Michael, R. v. GLD Foremost Holdings, LLC
156 A.3d 318
| Pa. Super. Ct. | 2017Background
- In May 2015 GLD Foremost Holdings, LLC (GLD) agreed to buy Foremost Industries from Ralph Michael under a Stock Purchase Agreement (SPA); Michael later sued GLD in federal court claiming GLD failed to pay $2 million of the purchase price and sought money damages.
- GLD sued Michael in a separate federal action asserting claims under the SPA and claiming a possessory interest in certain Foremost real property (including parcel 01-0A16-126).
- In January 2016 Michael filed praecipes to index lis pendens in Franklin County against three Foremost-owned tracts (the Greencastle parcels), certifying the federal actions as "concerning real property."
- GLD, then negotiating a sale of the office building (one Greencastle tract), filed an emergency petition to strike the lis pendens, arguing Michael’s federal complaint seeks only money damages and does not put title in issue.
- The trial court denied the petition; GLD appealed. The Superior Court reviewed whether lis pendens was proper when the underlying federal suit sought only monetary relief and not title to the property.
Issues
| Issue | Plaintiff's Argument (Michael) | Defendant's Argument (GLD) | Held |
|---|---|---|---|
| Whether 42 Pa.C.S. § 4302/4304 permits filing lis pendens when a federal action is merely "concerning" real property even if title is not at issue | Section 4304(b) authorizes indexing federal actions "concerning real property," so notice was proper without a title-specific claim | Lis pendens requires title to be in issue; Michael’s federal claims seek only money damages, so praecipe was improper | Court rejected Michael’s statutory argument and held common-law threshold requires title to be at issue; lis pendens improper |
| Whether the trial court erred by treating whether plaintiff sought title as irrelevant | Michael argued the statute’s language made the title-question irrelevant | GLD argued the threshold inquiry is whether title is actually in dispute and the relief sought (title vs. money) matters | Court held the trial court abused its discretion by ignoring the threshold title inquiry; relief sought is relevant |
| Whether a lis pendens may be maintained where underlying suit seeks only personal/contract damages | Michael contended potential impacts on real property justified notice | GLD contended allowing lis pendens for money claims would permit clouds on title whenever contract suits arise | Court held lis pendens has no application to actions seeking only personal demands; allowing it here would be improper |
| Whether balancing equities could save the lis pendens once title is not at issue | Michael argued equitable notice to buyers justified leaving lis pendens | GLD argued cancellation is necessary because lis pendens would be harsh and arbitrary given no title dispute | Court found equitable balancing unnecessary after threshold failure and ordered cancellation of the lis pendens |
Key Cases Cited
- Dorsch v. Jenkins, 365 A.2d 861 (Pa. Super. 1976) (lis pendens is equitable/common-law doctrine subject to equitable principles)
- Vintage Homes v. Levin, 554 A.2d 989 (Pa. Super. 1989) (lis pendens applies where property is subject to litigation and third-party interests will be affected)
- Psaki v. Ferrari, 546 A.2d 1127 (Pa. Super. 1988) (lis pendens applies only where title to real estate is involved; personal claims cannot predicate lis pendens)
- Dice v. Bender, 117 A.2d 725 (Pa. 1955) (equity may cancel lis pendens that would arbitrarily cloud title)
- McCahill v. Roberts, 219 A.2d 306 (Pa. 1966) (distinguishing lis pendens from an actual lien; court can rescind lis pendens)
- Rosen v. Rittenhouse Towers, 482 A.2d 1113 (Pa. Super. 1984) (appellate standard for chancery review; courts must balance equities in lis pendens disputes)
- DiDonato v. Reliance Standard Life Insurance Co., 249 A.2d 327 (Pa. 1969) (equitable conversion: purchaser becomes equitable owner upon sale agreement)
- Payne v. Clark, 187 A.2d 769 (Pa. 1963) (discussing vendor’s security interest and equitable conversion)