Hoskins v. Sand Hill Road Venture Group et al

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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-1-
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
RICHARD L. HATFIELD,
Debtor.
JANINA M. ELDER, Trustee in
Bankruptcy of the Estate of
RICHARD L. HATFIELD,
Plaintiff,
vs.
SAND HILL ROAD VENTURE GROUP,
et al.,
Defendants.
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Case No. 08-30154 TEC
Chapter 7
Adv. Proc. No. 08-3072 TC
MEMORANDUM DECISION RE DEFENDANT JENNIFER MOORE’S
MOTION FOR SUMMARY JUDGMENT
On May 1, 2009, the court held a hearing on Defendant Jennifer
Moore’s motion for summary judgment. 	The court took the matter
under submission and now determines that Moore’s motion should be
granted with respect to the effect of the lis pendens recorded on
June 2, 2002 in connection with In re the Marriage of Moore and
Hatfield, San Mateo Superior Court No. F068286.
Signed and Filed: September 03, 2009
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
September 04, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-03072 Doc# 73 Filed: 09/03/09 Entered: 09/04/09 08:31:13 Page 1 of 9

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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-2-
FACTS
On July 4, 1990, Richard Hatfield and Jennifer Moore held a
ceremony in which they purported to be married, although they had
neglected to obtain a marriage license. 	In June 1993, Hatfield
purchased the real property known as 35 Echo Lane, Woodside,
California (the Property). 	Hatfield took title to the Property in
his name only, as an unmarried man.
On December 17, 2001, Moore filed in the San Mateo Superior
Court a petition for dissolution of marriage (F068286) in which she
asserted a community property interest in the Property. 	On June 2,
2003, Moore recorded a lis pendens identifying the dissolution
action and the Property. 	On January 3, 2003, the San Mateo
Superior Court filed a statement of decision in which it found that
Hatfield and Moore had never legally married. 	On the same date,
the court issued an order expunging the lis pendens. 	The
expungement order was never recorded, and the dissolution-of-
marriage petition was never dismissed.
On August 21, 2003, Moore filed in the San Mateo Superior
Court a civil action (Civ 433625) in which she asserted a
contractual Marvin claim to an interest in the Property. 	On
February 26, 2004, Moore filed a motion to consolidate that civil
action with the previously filed dissolution-of-marriage
proceeding. 	The motion to consolidate was granted on April 20,
2004.
On February 27, 2004, two deeds of trust, executed by Hatfield
only, were recorded against the Property (the Deeds of Trust). 	The
first-filed was in favor of Preferred Financial Group to secure a
loan in the approximate amount of $1.21 million. 	The second-filed
Case: 08-03072 Doc# 73 Filed: 09/03/09 Entered: 09/04/09 08:31:13 Page 2 of 9

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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-3-
was in favor of Sand Hill Venture Group to secure a loan in the
approximate amount of $1.51 million.
On January 22, 2007, the San Mateo Superior Court issued a
statement of decision on Moore’s Marvin claim, determining that
Moore had a one-half interest in the Property. 	The decision was
issued in the consolidated action. 	That is, both the written
statement of decision and the docket upon which it was entered
included the numbers of both the original dissolution-of-marriage
action in which the lis pendens was recorded (F068286) and the
later-filed Marvin action (Civ 433625).
Hatfield filed a chapter 7 petition on January 31, 2008.
The Chapter 7 trustee has listed the Property for sale.
Trustee contends that the Deeds of Trust should be paid from the
proceeds of both Moore’s and Hatfield’s interests in the Property,
because those encumbrances were created before Moore was awarded an
interest in the Property and because Moore’s lis pendens was
expunged. 	Moore contends that the Deeds of Trust attach only to
Hatfield’s one-half interest in the Property, because the award
that Moore received in the consolidated action relates back to a
date before the Deeds of Trust were recorded.
DISCUSSION
A party who files a lawsuit asserting a claim for ownership of
real property can ensure that her claim enjoys priority over anyone
who might receive a conveyance of the property from the opposing
party before the lawsuit is concluded. 	The claimant does this by
recording a notice of pendency of action, or lis pendens. 	Once the
lis pendens is recorded, any party who might purchase or lend
against the property has constructive notice of the adverse claim
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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-4-
and receives any conveyance subject to whatever interest is
ultimately awarded to the claimant in the pending action. 	Cal.
Code Civ. Proc. § 405.24. 	The lis pendens remains effective until
the pending action is concluded by a final judgment not subject to
appeal, until a withdrawal of the lis pendens is recorded, or until
an order expunging the lis pendens is recorded. 	5 Miller & Starr
§§ 11:137 at 355; 11:142 at 372.
Had Moore been awarded an interest in the Property on her
original claim for division of marital property, the application of
the statutory rules noted above would be simple. 	Because her lis
pendens was recorded before the Deeds of Trust were recorded, and
because Moore prevailed in the pending action on her claim for
ownership of a one-half interest in the Property, Moore’s interest
would have priority over the Deeds of Trust. 	The Deeds of Trust
would attach only to Hatfield’s one-half interest in the Property.
The effect of Moore’s lis pendens is more difficult because
the present case involves three variations from the normal fact
pattern. 	Moore prevailed only on an amended complaint; that
amended complaint was first filed in a lawsuit separate from the
lawsuit of which the lis pendens provided constructive notice; and
the Superior Court had entered an order expunging Moore’s lis
pendens before the Deeds of Trust were recorded.
For the reasons stated below, I determine that notwithstanding
the somewhat unusual facts of this case, Moore’s lis pendens was
effective to give her one-half interest in the Property priority
over the Deeds of Trust.
That Moore did not prevail upon her original complaint does
not render her lis pendens ineffective. 	As noted above, a lis
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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-5-
pendens does not become ineffective through the failure of the
lawsuit until the lawsuit has been resolved by a final judgment
that is no longer subject to appeal. 	If relief is denied upon the
original complaint, relief that is granted on an amended complaint
will have priority over any conveyance that is recorded after the
date the amended complaint is filed, or that is recorded after the
date to which the amended complaint relates back. 	Gen. Petroleum
Corp. of Calif. v. Dougherty, 117 F.2d 529, 538-39 (9th Cir. 1941);
Dobbins v. Economic Gas Co., 182 Cal. 616, 626-28 (1920); accord
Fox v. Clarys, 227 Mont. 194, 196-97 (1987). 	Moore’s amended
complaint predates the Deeds of Trust under either approach.
I determine that Moore’s amended complaint was made part of
the pending action before the Deeds of Trust were recorded. 	The
Marvin claim was filed in June 2003, more than six months before
the Deeds of Trust were recorded. 	Although the Marvin claim was
originally filed as a new action separate from the pending action,
Moore had filed a motion in the pending action to consolidate the
two actions before the Deeds of Trust were recorded. 	The motion to
consolidate was granted, and Moore was awarded a one-half interest
in the Property in the consolidated action. 	Thus, before they
recorded the Deeds of Trust, the holders of the Deeds of Trust had
notice that Moore was seeking to assert the Marvin claim in the
pending action.
Even if the Marvin claim is not considered to have been filed
in the pending action until the motion to consolidate was granted,
the amended complaint relates back to the date the lis pendens was
recorded, because the Marvin claim did not assert a new cause of
action.
Case: 08-03072 Doc# 73 Filed: 09/03/09 Entered: 09/04/09 08:31:13 Page 5 of 9

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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-6-
Under California law, an amended complaint relates back to the
date of the recording of the lis pendens unless it raises a new
cause of action. 	Gen. Petroleum, 117 F.2d at 538; Dobbins, 182
Cal. at 627. 	The scope of a cause of action is a fact-based
concept; whether an amended complaint creates a new cause of action
depends upon whether it relies upon a different set of facts.
Black’s Law Dictionary defines “cause of action” and “new cause of
action” in fact-related terms.
cause of action. 	1. A group of operative facts giving
rise to one or more bases for suing; a factual situation
that entitles one person to obtain a remedy in court from
another person . . . .
new cause of action. 	A claim not arising out of or
relating to the conduct, occurrence, or transaction
contained in the original pleading. ! An amended pleading
often relates back to the date the original pleading was
filed. 	Thus, a plaintiff may add claims to a suit
without facing a statute-of-limitations bar, as long as
the original pleading was filed in time to satisfy the
statute. 	But if the amended pleading adds a claim that
arises out of a different transaction or occurrence, or
out of different alleged conduct, the amendment does not
relate back to the date the original pleading was filed.
Moore’s original claim for division of marital property and
the Marvin claim asserted in her second complaint are based upon
the same core of operative facts: the couple’s promise to treat
each other as if they were married.
[T]here are too many indices of a contractual
understanding to ignore. 	Moore and Hatfield clearly held
themselves out to the world as married; a co-worker
testified that everyone at the company thought they were
married. 	Moore’s relatives (who were credible) testified
they acted as a married couple. 	They conducted an
apparently active social life as a married couple. 	They
actively parented and interacted with other parents as a
married couple. 	They signed important documents as
husband and wife on numerous occasions.
January 22, 2007 Statement of Decision of the San Mateo Superior
Court at 4:15-21.
Case: 08-03072 Doc# 73 Filed: 09/03/09 Entered: 09/04/09 08:31:13 Page 6 of 9

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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-7-
That the Family Court entered an order expunging Moore’s lis
pendens also does not affect the constructive notice created by
Moore’s lis pendens, because that order was never recorded.
Section 405.24 of the California Code of Civil Procedure provides
that a lis pendens provides constructive notice of the claims in
the pending action from the date of its recording.
From the time of recording the notice of pendency of
action, a purchaser, encumbrancer, or other transferee of
the real property described in the notice shall be deemed
to have constructive notice of the pendency of the
noticed action as it relates to the real property and
only of its pendency against parties not fictitiously
named. 	The rights and interest of the claimant in the
property, as ultimately determined in the pending noticed
action, shall relate back to the date of the recording of
the notice.
Similarly, section 405.60 provides that purchasers and
encumbrancers are deemed not to have constructive notice of the
pending action after the date of the recording of an order
expunging a lis pendens.
Upon the withdrawal of a notice of pendency of action
pursuant to Section 405.50 or upon recordation of a
certified copy of an order expunging a notice of pendency
of action pursuant to this title, neither the notice nor
any information derived from it, prior to the recording
of a certified copy of the judgment or decree issued in
the action, shall constitute actual or constructive
notice of any of the matters contained, claimed, alleged,
or contended therein, or of any of the matters related to
the action, or create a duty of inquiry in any person
thereafter dealing with the affected property.
The constructive notice provided by the recording of Moore’s lis
pendens was never reversed by the recording of an order expunging
that lis pendens. 	5 Miller & Starr § 11:142 at 372-74; Formula
Inc. v. Sup. Ct., 168 Cal. App. 4th 1455, 1465 (2008) (order of
expungement of lis pendens is given effect by being recorded in
chain of title to overcome effect of earlier lis pendens).
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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-8-
CONCLUSION
The Deeds of Trust attach only to the Hatfield bankruptcy
estate’s one-half interest in the Property.
**END OF MEMORANDUM**
Case: 08-03072 Doc# 73 Filed: 09/03/09 Entered: 09/04/09 08:31:13 Page 8 of 9

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MEMORANDUM DECISION RE MOORE’S
MOTION FOR SUMMARY JUDGMENT 	-9-
Court Service List
John H. MacConaghy, Esq.
Jean Barnier, Esq.
MacConaghy and Barnier
645 First Street West #D
Sonoma, CA 95476
James H. Seymour, Esq.
Law Offices of James H. Seymour
706 Cowper Street
Palo Alto, CA 94301
Joel K. Belway, Esq.
Law Offices of Joel K. Belway
235 Montgomery Street, Suite 668
San Francisco, CA 94104
Case: 08-03072 Doc# 73 Filed: 09/03/09 Entered: 09/04/09 08:31:13 Page 9 of 9