2012-00137405-CU-CO

Jennifer Phen vs. Alex Vilderman

Nature of Proceeding: Motion for Attorney Fees

Filed By: Schrimp de la Vergne, Angela

Defendant’s motion for an award of attorney’s fees pursuant to C.C.P., sec. 405.38 is
GRANTED.

C.C.P. § 405.38 provides “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.”

This action arises out of a proposed transaction by which Plaintiffs Jennifer Phen and
Christopher Phen were to purchase commercial property owned by Defendant DVN
Enterprises, LLC (“DVN”). DVN was formed by Dr. Vildeman and a partner Dubminsky
to purchase the commercial property at issue here.

Unable to make the balloon payment required from DVN, Dr. Vilderman elected to
attempt to sell the property in a “short sale”, as the property was worth less than the
amount of the balloon payment. The short sale agreement by its terms expired on Dec.
31, 2013.

Plaintiffs Phens were the first potential buyers, and on Nov. 8, 2012, a Purchase
Agreement between Plaintiffs and DVN was formed. Escrow was required to close on
Dec. 31, 2012. Plaintiffs did not request an extension of the purchase agreement. The
escrow did not close on Dec. 31, 2012. Plaintiffs filed their original complaint in this action on Dec. 21, 2012. On Feb. 7, 2013,
Plaintiffs recorded the lis pendens. On Feb. 13, 2013, both the parties executed
escrow cancellation instructions. The escrow company returned to plaintiffs all of the
funds they had deposited into escrow.

On May 30, 2013 this Court granted moving party defendant’s motion to expunge lis
pendens filed by the plaintiffs.

Clearly, Code Civ. Proc. § 405.38 states that the court “shall” order an award in favor
of the prevailing party unless it makes specified findings. This does not make the
award absolutely mandatory, but in effect places a burden on the party subject to the
sanction to establish substantial justification or other good cause for not making the
award. The Court has discretion to award attorneys’ fees based on a determination of
which party prevailed on the motion and whether the lis pendens claimant acted with
substantial justification, or whether, in light of all of the circumstances, the imposition of
fees would otherwise be unjust . Castro v. Superior Court (2004) 116 Cal. App. 4th
1010, 1022-1023. Trial courts are instructed to adopt a “practical approach” [Id.] to
determine a prevailing party.

Here, Defendants are the prevailing parties for a motion for attorneys’ fees under
C.C.P., sec. 405.38 as they were successful in obtaining their objectives in bringing
the Motion to Expunge Lis Pendens. Castro v. Superior Court (2004) 116 Cal.App.4th
1010, 1013.

Plaintiff objects to the motion on the grounds set forth below.

Res Judicata/Collateral Estoppel

Plaintiff’s opposition to this motion on the grounds of res judicata and collateral
estoppel is not well taken. Although more than one formal order was submitted to the
Court on the motion to expunge lis pendens, the fact that the Court did not sign the
proposed order which contained a provision for attorneys’ fees was not a
determination on the merits. The proposed order containing the paragraph regarding
attorneys’ fees was returned to the counsel for the defense with a Clerk’s Notice to
Filing Party on June 21, 2013, reflecting that the “Last paragraph must be stricken.
Fees and costs must be sought by separate motion.”

This separate motion was required by the Court, pursuant to CRC, Rule 3.1702. The
Court’s statement in its order determined nothing other than that a separate motion
was required; this motion is that motion.

Acted with Substantial Justification

There was no “substantial justification” for Plaintiffs’ claims underlying the recording of
the lis pendens. Plaintiffs’ basis for filing the lis pendens was their mistaken belief that
the Purchase Agreement was still valid after December 31, 2012.

As this Court concluded on that motion, Defendants’ contractual obligation to sell the
Property to Plaintiffs expired on December 31, 2012. Accordingly, by the time Plaintiffs
recorded their lis pendens; they knew or should have known that their present real
property claim had no “probable validity” of success. (See Code Civ. Proc., §§ 405.30, 405.32)

The Court ordered that the notice be expunged as the Court found that the claimant
had not established by a preponderance of the evidence the probable validity of the
real property claim. Code Civ. Proc. § 405.32. On the record before the Court on the
motion to expunge, the Court did not conclude that Plaintiffs had presented sufficient
evidence to establish the “probable validity” of their claims in this action.

Plaintiffs have not shown “substantial justification” for their opposition to the motion to
expunge.

No Interest in the Real Property

Plaintiffs contend that not all the named defendants owned the real property, only DVN
Enterprises, LLC, and therefore the attorneys’ fees incurred should be apportioned as
defense counsel represented all named defendants. No authority for this proposition is
cited. Additionally, plaintiffs’ initiated this suit against all defendants, who were forced
to incur costs of suit as a result. None of the arguments on the motion to expunge
related to parties who were not DVN; therefore the Court is unpersuaded.

Fees Requested are Unreasonable and Excessive

Defendants request an award of $25,813.50, for the ex parte application for OST, the
motion to expunge lis pendens and this motion for attorneys’ fees.

Plaintiffs contend that the fees incurred are unreasonable and excessive. Plaintiffs
object to the fees incurred prior to the hearing ex parte application for an order
shortening time, on the May 10, 2013, except for the amount of $600.

In reviewing the statements attached to the motion, the Court notes that moving
papers in support of the motion to expunge lis pendens were prepared during the
period prior to the ex parte application for order shortening time.

Additionally, although plaintiffs’ counsel asserts the ex parte itself would not have been
necessary had he been contacted earlier, the Court notes that counsel for plaintiffs
appeared at the ex parte hearing, so the order shortening time was not pursuant to
stipulation. The Court declines plaintiffs’ invitation to cut moving parties’ hours on this
ground.

The motion is granted. Attorneys’ fees and costs in the adjusted amount of
$24,623.50 shall be paid by plaintiffs to defendants.

The prevailing party shall prepare a formal order for the Court’s signature pursuant to
C.R.C. 3.1312.