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Docket Number

No. 88-1223.

Attorney(S)

Fowler, White, Burnett, Hurley, Banick Strickroot and A. Rodger Traynor, Miami, for petitioners. Alex Hofrichter and Alan E. Krueger, Miami, for respondent.

Judges

NESBITT, Judge.

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Smart Summary

Case Summary: RAYMOND A. ROSS, JR., ET AL. v. ROBERT BREDER, No. 88-1223 (Fla. 3d DCA Jul. 5, 1988)

Factual and Procedural Background

Respondent Robert Breder is a five percent partner in Perrine Plaza, a Florida general partnership whose principal asset is a large shopping center. Petitioners are Breder's partners. Breder filed suit seeking dissolution of the partnership, an accounting, liquidation of partnership property, and partition of the real property; an additional claim for injunctive relief was dismissed with prejudice. Approximately ten months after filing suit, upon learning of the execution of a contract for sale of the shopping center, Breder filed a notice of lis pendens. Petitioners moved to discharge the lis pendens, citing the pending closing and arguing that Breder's claims were not founded upon a duly recorded instrument as required by section 48.23(3), Florida Statutes (1987). The trial court denied the motion, finding that the special warranty deed and the partnership agreement were recorded and thus satisfied the lis pendens statute, allowing the lis pendens to remain unconditionally. Petitioners sought certiorari review. After the petition was filed, the trial court permitted Breder to amend his complaint to seek specific performance of a partnership term concerning a right of first refusal to purchase a seventy percent controlling interest allegedly assigned in breach of the partnership agreement.

Legal Issues Presented

Whether the trial court erred in denying dissolution of the notice of lis pendens filed by respondent.
Whether the existence of recorded instruments (the partnership agreement and warranty deed) automatically satisfies the statutory predicate for a lis pendens as a matter of right under section 48.23(3), Florida Statutes.
Whether, given the nature of the claims (including specific performance), petitioners are entitled to a hearing and the setting of a reasonable bond to protect them from harm should respondent be unsuccessful.

Arguments of the Parties

Petitioners' Arguments

They sought emergency discharge of the lis pendens because a closing on the sale of the shopping center was pending.
They argued Breder's claims were not founded upon a duly recorded instrument as required by section 48.23(3), Florida Statutes (1987), and thus the lis pendens should be dissolved.

Respondent's Position

Breder filed the notice of lis pendens after learning of the sale contract to protect his litigation claims affecting the property.
He later amended his complaint to seek specific performance of the partnership agreement term that would give him a right of first refusal to purchase a seventy percent controlling interest, which, if granted, would affect control over sale of the property.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
James v. Wolfe, 512 So.2d 954 (Fla. 2d DCA 1987)	Cited for jurisdictional basis for certiorari review.	Used to establish the court's jurisdiction to hear the petition.
Nero v. Nero, 475 So.2d 1361 (Fla. 5th DCA 1985)	Cited for jurisdictional basis for certiorari review.	Used to establish the court's jurisdiction to hear the petition.
Sunrise Point, Inc. v. Foss, 373 So.2d 438 (Fla. 3d DCA), cert. denied, 374 So.2d 99 (Fla. 1979)	Cited for jurisdictional basis for certiorari review.	Used to establish the court's jurisdiction to hear the petition.
Berkley Multi-Units, Inc. v. Linder, 464 So.2d 1356 (Fla. 4th DCA 1985)	Describes the purpose of a notice of lis pendens: to warn that title is in litigation and that persons may be bound by an adverse judgment.	Invoked to explain the general purpose and effect of a lis pendens in evaluating the challenged notice.
Feinstein v. Dolene, Inc., 455 So.2d 1126 (Fla. 4th DCA 1984)	Holds a lis pendens indicates a cloud on title; also cited regarding setting a bond to protect defendants from irreparable harm.	Used to support the proposition that defendants are entitled to a hearing and reasonable bond to protect them if lis pendens is to remain.
Mohican Valley, Inc. v. MacDonald, 443 So.2d 479 (Fla. 5th DCA 1984)	Recognizes that a lis pendens indicates a cloud on title and that recorded documents may not place a good faith purchaser on notice.	Applied to reject the proposition that recorded partnership agreement and deed automatically create a statutory predicate for lis pendens as of right.
Beefy King Int'l, Inc. v. Veigle, 464 F.2d 1102 (5th Cir. 1972)	States that lis pendens is proper only when the required relief might specifically affect the property; there is no other justification for burdening alienability.	Quoted to reinforce the principle that lis pendens is appropriate only when the relief sought could specifically affect the property.
Glusman v. Warren, 413 So.2d 857 (Fla. 4th DCA 1982)	Holds that recorded instruments do not automatically constitute a statutory predicate for lis pendens as of right.	Cited to support the conclusion that recording of the partnership agreement and deed does not, by itself, permit continuation of a lis pendens as a matter of right.

Court's Reasoning and Analysis

The court first asserted its jurisdiction to review the petition for writ of certiorari by citing precedent. It then reviewed the nature and purpose of a notice of lis pendens, observing that such a notice warns that title is in litigation and creates a cloud on title. The court emphasized the controlling legal principle that a lis pendens is proper only when the relief sought might specifically affect the property at issue.

Applying these principles to the facts, the court found that Breder's underlying allegations placed in question who has the right to transfer the partnership property. If Breder prevailed on his claim for specific performance, he could obtain the seventy percent interest and thereby control the ability to sell the property under the partnership agreement (which vests sale power in a partner controlling sixty percent or more).

Despite that connection between the requested relief and the property, the court reasoned that the mere fact that the partnership agreement and warranty deed are recorded does not automatically convert those documents into the statutory predicate allowing a lis pendens to continue as a matter of right. The court relied on Glusman and Mohican Valley for the proposition that recorded instruments will not necessarily put a good faith purchaser on notice of a cloud and therefore do not automatically justify a lis pendens without further protection for purchasers or defendants.

Given these considerations, the court concluded that petitioners (defendants) are entitled to a hearing at which a reasonable bond shall be set to protect them from irreparable harm if Breder is ultimately unsuccessful, consistent with Feinstein. The court therefore concluded the trial court's unconditional denial of dissolution of the lis pendens was incorrect.

Holding and Implications

Holding: The petition for writ of certiorari is granted; the order of the trial court denying dissolution of the notice of lis pendens is quashed, and the matter is remanded. The court ordered that the lis pendens be stricken from the record unless a reasonable bond is posted.

Implications:

The direct effect is that the trial court's unconditional continuation of the lis pendens was reversed and the lis pendens must be stricken unless respondent posts a bond following a hearing to set the bond.
The court required a remand for further proceedings consistent with this decision (including a hearing to set a reasonable bond to protect petitioners). The opinion does not announce or purport to create broader new precedent beyond applying existing authorities to the recorded partnership/deed context.

Administrative note from the opinion: Due to the imminence of the scheduled closing, the court limited the time for filing a motion for rehearing to five days.

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RAYMOND A. ROSS, JR., ET AL., PETITIONERS, v. ROBERT BREDER, RESPONDENT.

NESBITT, Judge.

Petitioners seek review by petition for writ of certiorari of an order denying the dissolution of a notice of lis pendens. We have jurisdiction. James v. Wolfe, 512 So.2d 954 (Fla. 2d DCA 1987); Nero v. Nero, 475 So.2d 1361 (Fla. 5th DCA 1985); Sunrise Point, Inc. v. Foss, 373 So.2d 438 (Fla. 3d DCA) cert. denied, 374 So.2d 99 (Fla. 1979). We grant the petition, quash the order, and remand for further proceedings.

Respondent, Robert Breder, is a five per cent partner in Perrine Plaza, a Florida general partnership, the principal asset of which is a large shopping center. Petitioners are his partners in that venture. The underlying case originated when Breder filed suit seeking dissolution of the partnership, an accounting, liquidation of partnership property, and partition of the real property involved. The trial court dismissed with prejudice an additional claim seeking injunctive relief. Approximately ten months after filing suit, Breder learned of the execution of a contract for the sale of the shopping center. He then filed a notice of lis pendens. Petitioners filed an emergency motion to discharge the lis pendens citing the pending closing on the sale and arguing that Breder's claims were not founded upon a duly recorded instrument as required by section 48.23(3), Florida Statutes (1987). The trial court rejected the petitioners' contentions and found that the special warranty deed pertaining to the property and the parties' partnership agreement were both filed in the public records of Dade County and thus constituted the duly required instruments within the meaning of the lis pendens statute. The court thus allowed the lis pendens to be continued unconditionally as a matter of right. This petition for writ of certiorari followed. However, since this petition was filed, the lower court permitted Breder to amend his complaint to seek specific performance of the partnership agreement's term that he, as a partner, be offered the right of first refusal to purchase the seventy per cent controlling interest which partners R.A.R. Properties, Inc. and Ross Industries, Inc. assigned to Raymond Ross, Jr., allegedly in breach of the partnership agreement.

The purpose of a notice of lis pendens is to warn all persons that the title to property is in litigation and that they are in danger of being bound by an adverse judgment. Berkley Multi-Units, Inc. v. Linder, 464 So.2d 1356 (Fla. 4th DCA 1985). A notice of lis pendens indicates that there is a cloud on the title to the property involved. Feinstein v. Dolene, Inc., 455 So.2d 1126 (Fla. 4th DCA 1984); Mohican Valley, Inc. v. MacDonald, 443 So.2d 479 (Fla. 5th DCA 1984). "Under Florida law, a lis pendens is proper only when the required relief might specifically affect the property in question. There is no other justification for burdening the alienability of property pending the outcome of a lawsuit." Beefy King Int'l, Inc. v. Veigle, 464 F.2d 1102 (5th Cir. 1972).

The allegations made by Breder in the underlying lawsuit here place in question who has the right to transfer the partnership property involved. Should Breder win his claim for specific performance, he will be entitled to buy the seventy per cent interest of his corporate partners and thus will have the right to control the sale of the property, in accordance with the partnership agreement. That agreement states that any partner controlling sixty per cent or more of the partnership shares shall have full power to sell the property.

Consequently, because the right to transfer the property is at issue, a notice of lis pendens is in order; nevertheless, the fact that the partnership agreement and the warranty deed to the property involved here are recorded does not automatically transform those documents into a statutory predicate for a lis pendens as of right. See Glusman v. Warren, 413 So.2d 857, 858 (Fla. 4th DCA 1982). This is true because while the lawsuit is facially based on the instruments of record, the partnership agreement and deed would not put a good faith purchaser on notice that there is a cloud on the title. See Mohican Valley, 443 So.2d at 481. Thus, the defendants are entitled to a hearing at which a reasonable bond shall be set to protect them from the danger of irreparable harm should Breder be unsuccessful in his suit below. See Feinstein, 455 So.2d at 1128.

Accordingly, we quash the order of the trial court denying dissolution of the notice of lis pendens and order that the lis pendens be stricken from the record unless a bond is posted.

In view of the imminence of the closing, the time for filing of a motion for rehearing is limited to five days.

ROSS v. BREDER