MEHTA vs THD ENTERPRISES INC, et al.

A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk

24CV002369: MEHTA vs THD ENTERPRISES INC, et al. 01/23/2025 Hearing on Motion to Expunge Lis Pendens in Department 53

will forward the form to the Court Reporter’s Office and an official reporter will be provided.

TENTATIVE RULING: Defendant THD Enterprises, Inc.’s (“THD”) motion to expunge lis pendens is ruled upon as follows.

THD’s unopposed request for judicial notice is granted for the limited purposes permissible for judicial notice.

In this action, Plaintiff Vinnie Mehta alleges causes of action for fraud, unfair business practices, breach of contract, specific performance and declaratory relief. Plaintiff alleges that THD and defendant Melanie Hirsch own Bauers Car Wash in Citrus Heights. Plaintiff alleges that he entered into a Real Estate Purchase Agreement (“Real Estate Agreement”) and a Business Purchase Agreement (“Business Agreement”) with THD and Hirsch to purchase the land, business and fixtures of the car wash. Plaintiff alleges that escrow was opened and that she deposited $100,000 in earnest money as required by the agreements. She alleges that THD and Hirsch refuse to perform. Plaintiff recorded a lis pendens against the Citrus Heights property on February 4, 4024.

On January 8, 2025, this Court granted Defendant’s ex parte application for an order shortening time on the instant motion. The motion was originally set to be heard on March 13, 2025. The ex parte order stated that any opposition was to be filed five court days before the hearing which due to the Court holiday on January 20, 2025, made the opposition due no later than January 15, 2025. Plaintiff filed a late opposition on January 16, 2025, only four court days before the hearing. Nevertheless, the Court, in its discretion, considered the opposition.

THD moves to expunge the lis pended recorded by Plaintiff. According to THD, Plaintiff failed to file the lis pendens with the Court as required by statute. THD also argues that in any event, Plaintiff failed to plead a real property claim and even if she had, she cannot prove the probable validity of any real property claim.

Procedural Issues

THD first argues that Plaintiff failed to comply with CCP § 405.22. Relevant here, that section provides that “[i]mmediately following recordation, a copy of the notice shall also be filed with the court in which the action is pending.” (CCP § 405.22.) “Any notice of pendency of action shall be void and invalid as to any adverse party or owner of record unless the requirements of Section 405.22 are met for that party or owner and a proof of service in the form and content specified in Section 1013a has been recorded with the

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV002369: MEHTA vs THD ENTERPRISES INC, et al. 01/23/2025 Hearing on Motion to Expunge Lis Pendens in Department 53

notice of pendency of action.” (CCP § 405.23.) According to THD, Plaintiff has not filed a copy of the lis pendens with the Court as required by CCP § 405.22 and thus is void and invalid pursuant to CCP § 405.23.

In opposition, Plaintiff does not contend that she filed a copy of the lis pendens with the Court as required by CCP § 405.22. Instead, she argues that while THD asserts it was not served with the lis pendens, she substantially complied with the service requirements by mailing the lis pendens to THD’s place of business. However, THD did not argue that it was not served with the lis pendens. Instead, THD argued that Plaintiff did not file the lis pendens with the Court. Plaintiff does not address her failure to file the lis pendens with the Court.

Case law has recognized that a failure to comply with CCP § 405.22 is a basis for expungement due to the “void and invalid” language in CCP § 405.23. (Rey Sanchez Investments v. Superior Court (2016) 244 Cal.App.4th 259, 263.) “Other bases for expungement include: (1) claimant's failure to comply with the recording, service or filing requirements of section 405.22 (see § 405.23).” (Kirkeby v. Superior Court (2004) 33 Cal. 4th 642, 647, fn. 2.) There is an exception where the recording party substantially complied with the statutory requirements and the party seeking to expunge on this basis waived the defects. (Carr v.

Rosien (2015) 238 Cal.App.4th 845, 855.) Plaintiff argues that she substantially complied with the mailing requirements of CCP § 405.22 but again ignores the filing requirement and again, THD makes no argument that Plaintiff did not comply with the recording or service requirements. In any event, Plaintiff cites to inapplicable case law in support of her argument. To that end, she cites to Biddle v. Superior Court (1985) 170 Cal.App.3d 135, 138. In Biddle, a party sought to expunge a lis pendens on a claimed failure to comply with the service requirements of a prior version of the relevant statute.

However, Biddle found that the party recording the lis pendens substantially complied with the purpose of the statute’s service requirements which was to provide prompt notice of the recording of the lis pendens. Biddle found that the party seeking to expunge the notice never disputed receipt and brought two prior motions to expunge without mentioning any service defect. The party only raised the defect in a third motion. “On these facts not only was the purpose of the notice statute served, but the Paulsons waived any service defects by waiting more than a year to assert them.” (Id.)

Biddle did not address any failure to file the lis pendens with the Court as required by CCP § 405.22. Moreover, Plaintiff makes no argument that a complete failure to comply with a separately imposed requirement of the statute (such as the requirement of filing) constitutes substantial compliance. Indeed, finding substantial compliance in these circumstances would render a specific portion of CCP § 405.22 meaningless. In addition, Plaintiff makes no showing that THD waived any defect. Indeed, THD has raised the defect in the instant motion which was its first filing in this action.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV002369: MEHTA vs THD ENTERPRISES INC, et al. 01/23/2025 Hearing on Motion to Expunge Lis Pendens in Department 53

As a result, THD’s motion is granted on the basis that Plaintiff failed to comply with the filing requirement of CCP § 405.22 and thus the lis pendens is “void and invalid” pursuant to CCP § 405.23.

While the Court need to proceed further, it finds that even if the lis pendens was procedurally proper (which it is not), the Court concludes that THD is entitled to have the lis pendens expunged on additional grounds.

Probable Validity

Here, even if the lis pendens was procedurally proper, the Court concludes that Plaintiff failed to demonstrate the probable validity of any real property claim.

Pursuant to CCP § 405.32, “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.” As the party opposing the motion, Plaintiff has the burden to establish the probable validity of their claims by a preponderance of the evidence. (Howard S. Wright Construction Co. v. Superior Court (2003) 106 Cal.App.4th 314, 319.) “Probable validity” requires Plaintiffs to show that “it is more likely than not that [they] will obtain a judgment against [Defendants] on the claim.” (CCP § 405.3.)

The phrase “‘probable validity’ as used in section 405.32 was obviously written from the perspective of a trial court judge trying to forecast at some point before trial, the ‘probable’ outcome in the trial court.” (Mix v. Superior Court (2004) 124 Cal.App.4th 987, 995 [emphasis in original].)

Assuming, without deciding, that Plaintiff has stated a real property claim in the complaint, the Court nevertheless concludes that she has not met her burden to demonstrate its probable validity. As noted, Plaintiff has alleged a cause of action for breach of the Real Estate Agreement, and a cause of action seeking specific performance of the Real Estate Agreement.

THD first argues that Plaintiff cannot demonstrate the probable validity of any real property claim because she failed to satisfy a condition precedent to the Real Estate Agreement. As seen from the Real Estate Agreement attached to the complaint, the purchase price was $1,050,000. Plaintiff was to make an initial earnest money deposit of $100,000 into escrow and to pay $450,000 at or before close of escrow. The remaining $500,000 was to be financed by a loan from THD. (Comp. Exh. A.) The Real Estate Agreement contained a financing contingency. “This Agreement is contingent upon Buyer qualifying for the Seller financing necessary for the consummation of this Agreement.” (Comp.

Exh. A.) THD indicates that Plaintiff never provided it with verifiable financial information to allow it to assess Plaintiff’s financial condition. THD indicates that Plaintiff only provided two incomplete screenshots of unidentified bank

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV002369: MEHTA vs THD ENTERPRISES INC, et al. 01/23/2025 Hearing on Motion to Expunge Lis Pendens in Department 53

statements which were insufficient to allow THD to properly assess whether Plaintiff would qualify for seller financing. (Hirsch Decl. ¶¶ 4, 5.) THD indicates that Plaintiff’s counsel demanded that THD waive the financing contingency after THD requested that the lis pendens be withdrawn. (Gans Decl. ¶ 6.) “[A] common form of real estate contract binds both parties at the outset (rendering the transaction a bilateral contract) while including a contingency, such as a loan or inspection contingency, that allows one or both parties to withdraw should the contingency fail.” (Steiner v. Thexton (2010) 48 Cal.4th 411, 420-421.)

In her opposition, Plaintiff argues that she deposited $100,000 in escrow and that she received loan approval which she sent to THD. (Mehta Decl. ¶¶ 5, 7.) First, the $100,000 deposit is not relevant to the financing contingency which THD argues Plaintiff failed to comply with. In addition, the purported loan approval attached to Plaintiff’s declaration does not in any way show that Plaintiff qualified for financing from THD. Indeed, the letter from the Bank of Stockton dated November 6, 2023, indicates that Anmolpreet Singh was approved for a loan for purchase of the Citrus Heights property in the amount of $1,550,000. (Id.

Exh. C.) This letter relates to an unidentified individual who is not a party to the Real Estate Agreement and is not a party in this action, and further, the letter references an amount that is not the purchase price that is set forth in the Real Estate Agreement. The purchase price stated in the Real Estate Agreement was $1,050,000. (Comp. Exh. A.) Evidence that some unidentified individual was approved for a loan of any amount does not constitute evidence whether Plaintiff qualified for Seller financing as required by the Real Estate Agreement, an express contingency to THD’s duty to perform.

Further, even if had some connection to this transaction, the letter is dated November 6, 2023, which is well after the July 31, 2023, closing date identified in the Real Estate Agreement and Business Agreement. (Comp. Exh A [“final closing date will be when the business portion of the sale is completed”]; Exh. B. at “3. Closing.”].) Where, as here, a defendant’s duty to perform is conditioned on the happening of an event, the plaintiff must show that the event occurred. (Consolidated World Investments, Inc. v.

Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 380.) Plaintiff has entirely failed to show that she satisfied the financing contingency in the Real Estate Agreement. THD therefore had no duty to perform based on the record before the Court on this motion.

In addition, separate from the failure to satisfy the financing contingency, THD argues that Plaintiff failed to pay the $450,000 required under the Real Estate Agreement. As noted above, the Real Estate Agreement called for Plaintiff to deposit $450,000 on or before close of escrow. The agreement also provided that time is of the essence. (Comp. Exh A.) In a real property sale “[The buyer’s] obligation to deposit the purchase price within [the specified time] and the provision that time is of the essence are as binding as the promise to convey the land. Failure to pay the money within the specified time deprives the vendee of his right of action to enforce performance of the vendor who

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV002369: MEHTA vs THD ENTERPRISES INC, et al. 01/23/2025 Hearing on Motion to Expunge Lis Pendens in Department 53

holds the privilege of terminating the agreement of sale. [Citations.] Upon his failure to make payment the vendee committed a breach, and no affirmative act by the vendor was necessary to terminate the vendee's right of enforcement.” (Galdjie v. Darwish (2003) 113 Cal. App. 4th 1331, 1337-1338.) “Failure to pay the money within the specified time deprives the vendee of his right of action to enforce performance of the vendor who holds the privilege of terminating the agreement of sale.” (Pitt v. Mallalieu (1948) 85 Cal. App. 2d 77, 81.) There is no dispute that Plaintiff did not tender payment of the $450,000 called for under the Real Estate Agreement. (Hirsch Decl. ¶ 6.) Plaintiff’s opposition is silent on this point. Plaintiff’s failure to tender payment of the $450,000 by the July 31, 2023, closing date precludes enforcement of the Real Estate Agreement.

Plaintiff’s argument that expunging the lis pendens will cause her an injustice is no basis to deny the motion. Plaintiff argues that she put in considerable time and effort in an attempt to purchase the property and that if the lis pendens is expunged THD will be free to sell it to a third party against whom she will have no rights. While it may be that she will not have any rights to the property against any successor owner, the same could be said in any scenario where a lis pendens is expunged.

In short, the Court concludes that Plaintiff has failed to establish, for purposes of the instant motion only, the probable validity of any real property claim. As a result, the motion to expunge must be granted. (CCP § 405.32.)

Given this finding, the Court need not reach the alternate argument that the lis pendens should be expunged pursuant to CCP § 405.31 because Plaintiff has not pled a real property claim.

THD’s request for attorneys’ fees is granted. Pursuant to CCP § 405.38, the “court shall direct that the party prevailing on any motion under this chapter be awarded the reasonable attorney’s fees and cost 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.” Plaintiff has failed to demonstrate that she acted with substantial justification or that fees would be unjust.

Indeed, as set forth above, the evidence is uncontroverted that Plaintiff failed to satisfy her obligations with respect to the Real Estate Agreement. Further, when THD’s counsel contacted Plaintiff’s counsel regarding the procedural and substantive issued surrounding the lis pendens, Plaintiff’s counsel refused to withdraw the lis pendens and attempted to get THD to waive the financing contingency. Plaintiff’s conduct was not substantially justified. The Court finds that Plaintiff did not act with substantial justification under the circumstances.

However, the Court finds that the requested fees of $21,219 ($574/hr x 27.1 hours [representing a blended rate for the work of two attorneys and a paralegal] + $550/hr x 10 hours [representing work on reply] + $160 in

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV002369: MEHTA vs THD ENTERPRISES INC, et al. 01/23/2025 Hearing on Motion to Expunge Lis Pendens in Department 53

costs) is excessive. The Court awards THD reasonable attorneys’ fees and costs in the amount of $11,080 ($550/hr x 20 hrs + $80 filing fee).

Plaintiff’s request for fees is denied as THD’s motion was granted.

In sum, the motion is granted and the lis pendens is ordered expunged.

Defendant shall submit a formal order pursuant to CRC 3.1312.