Filing lis pendens is not a ‘process’

In a matter of first impression, a Virginia circuit court has dismissed a malicious abuse of process claim grounded solely in the filing of a lis pendens after finding that it wasn’t a “process” reachable by the claim.

The lis pendens was filed against real estate affected by a complaint for specific performance that was eventually nonsuited. The defendants in that case sued the prior plaintiffs alleging that their filing of the lis pendens was tortious.

Judge David Bernhard of the Fairfax Circuit Court dismissed the claim with prejudice.

“Because a lis pendens does not command an action but instead merely republishes the information in the complaint, this Court finds that the filing of a lis pendens is not a ‘process,’” he wrote. “The Court thus holds that a lis pendens is just a ‘filed declaration,’ and like the recording of a mechanic’s lien, is not a ‘process’ reachable by the confines of the tort of malicious abuse of process.”

The decision is Givago Growth, et al. v. iTech AG, LLC, et al. (VLW 023-8-066).

Overview

As co-owners of residential property in McLean, Givago Growth and Constanza Valdes entered into a partnership with Artifact, LLC, to renovate and sell it. Without informing Givago or Valdez, Artifact obtained financing from iTech — with 50% interest.

But Artifact used the proceeds for other projects. Unable to make the loan payments, Artifact assigned iTech a share of the proceeds when the house was sold. Two months later, iTech sued Givago and Valdez for specific performance of the project.

iTech also filed a lis pendens thereby notifying prospective purchasers that there was litigation pending affecting the property. The property was under contract at the time; the purchasers refused to complete the sale.

Artifact filed for bankruptcy and the trustee filed a mechanic’s lien against the property, which was eventually satisfied. iTech then nonsuited its case.

Givago and Valdez sued iTech and its law firm for several claims, including malicious abuse of process.

iTech and the law firm filed pleas in bar and demurrers, arguing that filing of a lis pendens wasn’t a “process” under Virginia law and couldn’t be the factual basis for a claim of malicious abuse of process.

Virginia Lawyers Weekly first reported on this case when the Virginia Supreme Court unanimously ruled that the filing of a lis pendens is part of a judicial proceeding for purposes of establishing absolute privilege against a defamation claim. (See “First impression: Absolute privilege may apply to lis pendens” Nov. 1, 2022)

‘Similarly incongruous’

A claim for malicious abuse of process requires pleading the existence of an ulterior purpose and an act in the use of the process not proper in the regular prosecution of the proceedings.

Bernhard said the issue in this case wasn’t whether Givago properly pled the elements of their claim.

“Rather, the question is whether, by relying solely on the filing of the lis pendens as the factual basis for such a claim, the tort of malicious abuse of process is barred as unsustainably pled,” he wrote.

Virginia defines a process in terms of “the mandate of a court order under its seal, whereby a party or an officer of the court is commanded to do certain acts,” the judge explained.

“A lis pendens is ‘“merely a notice of the pendency of the suit to anyone interested and a warning … [to] examine the proceedings therein to ascertain whether the title to the property was affected or not by such proceedings,”’ Bernhard pointed out.

Thus, the filing of a lis pendens merely republishes key information from a complaint. The notice of lis pendens was purely incidental to the underlying action, without which it wouldn’t exist.

Citing a prior round of litigation between the parties, Bernhard noted the Supreme Court of Virginia’s opinion that an affirmative defense of absolute privilege would apply here.

In that decision, Justice William C. Mims wrote for the court that “it would ‘incongruous to extend the [applicable] privilege to [the] complaint but not to its associated lis pendens when confronted with the allegation that it has slandered a title.’”

However, the Supreme Court has never extended that privilege to non-defamation torts, such as malicious abuse of process, tortious interference with contractual relations, and civil conspiracy.

Consistent with the Supreme Court’s guidance, Bernhard held that “it would thus similarly be incongruous to deny the viability of a malicious abuse of process claim that is based merely on the filing of the complaint, but to allow such a claim solely based on the filing of a lis pendens.”

Not a ‘process’

Bernhard pointed to 2011’s Smith v. Miller and Smith at Pembrooke in which the Fairfax Circuit Court dismissed an abuse of process claim because its sole factual allegation was the filing of a lis pendens.

“The suggestion from the Smith case is that the filing of a lis pendens is to be viewed as just ‘the institution of legal proceedings,’” he wrote.

That ruling was consistent with those of other states, including West Virginia, Kentucky and California.

Here, the plaintiffs cast the filing of a lis pendens as the sole factual basis underlying their malicious abuse of process claim.

Bernhard compared a lis pendens to a mechanic’s lien, both being notices that impact property. He also pointed out that a mechanic’s lien must be perfected to be enforced; doing so was insufficient to support an abuse of process claim.

“If a lis pendens were to be read to constitute a ‘process’ as contemplated within the tort of malicious abuse of process, this would lead to the functionally inconsistent interpretation that absolute privilege applies to a complaint and to a lis pendens filed in notice thereof, but that the privileged lis pendens would be dispossessed of such an affirmative defense when recast as the basis for the tort of malicious abuse of process,” he wrote.

Instead, the judge found that a lis pendens was just a filed declaration like the recording of a mechanic’s lien and wasn’t a process to be maliciously abused.

“For these reasons, when a lis pendens is the sole basis for the claim, the same may not be miscast as a malicious abuse of ‘process,’ thereby evading the absolute privilege afforded to a complaint and the associated lis pendens that has merely provided recordation notice thereof,” Bernhard concluded.

The judge sustained the defendants’ demurrers and pleas in bar with prejudice.

One claim remaining

Elizabeth Payne-Maddalena of Berenzweig Leonard in McLean represented iTech in the latest round of litigation and argued the defensive motions to Bernhard.

“Judge Bernhard was very careful to make his decision consistent with prior rulings, including the Supreme Court’s opinion from the slander of title case in which we weren’t defending iTech,” she told Virginia Lawyers Weekly.

While the tortious interference claim against her client remains active, Payne-Maddalena neither anticipates the plaintiffs will seek interlocutory appeal nor is she sure what arguments they would raise.