We granted certiorari in this case to consider whether the Court of Appeals erred in holding that a right of first refusal to invest in development of real estate through a limited liability company is an interest sufficient for the filing of a lis pendens. See Meadow Springs, LLC v. IH Riverdale, LLC , 296 Ga. App. 551 675 SE2d 290 2009. Under the circumstances of this case, we conclude that the Court of Appeals erred. 1. The agreements and transactions underlying the parties’ dispute in this case are complex and are explained in relevant detail in the Court of Appeals’ opinion in this case, as well as in its prior case involving these and other parties. Meadow Springs , 296 Ga. App. at 552-553; IH Riverdale, LLC v. McChesney Capital Partners, LLC , 280 Ga. App. 9, 9-11 633 SE2d 382 2006. For purposes of our decision, the relevant agreement is the amended operating agreement of Riverdale Capital Investments, LLC, a company formed with McChesney Capital Partners, LLC, and IH Riverdale, LLC, as its two members. Section 3.01 of the operating agreement provided that Riverdale Capital Investments was formed for the business of acquiring and developing two apartment complexes on separate tracts of land, both operating under the name of “Meadow Springs Apartments,” with the parties referring to the apartments to be built first as “Phase I” and those to be built second as “Phase II.” Section 3.01 also provided that the Phase II development was “referred to in Section 5.11 e hereof.” Section 5.11 e, in turn, provided that McChesney Capital Partners, which had an option to purchase the land for the Phase II development, would give IH Riverdale “the first right of refusal to invest” in the Phase II development. The agreement further provided that “if IH elects to invest, IH shall have the right to invest from twenty-five percent up to fifty percent of the capital and receive its proportionate share of profits and losses,” and that “in the event that Riverdale Capital Investments elects to sell the Option or ‘flip’ the Second Phase land for profit,” IH Riverdale would be entitled to 40 percent of the profit. The Phase II development is now owned by Meadow Springs, LLC.
In 2003, appellees IH Riverdale and Geoffrey Nolan, a member of IH Riverdale, filed a complaint against appellant Meadow Springs and others, alleging that certain of IH Riverdale’s rights regarding the Phase II development had been violated. More specifically, the complaint alleged that the defendants had deprived IH Riverdale of its right to invest in the Phase II development and sought specific performance of an alleged option to purchase 50 of the land involved in the Phase II development and the imposition of a constructive trust on the land and profits of that development. After filing that lawsuit, IH Riverdale filed a notice of lis pendens stating that the relief it was seeking involved the Phase II property. IH Riverdale delivered a copy of the lis pendens to Regions Bank, which then declined to fund an approved $9.7 million construction loan. As explained in the two Court of Appeals’ opinions, this initial litigation between the parties is ongoing.
