130.) The motion is therefore denied for lack of procedural compliance.

Even considering the merits of the motion, however, the court finds the motion insufficiently establishes wrongful conduct for purposes of recovering sanctions under the statutory standard. The motion contends the handling of the action by Plaintiff’s counsel and subsequent dismissal both constituted harassing conduct, and subsequent forum shopping. Defendants cite to Los Angeles Superior Court local rule 3.3(d), which states:

“Improper Refiling. A party must not dismiss and then refile a case for the purpose of obtaining a different judge. Whenever a case is dismissed by a party or by the court prior to judgment and a new action is later filed containing the same or essentially the same claims and the same or essentially the same parties, the new action will be assigned, unless the Supervising Judge for good cause orders otherwise, to the judge to whom the first case had been assigned. When multiple cases involving the same or essentially the same claims, and the same or essentially the same parties, are filed on the same date, the cases shall be assigned to the judge to whom the low numbered case (or first filed case) has been assigned, whether or not that case has been dismissed.”

The motion essentially depends on a finding that the dismissal and subsequent filing of the new action constitutes a bad faith violation of Local Rule 3.3(d). Defendants concede that the underlying case was flawed due to the purportedly defective 3-Day Notice, which would bar any recovery. Thus, dismissal was the only option, or alternatively further proceed to an adjudicated dismissal. Given the necessity to seek correction in the defects, the court finds no underlying wrongful conduct in dismissing the flawed complaint, and declines to find Plaintiff’s own late realization of the defect as a basis of sanctions. The court further declines to allow Defendants to shift the blame for allegedly dilatory conduct by Plaintiff given their own LACK OF ANY CHALLENGE to raise this issue in defense.

The motion also disregards Plaintiff’s absolute right to file a 170.6 without explanation barring a procedural reason barring the affidavit. The 170.6 challenge led to the reassignment of the later filed action out of Department 49, and prevents reassignment of the case back to the same courtroom, as required under Local Rule 3.3(d). Other than the factual circumstances of the dismissal and refilling, the motion lacks any address of the superseding filing the 170.6. The court declines to make any factual finding regarding a “bad faith” purpose for the filing of the preemptory challenge, including “forum shopping.”

Even if the court considered the existence of an improper 170.6 challenge, thereby removing the superseding dynamic changing event, Defendants failed to raise any objections on the issue of the propriety of the 170.6 filed in the later case. (See Rothstein v. Superior Court (2016) 3 Cal.App.5th 424, 428 [“We hold a section 170.6 challenge filed in a case that is related to (not consolidated with) an earlier-filed case in which the assigned judge has resolved a disputed factual issue relating to the merits requires transfer of only the later-filed case to another judge”]; Bravo v. Superior Court (2007) 149 Cal.App.4th 1489, 1493-1494; NutraGenetics, LLC v. Superior Court (2009) 179 Cal.App.4th 243, 252-259.) The 170.6 was therefore accepted and the case reassigned. The court finds the acceptance of the 170.6 constitutes an additional basis against any finding of wrongful conduct.

More fundamentally, even disregarding the 170.6, and treating the dismissal and refilling as isolated events, the court finds the motion lacks support for sanctions. The court declines to second guess the strategic and tactical decisions of Plaintiff’s counsel in litigating the action and deciding on whether to bring the case to trial or not. (West Coast Development v. Reed, supra, 2 Cal.App.4th at pp. 703–704.) Again, the court declines to speculate on when Plaintiff should have realized the 3-Day Notice was flawed.

The motion otherwise lacks any legal argument in support of a wrongful voluntary dismissal. (Code Civ. Proc., § 581.) The second action is currently proceeding in Department 51, and remains active. The court declines to create a detailed record of the entire litigation history for a determination on behalf of Defendants to establish improper conduct in the totality of the circumstances. (West Coast Development v. Reed, supra, 2 Cal.App.4th at pp. 704-705; Park Magnolia v. Fields (1987) 191 Cal.App.3d Supp. 1, 5.) Nothing in the dismissal and refilling automatically establishes a presumption that the entire prior action lacked merit, was filed purely for an improper purpose, and therefore retroactively justifies relief for all prior litigation.

The motion is therefore denied on both procedural and substantive grounds.

Defendants to give notice.