S.B. McLaughlin & Co., Ltd. v. Tudor Oaks Condominium Project

Decision Date15 June 1989
Docket NumberNo. 88-5424MN,88-5424MN
Citation877 F.2d 707
PartiesS.B. McLAUGHLIN & COMPANY, LTD., Appellant, v. TUDOR OAKS CONDOMINIUM PROJECT, ABIO Holdings (Minnesota), Inc., John Cochrane, KSCS Properties, Inc., and John Does 1-5, Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Wood R. Foster, Jr., Minneapolis, Minn., for appellant.

Ronald D. Alley, St. Paul, Minn., for appellees.

Before LAY and MARKEY, * Chief Judges, and BEAM, Circuit Judge.

MARKEY, Chief Judge.

S.B. McLaughlin & Company, Ltd. (McLaughlin) appeals from an order of the district court 1 cancelling McLaughlin's notice of lis pendens and enjoining the filing of further such notices. We affirm.

I. BACKGROUND

On June 11, 1987, McLaughlin sued Tudor Oaks Condominium Project, ABIO Holdings (Minnesota), Inc., John Cochrane, KSCS Properties, Inc., and John Does 1-5 (collectively Tudor) alleging that a complex relationship, the details of which are irrelevant on this appeal, gave rise to a constructive trust in McLaughlin's favor. McLaughlin filed a notice of lis pendens and Tudor moved to cancel that notice and to enjoin its refiling.

On July 28, 1988, the district court held a hearing at which it indicated that Eighth Circuit standards favored the granting of a temporary restraining order (TRO). See Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 112 (8th Cir.1981). Specifically, the court indicated that likelihood of success on the merits favors Tudor because the mere allegation of a constructive trust does not establish a sufficient "proprietary" interest under Minnesota law to support a notice of lis pendens; there would be irreparable harm to Tudor because the notice impedes borrowing necessary to complete Tudor's condominium property; the balance of hardships favors Tudor because further investment enhances McLaughlin's interest in the property; and the public interest would not be disserved by a grant of Tudor's motion.

On August 9, 1988, the district court granted a ten day TRO that cancelled the notice of lis pendens, enjoined further notices of lis pendens or "any other instrument creating a lien, encumbrance, or cloud" on title to the property, and required Tudor to notify the court and McLaughlin in writing before selling or transferring any portion of the property. On August 30, 1989, the court issued a preliminary injunction on the basis of its TRO analysis.

Cancellation of a notice of lis pendens being appealable under the collateral order exception to the final judgment rule, Keith v. Bratton, 738 F.2d 314, 316 (8th Cir.1984), McLaughlin appealed, saying the district court abused its discretion because a constructive trust is a sufficient proprietary interest to support a notice of lis pendens, and because Tudor failed to make showings sufficient to support a preliminary injunction.

II. ISSUES
A. Abuse of Discretion in Canceling the Notice

Under Minnesota law, a notice of lis pendens may be filed in "actions in which the title to, or any interest in or lien upon, real property is involved or affected, or is brought into question by either party...." Minn.Stat. Sec. 557.02. That statute has been interpreted to require that a party filing the notice claim a "proprietary interest" in the affected land. Painter v. Gunderson, 123 Minn. 342, 143 N.W. 911 (1913).

McLaughlin asserts that because its complaint sets forth a basis for declaring a constructive trust, it has a sufficient proprietary interest to support its notice. However, under Minnesota law, a mere claim to a constructive trust is not a sufficient proprietary interest. There must be a court judgment declaring the existence of a constructive trust. In Bly v. Gensmer, 386 N.W.2d 767, 769 (Minn.Ct.App.1986) (quoting Rehnberg v. Minnesota Homes, Inc., 236 Minn. 230, 234, 52 N.W.2d 454, 456 (1952)), the court said:

A constructive trust is not, in itself, construed as a lien on or as affecting title to property; it does not exist so as to affect the property held by the wrongdoer until it is declared by a court as a means of affording relief. If the appellants' complaint establishes that they are entitled to a constructive trust on the property, legal title would be held in trust for their benefit. An equitable lien would arise for the enforcement of this trust, thus bringing their cause of action within the lis pendens statute. (emphasis added).

* * *

* * *

The only lien that appellants can hope to have against the property in question is a lien that will be created as a result of the litigation between the parties,...

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  • Arc Iowa v. Reynolds
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • September 13, 2021
    ...apply the same standards to a motion for a TRO as to a motion for a preliminary injunction. See S.B. McLaughlin & Co. v. Tudor Oaks Condo. Project , 877 F.2d 707, 708 (8th Cir. 1989). A TRO "is an extraordinary remedy never awarded as of right." Winter v. Nat. Res. Def. Council, Inc. , 555 ......
  • HEATHER K. BY ANITA K. v. City of Mallard, Iowa, C 95-3048.
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    ...Sports Design and Development, Inc. v. Schoneboom, 871 F.Supp. 1158, 1162 (N.D.Iowa 1995) (citing S.B. McLaughlin & Co. v. Tudor Oaks Condominium Project, 877 F.2d 707, 708 (8th Cir.1989)). Those standards in this circuit are set out in the seminal decision in Dataphase Sys., Inc. v. CL Sys......
  • Frazier v. Kelley
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Eastern District of Arkansas
    • May 19, 2020
    ...to a request for a preliminary injunction as to a request for a temporary restraining order. See S.B. McLaughlin & Co. v. Tudor Oaks Condo. Project , 877 F.2d 707, 708 (8th Cir. 1989). A preliminary injunction "is an extraordinary remedy, and the burden of establishing the propriety of an i......
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    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • October 8, 2021
    ...apply the same standards to a motion for a TRO as to a motion for a preliminary injunction. See S.B. McLaughlin & Co. v. Tudor Oaks Condo. Project , 877 F.2d 707, 708 (8th Cir. 1989). The Court evaluates four factors: "(1) the threat of irreparable harm to the movant; (2) the state of the b......
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