One Man And Lis Pendens
As Paul Virgo of California once observed, there are few things in life that hold one’s interest as compellingly as the topic of liens.
The District of Columbia Court of Appeals decided a case today that deals with the equally fascinating topic of lis pendens.
In a case of first impression, the court held that the filing of lis pendens notices as part of litigation brought in good faith was immune from later claims of tortious interference with contract.
The story
this case is essentially about a bitter dispute between two companies over the right to purchase certain real properties for investment purposes, stemming, in large part, from the personal rivalry between the companies‘ owners over the attention of one man. Vicky Lynn Karen operated a business venture with her former romantic partner LaMar Carlson (―Carlson‖), entitled VLK, LLC (―VLK‖), to purchase distressed properties in the District of Columbia for resale to developers. At some point, Carlson started dating Joan A. Alderman (―Alderman‖), who also owned a company, Havilah Real Property Services, LLC (―Havilah‖), which was engaged in essentially the same type of business as VLK. Karen believed that Carlson was conspiring with Alderman to buy property that Karen was interested in having VLK purchase, thereby, in Karen‘s view, hurting VLK‘s business interests to the benefit of Havilah and Alderman.
The holding
We hold that, in the District of Columbia, the act of engaging in litigation is conditionally privileged against a claim of tortious interference with contract and/or prospective advantage, meaning that it is a complete defense to such a claim if the defendant can establish that the prior litigation asserted a legally protected interest in good faith. If the prior litigation was pursued in good faith and therefore privileged, then the filing of a lis pendens ancillary to that litigation is also privileged. The converse is also true; if the litigation was not pursued in good faith, then the lis pendens is likewise not privileged. In other words, even if the jury is persuaded that an individual lis pendens may have been filed, in whole or in part, based on improper motives independent from the litigation, there can be no liability if the underlying lawsuit itself was asserted in good faith. In this case, whether VLK filed the Maryland lawsuit in good faith was a factual question for the jury to decide, and the jury was entitled to conclude that the Maryland lawsuit was not pursued in good faith and therefore not a privileged act, and thus that VLK was liable for damages proximately caused by the prior litigation, including damages occasioned by the filing of the thirty-one lis pendens related to that litigation.
The court affirmed the grant of summary judgment to VLK on a claim of malicious prosecution. (Mike Frisch)