Garcia v. Tygier

1

Karl Garcia, Appellant, v. Michelle Tygier and Robert Rubin, Appellees

Nos. 22-CV-0051, 22-CV-0302

Court of Appeals of The District of Columbia

June 1, 2023

Submitted January 12, 2023

Amended June 29, 2023

Appeals from the Superior Court of the District of Columbia (2021-CA-001962-R(RP)) (Hon. Heidi M. Pasichow, Trial Judge)

Bethany R. Benes was on the brief for appellant.

Laurin H. Mills was on the brief for appellees.

Before MCLEESE and DEAHL, Associate Judges, and GLICKMAN, Senior Judge.

GLICKMAN, SENIOR JUDGE

On May 28, 2021, appellant Karl Garcia filed a notice of lis pendens in the public land records of the District of Columbia. The notice asserted Garcia's entitlement to a lien against "all the estate, real and personal," of appellees Michelle Tygier and Robert Rubin, and specifically against their personal residence in the District of Columbia. The notice was based on a pending lawsuit Garcia had filed against them and other defendants in Fairfax County Circuit Court, in which he alleges that the defendants had violated Virginia laws against fraudulent or otherwise improper conveyances of property to delay, hinder, or defraud creditors.

Tygier and Rubin responded to the lis pendens filing by suing Garcia in D.C. Superior Court. In that lawsuit, they asked the court to cancel and release the lis pendens notice and to sanction Garcia for the filing under Superior Court Civil Rule 11 by awarding them the attorneys' fees and costs they incurred to seek relief from it. The Superior Court denied Garcia's motion to dismiss the suit and granted appellees the relief they sought. In this appeal, Garcia challenges both the cancellation and the sanction.

We affirm the Superior Court's rulings, albeit with one qualification necessitating a remand to correct the court's order. As we explain below, the lis pendens notice did not and could not comply with the requirements of D.C. law, as set forth in D.C. Code § 42-1207, because appellees' ownership in their D.C. residence was not directly at issue in Garcia's pending Fairfax County lawsuit. Cancellation of the notice therefore was proper and required by D.C. law.

Furthermore, the court did not abuse its discretion by imposing a Rule 11 monetary sanction, because Garcia's lis pendens filing against appellees' residence is not warranted by existing law or by a nonfrivolous argument for altering existing law or establishing new law. Garcia ignored the requirements of D.C. Code § 42-1207; and while he predicates his right to file the notice on his supposed entitlement under the law of Virginia to a lien against any and all property of appellees, the judge in the Fairfax County Circuit Court proceedings had informed him, correctly, that his potential lien would apply only to assets (if any) that were transferred improperly to thwart creditors. Appellees' family home concededly is not such an asset, and Garcia did not allege or have reason to believe it was.

The record on appeal also confirms that the amount of the award of appellees' fees and costs incurred on account of the filing was appropriately supported and justified. However, given the law-related nature of the Rule 11 violation, the monetary sanction should have been imposed solely on Garcia's attorney and not on Garcia. As the order imposing the sanction appears not to comply with that requirement, we remand for the judge to amend the sanction order to make clear that it is solely Garcia's attorney who is responsible for paying the sanction.

I. Background

Garcia filed his lawsuit in Fairfax County Circuit Court in October 2020. The action is still pending. The defendants named in Garcia's complaint are appellees Tygier and Rubin, their son, and several entities they allegedly controlled or of which they allegedly were the agents.^[1] One of those entities, 819D LLC, is a District of Columbia limited liability company that sold Garcia in 2017 a condominium unit located at 819 D Street NE in the District. Garcia's complaint alleges that after he acquired this unit, he discovered it had manifold structural defects and other serious flaws, which led him to assert a multimillion dollar claim against 819D LLC and certain affiliated parties in a lawsuit he filed in D.C. Superior Court in May 2020.

Tygier and Rubin are not parties to that Superior Court lawsuit, which also remains pending.^[2] But in his Fairfax County lawsuit, Garcia alleges that they and the other named defendants transferred funds between and among themselves in order "to remove the funds from potential collection and to hinder, delay, and/or defraud" him and other creditors of 819D LLC, in violation of Virginia's fraudulent and voluntary conveyance statutes, Va. Code Ann. §§ 55.1-400 and 55.1-401. Garcia's amended complaint in the Fairfax County lawsuit seeks over $2 million in compensatory damages plus prejudgment interest, punitive damages, and attorney's fees and litigation costs. In addition, although Garcia does not allege that any assets other than cash were transferred improperly to thwart creditors, his complaint also asks the Fairfax County Circuit Court to enter a lien "against all the estate, real and personal, of each Defendant, pursuant to Va. Code § 55.1-402" (emphasis added),^[3]whether or not such property was improperly transferred or has any other connection with the claims in the complaint.

The defendants filed a demurrer to the complaint, which the Circuit Court sustained in part and overruled in part for reasons the judge put on the record at a hearing on April 23, 2021, and incorporated verbatim in a written order entered on April 29, 2021. The judge overruled the demurrer as to the fraudulent and voluntary conveyance counts of the complaint. But as to the relief that Garcia could obtain if he succeeded in proving those counts, the judge said the following (emphasis added):

Regarding whether Plaintiff can obtain an in personam judgment against Defendants, generally a creditor obtains a lien on the assets that were alleged to have been fraudulently transferred once the fraudulent transfer has been unwound, under [Va. Code Ann. §] 55.1-402. However, the Supreme Court [of Virginia] carved out a narrow exception in Price versus Hawkins,^[4] which . . . allowed the Plaintiff to obtain an in personam judgment where the evidence showed the grantees assisted the debtor in hiding cash assets that the creditor otherwise would have reached.

In other words, the judge explained that any lien obtainable by Garcia in the Fairfax County Circuit Court action would be limited under Virginia law to assets that were transferred in violation of the fraudulent or voluntary conveyance statutes, if there were such assets; with the further proviso that if Garcia proved there were improper conveyances of cash (the only improper conveyances Garcia alleged), the available relief under Virginia law would be an in personam judgment rather than imposition of a lien (or other in rem relief).

The following month, however, on May 28, 2021, Garcia filed in the District of Columbia the "Memorandum and Notice of Lis Pendens and Lien" (the Notice) against appellees' personal residence that is the subject of this appeal. The Notice states that it is filed "pursuant to Va. Code § 8.01-268 [the Virginia lis pendens statute] and Va. Code § 55.1-402." It cites and attaches Garcia's Fairfax County Circuit Court complaint and states the monetary amount of the claim asserted by Garcia in that action. The Notice then states that "[p]ursuant to Va. Code § 55.1-402, Plaintiff Karl Garcia is entitled to a lien from the date of the filing of this action on October 30, 2020, against all the estate, real and personal, of each Defendant, including Defendants Michelle A. Tygier and Robert N. Rubin." The Notice identifies the residence owned by Tygier and Rubin in the District of Columbia and concludes that "[p]ursuant to Va. Code § 55.1-402, a lien is hereby entered beginning on October 30, 2020, against the Property [i.e., appellees' residence], which may be subject to further judgment and execution by reason of the within cause of action." The Notice does not identify or describe any other property sought to be affected by a lien or to be covered by the lis pendens notice.

In opposing appellees' motions in Superior Court for cancellation of the lis pendens notice and a sanction for filing it, Garcia conceded that his Fairfax County complaint "does not include an allegation that the personal residence of Tygier and Rubin was fraudulently or improperly conveyed." Nor does his complaint allege that any fraudulently or improperly transferred funds were utilized to acquire, improve, or finance the residence in any way. To the contrary, appellees submitted documentary proof, which Garcia does not dispute, that Rubin purchased the residence in 1972, and that Tygier was added to the deed in 2014 - all long before and having no connection with the events giving rise to Garcia's Fairfax County complaint. Nothing alleged in that complaint has anything to do with appellees' family home; indeed, the complaint does not mention the residence at all.

Judge Pasichow granted appellees' motion for cancellation of the Notice (and denied Garcia's motion to dismiss appellees' complaint, which was essentially Garcia's opposition to that motion). The judge ruled that Garcia's filing of a lis pendens notice was improper under Virginia and District of Columbia law because Garcia's underlying fraudulent and voluntary conveyance claims do not involve or directly affect an interest in appellees' residence.^[5]

Judge Pasichow also granted appellees' request for a Rule 11 sanction, based on her determination that the filing of a lis pendens notice in the circumstances of this case was...