Debral Realty, Inc. v. DiChiara

• Citation: 383 Mass. 559,420 N.E.2d 343
• Parties: DEBRAL REALTY, INC. v. Salvy J. DiCHIARA, individually & as trustee, 1 et al. 2 (and a consolidated case 3 ).
• Decision Date: 06 May 1981
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 343

420 N.E.2d 343

383 Mass. 559

DEBRAL REALTY, INC. v. Salvy J. DiCHIARA, individually & as trustee,¹ et al. ² (and a consolidated case ³).

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Feb. 4, 1981.

Decided May 6, 1981.

Peter A. Johnson, Boston, for South Middlesex Ass'n of Retarded citizens.

George O. Gregson, Saugus (Richard M. Magnan, Andover, with him), for Salvy J. DiChiara and another.

Harvey S. Fishman for Debral Realty, Inc.

Brian T. Kenner, Boston (Mary K. Ryan, Boston, with him), for Andrew J. Lane.

Sumner Darman, Robert D. Cohan and Cynthia L. Hanley, Boston, for The Commercial Law League of America, amicus curiae, submitted a brief.

Before HENNESSEY, C. J., and BRAUCHER, WILKINS, LIACOS and ABRAMS, JJ.

HENNESSEY, Chief Justice.

The sole question presented for our resolution is whether the Massachusetts lis pendens procedure, G. L. c. 184, § 15, violates the due process clause of the Fourteenth Amendment to the United States Constitution. We hold it does not.

These two cases are before us on a report from a judge of the Superior Court, pursuant to Mass.R.Civ.P. 64, 365 Mass. 831 (1974), seeking review of the judge's ruling upholding the constitutionality of the lis pendens statute. Given the limited scope of the question reported, we need not engage in an extended discussion of the facts of the particular cases. ⁴ Suffice it to say that each case involves a suit over title to real estate, during which one of the parties to the suit filed a memorandum of lis pendens in the appropriate registry of deeds. The property owners in each case unsuccessfully moved to have the lis pendens discharged on the ground that the procedure set forth in G. L. c. 184, § 15, authorizing the ex parte filing of a memorandum of lis pendens without notice or an opportunity to be heard, is an unconstitutional deprivation of property.

Lis pendens means "pending suit." Under the common law doctrine of lis pendens, the mere existence of litigation involving title to real property was deemed constructive notice to the world, so that anyone who purchased the disputed property while the suit was pending was bound by the judgment ultimately rendered. See Steele v. Estabrook, 236 Mass. 252, 254-255, 128 N.E. 23 (1920); Wight v. Packer, 114 Mass. 473, 474 (1874); Haven v. Adams, 8 Allen 363, 367 (1864).

General Laws c. 184, § 15, first appearing in St. 1877, c. 229, ameliorated the harsh effects of the common law rule on good faith transferees unaware of pending litigation concerning the property. Under the statute, the judgment of the court in litigation affecting real property is no longer binding on those acquiring an interest in the property unless a memorandum of lis pendens was filed in the registry of deeds before the acquisition, reciting the names of the litigants, the court in which the suit is pending, the date the suit was brought, and a description of the real property liable to be affected by the suit. ⁵ A memorandum of lis pendens may be filed only when litigation "affects the title to real property or (its) use and occupation." Once the underlying litigation is terminated, whether by a judgment on the merits, dismissal, or other final disposition, a certificate of the disposition may be recorded in the registry of deeds in which the lis pendens was filed. G. L. c. 184, § 16. ⁶

The statute is cast in terms of a limitation on the scope of the common law rule; it does not purport to create a new right, interest, or remedy in the litigant filing the memorandum of lis pendens. By putting anyone interested in real estate that is in dispute on notice of the dispute, the statute ensures that a prospective third-party transferee can, with the exercise of reasonable prudence, acquire information relevant to a decision whether to consummate the transaction.

The property owners in the cases before us do not challenge the logical purpose of the lis pendens statute; they agree that notice of pending litigation affecting title to real estate and the orderly recording of that notice are beneficial to the public. They contend rather that the filing of a memorandum of lis pendens restricts their ability to sell or encumber their property, depriving them of a significant property interest. Given this deprivation, the property owners claim that the statutes governing lis pendens are constitutionally defective in their failure to provide an opportunity for a hearing prior to the filing of the memorandum in the registry of deeds. ⁷ This constitutional challenge derives largely from decisions of the United States Supreme Court invalidating statutory prejudgment creditor remedies as violative of the due process clause of the Fourteenth Amendment. Sniadach v. Family Fin. Corp. of Bay View, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) (garnishment of wages). Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) (replevin of personal property). North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975) (garnishment of bank account). Cf. Mitchell v. W. T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974) (upholding statute allowing sequestration of personal property under a vendor's lien).

The thrust of these Supreme Court cases is that when, as a result of State action, an owner of property is deprived of a significant property interest, the due process clause of the Fourteenth Amendment is implicated so as to require notice and some kind of timely hearing. In Sniadach, for example, the State garnishment procedure enabled a creditor to freeze half the wages due an alleged debtor, without according the latter any opportunity to be heard. In articulating the basis for the Court's holding that this procedure did not conform to procedural due process requirements, Justice Harlan explained that "(t)he 'property' of which petitioner has been deprived is the use of the garnished portion of her wages during the interim period between the garnishment and the culmination of the main suit. Since this deprivation cannot be characterized as de minimis, she must be accorded the usual requisites of procedural due process: notice and a prior hearing" aimed at establishing the probable validity of the underlying claim (emphasis in original). 395 U.S. 342-343, 89 S.Ct. at 1823 (Harlan, J., concurring).

The Supreme Court later applied the Sniadach rationale to other situations in which the State, in aid of a creditor, deprived a property owner of actual possession and enjoyment of tangible personal property. See Fuentes v. Shevin, supra (invalidating statute authorizing State agents to seize personal property in possession of an alleged debtor, virtually at will of creditor); North Georgia Finishing, Inc. v. Di-Chem, Inc., supra (striking down garnishment statute under which corporate bank account was impounded and put totally beyond use of depositor during pendency of litigation on alleged debt.) ⁸

No deprivation of comparable magnitude has taken place here. The filing of a memorandum of lis pendens does not result in seizure of the property or dispossession of the property owner. Nonetheless, a deprivation at the hands of the State need not reach the magnitude of a seizure to fall within the scope of the due process clause. See Fuentes v. Shevin, supra at 91 n. 23, 92 S.Ct. at 1999 n. 23. Thus we must consider the nature of the deprivation alleged here.

A memorandum of lis pendens, like an attachment of real estate, temporarily restricts the power of a landowner to sell his or her property, by depriving the owner of the ability to convey clear title while the litigation is pending. ⁹ Besides burdening the right of alienation, the existence of a lis pendens notice interferes with the owner's ability to obtain financing on the property. In the attachment context, the impairment of both marketability and mortgageability has been viewed as a deprivation of a significant property interest within the protection of the Fourteenth Amendment, leading to judicial invalidation of State statutory procedures that authorize prejudgment attachments of real estate without first giving the property owner notice and an opportunity to be heard. See, e. g., Bay State Harness Horse Racing & Breeding Ass'n v. PPG Indus., Inc., 365 F.Supp. 1299 (D. Mass.1973) (three-judge court); M P I, Inc. v. McCullough, 463 F.Supp. 887, 894-901 (N.D. Miss.1978); Terranova v. Avoco Financial Servs. of Barre, Inc., 396 F.Supp. 1402 (D. Vt.1975); Gunter v. Merchants Warren Nat'l Bank, 360 F.Supp. 1085 (D. Me.1973); Clement v. Four North State St. Corp., 360 F.Supp. 933 (D.N.H.1973) (three-judge court). Contra, Central Security Nat'l Bank v. Royal Homes, Inc., 371 F.Supp. 476 (E.D. Mich.1974). ¹⁰ The Supreme Court of at least one State has invalidated lis pendens procedures on the same ground. Kukanskis v. Griffith, 180 Conn. 501, 430 A.2d 21 (1980). Contra, Batey v. Digirolamo, 418 F.Supp. 695 (D. Hawaii 1976); George v. Oakhurst Realty, Inc., R. I., 414 A.2d 471 (1980); Empfield v. Superior Court of Los Angeles County, 33 Cal.App.3d 105, 108 Cal.Rptr. 375 (1973).

Although we acknowledge the substantial economic effects that can result from the filing of a lis pendens notice (effects that mirror those resulting from the use of a real estate attachment), we do not think that these effects constitute a significant enough deprivation by the State so as to require that the landowner be given an opportunity to be heard in advance of filing.

Fuentes, Sniadach, North Georgia, and the real estate attachment cases cited above all involved a private dispute between private parties in which the State, through some statutory mechanism, stepped in for the purpose of aiding one side to the dispute. ¹¹ Here, although we have a private dispute between private parties, the mechanism added by the State is not designed to aid either side in the dispute. Rather, the lis pendens mechanism is...