Appeals court reversal finds attorney did nothing wrong in required filing

The Missouri Court of Appeals Western District reversed a decision that held a Kansas City attorney liable for having filed an allegedly false document in an underlying real estate case.

Desarae G. Harrah of Harrah Law recorded a lis pendens – stating that there is a pending suit involving a property – in 2022 in connection to a filing she made on behalf of Gerald Mancuso, which alleged that Kyle and Audrey Odermann had breached a contract to sell Mancuso their property.

The Odermanns sued Mancuso, Harrah Law and Harrah personally, requesting that the court declare the notice of lis pendens invalid, as they claimed that Mancuso and Harrah had filed a false document. The Odermanns argued that the underlying case was filed with false and fraudulent intent, which in their view made the filing of the lis pendens illegal under a relatively new state law that makes it a class D felony to file false documents “with the intent to defraud, deceive, harass, alarm, or negatively impact financially.”

The law was enacted in 2018 and was examined by an appellate court for the first time in this case.

The Jackson County Circuit Court issued a judgment granting, in part, the Odermanns’ petition for judicial review and finding that probable cause existed to invalidate the lis pendens. The court ordered Mancuso and Harrah to pay costs of $348.49. The Odermanns have since filed a unilateral satisfaction of the judgment without collecting it.

In the underlying case, the court also ruled in favor of the Odermanns, awarding them $203,631.04 in damages.

While Harrah appealed the fraudulent documents case (initially with Mancuso, who later dismissed his appeal), the Odermanns sought to have the appeal rendered moot because the underlying case had been resolved and the lis pendens could no longer be reinstated. A decision on appeal would have no practical effects, they argued, in part because they had filed satisfaction.

The Court of Appeals disagreed.

“We conclude that the Odermanns, by unilaterally filing a satisfaction of a judgment without collecting it, cannot foreclose an opposing party’s appeal by rendering it moot, on that basis alone,” Judge Janet Sutton wrote in the opinion.

The Odermanns argued that criminal prosecution based on the judgment was unlikely, given the time that had passed. But the three-year statute of limitations had not passed, causing the court to disagree.

Additionally, the Odermanns filed a still-pending malicious prosecution case earlier this year, referencing and attaching the false documents case as an exhibit. Citing State ex rel. McCulloch v. Hoskins, the Court of Appeals held that an appeal from a judgment is not moot if the judgment is being used as a predicate for a separate civil action.

Turning to whether the lis pendens constituted a fraudulent document, the court agreed with Harrah that she was required by state law to file the document when she filed a lawsuit on behalf of Mancuso that could affect the title to the Odermanns’ property. The Odermanns’ argument that the lis pendens was a false or fraudulent document because of its connection to the underlying and allegedly malicious case missed the mark, the court said.

“We hold that where a notice of lis pendens that contains the information required by section 527.260, is filed and has ‘a reasonable relation’ to a civil action pending based on any equitable right, claim or lien affecting or designed to affect real estate, the lis pendens cannot be attacked under section 570.095 as a matter of law because of the requirement in section 527.260 to file such notice, and the resulting absolute privilege attached to the filing,” Sutton wrote.

The Odermanns’ attorney, Robert Drumm of Stranger Creek Advisors, said in a written statement that while the reversal has no bearing on the underlying case or the pending malicious prosecution case, it bodes ill for “future victims of abusive and vexatious real estate litigation.”

“We are disappointed that the court declined to apply the statute on this case, and more disappointed that appellants drove us to the expense of the appeal in the first place, because the Odermanns have already won judgment on the pleadings in the underlying litigation,” Drumm said in the statement.

He plans to bring the case to the attention of the Missouri legislature and propose changes that will make it easier for victims of vexatious property litigation to clear title and rover the cost of doing so.

Jonathan Sternberg, a Kansas City-based appellate lawyer who represented Harrah, said he was positively surprised that the court entered judgment for his client and called the reversal a pro-lawyer decision.

“I started out my oral argument by saying the law cannot be a catch-22,” he said. “You cannot hold attorneys liable for doing things that the law requires them to do,” he said. “Ms. Harrah had a duty, by statute, to file this notice.”

The case is Odermann v. Harrah WD85561.