Background
This case arose from a dispute within a planned community in Deschutes County. Petitioners Calaveras II, LLC, Cottages at Village Park, LLC, Scholls Development, LLC, and Saiid and Bahram Behboodi (collectively, the developers) own 53 individually titled lots subject to a Declaration of Protective Covenants, Conditions and Restrictions (CC&Rs). When the developers began constructing townhouses without obtaining prior design approval from the community’s Architectural Review Committee, Eastside Bend, LLC—which claimed status as the sole declarant of the planned community—sued for injunctive relief to enforce the CC&Rs.
In connection with that lawsuit, Eastside recorded a notice and an amended notice of lis pendens under ORS 93.740 against all 53 lots. The notices stated that the “object or nature of this action is: Enforce lien of Covenants, Conditions and Restrictions on real property and enjoin construction in violation of CC&R[s] lien on real property.” The developers responded by petitioning the trial court under ORS 205.460 to strike the notices as invalid claims of encumbrance. The trial court agreed, found that no CC&R lien existed, and struck the notices. It then awarded $265,000 in statutory damages—$5,000 per lot under ORS 205.470—plus attorney fees and costs. Eastside appealed both the striking of the notices and the per-lot calculation of damages.
The Court’s Holding
The Court of Appeals affirmed on both issues.
Invalid encumbrances (affirmed). Under ORS 93.740(1), a notice of lis pendens is only authorized when underlying litigation involves “title to or any interest in or lien upon real property,” and the notice must include “the object of the suit.” The court held that this requirement means the notice must accurately describe the purpose of the underlying litigation. Because Eastside’s notices stated that the object of the suit was to “enforce [a] lien,” but no CC&R lien existed and Eastside conceded the point, the notices did not include a true “object of the suit.” A recorder who chooses to identify the legal theory underlying a lis pendens must do so accurately. Because the notices failed to comply with ORS 93.740’s authorizing requirements, they were not “valid claims of encumbrance” under ORS 205.450(8)(a) and were properly stricken under ORS 205.460.
Per-lot damages (affirmed). ORS 205.470 imposes a minimum penalty of $5,000 on any person who “knowingly files * * * an invalid claim of encumbrance” on “the owner of the property bound by the claim of encumbrance.” Eastside argued that “property” should be read collectively—yielding a single $5,000 award per encumbrance or per owner. The court disagreed. Drawing on the ordinary meaning of “real property” and the concept of title-based ownership, the court held that “the owner of the property bound by the claim of encumbrance” refers to the owner of each individually titled parcel. Statutory damages are therefore calculated on a per-lot basis—one $5,000 minimum for each title clouded by the invalid encumbrance. The court found this interpretation confirmed by the statute’s legislative history, which repeatedly described the statute’s purpose as clearing “title to property” and deterring the filing of invalid encumbrances by imposing civil penalties proportionate to the harm caused.
The court also rejected Eastside’s ORCP 67 C argument that the $265,000 award violated the notice requirements for relief exceeding what was demanded in the pleadings, finding that petitioners had repeatedly and explicitly requested per-lot damages throughout the proceedings, providing Eastside with reasonable notice and an opportunity to be heard.
Key Takeaways
- A notice of lis pendens under ORS 93.740 must accurately describe “the object of the suit.” If the filer identifies a lien theory in the notice but no lien actually exists, the notice fails to comply with ORS 93.740 and may be stricken as an invalid encumbrance under ORS 205.460.
- Under ORS 205.470, the $5,000 minimum statutory penalty for filing an invalid encumbrance applies on a per-lot, per-title basis; owning multiple lots in a single planned community does not aggregate the exposure into a single penalty.
- ORCP 67 C’s notice requirement for relief exceeding the pleadings is satisfied when the enhanced award was explicitly and repeatedly requested in memoranda and hearings throughout the proceedings, even if the original petition stated a smaller amount.
Why It Matters
For Oregon real estate practitioners, Calaveras II answers two questions that arise whenever lis pendens are used as litigation leverage in planned-community or multi-lot disputes. First, it clarifies that accuracy in describing the “object of the suit” is not a mere technicality—misidentifying the underlying legal theory (claiming “lien” when none exists) makes the notice invalid and exposes the filer to the invalid-encumbrance regime. Declarants, homeowner associations, and others who might assert CC&R-based claims should ensure the stated object of the suit matches what the underlying action actually seeks before recording a lis pendens.
Second, the per-lot damages holding has significant implications for developers and planned-community disputes involving multiple parcels. A single blanket lis pendens on 53 lots that is later found to be invalid generates $265,000 in minimum exposure, not $5,000. Parties considering recording encumbrances against multi-lot developments should treat each lot as a separate unit of potential liability. The decision also reinforces the deterrence function of Oregon’s invalid-encumbrance statutes: the legislature designed them to protect individual title to real property, and the penalty scales accordingly with the number of titles clouded.