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 Post subject: CCP 405.4 Definition of "Real Property Claim"
PostPosted: Sat Nov 06, 2010 12:27 pm 
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405.4.

"Real property claim" means the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading, other than an easement obtained pursuant to statute by any regulated public utility.


CREDIT(S)

(Added by Stats.1992, c. 883 (A.B.3620), § 2.)

CODE COMMENT

Prior Law, Origin and Purpose

1. Prior law authorized a lis pendens “in an action concerning real property or affecting the title or the right of possession of real property”. See former CCP 409(a). The former statute did not carefully distinguish between the concepts of adequate pleading of a claim justifying a lis pendens and the evidentiary merit of the claim. As a result, the courts misconstrued the statutes to allow in effect recordation and maintenance of a lis pendens whenever the proponent's pleading was technically proper, regardless of whether the claim had factual merit. See, e.g., Malcolm v. Superior Court (1981) 29 Cal.3d 518, Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, Mason v. Superior Court (1985) 163 Cal.App.3d 989, Okuda v. Superior Court (1983) 144 Cal.App.3d 135, and Perry v. Superior Court (1981) 29 Cal.3d 837.

2. This section is new. It defines the type of claim which must be pleaded to support a lis pendens. If the pleading filed by the claimant does not properly plead a real property claim, the lis pendens must be expunged upon motion under CCP 405.31. If the claimant does plead a real property claim, but the claim pleaded has no evidentiary merit, the lis pendens must be expunged upon motion under CCP 405.32. By expressly distinguishing the concepts of pleading and evidence in this fashion, the statute makes clear that factual merit is also necessary to the maintenance of a lis pendens. This section aids in distinguishing pleading from evidence.

3. Prior law contained a confusing redundancy. Former CCP 409(a) authorized a lis pendens in an action “concerning real property” merely to assure availability of the lis pendens procedure in federal cases. Although the phrase was ruled otherwise meaningless, Allied Eastern Financial v. Goheen Enterprises (1968) 265 Cal.App.2d 131, Kendall-Brief Co. v. Superior Court (1976) 60 Cal.App.3d 462, its inclusion created confusion.

The prior law extending the lis pendens procedure to federal actions is preserved, but is dealt with expressly in CCP 405.5. This section therefore deletes the “concerning real property” phrase as redundant and likely to cause confusion.

4. Prior statutory law was not clear regarding the availability of the lis pendens procedure in cases involving easements. An easement does not technically “affect” title in the sense of changing it, nor does the existence of an easement oust the title holder of possession. Nevertheless, California title insurance practice treats an easement as both an insurable interest and an exception to title. This state of law and practice created confusion regarding the availability of the lis pendens procedure in cases involving easements. See Kendall-Brief Co. v. Superior Court (1976) 60 Cal.App.3d 462 and Woodcourt II Limited v. McDonald Co. (1981) 119 Cal.App.3d 245.

This section expressly includes cases affecting the use of easements within the definition of “real property claim”. Use of this definition in CCP 405.20 (notice of pending action, required contents, recordation.) thus expressly makes the lis pendens procedure available in all cases which affect the use of an easement (other than one obtained pursuant to statute by a regulated public utility) upon or appurtenant to the property affected by the action.

5. Current law is in conflict regarding the availability of the lis pendens procedure in cases claiming a constructive trust or equitable lien. See Coppinger v. Superior Court (1982) 134 Cal.App.3d 883 and Okuda v. Superior Court (1983) 144 Cal.App.3d 135 as opposed to Burger v. Superior Court (1984) 151 Cal.App.3d 1013, Deane v. Superior Court (1985) 164 Cal.App.3d 292, Moseley v. Superior Court (1986) 177 Cal.App.3d 672, Urez v. Superior Court (1987) 190 Cal.App.3d 1141, Wardley Development Co. v. Superior Court (1989) 213 Cal.App.3d 391 and LaPaglia v. Superior Court (1989) 215 Cal.App.3d 1322. The definition of “real property claim” neither includes nor excludes claims of constructive trust or equitable lien. Instead, the law in this area is left for judicial development. Should case law continue to allow use of the lis pendens procedure in cases claiming a constructive trust or equitable lien, any abuse which might have previously occurred should be mitigated by the provisions of CCP 405.32 (requiring proof by the claimant of the probable validity of the claim) and the provisions of CCP 405.34 (allowing the court to require a bond from the claimant). Moreover, the provisions of CCP 409.360 [sic. see C.C.P. § 405.8], which continue prior law maintaining the availability of injunction, attachment or other relief in connection with a real property claim, should also reduce any perceived need for availability of the lis pendens procedure in cases involving allegations of fraudulent or deceptive conduct leading to claims for a constructive trust or equitable lien.

Cross-references

6. The term “real property claim” appears in CCP 405.20 (notice of pending action, required contents), CCP 405.21 (procedure for creation and recording, other than eminent domain), CCP 405.31 (action does not contain real property claim), CCP 405.32 (no probable validity of real property claim), CCP 405.33 (undertaking where pecuniary relief will suffice), CCP 405.34 (undertaking required of proponent) and CCP 405.8 (availability of other relief). [1993-94 A.J. 4270]

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 Post subject: Re: CCP 405.4 Definition of "Real Property Claim"
PostPosted: Sat Nov 06, 2010 2:07 pm 
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Kirkeby v. Superior Court, 33 Cal.4th 642, 93 P.3d 395 (2004)

Supreme Court of California

Cynthia KIRKEBY, Petitioner,

v.

The SUPERIOR COURT OF ORANGE COUNTY, Respondent;

Frederick W. Fascenelli et al., Real Parties in Interest.

No. S117640.

July 22, 2004.

***806 *645 **397 Law Office of Rick Augustini and Rick Augustni for Petitioner.

No appearance for Respondent.

Callahan & Blaine, Jim P. Mahacek, Santa Ana, Michael J. Sachs, San Bernardino, and Kathleen L. Dunham, Santa Ana, for Real Parties in Interest.

BROWN, J.

In this case, we consider whether a fraudulent conveyance claim affects title to or the right to possession of specific real property and therefore supports the recording of a notice of pendency of action-commonly referred to as a lis pendens. We conclude that it does.

FACTS

FasTags, Inc., (FasTags) is a manufacturer and wholesale seller of identification tags for pets. Petitioner Cynthia Kirkeby and her brother Frederick Fascenelli developed the idea for the tags and jointly hold the patent for the manufacturing processes. Frederick and his wife Diana Fascenelli (hereafter the Fascenellis) hold 51 percent of the outstanding stock in FasTags, and Kirkeby owns 39 percent. The remaining 10 percent of FasTags's outstanding***807 stock is held by the FasTags Stock Trust, of which Kirkeby is the trustee.

After Kirkeby resigned from the FasTags board of directors in 1998, she alleged the Fascenellis looted the company. According to Kirkeby, the Fascenellis caused FasTags to execute improper patent licenses to increase their own salaries and bonuses, to pay their personal expenses, and to make improper loans. The Fascenellis allegedly prevented Kirkeby from seeking corporate records, canceled meetings so that Kirkeby could not elect a member to the board of directors, and appointed directors without board approval.

*646 Kirkeby filed the instant action in late 2001. In the complaint, Kirkeby alleged 27 causes of action, including a cause of action for fraudulent conveyance, and sought declaratory and injunctive relief and damages in the aggregate amount of $4.9 million on behalf of herself and FasTags.

In her fraudulent conveyance cause of action, Kirkeby alleged that Frederick obtained a $50,000 loan from FasTags by representing that he would use the borrowed funds to construct a building to house FasTags's operations. But Frederick did not use this loan for its stated purpose. According to Kirkeby, Frederick used the loan to purchase residential income property (the Oak Street Property) for himself and Diana in June 2000. After making this purchase, the Fascenellis immediately transferred their interest in the property to Italy & Greek Holdings, a family limited partnership (the Family Partnership).

Prior to the purchase of the Oak Street Property-in May 1999-Frederick also transferred his interest in his family's residence (the Clark Street Property) to the Fascenelli Family Trust. Several months later, the Fascenellis-as trustees of that trust-transferred the trust's interest in the Clark Street Property to the Family Partnership. Kirkeby alleged that the Fascenellis made both of these transfers in order to defraud creditors in the collection of their claims, and requested that the transfers be **398 voided to the extent necessary to satisfy the claims set forth in her complaint. These transfers formed the bases of Kirkeby's fraudulent conveyance claim as set forth in her complaint.

After filing her action, Kirkeby recorded a notice of lis pendens on the Oak Street Property and the Clark Street Property. The Fascenellis moved to expunge the lis pendens. The trial court granted the motion. During the hearing on the motion to expunge, the court held that the complaint was primarily about money damages and that the recording of a lis pendens was not appropriate where a cause of action for fraudulent conveyance-Kirkeby's only claim relating to the real property at issue-was made but no ownership interest or possessory interest had been claimed in the subject properties.

Kirkeby filed a writ petition seeking review of the expungement order. The Court of Appeal denied the petition. The Court of Appeal held that Kirkeby's complaint did not affect title to or the right to possession of real property so as to support her lis pendens, as required under Code of Civil Procedure section 405.4. The Court of Appeal determined that the basis of Kirkeby's complaint was to recover money that the Fascenellis wrongfully diverted to themselves in the running of FasTags. With respect to Kirkeby's fraudulent conveyance claim, the Court of Appeal stated, “[w]ith the exception of the cause of action for fraudulent conveyance, the complaint has nothing to do *647 with real property. And the goal of the fraudulent conveyance cause of action is to make ***808 the property available for the collection of a judgment, not to further a claim by Kirkeby to title or possession.”

We granted review.

DISCUSSION

[1] “A lis pendens is a recorded document giving constructive notice that an action has been filed affecting title to or right to possession of the real property described in the notice.” ( Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 1144, 235 Cal.Rptr. 837.) A lis pendens may be filed by any party in an action who asserts a “real property claim.” (Code Civ. Proc., § 405.20.) FN1 Section 405.4 defines a “ ‘Real property claim’ ” as “the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property....” “If the pleading filed by the claimant does not properly plead a real property claim, the lis pendens must be expunged upon motion under CCP 405.31.” (Code com., 14A West's Ann.Code Civ. Proc. (2004) foll. § 405.4, p. 239.)

FN1. Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.

Section 405.30 allows the property owner to remove an improperly recorded lis pendens by bringing a motion to expunge. There are several statutory bases for expungement of a lis pendens, including the claim at issue here: claimant's pleadings, on which the lis pendens is based, do not contain a real property claim. (See § 405.31.) FN2 Unlike most other motions, when a motion to expunge is brought, the burden is on the party opposing the motion to show the existence of a real property claim. (See § 405.30.)

FN2. Other bases for expungement include: (1) claimant's failure to comply with the recording, service or filing requirements of section 405.22 (see § 405.23); (2) claimant's failure to establish the probable validity of a real property claim by a preponderance of the evidence (see § 405.32); (3) claimant is secured by a property owner filing an undertaking (see § 405.33); and (4) claimant's failure to file an undertaking ordered by the court as a condition to maintaining a lis pendens (see § 405.34).

The Fascenellis moved to expunge pursuant to section 405.31-lack of a real property claim.FN3 Section 405.31 provides: “In proceedings under this chapter, the court shall order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim.” In making this determination, the **399 court must engage in a demurrer-like *648 analysis. “Rather than analyzing whether the pleading states any claim at all, as on a general demurrer, the court must undertake the more limited analysis of whether the pleading states a real property claim.” (Code com., 14A West's Ann.Code Civ. Proc., supra, foll. § 405.31, at p. 342.) Review “involves only a review of the adequacy of the pleading and normally should not involve evidence from either side, other than possibly that which may be judicially noticed as on a demurrer.” (Code com., 14A West's Ann.Code Civ. Proc., supra, foll. § 405.30, at p. 337.) Therefore, review of an expungement order under section 405.31 is limited to whether a real property claim has been properly pled by the claimant. (Code com., 14A West's Ann.Code Civ. Proc., supra, foll. § 405.31, at p. 342.)

FN3. At oral argument, counsel for the Fascenellis stated that, in addition to section 405.31, the motion to expunge was also brought pursuant to section 405.32. Kirkeby's counsel disputed this statement. Upon our review of the record, it is clear that the motion to expunge was brought solely under section 405.31.

Because only Kirkeby's fraudulent conveyance claim relates to real property, we ***809 must now determine whether that claim, as pled, affects “title to, or the right to possession of, specific real property.” (§ 405.4.) We conclude it does.

[2] [3] A fraudulent conveyance claim is set forth in the Uniform Fraudulent Transfer Act (UFTA), which is codified in Civil Code section 3439 et seq. “A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.” ( Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13, 33 Cal.Rptr.2d 283.) A transfer under the UFTA is defined as “every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset ..., and includes payment of money, release, lease, and creation of a lien or other encumbrance.” (Civ.Code, § 3439.01, subd. (i).) “A transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay, or defraud any creditor, or (2) without receiving reasonably equivalent value in return, and either (a) was engaged in or about to engage in a business or transaction for which the debtor's assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]” (Cortez v. Vogt (1997) 52 Cal.App.4th 917, 928, 60 Cal.Rptr.2d 841, fns. omitted; see also Civ.Code, § 3439.04.) FN4

FN4. Civil Code section 3439.04 provides: “A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows: [¶] (a) With actual intent to hinder, delay, or defraud any creditor of the debtor. [¶] (b) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: [¶] (1) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or [¶] (2) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they become due.”

[4] *649 Civil Code section 3439.07 FN5 sets forth the remedies in a fraudulent conveyance action. Under subdivision (a)(1) of that section, a creditor who makes a successful fraudulent conveyance claim may obtain “[a]voidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim.” Therefore, a fraudulent conveyance claim requesting relief pursuant to Civil Code section 3439.07, subdivision (a)(1), if successful, may result in the voiding of a transfer of title of specific real property. By **400 definition, the voiding of a transfer of real property will affect title to or possession of real property. Therefore, a fraudulent conveyance ***810 action seeking avoidance of a transfer under subdivision (a)(1) of Civil Code section 3439.07 clearly “affects title to, or the right to possession of” ( Code Civ. Proc., § 405.4) real property and is therefore a real property claim for the purposes of the lis pendens statutes.

FN5. Civil Code section 3439.07 provides in relevant part: “(a) In an action for relief against a transfer or obligation ... a creditor ... may obtain: [¶] (1) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim. [¶] (2) An attachment or other provisional remedy against the asset transferred or its proceeds.... [¶] (3) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure, the following: [¶] (A) An injunction against further disposition by the debtor ... of the asset transferred or its proceeds. [¶] (B) Appointment of a receiver.... [¶] (C) Any other relief the circumstances may require. [¶] (b) If a creditor has commenced an action on a claim against the debtor, the creditor may attach the asset transferred or its proceeds .... [¶] (c) If a creditor has obtained a judgment on a claim against the debtor, the creditor may levy execution on the asset transferred or its proceeds.”

Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 26 Cal.Rptr.2d 923 ( Hunting World ), offers additional support for this conclusion. In Hunting World, the plaintiff filed a federal court action for trademark infringement seeking money damages and the imposition of a constructive trust on profits obtained as a result of the infringement. After being served with the lawsuit, the defendant quitclaimed his interest in his family's residence to his wife. The plaintiff then brought a fraudulent conveyance action in state court to set aside the conveyance and recorded a lis pendens against the property. On appeal, the Court of Appeal reversed the trial court's order granting the defendant's motion to expunge the lis pendens. Using the same reasoning we use here, the Court of Appeal held that an action to set aside a fraudulent conveyance fell within the “clear wording of the ‘real property claim prong’ of lis pendens law.” ( Id. at p. 73, 26 Cal.Rptr.2d 923.)

[5] Nonetheless, like the defendants in Hunting World, the Fascenellis contend a court “must look through the pleadings to ascertain the purpose of the party seeking to maintain notice of lis pendens.” ( Hunting World, supra, 22 Cal.App.4th at p. 73, 26 Cal.Rptr.2d 923.) In support, the Fascenellis cite *650 Urez Corp. v. Superior Court, supra, 190 Cal.App.3d 1141, 235 Cal.Rptr. 837, and several other cases.FN6 The Fascenellis' argument fails based on the plain language of the applicable statute. Nowhere in the language of section 405.31, or in its legislative history, is the court directed to conduct such an examination during its demurrer-like analysis. Indeed, the legislative history expressly requires courts to consider only the specific claim as pled and to determine whether that claim is a real property claim: “This section concerns pleading. Prior law became confused because of failure of the courts to distinguish between allegations (pleadings) and evidence. This section concerns judicial examination of allegations only. Judicial examination of factual evidence is separately governed by CCP 405.32.[¶] ... This section ... mandates expungement if the pleading does not contain a real property claim. The analysis required by this section is analogous to, but more limited than, the analysis undertaken by a court on a demurrer.... [T]he court must undertake the more limited analysis of whether the pleading states a real property claim.” (Code coms. Assem. Bill No. 3620 (1991-1992 Reg. Sess.) 3 Assem. J. (1993-1994 Reg. Sess.) p. 4281.)

FN6. The other cases cited are: BGJ Associates, LLC v. Superior Court (1999) 75 Cal.App.4th 952, 89 Cal.Rptr.2d 693; Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 37 Cal.Rptr.2d 63; La Paglia v. Superior Court (1989) 215 Cal.App.3d 1322, 264 Cal.Rptr. 63; Wardley Development Inc. v. Superior Court (1989) 213 Cal.App.3d 391, 262 Cal.Rptr. 87; Moseley v. Superior Court (1986) 177 Cal.App.3d 672, 223 Cal.Rptr. 116; Deane v. Superior Court (1985) 164 Cal.App.3d 292, 210 Cal.Rptr. 406; Burger v. Superior Court (1984) 151 Cal.App.3d 1013, 199 Cal.Rptr. 227.

Lewis v. Superior Court, supra, 30 Cal.App.4th 1850, 37 Cal.Rptr.2d 63, is inapposite and actually supports our conclusion. In Lewis, the real party in interest “merely allege[d] that [seller] wrongfully took [real party in interest's] money and used the money to buy-not convey-the property.”( Id. at p. 1865, 37 Cal.Rptr.2d 63.) The Court of Appeal concluded that the real party in interest had simply realleged ***811 its constructive trust claim, which could not support a lis pendens. ( Ibid.) The court therefore held that although a fraudulent conveyance claim may support a lis pendens, the complaint in that case did not allege a conveyance of real property. ( Ibid.) FN7

FN7. Because it is not presented in this case, we do not address the question of whether a claim that seeks to impose a constructive trust or equitable lien may be a basis for a lis pendens.

[6] By contrast, Kirkeby adequately pled a fraudulent conveyance claim by alleging that the Fascenellis transferred title of the **401 subject properties with the intent to defraud. Specifically, she alleged “that Defendants made these transfers with the actual intent to hinder, delay, and/or defraud all of their creditors in the collection of their claims....” Kirkeby also asked the court to void the transfers of both properties to the extent necessary to satisfy the claims in her complaint. As such, her fraudulent conveyance claim, if *651 successful, will affect title to specific real property. Accordingly, her lis pendens was improperly expunged based on section 405.31.

[7] In reaching this conclusion, we recognize that the lis pendens statute may be abused. “While the lis pendens statute was designed to give notice to third parties and not to aid plaintiffs in pursuing claims, the practical effect of a recorded lis pendens is to render a defendant's property unmarketable and unsuitable as security for a loan. The financial pressure exerted on the property owner may be considerable, forcing him to settle not due to the merits of the suit but to rid himself of the cloud upon his title. The potential for abuse is obvious. [Citations.]” ( La Paglia v. Superior Court, supra, 215 Cal.App.3d at p. 1326, 264 Cal.Rptr. 63, abrogated on another ground by Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1258, fn. 17, 82 Cal.Rptr.2d 85, 970 P.2d 872.) Because of the effect of a lis pendens, “[t]he history of the lis pendens legislation indicates a legislative intent to restrict rather than broaden the application of the remedy.” ( Urez v. Superior Court, supra, 190 Cal.App.3d at p. 1145, 235 Cal.Rptr. 837.) Our courts have followed suit by restricting rather than broadening the application of a lis pendens. ( Ibid.)

[8] [9] Nonetheless, we cannot ignore the plain language of the statute, which clearly establishes that fraudulent conveyance claims may support a lis pendens where the plaintiff seeks to void a fraudulent transfer. If this is problematic, it is up to the Legislature-and not this court-to change the law. In any event, there are many other grounds for expunging a lis pendens. For example, under section 405.32, the court is required to expunge a lis pendens “if the court finds that the claimant has not established by a preponderance of the evidence the probable validity of the real property claim.” Section 405.32-unlike section 405.31-“expressly concerns factual merit. Provision for a demurrer-like review of the pleadings is preserved in CCP 405.31.” (Code com., 14A West's Ann.Code Civ. Proc., supra, foll. § 405.32, at p. 346.) Section 405.32 therefore requires a “judicial evaluation of the merits” of a claimant's case. (Code com., 14A West's Ann.Code Civ. Proc., supra, foll. § 405.32, at p. 346.) Under Section 405.33, even if a claimant shows a probably valid claim, the court may still order a lis pendens expunged if adequate relief for the claimant may be secured by the giving of an undertaking. In addition, “the property owner ... may be entitled to attorney fees and costs if successful” in expunging a lis pendens,***812 and “[t]rial courts should liberally impose these sanctions upon any who file fraudulent transfer actions and record notices of lis pendens before uncovering credible evidence of fraud.” ( Hunting World, supra, 22 Cal.App.4th at p. 74, 26 Cal.Rptr.2d 923.) The availability of these statutory alternatives and the possible imposition of attorney fees and sanctions should discourage abuse of the lis pendens statute.

[10] Finally, we consider the Fascenellis' argument that the UFTA does not allow a lis pendens as a remedy. The UFTA expressly provides for*652 remedies such as attachments, injunctions, and the appointment of receivers. With respect to a lis pendens as a remedy, “[a]lthough [the UFTA] does not provide for notices of lis pendens, it does not exclude them either.” ( Hunting World, supra, 22 Cal.App.4th at p. 73, 26 Cal.Rptr.2d 923.) Support for including a lis pendens as a remedy is found in Civil Code section 3439.07, subdivision (a)(3)(C), which entitles a creditor bringing a UFTA claim to “[a]ny other relief the circumstances may require.” We believe that this broad language allows a lis pendens remedy. In addition,Civil Code section 3439.10 and its accompanying legislative comments also provide a basis for supporting a lis pendens remedy in a fraudulent conveyance action. Civil Code section 3439.10 provides that “the principles of law and equity” supplement the provisions of the UFTA. The committee comment notes, **402 “ Among the remedies preserved by this section are the following: [¶] 1. The recordation of a lis pendens in an appropriate case.” (Leg. Com. com., 12A West's Ann. Civ.Code (1997 ed.) foll. § 3439.10, p. 364.)

DISPOSITION

We reverse the judgment of the Court of Appeal and remand for further proceedings consistent with this opinion.

WE CONCUR: GEORGE, C.J., KENNARD, BAXTER, WERDEGAR, CHIN, and MORENO, JJ.

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 Post subject: Lewis v. Superior Court
PostPosted: Sat Nov 06, 2010 2:11 pm 
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Lewis v. Superior Court, 30 Cal.App.4th 1850, 37 Cal.Rptr.2d 63 (1994)

Court of Appeal, Second District, Division 7, California.

Robert F. LEWIS, et al., Petitioners,

v.

The SUPERIOR COURT of Los Angeles County, Respondent.

FOLKSAM GENERAL MUTUAL INSURANCE SOCIETY, Real Party in Interest.

No. B084276.

Nov. 30, 1994.

As Modified on Denial of Rehearing

Dec. 29, 1994.

Review Denied March 16, 1995.

**66 *1854 Greines, Martin, Stein & Richland, Robin Meadow, Beverly Hills, Loeb and Loeb, Peter S. Selvin and Megan Scott-Kakures, Los Angeles, for petitioners.

Miller, Starr & Regalia, Lawrence E. Green and Harry D. Miller, Oakland, as amici curiae on behalf of petitioners.

**67 No appearance, for respondent.

Hughes Hubbard & Reed, William T. Bisset and Randy B. Holman, Los Angeles, for real party in interest.

FRED WOODS, Associate Justice.

I.

INTRODUCTION

This writ proceeding is taken from an order denying a motion for summary judgment and an order denying a motion for expungement of lis *1855pendens. The action arose out of the purchase and sale of a residence alleged to have involved a transfer in fraud of creditors.FN1 The petition for a peremptory writ is granted.

FN1. A motion for reconsideration of the order was denied.

II.

STATEMENT OF FACTS

A. Background of the sale.

Randolph Shipley (“Shipley”) bought the property in question in November 1990 for $3.2 million. About a year later, he contacted a broker, Al Scafati (“Scafati”), hoping to sell the property for $2,950,000. However, Scafati believed that the property would only bring somewhere around $2.5 million to $2.7 million, and after seeing the condition of the property, he lowered his estimate. Scafati found a buyer at $2.5 million, and escrow was opened at that price. However, Shipley and the buyer never reached agreement on financing.

B. Appearance of the Lewises.

Robert F. and Josephine N. Lewis (“the Lewises”) had lived in Palos Verdes for many years. They were casual house-hunters-not particularly anxious to move, but willing to consider opportunities. Chris Adlam (“Adlam”), like Scafati a RE/MAX realtor, called Josephine Lewis in late January 1992 to tell her about the property. Knowing that Robert Lewis had always liked the property, she told him about it, and they decided to go see it.

Adlam told the Lewises about the $2.5 million escrow and provided them with an appraisal Shipley had obtained only a month before that showed a $2.5 million value. Because the Lewises had the ability to pay cash without a financing contingency, Robert Lewis believed that Shipley would accept less than the $2.5 million asking price, and he offered $2.25 million. After an exchange of counterproposals, they agreed on $2.3 million and opened escrow in early February.

Subsequent analyses confirmed that $2,300,000 was a reasonable price. For instance, shortly after the purchase, the Lewises' bank obtained its own appraisal, which concluded that the property was worth $2,300,000. An additional valuation conducted for this litigation showed that the probable range of sales prices for the property in early 1992 would have been $2,200,000 to $2,600,000.

*1856 C. Fontana records the federal lis pendens, but it is neither indexed by the county recorder nor discovered by the title insurer.

After the Lewises opened escrow, and just a few days before they acquired title, Fontana Films of Sweden Aktiebalag (“Fontana”) recorded the federal lis pendens. Dennis McCraven (“McCraven”), the county recorder's division manager, document recording, determined that although the federal lis pendens was recorded on February 24, it was not indexed until February 29-the day after the Lewises acquired title.

During the same period, a title search was under way at Lincoln Title Company, which ultimately issued title insurance to the Lewises. The trial court based one of its key conclusions on its statement that Lincoln Title was “retained as Lewises['] agent.” The only evidence of how Lincoln Title became involved was Robert Lewis's statement that Adlam suggested using Lincoln Title because it had been used in the previous, failed escrow. The Lewises' original offer to purchase the property only provided that the buyer was to receive a title policy issued by Lincoln Title “at sellers['] expense.”

**68 The title officer, David Pelis (“Pelis”), explained that title companies have access to private services that provide copies of recorded documents. In this case, the service provided Lincoln Title with a computer report that contained an entry for the federal lis pendens. However, the service misposted the information and as a result it did not appear to affect the property. Pelis himself was never aware there was a lis pendens.

D. The Lewises acquire title and receive two “clean” title policies and never learn about the federal action.

The purchase agreement provided that after all contingencies were removed, $350,000 could be released from escrow to Shipley in return for a note secured by a first trust deed on the property. Shipley used that money to buy other property, which Folksam General Mutual Insurance Society (“Folksam”) then encumbered by an injunction. This transaction occurred on February 25-the day after Fontana recorded its lis pendens-and the Lewises received a title insurance policy insuring their trust deed. Neither this policy nor the preliminary report that preceded it disclosed the federal lis pendens.

Although escrow was originally scheduled to close by April 1, Shipley asked for an earlier close, and the Lewises agreed, with the result that the Lewises' grant deed was recorded on February 28. The Lewises received a second title insurance policy, this time insuring their title as owners. Like the earlier policy, this one did not reveal any claims against title.

*1857 During this series of events, there was no substantive communication between the Lewises and Shipley; everything was handled through the realtors. Neither the Lewises nor the realtors heard anything about any litigation involving Shipley, Yuk Lee, or anyone connected with them.

E. The Lewises undertake multi-million-dollar improvements to the property, still unaware of the Folksam-Fontana litigation.

The all-cash purchase by the Lewises, was funded by liquidating securities holdings. They expected to spend an additional $1,050,000 in renovating the property, but that estimate turned out to be far too low. By the March 3 hearing, they had spent approximately $2,600,000 on still-uncompleted construction, and they expected the total cost of the house to exceed $5,000,000.

In the midst of their multi-million-dollar renovation of the property, the Lewises received a copy of Fontana's cross-complaint in the mail. This was the first they ever heard about Folksam or Fontana or about any of the claims alleged in this case.

The Lewises brought a motion for summary judgment. The trial court ruled on the Lewises' motion after an unusually complete factual presentation by the parties. There was no serious claim of factual dispute and no credibility contentions. The denial of summary judgment was based entirely on legal conclusions drawn from the undisputed facts.

III.

DISCUSSION

A. The nature of the claims against the Lewises.

Because of the Lewises' settlement with Fontana, the issues are narrower than when the trial court ruled.

The pleadings of both Folksam and Fontana, including Fontana's federal complaint, originally focused on the conduct of Shipley and related parties, alleging in substance that Shipley bought the property with misappropriated funds. There was no claim that the Lewises did anything wrong; indeed, they were not even named in either the federal action or Folksam's second amended complaint. Any claim affecting the property therefore necessarily depended entirely on the intervention of the federal lis pendens: if the lis pendens were valid-supported by a proper complaint and properly recorded *1858 before the Lewises acquired title-in theory, the Lewises' purchase could be set aside solely upon proof of Fontana's claims against Shipley, without regard to the Lewises' conduct.

**69 The expungement of the federal lis pendens has eliminated this possibility. (Code Civ.Proc., §§ FN2 405.60, 405.61.) What remains is Fontana's fraudulent conveyance claim against the Lewises. Since this claim is based on Shipley's transfer of the property to the Lewises rather than his original acquisition of the property, it necessarily concerns the conduct of the Lewises themselves. The Lewises contended that they had established a complete defense to this claim by virtue of Civil Code section 3439.08, subdivision (a), which provides: “A transfer or an obligation is not voidable under subdivision (a) of Section 3439.04 [transfer made with intent to hinder, delay or defraud creditors], against a person who took in good faith and for a reasonably equivalent value....” (Emphasis added.) FN3

FN2. Unless otherwise noted, all statutory references are to the Code of Civil Procedure.

FN3. The trial court did not reach the question of whether the Lewises paid “reasonably equivalent value.” However, as discussed above, the Lewises offered substantial evidence that they paid reasonably equivalent value, and there was no contrary evidence. The trial court remarked, “I am just almost 100 percent this was a reasonably equivalent value.”

The trial court recognized that the Lewises did not actually know about the claims against Shipley or about the lis pendens: “The evidence presently before the court indicates the Lewises had no actual knowledge of Shipley's misdeeds, nor any relationship with Shipley other than in connection with purchase [sic] of 2728 Elevado. [R. Lewis Dec., par. 10]. The Lewises personally apparently had no knowledge of the federal lis pendens until September 1993....” (Emphasis added.)

The court concluded that the federal lis pendens deprived the Lewises of their status as good-faith purchasers through constructive notice.

This conclusion is the linchpin of the trial court's denial of summary judgment and its refusal to expunge Folksam's lis pendens. Without this conclusion, summary judgment and expungement were mandatory.

B. The fraudulent conveyance statute requires actual, subjective knowledge by the alleged fraudulent transferee. The fiction of constructive knowledge is not enough.

[1] [2] The requirements of the fraudulent conveyance statute are: “the term ‘good faith,’ as used in this subdivision and subdivision (d) [ofCiv.Code § 3439.08] means that the transferee did not collude with the debtor or otherwise actively participate in the fraudulent scheme of the debtor.” (See *1859 legis. committee com. 12 West's Ann.Civ.Code (1994 pocket supp.) p. 161.) “Fraudulent intent,” “collusion,” “active participation,” “fraudulent scheme”-this is the language of deliberate wrongful conduct. It belies any notion that one can become a fraudulent transferee by accident, or even negligently. It certainly belies the notion that guilty knowledge can be created by the fiction of constructive notice. (See Richardson v. White (1861) 18 Cal. 102, 106 [recognizing that constructive notice is a “fiction”].)

But that is nevertheless what the trial court concluded, rejecting the Legislature's clear mandate in the name of “common sense”: “[C]ommon sense suggests that the test cannot be a purely subjective one which allows the transferee to preserve good faith by hiding his head in the sand and making no reasonable inquiry. The extensive case authorities cited at pages 5-6 of Folksam's reply brief confirm that ‘good faith’ includes doing the sort of reasonable inquiry that a reasonably prudent person would do under the circumstances.” The problem with this reasoning, aside from the fact that the cited authorities do not support it, is that in the very next breath the trial court concluded that the Lewises did make what the court itself believed was a “reasonable inquiry” ! The court said: “reasonable inquiry includes getting a title report and title insurance.... The Lewises themselves by their conduct evidence this to be so: they obtained title reports and title insurance.” (Original emphasis.) Unfortunately, the Lewises' reasonable inquiry still left them in ignorance, because the federal lis pendens was not disclosed in the preliminary reports and title policies.

**70 Since the Lewises had made precisely the inquiry that the trial court thought they should have made and still knew nothing about the claims against Shipley, the trial court erred in holding that they “colluded” or “actively participated” in the claimed fraudulent conveyance. Instead, the court stripped the Lewises of their good-faith status by imputing to them knowledge supposedly (but not actually) held by their title insurer concerning the federal lis pendens and the supposed (but not shown by any evidence) negligence of their insurer in failing to find and disclose the lis pendens.

C. The federal lis pendens was a nullity and did not impart notice because the claims in the federal action did not support a lis pendens.

[3] In ruling that the lis pendens was proper, the trial court departed from decisional authority squarely holding that claims like those asserted in the federal action-essentially, claims to impose a constructive trust-do not support a lis pendens. The trial court implicitly concluded that the 1992 revisions to the lis pendens statute (§§ 405 et seq.) overruled this authority. We find no decisional support for this conclusion.

*1860 1. Only a proper lis pendens can affect title.

Under sections 405.2 and 405.4, subdivision (a), a lis pendens is only authorized in actions that affect “title to, or the right to possession of, specific real property.” FN4 Historically, the purpose of a lis pendens was to preserve the court's jurisdiction over property: if a party to litigation were able to transfer clear title during the litigation, the court would be unable to render an effective judgment. (See Richardson v. White, supra, 18 Cal. at p. 106.) The lis pendens prevents “the defendant property owner from frustrating any judgment that might eventually be entered by transferring his or her interest in the property while the action was still pending.” (Cal. Lis Pendens Practice (Cont.Ed.Bar 1994), § 1.2, p. 3.)

FN4. Although changes to the lis pendens statute have varied this formulation somewhat, the underlying principle has remained constant since the earliest lis pendens statute: a lis pendens is only authorized in an action affecting title or possession. (See Richardson v. White, supra, 18 Cal. 102.) The current statute requires a “real property claim,” which is defined in the language quoted in the text.

[4] Consistent with this limited purpose, the courts have repeatedly held that a lis pendens recorded in an action that does not involve title has no effect: “if there is a failure to comply with [the lis pendens statute] there can be no constructive notice of the pendency of the action.” (Bernhard v. Wall (1921) 184 Cal. 612, 630, 194 P. 1040.) As the court said in Brownlee v. Vang (1962) 206 Cal.App.2d 814, 24 Cal.Rptr. 158, the complaint must “set forth some cause of action affecting the title or right of possession of the specific real property described in the lis pendens.When it does not do so the lis pendens becomes a nullity....” ( Id., at p. 817, 24 Cal.Rptr. 158.) (See also MacDermot v. Hayes (1917) 175 Cal. 95, 110, 170 P. 616 [lis pendens in action to set aside sale of stock ineffective to give constructive notice]; Allied Eastern Financial v. Goheen Enterprises (1968) 265 Cal.App.2d 131, 134, 71 Cal.Rptr. 126 [lis pendens in action on loan “would have no legal effect”].)

2. The claims in the federal action all involve alleged fraud and conversion, not disputes over title.

Fontana's lengthy federal complaint boils down to this: Shipley and his coconspirators defrauded Fontana and put the money they got in various assets that Fontana seeks to reach by the imposition of a constructive trust.

The first 27 pages of the pleading recite the details of Shipley's alleged fraudulent conduct, asserting claims for the illegal sale of securities (first claim for relief) and violations of the Racketeer Influenced and Corrupt Organization Act (RICO) (second claim for relief). In these two claims, the only allegations that relate to the property appear in paragraph 12(c) (alleging the diversion of “the sums of $310,000 and $2,880,000 to defendant Yuk *1861 Lee Limited” this sum apparently being the money ultimately used to **71 buy the property) and paragraph 20(k) (alleging the establishment of the escrow to purchase the property).

The claims that involve the property are as follows:

Third Claim for Relief (Imposition of Trust): Fontana alleges that Shipley was acting as the plaintiffs' trustee, and further alleges: “32. As a proximate result of the foregoing, including specifically the transfer of any money and/or property to defendants and each of them, defendants and each of them hold such money and property, in trust, for the benefit of plaintiffs, with the interests of plaintiffs being superior to all other interests, in and to all such transferred property including without limitation, the following [describing the property].”

Fourth Claim for Relief (Injunctive Relief): This claim incorporates most of the preceding allegations and simply alleges that the plaintiffs will suffer harm unless the defendants are enjoined from transferring “the money and property wrongfully taken from plaintiffs.”

Fifth Claim for Relief (Possession): The only substantive allegations are those incorporated by reference. Beyond that, Fontana merely alleges that “plaintiffs were and are entitled to possession, control and beneficial use of Plaintiffs' Property.”

Sixth Claim for Relief (Quiet Title): Again, the substantive allegations appear by incorporation. Fontana adds the conclusionary allegation that the property described in the complaint “is property of and rightfully belonging to plaintiffs herein.”

Seventh Claim for Relief (Fraudulent Conveyance): This claim does not incorporate the complaint's charging allegations. As it pertains to the property, it alleges: “44. Within the four years last past [Shipley and other defendants] made the following conveyances: ...

“c) In October, 1990, transferred the sums of $310,000 and $2,880,000 to defendant YUK LEE LIMITED from the account of FONTANA HOLDINGS in the Cayman Islands with monies belonging to plaintiffs.”

None of these claims describes any transfer of real property. None of them alleges that any of the plaintiffs had any kind of interest in the property beyond the fact that Shipley used allegedly misappropriated funds to buy it. Even the fraudulent conveyance claim does not allege a conveyance of the *1862 property, but rather the movement of money from one Shipley pocket to another followed by the purchase of the property.

3. A constructive trust claim does not support a lis pendens.

[5] As the preceding recapitulation of Fontana's claims shows, the essence of the federal complaint is the effort to impose a constructive trust on the property. It is well settled that such a claim does not permit the recording of a lis pendens.

The leading case in this District is Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 235 Cal.Rptr. 837. There the plaintiff held a second trust deed that was extinguished by the foreclosure of the first trust deed. The purchaser at the foreclosure was a corporation formed by the defaulting owner. ( Id., at p. 1143-1144, 235 Cal.Rptr. 837.) The complaint alleged causes of action for fraud in the formation of the corporation, for a declaration that the plaintiff held a beneficial interest in the property, and for the imposition of a constructive trust. ( Id., at p. 1144, 235 Cal.Rptr. 837.)

This court found that the action did not support a lis pendens, noting that the case was “essentially a fraud action seeking money damages with additional allegations urged to support the equitable remedies of a constructive trust or an equitable lien.” ( Id., at p. 1149, 235 Cal.Rptr. 837.) The court held that “allegations of equitable remedies, even if colorable, will not support a lis pendens if, ultimately, those allegations act only as acollateral means to collect money damages.” ( Id., at p. 1149, 235 Cal.Rptr. 837; emphasis added.) The Urez court expressly rejected the contrary reasoning of Coppinger v. Superior Court (1982) 134 Cal.App.3d 883, 185 Cal.Rptr. 24 ( Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837) as have “a chorus of [other] decisions.” **72 ( Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 71, 26 Cal.Rptr.2d 923.)

(a) The trial court's conclusion that Folksam “owned” the property was incorrect and irrelevant.

The trial court tried several detours around the Urez rule. First, it sought to distinguish Urez by noting that in Urez the plaintiff had asserted “a remote and attenuated real property claim.” In contrast, according to the trial court, here there was an earlier summary judgment finding that Shipley had indeed misappropriated money from Folksam, and on this basis, the court leaped to the conclusion that this fact “establish[es] that Folksam owned a 100% beneficial interest in Elevado [the property] at the time Shipley (Yuk Lee) purported to deed the property to the Lewises. Thus Folksam was entitled to *1863 title and possession of the property, outright.” This conclusion is irrelevant: the validity of the lis pendens depends on the nature of Fontana's claims, not Folksam's.

[6] More fundamentally, there is no apparent legal basis for the trial court's conclusion, and the court cited none. The fact that someone buys property with stolen money does not make the victim the owner of that property as a matter of real property law. It merely entitles the victim to pursue the thief and to recover a money judgment, perhaps seeking to attach the property along the way (something that no one in this case ever tried to do).

(b) The trial court disregarded other controlling authority.

Regardless of whether Urez is factually distinguishable, the trial court failed to recognize that La Paglia v. Superior Court (1989) 215 Cal.App.3d 1322, 264 Cal.Rptr. 63 rejected the propriety of a lis pendens on facts virtually identical to those here. There the plaintiff claimed that the defendant was withholding royalties due plaintiff from the defendant's business operation. ( Id., at p. 1324, 264 Cal.Rptr. 63.) Alleging that the defendant used the wrongfully withheld money to buy some property, the plaintiff claimed that the defendant held title to that property in constructive trust, and it recorded a lis pendens. The Fourth District held that the lis pendens was improper, observing that the plaintiff claimed “an interest in the defendant's property only to the extent the monies it alleges were wrongfully obtained have been invested therein.” ( Id., at p. 1327, 264 Cal.Rptr. 63.)

Exactly as in La Paglia, here the federal action seeks to impose a constructive trust on property purchased with money wrongfully obtained. As inLa Paglia, Fontana claims an interest in the property “only to the extent the monies it alleges were wrongfully obtained have been invested therein.” La Paglia is therefore directly controlling, and the trial court was required to follow it.

(c) The 1992 revisions in the lis pendens law did not overrule Urez and La Paglia.

[7] The trial court further sought to distinguish the Urez line of cases by relying on the 1992 revisions to the lis pendens law (Stats.1992, ch. 883). Noting that the new statute made it easier to expunge a lis pendens, the court observed that the “drastically revised procedure eliminates the concerns about abuse of lis pendens which led the court in Urez and related cases to take a narrow view of what constitutes a ‘real property claim.’ ” Although the trial court cited Hunting World in support of this conclusion, the discussion in that case was dictum. Hunting World involved an entirely conventional fraudulent conveyance claim, and the question before the court was *1864 whether the Urez line of cases precluded the use of lis pendens in a fraudulent conveyance case in addition to constructive trust cases-in other words, the defendants were trying to narrow the lis pendens remedy even further than cases like Urez had already narrowed it. The Hunting World court declined to take that step, saying that “[e]xtension of the Urez/Wardley line of decisions is not warranted.” ( Hunting World, Inc. v. Superior Court, supra, 22 Cal.App.4th at p. 73, 26 Cal.Rptr.2d 923.) The court did not even hint that it questioned Urez.

Neither logic nor policy supports the trial court's evident belief that the Court of Appeal**73 should reverse field on this question. Allowing a lis pendens to be used in a constructive trust case like this transforms it into a money-collection remedy without any of the protections of the attachment statutes, a tactic for which the courts have consistently eschewed its use.

There is no reason to believe the Legislature intended to change the scope of the term “real property claim.” The State Bar Report that supported the legislation disclaimed any definitional strictures: it stated that the term “ ‘neither includes nor excludes claims of constructive trust or equitable lien,’ ” and suggested leaving the area for further judicial development. (See id., at p. 72, 26 Cal.Rptr.2d 923.) In the face of this report and theUrez line of decisions, the fact that the Legislature made no definitional change in the statute creates a very strong presumption that it was satisfied with the restrictive interpretation given to the statute by the overwhelming majority of decisions. (Eg., Buchwald v. Katz (1972) 8 Cal.3d 493, 502, 105 Cal.Rptr. 368.)

There is no getting around the fact that all Shipley did was to take money, and all the federal action seeks is to get the money back. Nothing in the case suggests the kind of real property dispute that has classically been the basis for the use of a lis pendens.

4. Fraudulent conveyance claim does not support a lis pendens.

The trial court's order does not address Fontana's fraudulent conveyance claim at all, instead focusing its entire discussion on Folksam's claim-even though only Fontana's claims in the federal action, not Folksam's claims in the present case, are relevant to the analysis of the federal lis pendens. To the extent it even mentioned Fontana's claims, the court actually seemed to reaffirm its earlier ruling that Fontana had not alleged a fraudulent conveyance: while the court said that it had changed its thinking as to the pleading of fraudulent conveyance claims since its December 20 order (where it ruled no such claim was pleaded), it only said this about Folksam-and at that, the *1865 change in thinking seems to have been based on the erroneous belief that Folksam had named the Lewises in its second amended complaint.

[8] In any event, while in the abstract the trial court was correct in stating that a fraudulent conveyance claim can support a lis pendens, the application of this rule in a given case depends on the specific nature of the claim. The facts of the cases the trial court relied on show why the federal action's fraudulent conveyance claims are insufficient.

McKnight v. Superior Court (1985) 170 Cal.App.3d 291, 215 Cal.Rptr. 909, presented an archetypal fraudulent conveyance. The defendant defaulted on a loan secured by real property. The plaintiff obtained a writ of attachment against the property and later obtained a judgment against the defendant. The defendant then quitclaimed his community interest in the property to his wife. The plaintiff filed a separate action to set aside this conveyance and recorded a lis pendens. ( Id., at pp. 295-296, 215 Cal.Rptr. 909.) The Court of Appeal held that this second action affected title to the real property and that a lis pendens was therefore proper (although it affirmed expungement on unrelated grounds). ( Id., at pp. 299, 303, 215 Cal.Rptr. 909.)

In Hunting World, Inc. v. Superior Court, supra, 22 Cal.App.4th 67, 26 Cal.Rptr.2d 923, the plaintiff filed a federal trademark infringement action against one Bogar and obtained a temporary restraining order and an order to seize any counterfeit property in Bogar's possession. Soon after that, Bogar quitclaimed his interest in his residence to his wife. The plaintiff then filed a fraudulent conveyance action and recorded a lis pendens. ( Id.,at p. 69, 26 Cal.Rptr.2d 923.) As noted above, the Court of Appeal held that the lis pendens was proper.

[9] The obvious and fundamental distinction between Fontana's federal action and cases like McKnight and Hunting World is that Fontana's complaint does not allege that there was any conveyance of real property, fraudulently or otherwise, to anyone, much less to the Lewises. It merely alleges that Shipley wrongfully took Fontana's money and used the money to buy-not convey-the property.

**74 That Fontana labelled its claim “fraudulent conveyance” is irrelevant, because the allegations make it clear that there is no claim of a fraudulent conveyance of real property. Without such a conveyance, there can be no claim that affects “title to, or the right to possession of,specific real property ” as required by section 405.4. (Emphasis added.) At bottom, Fontana merely re-alleged its constructive trust claim, which the overwhelming weight of authority holds cannot support a lis pendens.

5. None of the remaining claims supports a lis pendens.

[10] The fourth, fifth and sixth claims for relief in the federal action are merely perfunctory incorporations of the securities and RICO allegations, coupled *1866 with conclusionary allegations of entitlement to certain relief. Since none of these claims alleges anything concerning title to the property beyond the claims discussed above, they provide no additional support for a lis pendens.

[11] [12] The quiet title claim superficially seems to support a lis pendens; the trial court certainly thought so. But despite the terminology, there is no quiet title claim, for three reasons. First, as noted above, the incorporated allegations describe only a theft of money, and the other allegations do not add anything concerning title. Second, Fontana has never had standing to bring a quiet title action, because whatever interest it might have is only equitable, and the holder of equitable title cannot maintain a quiet title action against the legal owner. ( Stafford v. Ballinger(1962) 199 Cal.App.2d 289, 294-295, 18 Cal.Rptr. 568.) Third, the complaint was not verified as required by the quiet title statute. (§ 761.020.)

D. Even if the federal lis pendens was valid, the fact that it was indexed after the Lewises took title prevented it from giving constructive notice.

[13] [14] It is a common misperception, which the trial court evidently shared, that a recorded document imparts constructive notice from the moment it is recorded. That is not the law. The operative event is actually the indexing of the document, and that did not occur until the day after the Lewises acquired title.

The most recent in a long line of authorities stating this principle is Hochstein v. Romero (1990) 219 Cal.App.3d 447, 268 Cal.Rptr. 202: “[B]efore the constructive notice will be conclusively presumed, the document must be ‘recorded as prescribed by law.’ (Civ.Code, § 1213.) A document not indexed as required by statute (see Gov.Code, §§ 27230-27265), does not impart constructive notice because it has not been recorded ‘as prescribed by law.’ ” ( Id. at p. 452, 268 Cal.Rptr. 202.) The court explained the principle, citing such authorities as Witkin and Miller & Starr: “ ‘The policy of the law [requiring recordation and indexing] is to afford facilities for intending purchasers ... in examining the records for the purpose of ascertaining whether there are any claims against [the land], and for this purpose it has prescribed the mode in which the recorder shall keep the records of the several instruments, and an instrument must be recorded as herein directed in order that it may be recorded as prescribed by law. If [improperly indexed], it is to be regarded the same as if not recorded at all.’ [Citation.] Thus, it is not sufficient merely to record the document. ‘California has an “index system of recording,” and ... correct indexing is essential to proper recordation. [Citations.]’ [Citations.]” (Original emphasis.) ( Hochstein v. Romero, supra, 219 Cal.App.3d at p. 452, 268 Cal.Rptr. 202.)

*1867 The reason for this rule is obvious. The courts have long recognized that constructive notice is a “fiction” ( Richardson v. White, supra, 18 Cal. at p. 106), so if a recorded document is going to affect title there must at least be a way for interested parties to find it: “The California courts have consistently reasoned that the conclusive imputation of notice of recorded documents depends upon proper indexing because a subsequent purchaser should be charged only with notice of those documents which are locatable by a search of the proper indexes. ” (Emphasis added.) (Hochstein v. Romero, supra 219 Cal.App.3d at p. 452, 268 Cal.Rptr. 202.)

In part, the trial court simply disagreed with the decision, finding “puzzling” the Court of Appeal's perceived failure to “reconcile” its holding with the language of Civil Code section 1213 stating that a document “recorded as prescribed by law from the time **75 it is filed with the recorder for record is constructive notice.”

[15] Of course, a trial court does not have the luxury of refusing to follow decisions it disagrees with. ( Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.) But more important, the trial court's criticism was erroneous. The language that the trial court believed Hochstein failed to “reconcile” had in fact been interpreted by the Supreme Court in Cady v. Purser (1901) 131 Cal. 552, 63 P. 844, which Hochstein cited on that very point. The Hochstein court didn't disregard the effect of “filed with the recorder”; it knew that the question had been resolved in Cady. In fact, the principle was settled long before Cady, inasmuch as Cady relied in part on a case dating back almost to California's statehood. ( Cady v. Purser, supra, 131 Cal. at p. 555, 63 P. 844 (citing Chamberlain v. Bell (1857) 7 Cal. 292, 294).) Over the years, the courts have been absolutely consistent in following the indexing rule. (Eg., Dougery v. Bettencourt (1931) 214 Cal. 455, 462-464, 6 P.2d 499; Federal Construction Co. v. Curd (1918) 179 Cal. 479, 487-488, 177 P. 473.)

[16] [17] At the hearing on the Lewises' reconsideration motion, the trial court adopted Folksam's argument that attempted to distinguishHochstein and similar decisions from the present case on the basis that those cases involved documents that were improperly indexed, while the present case involves a document that ultimately was indexed properly. This is unavailing. The reason an improperly indexed document does not give notice is that no one can find it. The complete absence of indexing, even though it may be temporary, means exactly the same thing-no one can find the document. That was the state of affairs on February 28, 1992, when the Lewises acquired title. The federal lis pendens therefore did not impart notice.

*1868 E. The trial court's finding that the Lewises acquired imputed knowledge of the federal lis pendens from Lincoln Title is both factually unsupported and directly contrary to settled law.

[18] [19] The trial court also attempted to distinguish Hochstein on the ground that “[i]n Hockstein [sic], there was no evidence that the purchasers or any agent of the purchasers had actual notice of the title defect at the time they bought.” (Original emphasis.) The entire predicate for this conclusion appears in just a few words in the order: “... Lincoln Title, the very person retained as Lewises['] agent to search title, in fact discovered the existence of the federal lis pendens on February 25, 1992, using, as it regularly does, a search system wholly independent of any indexing.” Having concluded that Lincoln Title was the Lewises' agent, the trial court further concluded that the Lewises were charged with Lincoln Title's supposed knowledge of the lis pendens. There are at least three reasons why the conclusion is wrong, including direct Supreme Court authority that a title insurer's knowledge is not imputed to its insured.

1. There was no evidence that Lincoln Title discovered the existence of the lis pendens.

As noted above, the sum total of the evidence on this subject was that Lincoln Title's outside title service had (or knew about) the lis pendens but misposted it, so that neither Lincoln Title's title searcher nor Pelis, the title officer of the Lewises' policies, knew it was there. The most that can be said about the evidence on this subject is that there might have been a triable issue as to the state of the title searcher's knowledge. The trial court nevertheless concluded, as a matter of law (it did not specify any triable issues), that Lincoln Title knew about the lis pendens. That erroneous conclusion was the indispensable starting point for the imputation of constructive knowledge to the Lewises.

2. There was no evidence of any agency relationship between the Lewises and Lincoln Title.

The trial court cited no evidence to support its conclusion that Lincoln Title was the Lewises' agent, and there was none. The only evidence on the subject was the Lewises' **76 original offer to purchase the property, which provided that a title Policy was to be issued by Lincoln Title “at sellers['] expense.” There simply is no agency here.

“The essential characteristics of an agency relationship as laid out in the Restatement are as follows: (1) An agent or apparent agent holds a power to *1869 alter the legal relations between the principal and third persons and between the principal and himself; (2) an agent is a fiduciary with respect to matters within the scope of the agency; and (3) a principal has the right to control the conduct of the agent with respect to matters entrusted to him. [Citation.]” ( Alvarez v. Felker Mfg. Co. (1964) 230 Cal.App.2d 987, 999, 41 Cal.Rptr. 514; see also Civ.Code, § 2295 [“An agent is one who represents another, called the principal, in dealings with third persons.”].)

There was no evidence that Lincoln Title fit within even one of these requirements, much less all three. There was no evidence that it represented the Lewises vis-a-vis anyone else; that it could alter their relationships with anyone else; that anyone believed it was a fiduciary; or that the Lewises had any right to control its conduct.

3. Regardless of how one characterizes the relationship between the Lewises and Lincoln Title, as a matter of law, a title insurer's knowledge is not imputed to an insured.

[20] Another well-settled rule is that a title insurance company is not the agent of its insured, and the insurer's knowledge is not imputed to its insured. ( Mayhew v. Burke (1929) 206 Cal. 396, 400, 274 P. 517.)

Rice v. Taylor (1934) 220 Cal. 629, 32 P.2d 381, is uncannily similar to this case. It involved two trust deeds executed by Taylor, the first one to Rice and the second one to a mortgage company. Rice's trust deed was improperly indexed, and the mortgage company was unaware of it when it made its loan to Taylor, but the mortgage company's title insurance company did know about it. The trial court held that Rice's trust deed was superior to the mortgage company's.

The Supreme Court reversed. Its description of the issues could have been written for the present case: “Appellant makes three basic contentions: (1) That it had no actual notice of said instruments; (2) that it had no constructive notice thereof because of the improper indexing, and (3) that it had no imputed knowledge thereof because the title company, that discovered the documents, was not its agent respecting the condition of title to the property.” ( Id., at p. 633, 32 P.2d 381.) The Supreme Court agreed with all of these contentions. As to the agency claim, it observed: “The insured and the insurer deal at arm's length. There is no room for the operation of a fiduciary relationship. The title company is in business for profit. It may be willing to assume risks that the insured might think imprudent.” ( Id., at p. 636, 32 P.2d 381.)

[21] The trial court essentially misconceived Lincoln Title's role when it stated that “Lincoln's lack of reasonable diligence in acting upon the information it *1870 discovered, is imputed to Lewises.” As a matter of express statutory law, a title company issuing a preliminary report does not owe a negligence duty to a prospective insured. (Ins.Code, §§ 12340.10, 12340.11; see generally Southland Title Corp. v. Superior Court (1991) 231 Cal.App.3d 530, 536-538, 282 Cal.Rptr. 425 [no negligence liability based on preliminary report].) FN5 Lincoln Title was simply selling a product. Imputing its knowledge to the Lewises would be like imputing a car salesperson's knowledge of defective brakes to an unsuspecting buyer, and then using that imputed knowledge to subject the buyer to liability for reckless conduct for driving a car with actual knowledge that its brakes didn't work. Such a conclusion would be contrary to law, as well as to the most basic notions of fair play. It is no more appropriate here.

FN5. These principles also answer Rice 's suggestion, in dictum, that a “searcher of titles” could be an agent. ( Rice v. Taylor, supra, 220 Cal. at p. 635, 32 P.2d 381.) It is clear the court was referring to an abstractor, which is not the role Lincoln Title was playing.

4. The absence of an agency relationship between the Lewises and Lincoln Title cannot, as the trial court held, preclude a finding of good faith.

A further component of the trial court's analysis, revealed during the hearing on the **77 Lewises' reconsideration motion, is the notion that the Lewises are actually worse off if Lincoln Title was not their agent. According to the trial court's remarks from the bench, that conclusion would mean that the Lewises conducted no title search at all, so that, under the trial court's “duty of inquiry” standard, they would lack good faith because they failed to make a reasonable inquiry.

[22] We are aware of no authority, and Folksam never cited any, holding that a residential homebuyer owes some sort of duty to the world at large to search title at all, much less for the purpose of avoiding fraudulent conveyance claims. More to the point, however, is that the trial court's own formulation of the supposed duty of inquiry-“getting a title report and title insurance”-exactly describes what the Lewises did.

An additional feature of this case is that on the day after Fontana recorded its lis pendens the Lewises received a trust deed and a clean title policy. It is impossible to conceive of a rationale that would impose a heightened duty of care in connection with obtaining a grant deed only several days later, but that is the effect of the trial court's ruling.

F. The withdrawal of the lis pendens transformed the Lewises into good faith purchasers, and they are accordingly entitled to summary judgment.

[23] Although the federal lis pendens was the linchpin of the trial court's order, the court refused to recognize that the withdrawal of the lis pendens *1871 pursuant to the Lewises' settlement with Fontana eliminated any possible basis for Folksam's claims.

Sections 405.60 and 405.61 govern the effect of a lis pendens that has been withdrawn. Section 405.60 provides: “Upon the withdrawal of a notice of pendency of action ... neither the notice nor any information derived from it.... shall constitute actual or constructive notice of any of the matters contained, claimed, alleged, or contended therein, or of any of the matters related to the action, or create a duty of inquiry in any person thereafter dealing with the affected property.” (Emphasis added.)

Section 405.61 provides that upon the withdrawal or expungement of a lis pendens, even a person with actual knowledge of a claim is not bound by it. The statute provides that no one who acquires an interest in the property “shall be deemed to have actual knowledge of the action or any of the matters contained, claimed, or alleged therein, or of any of the matters related to the action, irrespective of whether that person possessed actual knowledge of the action or matter and irrespective of when or how the knowledge was obtained. ” (Emphasis added.)

The statute contains an unusually strong statement of Legislative intent that emphasizes the statute's broad reach: “It is the intent of the Legislature that this section shall provide for the absolute and complete free transferability of real property after the expungement or withdrawal of a notice of pendency of action.” (§ 405.61, italics added.)

[24] These statutory provisions make clear that once a lis pendens is withdrawn or expunged, title to the property must be treated as though the lis pendens had never been filed.

The few courts that have interpreted these statutes and their almost identical predecessors have all recognized this goal. (Eg., Knapp Development & Design v. Pal-Mal Properties, Ltd. (1987) 195 Cal.App.3d 786, 790, 240 Cal.Rptr. 920 [any notice “is entirely eliminated”]; Ranchito Ownership Co. v. Superior Court (1982) 130 Cal.App.3d 764, 770, 182 Cal.Rptr. 54 [record owner can “deal with his property as though no notice of lis pendens has been filed”].)

While it is true that the expungement statute speaks in terms of persons dealing with the property after the withdrawal of the lis pendens, here that description applies to anyone who acquires title from the Lewises-in other words, the Lewises may now transfer their property as though the lis pendens never existed. This result functionally makes the Lewises bona fide purchasers retroactively, since otherwise they could not transfer clear title.

*1872 The only fact that could possibly change this result is the pendency of Folksam's**78 claims and Folksam's lis pendens. But under the trial court's ruling, the only basis for Folksam's claims is the federal lis pendens, which supports Folksam's claims only because it gave the Lewises constructive or imputed notice. Since the Lewises' liability is based entirely on a fiction, when the fiction goes away so should the liability.

G. The Lewises paid equivalent value.

[25] At oral argument on September 8, 1994, counsel were given leave to file supplemental letter briefs pertaining to the applicability of payment of equivalent value by the Lewises.

Relying on the case of Davis v. Ward (1895) 109 Cal. 186, 41 P. 1010, Folksam contends that even if the Lewises took title before the indexing of the Fontana lis pendens, they nevertheless were not bona fide purchasers because they did not fully pay for the property until after indexing. Folksam appears to be making a make-weight argument that if the court determines that the date of recordation is not the effective date by reason of an absence of indexing until later, then the date for determining the Lewises' status is the date they paid $1,950,000 as the balance of the purchase price on the property. By then, Folksam contends, the deed had long since been indexed and the Lewises were chargeable with notice of the lis pendens. We have previously determined that the Lewises are entitled to a peremptory writ on three separate grounds, namely, that constructive notice was insufficient to defeat the Lewises' status as purchasers in good faith, that the Fontana federal action did not support a lis pendens, and that the withdrawal of the lis pendens nullified its effect.

Nevertheless, we address Folksam's make-weight argument and conclude that the Davis case payment of value rule does not apply in the instant case for a number of reasons, more fully explained hereafter, including these: (1) the rule does not apply and should not be applied at all to fraudulent transfer actions; (2) the rule is inconsistent with modern conveyancing practice and law; (3) the rule does not apply to purchasers who do not have actual notice of a competing claim to property; (4) the way in which the Davis court adjusted the equities of the parties does not apply in this instance; (5) the rule should only be applied in favor of a party that itself is a bona fide purchaser or has encumbrancer status, which Folksam did not; and (6) Davis cannot be applied here without violating the very equitable principles that undergird the decision.

1. Davis does not apply to fraudulent transfer actions.

The payment of value rule defined in Davis is one small part of an extensive body of real property recording and notice rules. These rules *1873govern conflicts concerning ownership of or encumbrances against property. Never have they been extended to, much less adopted wholesale by, the separate body of law governing fraudulent conveyances.

[26] The recording and notice rules governing real property conveyances were designed to establish a system of priorities among claimants asserting competing interests in property. In this system, a bona fide purchaser who first duly records his deed is granted preference over all unrecorded and unknown interests. (3 Miller & Starr, Cal.Real Estate (2d ed. 1989) § 8.3, p. 273.) The system operates without regard to fault, in the sense that a completely innocent purchaser who fails to record his deed becomes junior to anyone else who records a deed without knowing of the innocent purchaser's interest.

[27] [28] The fraudulent transfer statutes serve a completely different and unrelated purpose: they were designed not to insure predictability in the priority of titles, but for the protection of creditors. (See legis. committee com., West's Ann.Civ.Code, § 3439.03 (1994 pocket supp.) p. 150 [fraudulent transfer statute intended “to protect a debtor's estate from being depleted to the prejudice of the debtor's unsecured creditors”].) These statutory provisions allow creditors to set aside a transfer made with “actual intent to hinder, delay or defraud any creditor.” (Civ.Code, § 3439.04, subd. (a).) In such an action, the central inquiry is whether the transfer was fraudulently made. Issues of **79 notice, recording and payment of value, which are fundamental to real property conveyance disputes, are relevant insofar as they may tend to prove or disprove fraudulent intent. The reason is that creditors are not entitled to protection against the world at large, but only against fraudulent conduct.

[29] In deciding whether fraudulent intent has been proven, courts must look only to rules concerning fraudulent transfers, and should not be distracted by similar-sounding terms used in real property recording statutes. “ ‘ “[T]here is no rule of law that necessarily requires the same meaning to be given to the same word used in different places in the same statute” ... much less the same word used in different statutes relating to essentially different matters and subject to different construction.’ [Citation.]” ( Botello v. Shell Oil Co. (1991) 229 Cal.App.3d 1130, 1137, 280 Cal.Rptr. 535.) In the present case, superficial linguistic similarities between the two bodies of law mask fundamental distinctions that preclude the indiscriminate application in one area of principles developed in the other.

[30] The recording statutes concern what are generally called “bona fide purchasers”; the fraudulent transfer law provides a defense to one who “took *1874 in good faith and for a reasonably equivalent value.” (Civ.Code, § 3439.08, subd. (a).) While the language of these two areas of law is roughly comparable, the legal significance is decidedly different. In a real property conveyance dispute, a bona fide purchaser must pay value for the property, but there is no particular requirement as to how much he must pay: he may prevail over another grantee even though he has paid far less than the property is worth. As the Supreme Court observed in Horton v. Kyburz (1959) 53 Cal.2d 59, 346 P.2d 399: “ ‘The inadequacy of price is a circumstance proper to be considered in determining the question of good faith, but it will not the less fall within the legal definition of valuable consideration, however disproportionate it may be to the value of the land.’ [Citation.]” (Emphasis added.) ( Id., at pp. 65-66, 346 P.2d 399.) (See also Odone v. Marzocchi (1949) 34 Cal.2d 431, 436, 211 P.2d 297 [adequacy of consideration is not essential to the validity of a deed].) Under Davis, however, the timing of the payment may be significant.

[31] In contrast, the fraudulent transfer statutes work exactly the opposite way. Because a fraudulent transfer action focuses on protection of creditors-persons not parties to the property transaction-the transferee must pay reasonably equivalent value in order to establish a defense. However, the timing of actual payment is irrelevant, since the concept of value necessarily includes debt as well as cash payment.

In sum, we find Folksam's position to be confused. Although it brought this action under the fraudulent transfer statute, it is attempting to prove its theory not by meeting the statutory definition of fraud, but by applying a set of property conveyance rules that, as far as we are aware, no court has ever applied to fraudulent conveyances. Having chosen to ground its claim in fraudulent transfer law, Folksam is precluded from picking and choosing from other unrelated bodies of law to bolster its position.

2. The payment of value rule should not govern Folksam's claim against the Lewises and their property.

In Davis, Ward mortgaged some property to Davis' predecessor. Apparently by mutual mistake, the mortgage identified the wrong parcel of land. Ward later sold half of the property to Fleming, who paid cash, and half to Brown, who paid part cash and part notes. ( Davis v. Ward, supra, 109 Cal. at pp. 187-191, 41 P. 1010.) Davis sued to have the mortgage reformed and foreclosed. Evidence at trial proved that Fleming and Brown both took without notice of the prior sale because the mortgage was recorded against the wrong property and could not have been discovered by searching the record of the property actually purchased. The evidence also showed, however, that when *1875 Brown received notice of Davis' claim-apparently by being sued-he had paid only $200 of the purchase price. ( Id., at p. 190, 41 P. 1010.) Fleming and Brown both won nonsuits on the ground that they were bona fide purchasers.

**80 On appeal, the Supreme Court affirmed the nonsuit as to Fleming, the cash purchaser. However, it reversed Brown's nonsuit, holding that he was not a bona fide purchaser because he could not show that “the purchase money had been paid before notice.” ( Id., at p. 189, 41 P. 1010.)The court relied in part on Jewett v. Palmer (Chancery 1823) 7 Johns, Ch. 68, where the court explained, “ ‘A plea of a purchase for a valuable consideration, without notice, must be with the money actually paid; or else, according to Lord Hardwicke, you are not hurt. The averment must be, not only that the purchaser had not notice at or before the execution of the deeds, but that the purchase money was paid before notice.’ ” ( Davis v. Ward, supra, at p. 190, 41 P. 1010.)

As we discuss in more detail below, the Supreme Court did not decide what remedy should be applied. It simply reversed a nonsuit, saying nothing about how the trial court should adjust the parties' rights.

Folksam maintains that the facts in Davis parallel those involved here, and it asks this court to apply the payment of value rule to defeat the Lewises' good faith defense. A careful dissection of Davis' logic and aims, however, reveals how Folksam's argument fundamentally distorts the case's meaning and the payment of value rule. Properly understood, Davis should not extend to the Lewises and, in any event, does not support the implication that Folksam should be permitted to use the property to recover funds allegedly stolen by Shipley.

(a) The payment of value rule stated in Davis cannot be reconciled with modern real property law and practice and should be strictly limited to its facts.

Davis was premised, in part, on Lord Hardwicke's assertion that a purchaser who loses his property is “not hurt” if he has not fully paid for the land. This claim is inconsistent with both equitable considerations and modern market expectations.

Any purchaser without notice who makes a down payment and unequivocally obligates himself to pay the balance has every reason to believe that, if he makes the payments when due, his right to the property will be secure. Such a purchaser may drastically alter his position on the basis of this understanding, such as by selling his prior residence, moving his family and making significant improvements to the property. If his property is taken, his *1876 injury remains even if his money is returned. Aside from ignoring this undeniable reality, Davis also ignores the ancient principle that real property is unique and its loss cannot be compensated in money. ( Glynn v. Marquette (1984) 152 Cal.App.3d 277, 280, 199 Cal.Rptr. 306[specific performance available in land sale contracts because it is assumed real property is unique]; see Civ.Code, § 3387 [presumption that breach of agreement to transfer property cannot be adequately compensated].) We discern that Lord Hardwicke was simply expostulating an erroneous rule of law.

While this court is bound to follow existing, Supreme Court authority, we resist any attempt to apply an outdated theory to modern real property transactions. Since Davis was grounded on an archaic and misunderstood principle of real property conveyancing, we confine it to its facts and its narrow purpose. We decline to extend Davis beyond the boundaries of conveyancing law to a fraudulent conveyance action.

It should also be observed that Folksam's reliance on Davis appears contradictory. Until Folksam filed its answer to California Land Title Association's amicus brief, Folksam had steadfastly relied on standard recording and notice rules in an effort to undermine the Lewises' bona fide purchaser status. However, now it urges this court to expand Davis to reach a result that is inconsistent with these same rules.

Notice and recording rules work precisely because they lead to predictable results. Davis carves out a narrow exception to respond to particular equitable concerns-a narrow exception that contradicts what would be expected from a more typical application of notice and recording rules. For example, if, in Davis, Brown had recorded his deed, Brown should prevail over Davis using a straightforward race/notice analysis because he took without notice of Davis' claim, gave value (in the form of a note), and **81 duly recorded his deed. However, the payment of value rule leads to the opposite result: Brown loses his bona fide purchaser status, despite having done everything a bona fide purchaser is supposed to do. Kept within its original boundaries, Davis may serve equitable purposes without undermining the everyday operation of real property conveyancing. But to wrench the case out of its special context is to risk upsetting the very predictability that real property rules were designed to insure.

(b) Davis cannot rationally be applied to cases involving only constructive notice.

In Davis, Brown received actual notice of the litigation affecting his property; there was no constructive notice, and the court did not opine on*1877 what the effect of constructive notice would have been. The same is true in the only other case Folksam cites that actually applies Davis to a partial payment situation, Title Guarantee & Trust Co. v. Henry (1929) 208 Cal. 185, 192, 280 P. 959.FN6

FN6. Henry bears no factual resemblance to the present case; it involved a defendant who claimed an interest under a contract that had never been properly delivered. The other cases Folksam relies on quote the payment of value rule in circumstances where there was not, in fact, any issue of partial payment. ( Kenniff v. Caulfield (1903) 140 Cal. 34, 45, 73 P. 803; Eversdon v. Mayhew (1884) 65 Cal. 163, 167, 3 P. 641; County Bank of San Luis Obispo v. Fox (1897) 119 Cal. 61, 64, 51 P. 11.)

One might argue that a buyer in this situation-someone who continues to pay his seller in the face of actual notice of a competing claim-should be at risk of losing his post-notice investment, if only because the assertion of the claim could give rise to a defense to the payment obligation (in other words, the buyer becomes a volunteer). But constructive notice should not have that effect, and nothing in Davis requires such a result.

Applying Davis to a case of constructive notice penalizes a completely innocent purchaser for simply living up to his payment obligations. This is a purchaser who is “innocent” in every sense of the recording statutes, because he has already acquired title and has already received whatever title information or title insurance he was entitled to under his purchase agreement. If constructive notice before payment threatens him with loss of title, he will have to undertake a title search before each and every payment-360 title searches for a typical 30-year note! Such an obviously absurd result is fundamentally contrary to the whole purpose of the recording statutes, but it would be the unavoidable result of holding that constructive notice is enough to trigger the Davis payment of value rule.

(c) Davis does not apply because the fraudulent transfer act requires only the payment of “reasonably equivalent value,” not full payment in cash.

Under the indexing rule, the Lewises could not be charged with constructive knowledge of Fontana's lis pendens until February 29, 1992. By that time, they had paid “value” in two ways. First, $350,000 of their money was released from escrow on February 25, 1992. Then, on February 28, the day before the lis pendens was indexed, the Lewises' grant deed was recorded. As of that moment they were, under their purchase agreement, legally obligated to pay the balance of the purchase price, and without further documentation, the property was subject to a vendor's lien to secure payment of that amount. (Civ.Code, § 3046.) That outstanding obligation, combined with the $350,000 already paid, represented the “reasonably*1878 equivalent value” of the property. Accordingly, as of February 28, the requirements of the Lewises' good faith defense had been fulfilled.

Although Davis holds that giving a note instead of actual payment is insufficient, that was not a fraudulent conveyance action. This case is, and it has to be governed by fraudulent conveyance principles.

(d) Davis permits an injured party to assert an interest in disputed property only during the time the wrongdoing seller retains an interest in the property by virtue of the purchase money note.

To understand Davis, one must move beyond a superficial reading of the opinion and understand what was really going on.

**82 The language of the decision focuses on Brown's status as a bona fide purchaser. However, it is Ward 's conduct, not Brown's status, that explains the result. Ward was the only wrongdoer in Davis: he improperly attempted to convey unencumbered title to Fleming and Brown despite a preexisting mortgage, which left him with a continuing interest in the property in the form of a claim against Brown for the balance of his purchase price, secured at least by a vendor's lien (Civ.Code, § 3046), if not an express mortgage. If anyone should have lost his interest in the property to compensate an injured party, it was Ward.

Because the court in Davis merely reversed Brown's nonsuit and remanded the case, it did not determine the proper remedy. However, the trial court, exercising its equitable powers, could have easily preserved all of the parties' interests in the property except Ward's, in recognition that Ward, as the wrongdoer, should be the one to sacrifice his interest-i.e., his claim against Brown for the balance of his purchase price. The likely and appropriate remedy would have been for Davis to acquire Ward's interest in the property. In other words, Davis would become the payee of Brown's note to Ward, and Brown's position would remain unchanged: he would continue to pay the note, but would make payments to Davis rather than Ward, whose interest would be extinguished. Under this approach, the wrongdoer is penalized, the aggrieved party is compensated and the innocent purchaser's rights are preserved. This result would be possible because, at least as far as the opinion reveals, by the time of trial Brown's note to Ward was still outstanding, so the trial court had something on which to act.

[32] Davis reaches (or at least permits) this correct result, but for the wrong reasons. Davis should have prevailed not because Brown was not a good faith purchaser, but rather because Ward continued to hold an interest that, in *1879 equity, belonged to Davis, as the party damaged by Ward's wrongful conduct. Viewed this way, Davis serves a particularized goal: a party injured by a seller's transfer of title may succeed to any interest the seller retains in the property, so long as that interest has not been extinguished before the claim is asserted.

This goal is not served by extending Davis to the present case. The Lewises fully paid the note and extinguished Shipley's interest by the end of March 1992, but Folksam did not bring this action until May 1992, and the Lewises were not served until September 1993. Folksam may well have a legitimate claim against Shipley. But it cannot attempt to satisfy this claim by proceeding against Shipley's former property, because the Lewises now own that property outright. Unlike the situation in Davis, it is too late to adjust the parties equities, because the wrongful seller's interest in the property has been extinguished.

(e) Davis should not be applied in favor of a claimant that is not itself a bona fide purchaser or encumbrancer.

The most striking difference between this case and Davis is in the nature of the competing parties' claims to the property. In Davis, all three claimants had actual title claims-Davis as a mortgagee, and Brown and Fleming as fee holders-and they were all innocent even of constructive knowledge at the time they acquired title. The court had to resort to the payment of value rule as a way of adjusting the equities among parties whose title was, in all other respects, of equal stature.

[33] Here, the Lewises acquired a fee interest, but Folksam's only interest is a lis pendens filed by someone else-a document that, at the very most, simply established that Fontana has an as-yet-unproven claim against the property. A party in Fontana's position should not be entitled to bona fide purchaser/encumbrancer status, and Davis should not be applied to such claimants. A fortiori, Folksam's rights should be no greater.

This conclusion finds support in cases examining the rights of judgment lien creditors. For example, in Fulkerson v. Stiles (1909) 156 Cal. 703, 705, 105 P. 966, the court observed that “[a] judgment plaintiff has a mere general lien upon the real property of the judgment defendant. Such lien is an **83 encumbrance, but the original judgment plaintiff is not ordinarily an encumbrancer for a valuable consideration.” (Accord, Hansen v. G & G Trucking Co. (1965) 236 Cal.App.2d 481, 496, 46 Cal.Rptr. 186 [“a mere judgment creditor is not entitled to protection as a bona fide purchaser for value”].) If a judgment lien creditor, who has already prevailed in an action *1880 against the defendant and already has an enforceable lien, is not entitled to bona fide purchaser status, it has to follow that a lis pendens holder-whose claim has not even been adjudicated-cannot have a stronger position.

If, as appears from Davis, the payment of value rule is used to adjust equities between parties that would otherwise be bona fide purchasers, then Folksam should not be able to gain any advantage from the rule.

(f) Davis should not be applied where its use would subvert the very same equitable principles that informed its result.

In Henry v. Phillips (1912) 163 Cal. 135, 141, 124 P. 837, the Supreme Court cited Davis' payment of value rule and declared that “[t]he rule is not absolute or invariable, but depends upon circumstances and is governed by principles of equity and justice. ” (Emphasis added.) The court further explained: “where a very small part of the price was unpaid when notice was received, or where the defrauded party was negligent to the prejudice of the purchaser, or where, from the fact of improvements made in good faith, or other conditions, it would be a great hardship upon the vendee to take the land from him, it is said that he should be allowed to retain the land and the defrauded party limited to the recovery of the part of the purchase money still owing by such vendee.” ( Ibid.; see also 3 Miller & Starr, Cal.Real Estate, supra, § 8:41, p. 349.)

(i) Because the Lewises fully paid their note and made substantial improvements, they are entitled to keep the property.

[34] [35] If the payment of the value rule is applied here, the Lewises should retain the property and Folksam should be limited to money damages (in this case recoverable, if at all, from Shipley, the culpable party). By the time the Lewises received notice of the pending litigation (when they were served with Fontana's cross-complaint, 19 months after they purchased the property), they had fully paid the purchase price and had invested another $2,600,000 renovating the property. As the court recognized in Henry v. Phillips, supra, 163 Cal. 135, 124 P. 837, where little of the purchase price remains unpaid, or where substantial improvements have been made prior to notice, equity demands the vendee retain the land and the defrauded party be limited to money damages. This case involves not one, but both, of these factors. It would be patently unfair, and would undermine the equitable foundation of Davis, to allow the payment of value rule to deprive the Lewises of their home.

(ii) Applying Davis would unfairly penalize the Lewises for paying cash for the property, rather than financing the purchase price.

In Davis, the court recognized that if Ward had assigned the notes to a bank for value and without notice, “the defense of both Brown and the bank *1881 to this action would be complete, for in that event, the notes would have been payment.” ( Davis v. Ward, supra, 109 Cal. at p. 191, 41 P. 1010.) In other words, the fact that the seller ends up being fully paid transforms the buyer into a good-faith purchaser when otherwise he would not be. This distinction makes no sense; from the buyer's perspective, he is in the same position, and equally obligated to repay a note over time, whether the seller or a bank holds the mortgage.

Here, the Lewises did not merely obligate themselves to pay the purchase price; they paid the price in cash before receiving notice of the litigation. Bringing this case within Davis' sweep would lead to a thoroughly anomalous result: the Lewises, cash buyers, would be at risk of losing their property, while another purchaser, who paid only a small down payment and financed the balance, would be considered a bona fide purchaser. No one could comfortably acquiesce in so unfair an outcome.

**84 IV.

DISPOSITION

Let a peremptory writ of mandate issue directing the superior court to vacate its order denying petitioners' motion for summary judgment, and thereafter issue a new and different order granting said motion and expunging the lis pendens. Petitioners to recover costs of these proceedings.

LILLIE, P.J., and JOHNSON, J., concur.

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 Post subject: BGJ Assoc. LLC v. Superior Court (1999)
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BGJ Assoc., LLC v. Superior Court, 75 Cal.App.4th 952, 89 Cal.Rptr.2d 693 (1999)

Court of Appeal, Second District, Division 4, California.

BGJ ASSOCIATES, LLC, et al., Petitioners,

v.

The SUPERIOR COURT of Los Angeles County, Respondent;

M2B2, LLC, Real Party in Interest.

No. B131248.

Oct. 21, 1999.

Review Denied Jan. 13, 2000.

**694 *954 Greg David Derin; Greines, Martin, Stein & Richland LLP, Robin Meadow and Dana F. Gardner, Los Angeles, for Petitioners.

*955 No appearance for Respondent.

Hillel Chodos and Deborah Chodos, Los Angeles, for Real Party in Interest.

CHARLES S. VOGEL, P.J.

INTRODUCTION

The plaintiffs brought an action which included allegations supporting a constructive trust on a parcel of real property, and recorded a notice of pendency of action (lis pendens). (Code Civ. Proc., § 405 et seq.) FN1 On the defendants' motion the trial court expunged the lis pendens notice pursuant to section 405.31 on the ground that plaintiffs' pleading does not contain a “real property claim” within the meaning of the lis pendens statute. The plaintiffs have petitioned this court for a writ of mandate to compel the trial court to vacate its expungement of the lis pendens notice. Review by extraordinary writ is expressly provided in section 405.39. We issued an order to show cause to address an issue of continuing interest the circumstances under which an allegation supporting a constructive trust will support a lis pendens.

FN1. All further statutory references are to the Code of Civil Procedure.

We conclude the trial court properly expunged the lis pendens. For purposes of the lis pendens statute, this action, against partners/joint venturers, and a third party, for usurping to themselves the partnership's/joint venture's opportunity to purchase the disputed property, should be interpreted as primarily for money damages even though it also includes a request to impose a constructive trust on the property. In light of the clear policy of the courts to narrowly interpret the lis pendens statute in constructive trust cases in order to prevent its possible abuse to coerce settlement, plaintiffs are not entitled to maintain a lis pendens.

PRELIMINARY PROCEDURAL AND LEGAL BACKGROUND

The lis pendens statute was revised in 1992. The Real Property Law Section of **695 the State Bar of California proposed the revision and submitted a report to the Legislature. The comments in the state bar report were relied upon by the Legislature and indicate the legislative intent. (Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 71-72, 26 Cal.Rptr.2d 923; Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1864, 37 Cal.Rptr.2d 63; *956 historical note to § 405 in 14 West's Ann. Cal.Codes, 1999 supp., p. 149; see California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 700, 170 Cal.Rptr. 817, 621 P.2d 856.) These comments (hereafter cited as “Comment”) are reproduced under the applicable sections in both Deering's and West's Annotated California Codes. (14 West's Ann. Cal.Codes, 1999 pocket supp., § 405.1 et seq., p. 150 et seq.; Deering's Cal.Code Civ. Proc. Ann., 1999 supp., § 405.1 et seq., p. 62 et seq.)

The 1992 legislative revision, however, took no position and left to future judicial development the precise issue involved here: the circumstances under which a pleading supporting a constructive trust as to real property constitutes a “real property claim” so as to justify a lis pendens. “Current law is in conflict regarding the availability of the lis pendens procedure in cases claiming a constructive trust or equitable lien. [Citations.] The definition of ‘real property claim’ neither includes nor excludes claims of constructive trust or equitable lien. Instead, the law in this area is left for judicial development.” (Comment to § 405.4.)

Section 405.4 provides, “ ‘Real property claim’ means the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property....” This section “defines the type of claim which must be pleaded to support a lis pendens. If the pleading filed by the claimant does not properly plead a real property claim, the lis pendens must be expunged upon motion under CCP 405.31.” (Comment to § 405.4.)

Section 405.31 provides, “In proceedings under this chapter, the court shall order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim.” This section “concerns pleading. Prior law became confused because of failure of the courts to distinguish between allegations (pleadings) and evidence. This section concerns judicial examination of allegations only. Judicial examination of factual evidence is separately governed by CCP 405.32. [¶] ... The analysis required by this section is analogous to, but more limited than, the analysis undertaken by a court on a demurrer. Rather than analyzing whether the pleading states any claim at all, as on a general demurrer, the court must undertake the more limited analysis of whether the pleading states a real property claim.” (Comment to § 405.31.)

In contrast to such demurrer-like review of whether the “pleading” states “a real property claim,” section 405.32 provides an entirely separate ground of attack in the trial court on a lis pendens notice, an evidentiary hearing on *957 the probability the proponent will be able to establish avalid real property claim. It provides, “In proceedings under this chapter, the court shall order that the notice be expunged if the court finds that the claimant has not established by a preponderance of the evidence the probable validity of the real property claim.” This section “expressly concerns factual merit. Provision for a demurrer-like review of the pleading is preserved in CCP 405.31.” (Comment to § 405.32.)

The present case involves only the demurrer-like review pursuant to section 405.31 of whether the pleading states a “real property claim.” (§§ 405.4, 405.31.) In the trial court, the defendants' motion to expunge the lis pendens notice was based solely on the pleading pursuant to section 405.31. The defendants expressly disclaimed an evidentiary hearing on the **696 probable validity of the real property claim pursuant to section 405.32. The parties' moving and opposing papers addressed only the pleading. The trial court granted the defendants' motion to expunge the lis pendens notice, on the ground that the “[c]omplaint does not involve a real property claim.” The plaintiffs promptly filed the present writ petition to review that order. After receiving a preliminary opposition from the real party in interest, we issued an order to show cause to review that order.

The formal opposition subsequently filed by the real party attempts to inject new evidentiary matter into this writ proceeding. It contends that, “after the hearing on the motion to expunge, discovery has shown that all of the claims on which the lis pendens is based are totally fictitious and without any substantive merit as a matter of law.” (Italics omitted.) It offers to this court over 450 pages of “exhibits” in opposition to the petition, consisting of papers and evidentiary exhibits in support of a motion for summary judgment in the trial court. Seven pages of its formal opposition in this court are devoted to an argument that, “[o]n the merits, the undisputed evidence establishes that plaintiffs are unable to prove their claims ... as a matter of law; therefore, the lis pendens was properly expunged.”

In their reply in this court, the plaintiffs object to consideration of the real party's evidentiary material. They point out that the ruling under review was based solely on the pleading, and that the trial court did not consider the evidentiary matter cited by the real party, it having been produced after the ruling under review.FN2

FN2. The trial court subsequently denied the real party's motion for summary judgment.

[1] [2] We agree with plaintiffs, and shall not consider any evidentiary matter. This proceeding involves a demurrer-like review of the trial court's ruling which was based solely on the pleading pursuant to section 405.31. *958 Evidence extrinsic to the pleading cannot be considered on demurrer. ( Executive Landscape Corp. v. San Vicente Country Villas IV Assn. (1983) 145 Cal.App.3d 496, 499, 193 Cal.Rptr. 377; Bach v. McNelis(1989) 207 Cal.App.3d 852, 864, 255 Cal.Rptr. 232; Comment to § 405.30 [“A motion to expunge under CCP 405.31 ... involves only a review of the adequacy of the pleading and normally should not involve evidence from either side”]; Cal. Lis Pendens Practice (Cont.Ed.Bar 1997) § 3.14, p. 105.) Ordinarily a reviewing court will not consider evidence arising after the trial court ruling, involving facts open to controversy which were not placed in issue or resolved by the trial court. ( Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1526-1527, fn. 3, 80 Cal.Rptr.2d 94; seerule 56(c), Cal. Rules of Court [record on a petition for a writ of mandate involves documents submitted to the trial court supporting and opposing the ruling under review].)

FACTS

The pertinent facts, therefore, are those alleged in the complaint, which are assumed to be true for the purpose of the demurrer-like ruling undersection 405.31. (Comment to § 405.31; Deane v. Superior Court (1985) 164 Cal.App.3d 292, 294, fn. 1, 210 Cal.Rptr. 406.)

Plaintiffs. There are three named plaintiffs: Robert Goldman (Goldman); Jerome Janger (Janger); and BGJ Associates, LLC, a Delaware limited liability company (BGJ), formed by Goldman, Janger, and defendant Maynard Brittan (Brittan).

Defendants. There are three named defendants: M2B2, LLC, a Delaware limited liability company (M2B2), formed by the officers of Budget Rent a Car of Southern California; Brittan; and Jeff Wilson (Wilson).

Summary

The basic theory of plaintiffs' action is that Brittan, Goldman, and Janger formed **697 BGJ as a joint venture to buy certain real properties jointly with M2B2, but that Brittan and M2B2, in breach of their fiduciary duties, together with Wilson, wrongfully acquired the properties for themselves, to the exclusion of plaintiffs. Plaintiffs assert multiple causes of action for breach of oral contract, breach of fiduciary duty, unjust enrichment, intentional and negligent interference with contractual relations, inducing breach *959 of contract, and imposition of constructive trust. As to most of these causes of action, plaintiffs allege that defendants acquired the properties as constructive and involuntary trustees for plaintiffs, and plaintiffs' prayer for relief requests compensatory and punitive damages and/or orders compelling defendants to convey to BGJ and/or Goldman and Janger an interest in a described portion of the properties and possession thereof.

Detailed Allegations

The dispute concerns two parcels of real property which had been included among four parcels in a railroad right-of-way running along Santa Monica Boulevard in the City of Beverly Hills. The properties were owned by Southern Pacific Transportation Company, whose successor in interest was Union Pacific Railroad. “Parcel 1” and “Parcel 2” are west and east of the intersection of Santa Monica and Wilshire Boulevards.

Wilson owns real property adjacent to Parcel 1. Brittan owns real property adjacent to portions of Parcel 1, and he had filed a lawsuit against the railroad asserting a prescriptive easement over a portion of Parcel 1. Janger was Brittan's attorney in the lawsuit against the railroad.

In 1995 and 1996 Goldman was engaged in negotiations to purchase all four parcels from the railroad. Goldman discussed with Wilson a possible joint venture to develop the easterly portion of Parcel 1 in conjunction with the Wilson property adjacent to Parcel 1, and Wilson expressed interest in such a venture. Goldman and the railroad reached agreement and opened an escrow, but the escrow failed to close due to the railroad's inability to deliver the agreed title.

In 1997 Brittan discussed with the railroad the possibility of settling his lawsuit by acquiring title to the portion of Parcel 1 over which he asserted an easement. The railroad was unwilling to sell only the portion of Parcel 1 in which Brittan was interested, but indicated it might be willing to sell to Brittan all of Parcels 1 and 2.

Brittan's attorney Janger was aware of Goldman's prior efforts to purchase all four parcels, which included Parcels 1 and 2. At Janger's suggestion, Brittan, Goldman, and Janger met in August 1997 to discuss a possible joint effort by Brittan and Goldman to purchase Parcels 1 and 2. Goldman told Brittan about a potential joint venture with Wilson. Goldman and Brittan agreed to explore the possibility of acquisition of Parcels 1 and 2 by Brittan and/or a group of which Brittan was a member. Janger opened negotiations with the railroad.

*960 The railroad disclosed that it was also negotiating with other parties to sell Parcels 1 and 2. These included Wilson and Budget Rent a Car (Budget). Budget was interested in Parcel 2, which was adjacent to its existing car rental property.

With the consent of Brittan, Goldman called Wilson to see if Wilson was interested in joining with Brittan and Goldman to acquire Parcels 1 and 2. Wilson said he and Budget were already prepared to make a joint offer to purchase Parcels 1 and 2. But Wilson suggested that Wilson and Goldman meet with Budget to explore a possible joint effort with Budget. Wilson later indicated a disinterest in pursuing the purchase from the railroad until the railroad accomplished a “swap” of certain interests with the Beverly Hills Land Company which would enable the railroad to convey a 98.2 percent interest in Parcels 1 and 2.

**698 About December 1, 1997, Brittan, Goldman, and Janger agreed that Janger should join the Brittan/Goldman group as a principal, and that Brittan, Goldman, and Janger would each be one-third participants in a joint effort to acquire Parcel 1 from the railroad.

By December 16, 1997, Goldman had successfully negotiated the terms of an agreement with Budget by which Brittan, Goldman, Janger, and Budget would jointly offer to purchase Parcels 1 and 2, with the understanding that Budget would acquire Parcel 2, paying a substantially higher price per square foot than the price attributable to Parcel 1. On December 17, 1997, Budget's principals met with “its new partners,” and on December 18 Budget advised the railroad it would be participating “with the Brittan group” to purchase the property. On January 8, 1998, the railroad indicated its willingness to enter a purchase agreement with Budget and the Brittan/Goldman/Janger group. Brittan understood that a condition of the purchase and sale was his dismissal of his lawsuit against the railroad and execution of a release, which Brittan agreed to furnish.

On September 20, 1998, the railroad advised that it had executed an agreement with Beverly Hills Land Company to swap certain interests, thereby assuring the railroad's ability to convey a 98.2 percent interest in Parcels 1 and 2 which the railroad had agreed to sell to Budget, Brittan, Goldman, and Janger.

On September 23, 1998, Brittan, Goldman, and Janger agreed among themselves to “be equal partners and proceed with the transaction.” They agreed: (A) they would form a limited liability company for the purpose of entering the purchase agreement with the railroad and with Budget; (B) each *961 of them would make an initial capital contribution of $40,000, of which $104,693 would be used as a deposit in escrow for the purchase from the railroad along with Budget, the balance to be used for expenses relating to “due diligence” investigation of potentials for development; (C) if the limited liability company proceeded with the purchase, each of them would contribute one-third of the balance of the purchase price required of the limited liability company, and share equally in its profits and losses; (D) Brittan would deposit into escrow a dismissal of his lawsuit against the railroad and a release; and (E) upon acquiring title to Parcel 1, the limited liability company would deed to Brittan the easement rights he sought in the lawsuit against the railroad. Brittan, Goldman, and Janger agreed among themselves to work out in good faith an arrangement with Brittan, who desired to obtain sole title to that portion of Parcel 1 adjacent to the Brittan property for a smaller price per square foot than the price per square foot for the entire Parcel 1. On September 25, 1998, Janger “filed an LLC-1 with the California Secretary of State, thereby creating BGJ.”

The officers and directors of the company which owns Budget formed defendant M2B2 for the purpose of entering with BGJ an agreement to purchase Parcels 1 and 2 from the railroad and a “closing and tenancy in common agreement.”

On November 6, 1998, negotiations were completed on a purchase and sale agreement and escrow instructions relating to the sale of Parcels 1 and 2 by the railroad to BGJ and M2B2, and the closing and tenancy in common agreement between BGJ and M2B2. Execution copies of these documents were sent to BGJ.

On November 9, Brittan (who had independent counsel), Goldman, and Janger orally agreed among themselves to perform all the duties and obligations required of BGJ including that Brittan would deposit into escrow his dismissal of the lawsuit against the railroad and a release, each would make an immediate capital contribution of $40,000, of which $104,693 would be a deposit in escrow, and they reconfirmed their September 20 agreement.**699 Pursuant to the November 9 oral agreement, BGJ forwarded executed copies of the purchase agreement and tenancy agreement to the railroad and to M2B2 respectively, Brittan, Goldman, and Janger made immediate capital contributions of $40,000 each, of which $104,693 was deposited in escrow, and Goldman and Janger on behalf of BGJ made further due diligence investigations.

The purchase agreement with the railroad provided that (A) either BGJ or M2B2 could elect to “opt out” of the purchase agreement by 5:00 p.m. on *962 December 21, 1998, leaving the other party with the right to purchase Parcels 1 and 2 for its own benefit, and (B) escrow would close on December 30, 1998.

Meanwhile, between November 9 and November 29, 1998, Brittan, Goldman, and Janger discussed their oral operating agreement and agreed “that Goldman and Janger would proceed as the sole members of BGJ, and Brittan would be given an option to purchase certain property west of Charleville, adjoining the Brittan Property, at a favorable price.”

On December 6, 1998, Goldman had a conversation with Wilson concerning potential development of the Wilson property in conjunction with the portion of Parcel 1 adjacent to the Wilson property. In that conversation Wilson opined that BGJ was paying too much for Parcel 1. On December 7, 1998, Goldman related that information to Brittan and Janger. Goldman and Janger said they were having second thoughts about the purchase and might, as the majority members of BGJ, elect not to proceed with the purchase agreement when the December 21, 1998, opt-out deadline arrived. Brittan told them that if they elected not to proceed he had other potential investors who might proceed with him and would like the opportunity to discuss it with other investors. Goldman and Janger told Brittan that he did not have permission to negotiate, without their participation, any terms of the purchase agreement with the railroad or the tenancy agreement with M2B2, but that if on December 21 they elected not to proceed, and Brittan had other investors willing to go forward, they would “step aside upon reimbursement of their due diligence costs and payment for the reasonable value of Janger's legal services.” Brittan agreed to these terms.

On December 8, 1998, Janger informed M2B2's in-house counsel that it was likely BGJ would elect not to proceed with the purchase when the December opt-out deadline arrived. M2B2's counsel asked if M2B2/Budget could approach Brittan and Wilson about going forward with them. Janger stated that he and Goldman had no objection to such discussions, provided that no agreement be reached unless Goldman and Janger did, in fact, elect on December 21 not to proceed, and that M2B2/Budget not negotiate with the railroad without Goldman's and Janger's participation.

On December 14, 1998, Brittan advised Janger that because Janger and Goldman had, allegedly, “passed” on the purchase, Brittan intended to proceed to acquire the property without Goldman's and Janger's participation. Janger replied that he and Goldman had not yet “passed,” that they had until December 21 to make further due diligence investigation and decide whether to proceed with the purchase. Brittan stated he had investors willing *963 to step into Goldman's and Janger's shoes, and Brittan “admitted later in that same conversation that he had, in fact, negotiated a new deal with Wilson pursuant to which Brittan would acquire the portion of Parcel 1 adjacent to the Brittan Property at a price which Goldman and Janger had not been willing to assign to that portion of the property, and Wilson would acquire the balance of Parcel 1.” Janger warned Brittan that Goldman and Janger had not yet opted out of the purchase and that Brittan should not consummate any new arrangements until Goldman and Janger made their final decision.

**700 On December 15, 1998, Goldman and Janger decided to proceed with the purchase. When Janger on that date notified Brittan, Brittan indicated he would refuse to perform his part of the November 1998 oral operating agreement with Goldman and Janger. When Janger on December 15 informed M2B2 of the intention to proceed with the purchase rather than to opt out on December 21, M2B2 responded that M2B2 had already made a new deal with Brittan and Wilson. On December 16, M2B2 informed BGJ that it would “close the Purchase Agreement without the participation of BGJ.” On plaintiffs' information and belief, M2B2 refused to close the transaction with BGJ because M2B2 “had entered into a new and different agreement with Brittan and Wilson pursuant to which Brittan and Wilson would contribute BGJ's portion of the purchase price for Parcels 1 and 2, Brittan would deposit the Release and Dismissal in escrow for the benefit of M2B2, and Brittan and Wilson would then be granted an interest in M2B2, which would be converted into ownership of Parcel 1, or they would otherwise be deeded Parcel 1, on or after the close of escrow.” On December 23 and December 29, 1998, M2B2 notified the railroad that Brittan's release and dismissal would be deposited into escrow only if the railroad deeded the property to M2B2 alone, to the exclusion of BGJ.

BGJ did not opt out of the purchase agreement by the December 21, 1998, deadline. Subject only to Brittan's depositing his dismissal and release into escrow, BGJ was ready, willing, and able to close the purchase agreement and tenancy agreement by the December 30 closing deadline. Goldman and Janger were ready, willing, and able to perform all terms of the November oral agreement with Brittan. Despite Goldman's and Janger's demands upon him, Brittan refused to deposit his dismissal and release into escrow for the benefit of BGJ. On plaintiffs' information and belief, Brittan, Wilson, and M2B2 agreed among themselves that Brittan would refuse to deposit his dismissal and release into the escrow, thereby disabling BGJ from performing its obligations under the purchase agreement; in return, upon the contribution of Brittan and Wilson of BGJ's portion of the purchase price, M2B2 agreed to grant them an interest in M2B2 which would result in their ownership of Parcel 1 or a direct interest in Parcel 1.

*964 On December 23, 1998, counsel for Goldman and Janger notified the parties that Goldman and Janger were ready, willing, and able to deposit the required funds in escrow, demanded that Brittan deposit the dismissal and release, “and serv[ed] notice that anyone purporting to take title to any portion of Parcel 1 would do so as a constructive trustee for BGJ, Goldman and Janger.”

On plaintiffs' information and belief, on or before January 11, 1999, Brittan deposited into the escrow his dismissal and release for the benefit of M2B2 only; title to Parcels 1 and 2 vested in M2B2; and in consideration for Brittan's and Wilson's contributions of BGJ's portion of the purchase price and Brittan's deposit of his dismissal and release, M2B2 granted Wilson and Brittan an interest either in M2B2 or in Parcel 1. On plaintiffs' information and belief, “BGJ's deposit of $104,693 was credited to M2B2 against the purchase price for Parcels 1 and 2, and that the benefit of such credit was realized or will be realized by Brittan and/or Wilson when they acquire title to some or all of Parcel 1.”

Relief Requested in Complaint

Plaintiffs filed their complaint on January 26, 1999, and recorded a notice of pendency of action, as to Parcel 1, on January 27, 1999. They alleged the following 11 causes of action and prayers for relief:

First: Goldman and Janger against Brittan for breach of oral contract; for compensatory damages.

**701 Second: Goldman and Janger against Brittan for breach of fiduciary duty; for compensatory and punitive damages.

Third: BGJ against M2B2 for breach of fiduciary duty; for compensatory and punitive damages.

Fourth: BGJ, Goldman, and Janger against M2B2, Brittan, Wilson, and Does 1-35, for unjust enrichment; defendants “would be unjustly enriched if allowed to retain the benefits which they have achieved by their wrongful conduct. Consequently, said defendants hold whatever interest they may have acquired in Parcel 1, or in any entity possessing an interest in Parcel 1, as constructive and involuntary trustees for the benefit of BGJ, Goldman and Janger. [¶] ... Said defendants should also be required to disgorge and surrender any and all economic advantage which they have achieved by virtue of their wrongful conduct.”

Fifth: Goldman and Janger against M2B2, Wilson, and Does 1-35 for intentional interference with contractual relations; for compensatory and*965 punitive damages and “whatever interest they have acquired in Parcel 1, or in any entity possessing an interest in Parcel 1, as constructive and involuntary trustees for the benefit of Goldman and Janger” (constructive trust allegation).

Sixth: Goldman and Janger against M2B2, Wilson, and Does 1-35 for negligent interference with contractual relations; for compensatory damages and constructive trust.

Seventh: BGJ against Brittan, Wilson, and Does 1-35 for intentional interference with contractual relations; for compensatory and punitive damages and constructive trust.

Eighth: BGJ against Brittan, Wilson, and Does 1-35 for negligent interference with contractual relations; for compensatory damages and constructive trust.

Ninth: Goldman and Janger against M2B2, Wilson, and Does 1-35 for inducing breach of contract; for compensatory and punitive damages and constructive trust.

Tenth: BGJ against M2B2, Brittan, Wilson, and Does 1-50 for imposition of a constructive trust; “By virtue of the agreements ... it was understood and agreed that BGJ and M2B2 would proceed to acquire Parcels 1 and 2 and divide those parcels with BGJ owning an undivided 98.2% interest in Parcel 1, and pending the division of the parcels, granting BGJ the exclusive right to control and develop Parcel 1, as between BGJ and M2B2”; as a consequence of the conduct [of defendants], “BGJ has been wrongfully deprived of the right to own, control or develop Parcel 1”; defendants “hold their interest in Parcel 1, and any interest which they may have acquired relating to Parcel 1, as constructive trustees for the benefit of BGJ.”

Eleventh: Goldman and Janger FN3 against M2B2, Brittan, Wilson, and Does 1-50 for imposition of a constructive trust; as a consequence of defendants' conduct, “Goldman and Janger have been wrongfully deprived of their right to own or control an undivided 98.2% interest in Parcel 1 as members of BGJ and/or partners of Brittan”; defendants “hold their interest in Parcel 1, and any interest which they may have acquired relating to Parcel 1, as constructive trustees for the benefit of Goldman and Janger.”

FN3. The complaint in the eleventh cause of action refers to “Plaintiffs Goldman and Brittan,” an obvious clerical error.

As to those causes of action which included an allegation of a constructive trust, the prayer for relief requests “an order compelling defendants to*966 convey [to BGJ, or to BGJ, Goldman, and Janger, or to Goldman and Janger] their interest in Parcel 1,” and “an order granting [to BGJ, or to BGJ, Goldman, and Janger, or to **702 Goldman and Janger] possession of Parcel 1.” FN4

FN4. For the purpose of the present petition for a writ of mandate, real party M2B2, the only defendant responding to the petition, admits the following allegations of the petition: the separate deal closed; M2B2 acquired the railroad's 98.2 percent interest in Parcels 1 and 2 on January 11, 1999; M2B2 subsequently transferred interests in Parcels 1 and 2 to Brittan and Wilson; M2B2 is in the process of applying for governmental approval to permanently divide Parcels 1 and 2 into three separate lots, and once this is accomplished defendants have agreed that Wilson and Brittan will be the sole owners of Parcel 1, which BGJ was to have acquired under its agreement with M2B2.

Motion to Expunge Lis Pendens

Defendants moved pursuant to section 405.31 to expunge the lis pendens on the ground that the complaint did not allege a real property claim. Defendants asserted that the allegations of the complaint do not entitle any of the plaintiffs to “legal title” or possession, and that the action is essentially for money damages. They cited Lewis v. Superior Court, supra, 30 Cal.App.4th 1850, 37 Cal.Rptr.2d 63, which holds that allegations of the equitable remedy of a constructive trust, even if colorable, will not support a lis pendens if those allegations act only as a collateral means to collect money damages. Plaintiffs replied that unlike Lewis, the claims of wrongful conduct in this case relate to the specific property which is the subject of the lis pendens, and that they are not seeking the property as collateral for money damages but rather, “[p]laintiffs want the property for which they bargained.” Defendants replied that the gravamen of the action is for money damages, not “specific performance.” FN5 The trial court by minute order ruled: “[Defendants' motion] is granted. Lewis v. Superior Court ... is controlling. Complaint does not involve a real property claim.”

FN5. The present action is not for specific performance, and the railroad is not a party, but for lis pendens purposes plaintiffs analogize their claim to a specific performance action.

DISCUSSION

Legal Background

[3] [4] As this court summarized in Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 1144-1145, 235 Cal.Rptr. 837: a lis pendens is a recorded document giving constructive notice that an action has been filed affecting title or right to possession of the real property described in the notice. Its effect is that anyone acquiring an interest in the property after the action was filed will be bound by the judgment. The history of lis pendens legislation shows a legislative intent to restrict the common law notion of constructive notice. This is because of the ease with which a lis pendens can be recorded *967 and the serious consequences flowing from it. Once a lis pendens is filed, it clouds the title and effectively prevents the property's transfer until the litigation is resolved or the lis pendens is expunged. Accordingly, lis pendens is a provisional remedy which should be applied narrowly.

[5] A lis pendens notice may be recorded in an action which has a “real property claim,” which is defined by statute as “the cause or causes of action in a pleading which would, if meritorious, affect ... title to, or the right to possession of, specific real property.” (§ 405.4.) The statute provides no further definition of “affect ... title to, or the right to possession of,” specific real property, nor has case law provided any abstract definition. ( Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at p. 1145, 235 Cal.Rptr. 837; Cal. Lis Pendens Practice, supra, §§ 3.15, 3.20, pp. 105-106, 111.) Case law has determined that certain types of actions clearly do, or clearly do not, affect title or possession. (Cal. Lis Pendens Practice, supra, §§ 3.20-3.40, pp. 111-123; Cal. Practice Guide, Civil Procedure Before Trial (The Rutter Group, (rev. # 1 1999) §§ 15:27-15:44, pp. 15-5 to 15-9; 3 Miller & Starr, Cal. Real Estate (2d ed.1989) § 8:123, pp. 501-507.) At one extreme, “[a] buyer's **703 action for specific performance of a real property purchase and sale agreement is a classic example of an action in which a lis pendens is both appropriate and necessary.” (Cal. Lis Pendens Practice, supra, § 3.21, p. 112; Hilberg v. Superior Court (1989) 215 Cal.App.3d 539, 542, 263 Cal.Rptr. 675; Stewart Development Co. v. Superior Court (1980) 108 Cal.App.3d 266, 272-273, 166 Cal.Rptr. 450.) At the other extreme, an action for money only, even if it relates in some way to specific real property, will not support a lis pendens. ( Ziello v. Superior Court (1995) 36 Cal.App.4th 321, 332, 42 Cal.Rptr.2d 251; Deane v. Superior Court, supra, 164 Cal.App.3d 292, 297, 210 Cal.Rptr. 406.)

Cases in which the plaintiff seeks a constructive trust relating to real property have been troublesome, in part because of the wide variety of circumstances in which a constructive trust may be an appropriate remedy. ( La Paglia v. Superior Court (1989) 215 Cal.App.3d 1322, 1327, 264 Cal.Rptr. 63.) “A constructive trust is not a true trust but an equitable remedy available to a plaintiff seeking recovery of specific property in a number of widely differing situations. The cause of action is not based on the establishment of a trust, but consists of the fraud, breach of fiduciary duty, or other act that entitles the plaintiff to some relief. That relief, in a proper case, may be to make the defendant a constructive trustee with a duty to transfer to the plaintiff.” (5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 796, p. 252, italics in original.)

Two early cases took the position that an action in which the plaintiff seeks a constructive trust on specific real property clearly “affects” title to or *968 the right to possession of such property, and therefore supports a lis pendens. ( Coppinger v. Superior Court (1982) 134 Cal.App.3d 883, 890-891, 185 Cal.Rptr. 24 [purchaser of house infested with termites sought damages, rescission of the purchase, and a constructive trust on seller's new property]; Okuda v. Superior Court (1983) 144 Cal.App.3d 135, 141, 192 Cal.Rptr. 388 [purchaser who improved property and then discovered seller had failed to convey title sought damages and an equitable lien on the property for the cost of good faith improvements].) Subsequent cases have distinguished, limited, or explicitly rejected the reasoning of Coppinger and Okuda, and concluded that the allegation of a constructive trust should not be construed as a real property claim within the meaning of the lis pendens statute. ( Burger v. Superior Court (1984) 151 Cal.App.3d 1013, 1018-1019, 199 Cal.Rptr. 227; Deane v. Superior Court, supra, 164 Cal.App.3d 292, 296-297, 210 Cal.Rptr. 406; Urez Corp. v. Superior Court, supra, 190 Cal.App.3d 1141, 1145-1149, 235 Cal.Rptr. 837; Elder v. Carlisle Ins. Co. (1987) 193 Cal.App.3d 1313, 1320, fn. 8, 238 Cal.Rptr. 897; Wardley Development Inc. v. Superior Court (1989) 213 Cal.App.3d 391, 394-396, 262 Cal.Rptr. 87; La Paglia v. Superior Court, supra,215 Cal.App.3d 1322, 1326-1329, 264 Cal.Rptr. 63; Lewis v. Superior Court, supra, 30 Cal.App.4th 1850, 1862-1866, 37 Cal.Rptr.2d 63; see alsoMoseley v. Superior Court (1986) 177 Cal.App.3d 672, 677, 223 Cal.Rptr. 116 [dictum].)

The latter cases all involve situations in which the action was essentially for money. In Burger, supra, 151 Cal.App.3d 1013, 199 Cal.Rptr. 227,the plaintiff church advanced money to the defendant Gus, which Gus was supposed to use to improve the church's property but wrongfully used to improve a different property, which Gus transferred to Burger. The court held the church's claim to an equitable lien did not support a lis pendens, because “Church's claim is similar to that of almost any lender of money to a defaulting debtor who happens to own real property.” ( Id. at p. 1019, 199 Cal.Rptr. 227.) In Deane, supra, 164 Cal.App.3d 292, 210 Cal.Rptr. 406, the defendants owed commissions to a real estate broker. “[D]efendants merely owe plaintiffs a debt at the most.” ( Id. at p. 297, 210 Cal.Rptr. 406.) In **704 Urez, supra, 190 Cal.App.3d 1141, 235 Cal.Rptr. 837, a secured lender whose junior interest was eliminated by a foreclosure sale instituted a fraud action against the buyer and sought a constructive trust for the purpose of securing payment of the amounts due under his second trust deed. He did “not seek recission of the foreclosure sale or conveyance of the subject property to himself. At bottom, the ‘beneficial’ interest real party claims in the subject property is for the purpose of securing a claim for money damages.” ( Id. at p. 1149, 235 Cal.Rptr. 837.) In Elder, supra, 193 Cal.App.3d 1313, 238 Cal.Rptr. 897, the plaintiffs obtained money damages for good faith improvements on the subject property. They were not entitled to collect on an undertaking given to expunge a lis pendens, because “ ‘ultimately, those allegations act only as a collateral *969 means to collect money damages.’ ” ( Id. at p. 1320, fn. 8, 238 Cal.Rptr. 897.) In Wardley, supra, 213 Cal.App.3d 391, 262 Cal.Rptr. 87, a judgment debtor transferred cash to the real party in interest, who used it to purchase real property. The judgment creditor was not entitled to a lis pendens, because the creditor's only interest in the property was as collateral to secure money damages. ( Id. at pp. 394, 396, 262 Cal.Rptr. 87.) In La Paglia, supra, 215 Cal.App.3d 1322, 264 Cal.Rptr. 63,funds wrongfully withheld from the plaintiff Rey's predecessor were used to buy the property. “Rey does not claim any present right to title or possession of the property over which it seeks to impose a trust.... Rey claims an interest in the defendant's property only to the extent the monies it alleges were wrongfully obtained have been invested therein.” ( Id. at p. 1327, 264 Cal.Rptr. 63.) In Lewis, supra, 30 Cal.App.4th 1850, 37 Cal.Rptr.2d 63, the wrongdoer used misappropriated funds to buy the property. “The fact that someone buys property with stolen money does not make the victim the owner of that property as a matter of real property law.” ( Id. at p. 1863, 37 Cal.Rptr.2d 63.)

In rejecting Coppinger's broad interpretation of whether a constructive trust “affects” real property for purposes of a lis pendens, the later cases were guided by strong policy concerns favoring a restrictive application of lis pendens. Courts have long recognized that “[b]ecause the recording of a lis pendens place[s] a cloud upon the title of real property until the pending action [is] ultimately resolved ..., the lis pendens procedure [is] susceptible to serious abuse, providing unscrupulous plaintiffs with a powerful lever to force the settlement of groundless or malicious suits.” (Malcolm v. Superior Court (1981) 29 Cal.3d 518, 524; see also id. at p. 523, fn. 2, 174 Cal.Rptr. 694, 629 P.2d 495.) In Hilberg v. Superior Court, supra, 215 Cal.App.3d 539, 542, 263 Cal.Rptr. 675, the court stated, “We cannot ignore as judges what we know as lawyers-that the recording of a lis pendens is sometimes made not to prevent conveyance of property that is the subject of the lawsuit, but to coerce an opponent to settle regardless of the merits.” (Citations omitted.) “The financial pressure exerted on the property owner may be considerable, forcing him to settle not due to the merits of the suit but to rid himself of the cloud upon his title. The potential for abuse is obvious.” ( La Paglia v. Superior Court, supra,215 Cal.App.3d at p. 1326, 264 Cal.Rptr. 63.) We have stated, “It must be borne in mind that the true purpose of the lis pendens statute is to provide notice of pending litigation and not to make plaintiffs secured creditors of defendants nor to provide plaintiffs with additional leverage for negotiating purposes.” ( Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837.)

Therefore, in approaching the constructive trust cases, the courts have “consistently eschewed” an approach which would “transform [lis pendens] into a money-collection remedy without any of the protections of the attachment statutes.” ( Lewis v. Superior Court, supra, 30 Cal.App.4th at p. 1864, 37 Cal.Rptr.2d 63.) *970 “Overbroad definition of ‘an action ... **705 affecting the title or the right of possession of real property’ would invite abuse of lis pendens.” ( Burger v. Superior Court, supra, 151 Cal.App.3d at p. 1018, 199 Cal.Rptr. 227.) For such reasons, we declared in Urez Corp. v. Superior Court, supra, that lis pendens is not available in what “is essentially a fraud action seeking money damages with additional allegations urged to support the equitable remedies of a constructive trust or an equitable lien.” (190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837[italics added]; see also Hunting World, Inc. v. Superior Court, supra, 22 Cal.App.4th 67, 73-74, 26 Cal.Rptr.2d 923 [lis pendens held proper in an action to set aside a fraudulent conveyance; distinguishing cases in which “constructive trust or equitable lien causes of action were appended to lawsuits centering on money damages” (italics in original) ].) In determining whether the claims in the pleading affect title to or possession of specific real property the courts have not interpreted “affect” literally; they have looked instead to the substance of the dispute. The issue presented is a question of law for the appellate court's de novo review. ( Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837.)

Application to This Case

[6] The basic theory of plaintiffs' case is that plaintiffs had a joint venture agreement with Brittan and M2B2 to buy the subject property, but Brittan and M2B2, in breach of their fiduciary duties, together with Wilson, wrongfully acquired the subject property for themselves to the exclusion of plaintiffs.

[7] Where partners or joint venturers have agreed to buy a specific parcel of real property, and one partner or joint venturer, in breach of a fiduciary duty, wrongfully acquires it in his own name, the other partner or joint venturer may bring an action to impose a constructive trust and require the wrongdoing partner or joint venturer to convey the appropriate share of the legal title. ( Koyer v. Willmon (1907) 150 Cal. 785, 787-788, 90 P. 135; Jaffe v. Heffner (1959) 173 Cal.App.2d 512, 516, 343 P.2d 374; Sadugor v. Holstein (1962) 199 Cal.App.2d 477, 481, 483, 18 Cal.Rptr. 859.) Assuming the truth of plaintiffs' allegations, as we must in this demurrer-like context, plaintiffs may be entitled to imposition of a constructive trust requiring the defendants to convey to plaintiffs the share of the legal title plaintiffs would have acquired had not the defendants breached their duties toward plaintiffs.

Plaintiffs' entitlement to a constructive trust is not determinative of whether plaintiffs may maintain a lis pendens. ( Burger v. Superior Court, supra, 151 Cal.App.3d at p. 1018, 199 Cal.Rptr. 227.) But this case is unlike any of the cases in *971 the line from Burger to Lewis, because here plaintiffs do not seek a constructive trust remedy solely as “collateral” for money damages. In part they seek to be awarded title to the same specific real property, the property they bargained for, which is the subject of the same wrongful conduct giving rise to the constructive trust remedy in the first place. (See La Paglia v. Superior Court, supra, 215 Cal.App.3d at p. 1327, 264 Cal.Rptr. 63, noting the distinction.) They analogize to a specific performance action, which unquestionably supports a lis pendens. They say the only difference here is that plaintiffs were deprived of the specific property by the wrongful conduct of their own copurchasers rather than of a defaulting seller.

But on the other hand, in the specific performance analogies cited by plaintiffs, the action was solely for specific performance. ( Hilberg v. Superior Court, supra, 215 Cal.App.3d 539, 541, 263 Cal.Rptr. 675; Nash v. Superior Court (1978) 86 Cal.App.3d 690, 692, 150 Cal.Rptr. 394.)Plaintiffs' complaint has eleven causes of action. Only the tenth and eleventh causes of action focus narrowly on imposition of a constructive trust. The other causes of action seek compensatory and punitive damages on fraud and tort theories,**706 or a combination of compensatory and punitive damages with imposition of a constructive trust.

Plaintiffs say that at this pleading stage they are not required to elect between inconsistent remedies, and they are reserving their options. It is apparent that, depending on market conditions, or circumstances affecting the particular parcel of property, or other tactical considerations, plaintiffs may ultimately decide, if they prevail, that they prefer to be compensated by money damages rather than transfer of title to the property.

[8] The question presented is whether plaintiffs are entitled to maintain a lis pendens on the property in the meantime. We conclude that in the particular circumstances of this case they may not. Plaintiffs contend that they have pleaded one or more causes of action which state a real property claim within the meaning of section 405.4, and that the lis pendens statute makes no provision requiring them to elect remedies between alternative causes of action. We do not hold that the lis pendens statute requires an early election of remedies between monetary damages or a constructive trust. But what the Legislature has done in section 405.4 is to leave to the courts to determine in particular cases whether a claim supporting a constructive trust will justify the maintenance of a lis pendens. (Comment to section 405.4 [“The definition of ‘real property claim’ neither includes nor excludes claims of constructive trust or equitable lien. Instead, the law in this area is left for judicial development.”].) In determining this issue on a case-by-case basis, the courts have been restrictive because of well-known dangers that the lis pendens procedure can be abused to coerce a defendant to settle a claim. The courts *972 have looked to the substance of the dispute to determine whether it is “essentially” a fraud action seeking money damages, with constructive trust allegations “appended.” (See Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837; Hunting World, Inc. v. Superior Court, supra, 22 Cal.App.4th at pp. 73-74, 26 Cal.Rptr.2d 923.) In a case such as this where the pleading combines theories of liability for monetary damages and for a constructive trust, we hold that plaintiffs should not be able to maintain a lis pendens. The danger is too great that a lis pendens, which effectively renders the property unmarketable, will have the coercive effects condemned by the cases.

DISPOSITION

The order to show cause, having served its purpose, is discharged. The petition for a writ of mandate is denied. The parties shall bear their own costs.

HASTINGS, J., and CURRY, J., concur.

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 Post subject: Campbell v. Superior Court (2005)
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Campbell v. Superior Court, 132 Cal.App.4th 904, 34 Cal.Rptr.3d 68 (2005)

Court of Appeal, Fourth District, Division 1, California.

John D. CAMPBELL II, as Trustee, etc., Petitioner,

v.

The SUPERIOR COURT of San Diego County, Respondent;

Elissa Josephine La Barrie, Real Party in Interest.

No. D046064.

Sept. 14, 2005.

Review Denied Dec. 14, 2005.

**69 Best Best & Krieger and D. Brian Reider, Ontario, for Petitioner.

No appearance by Respondent.

Law Office of Thomas E. Polakiewicz and Thomas E. Polakiewicz, Escondido, for Real Party in Interest.

AARON, J.

*908 I.

INTRODUCTION

Petitioner John D. Campbell II (Campbell), as trustee of the John D. Campbell Trust (Trust), filed a complaint against real party in interest, Elissa La Barrie. Among other causes of action, Campbell **70 alleged that La Barrie exercised undue influence against his now deceased father, John D. Campbell (John),FN1 in persuading him to expend approximately $200,000 in Trust funds to pay for the remodeling of La Barrie's house. Campbell requested the imposition of a constructive trust and an equitable lien on La Barrie's house. Campbell recorded a notice of pendency of action, otherwise known as a lis pendens, on La Barrie's house. A lis pendens is a document recorded with the county recorder's office that gives constructive notice that a “real property claim” has been filed that may “affect ... title to, or the right to possession of, specific real property....” (Code Civ. Proc., § 405.4.) FN2

FN1. We use this first name for purposes of clarity and intend no disrespect.

FN2. All subsequent statutory references are to the Code of Civil Procedure unless otherwise specified.

La Barrie filed a motion to expunge the lis pendens in which she claimed that Campbell's underlying complaint did not state a real property claim pursuant to which a lis pendens could be recorded. The trial court granted La Barrie's motion. Campbell filed a petition for a writ of mandate in this court requesting that we direct the trial court to vacate its order granting La Barrie's motion to expunge and enter a new order denying the motion. Campbell contends that his claims seeking the imposition of a constructive trust and an equitable lien on La Barrie's house constitute real property claims sufficient to support the recording of a lis pendens. We disagree and deny the petition.

II.

FACTUAL AND PROCEDURAL BACKGROUND

In July 2003, Campbell filed a complaint against La Barrie.FN3 Campbell alleged that La Barrie and John had maintained a relationship that included *909 “dating and mutual companionship” since the mid-1980's. John created the Trust in 1997 and amended it in 1999. Campbell further alleged that John began to suffer “a weakness of mind” in November 2001, when he was 93 years old. Campbell alleged that, also beginning in November 2001, La Barrie started to take advantage of her relationship with John by persuading him to make financial decisions that benefited her. Specifically, Campbell claimed that between November 2001 and August 2002, La Barrie persuaded John to expend approximately $200,000 in Trust funds to remodel a house La Barrie owned on Grandee Place in San Diego (Grandee House). Campbell further alleged that John suffered a stroke in September 2002 and that Campbell became the successor trustee of the Trust shortly thereafter. John died in November 2002.

FN3. In October 2003, Campbell filed a first amended complaint against La Barrie that was identical to the original complaint in all respects relevant to this writ proceeding. We use the term “complaint” to refer to both pleadings.

Among other causes of action, Campbell brought claims for money had and received and conversion against La Barrie. With regard to these causes of action, Campbell claimed that La Barrie owed the Trust at least $215,838.19 in compensatory damages.

Campbell also brought a cause of action entitled, “Constructive Trust Based on Undue Influence.” In this cause of action, Campbell alleged that La Barrie had exerted undue influence on John in persuading him to utilize Trust assets to pay for the remodeling of her house. Campbell requested the imposition of a constructive **71 trust and an equitable lien on the Grandee House in favor of the Trust. Specifically, Campbell requested:

“1.... [A] determination that La Barrie holds title to the Grandee House as a constructive trustee for the benefit of the Trust, to the extent that assets of the Trust were used to improve the Grandee House in any way;

“2.... [A]n order compelling La Barrie to account to the Trust for all of the assets of the Trust used to improve the Grandee House in any way;

“3.... [A] further order compelling La Barrie to repay to the Trust the full amount, plus interest, of the assets of the Trust used to improve the Grandee House in any way or, in the alternative, for an order that the Grandee House be sold and the proceeds be used to repay the Trust for all of said assets;

“4.... [A] determination that the Trust has an equitable lien against the Grandee House equal to the amount of the assets of the Trust used to improve the Grandee House in any way.”

Shortly after filing his complaint, Campbell recorded a lis pendens on the Grandee House. In January 2005, La Barrie filed a motion to expunge the lis pendens. Campbell opposed the motion. On February 25, 2005, the trial court *910 held a nonevidentiary hearing on La Barrie's motion to expunge. At the conclusion of the hearing, the trial court granted La Barrie's motion to expunge, but denied La Barrie's request for an award of costs and attorney fees. That same day, the court entered a formal order expunging the lis pendens on La Barrie's house.

In March 2005, Campbell filed this petition for a writ of mandate. In his petition Campbell claims the trial court erred in granting La Barrie's motion to expunge. In April, La Barrie filed a preliminary response in which she claimed the trial court properly granted the motion to expunge. Shortly thereafter, this court issued an order to show cause as to why the relief requested by Campbell should not be granted. In May, La Barrie filed a verified answer to the petition and Campbell filed a reply.

III.

DISCUSSION

A. Campbell's prayer for the imposition of an equitable lien in the underlying complaint is not a real property claim within the meaning of sections 405.4 and 405.20

[1] Campbell claims his request for the imposition of an equitable lien on La Barrie's house states a “real property claim” pursuant to sections 405.4 and 405.20 sufficient to support the recording of a lis pendens. He claims the trial court erred in granting La Barrie's motion to expunge the lis pendens pursuant to section 405.31.

1. The law of lis pendens

This court set forth the history and purpose of lis pendens statutes in La Paglia v. Superior Court (1989) 215 Cal.App.3d 1322, 1326, 264 Cal.Rptr. 63, abrogated on another ground by Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1258, 82 Cal.Rptr.2d 85, 970 P.2d 872 ( La Paglia ):

“At common law the mere existence of a lawsuit affecting real property was considered to impart constructive notice that anyone who acquired an interest in the property after the suit was filed would be bound by any judgment in that suit. [Citation.] To ameliorate the harsh effect of the common law rule, Legislatures enacted lis pendens statutes to limit the constructive knowledge of pending claims to those instances **72 where a notice of lis pendens was recorded. [Citation.]

“In California, a notice of lis pendens gives constructive notice that an action has been filed affecting title or right to possession of the real *911property described in the notice. [Citation.] Any taker of a subsequently created interest in that property takes his interest subject to the outcome of that litigation.”

The Supreme Court outlined the law governing the statutory scheme pertaining to the recording of a lis pendens and the procedure applicable to expunging an improperly recorded notice in Kirkeby v. Superior Court of Orange County (2004) 33 Cal.4th 642, 647, 15 Cal.Rptr.3d 805, 93 P.3d 395 (Kirkeby ):

“A lis pendens may be filed by any party in an action who asserts a ‘real property claim.’ (Code of Civ. Proc. § 405.20.) [Footnote omitted.] Section 405.4 defines a ‘ “Real property claim” ’ as ‘the cause or causes of action in a pleading which would, if meritorious, affect ... title to, or the right to possession of, specific real property....’ ‘If the pleading filed by the claimant does not properly plead a real property claim, the lis pendens must be expunged upon motion under CCP 405.31.’ [Citation.]

“Section 405.30 allows the property owner to remove an improperly recorded lis pendens by bringing a motion to expunge. There are several statutory bases for expungement of a lis pendens, including [that the] claimant's pleadings, on which the lis pendens is based, do not contain a real property claim. (See § 405.31.) [Footnote omitted.] Unlike most other motions, when a motion to expunge is brought, the burden is on the party opposing the motion to show the existence of a real property claim. (See § 405.30.)”

The Kirkeby court also discussed the law governing a trial court's determination of a motion to expunge under section 405.31 and the standard of review applicable on appeal:

“Section 405.31 provides: ‘In proceedings under this chapter, the court shall order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim.’ In making this determination, the court must engage in a demurrer-like analysis. ‘Rather than analyzing whether the pleading states any claim at all, as on a general demurrer, the court must undertake the more limited analysis of whether the pleading states a real property claim.’ [Citation.] Review ‘involves only a review of the adequacy of the pleading and normally should not involve evidence from either side, other than possibly that which may be judicially noticed as on a demurrer.’ [Citation.] Therefore, review of an expungement order under section 405.31 is limited to whether a real property claim has been properly pled by the claimant. [Citation.]” ( Kirkeby, supra, 33 Cal.4th at pp. 647-648, 15 Cal.Rptr.3d 805, 93 P.3d 395.)

(Accord BGJ Associates, LLC v. Superior Court (1999) 75 Cal.App.4th 952, 957, 89 Cal.Rptr.2d 693 ( BGJ Associates ) [applying *912 “demurrer-like review pursuant to section 405.31 of whether the pleading states a ‘real property claim’ ”].)

2. A request for the imposition of an equitable lien does not support the recording of a lis pendens

a. Existing case law

[2] [3] [4] “An equitable lien is a right to subject property not in the possession of the lienor to the payment of a debt as a charge against that property. [Citation.] It may arise from a contract **73 which reveals an intent to charge particular property with a debt or ‘out of general considerations of right and justice as applied to the relations of the parties and the circumstances of their dealings.’ [Citation.] ‘The basis of equitable liens is variously placed on the doctrines of estoppel, or unjust enrichment, or on the principle that a person having obtained an estate of another ought not in conscience to keep it as between them; and frequently it is based on the equitable maxim that equity will deem as done that which ought to be done, or that he who seeks the aid of equity must himself do equity.’ [Citation.]” ( Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 453, 61 Cal.Rptr.2d 707.)

[5] A number of California courts have considered whether a complaint seeking the imposition of an equitable lien or other equitable security interest in real property constitutes a real property claim under the lis pendens statutes. The majority of these courts have concluded that a claim that seeks an interest in real property merely for the purpose of securing a money damage judgment does not support the recording of a lis pendens. (E.g., Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1862, 37 Cal.Rptr.2d 63 ( Lewis ); La Paglia, supra, 215 Cal.App.3d at p. 1329, 264 Cal.Rptr. 63; Wardley Development Inc. v. Superior Court (1989) 213 Cal.App.3d 391, 394, 262 Cal.Rptr. 87 ( Wardley ); Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 1149, 235 Cal.Rptr. 837 ( Urez ); but see Okuda v. Superior Court (1983) 144 Cal.App.3d 135, 141, 192 Cal.Rptr. 388 ( Okuda ); Coppinger v. Superior Court (1982) 134 Cal.App.3d 883, 891, 185 Cal.Rptr. 24 ( Coppinger ).) The California Supreme Court has yet to decide the issue. ( Kirkeby, supra, 33 Cal.4th at p. 650, fn. 7, 15 Cal.Rptr.3d 805, 93 P.3d 395 [“Because it is not presented in this case, we do not address the question of whether a claim that seeks to impose a constructive trust or equitable lien may be a basis for a lis pendens”].)

In Urez, supra, 190 Cal.App.3d at pages 1143-1144, 235 Cal.Rptr. 837, the real party in interest held a defunct second trust deed on real property acquired by the petitioner at a foreclosure sale. Real party brought an action against the petitioner alleging, among other causes of action, fraud and deceit in the acquisition of the property. Real party sought, among other remedies, a lien *913 against the property sufficient to secure payments due under the defunct trust deed. ( Ibid.) Real party recorded a notice of lis pendens on the property, and the trial court denied petitioner's motion to expunge. ( Ibid.) Petitioner sought a writ of mandate the Court of Appeal directing the trial court to expunge the lis pendens.( Ibid.)

In determining whether real party's claim in the underlying action could support the recording of a lis pendens, the Urez court began its analysis by noting that the “history of the lis pendens legislation indicates a legislative intent to restrict rather than broaden the application of the remedy.”( Urez, supra, 190 Cal.App.3d at p. 1145, 235 Cal.Rptr. 837.) Such legislative efforts stemmed from “the ease with which a lis pendens can be recorded and the serious consequences flowing from it.” ( Ibid.) A lis pendens clouds title to the property and effectively prevents its transfer until the litigation is resolved or the lis pendens is expunged. ( Ibid.)

The Urez court noted that a lis pendens can be maintained only in an action that “affects ‘title to or right of possession of the real property described in the notice,’ ” but observed that there had been no “definitive interpretation” of this statutory language. **74 ( Urez, supra, 190 Cal.App.3d at p. 1145, 235 Cal.Rptr. 837.) In describing the case law interpreting this language, the Urez court stated, “On the one hand, it is clear that an action that affects ownership of the disputed property is a proper action for a lis pendens notice.... [¶] On the other hand, an action for money damages alone will not support a lis pendens.” ( Ibid.)

In applying this law, the Urez court described the underlying action as to which the real party filed the lis pendens, as follows:

“It is essentially a fraud action seeking money damages with additional allegations urged to support the equitable remedies of a constructive trust or an equitable lien. Real party does not claim any ownership or possessory interest in the subject property.... [¶] ... [¶] ... At bottom, the ‘beneficial’ interest real party claims in the subject property is for the purpose of securing a claim for money damages.” ( Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837.)

The Urez court also noted that the interest real party was seeking in the underlying action did “not go to legal title,” and that, “[e]ven before foreclosure, real party was a lienholder whose lien did not transfer any interest in title.” ( Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837,citing Civil Code, § 2888.)

The Urez court concluded that claims that seek merely an interest in real property “for the purpose of securing a claim for money damages” (Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837), are not claims affecting title sufficient to support the recording of a lis pendens:

“We conclude ... that allegations of *914 equitable remedies, even if colorable, will not support a lis pendens if, ultimately, those allegations act only as a collateral means to collect money damages. It must be borne in mind that the true purpose of the lis pendens statute is to provide notice of pending litigation and not to make plaintiffs secured creditors of defendants nor to provide plaintiffs with additional leverage for negotiating purposes.” ( Ibid.)

This court addressed whether a claim seeking the imposition of a constructive trust constituted an action affecting title to real property in La Paglia, supra, 215 Cal.App.3d at page 1324, 264 Cal.Rptr. 63. In La Paglia, a landowner's assignee (Rey) sued a lessee, a mining company, for wrongfully withholding royalties on the sand and gravel mined on the landowner's land. Rey alleged the lessee had used $1.5 million in wrongfully withheld royalties to purchase a separate piece of real property (the Riverside property). ( Ibid.) Rey sought the imposition of a constructive trust on the Riverside property and recorded a lis pendens against it. ( Ibid.) The trial court denied the lessee's motion to expunge the lis pendens and the lessee sought a writ of mandate from this court. ( Id. at p. 1325, 264 Cal.Rptr. 63.)

In determining whether Rey's claim could support the recording of a lis pendens, the La Paglia court emphasized that Rey sought imposition of a constructive trust to secure the collection of money damages:

“Rey does not claim any present right to title or possession of the property over which it seeks to impose a trust.... Rey claims an interest in the defendant's property only to the extent the monies it alleges were wrongfully obtained have been invested therein. The Riverside property is in no sense unique to Rey and its claims can be totally satisfied by a money judgment. Even assuming Rey prevails in the lawsuit, title and possession of the property will not necessarily be affected if the defendant satisfies the **75 money judgment.” ( La Paglia, supra, 215 Cal.App.3d at p. 1327, 264 Cal.Rptr. 63.)

Following Urez, the La Paglia court concluded that such allegations were insufficient to support the recording of a lis pendens:

“We believe the reasoning in Urez is persuasive. Urez is consistent with the history of lis pendens statutes and the need to prevent abuse. As applied to the facts in this case, the rationale adopted in Urez bars use of a notice of lis pendens. Although Rey argues that it is illogical to allow a plaintiff to assert an action for constructive trust and then defeat the plaintiff's recovery by allowing the defendant to transfer the property away to a bona fide purchaser during the pendency of the action, we do not believe the lis pendens statute offers any solution to this problem. Where, as here, the purpose of the constructive trust is only to secure payment of a debt, the plaintiff, like other creditors must rely upon prejudgment attachment procedures. Accordingly, we conclude the constructive trust Rey has alleged is not an action affecting title to or *915 possession of the Riverside property within the meaning of [former] section 409.1.” ( La Paglia, supra, 215 Cal.App.3d at p. 1329, 264 Cal.Rptr. 63.)

The courts in Urez and La Paglia expressly rejected the reasoning and holding of an earlier case, Coppinger, supra, 134 Cal.App.3d at page 891, 185 Cal.Rptr. 24, in which the court held that an action seeking the imposition of a constructive trust on real property was an action affecting title to real property within the meaning of lis pendens statutes. ( Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837 [“reject[ing] Coppinger'sbroad definition of actions which affect title or possession of real property”]; La Paglia, supra, 215 Cal.App.3d at p. 1326, 264 Cal.Rptr. 63 [“Coppinger was incorrectly decided”].) In reaching its conclusion, the Coppinger court relied on the fact that “[a]n action to impose a constructive trust on real property has been held to be an action for the recovery of real property within the meaning of Code of Civil Procedure section 318prescribing a five-year statute of limitations.” ( Coppinger, supra, 134 Cal.App.3d at p. 891, 185 Cal.Rptr. 24.)

The court in Urez also rejected the reasoning of Okuda, in which the court followed Coppinger ( Okuda, supra, 144 Cal.App.3d 135, 192 Cal.Rptr. 388). Okuda relied on Coppinger in holding that an action seeking an equitable lien was akin to a constructive trust and was therefore sufficient to support the recording of a lis pendens. ( Okuda, supra, 144 Cal.App.3d at p. 141, 192 Cal.Rptr. 388.) The Okuda court also reasoned:

“[I]t is beyond dispute that an equitable lien is a direct charge or encumbrance upon the property, such that the property itself may be proceeded against in an equitable action and either sold or sequestered, and its proceeds applied in favor of the person in whose favor it exists. [Citation.] Therefore an action to establish or foreclose an equitable lien is clearly one which affects the title or the right to possession of real property.” (Ibid.)

The courts in Urez and La Paglia were not alone in rejecting the reasoning of Coppinger and Okuda. ( Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 71, 26 Cal.Rptr.2d 923 [noting there have been “a chorus of decisions disagreeing with Coppinger and Okuda”]; see, e.g.,Wardley, supra, 213 Cal.App.3d at p. 394, fn. 3, 262 Cal.Rptr. 87 [reasserting Urez's rejection of Coppinger and Okuda ]; **76 Elder v. Carlisle Ins. Co. (1987) 193 Cal.App.3d 1313, 1320, fn. 8, 238 Cal.Rptr. 897 [rejecting Okuda ].)

b. The 1992 amendments to the lis pendens statutes

In 1992, subsequent to the decisions in Coppinger and Urez and their early progeny, the Legislature substantially revised California's statutes governing the recording of a lis pendens. In so doing, the Legislature continued the historical trend of “restrict[ing] rather than broaden[ing] the application of the remedy” ( Urez, supra, 190 Cal.App.3d at p. 1145, 235 Cal.Rptr. 837), by requiring that a lis *916 pendens be expunged if a court finds that the recording party has failed to establish by a preponderance of the evidence the probable validity of its real property claim. (§ 405.32.) However, as the court in BGJ Associates, supra, 75 Cal.App.4th at page 956, 89 Cal.Rptr.2d 693, noted, “The 1992 legislative revision ... took no position and left to future judicial development ... the circumstances under which a pleading supporting a constructive trust [or equitable lien] as to real property constitutes a ‘real property claim’ so as to justify a lis pendens.” Specifically, a comment regarding the section of the statute defining “real property claim” states:

“Current law is in conflict regarding the availability of the lis pendens procedure in cases claiming a constructive trust or equitable lien. [Citations.] The definition of “real property claim” neither includes nor excludes claims of constructive trust or equitable lien. Instead, the law in this area is left for judicial development. Should case law continue to allow use of the lis pendens procedure in cases claiming a constructive trust or equitable lien, any abuse which might have previously occurred should be mitigated by the provisions of CCP 405.32 (requiring proof by the claimant of the probable validity of the claim) and the provisions of CCP 405.34 (allowing the court to require a bond from the claimant). Moreover, the provisions of CCP 409.360 [ sic. see C.C.P. § 405.8], which continue prior law maintaining the availability of injunction, attachment or other relief in connection with a real property claim, should also reduce any perceived need for availability of the lis pendens procedure in cases involving allegations of fraudulent or deceptive conduct leading to claims for a constructive trust or equitable lien.” (Real Property Law Section of State Bar of Cal. com., reprinted at 14A West's Ann.Code Civ. Proc. (2005 ed.) foll. § 405.4, pp. 315-316.) FN4

FN4. “The Real Property Law Section of the State Bar of California proposed the revision and submitted a report to the Legislature. The comments in the State Bar report were relied upon by the Legislature and indicate the legislative intent.” ( BGJ Associates, supra, 75 Cal.App.4th at p. 955, 89 Cal.Rptr.2d 693.)

c. A claim that seeks an interest in real property for the purpose of securing a judgment for money damages is not a real property claim

We continue to follow the holding of Urez, adopted by this court in La Paglia. (See also Lewis, supra, 30 Cal.App.4th at pp. 1863-1864, 37 Cal.Rptr.2d 63; BGJ Associates, supra, 75 Cal.App.4th at 970, 89 Cal.Rptr.2d 693 [both adhering to Urez and its progeny in the wake of the 1992 amendments to the lis pendens statutes].) In addition to the reasons offered in the Urez line of cases, the Legislature's disclaimer of any “definitional strictures” ( Lewis, supra, 30 Cal.App.4th at p. 1864, 37 Cal.Rptr.2d 63), regarding the meaning of the phrase “real property claim” (§ 405.4) in the 1992 amendments and its acquiescence to judicial doctrinal development in this area, supports our continuing **77 to interpret the phrase in a manner that is consistent with the “history and purpose of the lis pendens statutes” *917 ( La Paglia, supra, 215 Cal.App.3d at p. 1326, 264 Cal.Rptr. 63). (Accord Lewis, supra, 30 Cal.App.4th at p. 1864, 37 Cal.Rptr.2d 63 [“In the face of this [State Bar] report and the Urez line of decisions, the fact that the Legislature made no definitional change in the statute creates a very strong presumption that it was satisfied with the restrictive interpretation given to the statute by the overwhelming majority of decisions.”].)

The history of the common law doctrine of lis pendens and the statutes modifying that doctrine indicate that the doctrine evolved as a method of ensuring that courts could render enforceable judgments in actions whose object was to obtain an interest in a particular parcel of unique property.

“Historically, the American statutes providing for recording of a notice of pendency of an action affecting title to or possession of real property were designed to limit, rather than to expand, the common law doctrine of constructive notice. In England, the common law developed the doctrine that transferees and encumbrancers took with constructive notice of title defects asserted in any pending action. The purpose was to prevent frustration of jurisdiction by transfers pendente lite.” ( Allied Eastern Financial v. Goheen Enterprises (1968) 265 Cal.App.2d 131, 132, 71 Cal.Rptr. 126.)

Similarly, as the court in Newman v. Chapman (1823) 23 Va. 93, stated, “Without [the common law doctrine of lis pendens], the administration of justice might, in all cases, be frustrated by successive alienations of the property, which was the object of litigation, pending the suit, so that every judgment and decree would be rendered abortive, where the recovery of specific property was the object.”

“The doctrine [of lis pendens] is illustrative of the universal presumption that real property is unique, and that its loss is not compensable in money damages.” (Comment, The Use of Lis pendens in Actions Alleging Constructive Trusts or Equitable Liens: Due Process Considerations (1984) 24 Santa Clara L.Rev. 137, 139 (hereafter Comment ).) This underlying rationale for the doctrine is reflected in the lis pendens statute itself. A lis pendens must be expunged where “the court finds that the real property claim has probable validity, but adequate relief can be secured to the claimant by the giving of an undertaking.” (§ 405.33.) Thus, even where a claim undisputedly affects title to property, a lis pendens must be expunged where the claimant can be made whole by a monetary award. The State Bar report that proposed the 1992 amendments to the lis pendens statutes explained that this provision may apply in the commercial real estate context “where a presumption of uniqueness is often inappropriate.” (Real Property Law Section of State Bar of Cal. com., reprinted at 14A West's Ann.Code Civ. Proc. (2005 ed.) foll. § 405.33, p. 349 [“The essence of commercial activity is the earning of money; loss of a commercial investment opportunity can normally be offset by a pecuniary award”].)

*918 However, where a party seeks title to property, or some other interest dependent upon the uniqueness of a particular parcel of property, the party cannot ordinarily be made whole by money alone. (Civil Code § 3387 [“It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation”]; cf. La Paglia, supra, 215 Cal.App.3d at p. 1324, 264 Cal.Rptr. 63.) In such instances, the party's interest cannot be protected by **78 prejudgment attachment procedures, “a remedy by which a plaintiff with a contractual claim to money ( not a claim to a specific item of property ) may have various items of a defendant's property seized before judgment and held by a levying officer for execution after judgment.” ( Waffer Internat. Corp. v. Khorsandi (1999) 69 Cal.App.4th 1261, 1271, 82 Cal.Rptr.2d 241, italics altered.) On the other hand, a plaintiff should not to be able to obtain priority for a claim whose object is a security interest in real property by recording a lis pendens when the original purpose of such notices was to ensure that a plaintiff's unique interest in a particular piece of property would be preserved pending litigation. (See Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837 [purpose of lis pendens statute is “not to make plaintiffs secured creditors of defendants”].)

To allow a plaintiff to record a lis pendens in such an instance, as the court did in Coppinger, is to expand the use of this procedure beyond its historical purpose. Such expansion is particularly inappropriate given that the Legislature has continually restricted its use because of the ease with which such notices may be recorded and the adverse consequences to a property owner flowing from such recordation. As one commentator noted:

“Unlike the situation in Coppinger, when the property is unique to a plaintiff or is the subject of the underlying claim the plaintiff has a significant interest in protecting the particular property. If the property is transferred, pendente lite, the plaintiff could never be fully compensated.

“ Coppinger, however, allowed a lis pendens in what essentially was an ordinary fraud action. Plaintiff was not claiming title to or possession of defendant's property, but rather was looking to the property to secure a possible money judgment. Read broadly, Coppinger opens the door for subtle and creative pleading in any fraud action. By alleging a constructive trust, or even an equitable lien, plaintiff, who at most should be considered only a general creditor, effectively becomes a secured creditor with the availability of a lis pendens.” ( Comment, supra, 24 Santa Clara L.Rev. at p. 144, fn. omitted.)

We agree with Urez and the cases that follow it that to allow a party to record a lis pendens in a case in which the party seeks only “to freeze the real property as a res from which to satisfy a money judgment” *919 ( Wardley, supra, 213 Cal.App.3d at p. 397, 262 Cal.Rptr. 87), is not consistent with the history and purpose of the lis pendens statutes and conclude that the Urez line of cases is more consistent with the history and purpose of the lis pendens statutes than are Coppinger and Okuda.

3. Campbell's request for the imposition of an equitable lien on La Barrie's property does not support the recording of a lis pendens

In his complaint, Campbell requested “an equitable lien against the Grandee House equal to the amount of the assets of the Trust used to improve the Grandee House in any way.” In other words, Campbell, sought an interest in La Barrie's real property “for the purpose of securing a claim for money damages.” ( Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837). As in La Paglia, supra, 215 Cal.App.3d at page 1327, 264 Cal.Rptr. 63, Campbell's claim is not dependent upon the uniqueness of the defendant's property in the underlying suit, and Campbell will be fully compensated for any damages he has suffered by a money judgment. We conclude such an action does not “affect ... title to ... specific real **79property” (§ 405.4), and, therefore, does not support the recording of a lis pendens. ( Urez, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837.)

We also reject Campbell's attempts to distinguish the applicability of the Urez and La Paglia line of cases on the facts of this case. Campbell claims this case is distinguishable from La Paglia because La Barrie allegedly wrongfully used misappropriated funds to remodel a house she already owned, as opposed to using the funds to purchase a new piece of property, as in La Paglia. Campbell also claims that this case is not an action “essentially for money,” because La Barrie used the funds directly to improve her own property.

This distinction is immaterial and finds no support in the case law. “[T]he test is whether the action seeks to establish an interest in real property for the purpose of securing payment of the money judgment ultimately sought by the action.” ( Wardley, supra, 213 Cal.App.3d at p. 395, 262 Cal.Rptr. 87.) In such a case, a lis pendens may not be recorded. ( Ibid.) This is such a case. Through his complaint, Campbell is seeking money damages and a lien on La Barrie's property to secure those damages. Campbell's request for the imposition of an equitable lien in this case is precisely the type of claim that Urez and its progeny hold do not support the recording of a lis pendens. (Accord Burger v. Superior Court (1984) 151 Cal.App.3d 1013, 1019-1020, 199 Cal.Rptr. 227 ( Burger ) [concluding lis pendens could not have been recorded as ancillary to equitable lien claim where plaintiff claimed funds were wrongfully used to improve defendant's property].)

*920 We conclude that Campbell's request for the imposition of an equitable lien on La Barrie's property does not support the recording of a lis pendens. FN5

FN5. In light of our adherence to the Urez and La Paglia line of cases, and our conclusion that the reasoning in those cases is dispositive, we need not consider Campbell's contention that the trial court may have granted the motion to expunge because it felt bound to followLa Paglia rather than Okuda.

B. Campbell's prayer for the imposition of a constructive trust is not a “real property claim” within the meaning of sections 405.4 and 405.20

[6] [7] [8] Campbell claims his request for the imposition of a constructive trust on La Barrie's house states a “real property claim” pursuant to sections 405.4 and 405.20. We apply the standard of review described in part A.1., ante, to Campbell's claim. ( Kirkeby, supra, 33 Cal.4th at pp. 647-648, 15 Cal.Rptr.3d 805, 93 P.3d 395.)

“A constructive trust is an involuntary equitable trust created by operation of law as a remedy to compel the transfer of property from the person wrongfully holding it to the rightful owner. [Citations.] The essence of the theory of constructive trust is to prevent unjust enrichment and to prevent a person from taking advantage of his or her own wrongdoing. [Citation.]

“The principal circumstances where constructive trusts are imposed are set forth in Civil Code sections 2223 and 2224. Section 2223 provides that ‘[o]ne who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner.’ Section 2224 states that ‘[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.’ Under these statutes and**80 the case law applying them, a constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it. [Citations.]” ( Communist Party v. Valencia, Inc. (1995) 35 Cal.App.4th 980, 990, 41 Cal.Rptr.2d 618.)

In Burger, supra, 151 Cal.App.3d 1013, 199 Cal.Rptr. 227, in which the plaintiff alleged that his money had been wrongfully used to improve the defendant's property, the Court of Appeal considered whether a complaint that sought the imposition of a constructive trust on defendant Burger's property constituted a real property claim under former section 409 FN6 sufficient to support the recording of a lis pendens. In its amended complaint, the plaintiff alleged that it had paid over $83,000 to a second defendant and that the payment was “ ‘instituted and *921 consummated by fraud on the part of the defendants' who ‘have no legal right to or any interest in said money,’ that ‘said funds have been transmuted in form into the real property and appurtenances presently owned by defendants,’ and that for these reasons defendants should be deemed constructive trustees of the real property for [plaintiff].” ( Burger, supra, 151 Cal.App.3d at p. 1016, 199 Cal.Rptr. 227.) The Burger court held that these allegations were insufficient to support the recording of a lis pendens because a constructive trust was not an appropriate remedy under the circumstances. The Burger court reasoned:

FN6. Former section 409 is the predecessor statute to section 405.20.

“Burger's property was allegedly improved by a third party wrongdoer.... [Plaintiff] has neither pleaded nor demonstrated the elements of a constructive trust. ‘A constructive trust is a remedy used by a court of equity to compel a person who has property to which he is not justly entitled to transfer it to the person entitled thereto. The trust is passive, the only duty being to convey the property.’ [Citation.] Transfer of [Burger's property] to [plaintiff] is not an appropriate remedy where, as here, only improvements amounting to considerably less than the overall value of the property are involved.” ( Burger, supra, 151 Cal.App.3d at pp. 1017-1018, 199 Cal.Rptr. 227.)

Similarly, the Restatement of Restitution, section 206 provides, “Where a person wrongfully uses property of another in making improvements upon property already owned by the wrongdoer, the other is entitled to an equitable lien but is not entitled to enforce a constructive trust.” The comment associated with section 206 explains the reason for this rule:

“ b. No constructive trust. Where a person wrongfully uses the property of another in making improvements upon property already owned by the wrongdoer, the other is not entitled to enforce a constructive trust of the property or of a share of the property, since the property so improved is not acquired by the wrongdoer through the use of the claimant's property. Thus, if a person wrongfully takes money belonging to another and uses it in clearing land owned by the wrongdoer, the claimant is not entitled to an interest in the land in such proportion as the amount of his money so used bears to the value of the land, although he is entitled to an equitable lien upon the land for the amount of his money so used. If the land is subsequently sold he has an equitable lien on the proceeds and he is entitled to receive**81 out of the proceeds the amount of his money which was used in improving the property, but he is not entitled to a share of the proceeds in such proportion as the amount of his money bore to the value of the land.” (Rest., Restitution, § 206, com. b.)

We agree with the Burger court that a plaintiff may not file a lis pendens on the basis of a complaint that seeks the imposition of a constructive trust on the defendant's property where the plaintiff has failed to adequately plead facts in the underlying complaint that would entitle the plaintiff to such a remedy. ( Burger, supra, 151 Cal.App.3d at p. 1018, 199 Cal.Rptr. 227; accord Pacific Lumber Co. v. Superior Court (1990) 226 Cal.App.3d 371, 377, 276 Cal.Rptr. 425 [“We need not determine whether Coppinger survives because *922 real party has failed to plead facts which, if proven, would support a constructive trust on the real property.”].) We also agree with Burger and the Restatement of Restitution that the imposition of a constructive trust is not an appropriate remedy when a defendant improperly uses the property of another to make improvements to property that is not initially owned by the plaintiff. ( Burger, supra, 151 Cal.App.3d at pp. 1017-1018, 199 Cal.Rptr. 227; Rest., Restitution, § 206.)

Although it is not entirely clear from his complaint, Campbell appears to be seeking at least partial title to the Grandee House by virtue of his request for the imposition of a constructive trust. To the extent Campbell is seeking title to the Grandee House, we conclude that Campbell has failed to adequately plead facts in the underlying complaint that would entitle him to such a remedy. Accordingly, Campbell's request for the imposition of a constructive trust on the Grandee House does not support the filing of a lis pendens. We also conclude that, to the extent Campbell seeks merely a secured interest in La Barrie's property by way of his request for the imposition of a constructive trust, such a prayer for relief does not support the filing of a lis pendens for the reasons stated in part A., ante. (See Burger, supra, 151 Cal.App.3d at p. 1019, 199 Cal.Rptr. 227[concluding lis pendens could not have been recorded as ancillary to equitable lien where complaint failed to properly plead elements of constructive trust].)

C. Attorney fees and costs

[9] In her preliminary response to Campbell's petition, La Barrie requested that we order Campbell to pay her attorney fees and costs in moving to expunge the lis pendens in the trial court and in opposing this petition pursuant to section 405.38.

The trial court expressly found that La Barrie was not entitled to attorney fees and costs. La Barrie did not seek review of these determinations. We conclude La Barrie may not obtain review of this determination by way of her response to Campbell's writ petition. (Cf. Transworld Systems, Inc. v. County of Sonoma (2000) 78 Cal.App.4th 713, 716, fn. 4, 93 Cal.Rptr.2d 165 [concluding party waived right to contest adverse trial court ruling by failing to take cross-appeal].) However, La Barrie is entitled to her costs in this writ proceeding pursuant to the rules governing original proceedings in this court. (California Rules of Court, rule 56( l )(1).)

IV

CONCLUSION

The trial court properly granted La Barrie's motion to expunge Campbell's lis pendens.

**82 *923 V

DISPOSITION

The petition is denied. Campbell shall bear costs in this writ proceeding.

WE CONCUR: McCONNELL, P.J., and BENKE, J.

_________________
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