Judge: Teresa A. Beaudet, Case: 21STCV17195, Date: 2023-02-22 Tentative Ruling

Case Number: 21STCV17195    Hearing Date: February 22, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiffs Nivo 1, LLC, D.A. BEEC-007, LLC (“D.A. BEEC-007”), and Anne Kihagi (“Kihagi”) filed this action on May 6, 2021 against Defendants Lin Dee Lu Services, Yu Sheng Victor Liu, and Xiang Liu.

Plaintiffs filed the operative First Amended Complaint (“FAC”) on April 26, 2022, asserting causes of action for (1) breach of fiduciary duty, (2) violation of Business and Professions Code section 10240, et seq., (3) violation of Civil Code section 2924, et seq., (4) violation of Civil Code section 1799, et seq., (5) slander of title, (6) negligence per se, (7) rescission, (8) accounting, declaratory relief, injunctive relief, and (9) violation of Business and Professions Code section 17200.

On July 31, 2022, plaintiffs filed an amendment to the complaint substituting the name Lin Dee Liu Services (“LDLS”) for Lin Dee Lu Services.

On December 13, 2022, plaintiffs filed amendments to the complaint naming Eric Liu in place of “Doe 2” and Building Future Foundation in place of “Doe 3.”

In the FAC, plaintiffs allege that on May 7, 2018, LDLS represented a group of lenders in arranging a loan for Defendants. (FAC, ¶ 11.) The lenders were Yu Sheng Victor Liu and Xiang Liu. (FAC, ¶ 11.) The total loan amount was $1,500,000 secured by properties at 2011 Echo Park Avenue, 5958 Carlton Way, and 1237 N. Orange Grove Avenue, all located in Los Angeles, California. (FAC, ¶ 11.) In addition, LDLS arranged a loan to D.A. BEEC-007, in which Eric Liu and Building Futures Foundation were the lenders, for a total of a $1,000,000. (FAC, ¶ 12.)

Plaintiffs allege that “Defendants failed to provide any written disclosures prior to Ms.

Kihagi signing the promissory note and deed of trust secured by Defendants’ properties.” (FAC, ¶ 17.) Plaintiffs further allege that “Defendants violated numerous mandatory statutory obligations required of any lender or broker doing business in the State of California,” and that “Defendants also violated Department of Real Estate regulations governing real estate transactions and disclosure requirements for real estate transactions.” (FAC, ¶ 46.)

D.A. BEEC-00 and Kihagi (jointly, “Plaintiffs”) now move for an order “to have Eric Liu and Building Futures Foundation… reconvey the deed of trust for 2637 3rd Street, Santa Monica and for attorneys’ fees and costs, as well as statutory damages.” LDLS, Yu Sheng Victor Liu, Xiang Liu, Eric Liu, and Building Future Foundation (collectively, “Defendants”) oppose.

Evidentiary Objections

The Court rules on Defendants’ evidentiary objections concerning the Declaration of Anne Kihagi as follows: 

Objection No. 1: overruled

Objection No. 2: overruled

Objection No. 3: overruled

Objection No. 4: overruled

Objection No. 5: overruled

Objection No. 6: overruled

Discussion

Plaintiffs cite to Civil Code section 2941 as statutory authority for the instant motion.

Pursuant to Civil Code section 2941, subdivision (a), “[w]ithin 30 days after any mortgage has been satisfied, the mortgagee or the assignee of the mortgagee shall execute a certificate of the discharge thereof, as provided in Section 2939, and shall record or cause to be recorded in the office of the county recorder in which the mortgage is recorded. The mortgagee shall then deliver, upon the written request of the mortgagor or the mortgagor’s heirs, successors, or assignees, as the case may be, the original note and mortgage to the person making the request.” (Civ. Code, § 2941, subd. (a).) In addition, pursuant to Civil Code section 2941, subdivision (b)(1), “[w]ithin 30 calendar days after the obligation secured by any deed of trust has been satisfied, the beneficiary or the assignee of the beneficiary shall execute and deliver to the trustee the original note, deed of trust, request for a full reconveyance, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust.” (Civ. Code, § 2941, subd. (b)(1).)

Kihagi asserts that she entered into a loan agreement with Eric Liu and Building Futures Foundation, signed on January 22, 2018, for $1,000,000, secured by real property located at 2637 3rd Street, Santa Monica, California (the “Third Street Property”). (Kihagi Decl., ¶ 2.) Kihagi asserts that “Lin Dee Liu, on behalf of Lender, and I agreed to create a new replacement loan for $500,000, secured by 1237 North Orange Grove Avenue, West Hollywood, CA, and the remaining amounts due would be paid through a refinance of the Third Street property.” (Kihagi Decl., ¶ 8.) Kihagi states that “[t]he remaining balance on the Third Street loan was repaid through the escrow for the refinance of the Third Street property.” (Kihagi Decl., ¶ 10.)

Plaintiffs assert that “[u]pon execution of the new note and payment of the escrow funds, there should have been a reconveyance of the Third Street Deed of Trust.” (Mot. at p. 6:7-8.) In addition, Plaintiffs argue that “[t]he Third Street promissory note was paid through two pay-off demands. Section 2941 mandates that the Court order the Third Street Deed of Trust reconveyed, and award attorneys’ fees and costs, along with a statutory damage of $500…” (Mot. at p. 10:2-4.)

As a threshold matter, the Court agrees with Defendants that there are multiple procedural issues with the instant motion.

First, as noted by Defendants, although Plaintiffs cite to Civil Code Section 2941 and Civil Code section 2943 in the motion, Plaintiffs do not cite to any provision in such statutes authorizing the Court to “order the Third Street Deed of Trust reconveyed,” as requested. (Mot. at p. 10:3.) Defendants assert that the remedy for noncompliance with Civil Code section 2941 is a cause of action under Civil Code section 2941, subdivision (d) for damages for failure to reconvey a lien where the underlying obligation has been satisfied. In State of California ex rel. Bowen v. Bank of America Corp. (2005) 126 Cal.App.4th 225, 233, the Court of Appeal noted that “[o]ne who violates Civil Code section 2941 may be held civilly liable to the person affected by the violation for a $500 penalty, plus all damages which that person may sustain by reason of the violation…” (Internal quotations omitted, citing Civ. Code, § 2941, subd. (d).) In addition, Civil Code section 2943 does not contain any language pertaining to a motion to reconvey a deed of trust. Plaintiffs do not respond to this point in the reply.

In addition, although Plaintiffs request “a statutory damage of $500” under Civil Code section 2941 (Mot. at p. 10:3-4), the FAC does not contain any cause of action under Civil Code section 2941. Moreover, although the FAC alleges that LDLS, “arranged a loan to D A. BEEC-007, LLC…in which Eric Liu…and Building Futures…were the lenders for a total of a $1,000,000” (FAC, ¶ 12), the FAC does not contain any allegations concerning property located at 2637 3rd Street, Santa Monica, California or the “Third Street Deed of Trust.” As Defendants note, the FAC also does not contain any allegations concerning any purported obligation to reconvey a “Third Street Deed of Trust.” Thus, the Court agrees with Defendants that the motion is outside the scope of the pleadings.

To the extent Plaintiffs seek preliminary injunctive relief, they have not made any showing that such relief is warranted here. Defendants note that “[a] preliminary injunction is warranted only if there is on file a complaint which states a sufficient cause of action for injunctive relief of the character embraced in the preliminary injunction.” (Moreno Mut. Irrigation Co. v. Beaumont Irrigation Dist. (1949) 94 Cal.App.2d 766, 778; see also Department of Fair Employment & Housing v. Superior Court (2020) 54 Cal.App.5th 356, 384 [“ordinarily, a preliminary injunction may be sought only when the underlying cause of action on which the provisional remedy rests is presented for decision through the pleadings.”].) Here, the FAC contains no causes of action pertaining to Civil Code section 2941 or Civil Code section 2943, which is the statutory authority cited in the instant motion. Thus, there are no causes of action in the FAC on which any injunction could rest.

Based on the foregoing, the Court does not find that Plaintiffs have demonstrated grounds for the relief requested. In addition, in light of the foregoing, the Court need not and does not address Defendants’ remaining arguments.

Conclusion

Based on the foregoing, Plaintiffs’ motion is denied.

Defendants are ordered to give notice of this Order.

DATED:  February 22, 2023                          ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court