IN THE SUPREME COURT OF THE STATE OF MONTANA
JACK PAULSON and BUD GRANT,
Plaintiffs and Appellants,
-vs-
ROBERT J. LEE and DOROTHY MARIE
LEE, husband and wife, L O U I S CROPP
and IRENE CROHN, husband ans wife,
ELMER SPRUNGER and MARIE SPRUNGER,
husband and wife, and ROBERT RELLER,
Defendants and Respondents.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Leif Erickson, 7udge presiding.
COUNSEL OF RECORD:
For Appellant:
Richard DeJana, Kalispell, Montana
For Respondent:
Keller & German; Robert S. Keller, Kalispell,
Monta~a
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Submitted on Briefs: Aug. 13, 1987
Decided: November 10, 1987
Filed:
blov 10 1987
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Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
In this action for slander of title, the District Court
for the Eleventh Judicial District, Flathead County, granted
the defendants a directed verdict. Plaintiffs Paulson and
Grant appealed, and the defendants cross-appealed. Our
determination of the cross-appeal renders consideration of
the other issues unnecessary. We vacate the judgment of the
District Court which granted a. directed verdict and direct
the District Court to enter summary judgment for the
defendants.
The issues are:
1. Did the District Court err when it ruled that the
judge's order in - was the law of this case?
Lee
2. Does an action to stop the construction, sale, or
lease of a four-unit dwelling affect the title or right of
possession of real property within the meaning of
5 70-19-102, MCA?
3. Did the District Court err when it denied the de-.
fense of privilege in filing notice of the pendency of the
action (lis pendens) ?
With the exception of Mr. Keller, all parties to the
present case also were parties to the case of Lee v. Flathead
County (Mont. 1985), 704 P.2d 1060, 42 St.Rep. 1258. In - Lee
Mr. Paulson and Mr. Grant were involved in the construction
of a four-unit structure in a neighborhood where the Lees,
the Crohns, and the Sprungers all lived. Mr. and Mrs.
Sprunger lived adjacent to the construction. The neighbors
became concerned about the construction project and hired Mr.
Keller as their lawyer. Mr. Keller prepared a complaint
which alleged that the building was being constructed in
violation of subdivisiorl regulations. In count one the
complaint requested mandamus to compel county officials to
"enforce the prohibition against sale, lease or transfer of
any unit of said building." In addition the complaint sought
to enjoin construction and to enjoin county officials from
granting subdivision approval-. We are concerned here only
with count one. At the time of filing the complaint in - Lee,
Mr. Keller filed a notice of lis pendens. The District Court
then granted summary judgment to the defendants in - as to
Lee
count one. As a part of that judgment the court concluded
that the notice of lis pendens was improperly filed and
ordered it rernoved. Subsequent to that summary judgment and
prior to our decision on appeal, the legislature amended 5
76-3-204, MCA. In the appeal of - this Court held that
Lee,
the amendment controlled and that Paulson and Grant no longer
were required to comply with subdivision regulations. We
therefore affirmed the summary judgment of the District Court
as to count one and affirmed the removal of the lis pendens.
Mr. Paulson and Mr. Grant, defendants in the first
action, then brought this action for slander of title. They
sought damages caused by the filing of the notice of lis
pendens. The defendants moved for summary judgment on the
grounds that the publication of lis pendens was privileged.
The District Court, in an order dated March 6, 1987, denied
summary judgment.
During the trial, after the plaintiffs had called vari-
ous witnesses, the defendants moved for a directed verdict.
The District Court granted a directed verdict for the defen--
ants because of the failure of the plaintiffs to establish
direct evidence of malice, an essential element in a slander
of title action. Plaintiffs Paulson and Grant appeal.
Defendants cross-appeal, contending that the District Court's
refusal. to grant summary judgment was error.
3.
Did the District Court err when it ruled that the
judge's order in - was the law of this case?
Lee
In a memorandum supporting the Narch 6, 1987, order
denying defendants' motion for summary judgment, the District
Court noted that the trial court jn the previous case of -
. Lee
found that the lis pendens was not privileged because it had
been improperly filed. The District Court in the present
case then concluded that such prior determination by the
District Court in - became the "law of the case" so that
Lee
the issue could not be relitigated.
In this Court's opinion in - 704 P.2d at 1063, we
Lee,
stated:
The appellants also argue that the trial court
erred in granting the respondents' motion to remove
the notice of lis sendens. The trial court found
- -
L
that the lis pendens was improperly filed. In view
of our decision on the first issue, we affirm the
removal of lis pendens.
Our decision was based upon a statute enacted after the
District Court decision. Because of that statute, the notice
of lis pendens properly was removed. However, we did not
rule on whether the notice was properly filed originally.
Our decision on appeal was an affirmation of the result with
regard to the lis pendens but not an affj-rmation of the
reasoning of the District Court. As a result, the conclusion
of the District Court that the notice was improperly filed no
longer remained the law of the case. Our decision on appeal
became the law of the case. We conclude that the District
Court erred when it held that the trial judge's order in -Lee
was the law of the present case With regard to the improper
filing of the notice of lis pendens.
Does an action to stop the construction, sale, or lease
of a four-unit dwelling affect the title or right of posses-
sion of real property within the meaning of s 70-19-102, MCA?
Section 70-19-102, MCA, reads:
(1) In an action affecting the title or right
of possession of real property . .
. the plaintiff
. . . and the defendant . . . may file in the
office of the clerk and recorder of the county in
which the property is situated a notice of the
pendency of the action containing the names of the
parties and the object of the action or defense and
a description of the property in that county af-
fected thereby.
( 2 ) From the time of filing of such notice
only shall a purchaser or encumbrancer of the
property affected thereby be deemed to have con-
structive notice of the pendency of the action and
only of its pendency against parties designated b y
their real names.
Plaintiffs urge this Court to rule that the party filing a
notice of lis pendens must claim a right to the title or
possession of the subject property.
The language of the statute, however, does not suggest
such a strict application, but, rather, demands only that. the
action affect title or right of possession of real property.
We believe this non-restrictive view reflects the purpose of
the notice. As evident by subsection (2) of 5 70-19-102,
MCA, one vital purpose of the notice is to notify subsequent
purchasers and encumbrancers of pending litigation. This
provision protects the claimant should the claimant receive a
favorable judgment. This was a principal concern for the
defendants when they filed the 1984 action. A second purpose
of the notice i.s to alert third parties interested in the
subject property, thereby protecting them from litigation
attyendant tc the property. See Fox v. Clarys 1Mont. 1987),
738 P.2d 104, 106, 44 St.Rep. 1004, 1007. We hold that the
defendants were not required to show an actual claim to title
or possession of the subject property.
Even though the plaintiffs in - asserted no claim to
Lee
the property, they asked generally for an injunction against
the construction, sale, or lease of the property. Had the
District Court ordered such an injunction, certainly the
title and right of possession would have been affected.
The plaintiffs in - sought to enforce the subdivision
Lee
regulations which would have placed certain building restric-
tions on the structure being constructed.. Thus, the regula-
tions would place a limitation on the owners' right to build
on their property. The Colorado Supreme Court construed a
substantially similar notice statute in Eammersley v. Dis-
trict Court (Colo. 1980), 610 P.2d 94. The plaintiff in that
case brought an action against an adjacent landowner and
sought to enforce protective covenants which limited con-
struction within the subdivision. He also filed notice of
lis pendens. After discussing the policy supporting lis
pendens historically, the court went on to determine whether
the notice was authorized in that particular situation as
"affecting the title to real property."
The instant case involves the extent of limitations
on the rights of an owner of a lot in a subdivision
to construct a residence on that property. Those
rights are incidents of the owner's title. Al-
though the present litigation does not seek to
change ownership in any way, it does involve a
determination of certain rights incident to owner-
ship and in that sense affects title to real prop-
erty. It will promote the finality of litigation
and economy of judicial resources, will harm no
legitimate interest of the owner, and will be fully
consistent with the language of C.R.C.P.lOS(f) to
hold that the instant case is one affecting title
to real property within the meaning of that rule.
WE adopt that construction.
Harnrnersley, 610 P.2d at 96-97. We adopt that construction as
well and conclude that the relief which the defendants sought
would have affected title or right of possession of the
subject property. Therefore, under the facts of this case,
we hold that the notice of lis pendens was authorized by
§ 70-19-102, KCA.
I11
Did the District Court err when it denied the defense of
privilege in filing notice of the pendency of the action (lis
pendens) ?
The District Court in its order and rationale stated,
[Ilt is the rule of this case that where the under-
lying action does not affect title or possession,
as opposed to use, of real property a lis pendens
is not permitted by statute and is not privileged.
Were this not the rule, a groundless lis pendens
could be filed with impunity in a simple money
judgment action or in any action where title to or
right to possession of [the property] is not actu-
ally affected.
As we have already stated, however, the underlying action did.
affect title to or possession of the subject property, thus
the notice was permitted. Because the notice was authorized,
it was privileged and not subject to a slander of title
action. See Hauptman v. Edwards, Inc. (l976), 170 Mont. 310,
317, 553 P.2d 975, 979; Alhertson v. Raboff (Cal. 1956), 295
P.2d 405, 409. We hold that the District Court improperly
denied the defense of privilege in filing the notice of lis
pendens.
We vacate the judgment of the District Court which
granted a directed verdict, and we reverse the District
Court's denial of the defendants' motion for summary judg-
ment . Be dj.rect entry of summary judgment for the
defendants.
W e Concur: /
&cap+ Justices