DENIAL OF MOTION TO DISSOLVE LIS PENDENS DOES NOT AUTOMATICALLY CREATE BASIS FOR CERTIORARI RELIEF

A recent appellate decision out of Florida’s Sixth District Court of Appeal holds that a trial court’s denial of motion to dissolve a lis pendens does NOT automatically give a basis for a petition for a writ of certiorari. Generalized allegations of “irreparable harm” to support the basis for the petition for writ of certiorari are insufficient.  Rather, the party moving for the petition MUST clearly demonstrate the irreparable harm; otherwise, the petition for writ of certiorari will fail.

A lis pendens has legal significance.  It is a recorded document that notifies the world that there is a pending lawsuit dealing with the real property at issue.  This is important because who wants to buy a piece of property that is subject to litigation – that would be a risky transaction!

In CPPB, LLC v. Taurus Apopka City Center, LLC, 48 Fla.L.Weekly D1837a (Fla. 6th DCA 2023), a dispute arose as to a real estate transaction. The owner sold a parcel to a buyer.  The owner also owned three adjacent parcels. As part of the transaction, the buyer agreed to perform certain improvements to all of the parcels including those adjacent parcels owned by the owner. The owner deposited funds in escrow for purposes of its share of the improvements. A payment dispute arose regarding the improvements and the buyer sued the seller. The seller filed a counterclaim to rescind the transaction along with a recorded lis pendens on the parcel purchased by the buyer. The buyer moved to dissolve the lis pendens which the trial court denied. This prompted the appeal – a petition for a write of certiorari based on the trial court’s denial of the motion to dissolve the lis pendens.

The Sixth District explained that a petition for a writ of certiorari is an extraordinary remedy which may ONLY be granted on when the following are established:

“(1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case (3) that cannot be corrected on postjudgment appeal.” “A finding that the petitioning party has ‘suffered an irreparable harm that cannot be remedied on direct appeal’ is a ‘condition precedent to invoking a district court’s certiorari jurisdiction.’ ” As such, appellate courts should analyze irreparable harm first to determine if jurisdiction exists before deciding whether the trial court’s order departed from the essential requirements of law.

CPPB, supra (internal citations omitted).

Here, the Sixth District declined to adopt a rule that a petition for certiorari relief was always available when a trial court declined to dissolve a lis pendens.  Instead, the Sixth District held:

[W]e find that irreparable harm is not presumed in cases involving orders denying motions to dissolve lis pendens because this would create a new category of non-final orders reviewable on interlocutory appeal, which the Florida Supreme Court has expressly declined to do.  Accordingly, it was incumbent upon [the seller] to explain how it would suffer irreparable harm absent immediate review of the order denying its motion to dissolve the lis pendens. Having failed to do so, we dismiss its petition.

CPPB, supra (internal citations omitted).

This ruling is clearly not what a party dealing with the denial of a lis pendens want to hear. Or deal with. However, the takeaway here is that if moving to dissolve a lis pendens, make sure to establish irreparable harm to support the certiorari relief.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

RECORDING A LIS PENDENS IS CRUCIAL

If you are in a construction dispute where you are pursuing a construction lien foreclosure action, recording a lis pendens is crucial. Did I say crucial? “[O]ne purpose of a notice of lis pendens is to alert all others that title to the property is involved in litigation and that ‘future purchasers or encumbrancers of that property’ are at risk of being bound by an adverse judgment.” Henry v. AIM Industries, LLC, 47 Fla.L.Weekly D653b (Fla. 2d DCA 2022).  There really is never a reason not to record a lis pendens when pursing a construction lien foreclosure. Please remember that – don’t forget to record the lis pendens!

There are times a lis pendens is recorded when the lis pendens is NOT based on a duly recorded instrument (e.g., construction lien or mortgage).  A lis pendens, however, is recorded because the dispute is tied to the property in which the lis pendens is being recorded. The lis pendens is recorded to best safeguard the plaintiff’s interest in the real property without fear that the real property will be sold impacting the purpose (and, of course, security) of the lawsuit.

“When an action is not founded on a duly recorded instrument or chapter 713 lien [construction lien], but alleges a nexus between the real property and the claims set forth, an evidentiary hearing is required on a motion to discharge lis pendens.”  Henry, supra.

“[T]he supreme court held that a lis pendens could not be dissolved if, ‘in the evidentiary hearing on request for discharge, the proponent [of the lis pendens] can establish a fair nexus between the apparent legal or equitable ownership of the property and the dispute embodied in the lawsuit.’ ” Discharging a notice of lis pendens without affording the proponent notice and an opportunity to be heard is a departure from the essential requirements of law. 

Henry, supra (internal citations omitted).

If you are involved in a dispute where there is  a fair nexus between the dispute and the real property, discuss with your counsel the pros/cons of recording a lis pendens.  Yes, the other side will and should move to discharge the lis pendens which should be subject to an evidentiary hearing.  However, if your lawsuit hinges on the security of the real property, this strategically will presumably be the needed avenue during the pursuit of the litigation.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: DETERMINING “FAIR NEXUS” TO SUPPORT LIS PENDENS

When a lis pendens is recorded and the underlying action is NOT based on a duly recorded instrument and is NOT a construction lien action, an evidentiary hearing should generally be held to determine: (a) whether there is a fair nexus to support the basis of the lis pendens, and if so, (b) the amount of the lis pendens bond.    Check out this posting to determine more on the meaning of “fair nexus” to support the basis of a lis pendens in this context.

Without supporting a fair nexus between the underlying lawsuit and property subject to the lis pendens, the lis pendens will be dissolved / discharged.  It is important to note, however, that even if a fair nexus is supported, the party maintaining the lis pendens will, and should, be required to post a lis pendens bond as determined by the trial court.  If the lis pendens bond is not posted within a reasonable period of time set by the trial court, the lis pendens should be dissolved / discharged.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: PARTY ENTITLED TO EVIDENTIARY HEARING ON MOTION TO DISCHARGE LIS PENDENS NOT BASED ON DULY RECORDED INSTRUMENT

When a lis pendens is recorded and it is NOT founded on a duly recorded instrument such as a mortgage or a lien, the Court has the power to either discharge the lis pendens or require that a lis pendens bond be posted.   Typically, when the lis pendens is not recorded on a duly recorded instrument, the defendant will move to discharge the lis pendens or require the plaintiff to post a lis pendens bond to cover the defendant’s damages if the lis pendens is wrongfully recorded.  In a recent case, the Court held that a party is entitled to an evidentiary hearing on this motion and the plaintiff has the burden in in proving a fair nexus between the claim on the property and the lawsuit.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: LIS PENDENS BOND WHEN LIS PENDENS NOT FOUNDED ON RECORDED INSTRUMENT OR STATUTE

If a lis pendens is recorded and the lis pendens is NOT founded on a duly recorded instrument (e.g., mortgage or lien), a lis pendens bond should be recorded.  The lis pendens bond should cover prospective damages associated with the wrongful / unjustified recording of a lis pendens that were suffered by the property owner.  The reason being is that the lis pendens has an effect on the title to the property as long as the lis pendens is recorded.  Damages could stem from a decline in the market value of the property, continued upkeep and maintenance of the property, and there may also be (and, really, should be) consideration for loss of investment return associated with the equity in that property.  Finally, prospective attorney’s fees that could be incurred in discharging the lis pendens should also be included. For more information on this, please check out this article.   

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.