North Coast Business Park v. Superior Court

Opinion

STANIFORTH, J.

Real parties are three of an unknown number of limited partners in a partnership (PT I) which was formed to purchase and develop a tract of land. They received their collective 15 percent partnership interest plus monetary compensation in return for services rendered to the partnership. Financial difficulties made it necessary to transfer ownership of the property in order to secure new financing. The general partners of PT I undertook to form a second partnership (PT II) to which the property has been transferred. PT II executed promissory notes in favor of PT I in

[860]

the amount of approximately $3,750,000 secured by two deeds of trust on the property. Real parties brought suit, saying the property was transferred for $17,650,000 when it has a fair market value of $24,500,000. Their suit alleges breach of fiduciary duty, breach of agreement, fraud warranting imposition of a constructive trust and violations of the Penal Code. As part of the cause of action seeking a constructive trust, real parties filed a lis pendens on the property. Petitioner sought to have the lis pendens expunged based on Code of Civil Procedure sections 409.1 and 409.2. This was granted under Code of Civil Procedure section 409.2 on condition petitioner post a $1 million bond. Petitioner seeks to have the lis pendens expunged under Code of Civil Procedure section 409.1 so that no bond will be required.

Code of Civil Procedure section 409.1 reads in pertinent part: “At any time after notice of pendency of an action has been recorded pursuant to Section 409 or other law, the court in which the action is pending shall, upon motion of a party to the action supported by affidavit, order that the notice be expunged, unless the party filing the notice shows to the satisfaction of the court, by a preponderance of the evidence, that:

“(a) The action does affect title to or right of possession of the real property described in the notice . . . .”

Subsection (a) requires there be an action which affects title or right of possession. An action to impose a constructive trust may be one affecting title to or possession of land

(Coppinger