PEERY v. BENEFICIAL STANDARD PROPERTIES (1980)

This petition for a writ of mandate challenges trial court denial of a motion to expunge lis pendens. In deciding this matter we need not consider the facts and procedural posture of the underlying lawsuit. We focus solely upon the trial court's express reason for denying the motion to expunge. The court's statements on the record indicate a misunderstanding of our decision in California-Hawaii Development, Inc. v. Superior Court (1980) 102 Cal.App.3d 293, 162 Cal.Rptr. 365, and a consequent failure to exercise judicial discretion in ruling upon the motion to expunge. We grant the petition, vacating the trial court decision and returning the matter for reconsideration.

In California-Hawaii Development, Inc., supra, lis pendens had been filed with respect to a lawsuit, the 14th cause of action of which sought recission of a foreclosure sale. The trial court granted a defense summary judgment motion as to the recission cause of action and then granted a motion to expunge lis pendens on the ground that the recission cause of action was “no longer in issue.” We granted a petition for writ of mandate, concluding that the cause of action was still “pending” within the meaning of Code of Civil Procedure section 409 because the plaintiff still had an opportunity to appeal the trial court ruling during any appeal from an adverse judgment on the complaint.

In addition, because of ambiguity in the wording of Code of Civil Procedure section 409.1, we undertook to suggest a reading of the section which would make it more meaningful to the party seeking to expunge. The section provides that the court in which an action is pending “shall 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: (b) the party recording the notice has commenced or prosecuted the action for a proper purpose and in good faith.”

On its face, the section is subject to an interpretation that in order to avoid expungement the party resisting the motion need show by a preponderance of the evidence only that he commenced the action in good faith and with a proper purpose. Prosecution beyond the trial court level could be for a totally improper reason or in bad faith. We concluded that the section should be read to require that a party recording notice, losing in the trial court, and prosecuting an appeal, prove to the court that his prosecution to the present stage was in good faith and for a proper purpose. We further suggested that if a party was attempting to retain a lis pendens after a trial court ruling, “the merits of the trial court ruling should play an important role in determining whether a lis pendens should be expunged.” (102 Cal.App.3d at 299-300, 162 Cal.Rptr. 365.)

In the matter presently under consideration, the trial court has expressed the view that the California-Hawaii case “makes that section of the code meaningless” and that it “eliminates 409.1 from the code.” Nothing could be further from the truth. Case law had established some time prior to the California-Hawaii decision that a lawsuit was still “pending” for purposes of section 409.1 when the trial court's ruling was awaiting review on appeal. Thus, prior to the California-Hawaii decision it was clear that an appealing party could maintain his lis pendens by proving by a preponderance of the evidence that the action was “commenced or prosecuted” for a proper purpose and in good faith.

Our decision in California-Hawaii merely made clear that he would have to show more than good faith and proper purpose at the commencement of the lawsuit and that assertions of good faith and proper purpose could be overcome by argument that the appellant had little chance of succeeding in his challenge to the trial court ruling. Our decision did not change the burden of proof. It did not remove any factors the trial court may consider in determining good faith and proper purpose.¹ If anything it untied the trial court's hand in deciding motions to expunge pending appeal because it added to the appellant's burden a requirement that he show that appellate court review would be sought in good faith and for a proper purpose.²

On the record before this court it is clear that the trial court denied the motion to expunge without considering whether real party's appeal was being prosecuted in good faith and for a proper purpose. The court erroneously believed that our ruling in California-Hawaii had made it impossible to expunge lis pendens during pendency of an appeal. The court's ruling must be annulled in order that the court may reconsider the motion.

We have reached our conclusion after full briefing by the parties. Issuance of an alternative writ would only cause further delay. We therefore issue a peremptory writ in the first instance. (Code Civ.Proc., sec. 1088; San Diego Wholesale Credit Men's Assn. v. Superior Court (1973) 35 Cal.App.3d 458, 110 Cal.Rptr. 657; Goodenough v. Superior Court (1971) 18 Cal.App.3d 692, 697, 96 Cal.Rptr. 165.)

Let a peremptory writ of mandate issue directing the Santa Clara County Superior Court to vacate its order of August 4, 1980 denying petitioner's motion to expunge lis pendens and to reconsider the motion in light of the views expressed herein.

Certified for publication.

FOOTNOTES

1.  In stating that “(i)f there is almost no likelihood that the party filing the lis pendens will upset the trial court ruling, the owner of the property should not be burdened by the lis pendens during potentially drawn out appeals proceedings” (102 Cal.App.3d at 300, 162 Cal.Rptr. 365), we were only suggesting one circumstance in which expungement should take place. We did not preclude an adverse finding on purpose and good faith based upon other considerations.

2.  Furthermore, our decision had no effect upon the trial court's ability to condition the granting or denying of a motion to expunge upon a requirement that the prevailing party give an undertaking (see Code Civ.Proc., secs. 409.1, subd. (b) and 409.2).

WHITE, Presiding Justice.

FEINBERG and DEAL, JJ., concur.