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Demenus v. 35

filed: April 25, 1989; As Corrected June 29, 1989.

MANFRED DEMENUS AND THEODORE VAN ARTHOS, APPELLANTS
v.
TINTON 35 INC., TINTON 60 INC., HOMES FOR TODAY, INC., HARVEY I. MARCUS, JACQUES ROTNEMER AND GROUP CONSTRUCTION CO. OF OCEAN TOWNSHIP INC., SPYCO INC., APPELLEES



On Appeal From the United States District Court for the District of New Jersey, D.C. Civil No. 87-3428

Author: Becker

Before: GIBBONS, Chief Judge, BECKER and NYGAARD, Circuit Judges

Opinion OF THE COURT

BECKER, Circuit Judge.

This opinion addresses the question whether we have appellate jurisdiction over an appeal from a district court's interlocutory order discharging a notice of lis pendens under the New Jersey lis pendens statute. We hold that we do not.

I.

Plaintiff-appellants Manfred Demenus and Theodore Van Arthos brought suit in the district court for the District of New Jersey against their former real estate investment co-venturers, defendants Herbert Sylvester, Colette Speyer, and Spyco, Inc., alleging that defendants owed a duty to share with them future opportunities to participate in real estate investments.*fn1 Demenus and Van Arthos have further alleged that the defendants breached this duty by purchasing three New Jersey properties (subsequently sold to third parties in return for reconveyance mortgages) without informing them of the investment opportunity. The relief sought by Demenus and Van Arthos includes the creation of a constructive trust giving them partial ownership of these three properties, money damages and injunctive relief. Demenus and Van Arthos have appealed from the district court's interlocutory order discharging a notice of lis pendens that they had placed on the reconveyance mortgages.

In New Jersey, a plaintiff who seeks to affect the title to real estate or a lien thereon may file a notice of lis pendens with the title registrar. N.J.S.A. § 2A:15-6 (West 1987). The filing acts as constructive notice to any would-be purchaser of the property such that the purchaser takes the property subject to the outcome of the litigation. N.J.S.A. § 2A:15-7 (West 1987); Wendy's of South Jersey, Inc. v. Blanchard Management Corp., 170 N.J.Super. 491, 496, 406 A.2d 1337, 1339 (Ch. Div. 1979). After a party files a notice of lis pendens, one who has interest in property subject to the notice may (with an exception not relevant here) move "for a determination as to whether there is a probability that final judgment will be entered in favor of the plaintiff sufficient to justify the filing or continuation of the notice of lis pendens." N.J.S.A. § 2A:15-7(b).

Relying upon the leading New Jersey case construing section 15-7(b), the district court held that in deciding whether a notice of lis pendens should be discharged, it must "'weigh the strengths of plaintiffs' case against the detriment imposed on defendant'" by reason of the filing of the notice of lis pendens. Dist. Ct. Op. at 4 (Oct. 31, 1988) (quoting Fravega v. Security Savings & Loan Association, 192 N.J. Super. 213, 219, 469 A.2d 531, 534 (Ch. Div. 1983)). In this appeal, plaintiff-appellants contend that the district court erred in holding that they failed to demonstrate probable success on the merits of their claim that, through the imposition of a constructive trust, they were part owners of the properties that defendants had purchased in contravention of a duty to share the purchase opportunity with them. The threshold issue, however, is whether we have appellate jurisdiction over the district court's order discharging the notice of lis pendens.

II.

A.

Title 28 U.S.C. § 1291 (1982) provides that courts of appeals may review only "final" decisions of the district court. A party generally may not take an appeal under § 1291 until there has been a decision by the district court that "'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" Van Cauwenberghe v. Biard, 486 U.S. 517, 108 S. Ct. 1945, 1949, 100 L. Ed. 2d 517 (1988) (citation omitted).

Because the district court's order is clearly not the final one in this litigation (the constructive trust, injunctive and money claims remain outstanding), appellants rely on the collateral order exception to the finality requirement. An order is appealable under the collateral order doctrine only if each of three conditions: it must (1) 'conclusively determine the disputed question,' (2) 'resolve an important issue completely separate from the merits of the action,' and (3) 'be effectively unreviewable on appeal from a final judgment.'" Id. (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 57 L. Ed. 2d 351, 98 S. Ct. 2454 (1978)).

The Supreme Court in Van Cauwenberghe elaborated on the methodology for determining whether an interlocutory order meets the "separate from the merits" requirement of the collateral order doctrine. Van Cauwenberghe held that an order denying a motion to dismiss on forum non conveniens grounds was not a collateral order because "the question of the convenience of the forum is not completely separate from the merits of the action.'" Id. at 1952 (quoting Coopers & Lybrand, 437 U.S. at 468). The Court examined the issues that arise in forum non conveniens determinations and held that these issues "will substantially overlap factual and legal issues of the underlying dispute, making such determinations unsuited for immediate appeal as of right under § 1291." Id. at 1953. The Court noted, for example, that since the issues that arise in a forum non conveniens suit include the relative ease of access to sources of proof and the availability of witnesses, the district court "must scrutinize the substance of the dispute between the parties to evaluate what proof is ...


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