Carter Holdings Inc. v. Carter.
2023 COA 26. No. 21CA1881. Dissolution of Marriage—Real Property—Lis Pendens—Spurious Liens and Documents.
March 16, 2023
Carter Holdings Inc. (CHI) is a Colorado corporation specializing in residential property development. Corey Carter is CHI’s sole shareholder. Corey’s former wife, Danene, was involved in CHI’s operation by, among other things, co-signing loans for CHI. The Carters co-signed for two loans for CHI that it used to complete construction of two CHI properties (the properties). Both loans provided that the Carters were jointly and severally liable. Corey subsequently filed a dissolution of marriage action, and Danene recorded notices of lis pendens (the notices) on the properties. CHI demanded that the notices be removed, arguing that the notices were holding up the properties’ sales and depriving CHI of operating funds. Both of the notices were later removed, the properties sold, and the sales proceeds distributed to CHI. But between the release of the first and second notices, CHI moved to intervene in the divorce action, claiming that the notices were “spurious” under CRS § 38-35-201. More than a year after the notices were released, the properties sold, and the funds disbursed, CHI sued Danene, claiming that her recordation of the notices constituted abuse of process and tortious interference with prospective business relations. The trial court consolidated CHI’s motion to intervene in the dissolution case with its tort lawsuit and denied CHI’s claims.
On appeal, CHI contended that the trial court erred by concluding that the notices were not “spurious documents.” CHI asserted that the notices were spurious because they were “groundless” or “patently invalid.” A recording party may not have a vested legal interest in the property when it records a lis pendens but may seek to establish such interest through litigation, and in such circumstances, the propriety of a lis pendens notice turns on what relief the recording party claims in the underlying action. Here, Danene claimed an interest in the properties as marital assets in the dissolution of marriage proceeding based on her position that CHI’s corporate form should be disregarded for purposes of marital property division. Danene advanced a rational argument in support of her claim in CHI’s properties in the dissolution proceeding, so the notices were not groundless. Further, because she claimed relief in the dissolution proceedings that could affect the title to the properties, the notices were not patently invalid. Accordingly, the notices were not spurious within the meaning of CRS § 38-35-201(3).
CHI also argued that Danene’s recordation of the notices amounted to abuse of process and tortious interference with prospective business relations. There is record support for the court’s factual finding that Danene recorded the notices to protect her claimed interest in the properties. Because CHI did not prove that Danene had an ulterior purpose when she recorded the notices, its abuse of process claim fails. Similarly, the court concluded with record support that in recording the notices, Danene did not interfere with any contractual relation of CHI. Therefore, CHI failed to prove an essential element of its tortious interference with prospective business relations claim.
The order was affirmed.