The Docket: No Stay + No Bond = No Lis Pendens Following Trial Court Judgment
December 15, 2020
The Docket is a monthly TitleNews Online feature provided by ALTA’s Title Counsel Committee which reviews significant court rulings and other legal developments and explains the relevance to the title insurance industry.
Michael J. Sikora III, managing partner of Sikora Law LLC, provided today’s review of a ruling by Ohio’s First District Court of Appeals that addressed what must be done in order for lis pendens to apply in the face of a final trial court judgment. Sikora can be reached at [email protected].
Citation: Clinton v. Home Investment Fund V, LP, 2020-Ohio-4555 (1st Dist.)
Facts: The plaintiffs filed a quiet title action, seeking to confirm that a mortgage originally granted in favor of Huntington National Bank and its nominee MERS, and later assigned to Home Investment Fund, had been extinguished in a prior foreclosure case. The trial court granted summary judgment in Plaintiffs’ favor, and rejected the mortgagee’s primary argument that MERS should have been named in the prior foreclosure case, in addition to Huntington.
After the final judgment was entered by the trial court, the mortgagee filed an appeal, but did not seek a stay of the trial court’s judgment or post a supersedeas bond, based upon its belief that its claimed mortgage interest was protected during the pendency of the appeal by lis pendens.
After the mortgagee filed its appeal, the plaintiffs sold the property, and our firm filed a Motion to Dismiss the Appeal as Moot. The mortgagee vigorously opposed dismissal, arguing that the validity of the Huntington/MERS mortgage had not been finally determined, and that lis pendens continued during the appeal, preventing the parties’ dispute from becoming moot.
Holding: The Court of Appeals unanimously rejected the mortgagee’s arguments and dismissed the appeal. The Court of Appeals noted that Ohio’s lis pendens statute “does not provide for a terminating event,” so the Court of Appeals was called upon to make that determination. In so doing, the Court of Appeals held that lis pendens terminates upon final judgment by a trial court, and that “a party must seek a stay of judgment pending appeal in order to reinvoke lis pendens and protect its interest in the underlying property.” That holding clarified an important aspect of the practical operation of Ohio’s lis pendens doctrine.
Importance to the title industry: Clinton is a reminder of the contours of the doctrine of lis pendens and that lis pendens does not always apply when there is pending litigation in any form and no matter what the circumstances. Careful consideration of the facts and circumstances of each case is often necessary, and underwriting counsel should be consulted on a pending transaction in which there is any question as to whether lis pendens actually applies.
To review the Clinton decision issued by Ohio's First District Court of Appeals, click here.
Contact ALTA at 202-296-3671 or [email protected].