Judge: Walter P. Schwarm, Case: 30-2021-01207537, Date: 2023-08-01 Tentative Ruling

Defendant’s (First Standard Real Estate, LLC) Motion for Order Requiring Plaintiff PVC LLC to File an Undertaking Pursuant to C.C.P. Section 1030 (Motion), filed on 5-25-23 under ROA No. 308, is DENIED.

Code of Civil Procedure section 1030, states in part, “(a) When the plaintiff in an action or special proceeding resides out of the state . . . the defendant may at any time apply to the court by noticed motion for an order requiring the plaintiff to file an undertaking to secure an award of costs and attorney's fees which may be awarded in the action or special proceeding. For the purposes of this section, ‘attorney's fees’ means reasonable attorney's fees a party may be authorized to recover by a statute apart from this section or by contract. [¶] (b) The motion shall be made on the grounds that the plaintiff resides out of the state . . . and that there is a reasonable possibility that the moving defendant will obtain judgment in the action or special proceeding. The motion shall be accompanied by an affidavit in support of the grounds for the motion and by a memorandum of points and authorities. The affidavit shall set forth the nature and amount of the costs and attorney's fees the defendant has incurred and expects to incur by the conclusion of the action or special proceeding. [¶] (c) If the court, after hearing, determines that the grounds for the motion have been established, the court shall order that the plaintiff file the undertaking in an amount specified in the court's order as security for costs and attorney's fees.”

Shannon v. Sims Service Center, Inc. (1985) 164 Cal.App.3d 907, 914 (Shannon), states, “Finally, respondent carried its burden of proof of showing, by declaration, a reasonable possibility of prevailing by proper reference to the results of the earlier arbitration hearing.”

To carry Defendant’s burden of showing a reasonable possibility that Defendant will obtain a judgment, the Motion states, “PVC’s baseless contract causes of action thus are contradicted by the actual terms of the contracts attached as Exhibit A and Exhibit I to the FAC.” (Motion; 3:23-24.)  The Motion also states, “PVC’s baseless non-contract causes of action are similarly based on the Alleged Claims [see, e.g., FAC, paragraphs 82, 103, 107, 115, and 123] and similarly Defendant has a ‘reasonable possibility’ of prevailing on those causes of action because reasonable reliance is an element of each fraud cause of action and in view of paragraph 2.2 of both the 2520 Lease and the 2526 Lease there is doubt whether PVC could have reasonably relied on any of PVC’s Alleged Claims.” (Motion; 4:7-12.)

Plaintiff’s (PVC, LLC) Opposition to Defendant’s Motion for Order Requiring Plaintiff PVC, LLC to File an Undertaking Pursuant to California Code of Civil Procedure § 1030 (Opposition), filed on 7-19-23 under ROA No. 389, states, “PVC does not dispute that it is a foreign corporation.” (Opposition; 3:14.)  The Opposition also states, “Here, First Standard has not proffered any identifiable evidence to demonstrate that it will prevail against PVC’s contractual claims (Fifth, Seventh, and Eleventh Causes of Action), beyond its unsuccessful attempt to re-litigate the demurrer.” (Opposition; 4:21-23.)

Defendant does not present evidence that it has a reasonable possibility of obtaining a judgment. (Hairapetian Decl.)  Rather, Defendant relies upon the allegations in the First Amended Complaint (FAC), filed on 3-1-23 under ROA No. 276, to demonstrate that Defendant has a reasonable possibility of obtaining a judgment.

The leases for the 2520 and 2526 properties contain a term that states, “Except as expressly set forth in Paragraph 2.2 of this Lease, Lessor has not made, and will not make, any representations or warranties of any kind whatsoever, whether oral or written, express or implied, with respect to the Premises or the Building or the Project, and) the Premises are being leased to Lessee in their present ‘AS IS, WHERE IS' condition on the date of execution of this Lease, subject to all existing physical faults, latent or patent, and title defects. Lessee has been afforded the opportunity to make any and all inspections and investigations of the Premises and such related matters as Premises has desired, and has entered into this Lease based solely on Lessee's own due diligence and investigation.” (FAC, ¶¶ 35, 48, and Exhibits A and I.)  Defendant appears to assert that paragraph 2.2 of the leases contradicts Plaintiff’s allegations at paragraphs 51, 52, and 56 because the leases show that Plaintiff accepted the properties in “as is” condition.

The court finds that Defendant has not sustained its burden of producing sufficient evidence to demonstrate that it will have a reasonable possibility of obtaining a judgment as to each cause of action. The evidence submitted by Defendant relies on allegations in the in the FAC.  Allegations are not evidence.  Further, the court has ruled that the allegations in the FAC were sufficient to state causes of action for contract claims and fraud. (See the court’s 5-23-23 Minute Order that overruled the demurrer as to the fifth, seventh, eighth, ninth, tenth, and eleventh causes of action.)   Defendant has presented no additional evidence that would allow the court to conclude that it likely did not breach the lease agreements and/or commit fraud.  The court finds that the terms of the leases are not sufficient to demonstrate a reasonable possibility that Plaintiff will obtain a judgment on each cause of action.  The terms of the leases are insufficient because the interpretation of those terms is in dispute.

Based on the above, the court DENIES Defendant’s (First Standard Real Estate, LLC) Motion for Order Requiring Plaintiff PVC LLC to File an Undertaking Pursuant to C.C.P. Section 1030 filed on 5-25-23 under ROA No. 308.

The court DECLINES TO RULE on Plaintiff’s Objections, filed on 7-19-23 under ROA No. 387, as immaterial to the court’s ruling as set forth above. (Silverado Modjeska Recreation & Parks District v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18 (Silverado.)

Plaintiff is to give notice.