Wilton v. Mountain Wood Homeowners Ass'n
(1993) 18 Cal.App.4th 565
Stephen R. Gianelli for Cross-complainant and Appellant.
Fong & Fong and Michael E. Scholtes for Cross-defendant and Respondent.
Mark A. Wilton appeals from a judgment of dismissal after the demurrer
of respondent Mountain Wood Homeowners Association, Inc., to his
cross-complaint for slander of title was sustained without leave to
amend. The trial court ruled that the publication of respondent's liens
on appellant's property was protected by the litigation privilege under
Civil Code section 47, subdivision (b). We agree and hold that the
litigation privilege protects the publication of assessment liens by
condominium homeowners associations.
Appellant's cross-complaint alleges the following facts. Appellant
acquired title on May 1, 1984, to a condominium unit in Oakland.
Respondent agreed to excuse appellant from paying homeowners' dues and
assessments in exchange for appellant's services in maintaining and
repairing the common areas near his unit. Appellant performed these
services and was never billed for homeowners' dues. However, despite the
performance of these [18 Cal.App.4th 568] services, respondent
filed a total of $12,600 in fraudulent assessment liens against
appellant's unit. The existence of these liens was published to a number
of parties, including the subsequent purchaser of the unit, Timothy
Jones, and the selling broker and the title insurer of the unit.
Respondent either published the liens maliciously with the intent to
injure appellant or published them recklessly.
On or about March 24, 1989, appellant opened escrow for the sale of the
unit to Mr. Jones. Jones agreed to purchase the property subject to the
liens, provided he could obtain title insurance. He also agreed that if
respondent enforced the liens after the purchase, he would allow
appellant to oppose the liens in court. Jones promised not to bring suit
over the liens against appellant, the broker or the title insurer.
However, following the purchase, Jones sued the insurance company, which
cross-claimed against appellant. As a result, appellant filed a
cross-complaint against respondent because the false liens subjected him
to liability and attorney fees.
[1a] This case presents what appears to be an issue of first impression:
whether the publication of an assessment lien by a condominium
homeowners association is absolutely privileged under Civil Code section
47, subdivision (b). This statute states that "A privileged publication
or broadcast is one made: ... [i]n any ... judicial proceeding ...."
Condominium homeowners associations must assess fees on the individual
owners in order to maintain the complexes. (Civ. Code, § 1366, subd.
(a).) When an owner defaults, the association may file a lien on the
owner's interest for the amount of the fees. (Civ. Code, § 1367, subd.
(b).) If the default is not corrected, the association may pursue any
remedy permitted by law, including judicial foreclosure or foreclosure
by private power of sale. (Civ. Code, § 1367, subd. (d).)
The trial court ruled that the litigation privilege protected
respondent's publication of assessment liens from appellant's action for
slander or disparagement of title.  Disparagement of title occurs
when a person " 'without a privilege to do so, publishes matter which is
untrue and disparaging to another's property ... under such
circumstances as would lead a reasonable man to foresee that the conduct
of a third person as purchaser or lessee thereof might be determined
thereby ....' " (Gudger v. Manton (1943) 21 Cal.2d 537, 541 [134 P.2d 217], disapproved on other grounds in Albertson v. Raboff (1956) 46 Cal.2d 375 [295 P.2d 405].) The publisher is liable for the pecuniary loss to the owner as a result of the publication. (Ibid.) [18 Cal.App.4th 569]
[3a] If the publication is made by a party to a judicial proceeding,
that publication is absolutely privileged and cannot be the subject of a
disparagement suit. (Silberg v. Anderson (1990) 50 Cal.3d 205,
212 [266 Cal.Rptr. 638, 786 P.2d 365].) To be protected by this
privilege, the statements must be "(1) made in judicial or
quasi-judicial proceedings; (2) by litigants or other participants
authorized by law; (3) to achieve the objects of the litigation; and (4)
... have some connection or logical relation to the action." (Ibid.)
The requirement that statements be made "in" judicial proceedings does
not limit the privilege to the pleadings and the evidence offered in
court. (Albertson v. Raboff, supra, 46 Cal.2d at p. 381.) A publication
is privileged when it is "required or permitted by law in the course of a
judicial proceeding to achieve the objects of the litigation, even
though the publication is made outside the courtroom and no function of
the court or its officers is invoked." (Id. at pp. 380-381.) fn. 1
Thus, publications made "in the course of a judicial proceeding" can
include communications made prior to the commencement of a lawsuit.
(See, e.g., Rest.2d Torts § 586 and com. e [privilege extends to
preliminary communications]; Lerette v. Dean Witter Organization, Inc.
(1976) 60 Cal.App.3d 573, 577-578 [131 Cal.Rptr. 592] [pre-litigation demand letter held to be privileged].)
[1b] Frank Pisano & Associates v. Taggart (1972) 29 Cal.App.3d 1,
25 [105 Cal.Rptr. 414], held that the filing of a mechanic's lien is
privileged because the claim of lien is authorized by law and related to
an action to foreclose. Our case is indistinguishable from Pisano. Like
mechanics' liens, homeowners' assessment liens are permitted by law to
achieve the object of litigation. Both types of liens must be filed as a
first step in foreclosure actions to remedy defaults, and are thus
closely related to judicial proceedings. We therefore conclude that the
publication of homeowners' assessment liens is absolutely privileged
under Civil Code section 47, subdivision (b).
Appellant argues that homeowners' assessment liens should not be
privileged because such liens are not necessarily connected to a
judicial proceeding. Unlike mechanics' liens, these liens may be
enforced either by judicial [18 Cal.App.4th 570] foreclosure or
by private power of sale. (Civ. Code, § 1367, subd. (d).) Appellant
reasons that assessment liens should be treated like deeds of trust,
which also may be foreclosed judicially or by private sale (Civ. Code, §
2924 et seq.; Code Civ. Proc., § 725, subd. (a)), and which, if false,
can support a claim for disparagement of title (Forte v. Nolfi (1972) 25 Cal.App.3d 656, 686 [102 Cal.Rptr. 455]).
However, the mere existence of an alternative to litigation does not
necessarily eliminate the litigation privilege. (See Lerette v. Dean
Witter Organization, Inc., supra, 60 Cal.App.3d at pp. 575, 580-581
[demand letter threatening litigation but urging settlement is
privileged].) Moreover, deeds of trust are significantly different from
homeowners' assessment liens. Deeds of trust are filed with the owner's
consent and, at least initially, their purpose is to facilitate credit
rather than to collect debts. Although deeds of trust may be foreclosed
judicially after a default, they are not at their inception related to
judicial proceedings. In contrast to deeds of trust, assessment liens
are imposed unilaterally, only after a default, and only to initiate the
foreclosure process. They are more analogous to mechanics' liens than
deeds of trust in their purpose and effect. fn. 2
We further conclude that the litigation privilege attaches to the
publication of an assessment lien even if the homeowners association has
not decided, at the point the lien is filed, that it will pursue a
judicial foreclosure, and even if the lien is ultimately enforced by a
private sale. To conclude otherwise would make the privilege hinge upon
factual inquiries into which remedy associations intended to use, and
might lead associations to resort to judicial foreclosure in every case
simply to avoid the risk of tort liability. There is no reason to flood
the courts with such cases. The Legislature has given homeowners
associations a remedy of private sale, and we must avoid deterring the
use of that remedy while at the same time protecting associations'
access to the courts for purposes of judicial foreclosures. [3b] The
litigation privilege is created to afford "the utmost freedom of access
to the courts without fear of being harassed subsequently by derivative
tort actions." (Silberg v. Anderson, supra, 50 Cal.3d at p. 213.) [1c]
Thus, we would not reach a different result even if, as appellant
alleged below in opposition to the demurrer, respondent informed a third
party that it intended to enforce the lien through a private sale.
 Appellant also contends that the privilege should not apply because
respondent's publication was intentional and malicious. He cites Earp v.[18 Cal.App.4th 571] Nobmann (1981) 122 Cal.App.3d 270
[175 Cal.Rptr. 767], for the proposition that this kind of
disparagement is an exception to the privilege. However, Silberg v.
Anderson, supra, 50 Cal.3d at page 216, held that the absolute privilege
extends to publications in judicial proceedings regardless of whether
malice or intent to harm was involved. The court disapproved Earp and
other cases which sought to limit the privilege to publications which
serve the "interests of justice." (Id., at pp. 216-219.) Therefore, this
contention is meritless.
We do not share appellant's concern that our decision will prompt
condominium associations to file a flood of fraudulent assessment liens
against their neighbors, but should that occur the Legislature is free
to limit the litigation privilege for such liens as it has recently done
with respect to lis pendens (see fn. 1, ante).
 We note finally that our holding does not prevent those who are
subject to homeowners' assessment liens from seeking declaratory relief
or filing quiet title actions to contest the validity of liens that are
The judgment of dismissal is affirmed. Costs to respondent.
Anderson, P. J., and Reardon, J., concurred.
Albertson's holding that lis pendens are absolutely privileged has been
partially abrogated by a recent amendment to Civil Code section 47,
subdivision (b), which now provides that lis pendens are protected only
when the party using this remedy has filed an action affecting title or
possession to the property with a court of competent jurisdiction. This
amendment may have been prompted by concerns that lis pendens were often
filed by parties without any legitimate claim. (Cf. 3 Witkin, Cal.
Procedure (3d ed. 1985) Actions, § 272, p. 299 [noting that lis pendens
were "easily invoked with little hazard to cloud titles and force
settlement of groundless suits"].) We have not been apprised of any
similar concerns with respect to homeowners assessment liens but, in any
event, the amendment to Civil Code section 47, subdivision (b) does not
detract from the reasoning in Albertson upon which we rely.
We note also that while the prospect of tort liability for forged deeds
of trust does not affect the availability of credit, that prospect
could greatly impair the efficacy of assessment liens.