High Mesa General Partnership v. Patterson

Certiorari Granted, August 2, 2010, No. 32,488
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2010-NMCA-072Filing Date: June 8, 2010
Docket No. 28,802
HIGH MESA GENERAL PARTNERSHIP,
a New Mexico general partnership,
JON McCALLISTER, DAVID W. HARPER,
and PLACITAS, INC., a New Mexico corporation,
Plaintiffs-Appellants,
v.
WILLIAM J. PATTERSON III, JAMES LAWRENCE
SANCHEZ, and JAMES LAWRENCE SANCHEZ,
TRIAL LAWYER, P.C., a New Mexico professional
corporation,
Defendants-Appellees.
APPEAL FROM THE DISTRICT COURT OF SANDOVAL COUNTY
Louis E. DePauli, Jr., District Judge, sitting by designation
Aldridge, Grammar, Jeffrey & Hammar, P.A.
David A. Grammar III
Albuquerque, NM
for Appellants
Hatch, Allen, & Shepherd, P.A.
E. W. Shepherd
Jake A. Garrison
Albuquerque, NM
for Appellee William J. Patterson III
Pedro G Rael, Trial Lawyer, P.C.
Pedro G. Rael
1
Los Lunas, NM
for Appellees James Lawrence Sanchez, and
James Lawrence Sanchez, Trial Lawyer, P.C.
OPINION
GARCIA, Judge.
{1} The issue before us is whether a notice of lis pendens is properly filed in connection
with an appeal under Rule 1-074 NMRA (2007) (amended 2008) by a third party who does
not have a personal interest in the title to the property. Under the circumstances in this case,
the district court determined that the notice of lis pendens was appropriately filed. We
affirm.
BACKGROUND
{2} Plaintiffs, High Mesa General Partnership, Jon McCallister, David W. Harper, and
Placitas, Inc. (High Mesa), are owners and developers of certain real property located in
Sandoval County. Defendant William Patterson III, a resident of Sandoval County, opposed
High Mesa’s preliminary subdivision plat application filed before the Board of County
Commissioners for Sandoval County (County). High Mesa’s preliminary plat application
was approved by the County. After the County approved High Mesa’s application in
November 2006, Patterson hired an attorney, Defendants James Lawrence Sanchez and his
professional corporation, to represent him. This representation involved an administrative
appeal of the County’s decision to approve High Mesa’s preliminary subdivision plat
application and later involved the filing of a notice of lis pendens.
{3} High Mesa filed this separate civil complaint against all three Defendants, alleging
that the filing of the notice of lis pendens with Patterson’s administrative appeal was a
malicious abuse of process and a prima facie tort that resulted in the loss of sales within its
subdivision. In response to this separate complaint, Defendants filed a motion for judgment
on the pleadings and to dismiss for failure to state a claim, or in the alternative for summary
judgment, arguing that their use of a notice of lis pendens was proper and in accordance with
NMSA 1978, Section 38-1-14 (1965). The district court reviewed the parties’ pleadings and
granted Defendants’ motion for summary judgment. High Mesa appeals from the district
court’s order dismissing its two claims.
ANALYSIS
Standard of Review
{4} We review the district court’s granting of summary judgment de novo. Self v. United
Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. “Summary judgment
is appropriate where there are no genuine issues of material fact and the movant is entitled
to judgment as a matter of law.” Id. “[W]e view the facts in the light most favorable to the
2
party opposing summary judgment, drawing all inferences in favor of that party.” Gormley
v. Coca-Cola Enters., 2005-NMSC-003, ¶ 8, 137 N.M. 192, 109 P.3d 280 (internal quotation
marks and citation omitted).
Filing the Notice of Lis Pendens
{5} The question before us is whether the filing of a notice of lis pendens under Section
38-1-14 was proper when it arose exclusively from Patterson’s administrative appeal
pursuant to Rule 1-074. Patterson had no other interest in the real property being
subdivided. This issue of first impression is a legal question of statutory interpretation that
we review de novo. See Lion’s Gate Water v. D’Antonio, 2009-NMSC-057, ¶ 18, 147 N.M.
523, 226 P.3d 622. We must determine whether the Legislature intended to allow for the
filing of a notice of lis pendens under the circumstances of this case. See id. ¶ 23 (stating
that an appellate court seeks to give effect to the Legislature’s intent when interpreting
statutes). The plain language of the statute is the primary indicator of the Legislature’s
intent. Id. “When a statute contains language [that] is clear and unambiguous, we must give
effect to that language and refrain from further statutory interpretation.” State ex rel.
Helman v. Gallegos, 117 N.M. 346, 351, 871 P.2d 1352, 1357 (1994) (internal quotation
marks and citation omitted).
{6} Section 38-1-14 states in relevant part:
In all actions in the district court of this state . . . affecting the title to
real estate in this state, the plaintiff, at the time of filing his petition or
complaint, or at any time thereafter before judgment or decree, may record
with the county clerk . . . a notice of the pendency of the suit[.]
High Mesa argues that Patterson lacked legal standing under the statute to file the notice of
lis pendens because he did not have a “claim to the property’s title or have some other
present interest in the subject property.” The requirement that a party have an interest in the
property before filing a notice of lis pendens is not set forth in the plain language of our
statute. High Mesa nevertheless contends that the requirement is implicit in the statute
because “it is the basis for notices of lis pendens in the first place.” High Mesa in essence
argues for a narrow interpretation of the term “affect,” such that only a party with an interest
in the title may be deemed to “affect” the title of the real estate. We disagree with High
Mesa’s interpretation of the statute because there is no evidence that the Legislature intended
for such a narrow interpretation.
{7} One purpose for filing a notice of lis pendens is to protect a party’s interest in the
property. If a party has a personal interest in the property, the filing of a notice of lis
pendens protects the party’s interest by binding a subsequent purchaser to the “proceedings
taken after the recording of the notice to the same extent as if [the purchaser] were made a
party to the [underlying] action.” Id.; see Title Guar. & Ins. Co. v. Campbell, 106 N.M. 272,
277, 742 P.2d 8, 13 (Ct. App. 1987) (explaining that if a judgment is rendered for the party
3
filing the notice of lis pendens, “the rights of that party relate back to the date of the notice”).
However, there are other purposes for the filing a notice of lis pendens.
{8} The notice of lis pendens is also designed to protect unidentified prospective
purchasers of property by alerting them to the existence of a lawsuit that could affect the title
of the property. See Paulson v. Lee, 745 P.2d 359, 361 (Mont. 1987) (stating that a “second
purpose of the notice [of lis pendens] is to alert third parties interested in the subject
property, thereby protecting them from litigation attendant to the property”). As expressly
stated in Section 38-1-14, the filing of said notice provides “constructive notice” to
subsequent purchasers or encumbrancers of the property.
{9} Under the common law doctrine of lis pendens, which was in effect prior to the
enactment of state statutes, “a purchaser of real property [that was] the subject of pending
litigation [took] title subject to any adverse interests ultimately adjudicated in such
litigation.” Hammersley v. Dist. Ct., 610 P.2d 94, 95 (Colo. 1980) (en banc). This lis
pendens rule required all purchasers “to take notice, at their peril, of suits affecting the title
to property[.]” Id. (internal quotation marks and citation omitted). The common law rule
was harsh because “[i]t bound anyone who acquired an interest in property by the result of
pending litigation involving that property even though the interest [in the property] was
acquired without knowledge of the litigation.” Id. at 96. In response to the severity of the
common law rule of lis pendens, two things occurred. Courts limited lis pendens to cases
“directly operating on title as distinguished from those dealing with use or possession[,]” and
legislatures adopted “statutes providing for the registry or recording of notice of the
pendency of certain actions.” Id. at 95-96 (internal quotation marks and citation omitted);
see Kokoricha v. Estate of Keiner, 2010-NMCA-053, ¶ 22, ___ N.M .___, ___ P.3d ___ (No.
29,204, May 6, 2010) (holding that if no notice of lis pendens has been filed, the subsequent
purchaser is without constructive notice for purposes of determining whether that party is
a bona fide purchaser). Once the statutory mechanism was in place for providing
constructive notice and legal protection to subsequent purchasers of the property, the
limitations in place under common law lis pendens were no longer necessary. Hammersley,
610 P.2d at 96 (explaining that under the common law lis pendens and prior to statutory
requirements for filing a notice of lis pendens, “some courts limited the types of litigation
within the rule to those claims directly operating on title”).
{10} This shift in lis pendens jurisprudence is evident in New Mexico. Our Legislature
enacted the original version of the lis pendens statute in 1873. § 38-1-14. Shortly after its
enactment, the Territorial Court in Bell v. Gaylord, 6 N.M. 227, 233, 27 P. 494, 495 (1891)
stated that “[t]he language of [the 1884 version of Section 38-1-14] is very plain, and
sufficiently comprehensive to embrace ‘all actions in the district courts’ affecting the title
to real estate, whether at law or in equity.” Subsequent cases affirmed the underlying
principles of the lis pendens statute by concluding that the filing of a notice of lis pendens
is merely “a republication of the pleadings filed in the pending judicial proceedings.” Title
Guar. & Ins. Co., 106 N.M. at 277, 742 P.2d at 13; see Superior Const., Inc. v. Linnerooth,
103 N.M. 716, 719, 712 P.2d 1378, 1381 (1986) (Stowers, J., dissenting) (“The notice of lis
4
pendens is purely incidental to the action wherein it is filed, and refers specifically to such
action and has no existence apart from that action.”). The plain language of the statute along
with its well-developed history establish that where a party has standing to file a lawsuit in
district court affecting the title to real property, Section 38-1-14 allows for the filing of a
notice of lis pendens in connection with the pending lawsuit. Filing a notice of lis pendens
thus is not limited to those cases in which the adverse party claims a beneficial interest in
the title to the property.
{11} Given the plain language of the statute, we do not adopt the strict interpretation of
“affect” asserted by High Mesa. The Legislature intended to allow the filing of a lis pendens
under the circumstances of this case. The notice protected subsequent purchasers and
advanced the purpose of the statute. Judicial finality and economy were advanced because
the public had notice concerning the pending litigation involving High Mesa’s subdivision.
To restrict the filing of a notice of lis pendens to circumstances where the filing party has
an actual interest in the property would contradict both the plain language and the purpose
of the statute. See Superior Const., Inc., 103 N.M. at 719, 712 P.2d at 1381 (stating that a
“notice of lis pendens may be properly filed [when a] plaintiff pleads a cause of action which
involves or affects the title to, or any interest in or a lien upon, specifically described real
property” (alteration omitted) (emphasis added) (internal quotation marks and citation
omitted)); see also Paulson, 745 P.2d at 361 (holding that the defendant did not have to
show an actual claim to title in order to file a notice of lis pendens); 14 Richard R. Powell,
Powell on Real Property § 82A.02[4][a] at 82A-15 (Michael Allan Wolf ed., Matthew
Bender 2008) (1949) (“Any legal action at law or suit in equity that involves property that
will be affected by a judgment or decree may be the basis for applying the lis pendens
doctrine.”).
{12} High Mesa directs this Court’s attention to several cases it claims support its position.
These cases are distinguishable from the case before us. Although the district court in Ruiz
v. Varan found that the notice of lis pendens was improperly filed in part because “a claim
of title was never involved in the [underlying] litigation[,]” the actual issue being addressed
on appeal involved the measurement of damages. 110 N.M. 478, 479-80, 797 P.2d 267, 268-
69 (1990). The Supreme Court never addressed an issue of statutory construction under the
lis pendens statute, and the damages issue in Ruiz is not relevant to the issue raised by High
Mesa in the present case. In Moseley v. Superior Court, 223 Cal. Rptr. 116, 116-17 (Ct.
App. 1986), the underlying suit giving rise to the filing of the notice of lis pendens involved
a lawsuit seeking to repeal an amendment to a local law enacted by the county board of
supervisors that could ultimately have an effect on 491 condominium units governed under
the provisions of said law. The trial court held the lawsuit “did not affect title or right of
possession” of the properties. Id. at 117. The California appellate court agreed and held that
the underlying suit attacking the legality of the law had only a potential impact on the title
to the property identified in the lis pendens and was too remote and indirect to meet the
requirement of affecting the title or right of possession of the property as set forth in the lis
pendens code. Id. at 117-19. Unlike the underlying suit in Moseley, the appeal in this case
will directly affect the title to the subdivision.
5
{13} McCarthy v. Hurley, 510 N.E.2d 779, 781-82 (Mass. App. Ct. 1987) is the most
analogous case cited by Defendants. The court in McCarthy held that an appeal challenging
the lawfulness of a subdivision plat approved by town agencies did not affect the title for
purposes of filing a notice of lis pendens when the appealing party did not have an interest
in the title of the property. Id. This holding represents a split among various jurisdictions
regarding what is necessary to justify filing a notice of lis pendens. See, e.g., N. Coast Bus.
Park v. Super. Ct., 205 Cal. Rptr. 81, 82 (Ct. App. 1984) (holding that the party filing suit
must have a real interest in the property that affects the title to the property to support the
filing of a notice of lis pendens). On the surface, the holding in McCarthy seems to be
directly contrary to our position in this case. However, a closer reading of McCarthy reveals
that the Massachusetts statutory scheme for public notice in the context of subdivision
development approvals justified the limitation imposed by the court for the filing of a notice
of lis pendens in land development appeals. In Massachusetts, there are separate provisions
for notifying potential purchasers of litigation involving the subject property. McCarthy,
510 N.E.2d at 781 (explaining that for cases involving the subdivision control statute, G.L.
c. 41, § 81BB, the subdivision control act “provides for notice of such litigation to the public
at large by requiring the filing of notice with the town clerk of any appeal from a subdivision
approval”). In addition, it is unlikely the subdivision would be developed in lieu of a
pending appeal. Id. at 782 (explaining that G.L. c. 41, § 81X prohibits the recording of a
subdivision plat unless the city or town clerk certifies that a final judgment has been entered
in any appeal of the final plat approval). Thus, the Massachusetts public is not solely reliant
on the notice of lis pendens for notification of pending litigation in situations like the present
case. With public protections in place, the McCarthy court determined the lis pendens
statute was not intended to include suits that were covered under the subdivision control
statute and did not involve claims of an interest in title. Id. Since we do not have these same
statutory protections in New Mexico, we are not persuaded to follow the holding of the court
in McCarthy.
{14} The factual circumstances of the case before us provide an excellent example of why
the lis pendens statute applies to all claims that would directly affect the title to a specific
parcel of real property. Although Patterson did not have a personal interest in the title to the
subdivision, it is not disputed on appeal that Patterson had standing to file the appeal in
district court. See NMSA 1978, § 47-6-15(B) (2005) (stating that “[a] party who is or may
be adversely affected by a decision of the board of county commissioners may appeal to the
district court”). The notice of lis pendens served as a republication of the pending appeal.
Without the notice of lis pendens or some other form of legal notification filed with the
county clerk’s office, the public and potential purchasers would not have known that the
approval of the subdivision and title to the resulting lots were tied up in litigation.
Numerous unknowing parties could have been injured if High Mesa had proceeded with lot
sales before the district court ruled on the validity of the preliminary plat approval. Instead,
the notice of lis pendens in the real property records with the county clerk alerted the public
to the pending litigation.
{15} Patterson’s appeal in this case fits squarely within our interpretation of Section 38-1-
6
14. The purpose of High Mesa’s plat application was to divide a large parcel of land into
smaller, individual lots, see NMSA 1978, § 47-6-2(K), (M) (2009), and to describe the
placement of utility and infrastructure easements, roads, land boundaries, and uniform
restrictions upon subsequent use of the property. See NMSA 1978, §§ 47-6-3 (1996), 47-6-5
(1996), 47-6-11 (2009), 47-6-19 (1996). As a result of the subdivision process, title for High
Mesa’s larger parcel of property would have been altered. Patterson’s appeal sought to limit
or prevent the division of High Mesa’s larger parcel of land into smaller lots. The titles to
the subdivided lots were clearly subject to change based upon the district court’s ruling in
Patterson’s appeal, and therefore the title was affected by the suit. Cf. Hammersley, 610
P.2d at 95-97 (holding that a proceeding to enforce adherence to building code requirements
set forth in restrictive covenants affected title to the property).
Failing to Seek a Stay Under Rule 1-074(S)
{16} High Mesa next asks us to reverse the district court’s judgment because Defendants
never sought a judicial order staying the proceedings under Rule 1-074(S). High Mesa
argues that since the notice of lis pendens effectively acted as a stay when it clouded the
subdivision title, Defendants should have followed the requirements for filing a stay under
Rule 1-074(S). High Mesa’s argument that Defendants were trying to effect a stay via a
notice of lis pendens is incorrect. High Mesa confuses the markedly different reasons for
a stay and a notice of lis pendens. Defendants were not seeking a stay of High Mesa’s
preliminary subdivision plat. Such an action would have stopped High Mesa from taking
any further action based upon its preliminary plat approval. Instead, Defendants, in filing
the notice of lis pendens, were only notifying the public and any subsequent purchasers of
the lawful appeal that could affect title to High Mesa’s property. Although purchasers may
choose to wait or postpone their closings until the administrative appeal is resolved, High
Mesa would not be prevented from proceeding with the approval process beyond the
preliminary phase.
{17} Defendants did not have an obligation to seek a stay in connection with the appeal.
Rule 1-074(S) states that a “party appealing a decision or order of an agency may petition
the district court for a stay of enforcement of the order or decision of the agency.”
(Emphasis added.) Under Rule 1-074(S), parties have discretion in requesting a stay because
no language in the rule under Subsection (S) requires a party to seek a stay during an
administrative appeal. Defendants were given the right to decide whether they wanted to ask
the court to issue a stay and stop the administrative process while the appeal was pending.
Defendants were under no obligation to seek a stay. Furthermore, the district court has
discretion to award a stay. Id. (“Upon notice and hearing, the district court may grant a stay
of enforcement of the order or decision of the agency[.]”). High Mesa has failed to provide
us with any authority for its position that Defendants were required to obtain a stay under
Rule 1-074(S) prior to filing the notice of lis pendens. See In re Adoption of Doe, 100 N.M.
764, 765, 676 P.2d 1329, 1330 (1984) (stating that if a party did not present the appellate
court with authority to support its argument, the court will assume no such authority exists).
We conclude Defendants did not err in failing to obtain a stay under Rule 1-074(S) prior to
7
filing the notice of lis pendens.
Summary Judgment was Proper
{18} We have concluded that Defendants’ filing of the notice of lis pendens was not
improper. As a result, High Mesa has failed to prove an element of its malicious abuse of
process claim. See Durham v. Guest, 2009-NMSC-007, ¶ 29, 145 N.M. 694, 204 P.3d 19(explaining that one of the elements for the tort of malicious abuse of process is “the use of
process in a judicial proceeding that would be improper in the regular prosecution or defense
of a claim or charge”). Consequently, the district court did not err in granting summary
judgment on this claim.
{19} In order to prove the prima facie tort claim, High Mesa had to prove Defendants’
filing of the notice of lis pendens was committed “with the intent to injure [them], or, in
other words, without justification[.]” Schmitz v. Smentowski, 109 N.M. 386, 395, 785 P.2d
726, 735 (1990). In its complaint, High Mesa, without citing any evidence, alleged that
Defendants intended for the recording of the notice of lis pendens to injure them. On appeal,
High Mesa continues to argue that Defendants acted without justification in filing the notice
of lis pendens and that “Defendants’ requisite injurious intent could be inferred from their
conduct in bypassing the stay provisions of Rule 1-074(S)[.]” We have already concluded
that Defendants’ filing of a notice of lis pendens was appropriate and that Defendants were
not obligated under Rule 1-074 to seek a stay before filing a notice of lis pendens. See
Lexington Ins. Co. v. Rummel, 1997-NMSC-043, ¶ 12, 123 N.M. 774, 945 P.2d 992 (stating
that in proving prima facie tort, “[p]laintiffs bear a heavy burden to establish intent to
injure”). High Mesa also argues that the district court should not have granted summary
judgment on the prima facie tort claim since Defendants did not move for summary
judgment on that claim. We disagree because the district court could sua sponte grant
summary judgment as long as summary judgment was proper. See Martinez v. Logsdon, 104
N.M. 479, 483, 723 P.2d 248, 252 (1986) (indicating that the district court could sua sponte
grant summary judgment since there were no material issues of fact). As a result, the district
court did not err in granting summary judgment in favor of Defendants on the prima facie
tort claim.
CONCLUSION
{20} We affirm the district court for the foregoing reasons.
{21} IT IS SO ORDERED.
____________________________________
TIMOTHY L. GARCIA, Judge
WE CONCUR:
8
____________________________________
MICHAEL E. VIGIL, Judge
____________________________________
ROBERT E. ROBLES, Judge
Topic Index for High Mesa Gen. P'ship v. Patterson, No. 28,802
CP CIVIL PROCEDURE
CP-SJ Summary Judgment
PR PROPERTY
PR-LP Lis Pendens
PR-SU Subdivisions
PR-TL Titles
TR TORTS
TR-MA Malicious Abuse of Process
TR-PF Prima Facie Tort
ST STATUTES
ST-IP Interpretation
9