Mora v. SBS Trust Deed Network

1 UNITED STATES BANKRUPTCY COURT 2 EASTERN DISTRICT OF CALIFORNIA 3 In re: ) 4 ) BULA DEVELOPMENTS, INC. ) Case No. 23-24619-C-11 5 ) ) 6 Debtor. ) ) Adv. Pro. 2025-02008-C 7 NATASHA MORA, CESAR MORA, ) FAIZAL AWADAN, AND SHAINAZ ) DCN LRL-2 8 AWADAN, ) ) 9 Plaintiffs, ) v. ) 10 ) SBS TRUST DEED NETWORK, BLACK ) 11 HORSE CAPITAL INC., FINE ) CAPITAL, DANIEL BENSHIMON, TODD ) 12 BERNSTEIN AS TRUSTEE OF TB TRUST) DATED MAY 8, 1997, KAREN ALWEIL,) 13 AND LOVE GMC HOLDINGS, LLC, ) ) 14 Defendants. ) ________________________________) 15 16 MEMORANDUM ON MOTION TO EXPUNGE LIS PENDENS 17 The Defendants SBS Trust Deed Network (SBS), Black Horse 18 Capital Inc. and Fine Capital Investments move to expunge the 19 Notice of Pendency of Action (Lis Pendens)(“NOPA”), DOC # 2025- 20 0052319, which was recorded February 25, 2025 and filed March 10, 21 2025, in this Court in connection with the January 17, 2025, 22 Complaint for Injunctive Relief and to Void Transfer filed by 23 Plaintiffs Natasha Mora, Cesar Mora, Faizal Awadan, and Shainaz 24 Awadan. 25 26 Facts 27 The NOPA was signed by Plaintiff “Faizal Adawan, Pro Se” on 28 February 24, 2025 and notarized the same day. 1 The NOPA was not approved by this judge of the court in 2 which the subject action is pending. 3 The NOPA was recorded with the San Diego County Recorder on 4 February 28, 2025, and on March 10, 2025 was filed and served by 5 Plaintiff Natasha Mora in the U.S. Bankruptcy Court, Eastern 6 District of California, in Adversary Proceeding No. 2025-02008. 7 Dkts 31-32. 8 The NOPA asserts that an action has been commenced and is 9 pending in the U.S. Bankruptcy Court for the Eastern District of 10 California that affects title to real property in San Diego 11 County, described as Lot 86 of Muirlands Crest Unit No. 2, in the 12 City of San Diego, State of California, According to Map Thereof 13 No. 3345, Filed in the office of the County Recorder of San Diego 14 County on December 27, 1955, Assessor’s Parcel No. 352-512-03-00, 15 commonly known as 6389 Castejon Drive, La Jolla, CA 92037. 16 The “claimants” are the four Plaintiffs in Adversary 17 Proceeding No. 2025-02008, Natasha Mora, Cesar Mora, Faizal 18 Awadan, and Shainaz Awadan. 19 Defendants SBS Trust Deed Network; Black Horse Capital Inc.; 20 and Fine Capital Investments filed a Motion to Expunge Lis 21 Pendens on March 19, 2025. Dkts 43-45. 22 The Plaintiffs opposed the Motion to Expunge in filings made 23 April 3, 2025. Dkts 97-98. 24 The Defendants contend the NOPA should be expunged because 25 the Plaintiffs have no standing to assert claims made on behalf 26 of the bankruptcy estate, that there is no subject-matter 27 jurisdiction, and, incorporate their Motion to Dismiss Complaint 28 in support of expungement. 1 The subject Adversary Proceeding was dismissed by order 2 entered May 1, 2025, granting Defendants’ motion. Dkt 162. 3 4 Title 4.5, California Code of Civil Procedure Controls 5 The controlling statute regarding Notice of Pendency of 6 Action is Title 4.5, California Code of Civil Procedure 7 (“Recording Notice of Certain Actions”). 8 The NOPA procedure starts with definitions at § 405.1 9 through § 405.8. The Recordation Service and Filing provisions 10 are § 405.20 through § 405.24. Expungement and Other Relief 11 provisions are § 405.30 through § 405.39. 12 Title 4.5 applies in an action pending in any United States 13 District Court in the same manner as in the courts of the State 14 of California. Cal. Code Civ. P. § 405.5. This Bankruptcy Court 15 is a “unit” of the United States District Court for the Eastern 16 District of California. 28 U.S.C. § 151. 17 The “claimants” are the four aforenamed Plaintiffs in 18 Adversary Proceeding No. 2025-02008. Cal. Code Civ. P. § 405.1. 19 The “claimants” assert causes of action that would, if 20 meritorious, affect title or the right to possession of the 21 subject real property. Cal. Code Civ. P. § 405.4. As will be 22 explained, the causes of action are NOT meritorious. 23 24 NOPA is Invalid for Failure to Obtain Court Approval 25 The NOPA does not comply with § 405.21, which requires that 26 a NOPA, if not signed by an attorney of record (there is so such 27 attorney in this case), must be approved by a judge of the court 28 in which the real property claim is pending. Cal. Code Civ. P. 1 § 405.21 The undersigned judge of the court in which the action 2 is pending did not approve the NOPA. 3 If the San Diego County Recorder actually recorded the NOPA 4 on February 28, 2025, such recording is invalid as having 5 violated the third sentence of § 405.21: “A notice of pendency of 6 action shall not be recorded unless (a) it has been signed by the 7 attorney of record, (b) if it is signed by a party acting in 8 propria persona and approved by a judge as provided in this 9 section, or (c) the action is subject to § 405.6 [eminent 10 domain].” Cal. Code Civ. P. § 405.21. 11 The action is not an eminent domain case subject of § 405.6, 12 there is no attorney of record in this case, the signatory 13 Plaintiff Faizal Adawan signed “pro se” (i.e. in propria 14 persona), but the undersigned judge of the court in which the 15 action was then pending did NOT approve the NOPA. 16 The procedure for expungement is governed by Cal. Code Civ. 17 P. § 405.30. The parties defendant to the action pending in this 18 court have applied for expungement. 19 A claimant must establish by preponderance of evidence the 20 “probable validity” of the real property claim. Cal. Code Civ. P. 21 § 405.32. The court “shall order that the notice be expunged if 22 the court finds that the claimant has not established by a 23 preponderance of the evidence the probable validity of the real 24 property claim. Id. 25 “Probable validity” with respect to a real property claim 26 means that it is more likely than not that the claimant will 27 obtain a judgment on the claim. Cal. Code Civ. P. § 405.3. 28 1 Claimant has not established “probable validity” of claim 2 The “probable validity” is nil. The Complaint in this action 3 was dismissed by order of this Court entered May 1, 2025. Adv. 4 No. 2025-02008, Dkt 162. 5 The first reason for dismissal was that the Plaintiffs lack 6 standing to assert seven alleged causes of action for which the 7 chapter 11 trustee of Bula Developments, Inc., has exclusive 8 standing. The Plaintiffs’ Motion for Derivative Standing was 9 previously denied by this Court. 10 The second stated reason for dismissal was that there is no 11 defect in the foreclosure on account of California Civil Code 12 § 2924m because the Plaintiffs do not qualify as “eligible tenant 13 buyers” and “eligible bidders” under that statute. 14 The third stated reason for the dismissal was that prior 15 final unlawful detainer decisions on the merits by the Superior 16 Court of California, for the County of San Diego, rejecting the 17 Plaintiffs’ objections to eviction and lockout rendered the 18 validity of the foreclosure issue preclusive and claim preclusive 19 under California law. 20 Finally, there was no federal subject-matter jurisdiction 21 over the dispute between Plaintiffs and Defendants. The dispute 22 does not “arise under” and does not “arise in” a case under Title 23 11, United States Code. Moreover, it is not “related to” the 24 pending case under Title 11 because the outcome could have no 25 conceivable effect on the Bula Developments, Inc., estate being 26 administered under Title 11. 28 U.S.C. § 1334(b); Celotex Corp. 27 v. Edwards, 514 U.S. 300, 308 (1995); Fietz v. Great W. Savings 28 (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988). 1 In the now-dismissed action in this court, the Plaintiffs 2 were making an illegitimate bad-faith collateral attack on a 3 final judgment of the state court of competent jurisdiction and, 4 also in bad faith, were attempting to hijack the rights of the 5 bankruptcy trustee in the chapter 11 case of Bula Developments, 6 Inc. 7 In sum, the “claimants” have NOT established by 8 preponderance of evidence the “probable validity” of their real 9 property claim. Cal. Code Civ. P. § 405.32. 10 It follows that the application for expungement embodied in 11 the Motion to Expunge Lis Pendens will be GRANTED in a separate 12 order. 13 14 Attorney’s Fees and Costs 15 Attorney’s fee and costs are authorized in favor of the 16 prevailing party “unless the court finds that the other party 17 acted with substantial justification or that other circumstances 18 make the imposition of attorney’s fees and costs unjust.” Cal. 19 Code Civ. P. § 405.38. 20 The NOPA was filed and presented for recording by Plaintiffs 21 acting in bad faith in an illegitimate collateral attack on a 22 final judgment of the California Superior Court, County of San 23 Diego, regarding the legitimacy of a foreclosure, unlawful 24 detainer, and attendant eviction proceedings. 25 The Plaintiffs’ opposition to the Motion to Expunge contains 26 multiple false or materially inaccurate statements. For example, 27 it is asserted that the sale was “conducted post-petition, 28 without relief from the automatic stay and without court approval.” Plaintiffs’ Memorandum at page 4. To the contrary, 2] this judicial officer of the District Court granted relief from 3 |} the bankruptcy automatic stay and authorized the foreclosure. The 4] Plaintiffs’ assertion in this respect is a straightforward 5 || sanctionable violation of Federal Rule of Bankruptcy Procedure 6/9011 and borders on contempt. At a minimum, it evidences bad 7 faith. 8 In light of the bad faith of the claimants, this court concludes that the claimants did not act with substantial 10 justification. 11 This court concludes, also in light of the bad faith of the 12 || claimants, that no circumstances make the imposition of 13 || attorney’s fees and costs unjust. 14 15 KEK 16 A separate order will be issued ordering expungement of the 17! NOPA and authorizing award of attorney’s fees and costs in favor 18 || of the Defendants to be established by separate motion. 19 50 Datea: May 07, 2025 : 22 he Me 53 United States Bankruptcy Judge 24 25 26 27 28