`

COA: buyer did not slander title to property in lis pendens notice

January 11, 2019

Issuing another ruling in a 10-year lawsuit arising from a real estate deal gone bad, the Indiana Court of Appeals reminded the property seller that it cannot sue the buyer for slander over statements made in a lis pendens notice.

The buyer, 2007 East Meadows, LP, filed three lis pendens notices as part of its dispute with the seller, RCM Phoenix Partners, LLC. In 2007, Meadows was assigned a purchase agreement under which it would buy an apartment complex in Indianapolis from Phoenix for $9.05 million.

However, Meadows experienced delays in obtaining approval from Wachovia to assume the existing mortgage on the property, but after agreeing to several extensions of the closing date, Phoenix denied another extension in January 2008.

Eventually Phoenix filed a lawsuit in Indiana in July 2008, arguing because Meadows breached the purchase agreement, it was entitled to keep the earnest money deposit. Phoenix filed a supplemental complaint in September 2012, adding a claim against Meadows for slander of title and the resulting damages.

Meadows filed the first lis pendens notice when it filed a lawsuit against Phoenix in Texas in January 2008 and an amended notice of both pending Texas and Indiana lawsuits in August 2008. After learning Phoenix was in negotiations to sell the apartment property to a third party, Meadows filed its third amended lis pendens notice.

In June 2014, the Marion Superior Court granted summary judgment in favor of Phoenix and dissolved Meadows’ pending lis pendens notice. An appellate panel affirmed the ruling in 2007 in East Meadows LP v. RCM Phoenix Partners, LLC, 49A05-1407-PL-300 (Ind. Ct. App. Jan. 20, 2016), trans. denied.

On remand, the trial court entered an order in favor of Phoenix regarding its claim for retention of the earnest money. However, the court also found in favor of Meadows regarding Phoenix’s slander of title and damages claim.

Phoenix appealed and again the Court of Appeals reviewed the dispute, this time in RCM Phoenix Partners, LLC, v. 2007 East Meadows, LP, 18A-PL-1355. Here, Phoenix argued the trial court erred in finding Meadows did not slander Phoenix’s title to the property by filing a lis pendens notice. And Meadows countered that its filing of a lis pendens notice was absolutely privileged and cannot constitute slander of title. Phoenix asserted Meadows waived its privilege argument because it failed to raise the issue at the trial court level.

Tackling the waiver issue first, the Court of Appeals noted the general rule that an argument or issue raised for the first time on appeal is waived for appellate review. However, the appellate court pointed to Citimortgage v. Barabas, 975 N.E. 2d 805, 813 (Ind. 2012) which held the limitation on presenting an argument not presented to the trial court does not apply to an appellee who seeks to affirm the trial court’s judgment.

Seeing that Meadows was seeking an affirmance, the Court of Appeals allowed the privilege argument to be raised.

As to Phoenix’s claim that Meadows slandered the title to the property and caused Phoenix $1.1 million in damages by filing a lis pendens notice, the panel was not convinced.  

The Court of Appeals noted in all three instances, the filing of a lis pendens notice is required in order to inform interested third parties of the potential cloud upon the title of the property. Also, statements made in a properly filed lis pendens notice are absolutely privileged and defendants who file such a notice may not be held liable for slander of title.

“Thus Meadows was required by Indiana law to file a lis pendens notice as to the Property, I.C. (section) 32-30-11-3 and (Trotter v. Ind. Waste Sys., Inc., 632 N.E.2d 1159, 1163 (Ind. Ct. App. 1994)) and it properly did so,” Judge L. Mark Bailey wrote for the court. “Therefore, the statements Meadows made regarding the Property in the lis pendens notice and the related lawsuits were absolutely privileged, and Meadows cannot be held liable, on the basis of those statements, for slander of title.”

ADVERTISEMENT

Recent Articles by Marilyn Odendahl