74 Cal.App.5th 1
Cal. Ct. App.2022Background
- J&A Mash & Barrel (tenant operating Sequoia Brewing) held a lease with a written right of first refusal to buy the brewery portion of a larger parcel that includes the historic Tower Theatre.
- TTP negotiated a sale of the Tower Theatre parcel to Adventure Church; J&A alleges TTP failed to give proper notice of the third‑party offer and misrepresented prices.
- J&A filed suit and recorded a lis pendens (Feb. 22, 2021) and sought emergency relief; the superior court initially enjoined sale but later denied a preliminary injunction and ordered the lis pendens expunged.
- After this court issued an alternative writ and the superior court re‑heard the expungement motion, the superior court again granted expungement on two grounds: (1) defective service on the owner of record (a partnership), and (2) J&A failed to show probable validity of a real‑property claim. The superior court also awarded TTP modest fees.
- The Court of Appeal held the superior court erred: key evidentiary exclusions were improper, the lis pendens was mailed to the owner of record (or at least substantially complied), J&A demonstrated probable validity of its right‑of‑first‑refusal claims (parcel split feasible; price could be determined; evidence of bad faith), and J&A is entitled to attorney’s fees and costs under CCP §405.38.
Issues
| Issue | Plaintiff's Argument (J&A) | Defendant's Argument (TTP) | Held |
|---|---|---|---|
| 1) Was the lis pendens void for defective service on the owner of record? | Mailing to Laurence Abbate (agent/partner) and counsel sufficed; owner had actual notice. | ParcelQuest shows "Tower Theatre Productions" (partnership) is owner of record and was not served; strict compliance required. | Court: Service met §405.22 because Abbate/TTP constituted partner/agent such that notice to them sufficed; alternatively, J&A substantially complied. |
| 2) Is substantial compliance with §405.22 permitted? | Yes—substantial compliance satisfies mailing requirement when it imparts the same notice. | Argues statute requires strict mailing to owner of record on assessor roll. | Court: Substantial compliance is allowed; three‑part test satisfied here (some compliance, high probability of imparting same notice, actual notice occurred). |
| 3) Did the trial court abuse discretion by excluding lease and sales agreement evidence? | Excluded documents were operative agreements (not hearsay), authenticated sufficiently, and necessary to show probable validity. | Objected on hearsay/authentication/foundation grounds. | Court: Exclusion was an abuse of discretion; documents were admissible (operative facts, produced by opposing counsel or via custodian declarations) and should have been considered. |
| 4) Did J&A show probable validity of its real‑property claim (enforceability of right of first refusal given price and parcel‑split issues)? | Right is enforceable; price can be ascertained (court can allocate or otherwise determine value); parcel split feasible; TTP withheld true sale price and acted in bad faith. | Right is vague/unenforceable because buyer purchased larger parcel, price for brewery unclear, and parcel‑split uncertain; TTP offered $1.268M as fair price. | Court: J&A met its burden of probable validity — contract should be interpreted to be enforceable where possible; parcel split feasible; price could be determined (court or allocation); evidence supports bad faith by TTP. Lis pendens should not have been expunged on substantive grounds. |
| 5) Is J&A entitled to attorney’s fees under CCP §405.38? | Yes — prevailing on motion and writ, and TTP lacked substantial justification. | Claimed positions justified; trial court originally awarded TTP small fees. | Court: J&A is prevailing party and TTP did not act with substantial justification; J&A entitled to reasonable fees and costs; also costs for writ under Cal. Rules of Court. |
Key Cases Cited
- Amalgamated Bank v. Superior Court, 149 Cal.App.4th 1003 (Cal. Ct. App.) (describing lis pendens function and statutory scheme)
- Rey Sanchez Investments v. Superior Court, 244 Cal.App.4th 259 (Cal. Ct. App.) (standard of review for lis pendens expungement)
- Biddle v. Superior Court, 170 Cal.App.3d 135 (Cal. Ct. App.) (substantial‑compliance/waiver principles re: mailing requirement)
- Maron v. Howard, 258 Cal.App.2d 473 (Cal. Ct. App.) (right of first refusal enforceable where larger parcel sold; court may apportion/determine price)
- Bewick v. Mecham, 26 Cal.2d 92 (Cal. 1945) (party who prevents fulfillment of a condition cannot rely on it; bad faith breach doctrine)
- Carol Gilbert, Inc. v. Haller, 179 Cal.App.4th 852 (Cal. Ct. App.) (tests for substantial compliance with service/notice requirements)
- Castro v. Superior Court, 116 Cal.App.4th 1010 (Cal. Ct. App.) (prevailing‑party attorney fees under §405.38)