MEDICAL FACILITIES DEVELOPMENT, INC., Petitioner,
v.
LITTLE ARCH CREEK PROPERTIES, INC., Respondent.
Supreme Court of Florida.
*916 Terrence Russell, Nancy W. Gregoire, John R. Keller and John H. Pelzer of Ruden, McClosky, Smith, Schuster & Russell, P.A., Fort Lauderdale, for Petitioner.
Stanley A. Beiley of Hornsby, Sacher, Zelman, Stanton, Paul & Beiley, P.A., Miami, for Respondent.
WELLS, Justice.
We have for review Medical Facilities Development, Inc. v. Little Arch Creek Properties, Inc.,
The events giving rise to the dispute in this case began in 1993, when Medical Facilities Development, Inc. (Medical Facilities) offered to purchase an office building owned by Little Arch Creek Properties, Inc. (Little Arch) for $5.5 million. The sale was never completed, and Little Arch contracted to sell the building to another entity for $6.5 million. Medical Facilities then sued for specific performance, claiming that a purchase contract existed based upon the exchange of correspondence and communications. Medical Facilities also filed a notice of lis pendens which prevented Little Arch from closing on the latter contract. Medical Facilities,
The Third District Court of Appeal affirmed. The court first turned to section 48.23(3), Florida Statutes (1993), which governs a notice of lis pendens when the initial pleading does not show that the action is founded upon a duly recorded instrument or construction lien.[1] This section permits the trial court to control and discharge the notice of lis pendens in the same manner that a court may grant and dissolve injunctions. See § 48.23(3). The court recognized that the reference to injunctions has led to three different legal standards when determining whether a property-holder defendant is entitled to a lis-pendens bond. The first standard allows a trial court to require the lis-pendens proponent to post a bond if the property-holder defendant can show that the bond was necessary for protection from irreparable harm. See, e.g., Feinstein. The second would leave it to the trial court's discretion to determine whether a bond would be required after considering whether the notice of lis pendens would place a cloud on the title. See, e.g., Mohican Valley. The third standard provides the trial court with no discretion and requires a bond to be posted whenever a lis pendens is filed. The district court followed the third standard and affirmed both the requirement and the amount of the bond.
In so holding, the court rejected as dicta our statement in Chiusolo that the statutory reference to injunctions exists to permit a property-holder defendant to ask for a bond *917 if needed to protect the defendant from irreparable harm. Medical Facilities,
On appeal to this Court, Medical Facilities contends the district court's decision requiring a bond in all cases not founded on a duly recorded instrument or construction lien imposes too great a burden on the lis-pendens proponent. Rather, Medical Facilities argues that the statutory reference to injunctions gives the trial court broad discretion to determine whether a bond is appropriate in those cases in which the property-holder defendant can show "irreparable harm," which should be defined as harm which cannot be adequately compensated by monetary reward. See generally id. at 1306-07 (Green, J., dissenting). On the other hand, Little Arch agrees that the trial court should have discretion in requiring a bond. However, it contends that the irreparable-harm standard is impractical, and it advocates a rule to require a lis-pendens bond in cases in which the property-holder defendant can show damage or injury. See generally, id. at 1306 (Barkdull, J., specially concurring). For the reasons expressed below, we agree with the position advanced by Little Arch.
While the term "lis pendens" literally implies a pending suit, it is defined as the jurisdiction, power, or control which courts acquire over property involved in a pending suit. See DePass v. Chitty,
However, the protection which a notice of lis pendens affords is counterbalanced by the constraining effects the notice has on the property-holder defendant. The notice will often prevent the property holder from selling or mortgaging the property. See Medical Facilities,
We recently addressed the statutory reference to injunctions in Chiusolo. In that case, we held that the proponent of a notice of lis pendens has the burden of proof to show a fair nexus between the property and the dispute. After reaching this decision, we proceeded to address the meaning of the statutory reference to injunctions and agreed with the observation of the Fifth District in Sparks v. Charles Wayne Group,
[T]he statutory reference to injunctions exists merely to permit property holders to ask in an appropriate case that the plaintiff post a bond where needed to protect the former from irreparable harm. The bond requirement, whenever appropriate, is a vehicle for protecting the property holders just as the lis pendens protects the plaintiff and third parties.
Chiusolo,
We continue to adhere to our position in Chiusolo that the decision of whether a lis-pendens bond should be posted rests within the discretion of the trial judge. However, we clarify our statement in Chiusolo and specifically hold that the trial court's discretion to require a bond is not limited only to cases in which the property-holder defendant can show irreparable harm. Rather, the trial court may also consider the likelihood of other damages which do not meet the standard of irreparable harm. We agree with *918 Judge Barkdull's statement that the property-holder defendant's right to a bond should be conditioned upon a demonstration of the potential loss or damage the defendant will likely incur if the notice of lis pendens is unjustified. See Medical Facilities,
Our holding today specifically rejects the interpretation that the statutory reference to injunctions requires the lis-pendens proponent to post a bond in every case. As noted above, a significant difference between an injunction and a notice of lis pendens is that the notice of lis pendens not only protects the plaintiff but also warns third parties about the pending litigation. Given this distinction, providing the trial court with broad discretion to determine whether a bond is necessary rather than requiring it in every case will better promote the several purposes of the notice of lis pendens.
In sum, we hold the trial judge has broad discretion to require the proponent of a notice of lis pendens to post a bond when the notice is not based on a duly recorded instrument or construction lien in cases in which the property-holder defendant can show damage or injury will likely be suffered by that defendant in the event the notice was unjustified.
Accordingly, we quash in part the decision of the district court to the extent that it holds that a lis-pendens bond is mandatory, and we approve in part the decision's affirmance of both the entitlement to and amount of the bond. We clarify our statements in Chiusolo to explain that the trial court is not limited to considering whether the property-holder defendant will suffer irreparable harm when determining if a lis-pendens bond is required. Additionally, we approve Mohican Valley and Feinstein only to the extent that they are consistent with this opinion.
It is so ordered.
KOGAN, C.J., and OVERTON, SHAW, GRIMES, HARDING and ANSTEAD, JJ., concur.
NOTES
Notes
[1] The statute provides: "When the initial pleading does not show that the action is founded on a duly recorded instrument or on a lien claimed under part I of chapter 713, the court may control and discharge the notice of lis pendens as the court may grant and dissolve injunctions."
[2] The amount of a lis pendens bond in these circumstances is likewise within the discretion of the trial court. The amount should bear a reasonable relationship to the amount of damages which the property-holder defendant demonstrates will likely result if it is later determined that the notice of lis pendens was unjustified.