Opinion
No. 01-04-00485-CV
Opinion issued December 9, 2004.
On Appeal from the 113th District Court County, Texas, Trial Court Cause No. 2004-08451.
Henry James Fasthoff, Stumpf Craddock Massey Farrimond, 1400 Post Oak Blvd, Ste 400, Houston, TX 77056, Peter M. Kelly, Hogan Hogan, L.L.P., 700 Lousiiana, Suite 4200, Houston, TX 77002, for Appellant.
Mr. Robert N. Lemay, 3700 Thanksgiving Tower, 1601 Elm St, Dallas, Tx 75201-7254, for Appellee.
Panel consists of Chief Justice RADACK and Justices KEYES and ALCALA.
MEMORANDUM OPINION
In this original proceeding, we consider whether the trial court abused its discretion by cancelling a notice of lis pendens filed by relator, Chayn Mousa d/b/a/ Dimensional Investment ("Mousa"). We conditionally grant the petition for writ of mandamus.
The Honorable Patricia Hancock, judge of the 113th Judicial District Court of Harris County, Texas. The underlying proceeding giving rise to the filing of the lis pendens is Chayn Mousa d/b/a Dimensional Investments v. Toys "R" Us-Delaware, Inc., and Toys "R" Us-Texas, L.L.C., Tru Properties, Inc., No. 2004-08451.
BACKGROUND
In 2003, relator, Chayn Mousa, negotiated to purchase two parcels of real property from real-party-in-interest, Toys "R" Us-Delaware, Inc. (Toys "R" Us). In July 2003, Mousa and Toys "R" Us entered into a letter of intent, which expressly stated that it was not intended to be a binding agreement. The parties, however, never entered into a formal contract of sale and no earnest money was ever exchanged. Several months later, Toys "R" Us entered into an agreement to sell the property to Discount Tire for $400,000 dollars more that Mousa had intended to pay.
The letter of intent contained the following language:
This letter is not legally binding and creates no rights, obligations, or duties on either party. Binding rights, obligations and duties will only be created or imposed by written agreement signed by both parties, setting forth in full the terms and conditions of the sale.
On February 19, 2004, Mousa filed suit, alleging that the letter of intent formed "a binding contract, irrespective of the attempted disclaimer language therein." Mousa also sought specific performance of the purported sale. On February 24, 2004, Mousa filed a notice of lis pendens with the county clerk. See TEX. PROP. CODE ANN. § 12.007 (Vernon 2004). On April 19, 2004, Toys "R" Us filed a motion to cancel the notice of lis pendens so that it could proceed with the sale to Discount Tire. After a hearing on the issue, the trial court granted Toys "R" Us's motion to cancel the notice of lis pendens, whereupon Mousa filed this petition for writ of mandamus. Mousa contends that his petition asserts an "interest in real property," and that the trial court erred in dismissing his notice of lis pendens. We agree.
The underlying purpose of a lis pendens is "to put those interested in a particular tract of land on inquiry as to the facts and issues involved in the suit or action concerned." Kropp v. Prather, 526 S.W.2d 283, 287 (Tex.Civ.App. 1975, writ ref'd n.r.e.). A filed lis pendens is constructive notice of the underlying lawsuit, and a prospective buyer is on notice that he acquires any interest subject to the outcome of the pending litigation. Gene Hill Equip. Co. v. Merryman, 771 S.W.2d 207, 209 (Tex.App. 1989, no writ); Allen-West Comm'n Co. v. Gibson, 228 S.W. 342, 345 (Tex.Civ.App. 1921, writ ref'd). Ultimately, the effect of filing a lis pendens "is to prevent either party to the litigation from alienating the property in dispute. . . . [O]ne acquiring an interest in property from a party pending litigation in regard to it is bound by the result." Gene Hill Equip. Co 771 S.W.2d at 209 (quoting Black v. Burd, 255 S.W.2d 553, 555 (Tex.Civ.App.-Fort Worth 1953, writ ref'd n.r.e.).
A lis pendens may be filed during the pendency of an action involving (1) title to real property, (2) the establishment of an interest in real property, or (3) the enforcement of an encumbrance against real property. Tex. Prop. Code Ann. § 12.007. Toys "R" Us argues that the lis pendens statute does not apply because the letter of intent, on its face, is not an enforceable contract and is insufficient to create an interest in real property. Toys "R" Us's argument misses the point. Whether or not the letter of intent creates an enforceable contract of sale is the ultimate issue to be resolved in the underlying suit. The issue the trial court should resolve in a motion to cancel a lis pendens suit is whether the pleadings of the underlying suit involve a claim to an interest in property. See First Nat'l Petroleum Corp. v. Lloyd, 908 S.W.2d 23, 25 (Tex.App. 1995, orig. proceeding) (holding that "[w]e examine the petition to determine whether the action is within the lis pendens statute" and rejecting dissent's invitation to look beyond pleadings).
The lis pendens statute provides in pertinent part as follows:
(A) After the plaintiff's statement in an eminent domain proceeding is filed or during the pendency of an action involving title to real property, the establishment of an interest in real property, or the enforcement of an encumbrance against real property, a party to the action who is seeking affirmative relief may file for record with the county clerk of each county where a party of the property is located a notice that the action is pending.
TEX. PROP. CODE ANN. § 12.007(a) (emphasis added).
Thus, we examine Mousa's petition to determine whether he has stated a claim within the lis pendens statute. Mousa's Second Amended Petition includes the following claim:
Plaintiff asks the Court to require Defendants to specifically perform the contractual obligations to which the Parties agreed in writing or by partial performance of the Letter of Intent or, alternatively, to which they agreed by partial performance of the Sales Agreement. Without limitation, Plaintiff seeks to establish his interest in the Property and asks the Court to enter judgment ordering Defendants to transfer legal title to the Property to Plaintiff.
Mousa's petition clearly claims that the letter of intent was either a binding sales agreement or that it became binding through the partial performance of the parties. The petition further asserts a claim for specific performance of the agreement, transferring legal title to Mousa. A party's assertion that they are entitled to recover the property at issue in the lawsuit sufficiently states a claim coming within the provisions of the lis pendens statute. See id.
See John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 18 (Tex.App. 2000, pet. denied) (holding letter of intent not binding as a matter of law, but leaving open issue of whether partial performance after execution could, in certain cases, raise question of fact regarding binding nature of agreement).
Because Mousa's petition seeks the actual transfer of the title to the property, he has stated a claim within the provisions of section 12.007. See id. Accordingly, the trial court erred in cancelling the notice of lis pendens. A writ of mandamus is the appropriate remedy when issues arise concerning the propriety of a notice of lis pendens. See Flores v. Haberman, 915 S.W.2d 477, 478 (Tex. 1995); First Nat'l Petroleum Corp., 908 S.W.2d at 25. The petition for writ of mandamus is conditionally granted. In light of this opinion, we are confident that the trial court will vacate its order cancelling the lis pendens. The writ of mandamus will issue only if the trial court does not do so.
We express no opinion about whether the letter of intent is an enforceable contract.