Court Opinion

ID: 4108773
Source: CourtListenerOpinion
Date Created: 2016-12-19 23:19:01.769393+00
Date Added: 2024-06-11T07:45:43.272791
License: Public Domain

Affirmed and Opinion filed December 15, 2016.

                                    In The

                    Fourteenth Court of Appeals

                             NO. 14-15-00207-CV

                  COUNTY INVESTMENT, LP, Appellant
                                      V.
      ROYAL WEST INVESTMENT, LLC, SERIES E AND SHAWN
                    SHAHBAZI, Appellees

                   On Appeal from the 189th District Court
                           Harris County, Texas
                     Trial Court Cause No. 2014-34978

                               OPINION

      Appellant, County Investment, LP (“County Investment”), sued appellees,
Royal West Investment, LLC (“Royal West”) and Shawn Shahbazi for damages,
alleging they unlawfully placed a lis pendens on real property owned by County
Investment. The trial court granted appellees’ motion for summary judgment on
the ground that County Investment’s claims are barred by the defense of absolute
privilege. We affirm.
                                    I. BACKGROUND

      Non-party Massood Danesh Pajooh (“Pajooh”), a commercial real estate
developer, is a principal owner or member of several entities through which he
conducts business, including another non-party, U.S. Capital Investments, LLC
(“USCI”), and appellant County Investment.            See U.S. Capital Invs., LLC v.
Shahbazi, No. 02–12–00417–CV, 2014 WL 1713464, at *1 (Tex. App.—Fort
Worth May 1, 2014, no pet.) (mem. op.). Appellee Shahbazi is also a commercial
real estate investor and is a principal owner or member of several entities through
which he conducts business, including appellee Royal West. See id.

      In 2010, USCI and Pajooh became involved in litigation with appellees in a
Tarrant County district court. See id. at *1–2.1 That suit arose out of several real
estate transactions between those parties, and they asserted various claims against
each other. See id. The jury’s verdict and post-trial rulings resulted in Royal West
being the prevailing party. See id. at *2. In July 2012, the Tarrant County district
court signed a final judgment awarding Royal West $352,380 and attorney’s fees
of $165,000 (plus conditional appellate attorney’s fees) against USCI and Pajooh,
jointly and severally. See id. at *3. The Fort Worth Court of Appeals affirmed the
judgment. See id. at *11.

      Upon the district court signing the judgment, Royal West sought immediate
execution. The request was supported by an affidavit of Royal West’s attorney
averring that he believed Pajooh would conceal assets, manipulate assets to file
bankruptcy on behalf of USCI, or place assets beyond the jurisdiction of the court
because he has a history of conducting fraudulent transactions to avoid creditors
and is an Iranian citizen with family and business contacts in Iran. On the same

      1
         We recite the facts regarding the Tarrant County suit based on the appellate court
opinion in that case and uncontroverted summary-judgment evidence in the present case.

                                            2
day that it signed the judgment, the Tarrant County district court signed an order
permitting immediate execution.

       According to Shahbazi, when he/Royal West served post-judgment
discovery, Pajooh boasted that he would prevent Shahbazi from locating assets to
satisfy the judgment. Then, in January 2013, appellees filed a “Notice of Lis
Pendens” in Harris County relative to certain real property in Houston owned by
County Investment and referenced the Tarrant County suit. The lis pendens was
ultimately released in April 2014.

       In the present suit, filed in June 2014, County Investment alleges the
following: (1) in early April 2013, it entered into an agreement to sell the property
at issue for $956,000; (2) a commitment for title insurance was made subject to
dismissal of the Tarrant County suit and release of the lis pendens; (3) appellant
contacted Shahbazi who said he instructed his attorney to release the lis pendens,
but it was not released at the time; and (4) in June 2013, the proposed buyer
cancelled the purchase because of the lis pendens.2 County Investment seeks
actual and punitive damages for appellees’ alleged violation of Texas Civil
Practice and Remedies Code Chapter 12 by filing a fraudulent lien, see Tex. Civ.
Prac. & Rem Code Ann. §§ 12.002(a), (b), 12.003(a)(8) (West Supp. 2016),
tortious interference with contract, and slander of title. The crux of the claims is

       2
          The parties present conflicting summary-judgment evidence regarding events between
the filing of the lis pendens and the filing of the present suit and the opposing party’s motives,
which evidence is not germane to our disposition. But, in essence, according to County
Investment’s evidence, Pajooh informed Shahbazi that the lis pendens was an improper attempt
to force a settlement of the Tarrant County suit and demanded the lis pendens be released.
Shahbazi avers that (1) shortly after the court of appeals affirmed the Tarrant County judgment
(May 2014), Pajooh began proposing settlement options that would result in release of the
judgment, which Pajooh needed to consummate another transaction, and (2) when Shahbazi
declined a “meager” monetary offer, Pajooh immediately had appellees served with the present
suit.

                                                3
that the lis pendens was unlawful because County Investment was not a party to
the Tarrant County suit and the lis pendens caused County Investment to lose the
$956,000 it would have realized from the sale of the property.

      Appellees filed a traditional motion for summary judgment, contending all
claims are barred by the defense of absolute privilege, to which County Investment
filed a response. The trial court signed an order granting summary judgment and
ordering that County Investment take nothing. County Investment filed a motion
to reconsider and motion for new trial, which was overruled by operation of law.

                          II. THE SUMMARY JUDGMENT

      A party moving for traditional summary judgment must establish there is no
genuine issue of material fact and it is entitled to judgment as a matter of law. See
Tex. R. Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d
211, 215–16 (Tex. 2003). A defendant moving for traditional summary judgment
must negate at least one element of each of the plaintiff’s theories of recovery or
plead and conclusively establish each element of an affirmative defense. Sci.
Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). If the motion and
summary-judgment evidence facially establish the movant’s right to judgment as a
matter of law, the burden shifts to the nonmovant to raise a genuine issue of
material fact sufficient to defeat summary judgment. See Arguelles v. Kellogg
Brown & Root, Inc., 222 S.W.3d 714, 723 (Tex. App.—Houston [14th Dist.] 2007,
no pet.). We review a summary judgment de novo. Provident Life, 128 S.W.3d at
215. We take all evidence favorable to the nonmovant as true and indulge every
reasonable inference and resolve any doubts in its favor. Id.

A.    Law on Lis Pendens and the Absolute Privilege Defense

      “Lis pendens provides a mechanism for putting the public on notice of

                                         4
certain categories of litigation involving real property.” Prappas v. Meyerland
Cmty. Improvement Ass’n, 795 S.W.2d 794, 795 (Tex. App.—Houston [14th Dist.]
1990, writ denied). “A lis pendens is a notice of litigation, placed in the real
property records, asserting an interest in the property, and notifying third parties
that ownership of the property is disputed.” In re Miller, 433 S.W.3d 82, 84 (Tex.
App.—Houston [1st Dist.] 2014, orig. proceeding). Texas Property Code section
12.007, governing the filing of a lis pendens, provides, in pertinent part:

      (a) After the plaintiff’s statement in an eminent domain proceeding is
      filed or during the pendency of an action involving title to real
      property, the establishment of an interest in real property, or the
      enforcement of an encumbrance against real property, a party to the
      action who is seeking affirmative relief may file for record with the
      county clerk of each county where a part of the property is located a
      notice that the action is pending.
Tex. Prop. Code Ann. § 12.007(a) (West 2014). Section 12.007 also prescribes
requirements for the contents of the notice, recording of the notice by the clerk,
and service on others. See id. § 12.007(b)–(d) (West 2014).

      County Investment seeks damages on the basis that appellees were not
authorized to place a lis pendens on the property. In the motion for summary
judgment, appellees relied on Prappas, in which our court set forth the defense of
absolute privilege to an action seeking damages for the alleged wrongful filing of a
lis pendens. See 795 S.W.2d at 795–800.

      In Prappas, a community association had brought a separate declaratory
judgment action against several homeowners seeking to preclude them from selling
their homes, after heavy flooding, for non-residential use. See id. at 795. The
association did not prevail in the trial court or on appeal. See id. However, after
the trial court’s judgment, but right before the sale was to close, the association
filed a notice of lis pendens which remained on file until the association’s appeals

                                          5
were exhausted. See id. The lis pendens caused the buyer to cancel the purchase.
See id. The homeowners filed the Prappas suit against the association for slander
of title and tortious interference with contract, alleging the lis pendens was
wrongful as unauthorized by statute and seeking damages. See id. The trial court
rendered summary judgment in favor of the association. See id.

      When affirming, we held that there is an absolute privilege defense against a
suit seeking damages for placing a lis pendens even when the plaintiff alleges the
lis pendens was wrongful as falling outside the circumstances for which a lis
pendens may be filed under section 12.007(a). See id. at 795–800. We relied on
two cases from sister courts and the principles cited therein for recognizing the
privilege: (1) a lis pendens is part of a judicial proceeding, as it has no existence
separate from the litigation of which it gives notice, and communications, oral or
written, in the course of a judicial proceeding are privileged; and (2) the open
courts guarantee of the Texas Constitution ensures litigants access to the courts
without fear of defamation actions. See id. at 796–97 (citing Kropp v. Prather, 526
S.W.2d 283, 286–87 (Tex. Civ. App.—Tyler 1975, writ ref’s n.r.e.); Griffin v.
Rowden, 702 S.W.2d 692 (Tex. App.—Dallas 1985, writ ref’d n.r.e.)).

      We further stated that there are remedies for nullifying an unauthorized lis
pendens, including a statutory method for cancellation, or other request for an
appropriate order from the trial court, with mandamus relief available if the trial
court refuses to order cancellation. See id. at 795–96, 798 (citing Tex. Prop. Code
§ 12.008; Olbrich v. Touchy, 780 S.W.2d 6 (Tex. App.—Houston [14th Dist.]
1989, orig. proceeding); Moss v. Tennant, 722 S.W.2d 762 (Tex. App.—Houston
[14th Dist.] 1986, orig. proceeding); Helmsley–Spear of Tex., Inc. v. Blanton, 699
S.W.2d 643 (Tex. App.—Houston [14th Dist.] 1985, orig. proceeding)). In fact,
we noted that “impossibility” of recovering damages is why courts have given a

                                         6
broad reading to the statute governing cancellation. See id. at 798; see also
Manders v. Manders, 897 F. Supp. 972, 976–78 (S.D. Tex. 1995) (citing Prappas
when holding that plaintiffs’ claims for damages for tortious interference and
slander of title based on filing a lis pendens were barred by absolute privilege
defense under Texas law); Bayou Terrace Inv. Corp. v. Lyles, 881 S.W.2d 810, 818
(Tex. App.—Houston [1st Dist.] 1994, no writ) (citing Prappas when stating that
absolute privilege defense bars suit for damages arising from filing a lis pendens).

B.    Analysis

      In two issues, County Investment proffers several reasons that Prappas does
not apply in the present case and County Investment’s claims are not barred by the
privilege defense.

      County Investment emphasizes that unlike in Prappas, in which the property
owners were parties to the litigation in which the lis pendens was placed, County
Investment was not a party to the judicial proceeding referenced in appellees’
notice of lis pendens and the property at issue was not involved in the judicial
proceeding. Thus, County Investment suggests the lis pendens affects “collateral”
real property unrelated to any judicial proceeding and is void ab initio. County
Investment cites uncontroverted summary-judgment evidence that it was not a
party to the Tarrant County suit and the property has never been owned by the
parties to that suit. Therefore, County Investment maintains that appellees acted
contrary to Property Code section 12.007(a) by filing the lis pendens.

      We note that appellees assert the lis pendens was placed on the property of
County Investment in order to satisfy Royal West’s Tarrant County judgment
against Pajooh, a member or owner of County Investment, and USCI, of which
Pajooh is also a member or owner. Regardless, assuming without deciding that
such connection is insufficient to support filing of a lis pendens under section
                                          7
12.007(a), the essence of County Investment’s claim is that the lis pendens is not
authorized under the statute. We made clear in Prappas that such a claim is barred
under the absolute privilege doctrine. See 795 S.W.2d at 795–800. The issue of
whether one may place a lis pendens against property owned by a non-party to a
suit to enforce a judgment against a party to the suit concerns the merits of the lis
pendens and does not negate application of the absolute privilege defense to a
claim for damages even if the lis pendens was improper.

      County Investment cites three cases to support its contention. In each case,
our court held that a lis pendens was not authorized under section 12.007(a)
because the property at issue was only collaterally related to the judicial claims of
the party filing the lis pendens. See Olbrich, 780 S.W.2d at 7–8; Moss, 722
S.W.2d at 763; Helmsley–Spear, 699 S.W.2d at 645. However, those cases were
not actions for damages for the improper filing of the lis pendens, and thus we did
not address whether there was a privilege against such a suit; rather, the cases
involved a request in the trial court to cancel the lis pendens and a mandamus
proceeding in our court after the trial court denied the request. See Olbrich, 780
S.W.2d 6–8; Moss, 722 S.W.2d at 762–64; Helmsley-Spear, 699 S.W.2d at 644–
45. Consequently, none of these cases negate application of the absolute privilege
defense to a claim for damages for placing an unauthorized lis pendens. In fact,
the cases support appellees’ position by confirming that a property owner may seek
cancellation of an improper lis pendens followed by mandamus relief if a trial
court refuses the request for cancellation.

      In this regard, County Investment contends the privilege should not apply
because County Investment did not have adequate avenues for obtaining
cancellation of the lis pendens under Property Code sections 12.0071 or 12.008.
As County Investment asserts, section 12.0071, prescribing circumstances under

                                              8
which a “party to an action in connection with which a notice of lis pendens has
been filed,” may obtain expunction of the lis pendens, see Tex. Prop. Code Ann. §
12.0071 (West 2014), requires twenty days’ notice of the hearing on the motion to
expunge.    See id. § 12.0071(d).     County Investment also asserts that section
12.008, governing circumstances under which “a party or other person interested in
the result of or in property affected by a proceeding in which a lis pendens has
been filed” may obtain cancellation of the lis pendens, implies that the lis pendens
is valid by requiring the court to protect the party seeking affirmative relief in the
suit; the court must require the movant to deposit money into the court or require
the “giving of an undertaking” to ensure payment of the judgment. See id. §
12.008 (West 2014).      County Investment suggests it lacked adequate time or
resources to pursue the above-cited remedies before the lis pendens prevented
County Investment’s intended sale of the property, particularly because Shahbazi
kept fraudulently representing he would have the lis pendens removed.

      Even if we construe the above-cited provisions as urged by County
Investment, it expressly acknowledges that they are not the exclusive methods for
obtaining cancellation of a lis pendens. In Prappas, we stated that section 12.008
is not the exclusive remedy for nullifying an unauthorized lis pendens and an
affected party may seek another appropriate order from a district court, under the
rationale that when the notice fails to comply with the Property Code, the remedy
for removal should not be limited to that provided by the statute. See 795 S.W.2d
at 796, 798 (citing Olbrich, 780 S.W.2d 6; Moss, 722 S.W.2d 762; Helmsley-
Spear, 699 S.W.2d at 643; Lane v. Fritz, 404 S.W.2d 110 (Tex. Civ. App.—Corpus
Christi 1966, no writ); Hughes v. Houston NW Med. Ctr., 647 S.W.2d 5, 7 (Tex.
App.—Houston [1st Dist.] 1982, writ dism’d)).

                                          9
      We note that section 12.0071 was not yet enacted when we decided
Prappas. However, we see no reason that subsequent enactment of a method for
obtaining expunction would negate the Prappas court’s recognition that statutory
methods for nullifying a lis pendens are not exclusive—particularly considering
that section 12.0071 is available only to a “party to an action in connection with
which a notice of lis pendens has been filed,” whereas section 12.008 is more
broadly available to “a party or other person interested in the result of or in
property affected by a proceeding in which a lis pendens has been filed,” and even
the latter is not exclusive. Compare Tex. Prop. Code Ann. § 12.0071 with 12.008;
see Prappas, 795 S.W.2d at 796, 798.

      And, as appellees assert, the Government Code provides a method whereby
a person who owns or has an interest in real property and believes a filed document
purporting to place a lien or claim against the property is fraudulent may file a
motion and obtain, even ex parte, a judicial declaration that the lien is not valid.
See Tex. Gov’t Code Ann. § 51.903 (West 2013). County Investment presents no
reason it could not have sought cancellation as authorized generally or under
section 51.903. Nevertheless, in Prappas, we made no exception to the privilege
against a suit for damages for an unauthorized lis pendens based on the length of
time it might take to nullify the lis pendens, the timing for nullification when
compared to a potential sale of the property, or whether the party placing the lis
pendens had promised its removal. See 795 S.W.2d at 795–800.

      Next, County Investment maintains that the privilege does not apply because
the lis pendens was a fraudulent court record as forbidden by the Civil Practice and
Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 12.002(a). County
Investment cites an affidavit it presented, reflecting a lis pendens was filed against
multiple properties associated with [Pajooh] “to make life miserable for [Pajooh]

                                         10
and for all those associated who are joint venture and partners of [County
Investment].”   We acknowledge that Prappas involved only two of the same
claims asserted in the present case—slander of title and tortious interference—and
the court did not address any fraudulent-lien claim. See 795 S.W.2d at 795–800.
Regardless, we conclude Prappas is also applicable to County Investment’s
fraudulent-lien claim. The Prappas court’s reasoning for recognizing the privilege
was not limited to the claims asserted in the suit or contingent on the motives of
the party placing the lis pendens. See generally id. Significantly, we stated that
availability of the privilege does not turn on whether the party placing the lis
pendens acted in good faith and even malice would not dissolve the privilege. See
id. at 799.

       County Investment further cites a case in which a court of appeals upheld a
jury’s finding of no damages on a claim for purportedly filing a fraudulent lis
pendens. See Duke v. Power Elec. & Hardware Co., 674 S.W.2d 400, 405 (Tex.
App.—Corpus Christi 1984, no writ). According to County Investment, that case
shows that County Investment’s fraudulent-lien claim should be submitted to a
jury. But, that case does not negate applicability of the privilege defense because
there is no indication that defendant raised the defense and the case was decided
before the Prappas court recognized the defense. See id.

       Finally, County Investment argues that permitting the absolute privilege
defense even when the party owning the property at issue or the property itself are
not part of a judicial proceeding will have a “deleterious effect”—any party could
maliciously file a lis pendens without consequences and use the lis pendens as “a
sword.” We reject this argument for the same reasons we have rejected County
Investment’s fraudulent-lien contention—application of the privilege defense does

                                        11
not depend on the motives of the party filing the lis pendens. See Prappas, 795
S.W.2d at 799.

      In summary, because we are bound by the precedent of Prappas, dictating
that County Investment’s claims for damages are barred by the defense of absolute
privilege, we conclude the trial court did not err by granting summary judgment on
all of the claims. We overrule both of County Investment’s issues.

      We affirm the trial court’s judgment.

                                              /s/   John Donovan
                                                    Justice

Panel consists of Justices Jamison, Donovan, and Brown.

                                        12