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Lis Pendens Case Analysis

The court’s decision in this case is indeed necessary, lest, as it noted, "both the notice and preservation objectives" of the statute would be defeated.

The more interesting question is the slander of title counterclaim, which the court addressed only in a footnote.

The court wrote: "Melar complains that Zweber failed to seek permission to appeal the dismissal of his contract action. However, because the slander of title counterclaim was still pending, Zweber was not required to appeal the merits of the contract claim until the counterclaim was also resolved. See Brownsell v. Klawitter, 99 Wis. 2d 407, 410, 299 N.W.2d 292 (Ct. App. 1980). Melar argues its slander of title counterclaim is analogous to a fee-shifting statute, like a statute allowing for attorney fees, and the rule on pending counterclaims therefore does not apply. We disagree. Slander of title is a tort. Wis. Stat. sec. 706.13(1)."

Although the court’s holding is consistent with case law, greater discussion is warranted, both because Brownsell is not directly on point, and because the reasoning in Brownsell is arguably flawed.

In that case, Brownsell sued Klawitter for specific performance of a real estate agreement. Klawitter counterclaimed for abuse of process.

While the case was pending, the Wisconsin Court of Appeals decided M. Bryce & Associates, Inc. v. Gladstone, 88 Wis.2d 48, 59, 276 N.W.2d 335, 340 (Ct.App.1979), holding that, "A claim which might arise out of the bringing of the main action or out of the allegations in the pleadings, or proceedings taken in the course of the main action, may not be made the subject of a counterclaim. Such a claim is premature and cannot ripen or mature until the main action has been determined."

As a means of complying with Gladstone, the trial court bifurcated the plaintiff’s action for specific performance, and the defendant’s abuse of process claim. The court then dismissed Brownsell’s specific performance claim.

Brownsell appealed, but the court of appeals dismissed the appeal, holding that the trial court’s judgment was not a final judgment appealable as a matter of right.

The court of appeals iterated its prior reasoning in Gladstone, however, that abuse of process claims should, in the future, not be filed until the main action is completed.

The Supreme Court accepted review, and affirmed the trial court’s holding that no final judgment had been entered. Brownsell v. Klawitter, 102 Wis.2d 108, 306 N.W.2d 41 (1981).

However, the Supreme Court continued, overruling the decision in Gladstone that the court of appeals cited. The Supreme Court determined that there is a significant difference between actions for malicious prosecution and abuse of process, holding that, while no claim can accrue for malicious prosecution until the main action has been resolved, an abuse of process claim can be asserted as a counterclaim. Brownsell, 102 Wis.2d at 113-114.

Other courts have held, however, that, even if a slander of title claim is labelled a claim for abuse of process, the plaintiff must have succeeded in the underlying action to prevail. This was the reasoning adopted in a similar case in Rhode Island, Grasso v. Byrd, 417 A.2d 911 (R.I. 1980).

In that case, the defendant Byrd brought suit against Grasso, seeking to impose a restriction on use of the property. Byrd also filed a lis pendens. The case was dismissed, the trial court ordered the lis pendens be withdrawn, and no appeal was taken.

Grasso then sued Byrd for abuse of process, and seeking damages sustained as a consequence of the filing of the lis pendens. Id., 417 A.2d at 912-913.

Byrd moved to dismiss, arguing that the abuse of process claim was a compulsory counterclaim to his initial suit, and because Grasso did not do so, res judicata bars him from doing so later.

Rejecting the argument, the Rhode Island court held, "Since Mr. Grasso’s claim of abuse of process could not come into being until the prior action had been determined in his favor, his claim is not now barred by the compulsory counterclaim provisions of our Rules of Civil Procedure." Id. at 914.

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Wisconsin Court System

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Lis pendens must be maintained during appeal

The precise issue is different — whether abuse of process is a compulsory counterclaim, versus whether discharge of a lis pendens is a final order — but the underlying question is the same: whether a slander of title claim, like a malicious prosecution claim, must wait until the main action is resolved.

There are practical reasons for not permitting slander of title claims to be filed until the underlying action is resolved. If the counter-plaintiff loses in the main action, any time spent on the slander of title counterclaim will have been a waste of judicial resources.

If the counter-plaintiff wins in the underlying action, there may need to be two trials to determine damages — the main trial before appeal, and another one after. If there is an appeal, and the counter-plaintiff is successful, not only will the counter-plaintiff incur damages in the form of attorney fees, but the continuation of the lis pendens pending appeal may cause consequential damages
that need to be redetermined after appeal, also resulting in a waste of judicial resources.

It is not uncommon for trial courts, after appeal, to determine attorney fees. In the slander of title context, however, actual damages need to be determined a second time.

– David Ziemer

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David Ziemer can be reached by email.

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