(PS) Kan v. Verdera Community Assoc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 | Johnny Kan, No. 2:22-cv-00348-KJM-JDP 12 Plaintiff, ORDER 13 v. 14 Verdera Community Association, et al., 1S Defendants. 16 17 This action arises from the sheriffs sale of a residential property in Lincoln, California. 18 | For the reasons below, the court grants defendants’ motion in part and expunges the /is 19 | pendens on the property. 20 | I. DISCUSSION 21 The court has already discussed the history of this case in a prior order and incorporates 22 | that discussion by reference here. Prior Order (Apr. 13, 2023), ECF No. 52. Defendants Scott 23 | Jacoby and 22 DM purchased a residential property at 3591 Camino Cielo, Lincoln, California in 24 | February 2022, through the Sherriff’s sale of the property. Prior Order (Apr. 13, 2023) at 2; Mot. 25 | at 2, ECF No. 59-1. Plaintiff filed his original complaint in this court the day of the sale but did 26 | not name defendants as parties in the original complaint. See Compl., ECF No. 1. Plaintiff then 27 | recorded a lis pendens— a recorded notice that real property is the subject of pending litigation— 28 | onthe Lincoln residence on September 19, 2022, and “falsely claim[ed] this action was pending 1 against” defendants at that time. Mot. at 2. Defendants allege plaintiff failed to serve notice on 2 defendants regarding the lis pendens. Mark Decl. ¶ 4, ECF No. 59–3. Plaintiff then filed a first 3 amended complaint in January 2023, naming defendants. First Am. Compl. (FAC), ECF No. 29. 4 As relevant to the Lincoln residence, the amended complaint included a claim to cancel the 5 Sheriff’s sale deed. Id. at 15. In its prior order, the court had dismissed this claim without 6 prejudice and gave plaintiff twenty-one days to file an amended complaint. Prior Order 7 (Apr. 13, 2023) at 10. Plaintiff did not file an amended complaint. 8 Defendants allege they discovered the lis pendens on April 28, 2023, when they tried to 9 sell the Lincoln residence. Mark Decl. ¶ 7; Bernstein Decl. ¶ 3, ECF No. 59–2. Defendants 10 allege they cannot obtain insurance on the title to the Lincoln residence and cannot sell the 11 property because of the lis pendens and the ongoing litigation. Mark Decl. ¶ 12. Defendants’ 12 attorneys reached out to plaintiff’s attorney about expunging the lis pendens immediately after 13 learning of it. Bernstein Decl. ¶ 7. Plaintiff’s attorney seemed amenable to recording the 14 expungement, id. ¶ 8, and sent defendants’ attorney a draft withdrawal on May 20, 2023, id. ¶ 15. 15 But defendants allege communications have since broken down and plaintiff “negat[ed] his prior 16 representations that he would file the withdrawal of Lis Pendens when notarized.” Id. ¶ 20. 17 Defendants filed a first ex parte motion asking this court to expunge the lis pendens, ECF No. 55, 18 but this court denied the motion for failure to comply with the Local Rules, ECF No. 58. 19 Defendants then filed this ex parte motion asking the court to expunge the lis pendens, dismiss 20 plaintiff’s second claim with prejudice and grant their attorneys’ fees. See generally Not. of Mot., 21 ECF No. 59; Mot. Plaintiff opposes the motion. Opp’n, ECF No. 60. 22 A. Expungement of lis pendens 23 Lis pendens, literally “pending lawsuit,” is common shorthand for a recorded notice that 24 real property is the subject of pending litigation; for all practical purposes, it prevents any transfer 25 until the litigation is resolved or the notice is expunged. BGJ Assocs., LLC v. Super. Ct. of L.A., 26 75 Cal. App. 4th 952, 966–67 (1999); Cal. Civ. Proc. Code § 405.24. State law provides the rule 27 of decision for a motion to expunge the notice. See 28 U.S.C. § 1964; Cal. Civ. Proc. Code 1 § 405.5; see also Rodrigues v. F.D.I.C., No. 12-1243, 2012 WL 1945497, at *6 (N.D. Cal. May 2 30, 2012). 3 The California Code of Civil Procedure includes provisions for the recording and 4 expunging of a notice of the pendency of an action. Section 405.20 allows “[a] party to an action 5 who asserts a real property claim” to “record a notice of pendency of action in which that real 6 property claim is alleged.” But “[a]t any time” after that notice is recorded, any other party with 7 an interest in the target real property “may apply to the court in which the action is pending to 8 expunge the notice.” Cal. Civ. Proc. Code § 405.30. The notice must be expunged if either 9 (a) the party who filed the notice does not assert a real property claim or (b) “the court finds that 10 the claimant has not established by a preponderance of the evidence the probable validity of the 11 real property claim.” Id. §§ 405.31, 405.32. “Probable validity . . . means that it is more likely 12 than not that the claimant will obtain a judgment against the defendant on the claim.” Id. § 405.3. 13 The party who recorded the notice—the party who opposes the motion—bears the burden of 14 proof. Id. § 405.30. The court may consider “[e]vidence or declarations” filed with the motion to 15 expunge, may conduct a hearing on the matter, and may “make any orders it deems just to 16 provide for discovery by any party affected by a motion to expunge the notice.” Id.; see also 17 Hunting World, Inc. v. Super. Ct. of S.F., 22 Cal. App. 4th 67, 70–71 (1994) (summarizing 18 relevant statutes). 19 Here, plaintiff is the claimant—the party who recorded the notice—and bears the burden 20 to prove his claim is both a real property claim and is more likely than not to result in a judgment 21 in his favor. However, as discussed above, this court already dismissed plaintiff’s claim to cancel 22 the Sheriff’s sale without prejudice and plaintiff did not file an amended complaint within the 23 specified period. Prior Order (Apr. 13, 2023) at 10. “Accordingly, the pleading on which the lis 24 pendens was based—the FAC—cannot provide a valid real property claim to support the lis 25 pendens.” Doan v. Singh, No. 1:13-CV-531, 2014 WL 3867418, at *2 (E.D. Cal. Aug. 6, 2014). 26 Thus, the court grants defendants’ motion to expunge the lis pendens. 1 B. Attorneys’ Fees 2 California Code of Civil Procedure section 405.31 generally permits an award of 3 attorneys' fees in connection with expungement of a lis pendens. As such, defendants allege 4 plaintiff’s counsel “knew full well at the time he recorded the lis pendens he had no basis to do 5 so” and ask the court to grant $7,600 in attorneys’ fees. Mot. at 7–8; Bernstein Decl. ¶ 24. 6 The court is troubled by the plaintiff’s briefing and defendants’ allegations. “[N]o 7 plaintiff has the right to ambush a property owner by surreptitiously recording a lis pendens.” 8 Bergman v. Tobin, No. 11-1866, 2012 WL 5471796, at *4 (E.D. Cal. Nov. 9, 2012), report and 9 recommendation adopted, 2012 WL 6088293 (E.D. Cal. Dec. 6, 2012) (citing Biddle v. Super. Ct. 10 of Orange Cty., 170 Cal. App. 3d 135, 137 (1985)). Although plaintiff filed a notice of lis 11 pendens, Opp’n at 2, a party who records a notice of a pending action must serve a copy of the 12 notice on all “parties to whom the real property claim is adverse and to all owners of record of the 13 real property affected by the real property claim.” Cal Civ. Proc. Code § 405.22. Defendants 14 claim they were not served with notice of the lis pendens. Mark Decl. ¶ 4. Additionally, plaintiff 15 now seemingly has refused to cooperate and expunge the lis pendens, with no good reason. 16 Bernstein Decl. ¶ 23. 17 Due to the severity of defendants’ accusations and the lack of urgency regarding payment 18 of the fees, the court finds it prudent to proceed on a noticed motion, and not ex parte. See In re 19 Intermagnetics Am., Inc., 101 B.R. 191 (C.D. Cal. 1989). The court denies defendants’ current 20 motion for attorneys’ fees. Defendants may file a noticed motion for attorneys’ fees and plaintiff 21 may respond to the motion, as outlined in the Local Rules. 22 C. Second Claim Moot 23 As discussed above, the court has already dismissed plaintiff’s second claim to cancel the 24 Sheriff’s deed of sale on the Lincoln residence. Because plaintiff did not file an amended 25 complaint within the permitted time period, plaintiff has no claim pending before the court 26 challenging the validity of the sale. Accordingly, the court denies the motion to dismiss the 27 second claim as moot. 1} I. CONCLUSION 2 For the reasons above, the court grants defendants’ motion in part. The court orders 3 | the expungement of the /is pendens on the Lincoln residence. If defendants wish to renew 4 | their motion for attorneys’ fees in relation to the lis pendens question they may file a noticed 5 | motion with the court. The court denies defendants’ motion to dismiss as moot. 6 This order resolves ECF No. 59. 7 IT IS SO ORDERED. 8 DATED: June 29, 2023. / 9 CHIEF ED STATES DISTRICT JUDGE «