Williams v. Bartlett

• Decision Date: 15 March 1983
• Citation: 189 Conn. 471,457 A.2d 290
• Court: Connecticut Supreme Court
• Parties: Burch WILLIAMS et al. v. John R. BARTLETT, Jr., et al.

Page 290

457 A.2d 290

189 Conn. 471

Burch WILLIAMS et al. v. John R. BARTLETT, Jr., et al.

Supreme Court of Connecticut.

Argued Dec. 9, 1982.

Decided March 15, 1983.

Donald A. Mitchell, Danbury, for appellants (defendants).

Carter LaPrade, New Haven, for appellees (plaintiffs).

Before SPEZIALE, C.J., and PETERS, PARSKEY, SHEA and GRILLO, JJ. GRILLO, Associate Justice.

This appeal from the trial court's judgment denying an application to discharge a notice of lis pendens raises the following issues: (1) whether the lis pendens statute comports with procedural due process guarantees; (2) whether the trial court applied the correct standard by which the propriety of a notice of lis pendens is tested; and (3) whether the evidence presented is sufficient to sustain the trial court's decision.

The trial court could reasonably have found the following: In 1970 the plaintiff Burch Williams and the defendant John R. Bartlett, Jr. formed Barwil, Ltd., a limited partnership created under the laws of the state of Florida. The purpose of the partnership was to provide a vehicle for real estate investment. Bartlett became Barwil's general partner, while Williams became one of its limited partners. Between 1970 and 1975 Barwil acquired real property located in both Florida and Connecticut.

In 1975, it became apparent that some of Barwil's partners were interested in further investment only in relation to Florida realty, while others wished to pursue real estate investment opportunities solely in Connecticut. Accordingly, two new limited partnerships were formed under Florida law. The Florida real estate assets of Barwil were transferred to Suni Pines, Ltd., while the Connecticut real estate held by Barwil was to be conveyed to FWZ, Ltd. ¹ (hereinafter FWZ).

Under the certificate of partnership of FWZ, the three general partners of FWZ were the defendant John R. Bartlett, Jr., Barwil, Ltd., and Barwil Corporation, a Florida corporation whose president is John R. Bartlett, Jr. The plaintiff Burch Williams, a limited partner in FWZ, contributed approximately $110,000 to FWZ.

On May 13, 1981, the plaintiffs, who include Burch Williams and other limited partners of FWZ, instituted the present action against John R. Bartlett, Jr., FWZ and the Farview Builders Corporation of Connecticut, a Florida corporation whose president is John R. Bartlett, Jr. ² The complaint alleged, inter alia, that Bartlett (1) misrepresented the assets of FWZ and Barwil, Ltd. to his limited partners with the intent that they rely thereon; (2) conveyed real property in Connecticut rightfully belonging to FWZ to himself or entities which he controlled, including Farview Builders Corporation, for inadequate consideration; and (3) sold or mortgaged Connecticut real property rightfully belonging to FWZ without returning the proceeds to FWZ. The complaint described the affected real property as land known as Farview Farm and Georgetown I, II and III, located in the towns of Redding and Weston, Connecticut. In their prayer for relief, the plaintiffs seek, inter alia, (1) injunctive relief restraining the defendants from engaging in any transactions affecting title to the real property pending resolution of the action; (2) an injunction compelling conveyance to FWZ of the real property rightfully belonging to it; and (3) dissolution of FWZ, with winding up by the plaintiffs.

In conjunction with their complaint, the plaintiffs caused to be filed, on May 13, 1981, a notice of lis pendens on the land records where the disputed realty is located. The lis pendens describes three separate parcels of land, one of which is divided into multiple lots. Two of these parcels are held in the name of John R. Bartlett, Jr., with the exception of three lots, which are held in the name of Farview Builders Corporation. The remaining parcel is held in the name of Barwil, Ltd.

On June 1, 1981, the defendants Bartlett and Farview Builders Corporation applied for discharge of the notice of lis pendens. ³ Public Acts 1981, No. 81-8 § 2. Hearings on the defendants' application were held before the court, Sullivan, J., on June 15 and 22, 1981. After hearing the relevant evidence, the court concluded that there was probable cause that the plaintiffs would prevail in their action, and therefore denied the defendants' application for discharge of the notice of lis pendens. From this judgment the defendants take the present appeal.

The defendants first contest the constitutional validity of the lis pendens statute, General Statutes § 52-325, as amended by Public Acts 1981, No. 81-8. ⁴ They argue that the act, which provides only for a post-filing hearing and does not contain a bonding provision or any other mechanism whereby the property owner may substitute security to obtain release of the lis pendens, in constitutionally infirm under principles of procedural due process. We disagree.

We note, first, that due process "is not a technical conception with a fixed content unrelated to time, place and circumstances." Cafeteria & Restaurant Workers Local 473 v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961). Rather, it is a flexible doctrine, requiring "such procedural protections as the particular situation demands." Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972). The United States Supreme Court, in Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), created a three-part balancing test for determining what procedural safeguards are required by due process: (1) the private interests affected; (2) the risk of an erroneous deprivation of such interests by the present procedures, coupled with the probable value of additional or substitute safeguards; (3) the governmental interests, including the additional fiscal and administrative burdens which would be created by different procedural requirements. Id., 334-35, 96 S.Ct., 902-03; see Society for Savings v. Chestnut Estates, Inc., 176 Conn. 563, 572-73, 409 A.2d 1020 (1979). Moreover, in the context of a challenged sequestration procedure, the court has characterized the test as whether the statutory scheme "effects a constitutional accommodation [between] the conflicting interests of the parties." Mitchell v. W.T. Grant Co., 416 U.S. 600, 607, 94 S.Ct. 1895, 1900, 40 L.Ed.2d 406 (1974).

This court has previously considered the constitutional validity, under the fourteenth amendment to the federal constitution and article first, § 10 of the Connecticut constitution, of both a mechanics lien statute and the previous lis pendens statute. Roundhouse Construction Corporation v. Telesco Masons Supplies Co., 168 Conn. 371, 362 A.2d 778, vacated, 423 U.S. 809, 96 S.Ct. 20, 46 L.Ed.2d 29 (1975) (remanded to consider whether judgment based upon federal or state constitutional grounds, or both), aff'd on remand, 170 Conn. 155, 365 A.2d 393 (decision based on both state and federal constitutional grounds), cert. denied, 429 U.S. 889, 97 S.Ct. 246, 50 L.Ed.2d 172 (1976) (adequate state ground); Kukanskis v. Griffith, 180 Conn. 501, 430 A.2d 21 (1980). In both decisions, we held that the absence of statutory provisions providing the property owner with a hearing "at a meaningful time and in a meaningful manner" violated due process principles under both the federal and state constitutions. Roundhouse Construction Corporation v. Telesco Masons Supplies Co., supra, 385, 362 A.2d 778; Kukanskis v. Griffith, supra, 510-11, 430 A.2d 21.

Guided by these precedents, we turn to a consideration of whether the current lis pendens statute, with its provision for a post-filing hearing, comports with procedural due process. ⁵ In order to determine what constitutes a hearing at a meaningful time and in a meaningful manner, we look first to the nature of the property interest affected. Certainly the deprivation caused by the notice of lis pendens is considerably less severe than a total deprivation of the property interest, where due process mandates a pre-seizure hearing. E.g., Fuentes v. Shevin, 407 U.S. 67, 96, 92 S.Ct. 1983, 2002, 32 L.Ed.2d 556, reh. denied, 409 U.S. 902, 93 S.Ct. 177, 34 L.Ed.2d 165 (1972) (seizure of household goods). Nor can the interest at stake in the present case be construed as a deprivation of property essential to meet the owner's basic needs. See Goldberg v. Kelly, 397 U.S. 254, 264, 90 S.Ct. 1011, 1018, 25 L.Ed.2d 287 (1970) (termination of welfare benefits); Sniadach v. Family Finance Corporation, 395 U.S. 337, 341-42, 89 S.Ct. 1820, 1822-23, 23 L.Ed.2d 349 (1969) (garnishment of wages). The deprivation in Fuentes, Goldberg and Sniadach was blatant and total, thus requiring a pre-seizure hearing. The degree of deprivation under Public Acts 1981, No. 81-8, however, is at all times nonpossessory. Indeed, unless the property owner has any intention of alienating or mortgaging the realty, the effect of the lis pendens procedure is de minimis.

Turning to a consideration of the plaintiffs' interest in the procedure, we note that a notice of lis pendens ensures that the plaintiffs' claim cannot be defeated by a prejudgment transfer of the property. Because of the uniqueness of real estate, this function is particularly important where the complaint seeks specific performance relative to the affected property. Even where the plaintiff seeks only recovery of funds allegedly invested in the burdened real estate, or where the plaintiff asserts a partial ownership interest therein, the lis pendens procedure provides security for payment of the claim pending final resolution of the case.

Moreover, the state possesses a legitimate interest in the challenged lis pendens procedure. In enacting Public Acts 1981, No. 81-8, the legislature created a specified procedure whereby the rights of third-party purchasers are readily defined. "The doctrine underlying lis pendens is that a person who deals with property while it is in litigation does so at...