Clarkson v Neff (IN)

Lis Pendens

878 NE2d 240 (Ind Ct App 2007)

Facts: In 2002, the Clarksons entered into a contract with Summit Custom Homes, Inc. (Summit) to construct their home in Hancock County. In 2003, the Clarksons refused to close on the home because they said it had taken longer and cost more than they had agreed.

The Clarksons then filed suit in the Marion County Superior Court for damages and specific performance. On August 5, 2003 they filed a lis pendens notice of the suit with the Hancock County Recorder, when it should have been filed with the court clerk. On March 5 the suit was dismissed sue sponte by the court for failure to prosecute, but neither party was aware of the dismissal.

Upon learning of the dismissal on November 17, 2005, the Clarksons filed a new suit in the Marion County Circuit Court. The new suit was a word-for-word duplicate of the Superior Court suit. The Clarksons also properly filed on that date a new lis pendens notice of the Circuit Court suit with both the Marion and Hancock County Clerks. The next day they filed to reinstate the Superior Court suit. On November 30, 2005, Neff purchased the home. The Superior Court case was shortly thereafter reinstated and Neff was added as a defendant. The suits were consolidated under Indiana Trial Rule 42(a), and the Superior Court granted summary judgment to Neff, stating that he owned the house free and clear.

Holding: Reversed and remanded.

A lis pendens notice provides protection such that a subsequent purchaser, like Neff, would take the property subject to the judgment in a pending suit. But this requires that the notice be recorded in the clerk's office for the county in which the property is located. IC 32-30-11-3. Neff relied upon the bona fide purchaser doctrine. But the bona fide purchaser doctrine requires that the purchase be made without notice of the claims of others. The court saw the question as whether Neff had notice through a valid lis pendens. The first, Superior Court, lis pendens was filed in the wrong office, and didn't qualify.

The second lis pendens, for the Circuit Court, was a proper filing. So Neff had constructive notice of the Circuit Court case before his purchase. However, the Clarksons added Neff in the Superior Court lawsuit, and he obtained summary judgment there as well. Because the cases were consolidated, the court held that the valid Circuit Court lis pendens can be 'piggy-backed' to the Superior Court suit.

While in many instances, consolidated cases should retain distinct identities, here the cases were exact, verbatim copies of each other. Under these specific facts, the court held that purpose of the notice was fulfilled even though the lis pendens notice was for a suit in which the judgment was not ultimately given. Thus, Neff's rights in the home were subject to the outcome of the Clarkson's suit.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Wed, 09/03/2008 - 2:44pm