Indian Ridge I, LLC v. Lenahan

314 Or.App. 715

497 P.3d 806

INDIAN RIDGE I, LLC, Petitioner-Appellant Cross-Respondent,

v.John LENAHAN, Respondent-Respondent Cross-Appellant.

A172384

Court of Appeals of Oregon.

Argued and submitted June 3, 2021.

September 22, 2021

Benjamin Boyd, Enterprise, argued the cause for appellant-cross-respondent. Also on the briefs were D. Zachary Hostetter and Hostetter Law Group, LLP.

R. Daniel Lindahl, Portland, argued the cause for respondent-cross-appellant. Also on the briefs was Bullivant Houser Bailey PC.

Before Armstrong, Presiding Judge, and Tookey, Judge, and Aoyagi, Judge.

AOYAGI, J.

Pursuant to ORS 93.740, respondent filed a notice of lis pendens against petitioner's real property, i.e. , a notice of the "pendency of an action" involving the real property. The circuit court declared the notice to be invalid. Respondent appeals.¹ For the following reasons, we agree with respondent that the circuit court misconstrued ORS 93.740 and that the notice was valid.

FACTS

Respondent Lenahan owns real property in Wallowa County that is used for agriculture. The property has water rights for the nearby Wallowa River. The property also benefits from two recorded easements over a neighboring property, the "Hayes property," where water conveyance mechanisms have been constructed to facilitate the transfer of water from the Wallowa River to respondent's property for irrigation purposes.

In 2014, the then-owner of the Hayes property applied to partition the approximately 150-acre existing parcel into one 146-acre parcel and two approximately 2-acre parcels. Respondent opposed the partition, concerned that development of the proposed 2-acre parcels might negatively affect his water rights. The county planning commission approved the partition, the county board of commissioners denied appeal, and the Land Use Board of Appeals (LUBA) denied review for lack of jurisdiction. On respondent's motion, LUBA transferred the matter to the Wallowa County Circuit Court, where it proceeded as a writ of review proceeding under ORS 34.010.

While the writ of review proceeding was underway, the Hayes property went into foreclosure. Anticipating that the property could be sold at auction, respondent filed a notice of lis pendens in Wallowa County on April 28, 2017. The notice identified the writ of review proceeding by case number, listed the parties to the proceeding as Lenahan (as petitioner) and Wallowa County (as respondent), identified the Hayes property as the real property affected, and described the object of the action as "Appeal of Wallowa County's decision (Order 2015-017) to approve a tentative plat (LP#14-13) to create two two-acre parcels pursuant to Ballot Measure 49 Final Order H129386."²

Almost immediately, petitioner Indian Ridge I, LLC—which then owned the Hayes property—filed a petition under ORS 205.460 to have the notice of lis pendens stricken as invalid. Petitioner also sought damages under ORS 205.470.

The circuit court agreed with petitioner that respondent's notice of lis pendens was invalid and ordered it stricken and released. The court reasoned that the notice did not comply with ORS 93.740 because, first, Lenahan was not making any "claims against any interest or lien" in the writ of review proceeding, and second, the circuit court had no jurisdiction in the writ of review proceeding "to determine the title to, interests in, or liens against the parcels."

The circuit court then proceeded to try petitioner's damages claim under ORS 205.470. The court made findings and, given those findings, concluded that damages were not available. In announcing its decision on damages, the court mentioned that its determination that the notice of lis pendens was invalid had been a "close call," and it seemed to express some uncertainty about its prior construction of the statute, stating that, at least on its face, ORS 93.740 was "broader * * * than ultimately what this court found." Nonetheless, the court did not disrupt its prior determination, and it entered a general judgment for petitioner. Both parties appealed, with respondent challenging the invalidity ruling and petitioner challenging two rulings regarding the damages claim.

Meanwhile, respondent succeeded in his efforts to challenge the partition approval for the Hayes property. In the writ of review proceeding, the circuit court granted summary judgment for Lenahan,³ reversed the county's approval of the partition application, and remanded to the county for further proceedings. After judgment was entered, the new owner of the Hayes property—that is, the entity who bought the Hayes property in foreclosure (not petitioner)—moved to intervene and to have the judgment set aside. The court denied both motions. In denying intervention, the court found it "compelling" that Lenahan had filed a notice of lis pendens in April 2017, "such that any potential new owner of the property would be aware of the pending action," and which "should have put any potential property owner on notice of the action and should have put them on notice that there was an action that needed to be defended." The court said that it did not know what more Lenahan could have done to put interested parties on notice of the proceeding. With the writ of review proceeding concluded, the county took up the matter again, ultimately vacating its approval of the partition application.⁴

ANALYSIS

The phrase lis pendens means "a pending suit," Black's Law Dictionary 1081 (rev. 4th ed. 1968), and "usually refers to a doctrine or rule that ‘the filing of a suit concerning real property is notice to people who obtain an interest in the property after commencement of the suit that they will be bound by the outcome of the suit.’ " Hoyt v. American Traders, Inc. , 301 Or. 599, 603, 725 P.2d 336 (1986) (quoting Land Associates, Inc. v. Becker , 294 Or. 308, 313-14, 656 P.2d 927 (1982) ).

The circumstances under which a notice of lis pendens may be filed in Oregon are provided in ORS 93.740, which states:

"In all suits in which the title to or any interest in or lien upon real property is involved, affected or brought in question , any party thereto at the commencement of the suit, or at any time during the pendency thereof, may have recorded by the county clerk or other recorder of deeds of every county in which any part of the premises lies a notice of the pendency of the action containing the names of the parties, the object of the suit, and the description of the real property in the county involved, affected, or brought in question, signed by the party or the attorney of the party. From the time of recording the notice, and from that time only, the pendency of the suit is notice, to purchasers and incumbrancers, of the rights and equities in the premises of the party filing the notice. The notice shall be recorded in the same book and in the same manner in which mortgages are recorded, and may be discharged in like manner as mortgages are discharged, either by such party or the attorney signing the notice."

ORS 93.740(1) (emphases added).

Meanwhile, more generally, a person whose real property is subject to an "invalid claim of encumbrance" may petition the circuit court for an order "directing the encumbrance claimant to appear at a hearing before the court and show cause why the claim of encumbrance should not be stricken and other relief provided by this section should not be granted." ORS 205.460(1). After a hearing, the court either "shall issue an order striking and releasing the claim of encumbrance," if it is determined to be invalid, or "shall issue an order" stating "that the claim of encumbrance is valid." ORS 205.460(6). The prevailing party may be awarded attorney fees and costs. Id . As relevant here, a person who "knowingly file[d], or direct[ed] another to file, an invalid claim of encumbrance," also may be ordered to pay the property owner $5,000 or actual damages, whichever is greater. ORS 205.470.

Respondent has not preserved any argument that his notice of lis pendens did not qualify as a "claim of encumbrance," and so, for present purposes, it is undisputed that his notice was subject to ORS 205.460 and ORS 205.470.⁵ The only issue is whether the circuit court erred in ruling that his notice was invalid under ORS 93.740. The validity of respondent's notice was squarely before the circuit court, and respondent's appellate arguments on that issue are essentially the same as he made to the circuit court. We disagree with petitioner that respondent needed to object after the circuit court ruled, or move for a new trial, to preserve his claim of error for appeal. We turn to the merits.

The validity of a notice of lis pendens presents an issue of statutory construction, specifically whether the notice conforms to the requirements of ORS 93.740. Vukanovich v. Kine , 251 Or. App. 807, 815, 285 P.3d 733 (2012), rev. den. , 353 Or. 203, 296 P.3d 1275 (2013). Statutory construction is a question of law.⁶ State v. Thompson , 328 Or. 248, 257, 971 P.2d 879, cert. den. , 527 U.S. 1042, 119 S.Ct. 2407, 144 L.Ed.2d 805 (1999). "To discern the meaning of the statute most likely intended by the legislature that enacted it, we examine the text and context of the statute and, where appropriate, legislative history and pertinent canons of construction." Dowell v. Oregon Mutual Ins. Co. , 361 Or. 62, 67, 388 P.3d 1050 (2017). The text "is the starting point for interpretation and is the best evidence of the legislature's intent." PGE Co. v. Bureau of Labor and Industries , 317 Or. 606, 610, 859 P.2d 1143 (1993) ; see also State v. Gaines , 346 Or. 160, 171, 206 P.3d 1042 (2009) (discussing primacy of text and context). Here, the parties have not identified any useful legislative history—see Hoyt , 301 Or. at 604, 725 P.2d 336 (noting the limited legislative history for ORS 93.740, which was enacted in 1909)—and, in any event, the text in context is dispositive.

The parties' disagreement centers on whether the writ of...