Peoples Freedom Baptist Church v. Watson

ARNOLD, Judge. The additional defendants contend that the trial court erred in concluding that the notice of lis pendens filed by original plaintiffs on 1 March 1983 constituted constructive notice of pending litigation affecting title to the property so as to defeat the additional defendants’ claim to title. We agree. The doctrine of lis pendens is firmly established and provides that: When a person buys property pending an action of which he has notice, actual or presumed, in which the title to it is in issue, from one of the parties to the action, he is bound by the judgment in the action, just as the party from whom he bought would have been. [481] Rollins v. Henry, 78 N.C. 342, 351 (1878); see also Hill v. Memorial Park, 304 N.C. 159, 282 S.E. 2d 779 (1981). In this case the original plaintiffs filed their lis pendens on 1 March 1983 providing notice of their action and claim to title as against the directors of Fraley Road Baptist Church and Steven Montgomery. When the Smiths purchased the property and obtained a mortgage in favor of NCNB on 15 April 1983, the action by original plaintiffs was the only pending litigation affecting title to the property. The denominated crossclaim of the original defendants against Steven Montgomery was not filed until 5 May 1983, some 20 days after the Smiths had purchased the property from Montgomery. Since the crossclaim was not pending when the property was purchased by the Smiths, we hold that the lis pendens filed by original plaintiffs giving notice of their litigation and claim of ownership of the property cannot serve as notice of a dispute in ownership as between Fraley Road Baptist Church and Steven Montgomery so as to defeat the Smiths’ claim to title. Lis pendens notice under our statutes is not exclusive, however. It serves only to provide constructive notice of pending litigation. Hill, 304 N.C. at 164, 282 S.E. 2d at 783. Where, as here, actual notice of pending litigation has been properly pled by one claiming title, the burden is upon the subsequent transferee to establish, by a preponderance of the evidence, the absence of actual notice of pending litigation. Lawing v. Jaynes and Lawing v. McLean, 285 N.C. 418, 206 S.E. 2d 162 (1974). The original defendants have recited to this Court testimony which they contend establishes actual notice of pending litigation as to Mr. Smith. However, assuming arguendo that this evidence of conversations occurring prior to the Smiths’ purchase does establish actual notice, this notice again is only notice of the original plaintiffs’ claim against the directors of Fraley Road Baptist Church and Steven Montgomery. These conversations cannot serve as actual notice of pending litigation involving the directors of Fraley Road Baptist Church and their claim against Steven Montgomery, because this claim was not yet filed and was thus not pending litigation at the time of the conversations. We therefore find that the Smiths, NCNB, and its Trustee have met their burden of proof as to the absence of actual notice of pending litigation. From the record, we determine that the Smiths and NCNB are purchasers [482] for value without notice and therefore the deed to the Smiths and their Deed of Trust to NCNB are valid. The additional defendants also contend that the trial court erred in failing to allow the Smiths to recover on their counterclaim for the fair rental value of the property. We agree. We remand this cause for a determination of the fair rental value of the property for the period of loss and for further proceedings not inconsistent with this opinion. Reversed and remanded. Judges WHICHARD and JOHNSON concur.