Judge Teresa A. Beaudet, Case Number: 19, Date: 2023-11-06 Tentative Ruling

Plaintiffs Richard Meng and Vivian Meng (jointly “Plaintiffs”) filed this action on June 21, 2019 against, inter alia, Defendant Leon Richard Mays, an individual (“Mays”) and as Trustee of the 402 Randolph Trust.

The operative Fourth Amended Complaint (“FAC”) was filed by Plaintiffs on January 27, 2023. The FAC asserts causes of action for (1) intentional misrepresentation, (2) negligence, (3) fraudulent conveyance, (4) “withdrawn,” (5) violation of Business and Professions Code section 7160, (6) aiding and abetting unlicensed contracting, (7) conversion, (8) unjust enrichment, (9) rescission, (10) disgorgement under Business and Professions Code section 7031, and (11) breach of fiduciary duty.

In the FAC, Plaintiffs allege that “[t]his action arises out of a fraudulent scheme based on a construction renovation project perpetuated by Defendants MAYS and DANIELS, and through their companies, MILLENNIUM CONCEPTS LLC and MILLENNIUM CONCEPTS INVESTMENTS LLC., that defrauded Plaintiffs in excess of $3.5 million. From 2014 to 2019, Defendants MAYS and DANIELS repeatedly misrepresented to Plaintiffs with regards to their license, qualification, status and/or progress of the said construction project, and the construction fees allegedly incurred, which Plaintiffs materially relied upon and made an outrageous amount of payment to Defendants.” (FAC, ¶ 1.) Plaintiffs further allege that “DANIELS and MAYS misappropriated portion of Plaintiffs’ funds to purchase and/or to fulfill their mortgage repayment obligations for their real properties located at: (1) 2160 Charmaine Dr, Upland, CA 91784; and (2) 402 Randolph St, Pomona, CA 91768…Plaintiffs, therefore, have a vested legal interest in the said real properties in light of the misappropriation of Plaintiffs’ funds carried out as related to the title ownership of these real properties by Defendant DANIELS and MAYS.” (FAC, ¶ 38.)

Mays, solely in his capacity as Trustee of the 402 Randolph Trust (herein, “Defendant”) indicates that on August 1, 2019, Plaintiffs recorded a notice of lis pendens on property located at 402 Randolph Street, Pomona California 91768 (the “Property”). (Mays Decl., ¶ 6, Ex. 3.) Defendant also states that on March 21, 2023, a second notice of lis pendens was recorded by Plaintiffs regarding the Property. (Mays Decl., ¶ 7, Ex. 4.)

Defendant now moves “for an order expunging the two Notices of Pending Action (‘Lis Pendens’) filed and recorded by Plaintiffs Richard Meng and Vivian Meng…in connection with this action on the ground that Plaintiffs cannot establish the probable validity of any real property claim as it relates to the property and improvements thereon located at 402 Randolph Street, Pomona CA 91768…” Plaintiffs oppose.

The authorization to file a notice of lis pendens is found in section 405.20 of the Code of Civil Procedure. That statute provides in part: “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. The notice may be recorded in the office of the recorder of each county in which all or part of the real property is situated.” (Code Civ. Proc., § 405.20.) “The whole idea of a notice of lis pendens is to give constructive notice of the legal proceeding affecting title to a specific piece of property.” (Gale v. Superior Court (2004) 122 Cal.App.4th 1388, 1396.)

“A court shall order a notice of lis pendens expunged if it determines (1) that the pleading on which the notice is based does not contain a real property claim (§ 405.31); (2) that the claimant has not established, by a preponderance of the evidence, the probable validity of a real property claim (§ 405.32); or (3) that adequate relief can be secured by an undertaking. (§ 405.33.)…Unlike most motions, the party opposing a motion to expunge bears the burden to show the existence of a real property claim….In considering whether the burden has been met, the court engages in a demurrer-like analysis.” (Shoker v. Superior Court (2022) 81 Cal.App.5th 271, 277 [internal quotations omitted].)

Pursuant to Code of Civil Procedure section 405.30, “[a]t any time after notice of pendency of action has been recorded, any party, or any nonparty with an interest in the real property affected thereby, may apply to the court in which the action is pending to expunge the notice. However, a person who is not a party to the action shall obtain leave to intervene from the court at or before the time the party brings the motion to expunge the notice. Evidence or declarations may be filed with the motion to expunge the notice. The court may permit evidence to be received in the form of oral testimony, and may make any orders it deems just to provide for discovery by any party affected by a motion to expunge the notice. The claimant shall have the burden of proof under Sections 405.31 and 405.32.”

As an initial matter, in the opposition, Plaintiffs assert that “MAYS does not have the authority to represent the Trust in this case, let alone filing the instant motion to expunge notice of pendency of action. This is critical since Code Civ. Proc. Section 405.30 requires a leave to intervene before filing any motion to expunge if the filing party is a ‘nonparty with an interest in the real property.’” (Opp’n at p. 6:25-28.) But Leon Richard Mays “as Trustee of the 402 Randolph Trust” is a defendant named in the FAC in this action. Code of Civil Procedure section 405.30 provides in pertinent part that “[a]t any time after notice of pendency of action has been recorded, any party, or any nonparty with an interest in the real property affected thereby, may apply to the court in which the action is pending to expunge the notice. However, a person who is not a party to the action shall obtain leave to intervene from the court at or before the time the party brings the motion to expunge the notice.” (Emphasis added.)

Defendant argues in the motion that, inter alia, there is a “lack of a real property claim.” (Mot. at p. 8:8.) Defendant cites to BGJ Associates v. Superior Court (1999) 75 Cal.App.4th 952, 967, where the Court of Appeal noted that “[a] lis pendens notice may be recorded in an action which has a ‘real property claim,’ which is defined by statute as ‘the cause or causes of action in a pleading which would, if meritorious, affect . . . title to, or the right to possession of, specific real property.’ (§ 405.4.) The statute provides no further definition of ‘affect . . . title to, or the right to possession of,’ specific real property, nor has case law provided any abstract definition. Case law has determined that certain types of actions clearly do, or clearly do not, affect title or possession. At one extreme, ‘[a] buyer’s action for specific performance of a real property purchase and sale agreement is a classic example of an action in which a lis pendens is both appropriate and necessary.’ At the other extreme, an action for money only, even if it relates in some way to specific real property, will not support a lis pendens.” (Internal citations omitted, emphasis in original.) Defendant notes that the BGJ Associates Court found as follows:

“Therefore, in approaching the constructive trust cases, the courts have ‘consistently eschewed’ an approach which would ‘transform [lis pendens] into a money-collection remedy without any of the protections of the attachment statutes.’ ( Lewis v. Superior Court, supra, 30 Cal. App. 4th at p. 1864.) ‘Overbroad definition of ‘an action . . . affecting the title or the right of possession of real property’ would invite abuse of lis pendens.’ (Burger v. Superior Court, supra, 151 Cal. App. 3d at p. 1018.) For such reasons, we declared in Urez Corp. v. Superior Court, supra, that lis pendens is not available in what ‘is essentially a fraud action seeking money damages with additional allegations urged to support the equitable remedies of a constructive trust or an equitable lien.’ (190 Cal. App. 3d at p. 1149, italics added; see also Hunting World, Inc. v. Superior Court, supra, 22 Cal. App. 4th 67, 73-74 [lis pendens held proper in an action to set aside a fraudulent conveyance; distinguishing cases in which ‘. . . constructive trust or equitable lien causes of action were appended to lawsuits centering on money damages’ (italics in original)].) In determining whether the claims in the pleading affect title to or possession of specific real property the courts have not interpreted ‘affect’ literally; they have looked instead to the substance of the dispute.” (BGJ Associates v. Superior Court, supra, 75 Cal.App.4th at pp. 969-970.)

Defendant argues that here, “[t]he substance of the underlying dispute in the Complaint in this case is the recovery of money under various legal theories. The primary alleged basis for this case is that Plaintiffs claim they overpaid for the services that the Defendants provided. This is not a real property claim case and it does not convert to a real property claim case simply by alleging that some of the funds that Plaintiffs paid to Defendants went to pay a mortgage or acquire real property.” (Mot. at p. 9:8-11.)

Defendant cites to paragraph 67 of the FAC (contained in the third cause of action) which alleges that “DANIELS and MAYS misappropriated portion of Plaintiffs’ funds to purchase and/or to fulfill their mortgage repayment obligations for their real properties located at: (1) 2160 Charmaine Dr, Upland, CA 91784; and (2) 402 Randolph St, Pomona, CA 91768. It is believed that a portion of Plaintiffs’ funds were used to pay for home improvements and HOA fees of the said real properties. During the relevant time period, Defendant MAYS transferred the title of the 402 Randolph St, Pomona property to a trust which names himself as the trustee, transfer of which was to make the defendants judgment proof. Since February 2020, Defendants DANIELS and MAYS repeatedly listed and actively looked to sell their Upland property, which property was claimed to be an exempted asset during their bankruptcy proceeding. Plaintiffs, therefore, have a vested legal interest in the said real properties in light of the misappropriation of Plaintiffs’ funds carried out as related to the title ownership of these real properties by Defendant DANIELS and MAYS. The determination of Plaintiff’s legal interest in the (1) 2160 Charmaine Dr, Upland, CA 91784; and (2) 402 Randolph St, Pomona, CA 91768 will be resolved in the present litigation of this matter.” (FAC, ¶ 67.) Defendant notes that Plaintiffs allege that they “seek the following reliefs: avoidance of the transfer or obligation to the extent necessary to satisfy the Plaintiffs’ claims; an attachment or other provisional remedy against the asset transferred or its proceeds; an injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or its proceeds.” (FAC, ¶ 71.) Defendant asserts that “[w]hat Plaintiffs are arguing for is essentially the recovery of the money they allege was misappropriated and applied to the Property.” (Mot. at p. 9:1-3.)

Plaintiffs do not appear to respond to or dispute the foregoing points in their opposition. Defendants assert in the reply that, “Plaintiffs have failed to demonstrate to the Court how their claims of misappropriation of funds are real property claims that justify the recording and maintaining of a lis pendens pending trial in the case. Moreover, Plaintiffs have failed to distinguish the case of BGJ Associates v. Superior Court (1999) 75 Cal. App. 4th 952…” (Reply at p. 2:9-13.) Indeed, Plaintiffs do not address the BGJ Associates case in their opposition.

As set forth above, “[u]nlike most motions, the party opposing a motion to expunge bears the burden to show the existence of a real property claim.” (Shoker v. Superior Court, supra, 81 Cal.App.5th at p. 277.) Pursuant to Code of Civil Procedure section 405.30, “[t]he claimant shall have the burden of proof under Sections 405.31 and 405.32.” Pursuant to Code of Civil Procedure section 405.31, “[i]n proceedings under this chapter, the court shall order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim. The court shall not order an undertaking to be given as a condition of expunging the notice where the court finds the pleading does not contain a real property claim.” Here, Plaintiffs do not appear to argue that their third cause of action constitutes a “real property claim” under Code of Civil Procedure section 405.4.[1] Thus, the Court does not find that Plaintiffs have met their burden to show the existence of a real property claim in the FAC.

Lastly, both parties seek sanctions. Pursuant to Code of Civil Procedure section 405.38, “[t]he court shall direct that the party prevailing on any motion under this chapter be awarded the 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.” The Court finds that Plaintiffs acted with substantial justification in presenting their position in the opposition and thus declines to award sanctions against them. In addition, as the instant motion is granted, the Court also denies Plaintiffs’ request for sanctions.

For the foregoing reasons, Defendant’s motion to expunge the lis pendens recorded against the Property on August 1, 2019 and March 21, 2023 is granted.

[1]As referenced above, “‘[r]eal property claim’ means the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading, other than an easement obtained pursuant to statute by any regulated public utility.” (Code Civ. Proc., § 405.4.)

richard meng, et al., Plaintiffs, vs. leon richard mays, et al., Defendants.	Case No.:	19STCV21850
	Hearing Date:	November 6, 2023
	Hearing Time:	10:00 a.m.
	TENTATIVE RULING RE: MOTION TO EXPUNGE NOTICES OF PENDENCY OF ACTION AND FOR COURT COSTS AND SANCTIONS

Superior Court of California

County of Los Angeles

Department 50