Filed 11/4/26 Interstate Automobile Network v. Kazanchian CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
INTERSTATE AUTOMOBILE B343045
NETWORK, INC.,
(Los Angeles County
Plaintiff, Cross-defendant and Super. Ct. No.
Respondent, 21STCV16951)
v.
ONNIK KAZANCHIAN,
Defendant, Cross-complainant
and Appellant.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Wendy Chang, Judge. Affirmed.
Kaplan, Kenegos & Kadin and Jerry Kaplan for Defendant,
Cross-complainant and Appellant.
Gemmill, Baldridge & Yguico and William P. Gemmill for
Plaintiff, Cross-defendant and Respondent.
____________________
Interstate Automobile Network, Inc., dba Luxury Auto
Leasing (Luxury Auto Leasing), sued Onnik Kazanchian
(Kazanchian), asserting ownership of a Lamborghini Kazanchian
had purchased. The individual who sold the vehicle to
Kazanchian had purchased it through an invalid lien sale. After
a bench trial, the trial court concluded that Luxury Auto Leasing
is the rightful owner of the car, and Kazanchian appealed.
Finding no error, we affirm.
BACKGROUND
I. Facts
Luxury Auto Leasing bought a 2014 Lamborghini
Aventador Coupe in August 2015 for $422,000 from British Motor
Car Distributors (British Motor). The sale was reported to the
California Department of Motor Vehicles (DMV). Before British
Motor, the Lamborghini was owned by a Porsche entity and
leased to Lars Dalgaard (Dalgaard).
In December 2017, Luxury Auto Leasing leased the
Lamborghini to Arizona resident Julie Osten (Osten). According
to the lease agreement, the value of the Lamborghini was
approximately $349,000. The lessor/lessee relationship was
registered with the Arizona Department of Transportation, and
the DMV was notified of the vehicle transfer.
In April 2018, the Lamborghini was involved in an accident
in Los Angeles and was brought to West Hollywood Collision
Center, Inc. (WHCC) to be repaired. Allstate, the company
insuring the Lamborghini, conducted an investigation of the
accident. Allstate estimated the repairs would cost
approximately $128,000 and delivered two checks to WHCC for
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the repairs. One of those checks was in the amount of
$64,195.12, dated July 18, 2018, and made payable to WHCC,
Osten, and Luxury Auto Leasing. The check was endorsed by
Osten and Luxury Auto Leasing and specified deposit to WHCC’s
bank account. Luxury Auto Leasing, however, did not endorse
the check because it had not been notified of the accident,
insurance claim, or check.
WHCC subsequently pursued a lien sale for the
Lamborghini to satisfy allegedly unpaid repair and storage
charges for the vehicle. WHCC hired Lien Sale Services (LSS) to
help complete the lien sale process. WHCC was required to first
fill out an application for a lien sale that included information
about the Lamborghini, the lien, the registered and legal owners,
and any other interested parties. LSS submitted the application
to the DMV on June 23, 2018, reflecting a lien comprising $50 for
lien costs, $850 for towing, $5,600 for storage, and $50,000 for
repairs. The application listed the names and addresses of the
Porsche entity and Dalgaard as the registered and legal owners
of the Lamborghini. The application further listed the names
and addresses for Osten, British Motor, Dalgaard, and the
Arizona Department of Transportation. The application did not
identify Luxury Auto Leasing as an owner or interested party.
Ron Sachs (Sachs), LSS’s owner, explained that LSS had
not inspected the Lamborghini and instead filled out the
application based upon information from WHCC and a vehicle
registration report from a company called Ran/Soft. The Ran/Soft
report, dated June 21, 2018, reflected that a Porsche entity leased
the car to Dalgaard in 2013 and that Dalgaard sold the car to
British Motor in 2015. The report did not reflect that Luxury
Auto Leasing had purchased the Lamborghini in 2015, leased the
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Lamborghini to a Florida entity in 2015, or leased the
Lamborghini to Osten in 2017. The report also disclaimed any
warranty of “the currentness, accuracy and/or completeness of
any data.”
In a letter dated August 3, 2018, and addressed to LSS, the
DMV granted authorization for LSS to conduct a lien sale of the
Lamborghini. The letter provided that “the department ha[d]
notified the following owners and interested parties,” listing the
names and addresses that LSS had included in the application:
the Porsche entity, Dalgaard, British Motor, Osten, and the
Arizona Department of Transportation. Because Luxury Auto
Leasing had not been included in the application, the letter did
not list Luxury Auto Leasing as an owner or interested party.
LSS then prepared a notice of the pending lien sale, which
provided that a lien sale for the Lamborghini would be held on
September 14, 2018, at WHCC. On August 25, 2018, LSS sent
the notice to the parties listed in the August 3, 2018 letter.
Luxury Auto Leasing was again not among the parties that were
sent notice of the lien sale.
The lien sale took place on September 14, 2018. The
Lamborghini was sold to Rafael Valdez (Valdez) for $50,000.
Valdez filed a transfer form with the DMV the same day.
Issuance of the title was delayed due to Valdez’s failure to obtain
a smog check. Title was issued to Valdez in May 2019.
Luxury Car Leasing received a letter from the Arizona
Department of Transportation dated September 26, 2018,
enclosing the notice of pending lien sale for the Lamborghini.
This is the first notice LSS had received about the lien or lien
sale. After investigating the lien sale, LSS reported the
Lamborghini stolen on July 18, 2019.
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In June 2019, the Lamborghini was in a second accident
and was again brought to WHCC for repairs. While the
Lamborghini was being held at WHCC, the California Highway
Patrol (CHP) seized it in connection with the execution of a
search warrant in an unrelated criminal investigation. Valdez
sought an order for the return of the Lamborghini from the court
that had issued the search warrant, which was denied. The court
granted Luxury Auto Leasing’s motion to have the Lamborghini
returned to it. WHCC sought a writ of mandamus, which the
Court of Appeal initially granted on December 31, 2019,
reasoning that Luxury Auto Leasing lacked standing in the
criminal matter.
The trial court held further proceedings, in which the
People argued that the car should not be released to WHCC and
the court received testimony about the ongoing criminal
investigation. The Court of Appeal subsequently discharged the
writ on March 20, 2020. The Lamborghini remained in the CHP
impound lot.
While the Lamborghini was impounded and held at the
CHP’s lot, Kazanchian bought the vehicle from Valdez on or
about June 23, 2020, for $50,000. Kazanchian relied exclusively
on Valdez’s title for proof of Valdez’s ownership and the lack of
any third party claims, liens, or secured creditors. Title was
issued to Kazanchian in January 2021.
II. Complaint; Cross-Complaint; Bench Trial
Luxury Auto Leasing and the bank that had financed the
Lamborghini purchase filed a complaint against Osten, WHCC,
Valdez, Kazanchian, Allstate, and several other parties in May
2021, alleging causes of action including conversion and
declaratory and injunctive relief against WHCC, Valdez, and
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Kazanchian. An amended complaint alleging the same causes of
action against the same parties was filed in August 2021. Luxury
Auto Leasing obtained defaults against Valdez and WHCC, who
did not answer.
Kazanchian filed a cross-complaint against Luxury Auto
Leasing and others in April 2022, alleging causes of action
including declaratory relief regarding ownership of the
Lamborghini. Kazanchian filed an amended cross-complaint in
May 2022.
The parties agreed to a bench trial on the papers to try the
Lamborghini ownership issues presented in Luxury Auto
Leasing’s amended complaint and Kazanchian’s amended cross-
complaint. The parties submitted stipulated facts, declarations
in lieu of live testimony, and agreed to the admission of exhibits.
III. Ruling; Appeal
The trial court issued a tentative statement of decision,
concluding that Luxury Car Leasing owned and had the right to
possess the Lamborghini. The court concluded that, because the
lien sale of the Lamborghini did not comply with the
requirements of Civil Code section 3071,1 the lien sale was void
and that Kazanchian’s claim of ownership arising from that void
lien sale was also invalid. The trial court adopted the tentative
decision as its final statement of decision. Judgment was
entered, and Kazanchian timely appealed.
1 All statutory references are to the Civil Code unless
otherwise stated.
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DISCUSSION
I. Standards of Review
“Because the issues were presented on stipulated facts, the
trial court ruled solely on questions of law.” (Steinhebel v.
Los Angeles Times Communications, LLC (2005) 126 Cal.App.4th
696, 704.) We therefore review the judgment de novo. (Price v.
Connolly-Pacific Co. (2008) 162 Cal.App.4th 1210, 1218.)
To the extent the trial court made any findings of fact, they
are reviewed for substantial evidence, where we liberally
construe facts to support the judgment, consider evidence in the
light most favorable to the prevailing party, and draw all
reasonable inferences in support of the findings. (Ribakoff v. City
of Long Beach (2018) 27 Cal.App.5th 150, 162.)
II. The Lien Sale Is Void Because It Did Not Comply
with Civil Code Section 3071
A. Relevant law
Due process of law under the federal and state
constitutions requires that property owners receive notice and a
hearing before their property is taken. (Adams v. Department of
Motor Vehicles (1974) 11 Cal.3d 146, 151–152 (Adams).) Section
3071 thus prescribes a detailed process before a vehicle lien sale
may take place, including multiple notice requirements and the
opportunity for a hearing. First, a lienholder must apply to the
DMV for authorization to conduct a lien sale. (§ 3071, subd. (a).)
Among other things, the application must include “[t]he names
and addresses of the registered and legal owners of the vehicle, if
ascertainable from the registration certificates within the vehicle,
and the name and address of any person whom the lienholder
knows, or reasonably should know, claims an interest in the
vehicle.” (§ 3071, subd. (a)(2).)
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Second, upon receiving the application, the DMV must
notify the vehicle registry agency of a foreign state if the vehicle
bears indicia of registration in that state (§ 3071, subd. (b)(1))
and send notice to the registered and legal owners at their
addresses of record and any other person listed in the application
(§ 3071, subd. (b)(2)). The notice to the owners and interested
persons must disclose that they have a right to a hearing in court
and that if such hearing is desired, they shall sign and return a
Declaration of Opposition. (§ 3071, subd. (c).)
Third, if the DMV receives a timely Declaration of
Opposition, the DMV must notify the lienholder that the sale
may not go forward unless the lienholder files a lawsuit and
judgment is entered in the lienholder’s favor. (§ 3071, subd. (d).)
If the DMV does not receive a Declaration of Opposition, the
DMV is to issue an authorization to conduct the lien sale.
(§ 3071, subd. (f).)
Fourth, if the DMV provides authorization, the lienholder
must give notice of the sale by publication (§ 3071, subd. (f)(1))
and send notice 20 days before the sale to the registered and legal
owners, all persons with an interest in the vehicle, and the DMV
(§ 3071, subd. (f)(2)).
Fifth, there are requirements for the manner of the lien
sale. (§ 3071, subd. (j).)
Sixth, the lienholder must retain the vehicle for 10 days
after the sale to allow the owner one last opportunity to redeem
the vehicle. (§ 3071, subd. (k).)
B. WHCC failed to provide notice to Luxury Auto
Leasing
WHCC was required to include in its application for a lien
sale the names and addresses of the registered and legal owners
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of the Lamborghini, if ascertainable from registration
information in the car, and the name and address of any person
the lienholder knows “or reasonably should know” claims an
interest in the vehicle. (§ 3071, subd. (a)(2).) The DMV and
WHCC were then required to provide notice of the application
and pending lien sale to the same group of registered and legal
owners and interested parties. (§ 3071, subds. (b)(2), (f)(2).)
It is undisputed that WHCC did not include Luxury Auto
Leasing’s name or address in its application to conduct a lien
sale. It is undisputed that neither WHCC nor the DMV provided
notice of the application or pending lien sale to Luxury Auto
Leasing. It is further undisputed that Luxury Auto Leasing was
first informed of the pending lien sale through a letter from the
Arizona Department of Transportation on or after September 26,
2018—12 days after the lien sale had already taken place.
C. WHCC knew or should have known Luxury Auto
Leasing had an interest in the vehicle
The trial court found that WHCC knew or reasonably
should have known that Luxury Auto Leasing had an interest in
the Lamborghini. This finding is supported by substantial
evidence. WHCC deposited two checks from Allstate to pay for
the repairs to the Lamborghini. At least one of those checks, in
the amount of more than $64,000, was made payable to Luxury
Auto Leasing, as well as WHCC and Osten. Luxury Auto
Leasing’s endorsement was forged on the check prior to WHCC’s
deposit of the check. WHCC thus knew or reasonably should
have known that Luxury Auto Leasing had an interest in the
vehicle.
Kazanchian resists this conclusion and essentially asks us
to weigh the evidence and reach a different decision. (See
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Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.) That
is not our role. Regardless, Kazanchian’s arguments are not
persuasive.
Kazanchian argues that Luxury Car Leasing could have
been included on the check for administrative reasons unrelated
to ownership in the Lamborghini. Kazanchian provides no record
or legal support for this speculation. Moreover, the statute refers
not simply to owners, but to any person that “claims an interest
in the vehicle.” (§ 3071, subd. (a)(2).) The insurance check would
have led a reasonable person to believe Luxury Auto Leasing
would claim an interest in the vehicle.
Kazanchian suggests that any knowledge supported by the
insurance check is negated because WHCC, through LSS,
generated a Ran/Soft registration report for the Lamborghini that
did not include Luxury Auto Leasing. That report, however, was
facially inaccurate and unreliable. Osten was the insured and
the person WHCC billed for the lien on the Lamborghini, but
Osten is found nowhere in the Ran/Soft report. The report also
includes no reference to the state of Arizona, where Osten
resided, and disclaims any warranty of “the currentness,
accuracy and/or completeness of any data.” Thus, WHCC knew it
should not rely on that report.
Finally, Kazanchian argues that inquiry notice arises
under section 3071 only when a party has knowledge of facts that
would cause a reasonably prudent person to investigate a specific
adverse interest, citing Triple A Management Co. v. Frisone
(1999) 69 Cal.App.4th 520 (Triple A) and First Fidelity Thrift &
Loan Ass’n v. Alliance Bank (1998) 60 Cal.App.4th 1433 (First
Fidelity). These cases do not compel a different result. In Triple
A, the Court of Appeal held that a person is charged with
10
knowledge of a fact if a “reasonable and prudent” person in their
position would have investigated. (Triple A, supra, 69
Cal.App.4th at p. 539.) Here, a reasonable and prudent person—
especially one in the automobile repair business—should have
investigated why Luxury Auto Leasing was a payee of the
insurance check. In First Fidelity, the Court of Appeal held that
a notice of inquiry triggers only a reasonable inquiry, not an
exhaustive one. (First Fidelity, supra, 60 Cal.App.4th at p. 1445.)
But WHCC did not satisfy even this standard.
In sum, there is substantial evidence to support the trial
court’s finding that WHCC knew or reasonably should have
known Luxury Auto Leasing was an interested party and thus
entitled to notice.2 WHCC accordingly failed to comply with
section 3071, subdivision (a)(2).
C. The lien sale is void, not voidable
Kazanchian argues that the defects in the lien sale
rendered the sale merely voidable rather than void. The plain
statutory language provides otherwise. Subdivision (l) of section
3071 expressly states that “[a]ny lien sale pursuant to this
section shall be void if the lienholder does not comply with this
chapter.” As discussed above, WHCC, the lienholder, did not
comply with the requirement to include in the application the
names and addresses of any person whom WHCC knew or
reasonably should have known claimed an interest in the
Lamborghini. Therefore, the lien sale is void, not voidable.
2 Because we must uphold the judgment if it is correct on any
ground (O’Byrne v. Santa Monica-UCLA Medical Center (2001)
94 Cal.App.4th 797, 804–805), we do not reach the other
deficiencies in the lien sale process that the trial court identified.
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Kazanchian questions whether the Legislature truly
intended to make noncomplying lien sales void. “We must look to
the statute’s words and give them their usual and ordinary
meaning. [Citation] The statute’s plain meaning controls the
court’s interpretation unless its words are ambiguous. If the
plain language of a statute is unambiguous, no court need, or
should, go beyond that pure expression of legislative intent.”
(Kobzoff v. Los Angeles County Harbor/UCLA Medical Center
(1998) 19 Cal.4th 851, 861.) Kazanchian has pointed to, and we
discern, no ambiguity in section 3071, subdivision (l).
Kazanchian further suggests that any violations of section 3071
were minor or technical, but the statute does not draw such
distinctions. (See Peerless Ins. & Brokerage Co. v. Dwyer
Equipment Co. (1926) 78 Cal.App. 141, 143–144 [holding that a
vehicle lien sale was void, not merely voidable, because it was
held before 20 days had elapsed after the completion of the
service, in violation of the 20-day statutory period].)
Relying upon California Uniform Commercial Code
section 2403, subdivision (1), Kazanchian asserts that California
law distinguishes between void and voidable transactions.
Kazanchian’s reliance is misplaced. The California Uniform
Commercial Code applies only to voluntary transactions, not
involuntary transactions like the lien sale here. (See Cal. U.
Com. Code, § 1201, subd. (b)(29) [“ ‘Purchase’ means taking by
sale, lease, discount, negotiation, mortgage, pledge, lien, security
interest, issue or reissue, gift, or any other voluntary transaction
creating an interest in property”]; Nist v. Hall (2018)
24 Cal.App.5th 40, 46; Suburban Motors, Inc. v. State Farm Mut.
Auto. Ins. Co. (1990) 218 Cal.App.3d 1354, 1360–1361
(Suburban).) Similarly, Kazanchian relies on a series of cases
12
concerning voluntary sales rather than involuntary sales not
subject to the California Uniform Commercial Code. (See T & O
Mobile Homes, Inc. v. United California Bank (1985) 40 Cal.3d
441 (T & O Mobile Homes); Ferraro v. Pacific Fin. Corp. (1970)
8 Cal.App.3d 339 (Ferraro); First Nat’l Bank of Hays City v.
Sprigg (1962) 209 Cal.App.2d 258.)3 Therefore, we agree that the
lien sale of the Lamborghini is void.
III. The Bona Fide Purchaser Doctrine Does Not Apply
Kazanchian argues that even if the lien sale was void, he is
the rightful owner of the Lamborghini under the bona fide
purchaser and full title doctrines. Where there are competing
security interests in a vehicle, a purchaser of a vehicle prevails
over other interests where the purchaser relies upon the
statutory certificate of ownership and has no knowledge of any
defect of title. (Ferraro, supra, 8 Cal.App.3d at p. 346, fn. 1.)
This is referred to as the bona fide purchaser doctrine or full title
doctrine. (T & O Mobile Homes, supra, 40 Cal.3d at p. 454.)
However, the bona fide purchaser doctrine does not apply
to a void title. A void legal instrument is one that “is without
legal effect,” “ ‘is a mere nullity,’ ” and “ ‘has no existence
whatever.’ ” (Yvanova v. New Century Mortgage Corp. (2016) 62
Cal.4th 919, 929.) “ ‘A void thing is as no thing.’ ” (Ibid.)
Accordingly, while “[a] seller with a voidable title has power to
transfer a good title to a good faith purchaser for value,” “[a]
seller with a void title has no power to transfer a good title to a
good faith purchaser for value.” (5 Witkin, Summary Cal. Law
3 Kazanchian also relies on Melendrez v. D & I Investment,
Inc. (2005) 127 Cal.App.4th 1238, but that case involved a
nonjudicial foreclosure sale under section 2924, which is more
favorable to bona fide purchasers.
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Sales § 137 (2026).) When title is “void, not merely voidable[,]” a
subsequent purchaser does “not acquire valid title although a
good faith purchaser for value.” (Suburban, supra, 218
Cal.App.3d at p. 1361.) Simply, Kazanchian could not have
obtained title to the Lamborghini from Valdez because Valdez
had no title to convey to Kazanchian.
Even if the bona fide purchaser doctrine were to apply,
Kazanchian has not satisfied it. A bona fide purchaser is one
that (1) relied on the information in the statutory certificate of
ownership, and (2) lacked knowledge of any defect in title. (T &
O Mobile Homes, supra, 40 Cal.3d at p. 449; Ferraro, supra,
8 Cal.App.3d at p. 346, fn. 1.) Kazanchian’s declaration provides
only that he “relied exclusively on . . . Valdez’s certified title from
the DMV for proof of his ownership and lack of any [third] party
claims, liens, or secured creditors.” The declaration does not
provide that Kazanchian lacked knowledge of the defects in the
Lamborghini’s title. To the contrary, the evidence shows that
Kazanchian had at least some knowledge of the ownership issues
because Kazanchian attempted to purchase the Lamborghini
from Valdez while the Lamborghini remained embroiled in legal
disputes and impounded by the CHP.
IV. Policy Decisions Are for the Legislature
Last, Kazanchian argues as a policy matter that a good-
faith purchaser of a vehicle should be able to rely on a clean title
in the purchase of the vehicle. While competing policy
considerations may be at play, “our role as a court is not to ‘ “sit
in judgment of the Legislature’s wisdom in balancing such
competing public policies. [Citation]” ’ ” (Los Angeles County
Metropolitan Transportation Authority v. Alameda Produce
Market, LLC (2011) 52 Cal.4th 1100, 1113–1114.) “Instead, ‘due
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respect for the power of the Legislature and for the separation of
powers’ requires us to ‘follow the public policy choices actually
discernible from the Legislature’s statutory enactments.’ ” (Ibid.)
DISPOSITION
The judgment is affirmed. Luxury Auto Leasing is entitled
to costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
GOORVITCH, J.
We concur:
CHAVEZ, Acting P. J.
RICHARDSON, J.
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