Court of Appeals Affirms Award of Damages for Tortious Interference Arising from Notices of Lis Pendens

On January 29, 2015, the District of Columbia Court of Appeals decided Havilah Real Property Services, LLC v. VLK, LLC, Nos. 12-CV-403 & 12-CV-542, slip op. (D.C. Jan. 29, 2015), in which it considered tort claims for tortious interference and malicious prosecution.

By way of background, this case arose from the defendants’ filing of thirty-one notices of lis pendens with respect to real properties in the District of Columbia owned by the plaintiff. Id. at 3. The defendants filed the notices in connection with a prior civil lawsuit (also involving real property) that they brought against the plaintiff and lost. Id. The plaintiff alleged that the defendants’ filing of the notices of lis pendens tortiously interfered with business transactions involving the subject real properties and constituted malicious prosecution. Id. The trial court granted summary judgment for the defendants on the malicious prosecution claim because the plaintiff failed to establish “special injury,” which is an essential element of a claim for malicious prosecution of a civil proceeding. Id. at 3-4. The tortious interference claim proceeded to trial, which culminated in a jury verdict finding the defendants liable and awarding approximately $600,000 in compensatory damages. Id. Both sides appealed. Id. at 4.

The Court of Appeals affirmed and, in doing so, made three principal determinations. Id. at 5-6, 49-50. First, the Court of Appeals held that “the filing of a notice of lis pendens is protected by a conditional privilege as a defense to a claim of tortious interference.” Id. at 49. In making this determination, the Court of Appeals rejected the defendants’ assertion that the filing of a notice of lis pendens is protected by an absolute privilege (i.e., that such a filing should not be actionable even where the underlying lawsuit was brought without legal justification). Id. at 17-33. It also concluded that the issue of whether the privilege attached was for the jury to decide, and that there was sufficient evidence to support the jury’s finding of liability. Id. at 6, 23, 33-36.

Second, the Court of Appeals held that, “in determining damages for a tortious interference claim stemming from the wrongful filings of lis pendens, . . . the fair market value method [of determining damages] is [appropriate].” Id. at 50. In other words, recoverable damages for such a claim include damages for “the diminishment in fair market value” of a real property due to the wrongful filing of lis pendens. Id. at 37-40. In making the determination that the fair market value method is appropriate, the Court of Appeals stated that the method “is not speculative and is consistent with the [Restatement (Second) of Torts’] approach for damage calculations [for tortious interference], which we adopt going forward.” Id. at 50.

Third, the Court of Appeals held that “the trial court did not err in granting summary judgment in favor of [the defendants] on [the plaintiff’s] claim of malicious prosecution” because the plaintiff’s filing of lis pendens “did not constitute a ‘special injury’ as a matter of law.” Id. It explained that “any economic injuries stemming from a simple filing of lis pendens cannot accurately be described as an injury beyond what is normally incidental” to an action involving real property “because lis pendens are routinely filed” in connection with such actions. Id. at 44 (emphasis in original). Accordingly, the Court of Appeals concluded that the trial court properly rejected the malicious prosecution claim. Id. at 41-50.

For general background about tort claims for tortious interference and malicious prosecution in the District of Columbia, see Tort Claims and Defenses in the District of Columbia §§ 25, 28 (2014).