Judge Thomas Falls, Case 21PSCV00782 2023-01-18 Tentative Ruling

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Plaintiff’s MOTION FOR SUMMARY AND ENTRY OF INTERLOCUTORY JUDGMENT F'OR PARTITION OF'REAL PROPERTY BY SALE

Plaintiff’s MOTION FOR SUMMARY AND ENTRY OF INTERLOCUTORY JUDGMENT F'OR PARTITION OF'REAL PROPERTY BY SALE is GRANTED.

This is a real property dispute. Plaintiff RANDALL ZORN (“Plaintiff”) alleges the following against Defendants MICHAEL ZORN; JOANNA N. ZORN; JULIE ZORN; 7-ELEVEN, INC.,[1] a Texas corporation, formerly known as "The Southland Corporation" and DOES 1-20 (collectively, “Defendants”): This action concerns certain real property located at 730 E. Foothill Boulevard, Pomona California 91767 (“Subject Property”). From at least January 22, 2021 to the present, title and ownership to the real property has been and is held as follows:

Randall Zorn owns an undivided 1/2 interest in the entirety of the real property, holding title as a tenant in common with the remaining owners; (2) Joanna N. Zorn owns an undivided 1/3 interest in the entirety of the real property, holding title as a tenant in common with the remaining owners; (3) Michael Zorn owns an undivided 1/12 interest in the entirety of the real property, holding title as a tenant in common with the remaining owners; and (4) Julie Zorn owns an undivided 1/12 interest in the entirety of the real property, holding title as a tenant in common with the remaining owners.

Plaintiff wishes to sell the real property and divide the sale proceeds pursuant to percentage ownership, but Defendants refuse. Partition in kind is neither practical nor desired because (i) an ordinance and (ii) even if not prohibited by ordinance, a partition in kind would be impractical due to the (a) exorbitant expense in converting the building to multiple separate sections; (b) it would destroy the aesthetic appearance; and (iii) adversely affect its marketability and market value. (Complaint ¶9.)

On September 24, 2021, Plaintiff filed suit against Defendants for PARTITION OF REAL PROPERTY BY SALE.

On December 3, 2021, Defendants Julie and Michael Zorn filed a Cross-Complaint against Plaintiff for ACCOUNTING.[3]

On June 15, 2022, Plaintiff filed the instant Motion for Summary Judgment And Entry Of Interlocutory Judgment For Partition Of Real Property By Sale (“MSJ”).

On August 12, 2022, Defendants JULIE ZORN, JOANNA N. ZORN AND MICHAEL ZORN filed their Opposition to the MSJ.

On August 31, 2022, the court heard oral argument on the matter, continued the matter, and allowed for supplemental briefing.

Previously, the court denied the motion for Plaintiff’s insufficient evidence as to (1) showing that the property is so situated that a division into subparcels of equal value cannot be made (i.e., land cannot be divided equally) and (2) economic prejudice.

Upon reflection of the arguments raised during the oral argument and the supplemental briefing, the court now finds that Plaintiff has satisfied its burden to order partition.

First, as to the issue of whether the sale of the property and division of the proceeds is more equitable than the dividing the property in kind, the court finds that that there is no equitable way to divide the property due to the lease agreement with 7-Eleven.

Here, the property consists of two units of equal 20 square footage, both units which are leased by 7 Eleven, who has exclusive possession and control until 2027. 7 Eleven has elected to leave one of the two units empty and un-maintained, and to occupy the other. As such, with one unoccupied unit, the person who ends up owning the empty unit would be prejudiced as the unit would be non-income producing.

Therefore, there is sufficient evidence as to this first factor, in favor of partition by sale.

Second, as for economic prejudice, this is where the matter gets more complicated.

Plaintiff provides that the appraisal, completed on February 14, 2022, opined a fair value for the property at $2.22 million, meaning the fair value of Plaintiff’s ownership share was $1.11 million.

Defendants’ appraiser, however, valued the property at $2,050,000.00. (Julie Zorn Decl., Ex. A.)[4]

Effectively, the parties offer different appraisal amounts. However, the court need not determine which appraisal value governs because Defendants have only offered proof of funds in the amount of $641,204.00, which is far less than the fair market value of Plaintiff’s share.

Therefore, absent proof that Defendants have the wherewithal to come up with the remaining amount for either offer, Defendants have failed to meet their evidentiary burden.

Based on the foregoing, while the court acknowledges Defendants’ desire to keep the property in the family and strongly urges the parties’ to settle the mater, the court GRANTS the motion because (1) there is no practical, fair or reasonable way to partition the land and building in kind and (2) Plaintiff would be economically prejudiced absent partition by sale.

[1] Defendant 7-Elevan Inc. is named is named “only herein as a nominal defendant only, in that Plaintiff is informed and believes that 7-Eleven neither has, nor makes any ownership claim to the real property, and will not make or claim any entitlement to any sale proceeds from any sale of the real property in this partition action.” (Complaint ¶3.)

[2] (I.e., Plaintiff owns ½ and Defendants own the remaining ½.) Moreover, as set forth in more detail in the MSJ, Plaintiff and Defendants inherited this properly together, and now hold title to it as tenants in common because of that inheritance.

[3] The basis of the cross-complaint is that Plaintiff is collecting rent from 7-Eleven but is not reimbursing Defendants for their share of the rent.

[4] Plaintiff argues that “Defendants don't provide their own appraisal to controvert the appraisal already before this court prepared by a licensed appraiser” but the appraisal done by Frazier Capital seems to indicate otherwise. (PLAINTIFF RANDALL ZORN'S POINTS AND AUTHORITIES IN REPLY TO OPPOSITION TO MOTION FOR SUMMARY AND ENTRY OF INTERLOCUTORY JUDGMENT FOR PARTITION OF REAL PROPERTY BY SALE p. 7.)