USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
____________________
No. 95-1786
TPM HOLDINGS, INC.,
Plaintiff, Appellee,
v.
INTRA-GOLD INDUSTRIES, INC.
and JASPER C. ROWE,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Paul J. Barbadoro, U.S. District Judge]
___________________
____________________
Before
Selya, Cyr and Boudin,
Circuit Judges.
______________
____________________
Jasper C. Rowe with whom Law Offices of Jasper C. Rowe was on
_______________ _______________________________
briefs for appellants.
Daniel P. Schwarz with whom Christopher Cole and Sheehan,
___________________ _________________ ________
Phinney, Bass & Green, P.C. were on briefs for appellee.
_______ __________________
____________________
July 30, 1996
____________________
Per Curiam. Intra-Gold Industries, Inc. ("Intra-Gold"),
__________
a Texas corporation, appeals from the New Hampshire district
court's grant of summary judgment in favor of TPM Holdings,
Inc. ("TPM"), in TPM's action to remove a notice of lis
___
pendens from the title of property it owns in New Hampshire.
_______
The lis pendens relates to a Texas federal-court action
____________
brought by Intra-Gold against TPM and another party, New
England Aggregate Trust, Inc. ("Aggregate Trust"), in which
Intra-Gold sought enforcement of an alleged agreement with
Aggregate Trust to transfer to Intra-Gold certain mineral
rights in the New Hampshire property.
The background facts are complex but largely undisputed,
and we limit our description to the transactions directly
pertinent to this appeal. In June 1992, TPM bought a
promissory note and mortgage interest in 3,500 acres of
property located in both Freedom and Madison, New Hampshire.
One of the mortgagors was Freedom Properties Realty Trust
("Freedom Properties"), a New Hampshire general partnership
with Aggregate Trust as its general partner. By late 1992,
the mortgagors were in default, and TPM had initiated
foreclosure proceedings.
Intra-Gold claims that in January 1993, Aggregate Trust
agreed on behalf of Freedom Properties to assign the latter's
mineral rights in the New Hampshire property to Intra-Gold.
According to Intra-Gold this was part of a plan to avoid the
-2-
-2-
foreclosure; in return for the mineral rights, Intra-Gold
would try to arrange financing that would permit Aggregate
Trust to retire its debt to TPM and would pay royalties to
Aggregate Trust for the minerals removed.
But in February 1993, the mortgagors of the New
Hampshire property--including Freedom Properties--agreed to
deed the property to TPM in lieu of foreclosure proceedings.
The agreement reserved in the mortgagors the right to exploit
the minerals for one year and gave them an option to purchase
the property within one year for approximately $4 million.
Intra-Gold took the position that by entering into this
settlement, Aggregate Trust had breached its January 1993
agreement with Intra-Gold.
In July 1994, Intra-Gold filed suit in Texas state court
against Aggregate Trust and TPM, seeking damages and
rescission of the deed transferring the property to TPM.
The defendants removed the case to the federal district court
for the Eastern District of Texas. The day after bringing
the suit, Intra-Gold placed--without notice to TPM or
application to any court--a notice of lis pendens on the deed
___________
for the New Hampshire property. It was the filing of this
lis pendens in the Registry of Deeds in Carroll County, New
___________
Hampshire that prompted the litigation at issue here.
On November 1, 1994, TPM filed a complaint in the
federal district court in New Hampshire, based on diversity
-3-
-3-
jurisdiction, seeking a declaration that the notice of lis
___
pendens was not valid under the New Hampshire statute. N.H.
_______
Rev. Stat. Ann. 511-A:8 permits filing a lis pendens
____________
without prior application to the court or notice to the
adverse party, in "equity cases for specific performance of
an agreement to transfer land or a unique chattel." TPM
pointed out that Intra-Gold's Texas complaint sought only
money damages and rescission of the deed from Aggregate Trust
(and the other mortgagors) granting the New Hampshire
property to TPM.
While pre-trial motions were pending in the New
Hampshire action, the Texas district court on April 7, 1995,
dismissed with prejudice all of Intra-Gold's claims against
TPM for failure to state a claim. Fed. R. Civ. P. 12(b)(6).
On motion by TPM, the court followed with an order on May 17,
1995, cancelling the notice of lis pendens filed in the New
___________
Hampshire Registry of Deeds. Intra-Gold proceeded with its
claims against Aggregate Trust, but after a bench trial in
the summer of 1995, the court found in Aggregate Trust's
favor on all claims.
One might think that resolution of the underlying claims
against TPM in Texas would moot the New Hampshire action by
removing the basis for the lis pendens, but Intra-Gold
____________
appealed the Texas decision to the Fifth Circuit, and some
cases suggest that a lis pendens remains in effect pending
___________
-4-
-4-
appeal. See 54 C.J.S. Lis Pendens 26 (1987). In all
___ ____________
events, neither party asserts mootness, and there are obvious
practical reasons why--with the Fifth Circuit appeal pending-
-it is important for TPM to maintain in force the district
court's declaration that the lis pendens is invalid. We thus
___________
resume the chronology.
In the New Hampshire district court, Intra-Gold argued
by motion that the court should refuse to entertain TPM's
claim because similar issues were then before the Texas
district court. Intra-Gold contended this result was
required both by 28 U.S.C. 1450--a claim now abandoned--and
for reasons of "fairness and judicial economy." In the
alternative, Intra-Gold argued that Texas law should govern
the validity of the lis pendens. The district court denied
___________
this motion in June 1995.
During the June 1995 hearing, the New Hampshire district
court also proposed sua sponte to grant summary judgment on
___ ______
the merits in favor of TPM, because the lis pendens was not
___________
authorized by the New Hampshire statute because the
underlying Texas action was not an equity case for specific
performance of an agreement to transfer land or a unique
chattel. In opposition, Intra-Gold conceded this defect, but
argued that it had filed an amended complaint in the Texas
suit on December 7, 1994--over a month after TPM had
initiated the New Hampshire declaratory action--which asked
-5-
-5-
for "an injunction preventing transfer of the property to TPM
or any third party and granting title to the property to
[Intra-Gold]."
Unpersuaded, the district court granted summary judgment
in TPM's favor, explaining simply that the lis pendens "was
___________
not filed in compliance with N.H. Rev. Stat. Ann. 511-A."
Intra-Gold now appeals, renewing its earlier claim that, for
prudential reasons of fairness and economy, the New Hampshire
district court should have declined to hear TPM's action to
remove the lis pendens. Alternatively, Intra-Gold contends
___________
that the amended complaint in the Texas suit falls within the
"specific performance" exception of the New Hampshire lis
___
pendens statute. We discuss the claims in order.
_______
Obvious concerns arise when actions involving the same
parties and similar subject matter are pending in different
federal district courts: wasted resources because of
piecemeal litigation, the possibility of conflicting
judgments, and a general concern that the courts may unduly
interfere with each other's affairs. To resolve such
tensions, courts rely primarily on common sense and
historical practice. See, e.g., Colorado River Water
___ ____ ______________________
Conservation Dist. v. United States, 424 U.S. 800, 817
___________________ ______________
(1976); 28 U.S.C. 1404.
Where the overlap between the two suits is nearly
complete, the usual practice is for the court that first had
-6-
-6-
jurisdiction to resolve the issues and the other court to
defer. West Gulf Maritime Ass'n v. ILA Deep Sea Local 24,
_________________________ _______________________
751 F.2d 721, 729 (5th Cir. 1985). But where the overlap
between two suits is less than complete, the judgment is made
case by case, see Colorado River Water Conservation Dist.,
___ ________________________________________
424 U.S. at 817, based on such factors as the extent of
overlap, the likelihood of conflict, the comparative
advantage and the interest of each forum in resolving the
dispute.
Here, the heart of the Texas action was Intra-Gold's
breach of contract claim against Aggregate Trust. If
determining the validity of the lis pendens required the New
___________
Hampshire district court to assess the merits of this claim,
there might be a good case for deferring to the Texas suit.
But the New Hampshire court was asked only to decide whether
Intra-Gold's Texas suit constituted an "equity case for
specific performance of an agreement to transfer land or a
unique chattel" under N.H. Rev. Stat. Ann. 511-A:8. This
required an assessment of the nature of the claims being
______
made, not their merit, and could not realistically be said to
interfere with the Texas court's authority or conduct of its
case.
Only slightly more troublesome is the argument that the
validity of the lis pendens was being litigated in the Texas
___________
suit. Formally this was true, since a few days after filing
-7-
-7-
the New Hampshire suit, TPM also brought a motion in the
Texas district court seeking cancellation of the lis pendens.
___________
And indeed, after the Texas court dismissed Intra-Gold's
claims against TPM, that court did issue an order to cancel
the lis pendens. But beneath this surface resemblance the
____________
two courts were addressing very different issues.
Neither party has shown that the Texas district court
ever had before it a claim that the lis pendens did not
____________
comply with the New Hampshire statute. Instead it appears
that TPM simply requested that, if the Texas court dismissed
Intra-Gold's claims, it also cancel the lis pendens since
___________
there would no longer be any litigation pending. If so,
there was little risk of conflict posed by the New Hampshire
court's resolution of the independent issue of whether the
lis pendens complied with New Hampshire state law.
___________
We turn now to the merits of the New Hampshire district
court's decision on summary judgment that the lis pendens was
___________
invalid. The district court said that the notice of lis
___
pendens was not filed in compliance with the New Hampshire
_______
statute, a point that Intra-Gold has effectively conceded.
But, as already noted, Intra-Gold argues that its amended
complaint did seek such specific performance. While this is
itself an issue open to dispute, for us the anterior question
is whether an amended complaint--even within N.H. Rev. Stat.
-8-
-8-
511-A--can revive and salvage an earlier, invalid lis
___
pendens.
_______
It does not appear the New Hampshire state courts have
ever decided this issue, but cases from elsewhere suggest
that the answer is no. E.g., 5303 Realty Corp. v. O & Y
____ __________________ _____
Equity Corp., 476 N.E.2d 276 (N.Y. 1984). This result may
____________
appear severe or formalistic. But it may also be viewed as a
counterweight to the obvious dangers inherent in a lis
___
pendens scheme that allows a party to wield this considerable
_______
power without prior application to any court, and with no
judicial assessment of the merits of the underlying suit.
The purpose of a lis pendens is to notify potential
____________
purchasers that there is pending litigation that may affect
title to real property and that the purchaser will take
subject to the judgment. This cloud on title can impair the
marketability of the property. Under the New Hampshire
statute, as in many states, this can be done without resort
to a court, under specified circumstances. The resulting
danger of abuse has led courts to require strict compliance
with lis pendens statutes. E.g., S. Utsunomiya Enters., Inc.
___________ ____ ___________________________
v. Moomuku Country Club, 866 P.2d 951, 963 (Haw. 1994); E & E
____________________ _____
Hauling, Inc. v. County of DuPage, 396 N.E.2d 1260, 1266
______________ _________________
(Ill. App. Ct. 1979).
Consistent with this strict-compliance approach, we see
no reason why an invalid lis pendens should be made valid by
___________
-9-
-9-
a later amendment to a complaint. Where the original
_____
complaint does not support the lis pendens, it is easy enough
___________
for the plaintiff who files an amended complaint to file a
new lis pendens based upon that new complaint. Allowing an
___________
amended complaint alone to breathe life into an earlier,
previously invalid lis pendens could easily cause confusion
___________
and unfair prejudice. Since the plaintiff is responsible for
the original error and is free to file a new lis pendens
___________
along with the amended complaint, this outcome appears well
warranted.
Of course, lacking precedent from a New Hampshire court,
we can only make our best assessment as to how the state
court would resolve the issue. And there are other contexts
in which a later act can revive an earlier, otherwise defunct
claim. See, e.g., Fed. R. Civ. P. 15(c). But in the present
___ ____
context, we think that the practical considerations already
mentioned, and the general instance that a lis pendens
____________
applicant turn square corners, carries the day for TPM.
Affirmed.
_________
-10-
-10-
