in Re: Saleh Elisa and Carzone Investors, Inc. ( 2022 )

Conditionally Granted and Opinion Filed February 9, 2022
In the
Court of Appeals
Fifth District of Texas at Dallas
No. 05-21-00370-CV
IN RE SALEH ELISA AND CARZONE INVESTORS, INC., Relators
Original Proceeding from the 193rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-18-16184
MEMORANDUM OPINION
Before Justices Myers, Partida-Kipness, and Carlyle
Opinion by Justice Carlyle
In this mandamus proceeding, relators Saleh Elisa and Carzone Investors, Inc.
challenge the trial court’s refusal to expunge a notice of lis pendens. After reviewing
relators’ petition for writ of mandamus, real parties in interest’s response, and the
mandamus record, we conditionally grant relators’ petition for writ of mandamus.
Background
The plaintiffs in the underlying lawsuit are JAT Real Property Holdings Texas,
LLC and JAT Project Holdings Texas, LLC (collectively, plaintiffs), who are real
parties in interest here.1 Plaintiffs sued Johnny Aguinaga; his company DFW
Projects, LLC; Risk Free Investments, LLC; and Westmoreland JAT/DFW
Properties, LLC (collectively, defendants) regarding funds plaintiffs provided for a
townhome development on Westmoreland Road in Dallas, Texas (the Westmoreland
development). According to plaintiffs’ March 26, 2019 second amended petition,
defendants contracted with plaintiffs to use those funds exclusively for the
Westmoreland development but improperly used the funds to purchase or develop
other properties, including 13064 Fish Road, Dallas, Texas (the Fish Road property).
Plaintiffs’ second amended petition asserted various tort, contract, statutory,
and other claims, including claims for fraudulent transfer and constructive trust. The
requested relief included “(a) Actual, consequential, incidental, economic, non-
economic, special, general, consequential, reliance, restitution, recoupment of
property wrongfully obtained, incidental damages, and exemplary damages in an
amount within the jurisdictional limits of this Court; (b) Disgorgement of profits and
benefits wrongfully obtained by Defendants; [and] (c) An accounting and imposition
of a constructive trust upon the monies and assets acquired as a result of [the alleged]
acts, including any property of Defendants.” Plaintiffs also sought prejudgment writs
of attachment regarding certain real and personal property, including the Fish Road
property, and temporary injunctive relief restraining defendants from “conveying,
1
John Thaler, managing member of the JAT companies’ controlling entity and a third-party defendant
in the underlying lawsuit, is also a real party in interest in this proceeding.
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assigning, encumbering, hypothecating, concealing, or alienating any rights, title, or
interest in or to the [Fish Road property], or any proceeds from any sale thereof, or
otherwise developing or constructing [that] real property.”
On May 24, 2019, plaintiffs filed a notice of lis pendens as to the Fish Road
property. On November 12, 2020, Mr. Elisa filed a plea in intervention and a motion
to expunge the notice of lis pendens. He asserted he is the owner of the Fish Road
property and “intervenes in this case in order to obtain an order from this court
removing the lis pendens on his property.” According to Mr. Elisa, “Defendant Risk
Free Investments, LLC, who was the previous owner, deeded one hundred percent
of this property to Elisa on April 16, 2019, and Elisa recorded the deed on April 18,
2019.” He contended, among other things, that the notice of lis pendens must be
expunged because “the pleading on which the Notice of Lis Pendens is based does
not contain a real property claim.”
The record does not show plaintiffs filed a response to Mr. Elisa’s motion to
expunge. On January 8, 2021, plaintiffs filed a third amended petition. Unlike the
second amended petition, the third amended petition’s fraudulent transfer claims
asserted in part, “Plaintiffs further seek imposition of a constructive trust upon such
real property as Plaintiffs have a legal interest in the real properties Defendants
fraudulently transferred and that Plaintiffs request that such transfers be set aside and
returned to the transferors or otherwise Plaintiffs.”
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Following a January 11, 2021 hearing,2 the trial court denied the motion to
expunge on January 22, 2021, without stating the basis for the denial.
On March 17, 2021, Mr. Elisa and his company Carzone Investors, Inc., which
had also intervened in the underlying lawsuit, filed a first amended motion to
expunge the notice of lis pendens. That motion relied on additional ownership
evidence not presented with the original motion to expunge. Additionally, the
amended motion asserted that for purposes of determining whether plaintiffs had
pleaded a real property claim, “the relevant pleading is Plaintiffs’ Second Amended
Petition filed on March 26, 2019,” not the third amended petition.
Plaintiffs filed a response in which they asserted, among other things, that they
“have pleaded and established a viable real property claim in the Fish Road
Property” because they “requested a constructive trust be placed on properties that
were allegedly fraudulently transferred and the title transfers set aside.” In support
of that assertion, they cited their third amended petition. They did not address the
amended motion’s contention that only the second amended petition is relevant to
that determination.
On April 20, 2021, after a hearing, the trial court denied relators’ first amended
motion to expunge the notice of lis pendens without stating the ground for that ruling.
2
The mandamus record contains no reporter’s record of this or any other hearing.
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Applicable law
Mandamus is an extraordinary remedy available only when the trial court has
clearly abused its discretion and there is no adequate remedy by appeal. In re
Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding).
“Mandamus has been recognized as the appropriate remedy when issues have arisen
concerning the issuance of notices of lis pendens.” In re Cohen, 340 S.W.3d 889,
900 (Tex. App.—Houston [1st Dist.] 2011, orig. proceeding); In re Collins, 172
S.W.3d 287, 297 (Tex. App.—Fort Worth 2005, orig. proceeding).
“A notice of lis pendens is a mechanism to give constructive notice to all those
taking title to the listed property that a claimant is litigating a claim against the
property.” Campbell v. Martell, No. 05-19-01413-CV, 2021 WL 1731754, at *10
(Tex. App.—Dallas May 3, 2021, no pet.) (mem. op.). Only a party seeking
affirmative relief in “an action involving title to real property, the establishment of
an interest in real property, or the enforcement of an encumbrance against real
property” may file “for record with the county clerk of each county where a part of
the property is located a notice that the action is pending.” Id. (quoting TEX. PROP.
CODE § 12.007(a)). To satisfy § 12.007, “the suit on which the lis pendens is based
must claim a direct interest in real property, not a collateral one.” Id. “If a party seeks
a property interest only to secure recovery of damages or other relief, the interest is
collateral and will not support a lis pendens.” Id.
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A party to an action in connection with which a notice of lis pendens has been
filed may apply to the court to expunge the notice. TEX. PROP. CODE § 12.0071(a).
Section 12.0071(c) provides:
The court shall order the notice of lis pendens expunged if the court
determines that:
(1) the pleading on which the notice is based does not contain a
real property claim;
(2) the claimant fails to establish by a preponderance of the
evidence the probable validity of the real property claim; or
(3) the person who filed the notice for record did not serve a copy
of the notice on each party entitled to a copy . . . .
Analysis
Relators contend the trial court abused its discretion because “[t]he notice of
lis pendens must be expunged as long as any one of [§ 12.0071(c)’s] three
requirements is not satisfied” and plaintiffs “failed to prove compliance with any of
[those] three requirements.” Relators request mandamus relief “declaring the
Plaintiffs’ notice of lis pendens null and void, ordering the trial court to vacate its
orders denying the original and first amended motions to expunge lis pendens and
directing the trial court to issue a new order dismissing the lis pendens on 13064
Fish Road.”
As to § 12.0071(c)(1), relators assert “the relevant pleading is the one on file
at the time of the filing of the lis pendens,” which in this case is plaintiffs’ second
amended petition. Relators contend that in that pleading, plaintiffs did not claim a
“direct interest” in the Fish Road property or “seek to restore the title to [that
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property],” but instead “were alleging fraudulent transfer and constructive trust
merely to protect a money damages claim or to satisfy a money judgment.” Relators
assert that because the second amended petition “only collaterally affect[s]” the Fish
Road property, the notice of lis pendens should have been expunged under
§ 12.0071(c)(1).
Real parties in interest argue Texas courts have generally concluded pleadings
sufficiently support a notice of lis pendens where the pleader “requested a
constructive trust be placed on properties that were allegedly fraudulently transferred
and the title transfers set aside” (citing Cohen, 340 S.W.3d at 899). They contend
expungement under § 12.0071(c)(1) is improper here because plaintiffs pleaded
such. In support of that position, real parties in interest cite the above-described third
amended petition provision that was not in the second amended petition. Real parties
in interest do not address relators’ contention that only the second amended petition
is relevant to the § 12.0071(c)(1) analysis in this case, nor do they explain or address
how the second amended petition supports their position.
Additionally, real parties in interest assert (1) relators proffered no “‘new’
evidence to support their renewed request to expunge the lis pendens on the Fish
Road Property which was not in Relators’ possession or access during the prior
expunction hearings” or “new, applicable law to support their renewed request to
expunge the lis pendens,” and (2) “[a]bsent new evidence or new applicable law,
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Relators effectively filed a motion for reconsideration of the District Court’s prior
denial of the same motion—but without any lawful basis to do so.”
We agree with relators that only the second amended petition is relevant to
our § 12.0071(c)(1) analysis here. In re Kroupa-Williams, No. 05-05-00375-CV,
2005 WL 1367950, at *2 (Tex. App.—Dallas June 10, 2005, orig. proceeding) (mem.
op.) (concluding plaintiff’s live pleading “at the time she filed the lis pendens on the
properties,” rather than her subsequently-filed amended pleading, was relevant
pleading for determining whether plaintiff pleaded interest in real property on which
lis pendens was filed).
Though real parties in interest contend a request that “a constructive trust be
placed on properties that were allegedly fraudulently transferred and the title
transfers set aside” supports a notice of lis pendens, the record does not show, and
real parties in interest do not explain, how the second amended petition asserted such
a request or sought more than merely an interest in the proceeds of the Fish Road
property. On this record, we conclude the trial court abused its discretion by
determining § 12.0071(c)(1) did not require expunging the notice of lis pendens in
question. See Flores v. Haberman, 915 S.W.2d 477, 478 (Tex. 1995) (orig.
proceeding) (per curiam) (concluding that seeking constructive trust as to real
property allegedly purchased with converted funds only to satisfy judgment
constituted seeking a collateral interest in the property, which did not render property
subject to lis pendens); see also Moss v. Tennant, 722 S.W.2d 762, 763 (Tex. App.—
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Houston [14th Dist.] 1986, orig. proceeding) (in fraud action by home purchaser
against vendors of home and property, “constructive trust” that purchaser sought to
impose against different property to extent vendors purchased that property with
proceeds traceable from vendors’ sale of home did not entitle purchaser to lis
pendens against that property).
As to real parties in interest’s contention that relators’ first amended motion
to expunge the notice of lis pendens was “without any lawful basis” due to a
purported lack of “new evidence or new applicable law,” real parties in interest cite
no authority to support that position and we have found none. Generally, “[t]he trial
court holds continuing authority to reconsider its interlocutory orders while it has
plenary power over the case.” Moring v. Inspectorate Am. Corp., 529 S.W.3d 145,
150 (Tex. App.—Houston [14th Dist.] 2017, pet. denied).
* * *
We conditionally grant relators’ petition for writ of mandamus. We direct the
trial court to (1) vacate the orders denying the original and first amended motions to
expunge the notice of lis pendens on the Fish Road property and (2) sign an order
expunging the notice of lis pendens on the Fish Road property pursuant to
§ 12.0071(c)(1). We are confident the trial court will act in accordance with this
opinion. The writ of mandamus will issue only if the trial court does not do so.
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/Cory L. Carlyle/
CORY L. CARLYLE
210370f.p05 JUSTICE
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