FOURTH DIVISION DOYLE, P. J., ANDREWS and BOGGS, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. (Court of Appeals Rule 4 (b) and Rule 37 (b), February 21, 2008) http://www.gaappeals.us/rules/
June 20, 2012
In the Court of Appeals of Georgia A12A0637. PETROLEUM REALTY II, LLC et al. v. MORRIS, BO-030 MANNING & MARTIN, LLP.
BOGGS, Judge.
Petroleum Realty II, LLC and Petroleum Realty V, LLC (collectively
“Petroleum Realty”) appeal from a superior court order granting Morris, Manning &
Martin, LLP’s (“MMM”) motion to dismiss. Petroleum Realty asserts that the trial
court erred by concluding its complaint for abusive litigation failed as a matter of a
law because it could not establish that MMM acted “[w]ithout substantial
justification” as required by OCGA § 51-7-81. For the reasons explained below, we
disagree and affirm.
We review the trial court’s grant of a motion to dismiss for failure to state a
claim de novo, and will not affirm unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party’s favor.
(Citations and footnote omitted.) Professional Energy Mgmt. v. Necaise, 300 Ga.
App. 223, 224 (1) (684 SE2d 374) (2009). See OCGA § 9-11-12 (b) (6).
Petroleum Realty’s abusive litigation complaint is based upon lis pendens
notices filed by MMM on behalf of its clients in 11 Georgia counties. In Boca
Petroco Inc. v. Petroleum Realty II, 285 Ga. 487 (678 SE2d 330) (2009), the Supreme
Court of Georgia affirmed this court’s conclusion that a lis pendens may not be filed
in Georgia to give notice of litigation pending outside of Georgia that involves the
Georgia property. See Boca Petroco Inc. v. Petroleum Realty II, 292 Ga. App. 833
(666 SE2d 12) (2008). The trial court here concluded that the lis pendens filed by
MMM did not lack substantial justification as a matter of law, however, reasoning
that “[a]lthough a divided Georgia Supreme Court eventually ruled against the actions
2 taken by [MMM], the issue had not been decided when the lis pendens at issue were
filed. The lower courts in this [S]tate, and other states throughout the country, reached
different results on this issue.” The trial court’s order did not address the issue of
malice.
On appeal, Petroleum Realty asserts the superior court examined the issue of
substantial justification too narrowly, contending it should have also considered
whether “MMM was substantially justified in maintaining the notices of lis pendens
after acquiring knowledge that the underlying [Florida] litigation was abusive.” In
order to evaluate this argument, we must examine the requirements of the abusive
litigation statute and the law governing notices of lis pendens generally.
OCGA § 51-7-81 provides: “Any person who takes an active part in the
initiation, continuation, or procurement of civil proceedings against another shall be
liable for abusive litigation if such person acts: (1) With malice; and (2) Without
substantial justification.” (Emphasis supplied.) “An action for abusive litigation
requires proof of both of these elements. And because OCGA § 51-7-81 is in
derogation of common law, it must be strictly construed.” (Citations omitted.) Bacon
v. Volvo Svc. Center, 288 Ga. App. 399, 400 (654 SE2d 225) (2007).
3 OCGA § 51-7-80 (5) defines “malice” as “acting with ill will or for a wrongful
purpose” and OCGA § 51-7-80 (8) defines “wrongful purpose” as “[a]ttempting to
unjustifiably harass or intimidate another party or witness to the proceeding” or
“[a]ttempting to unjustifiably accomplish some ulterior or collateral purpose other
than resolving the subject controversy on its merits.” A claim is without substantial
justification for purposes of an abusive litigation claim if it is “frivolous,”
“groundless in fact or law,” or “vexatious.” OCGA § 51-7-80 (7).
The purpose of a lis pendens “is one of notice, that is, the aim is to inform
prospective purchasers that real property is directly involved in a pending lawsuit, in
which lawsuit there is some relief sought in regard to that particular property.” [Cit.]
Boca Petroco, supra, 285 Ga. at 488. One of the essential elements of a valid and
effective lis pendens is that “the real property must be ‘involved’ in the suit, i.e., it
must be property which is ‘actually and directly brought into litigation by the
pleadings in a pending suit and as to which some relief is sought respecting that
particular property.’” (Citation and punctuation omitted.) Id. at 489.
With these guidelines in mind, we turn to the allegations in the complaint at
issue in this case. Petroleum Realty urges this court to find a lack of substantial
justification for the notices of lis pendens filed by MMM based upon an alleged lack
4 of substantial justification for the underlying claim for specific performance in
Florida. This we cannot do, as we are obligated to strictly construe the abusive
litigation statute. Bacon, supra, 288 Ga. App. at 400. We will therefore only look to
the notices of lis pendens filed by MMM to determine whether the trial court properly
concluded that Petroleum Realty failed to state a claim for abusive litigation.
The vast majority of Petroleum Realty’s allegations against MMM in its
complaint and on appeal go to the malice element of an abusive litigation claim. 1 But
as previously noted, Petroluem Realty must also demonstrate a lack of “substantial
justification.” Based upon our review of the complaint, the only allegation which
potentially supports this element of Petroleum Realty’s abusive litigation claim
follows:
In the fall of 2006, [MMM’s clients] amended an earlier suit that they had initiated relating to the Florida properties, to include a request for specific performance to consummate the sale of the Properties in Georgia, and thus, create a basis for the filing of the lis pendens in Georgia. The claim for specific performance was not an available remedy for [MMM’s clients] as the Leases/Amended Leases upon which the rights were premised had been terminated as a matter of law as a
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FOURTH DIVISION DOYLE, P. J., ANDREWS and BOGGS, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. (Court of Appeals Rule 4 (b) and Rule 37 (b), February 21, 2008) http://www.gaappeals.us/rules/
June 20, 2012
In the Court of Appeals of Georgia A12A0637. PETROLEUM REALTY II, LLC et al. v. MORRIS, BO-030 MANNING & MARTIN, LLP.
BOGGS, Judge.
Petroleum Realty II, LLC and Petroleum Realty V, LLC (collectively
“Petroleum Realty”) appeal from a superior court order granting Morris, Manning &
Martin, LLP’s (“MMM”) motion to dismiss. Petroleum Realty asserts that the trial
court erred by concluding its complaint for abusive litigation failed as a matter of a
law because it could not establish that MMM acted “[w]ithout substantial
justification” as required by OCGA § 51-7-81. For the reasons explained below, we
disagree and affirm.
We review the trial court’s grant of a motion to dismiss for failure to state a
claim de novo, and will not affirm unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party’s favor.
(Citations and footnote omitted.) Professional Energy Mgmt. v. Necaise, 300 Ga.
App. 223, 224 (1) (684 SE2d 374) (2009). See OCGA § 9-11-12 (b) (6).
Petroleum Realty’s abusive litigation complaint is based upon lis pendens
notices filed by MMM on behalf of its clients in 11 Georgia counties. In Boca
Petroco Inc. v. Petroleum Realty II, 285 Ga. 487 (678 SE2d 330) (2009), the Supreme
Court of Georgia affirmed this court’s conclusion that a lis pendens may not be filed
in Georgia to give notice of litigation pending outside of Georgia that involves the
Georgia property. See Boca Petroco Inc. v. Petroleum Realty II, 292 Ga. App. 833
(666 SE2d 12) (2008). The trial court here concluded that the lis pendens filed by
MMM did not lack substantial justification as a matter of law, however, reasoning
that “[a]lthough a divided Georgia Supreme Court eventually ruled against the actions
2 taken by [MMM], the issue had not been decided when the lis pendens at issue were
filed. The lower courts in this [S]tate, and other states throughout the country, reached
different results on this issue.” The trial court’s order did not address the issue of
malice.
On appeal, Petroleum Realty asserts the superior court examined the issue of
substantial justification too narrowly, contending it should have also considered
whether “MMM was substantially justified in maintaining the notices of lis pendens
after acquiring knowledge that the underlying [Florida] litigation was abusive.” In
order to evaluate this argument, we must examine the requirements of the abusive
litigation statute and the law governing notices of lis pendens generally.
OCGA § 51-7-81 provides: “Any person who takes an active part in the
initiation, continuation, or procurement of civil proceedings against another shall be
liable for abusive litigation if such person acts: (1) With malice; and (2) Without
substantial justification.” (Emphasis supplied.) “An action for abusive litigation
requires proof of both of these elements. And because OCGA § 51-7-81 is in
derogation of common law, it must be strictly construed.” (Citations omitted.) Bacon
v. Volvo Svc. Center, 288 Ga. App. 399, 400 (654 SE2d 225) (2007).
3 OCGA § 51-7-80 (5) defines “malice” as “acting with ill will or for a wrongful
purpose” and OCGA § 51-7-80 (8) defines “wrongful purpose” as “[a]ttempting to
unjustifiably harass or intimidate another party or witness to the proceeding” or
“[a]ttempting to unjustifiably accomplish some ulterior or collateral purpose other
than resolving the subject controversy on its merits.” A claim is without substantial
justification for purposes of an abusive litigation claim if it is “frivolous,”
“groundless in fact or law,” or “vexatious.” OCGA § 51-7-80 (7).
The purpose of a lis pendens “is one of notice, that is, the aim is to inform
prospective purchasers that real property is directly involved in a pending lawsuit, in
which lawsuit there is some relief sought in regard to that particular property.” [Cit.]
Boca Petroco, supra, 285 Ga. at 488. One of the essential elements of a valid and
effective lis pendens is that “the real property must be ‘involved’ in the suit, i.e., it
must be property which is ‘actually and directly brought into litigation by the
pleadings in a pending suit and as to which some relief is sought respecting that
particular property.’” (Citation and punctuation omitted.) Id. at 489.
With these guidelines in mind, we turn to the allegations in the complaint at
issue in this case. Petroleum Realty urges this court to find a lack of substantial
justification for the notices of lis pendens filed by MMM based upon an alleged lack
4 of substantial justification for the underlying claim for specific performance in
Florida. This we cannot do, as we are obligated to strictly construe the abusive
litigation statute. Bacon, supra, 288 Ga. App. at 400. We will therefore only look to
the notices of lis pendens filed by MMM to determine whether the trial court properly
concluded that Petroleum Realty failed to state a claim for abusive litigation.
The vast majority of Petroleum Realty’s allegations against MMM in its
complaint and on appeal go to the malice element of an abusive litigation claim. 1 But
as previously noted, Petroluem Realty must also demonstrate a lack of “substantial
justification.” Based upon our review of the complaint, the only allegation which
potentially supports this element of Petroleum Realty’s abusive litigation claim
follows:
In the fall of 2006, [MMM’s clients] amended an earlier suit that they had initiated relating to the Florida properties, to include a request for specific performance to consummate the sale of the Properties in Georgia, and thus, create a basis for the filing of the lis pendens in Georgia. The claim for specific performance was not an available remedy for [MMM’s clients] as the Leases/Amended Leases upon which the rights were premised had been terminated as a matter of law as a
1 Specifically, Petroleum Realty alleges that MMM knew that its clients’ underlying claim for specific performance in Florida had no valid basis and was being asserted to avoid collection of a large judgment.
5 result of [MMM’s clients]’ material breaches. The claims for specific performance, as well as other claims asserted by [MMM’s clients] were later dismissed as barred by the judgement entered in [a] 2004 Lawsuit. Even after being notified of this dismissal, all of the Defendants continued to refuse to cancel the lis pendens.
Based upon these allegations, Petroleum Realty asserts that MMM continued the lis
pendens proceedings “without substantial justification” because dismissal of its
clients’ claim for specific performance in Florida meant that the Georgia property
identified in the notices of lis pendens was no longer “involved” in the Florida
litigation.2 MMM counters this assertion by pointing to pleadings and exhibits
thereto3 showing that its clients attempted to appeal the order dismissing their specific
performance claim, but the appeal was dismissed and their right to appeal was
preserved until the Florida court issued a final order in the pending action.
A lis pendens may properly remain in effect to give notice that property is
involved in a pending lawsuit until a party’s right to appellate review has been
2 The Florida court did not dismiss all of the claims asserted by MMM’s clients. 3 “[A] trial court may properly consider exhibits attached to and incorporated in the pleadings in considering a motion to dismiss for failure to state a claim for relief.” (Citation and footnote omitted.) Hendon Properties. v. Cinema Dev., 275 Ga. App. 434, 435 (620 SE2d 644) (2005).
6 extinguished. See Vance v. Lomas Mortgage USA, 263 Ga. 33, 36 (1) (426 SE2d 873)
(1993); Executive Excellence v. Martin Bros. Investments, 309 Ga. App. 279, 283 (1)
(a) (710 SE2d 169) (2011). Consequently, MMM’s failure to withdraw the notices of
lis pendens based upon the non-final dismissal of its clients’ specific performance
claim does not demonstrate that it continued the notices of lis pendens “without
substantial justification.”
For all of the above-stated reasons, Petroleum Realty cannot establish that
MMM acted without substantial justification and we need not address the malice
element of its abusive litigation claim. We therefore affirm the trial court’s order
dismissing Petroleum Realty’s abusive litigation claims against MMM.
Judgment affirmed. Doyle, P. J. and Andrews, J., concur.