McKnight v. Superior Court

• Decision Date: 19 July 1985
• Parties: William McKNIGHT, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent, Julie FABER, Real Party in Interest. B011834.
• Court: California Court of Appeals Court of Appeals

Page 909

215 Cal.Rptr. 909

170 Cal.App.3d 291

William McKNIGHT, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent, Julie FABER, Real Party in Interest.

B011834.

Court of Appeal, Second District, Division 4, California.

July 19, 1985.

Williams, Williams & Furukwa, Los Angeles, David L. Brandon, Encino, for petitioner.

No appearance for respondent.

Barbra Reinecke, Encino, for real party in interest.

WOODS, Presiding Justice.

Petitioner is the plaintiff in an action seeking, in part, to set aside a conveyance of real property by his judgment debtor as fraudulent and to impose a constructive trust thereon in his favor. He asks this court to issue a peremptory writ of mandate to vacate an order that granted defendant grantee's motion to expunge his notice of lis pendens. The alternative grounds for expungement at issue are (1) that plaintiff commenced and prosecuted his action in bad faith (Code Civ.Proc., § 409.1, subd. (b)), ¹ and (2) that plaintiff's failure to comply with the lis pendens service and filing requirements of section 409, subdivisions (c) and (d) render the notice "void and invalid."

We conclude the record does not contain sufficient evidence to support a finding that plaintiff commenced his action in bad faith but that failure to comply with subdivisions (c) and (d) of section 409 justifies expungement.

The material facts are simple and not in dispute.

Plaintiff filed his verified complaint in June 1982, alleging that in 1976 defendant Melville Farber (hereafter Melville) became indebted to him on a loan secured by certain real property. Melville defaulted on the loan and plaintiff filed prior Los Angeles Superior Court action C 172157 to recover. In December 1976, plaintiff obtained a pre-judgment writ of attachment in the amount of $50,000 against the subject real property owned by Melville and his wife, Julie Farber (hereafter Julie) as community property. Under the terms of an uncontested final judgment of dissolution of marriage entered May 28, 1981, Melville was confirmed to own a community property interest in the subject residence. Pursuant to written stipulation between plaintiff and Melville in the prior action, the effect of plaintiff's attachment lien was extended to March 1, 1982. On January 18, 1982, judgment was entered in favor of plaintiff and against Melville in the amount of $70,314.

The complaint further alleges that on March 16, 1982, defendant Melville filed a notice of appeal from the January 18 judgment. On or about March 23, 1982, Melville quitclaimed his interest in the subject real property to Julie. On March 30, 1982, plaintiff recorded his abstract of judgment.

On April 6, 1982, an order was entered in the dissolution of marriage proceeding between Melville and Julie modifying their November 18, 1980 uncontested "Interlocutory Final Judgment for [sic] Dissolution of Marriage" to provide that the subject real property described therein as community property was awarded to Julie as her separate property.

Upon these undisputed foundational facts, paragraph 34 of the complaint alleges that the March 23, 1982 quitclaim conveyance to Julie was "without a fair or any consideration." Paragraph 35 alleges "That said conveyance to defendant Julie Faber was made in pursuance of an agreement between said defendants to conceal the property of defendant Melville Farber and for the purpose of defrauding, hindering and delaying his creditors...." Paragraph 51 alleges that the purpose and effect of defendants' "general scheme and plan" was to render Melville insolvent and frustrate plaintiff's right of execution on the subject real property. Paragraph 46 alleges that defendant attorney Reinecke was the attorney representing both Melville and Julie in their prior uncontested dissolution of marriage proceeding. It was further alleged that Reinecke represented to plaintiff that plaintiff need not file an abstract of judgment on his January 18, 1982 judgment because Melville would be filing an undertaking in conjunction with his appeal from that judgment. This representation caused plaintiff to delay the recordation of an abstract of judgment until March 30, 1982.

Melville never posted an undertaking on appeal.

Plaintiff's judgment was affirmed. He seeks by his present action to reach whatever community property interest Melville had in the real property at the time of the allegedly fraudulent conveyance to Julie.

In conjunction with his action, plaintiff caused a notice of lis pendens to be recorded on the subject property on June 18, 1982.

In August 1982, defendants Julie and Reinecke filed an answer that denied the allegations of an agreement to convey for inadequate consideration to defraud Melville's creditors. They also denied that they represented to plaintiff that he need not file an abstract of judgment.

As an affirmative defense, defendants asserted that there is no relationship in law between the filing of an abstract of judgment and the judgment debtor posting an undertaking on appeal. Nothing alleged explained plaintiff's failure to record the abstract until after the appeal period and after Melville quitclaimed his interest in the subject real property.

Julie's January 26, 1985 motion to expunge lis pendens was premised upon two grounds. First, that plaintiff commenced and prosecuted the action in bad faith and for an improper purpose within the meaning of Code of Civil Procedure section 409.1, subdivision (b). Second, that plaintiff's failure to have satisfied the technical requirements of subdivisions (c) and (d) of section 409 renders the lis pendens "void and invalid as to any adverse party or owner of record." Specifically, plaintiff did not file a copy of the lis pendens with the trial court and did not file a proof of service showing pre-recordation service of the notice upon Julie or any other defendant.

In support of her first basis for expungement, Julie relies upon the fact that plaintiff did not file his abstract of judgment on the January 18, 1982 money judgment until March 30, 1982, when judgment debtor Melville had already quitclaimed his interest in the subject property to Julie. Defendant argues that the delay in filing the abstract was not barred by defendants' conduct and was due solely to the negligence of plaintiff's counsel. Thus, the present action was commenced in bad faith to force an improper settlement and cover-up the legal malpractice of plaintiff's counsel. Julie does not offer any analysis in support of her second contention that the "void and invalid" notice is subject to expungement.

Plaintiff's opposition relies upon the allegations of the verified complaint and contends, in general terms, that these allegations present a prima facie case potentially affecting title to the subject real property. Plaintiff replies to defendants' "technical defects" contention by pointing out that section 409.1, subdivisions (a) and (b) explicitly provide the two exclusive bases for expungement of lis pendens (action does not affect title to or the right of possession of the subject real property and bad faith maintenance of the action) and that subdivisions (c) and (d) of section 409 do not authorize expungement but merely provide that defectively served and filed notices of lis pendens are "void and invalid as to any adverse party or owner of record."

Respondent granted expungement by minute order dated February 22, 1985. Neither this order nor the attorney-prepared order states the basis for the expungement. The record does not include a reporter's transcript.

Plaintiff timely filed his petition with this court, and we issued the alternative writ and temporarily stayed execution of the expungement order.

DISCUSSION

I

The record does not reveal the ground or grounds for the order for expungement. The petition challenges both of the alternative bases urged by defendants below. The return addresses only the "bad faith" issue and does not mention the issue of whether the technical defects of service and filing permit expungement. We therefore review both of the potential bases for the challenged order.

II

When a party moves to expunge lis pendens, pursuant to subdivision (b) of section 409.1, the burden is upon the recording party to demonstrate by a preponderance of the evidence that the action was commenced and prosecuted for a proper purpose and in good faith. (Code Civ.Proc., § 409.1, subd. (b); Malcolm v. Superior Court (1981) 29 Cal.3d 518, 528, 174 Cal.Rptr. 694, 629 P.2d 495.)

The "good faith or proper purpose" criterion of subdivision (b) of section 409.1 focuses upon the state of mind or motive of the plaintiff in maintaining his action. The two concepts are overlapping and may be held to be absent where the evidence shows that the action is maintained "primarily because of hostility or ill will" or "solely to deprive a person ... of a beneficial use of his property" or "for the purpose of forcing a settlement which has no relation to the merits of the claim." Absence of "good faith" in this context means that the plaintiff does not believe in the validity of his claim. (Malcolm v. Superior Court, supra, 29 Cal.3d at p. 527, 174 Cal.Rptr. 694, 629 P.2d 495.)

Lack of good faith may be demonstrated by the moving party's averment of extrinsic facts or by demonstration that plaintiff does not make out even a prima facie case in his complaint or supporting affidavits. Under this criterion, expungement may not turn upon the trial court's evaluation of the likely outcome of the action, e.g., no "mini-trial on the merits." A defendant may not rebut a plaintiff's prima facie showing simply by presenting counteraffidavits which controvert the plaintiff's evidence and raise triable issues of fact on the merits of the case. The court may, however, consider the patent lack of merit reflected in the complaint as evidence of bad faith. (Malcolm v. Superior Court, supra, 29 Cal.3d at pp. 528-529, 174 Cal.Rptr....