Boca Petroco v. Petroleum Realty II, LLC

• Court: Georgia Supreme Court
• Writing for the Court: Hines
• Citation: Boca Petroco v. Petroleum Realty II, LLC, 678 S.E.2d 330, 285 Ga. 487 (Ga. 2009)
• Decision Date: 08 June 2009
• Docket Number: No. S08G2020.,No. S08G2043,,No. S08G2044.,No. S08G2025.,No. S08G2019.,S08G2019.,S08G2020.,S08G2025.,S08G2043,,S08G2044.
• Parties: BOCA PETROCO, INC. et al. v. PETROLEUM REALTY II et al. (five cases).

678 S.E.2d 330

285 Ga. 487

BOCA PETROCO, INC. et al. v. PETROLEUM REALTY II et al. (five cases).

No. S08G2019.

No. S08G2020.

No. S08G2025.

No. S08G2043,

No. S08G2044.

Supreme Court of Georgia.

June 8, 2009.

Morris, Manning & Martin, Robert P. Albert, Jeffrey K. Douglass, Atlanta, for appellants.

Swift, Currie, McGhee & Hiers, Bradley S. Wolff, Deborah D. Heald, Atlanta, Berger Singerman, Mitchell W. Berger, Fort Lauderdale, FL, Fred O. Goldberg, Miami, FL, for appellees.

HINES, Justice.

We granted certiorari to the Court of Appeals in the whole court case Boca Petroco v. Petroleum Realty II, 292 Ga.App. 833, 666 S.E.2d 12 (2008),¹ and related panel cases applying the whole court holding² to address the issue of whether a lis pendens may be filed in Georgia to give notice of litigation pending outside of Georgia that involves the Georgia property.³ Finding that a notice of lis pendens may not be filed in such situation, we affirm the judgments of the Court of Appeals.⁴

The facts giving rise to this litigation are detailed in the whole court opinion of the Court of Appeals. Boca Petroco v. Petroleum Realty II, supra at 834, 666 S.E.2d 12. In summary, the appeals stem from lawsuits in Florida between appellants Boca Petroco, Inc., Trico V Petroleum, Inc., and Trico VII Petroleum, Inc. (collectively "Boca"), and appellees Petroleum Realty II, LLC and Petroleum Realty V, LLC (collectively "PR") over respective lease rights for properties in several counties in Georgia, the properties to be used for the operation of gas stations and convenience stores. Boca filed notices of lis pendens against the properties, and PR, with mixed success, petitioned the various trial courts to cancel the notices of lis pendens. The Court of Appeals held that the notices of lis pendens were invalid because the Florida court lacked subject matter jurisdiction over the properties located in Georgia. Id. at 837(2), 666 S.E.2d 12. The holding by the Court of Appeals is sound.

As noted by the Court of Appeals, "[t]he phrase `lis pendens' means, literally, pending suit." Boca Petroco v. Petroleum Realty II, supra at 835, 666 S.E.2d 12. Its purpose is one of notice, that is, the aim is to inform prospective purchasers that real property is directly involved in a pending lawsuit, in which lawsuit there is some relief sought in regard to that particular property. Id. at 834, 666 S.E.2d 12. Lis pendens has its origins in the common law. Vance v. Lomas Mtg. USA, 263 Ga. 33, 35(1), 426 S.E.2d 873 (1993). At common law, in order to have a valid and effective lis pendens, certain requirements regarding the property at issue and the court adjudicating the legal dispute had to be satisfied. Walker v. Houston, 176 Ga. 878, 169 S.E. 107 (1933). Furthermore,

[t]he common law doctrine of lis pendens relied on notice in the actual pleadings filed with the court in initiating litigation of property interests. The doctrine imputed to all third parties constructive notice of the litigation and of the claims against property being asserted in the pleadings and bound third parties to the outcome of the litigation.

Boca Petroco v. Petroleum Realty II, supra at 835, 666 S.E.2d 12. The General Assembly has enacted legislation to address the filing of a lis pendens. Id. at 834-835, 666 S.E.2d 12. OCGA § 44-14-610 provides:

No action, whether seeking legal or equitable relief or both, as to real property in this state shall operate as a lis pendens as to any such real property involved therein until there shall have been filed in the office of the clerk of the superior court of the county where the real property is located and shall have been recorded by the clerk in a book to be kept by him for the purpose a notice of the institution of the action containing the names of the parties, the time of the institution of the action, the name of the court in which it is pending, a description of the real property involved, and a statement of the relief sought regarding the property.

In regard to this statute, the Court of Appeals concluded that "[n]otwithstanding OCGA § 44-14-610, Georgia continues to require a showing of the common law elements of lis pendens before finding that litigation gives rise to a valid lis pendens for which notice may be filed." Boca Petroco v. Petroleum Realty II, supra at 835, 666 S.E.2d 12. It did so based upon this Court's affirmation of the common law requirements for lis pendens which are found in Scroggins v. Edmondson, 250 Ga. 430, 432(2), 297 S.E.2d 469 (1982).⁵ There this Court stated:

To the existence of a valid and effective lis pendens, it is essential that three elements be present; that is, three material facts must concur: the property must be of a character to be subject to the rule; the court must have jurisdiction both of the person and the subject-matter; and the property involved must be sufficiently described in the pleadings. Further, the real property must be "involved" in the suit ... i.e., it must be property which is "actually and directly brought into litigation by the pleadings in a pending suit and as to which some relief is sought respecting that particular property."

Id. at 432(2), 297 S.E.2d 469 (citations and punctuation omitted; emphasis supplied.) And the Court in Scroggins v. Edmondson properly determined that the common law elements of lis pendens survive the statutory enactment. OCGA § 44-14-610 focuses on the mechanics of filing a notice of lis pendens and provides that recordation of the notice of lis pendens is necessary for it to be effective; it does not in any manner attempt to alter the prerequisites for such notice. See Culpepper v. Veal, 246 Ga. 563, 272 S.E.2d 253 (1980) (common law rule survives statute regarding same area of concern when statute does not directly address certain elements of common law rule).

A prerequisite is that "the court must have jurisdiction both of the person and the subject-matter." As the Court of Appeals noted, "[f]or the requirement of subject matter jurisdiction in Scroggins to have purpose, the `court' referred to must be the court before which the underlying litigation was filed." Boca Petroco v. Petroleum Realty II, supra at 837(2), 666 S.E.2d 12. Thus, the court at issue is the Florida court.

The remaining question now raised is the meaning of the mandate that the court involved in the underlying litigation have jurisdiction of the "subject-matter" itself. Boca urges that in articulating this jurisdictional requirement in Scroggins v. Edmondson, this Court did not mean the real property subject to the lis pendens, as the Court of Appeals concluded, but rather was referring to the trial court's power to adjudicate the dispute and to grant the relief requested, i.e., the general concept of subject matter jurisdiction. But, that is plainly not the case.

Under common law precepts, the involved court must have jurisdiction over the real property or res⁶ for which a notice of lis pendens is sought.⁷ Walker v. Houston, supra at 880, 169 S.E. 107. This is so because lis pendens involves,

the jurisdiction, power, or control which the court acquires over the property involved in the suit pending the continuance of the action and until its final judgment therein, has for its object the keeping of the subject, or res, within the power of the court until the judgment or decree shall be entered, and thus to make it possible [for courts of justice] to give effect to their judgments and decrees.⁸

Carmichael Tile Co. v. Yaarab Temple Building Co., 177 Ga. 318, 327-328(2), 170 S.E. 294 (1933). Accord Scarborough v. Long, 186 Ga. 412, 418-419(2), 197 S.E. 796 (1938).

As stated in Boca Petroco v. Petroleum Realty II,

[t]he United States Supreme Court noted long ago that a court in one state does not have subject matter jurisdiction over real property in another state and cannot directly affect the title of property in another state. And Florida courts have recognized that they lack jurisdiction over real property in other states.

Id. at 838(2), 666 S.E.2d 12. Yet, Boca urges that not permitting lis pendens to give notice of litigation outside the state undermines the public policy of affording greater protection to purchasers of Georgia property, thereby discouraging real estate and other business transactions, and is contrary to the view taken by a majority of states.

The states are split on the question of extraterritorial application of lis pendens. Jurisdictions that permit notices of lis pendens stemming from litigation outside the state have justified this expansion of the reach of common law lis pendens on policy considerations and/or in light of statutory provisions. See, e.g., TWE Retirement Fund Trust v. Ream, 198 Ariz. 268, 8 P.3d 1182, 1187(B)(1)(b) (Ariz.App. 2000) (statute permitting a party to "an action affecting title to real property" in Arizona to file notice of lis pendens does not limit filing based upon location of the action); Kerns v. Kerns, 53 P.3d 1157, 1160-1164(II) (Colo.2002) (plain language of Colorado statute permits a party in any action wherein relief affecting title to real property is claimed, to file lis pendens in the county where the Colorado real estate is located, and jurisdiction in which the action is brought is not relevant under statute); Winters v. Schulman, 977 P.2d 1218, 1223(1)(C) (Utah App.1999) (Utah statute not undermined by applying it to out-of-state judicial proceedings because it provides prospective purchasers of Utah real property with more protection); Belleville State Bank v. Steele, 117 Wis.2d 563, 345 N.W.2d 405 (1984) (because statutory lis pendens readily permits determination of any pending litigation affecting the land, "no reason therefore for statutory lis pendens, in contrast to the common law lis pendens, to be limited to the territorial jurisdiction of the court in which the action is pending"). Other states have remained fast to the common law principles of lis pendens. See, e.g., ...