State ex rel. Bannister v. Goldman

• Decision Date: 20 May 2008
• Docket Number: No. ED 90593.,ED 90593.
• Citation: 265 S.W.3d 280
• Parties: STATE of Missouri ex rel. Bonnie BANNISTER, Relator, v. The Honorable Steven H. GOLDMAN, Respondent.
• Court: Missouri Court of Appeals

265 S.W.3d 280

STATE of Missouri ex rel. Bonnie BANNISTER, Relator, v. The Honorable Steven H. GOLDMAN, Respondent.

No. ED 90593.

Missouri Court of Appeals, Eastern District, Writ Division Two.

May 20, 2008.

Application for Transfer to Supreme Court Denied July 15, 2008.

Application for Transfer Denied October 28, 2008.

Donald R. Carmody, Teresa Dale Pupillo, St. Louis, MO, for relator.

Angela N. Loehr, St. Charles, MO, for respondent.

LAWRENCE E. MOONEY, Presiding Judge.

The plaintiff and relator, Bonnie Bannister, petitioned for a writ of prohibition, requesting that the respondent judge be restrained from ordering the release of the lis pendens on her former home, which is the subject of litigation pending in the Circuit Court of St. Louis County. The trial court dismissed the buyer of the subject property from the plaintiff's claim in the underlying action, and that dismissal is on appeal before this Court following certification pursuant to Missouri Supreme Court Rule 74.01(b). We issued a preliminary order in prohibition staying release of the lis pendens to examine whether a lis pendens should remain in effect during appeal. However, we are presented with a more fundamental issue, the trial court's improper Rule 74.01(b) certification of a portion of the underlying litigation, which failed to dispose of one claim, or a distinct judicial unit, in the litigation. Because of this failure, the buyer's dismissal from the plaintiff's claim did not constitute a final judgment, despite the trial court's Rule 74.01(b) certification, and so cannot serve as the basis for release of the lis pendens. Therefore, the trial court exceeded its jurisdiction when it ordered the plaintiff to release the lis pendens. Our preliminary order in prohibition is made absolute.

Facts

The defendants, Pulaski Financial Corp. and Pulaski Service Corp. (collectively "the bank"), foreclosed on a deed of trust held on the home of Bonnie Bannister, the plaintiff and relator. The defendant S & P Properties, Inc. ("the buyer") purchased that property at a foreclosure sale. Four days later, the plaintiff filed suit against the bank and the buyer and filed a notice of lis pendens. The plaintiff alleged negligent misrepresentation, breach of contract, and wrongful foreclosure and on all counts sought damages and "a declaration that the foreclosure sale is null and void." The petition stated that the buyer "is made a party hereto in that it may claim some interest in the [p]roperty." In its answer, the buyer asserted the affirmative defense that it was an innocent third-party purchaser, unaware of any alleged irregularities or deficiencies in the sale. The buyer also asserted the affirmative defense that the bank had an absolute right to foreclose on the property because the plaintiff defaulted on the note secured by the deed of trust and failed to cure the default.

The bank filed a counterclaim against the plaintiff and a cross-claim against the buyer, interpleading the excess sale proceeds. The buyer in its answer to the bank's cross-claim averred that the "plaintiff filed a frivolous suit naming [the buyer] as a defendant and filed a lis pendens." The buyer sought recovery from the interpleaded funds for actual damages as a result of the lis pendens, as well as indemnification for its costs and attorney's fees.

The buyer then moved for judgment on the pleadings, alleging that it bought the property at the foreclosure sale without notice of any defects in the foreclosure proceedings or a purported forbearance agreement between the bank and the plaintiff. The trial court granted the buyer's motion, finding that it was an innocent purchaser of the foreclosed property and dismissing the buyer from the plaintiff's lawsuit. Pursuant to Missouri Supreme Court Rule 74.01(b), the trial court certified its decision regarding the buyer for appeal, finding no just reason for delay in determining that the plaintiff has no right to set aside the foreclosure sale or to claim damages from the buyer. The plaintiff timely appealed. The trial court then ordered release of the lis pendens on the subject property so that the buyer could sell the property free of the plaintiff's claim. The plaintiff filed a petition for an extraordinary writ and this Court issued its preliminary order in prohibition.

Analysis

A writ of prohibition is not issued as a matter of right, but is left to the sound discretion of the Court in which the petition has been filed. State ex rel. Linthicum v. Calvin, 57 S.W.3d 855, 856-57 (Mo. banc 2001); State ex rel. Harness v. Grady, 201 S.W.3d 48, 50 (Mo.App. E.D.2006). We will issue a writ of prohibition to prevent an abuse of judicial discretion, to avoid irreparable harm to a party, or to prevent exercise of extra-jurisdictional power. State ex rel. Green v. Neill, 127 S.W.3d 677, 678 (Mo. banc 2004); Harness, 201 S.W.3d at 50.

Section 527.060 RSMo. (2000) provides in pertinent part that:

In any civil action, based on any equitable right, claim or lien, affecting or designed to affect real estate, the plaintiff shall file for record, with the recorder of deeds of the county in which any such real estate is situated, a written notice of the pendency of the suit ... and the pendency of such suit shall be constructive notice to purchasers or encumbrancers, only from the time of filing such notice.

(Emphasis added.) The lis pendens doctrine preserves the situation as it existed when the litigation began so that effect may be given to the rights ultimately established. Bristow v. Thackston, 187 Mo. 332, 86 S.W. 94, 98 (1905). The lis pendens statute supplements the general recording statutes to protect third parties dealing in good faith in reliance on the public records from secret equitable rights, claims, or liens. Missouri State Life Ins. Co. v. Russ, 214 S.W. 860, 864 (Mo.1919). The property may still be conveyed while the lis pendens remains in effect. 14 Richard R. Powell, Powell on Real Property § 82A.01[1], at 82A-4 (Michael Allen Wolf ed., 2002). During the pendency of the litigation, however, potential buyers are placed on notice that the property may be subjected to the full extent of the relief sought. 14 id. § 82A.04[2], at 82A-22. The title of the lis pendens purchaser is not affected unless the suit is brought to a successful conclusion against the vendor through whom the purchaser derived title. Bristow, 86 S.W. at 98. Generally, only on final judgment can a party be compelled to release a lis pendens, State ex rel. Shannon v. Crouch, 645 S.W.2d 204, 204 (Mo.App. S.D.1983), and generally the right to appeal extends the time for which property remains subject to the lis pendens doctrine, 14 Powell § 82A.04[3], at 82A-22-82A-23.

The precise question of whether a lis pendens remains effective throughout appeal appears to be undecided in Missouri. Stating that the effect of an appeal is to continue the litigation, however, the Missouri Supreme Court in Carr v. Cates held that where a buyer with knowledge of a lawsuit purchased the subject property while the suit was pending on appeal, the buyer would be bound by the judgment that may be rendered against the person from whom the buyer derived title. 96 Mo. 271, 9 S.W. 659, 660 (1888).

Other jurisdictions have expressly held that a lis pendens should remain in place during the pendency of appellate review. See, e.g., Zweber v. Melar Ltd., 276 Wis.2d 156, 687 N.W.2d 818, 821 (2004) (holding that "a lis pendens may not be discharged until all opportunities for appeal expire or are exhausted, except as provided otherwise by statute."); Vonmitschke-Collande v. Kramer, 841 So.2d 481, 482 (Fla.Dist.Ct. App.2002) (concluding that lis pendens was in effect and gave notice of the litigation where property was sold while the case was on appeal); Vance v. Lomas Mortgage USA, Inc., 263 Ga. 33, 426 S.E.2d 873, 875 (1993) (holding that valid notice of lis pendens remains effective as constructive notice of the action until final judgment has been entered and the time for appeal has expired); Salas v. Bolagh, 106 N.M. 613, 747 P.2d 259, 261 (1987) (holding that "the lis pendens established by the suit continues until expiration of the time for appeal or until final disposition of the case by the appellate court."); Group Purchases, Inc. v. Lance Invs., Inc., 685 S.W.2d 729, 731-32 (Tex.App.1985) ("The effect of the lis pendens continues through the appeal of the judgment."); Ashworth v. Hankins, 241 Ark. 629, 408 S.W.2d 871, 873 (1966) (holding that "the statutory effect of a lis pendens follows the litigation to its conclusion," which is "not completed until appellate review is had in cases where appeals are perfected"); Hart v. Pharaoh, 359 P.2d 1074, 1079 (Okla.1961) (concluding that lis pendens continues through the time within which appeal may be taken). But see, e.g., Mix v. Superior Court, 124 Cal.App.4th 987, 21 Cal.Rptr.3d 826, 828 (2004) (concluding that statute requires expungement of lis pendens pending appeal where the claimant has lost at the trial level); American Town Center v. Hall 83 Assoc., 912 F.2d 104, 110 (6th Cir.1990) (concluding that where district court determined that plaintiff was unlikely to prevail on merits and equities favored cancellation, district court had jurisdiction to cancel lis pendens once complaint dismissed, despite plaintiff's appeal); Title Guar. and Ins. Co. v. Campbell, 106 N.M. 272, 742 P.2d 8, 12 (1987) (noting a split of authority on the question of whether a lis pendens continues in effect during appeal, but not deciding the issue).

Furthermore, the result here of the trial court's order to release the lis pendens is to summarily adjudicate the plaintiff's action to reclaim the foreclosed property. If the lis pendens is released, then the buyer will be free to sell the property unencumbered by the plaintiff's claim, and the plaintiff's equitable remedy—to set aside the foreclosure sale and reclaim the property—will be...