Meritage Companies v. Gross

2017 UT App 223THE UTAH COURT OF APPEALS
MERITAGE COMPANIES LLC,
Appellant,
v.
ROBERT GROSS AND AK MERITAGE COMPANIES LLC,
Appellees.
Opinion
No. 20160381-CA
Filed November 30, 2017
Second District Court, Ogden Department
The Honorable Ernest W. Jones
No. 150906138
M. Darin Hammond, Attorney for Appellant
David C. Wright and Brooke M. Wangsgard,
Attorneys for Appellees
JUDGE DIANA HAGEN authored this Opinion, in which JUDGES
KATE A. TOOMEY and DAVID N. MORTENSEN concurred.
HAGEN, Judge:
¶1 Meritage Companies LLC (Meritage) is embroiled in
litigation in Alaska. The adverse parties in that litigation, Robert
Gross and AK Meritage Companies LLC (collectively, AK
Meritage), filed a lis pendens in Utah, claiming the action
pending in Alaska potentially affects Utah real estate. Meritage
filed a motion in a Utah district court seeking several forms of
relief related to the lis pendens. The district court denied that
motion, and Meritage appeals. We affirm.
BACKGROUND
¶2 AK Meritage recorded a lis pendens in Weber County,
Utah, concerning two parcels of land located in North Ogden
Meritage Companies v. Gross
(collectively, the North Ogden Properties). Meritage is listed as
owner on the title to the North Ogden Properties and is in the
process of developing those parcels. The lis pendens gave
“notice . . . of an action affecting title to” the North Ogden
Properties and referenced an Alaska lawsuit captioned Meritage
Companies, LLC (Alaska entity 1001428) and Jack Barrett v. Robert
“Bob” Gross and AK Meritage Companies, LLC (Alaska entity 86426),
Case No. 3AN-15-8320 CI.
¶3 Meritage initiated this action by filing a Petition for
Nullification of Lis Pendens (the Petition) in the Second District
Court in Ogden, Utah. Meritage claimed that the lis pendens was
delaying its development project and filed a motion seeking to
release the lis pendens or, in the alternative, to require AK
Meritage to post sufficient guarantee (the Motion). In the
Motion, Meritage also requested an injunction, prohibiting AK
Meritage from maintaining the lis pendens or otherwise
attempting to encumber the North Ogden Properties. After
hearing argument and receiving evidence on the Motion, the
district court found that “the only [court] that has the authority
to release [the] lis pendens is . . . the Alaska court.” Accordingly,
the district court denied the Motion for release of the lis
pendens, posting of a guarantee, and injunctive relief.
ISSUES AND STANDARDS OF REVIEW
¶4 On appeal, Meritage challenges the denial of the three
types of relief sought in its Motion. First, Meritage contends that
the district court erred in denying its request for release of the lis
pendens. Second, Meritage contends that the district court erred
in denying its request for a guarantee. Both issues concern the
district court’s statutory interpretation and application and are
reviewed for correctness. See Bott v. Osburn, 2011 UT App 139,
¶ 5, 257 P.3d 1022 (“The proper interpretation and application of
a statute is a question of law which we review for correctness,
affording no deference to the district court’s legal conclusions.”
(citation and internal quotation marks omitted)).
20160381-CA 2 2017 UT App 223Meritage Companies v. Gross
¶5 Meritage also contends that the district court erred in
denying its request for injunctive relief. This issue is reviewed
for abuse of discretion. See Water & Energy Sys. Tech., Inc. v. Keil,
1999 UT 16, ¶ 6, 974 P.2d 821. An appellate court “will not
disturb a district court’s grant [or denial] of a preliminary
injunction unless the district court abused its discretion or
rendered a decision against the clear weight of the evidence.” Id.ANALYSIS
I. Denial of Release of Lis Pendens
¶6 Meritage contends the district court erred in ruling that
only the Alaska court has authority to review a motion to release
the lis pendens recorded on the North Ogden Properties.
¶7 A lis pendens is a notice of a pending action that affects
“the title to, or the right of possession of, real property.” Utah
Code Ann. § 78B-6-1303(1) (LexisNexis 2012).1 “It charges the
public with notice of outstanding claims and causes one who
deals with property involved in pending litigation to do so at his
peril.” Hidden Meadows Dev. Co. v. Mills, 590 P.2d 1244, 1247
(Utah 1979). Under Utah Code section 78B-6-1304(1), a party to
an action “may make a motion to the court in which the action is
pending to release the notice.”
1. References to the lis pendens statute concern the version in
effect when the notice was recorded in 2015. See Utah Code Ann.
§§ 78B-6-1303, 78B-6-1304 (LexisNexis 2012). The statute was
amended effective May 10, 2016. Id. (Supp. 2017). Under the
current version, a party may file a lis pendens only if the action
that affects real property is pending in federal or state courts in
Utah. Neither party suggests that this amendment affects the
validity of the lis pendens in this case, which was filed prior to
the change in the law.
20160381-CA 3 2017 UT App 223Meritage Companies v. Gross
¶8 The district court correctly interpreted this statute, ruling
that it did not have the authority to substantively address the
Motion to release the lis pendens. Under the statute, a party to
an action may move for release of a lis pendens only in “the
court in which the action is pending.” Utah Code Ann. § 78B-6-
1304(1). In the present case, the lis pendens gives notice of an
action pending in Alaska. Therefore, the district court properly
interpreted and applied Utah Code section 78B-6-1304(1) in
concluding that the only court with the authority to address the
Motion for release is the Alaska court.
¶9 Meritage also claims that the district court had authority
to adjudicate claims to the North Ogden Properties pursuant to
Utah Code section 78B-6-1301. Section 1301 allows a party to
bring an action to quiet title. While the Petition mentions the
term “quiet title,” it was expressly filed, not as a quiet title
action, but as a Petition for Nullification of Lis Pendens
“pursuant to Utah Code Annotated [section] 78b-6-1304.”
Neither the Petition nor the Motion refers to section 78B-6-1301.
¶10 Meritage further asserts that the court had authority to
dissolve the lis pendens under the Wrongful Lien Act. See
generally id. §§ 38-9-101 to -305 (2014). Although the Motion
mentioned the Wrongful Lien Act, this action was not filed as
such. A petition filed under the Wrongful Lien Act must “state
with specificity the claim that the lien is a wrongful lien and
shall be supported by a sworn affidavit of the record interest
holder.” Id. § 38-9-205(2). In the Petition, Meritage neither cited
the Wrongful Lien Act nor complied with its requirements.2
2. We note that review of a lis pendens under the Wrongful Lien
Act is limited to evaluating whether (1) the claimant filing the lis
pendens is a party to a pending action, and (2) the pending
action affects “title to, or the right of possession of, real
property.” Id. § 78B-6-1303. In making this determination, the
court confines its review to the face of the underlying claims. See
Winters v. Schulman, 1999 UT App 119, ¶¶ 18–22, 977 P.2d 1218;
(continued…)
20160381-CA 4 2017 UT App 223Meritage Companies v. Gross
Instead, Meritage filed a petition and motion to release the lis
pendens under section 78B-6-1304(1), which could only be filed
with the Alaska court. Therefore, the district court correctly
denied the Motion to release the lis pendens.
II. Denial of Guarantee
¶11 Meritage contends that the district court “mistakenly
ruled that no bond or guarantee should be posted in order to
maintain the Lis Pendens.” It argues that a bond was necessary
“because of the pending real estate development” that the lis
pendens allegedly impeded.
¶12 The governing statute for motions relating to a lis
pendens provides that “a court may require the claimant to give
the moving party a guarantee as a condition of maintaining the
notice.” Utah Code Ann. § 78B-6-1304(4). Assuming, without
deciding, that a motion seeking a guarantee can be brought in a
court other than one in which the underlying action is pending,
the statutory language is permissive. It was well within the
district court’s discretion to deny the request for a guarantee,
particularly in light of the fact that the merits of the underlying
action were not before it. Meritage has not shown that the
district court erred in interpreting or applying the governing
statute.
III. Denial of Injunctive Relief
¶13 Finally, we conclude that the district court did not exceed
its discretion when it denied Meritage’s request for injunctive
(…continued)
Eldridge v. Farnsworth, 2007 UT App 243, ¶ 50, 166 P.3d 639.
Here, the record establishes that AK Meritage is a party to the
Alaska action and has asserted counterclaims, alleging that the
North Ogden Properties are wrongfully titled in Meritage’s
name.
20160381-CA 5 2017 UT App 223Meritage Companies v. Gross
relief. Meritage asked the district court to order “that [AK
Meritage] may not maintain the Lis Pendens on the North
Ogden Properties and that [AK Meritage] may not further record
any other document encumbering [Meritage’s] real property
interest therein.” Meritage cannot subvert the statutory directive
of section 78B-6-1304 merely by recasting the Motion as a request
for injunctive relief. Because the district court did not have
authority under Utah Code section 78B-6-1304 to release the lis
pendens, the district court did not abuse its discretion when it
denied injunctive relief.
CONCLUSION
¶14 We conclude that the district court did not err in denying
Meritage’s Motion to release the lis pendens, to require a
guarantee, or to issue an injunction.
¶15 Affirmed.
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