DC: Filing a lis pendens may expose filer to claim if the underlying lawsuit was filed in bad faith


In Havilah Real Property Services, LLC v. VLK, LLC, et al., the D.C Court of Appeals recently addressed the merits of litigation and the privilege associated with the recordation of lis pendens in a lengthy dispute between Havilah and VLK that was directly related to a personal dispute between the respective two owners, Joan A. Alderman and Vicky Lynn Karen, over the affections of one man, LaMar Carlson. In connection with a civil suit filed by VLK against Havilah, Alderman, and Lamar Carlson in the Circuit Court for Montgomery County, Maryland alleging interference with a business plan to purchase distressed properties in the District of Columbia, VLK recorded fifty-one lis pendens in the Land Records of the District of Columbia against properties owned by Havilah. During the pendency of the Maryland action, Havilah and Alderman sued VLK Karen in the Superior Court of the District of Columbia for malicious prosecution and tortious interference with contract and/or prospective advantage based upon the recordation of thirty-one of the fifty-one recorded lis pendens, and the case was stayed pending the outcome in the Maryland litigation. Ultimately, VLK and Karen did not prevail on their claims against Havilah and Alderman in Maryland and the D.C. Superior Court action recommenced.

In the D.C. action, the trial judge granted VLK and Karen summary judgment on the malicious prosecution claim, finding that the recording of the lis pendens was not a “special injury” sufficient to maintain the cause of action. The trial court denied VLK and Karen summary judgment on the claim tortious interference, and the jury found in favor of Havilah and Alderman on their claim awarding $602,942.00.

At issue in the appeal was whether the privilege attached to the recording of a lis pendens was absolute or conditional and whether or not the recording of thirty-one lis pendens was a “special injury” sufficient to support a claim for malicious prosecution and. The Court of Appeals clarified the privilege that attaches to the recording of a lis pendens, resolving a division within the Courts of the District of Columbia.

In the majority of jurisdictions, the privilege of recording a lis pendens is absolute. However, the D.C. Court of Appeals, in adopting the minority rule, held that the act of engaging in litigation is conditionally privileged against a claim of tortious interference with contract and/or prospective advantage. The finding of a conditional privilege was compelled by the Court’s adoption of the Restatement on tortious interference. The filing of a lis pendens shall be protected so long as the underlying litigation was pursued in good faith. If the underlying litigation was filed in bad faith, the filing party may be liable for all damages proximately caused by the filing, and any damages resulting from the recordation of lis pendens related to the litigation. Those damages include damages for the diminished fair market value of the property.

The Court further held that the numerous lis pendens did not constitute a special injury sufficient to support a claim for malicious prosecution, and reaffirmed that the Court follows a narrow “special injury” requirement. The Maryland litigation that resulted in the recoding of numerous lis pendens involved a dispute over numerous properties, which would not be different from similar suits involving multiple properties. Any injury caused by the lis pendens was incidental.

Parties and attorneys should be certain when recording lis pendens that the litigation has been filed in good faith, or suffer the consequences.