Opinion
No. 05-05-00375-CV
Opinion Issued June 10, 2005.
Original Proceeding from the 255th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 04-17651-S.
Writ of Mandamus Granted.
Before Justices WRIGHT, O'NEILL, and LANG.
MEMORANDUM OPINION
In this original proceeding, relator Debra Kroupa-Williams contends the trial judge abused his discretion in cancelling lis pendens filed by her on three pieces of real property located in Nueces County, Texas. Kroupa-Williams asserts that the trial judge did not comply with the requirements of the property code and that she does not have an adequate remedy at law for the error. We agree and conditionally grant a writ of mandamus.
BACKGROUND
Kroupa-Williams and real party in interest Robert Williams co-habitated for several years. During that time, one or both of them acquired interests in several parcels of real property in Texas.
Kroupa-Williams filed an original petition for divorce alleging a common-law marriage existed between the couple. The petition requests the trial court to enter temporary orders and upon final determination to "divide the estate of the parties." In her original petition, Kroupa Williams seeks to quiet title in the acquired real property, and seeks damages for (1) personal injuries, (2) fraudulent transfer of community property, (3) selling, hiding or conveying community property, and (4) conspiracy to transfer community property. The petition asserts a community property interest in property located on Meadow Road in Dallas, "along with other property." Attached to the petition is exhibit B which includes the Nueces County properties at issue. Kroupa-Williams filed lis pendens on several pieces of property in Dallas and Tarrant counties in which Williams has an interest.
Kroupa-Williams filed a second amended petition requesting the court to (1) "divide the estate of the parties," and (2) compensate the community estate for Kroupa-Williams's work that benefitted Williams's claimed separate estate. The attached exhibit 2 includes the three pieces of property located in Nueces County, Texas at issue in this original proceeding. The second amended petition also includes requests for (1) damages for personal injuries, (2) a determination, by trespass to try title, of Kroupa-Williams's interest in the Meadow Road property only, (3) damages for breach of fiduciary duty, fraud, conversion, and waste of community assets, and (4) a finding of fraudulent transfer of the Meadow Road property, "along with other property." In her prayer, Kroupa-Williams asks the court to find that two properties in Dallas and the property listed in exhibit 2 belongs to Kroupa-Williams and Williams and to divide them as part of the division of the community estate.
After filing the second amended petition, Kroupa-Williams filed lis pendens on the three pieces of real property listed in exhibit 2 located in Nueces County, which Williams holds as trustee.
The trial court signed an order modifying a previously issued temporary restraining order. The modification ordered that Williams "be allowed to engage in the ordinary course of his business in the real estate industry and be allowed to reasonably buy, sell, and transfer titles of real property located in the State of Texas, specifically" the three pieces of property located in Nueces County. The court also ordered Williams to notify Kroupa-Williams or her attorney of the terms of any potential sale of other real property.
Williams filed an emergency motion to cancel lis pendens and to find Kroupa-Williams in contempt. The motion alleged Kroupa-Williams called the title company in Nueces County that was handling the sale of the three properties and interfered with the sale by asserting her lis pendens rights, in violation of the modified TRO. Williams requested the trial court to cancel the lis pendens on the three properties.
Kroupa-Williams subsequently filed a fourth amended petition, which requests the trial court (1) to divide the community estate of the parties; (2) to reimburse the estate for Kroupa-Williams's work benefitting Williams's separate estate; (3) to quiet title in the estate's real properties by declaring Kroupa-Williams has an ownership interest in the properties; (4) to place a constructive trust on the properties listed in the attached exhibits; (5) to grant damages for fraudulent transfer and conspiracy regarding the assets listed in the attached exhibits; and (6) to award damages for other torts. All of these claims rely on the same two exhibits listing the claimed property.
The first exhibit lists the properties by street number; the second exhibit lists them by legal description. Both lists include the three Nueces County properties at issue.
After a hearing, the trial court entered an order amending its modified TRO and authorized Williams, individually or as trustee, to sell the Nueces County properties. The court ordered Williams to direct the escrow officer for the sale to place one-half of the proceeds into the registry of the court. The order also dissolved "any and all lis pendens" on the three properties. The order provided that Williams, individually or as trustee, may sell other properties free and clear of Kroupa-Williams's lis pendens if she does not object within ten days of his notifying her of the terms of any sale and the trial court dissolves the lis pendens on the property. Williams is to place one-half the sale proceeds of any sale made under the order into the registry of the court. This is the order at issue in this original proceeding.
VALIDITY OF LIS PENDENS
The first issue to be determined is whether Kroupa-Williams's lis pendens on the Nueces County properties were properly filed. No one asserts the forms of the lis pendens are defective. However, the question is whether Kroupa-Williams had a live pleading seeking title to, an interest in, or enforcement of an encumbrance against, the Nueces County properties at the time she filed the lis pendens on the properties. See Tex. Prop. Code Ann. § 12.007 (Vernon 1984) (a lis pendens may be filed "during the pendency of an action involving title to real property, the establishment of an interest in real property, or encumbrance against real property.").
Kroupa-Williams asserts she claimed an ownership interest in the Nueces County properties in her petitions. Williams asserts Kroupa-Williams did not claim an ownership interest in the properties until her fourth amended petition. She filed the fourth amended petition after filing the lis pendens at issue and after the trial court's order permitting Williams to sell the properties. Thus, Williams claims, the lis pendens are invalid and the trial court properly dissolved them.
At the time Kroupa-Williams filed the lis pendens at issue, her second amended petition was the live pleading. The second amended petition requested (1) "division of the estate of the parties," the assets of which are not specified, and (2) compensation to the community estate for (a) Kroupa-Williams work benefitting Williams's claimed separate estate, (b) waste of unspecified community assets, and (c) fraudulent transfer of community assets, specifying the Meadow Road property in Dallas "along with other property" listed in exhibit 2.
Relying on the cases of Flores v. Haberman, Khraish v. Hamed, Moss v. Tennant, and Mangione v. Jaffe, Williams argues that Kroupa-Williams's lis pendens are only security to recover any damages she may be awarded; thus, under Texas law the lis pendens are not valid. Flores v. Haberman, 915 S.W.2d 477 (Tex. 1995) (orig. proceeding); Moss v. Tennant, 722 S.W.2d 762 (Tex.App.-Houston [14th Dist.] 1986, orig. proceeding); Khraish v. Hamed, 762 S.W.2d 906 (Tex.App.-Dallas 1988, writ denied); Mangione v. Jaffe, 61 S.W.3d 591 (Tex.App.-San Antonio 2001, writ dism'd).
In Flores, the plaintiff sued for conversion, claiming that the defendant converted property and used the proceeds from the conversion to purchase other property. Flores, 915 S.W.2d at 478. Plaintiff sought a constructive trust on the purchased property and filed a lis pendens on it. The supreme court, in a per curiam opinion, held that seeking a constructive trust on the property allegedly purchased with the converted funds is seeking a collateral interest in the property which does not render the property subject to lis pendens. Id. In Moss, the plaintiff filed a lis pendens on property other than the property at issue in the litigation. Moss, 722 S.W.2d at 763. The purchaser of the un-litigated property filed a petition asserting the lis pendens was invalid. A Houston court of appeals held the lis pendens on un-litigated property was not valid because it was a collateral attachment. Id.
Likewise in Khraish, this Court held that a lis pendens on property not the subject of the loan agreement at issue was improper. Khraish, 762 S.W.2d at 909. Finally, in Mangione, the San Antonio court of appeals held that an action for interest in a joint venture, which did not allege fraud, was not an action for an ownership interest in real property owned by the joint venture, so a lis pendens on that property was invalid. Mangione, 61 S.W.3d at 592-93.
We conclude Williams's cases are distinguishable on their facts.
In none of the cases relied on by Williams was the lis pendens filed on real property that was at issue in the case. Kroupa-Williams placed the separate or community nature of the Nueces County property at issue in her original and second amended petitions before the lis pendens were filed. Kroupa-Williams claims a community property interest in the Nueces County property, which was specifically included in her pleadings and its exhibits. This claim was on file at the time she filed the Nueces County lis pendens. We conclude Kroupa-Williams's claim for a division of the community estate, which allegedly includes the Nueces County properties, is an adequate nexus to a claim for an interest in the real property on which the lis pendens were filed. Thus, we conclude the lis pendens are valid.
DISSOLUTION OF THE LIS PENDENS
The trial court's order "dissolves" the lis pendens. The property code provides for "cancellation" of the lis pendens. We conclude that in this case there is no difference between the terms.
We next determine if the trial court properly dissolved the three lis pendens. First, Williams argues that the trial court's modification of the TRO proves Kroupa-Williams does not have a sufficient interest in the properties to enjoin their sale. Under Texas law, a lis pendens does not prevent sale of the property; it merely places a purchaser on notice that a person other than the title holder claims an interest in the property. Group Purchases, Inc. v. Lance Inv., Inc., 685 S.W.2d 729, 731 (Tex.App.-Dallas 1985, writ ref'd n.r.e.).
The order modifying the TRO does not hold that Kroupa-Williams does not have any interest in the properties, nor does it release the lis pendens on the properties. Thus, we conclude the trial court's order modifying the TRO had no effect on Kroupa-Williams's lis pendens.
Williams also asserts the trial court did not have to comply with the cancellation provisions of the property code because Kroupa-Williams's lis pendens are invalid. We have concluded the lis pendens are valid. Accordingly, the only means for a Texas court to cancel them is in compliance with the provisions of section 12.008 of the property code. Hughes v. Houston Northwest Med. Center, 647 S.W.2d 5, 7 (Tex.App.-Houston [1st Dist.] 1982, writ dism'd) (addressing repealed article 6643a, now at section 12.008). Section 12.008 provides, in part, that (a) after notice to each affected party, the court . . . may cancel the lis pendens at any time during the proceeding . . ., if the court determines that the party seeking affirmative relief can be adequately protected by the deposit of money into court or by the giving of an undertaking.
(b) If the cancellation of a lis pendens is conditioned on the payment of money, the court may order the cancellation when the party seeking the cancellation pays into the court an amount equal to the total of:
(1) the judgment sought; (2) the interest the court considers likely to accrue during the proceeding; (3) and costs.
(c) If the cancellation of a lis pendens is conditioned on the giving of an undertaking, the court may order the cancellation when the party seeking the cancellation gives a guarantee of payment of a judgment, plus interest and costs, in favor of the party who recorded the lis pendens. The guarantee must equal twice the amount of the judgment sought and have two sufficient sureties approved by the court.
Tex. Prop. Code Ann. § 12.008 (Vernon 1984). Kroupa-Williams contends the trial court's order dissolving the lis pendens does not comply with the requirements of section 12.008 because the deposit required is insufficient and the dissolution is not dependent on the filing of a proper deposit. Williams argues that the order to deposit one-half of the sale proceeds into the registry of the court is to protect the marital assets. It is not a requirement for release of the lis pendens, thus, it does not have to be in the amount specified in section 12.008.
He asserts ample evidence was presented to the trial court at the hearing on modification of the TRO and the trial court relied on this evidence in dissolving the lis pendens. He contends the dissolution order merely confirms the trial court's previous ruling that he can sell the properties "free and clear."
We have held that Kroupa-Williams's lis pendens are valid.
Therefore, under Texas law, any dissolution of them must be done in compliance with the requirements of section 12.008 of the property code.
The order dissolving the lis pendens requires a deposit of one-half the proceeds of the sale of the claimed community property. Even assuming the trial court was presented with evidence on which it determined that Kroupa-Williams would only be entitled to a one-half interest in the property, the order does not require the deposit of interest and costs likely to accrue during the pendency of the action as required by section 12.008. Additionally, the dissolution of the lis pendens is not contingent upon the deposit being made. Section 12.008 requires the dissolution (cancellation) to be conditioned upon the making of the deposit. In this case, the trial court did not condition the dissolution of the lis pendens upon the making of the deposit. Therefore, we conclude the trial court abused its discretion by dissolving the lis pendens in its order of March 17, 2005, because it did not require the deposit of interest and costs accruing during the pendency of the litigation and did not condition dissolution of the lis pendens contingent upon the filing of the statutorily required deposit.
ADEQUATE REMEDY AT LAW
In her petition for writ of mandamus, Kroupa-Williams asserts she does not have an adequate remedy at law for the wrongful cancellation of her lis pendens on the Nueces County properties. We agree. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding); First Nat'l. Petroleum Corp. v. Lloyd, 908 S.W.2d 23, 24 (Tex.App.-Houston [1st Dist.] 1995, orig. proceeding).
CONCLUSION
Accordingly, we conditionally grant the writ of mandamus. We order the trial court to vacate the portion of its order signed March 17, 2005 that dissolved any and all lis pendens filed by Kroupa-Williams on Lot 40 Block 233 Padre Island Section 4 (15410 Gypsy Street), Lot 2 Block 233 Padre Island Section 4 (15405 Finistere Street), and Lot 4 Block 226 Padre Island Section 4 (15613 Finistere Street). We order the trial court to file a certified copy of its order in compliance with this opinion and order within thirty days of the date of this opinion and order. Should the trial court fail to comply, the writ will issue.