Does the California Litigation Privilege Apply to a Lis Pendens?

As discussed in the recent California appellate decision in Kim v. New Life Oasis Church, three churches went to court, and the ensuing litigation lasted 14 years.

In the beginning, the conflict was about which church owned what land. The dispute evolved.

The present questions concerned a deed in trust that attorney Steven C. Kim obtained to secure his fee for services to one of the litigating churches.

The appellate court decided two legal questions.

First, is there issue preclusion?

Second, does the litigation privilege insulate Kim’s lis pendens from claims for slander of title and abuse of process?

On September 20, 2018, Kim filed the action that is the subject of the appeal. As a self represented plaintiff, Kim sued New Life, seeking a declaration that, contrary to the previous court action, his lien was valid and the October 19, 2017 order extinguishing that lien was “rendered without jurisdiction and therefore is of no legal force and effect . . . .”

Kim included a second cause of action for an injunction. Kim amended to add the Bank of Hope, which by virtue of its loan was a lienholder on the property.

Kim attached the deed of trust as an exhibit to his complaint.  In short, the deed allowed Kim to foreclose on the property, to cause it to be sold, and to recover his attorney fee from the sale proceeds.

Kim recorded a lis pendens (notice of pendency of legal action) against this property.

In response to Kim’s suit, New Life filed a cross-complaint against him, alleging his lis pendens was a slander of title and an abuse of process.

New Life and Bank of Hope moved for judgment on the pleadings. The trial court granted this motion without leave to amend. The court reasoned, in part, that the doctrine of collateral estoppel barred Kim’s effort to relitigate the lien question.

Kim filed a trial brief arguing the litigation privilege protected his recording of the lis pendens.

The court held a bench trial on New Life’s cross-complaint. The court ruled for New Life. It awarded it $277,821.90 in compensatory damages against Kim.

The trial court’s statement of decision did not address the topic of the litigation privilege. This privilege was Kim’s primary defense to the cross-complaint. When the dust settled in the trial court, Kim had lost entirely. He alone appealed.

The doctrine of preclusion aims to prevent a dispute resolved in one case from being relitigated in a later case. Courts now refer to claim preclusion rather than res judicata, and to issue preclusion rather than collateral estoppel.

Issue preclusion prevents relitigation of previously decided issues and applies only (1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.

The trial court correctly found that earlier litigation precluded relitigation of the lien question.

On October 19, 2017, a trial court decided the lien was invalid. The court also ordered Kim to withdraw his escrow demand so the sale to New Life could proceed.

Kim could have appealed the issue by filing a motion to vacate, but he never took this step. No one sought review in the Supreme Court. That case is over. The judgment is final.

The basis for New Life’s cross-claims against Kim for slander of title and abuse of process. was the lis pendens that Kim recorded on September 21, 2018.

A lis pendens is a recorded document that constructively announces to the world a lawsuit may affect real property identified in the lis pendens. The purpose is to make any judgment in the specified lawsuit binding on those who might acquire an interest in that property.

The lis pendens effectively republishes the pleadings in the lawsuit. Potential buyers or lenders can go to the courthouse and examine the pleadings. Any party in a lawsuit asserting a real property claim may file a lis pendens. 

The litigation privilege applies to any communications made in judicial or quasi-judicial proceedings by litigants or other participants to achieve the objects of the litigation that have some logical relation to the action.

The California Supreme Court interprets the litigation privilege broadly to further its salutary purposes. The main purpose is to afford litigants and witnesses complete access to courts without fear of later harassment via derivative tort actions. If parties, lawyers, and witnesses worried their actions could be the subject of retaliatory attacks, their worry could inhibit open communication in judicial proceedings.

The litigation privilege protects the recording of a lis pendens so long as the lis pendens (1) identifies an action previously filed in a court of competent jurisdiction, and (2) the action affects title or right to possession of real property.

Kim’s lis pendens satisfied both conditions and thus gained the protection of the litigation privilege.

First, Kim’s lis pendens identified a lawsuit previously filed in a court of competent jurisdiction. No one claimed otherwise.

Second, his lis pendens identified an action affecting the title of real estate. Kim’s suit sought to revive his expunged deed of trust, which had given Kim the power to order the sale of the property if his client did not pay his attorney fee. Selling the property would affect the title to the property. It would dramatically affect the title. It would change the title completely.

Thus, the litigation privilege protected Kim’s lis pendens.

New Life asserted the litigation privilege did not apply, citing Campbell v. Superior Court, but  Campbell is inapposite. Campbell held a prayer for the imposition of an equitable lien in the underlying complaint is not a real property claim.  

Campbell did not involve a deed of trust with a power of sale. Conversely, this appeal did not concern a prayer for the imposition of an equitable lien.

In sum, it was legal error for the trial court to make Kim liable for slander of title. The litigation privilege barred this result.

The litigation privilege broad purpose is to safeguard access to the judicial system by shielding litigants and lawyers from fear of later harassment via derivative tort actions. This broad purpose blocked the derivative tort action of abuse of process just as it blocked the slander-of-title claim.

LESSONS:

1.         Issue preclusion prevents relitigation of previously decided issues and applies only (1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.

2.         A lis pendens is a recorded document that constructively announces to the world a lawsuit may affect real property identified in the lis pendens. The purpose is to make any judgment in the specified lawsuit binding on those who might acquire an interest in that property.

3.         The litigation privilege applies to any communications made in judicial or quasi-judicial proceedings by litigants or other participants to achieve the objects of the litigation that have some logical relation to the action.