Judge: Walter P. Schwarm, Case: 30-2021-01207537, Date: 2022-09-20 Tentative Ruling

Defendants’ (First Standard Real Estate, LLC and George Gemayel) Motion to Expunge Plaintiffs/Cross-Defendants’ Notice of Recorded Pendency of Actions (Lis Pendens) (Motion), filed on 6-14-22 under ROA No. 88, is GRANTED in part and DENIED in part.

The court GRANTS Defendants’ Request for Judicial Notice (RJN), filed on 6-14-22 under ROA No. 77, pursuant to Evidence Code section 452, subdivisions (c) and (d).

Code of Civil Procedure section 405.31 states, “In 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.”  Code of Civil Procedure section 405.32 provides, “In proceedings under this chapter, the court shall order that the notice be expunged if the court finds that the claimant has not established by a preponderance of the evidence the probable validity of the real property claim.”

Code of Civil Procedure section 405.38 states, “The 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.”

Code of Civil Procedure section 405.4 states, “ ‘Real 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.”

Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1022–1023 (Castro), explains, “Because section 405.38 does not define prevailing party or expressly authorize or bar recovery of attorney fees in the event the lis pendens is withdrawn before a ruling on a motion to expunge, we adopt the practical approach to determine the prevailing party for purposes of awarding attorney fees. Under the practical approach, a trial court must determine whether the moving party is the prevailing party under section 405.38 by analyzing the extent to which each party has realized its litigation objectives. To determine litigation objectives, it is not enough simply to consider that the lis pendens has been withdrawn; the court must consider and decide whether the moving party would have prevailed on the motion. Where, as here, the motion to expunge is brought under section 405.32, the court must determine the probable validity of the lis pendens claimant’s real property claim. On this issue, the lis pendens claimant has the burden of proof. (§ 405.32.) The lis pendens claimant must establish the probable validity of the claim by a preponderance of evidence. [Citation.] As we have previously stated, there can be no presumption that the moving party is a prevailing party simply because the lis pendens has been withdrawn prior to a ruling on the motion. Such a presumption would ignore the discretionary language of section 405.38. [¶] Even after the merits of the expungement motion are determined in favor of the moving party, there may nonetheless be facts and circumstances militating against imposing attorney fees and costs on the lis pendens claimant. The trial court must consider whether the withdrawal of the lis pendens was for reasons unrelated to the merits of the motion. For example, the lis pendens claimant may have achieved its goals through settlement or other means. In addition, the trial court has the discretion to consider whether, in light of all the circumstances, the imposition of fees would otherwise be unjust. [¶] Until a court determines all of these issues, the moving party is not entitled to its attorney fees and costs under section 405.38.”

On 5-19-22, Plaintiffs (Solana Co., LLC, Superb Product Resource, LLC, and PVC LLC) served a “Notice of Lis Pendens” on Defendants, and subsequently served “Notice of Recorded Pendency of Action (Lis Pendens)” on 5-24-22. (RJN, Exhibits B and C.)  On 8-26-22, Plaintiffs recorded a “Notice of Withdrawal of Pendency of Action (Lis Pendens).” (Plaintiffs’ Notice of Errata (NOE) filed on 9-8-22 under ROA No. 165.)   Since Plaintiffs have withdrawn the lis pendens, the court DENIES the Motion as MOOT to the extent it seeks to expunge the lis pendens. The only issue remaining before the court is the award of attorney fees.

In applying the practical approach provided in Castro, the court must determine the probable validity of the lis pendens claimant’s real property claim.

Here, the Complaint alleges causes of action against defendants George Gemayel and First Standard for (1) Rescission; (2) Fraud; (3) Negligent Misrepresentation; (4) Breach of Written Contract; (5) Breach of Implied Covenant; (6) Money Had And Received; (7) Declaratory Relief; (8) Rescission; (9) Fraud; (10) Negligent Misrepresentation; (11) Breach Of Written Contract; (12) Breach of Implied Covenant; (13) Money Had And Received; and (14) Declaratory Relief. (ROA 2.) Defendants contend, “There is no allegation of valid title to any property and, as Defendants are seeking rescission of the underlying leases and damages, neither is there any claim to possession of any property.” (Motion; 4:22-24.)

Plaintiffs’ Opposition to Request for Sanctions to Expunge Lis Pendens (Opposition), filed on 9-7-22 under ROA No. 157, asserts, “All of the parties’ claims affect title to real property because they involve five-year leases to the two properties involved. Whether the leases are or are not found to be viable will ‘affect’ the title to these real properties. Thus, from a statutory standpoint, it is clear that a lis pendens is valid in this case.” (Motion; 2:25-28.)  In support of their Opposition Plaintiff’s cite to Goens v. Blood (2020) 437 F.Supp.3d 793, 797-798 (Goens) which states, “Under existing California case law, whether Goens has alleged a real property claim for purposes of section 405.20 is a close call. In Parker v. Superior Court, 9 Cal.App.3d 397, 88 Cal.Rptr. 352 (1970), the court held that a leasehold is an estate in real property and ‘under the broad language of’ the lis pendens statute, ‘an action concerning  . . . the right of possession of real property. . . .’ Id. at 400, 88 Cal.Rptr. 352 (italics in original). Because two of Goens' causes of action seek possession of real property under a leasehold interest, Parker supports a finding that Goens has pled a real property claim. [¶] What complicates the issue is the more recent California Court of Appeal decision, BGJ Associates, LLC v. Superior Court, 75 Cal.App.4th 952, 89 Cal.Rptr.2d 693 (1999), which limited the availability of a lis pendens. . . . [¶] This case is more analogous to BGJ Associates because the vast majority of Goens’ causes of action seek monetary damages; only two of the sixteen seek possession of the Subject Property. Moreover, the BGJ Associates plaintiffs had a more significant property interest than Goens, because they sought title and not simply temporary possession. Yet the California Court of Appeal refused to find plaintiffs’ interest in title sufficiently ‘affected’ the property to constitute a real property claim under the lis pendens statute. Because Goens’ interest in temporary possession of the Subject Property is less compelling than an interest in title, BGJ Associates supports the conclusion that Goens failed to sufficiently allege a real property claim under section 405.4.” (Alan v. Superior Court (2003) 111 Cal.App.4th 217, 229, provides, “And, of course, the decisions of federal district and circuit courts, although entitled to great weight, are not binding on state courts even as to issues of federal law. [Citation.]”)

In Goens, the court found that Goens did not sufficiently allege a real property claim even though Goens sought possession of the property. Unlike Goens Plaintiffs do not seek possession of the property at issue.  The Complaint, filed on 6-25-21 under ROA No. 2, Plaintiffs seek rescission of the 2520 and 2526 lease as to the first and eighth causes of action, general, special, and punitive damages as to the second and ninth causes of action, general and incidental damages as to the third fourth fifth sixth tenth, eleventh, twelfth, and thirteenth causes of action, and a declaration as to the seventh and fourteenth causes of action. (Complaint, Prayer for Relief at 22:16-23:7)  Plaintiffs do not seek possession of the property at issue (2526 Unit D South Birch Street Santa Ana California 92707 and 2520 Birch Street Santa Ana, CA   (Complaint, ¶¶ 14 and 57.) Instead, Plaintiffs seek rescission of the underlying leases. Therefore, Goens does not support a finding that Plaintiff’s Complaint alleges a real property claim. 

In support of their contention that a real properly claim was alleged, Plaintiffs state “. . . CEB, Cal. Real Property Remedies and Damages (2021) at section 13.82, p. 13-71 notes that, [a]n action based on rescission of either a real property purchase and sale agreement or an installment land title contract (see chap 1) usually affects title to or possession of the real property and thus should support recordation of the lis pendens.” (Opposition; 3:5-8.) The Complaint, however, seeks rescission of the underlying leases and not rescission of real property purchase or sale agreement or an installment land title contract.

Under Castro, the court finds that Defendants would have prevailed on this Motion to expunge the lis pendens because Plaintiffs have not demonstrated the probable validity of their real property claim by a preponderance of the evidence. Plaintiffs have also made no showing that the withdrawal of the lis pendens was for reasons unrelated to the merits of the Motion. Therefore, Plaintiffs have not shown that they acted with substantial justification or that other circumstances make the imposition of attorney's fees and costs unjust. Therefore, the court finds that Defendants are the prevailing party for purposes of section 405.38 and are entitled to attorney fees and costs.

Plaintiffs also contend that the court should deny a sanction because the Notice of Motion did not comply with Code of Civil Procedure Section 2030.040 by failing to “. . . set forth the names of anyone against whom the sanctions are sought.” (Opposition; 4:20-21 (Underscore in Opposition.) Specifically, the Notice of Motion states, “Defendants further move for an order awarding attorneys’ fees and costs in the amount of $4,460.00 which they have expended and will expend bringing this Motion.” (Motion; 2:3-4.))

Plaintiffs appear to be referencing Code of Civil Procedure section 2023.040 which applies to requests for sanctions and not Code of Civil Procedure section 2030.040 which applies to special interrogatories.

Code of Civil Procedure section 2023.040 states, “A request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought. The notice of motion shall be supported by a memorandum of points and authorities, and accompanied by a declaration setting forth facts supporting the amount of any monetary sanction sought.”  Code of Civil Procedure section 2023.040 applies to monetary sanctions under the Civil Discovery Act.  Defendants seeks a sanction pursuant to Code of Civil Procedure section 405.38 rather than a sanction based on a violation of a provision in the Civil Discovery Act.  Thus, the Motion’s failure to state the names of the Plaintiffs against whom the sanction is sought does not support the denial of the Motion.

Therefore, the court GRANTS the Motion to the extent it seeks attorney’s fees and costs under Code of Civil Procedure section 405.38.

Based on the above, the court DENIES Defendants’ (First Standard Real Estate, LLC and George Gemayel) Motion to Expunge Plaintiffs/Cross-Defendants’ Notice of Recorded Pendency of Actions (Lis Pendens), filed on 6-14-22 under ROA No. 88, to the extents it seeks to expunge the lis pendens.  The court GRANTS the Motion to the extent it seeks an award of attorney’s fees and costs pursuant to Code of Civil Procedure section 405.38. The court AWARDS Defendants awards $2,260 in attorney’s fees and costs against Plaintiffs jointly and severally. (Lazo Decl., ¶¶ 4 and 5.)

Defendants are to give notice.