In Givago Growth, LLC, et al. v. iTech AG, LLC, et al., the Supreme Court of Virginia held that the filing of a lis pendens is entitled to absolute privilege as to defamation tort claims. The Court elaborated on the scope of the privilege, and declined to extend the doctrine to non-defamation claims, clarifying that “[a]bsolute privilege does not apply to non-defamation torts in Virginia, specifically including malicious abuse of process, tortious interference with contractual relations, and civil conspiracy.” Op. at 6.
A copy of the opinion is available here.
Background
In Givago Growth, a limited liability company (the LLC) held title to certain real property in Virginia. The LLC formed a partnership with a construction company (Partner) to develop and sell the property. Under the partnership agreement, title to the property would remain in the name of the LLC until the property was sold, at which point the sale proceeds would be distributed to the partners, i.e., the LLC and Partner.
To fund its contribution under the partnership agreement, Partner borrowed funds from a private lender (Lender). Unbeknownst to the LLC, Partner assigned its expected share of the property’s sale proceeds to Lender, including pledging a secured interest in the LLC’s real property.
Lender then sued the LLC seeking a secured interest in the Property and filed a lis pendens in the land records that referenced the lawsuit. The Property was in the midst of being sold to a third party, and ultimately, upon sale, a portion of such sale proceeds were escrowed, and Lender withdrew its lis pendens and dismissed its lawsuit. The LLC then sued Lender and its attorneys for slander of title, malicious abuse of process, tortious interference with contractual relations, and civil conspiracy, arising out of the filing of the lis pendens. The trial court sustained Lender’s demurrer (motion to dismiss) to all claims on the basis of absolute privilege. The LLC appealed.
Analysis
On appeal, the Supreme Court reversed the trial court’s holding and remanded the case to the trial court for further proceedings, clarifying that the trial court improperly sustained the demurrer on the basis of absolute privilege, which is an affirmative defense not properly raised on demurrer. Op. at 3-4.
Addressing the absolute privilege, the Court explained that “words spoken or written in a judicial proceeding that are relevant and pertinent to the matter under inquiry are absolutely privileged from subsequent charges of defamation.” Op. at 4. The absolute privilege rule “is broad and comprehensive, including within its scope all proceedings of a judicial nature whether pending in some court of justice, or before a tribunal or officer clothed with judicial or quasi-judicial powers, and includes any proceeding for the purpose of obtaining such remedy as the law allows.” Op. at 4.
The Court determined that absolute privilege applied to the filing of a lis pendens, noting that it is “intertwined” with the filing of a complaint. Op. at 5. “While not necessary to institute a case, [a lis pendens] provides notice of the pending lawsuit to parties who may be interested in the property underlying the suit. Moreover, a lis pendens merely republishes the key information from the complaint. It would therefore be incongruous to extend the privilege to a complaint but not to its associated lis pendens when confronted with the allegation that it has slandered a title.” Op. at 5. The Court compared a lis pendens to a mechanic’s lien, which was entitled to absolute privilege under established Virginia law. Op. at 5.
However, the Supreme Court declined to extend the doctrine to the LLC’s non-defamation claims, clarifying that “[a]bsolute privilege does not apply to non-defamation torts in Virginia, specifically including malicious abuse of process, tortious interference with contractual relations, and civil conspiracy.” Op. at 6.
Finally, the Court examined whether absolute privilege would extend to the specific lis pendens in the case at bar, which required that the privileged words must be “relevant and pertinent to the matter under inquiry.” Op. at 6. Under this liberal standard, “the matter to which the privilege does not extend must be so palpably wanting in relation to the subject matter of the controversy that no reasonable man can doubt its irrelevancy and impropriety.” Op. at 6. While noting that the circuit court must resolve this fact-based issue on remand, the Court commented that that “the facts alleged in the complaint, if proven true, are concerning and may not satisfy even this ‘liberal rule’ regarding relevancy.” Op. at 7.