Oak Hill Realty Trust v. Reed

STATE OF MAINE SUPERIOR COURT YORK, ss. CIVIL ACTION DOCKET NO. RE-05-020 v , 7 '

-3 i,' -' w

OAK HILL REALTY TRUST,

Plaintiff v. ORDER

DONALD E. REED,

Defendant v.

ROBERT NADEAU,

Third-Party Defendant

This case comes before the Court on Defendants Donald and Lorraine Reed's Motion to Dismiss and Motion to Strike Language from Plaintiff Oak Reality Trust's Complaint; and T h r d Party Defendant Robert Nadeau's Motion to Dismiss the T h r d Party Complaint.

FACTUAL BACKGROUND

On August 10, 2004, the Reeds entered into a purchase and sale agreement with Oak Hill Reality Trust (Oak Hill), represented by Attorney Nadeau, for the purchase of Lot 13 on the Well's Assessor's Map. The agreement includes a promise by the seller to complete certain improvements to the structure of a house. The agreement also indicates that the lot is 2.5 +/- acres. It refers to the warranty deed for a complete legal description of the lot. However, the warranty deed indicates that the size of the lot is l o + / - acres. At the closing, Attorney Nadeau issued a title insurance policy of $150,000 on behalf of Lawyers' Title Insurance Company for the real estate conveyed by the warranty deed.' During that time, the complaint alleges that the Reeds were aware of Oak Hill's plans to subdivide and sell the remaining 7.51/ - acres. After the closing and the recording of the deed, it came to Attorney Nadeau's attention that a mistake had been made in the warranty deed regarding the size of the lot. To remedy the mistake, Attorney Nadeau unilaterally recorded a corrective warranty deed representing the size of the lot to be exactly 2.33 acres2 He also corrected the insurance policy.

On February 25, 2005, Oak Hill filed a four-count Complaint seelung injunctive relief (Count I), declaratory judgment (Count 11), slander of title (Count III), and interference with economic relations (Count IV). The Reeds have moved for dismissal of the Complaint in its entirety. At the same time, they moved to strike paragraphs 14-18 from Oak Hill's Complaint.

On March 8, 2005, the Reeds filed a Third Party Complaint against Attorney Nadeau, which they supplemented with an Amended Third Party Complaint on March 29,2005. The Amended Third Party Complaint seeks relief for negligence, slander of title and tortious interference with a prospective economic advantage. Attorney Nadeau has moved for dismissal of the Reeds Third Party Complaint in its entirety.

I. THE REED'S MOTION TO DISMISS

The Reeds argue that Oak Hill's complaint should be dismissed on two grounds. First, the Declaratory Judgment Act is not the appropriate remedy for

' At the closing, the Reeds, while represented by coulisel up until that point, asked their attorney not to accompany them to the closing to avoid additional legal fees.

The corrective deed was not delivered to the Reeds. reformation of a deed. Second, pursuant to M.R. Civ. P. 19, Oak Hill failed to join persons needed for just adjudication; i.e., the Trustees of Oak Hill Realty Trust.

At oral argument, Oak Hill conceded that instead of s e e h i ~ ga declaratory judgment, the appropriate action is reformation of the deed. Accordingly, Oak Hill petitioned the Court to anlend its Complaint to substitute a claim for reformation of the deed for the declaratory judgment action, and to join the Trustees of the Oak Hill Realty Trust pursuant to M.R. Civ. P. 19.

The Court grants Oak Hill's motion to amend its Complaint pursuant to M.R. Civ. P. 15(a). Unless Oak Hill amends the Complaint within 30 days of this order, the Complaint will be dismissed. 11. THE REEDS' MOTION TO STRIKE BASED ON M.R. Evid. 408(a).

The Reeds motion to strike is based on paragraphs in the complaint purporting to disclose an offer to compromise. Pursuant to M.R. Civ. P. 12(f), "the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Notably, t h s rule does not state that evidence that could be deemed inadmissible at trial may be stricken at this early stage of litigation.

Maine Rule of Evidence 408(a) "provides that evidence associated with the compromise of a claim is not admissible to prove liability. . . . This rule of exclusion pertains to proof of liability, or the validity or amount of a claim, but does not exclude evidence offered for other purposes." Union Riuer Associates v. Budman, 2004 ME 48, q[ 18,850 A.2d 334, 340.

The Reeds argue that paragraphs 14-18 reveal information regarding offers to compromise and therefore should be stricken from the record. In reviewing these paragraphs, it is unclear whether the statements are offers to compromise this claim. However, the purpose of Rule 408 is to keep certain prejudicial evidence from the jurylfact-finder. If it becomes clear that the evidence Oak Hill seelcs to introduce at trial is an offer to compromise, the Reeds may appropriately file a motion in limine.

The Reed's Motion to Strike is DENIED. 111. ATTORNEY NADEAU'S MOTION TO DISMISS

Attorney Nadeau argues that the claim for negligence should be dismissed because as counsel for Oak Hill, he did not owe a duty to the Reeds in the real estate transaction. Attorney Nadeau also argues that the claim for tortious interference with a prospective economic advantage should be dismissed because he was merely an agent acting at the direction of his disclosed

principle, Lawyers' Title Insurance Company. - .

A motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint. Plirt~ptonv. Gerrnrd, 668 A.2d 882, 885 (Me. 1995). Dismissal for failure to state a claim is appropriate only where it appears beyond doubt that the plaintiff is entitled to no relief under any set of facts which he might prove in support of his claim. Dlltil v. Bt~rns,674 A.2d 910, 911 (Me. 1996). 1. Negligence

For a cause of action for negligence to withstand a motion to dismiss, the plaintiff must establish that the defendant owed a legal duty to the plaintiff, Rowe v. Bennett, 514 A.2d 802,804 (Me. 1986), and that the breach of that duty resulted in harm. Whether a party owes a duty of care is a question of law to be determined by the Court. Fish v.Pnul, 574 A.2d 1365, 1366 (Me. 1990). Although the Law Court has recognized that an attorney may owe a duty to a non-client, the facts alleged in the complaint must give rise to a duty or an attorney-client relationship. Gerber v. Peters, 584 A.2d 605, 607 (Me. 1990).

In this case, the Reeds contend that because Attorney Nadeau drafted the warranty deed involved in purchasing real estate from Oak Hill, he provided legal representation to the Reeds in the transaction. The fact that pro se clients engage in negotiations with an opposing attorney does not alone establish a duty or an attorney-client relationship with the opposing attorney. If the Reeds had alleged that Attorney Nadeau made representations to the Reeds to the effect that he was representing them in a legal capacity, a duty may very well exist. The Reeds are not alleging that he did so in this case.3

Accordingly, Attorney Nadeau's motion to dismiss the negligence claim is

GRANTED.

2. Slander of Title

The tort of slander of title protects a person's property interest against words or conduct of another that bring the validity of that interest into question.

C O ~ ~ ~ Lv.L Webber, I Z A.2d 405, 409 (~Z/le.1996). The elements of slander of title ~ ~ D ~ L684

are "(1)a publication of a slanderous statement disparaging [a] claimant's title; (2) that was false; (3) made with malice or with reckless disregard of its falsity; and (4) that caused actual or special damages." Id.

The Reeds also appear to argue that the harm they have suffered is the onset of this laws~litby Attorney Nadeau. This is not the kind of harm envisioned by a negligence action. In regards to what Attorney Nadeau argues is a scrivener's mistake, not only have the Iieeds not suffered harm at the hands of attorney Nadeau, they have benefited by becoming putative owners of the property.

In the present case, the Reeds' Complaint alleges that by recording the corrective warranty deed, which contained a false legal description of the property sold, Attorney Nadeau maliciously placed on cloud on the Reeds' title. Although the Complaint is silent on damages, the Court can infer that because of the cloud on their title, the Reeds are unable to sell the Property at full market value. Accordingly, the Reeds have asserted the bare minimum to establish a claim of slander of title.

The motion to dismiss the claim of slander of title is DENIED.

3. Tortious Interference with a Prospective Economic Advantage

Tortious interference with a prospective economic advantage requires a plaintiff to prove: (1) that a valid contract or prospective economic advantage existed; (2) that the defendant interfered with that contract or advantage through fraud or intimidation; and (3) that such interference proximately caused

2002 ME 98, damages. Rtltlnlzd v. M~rlle~z, 13, 798 A.2d 1104, 1110.

The Reeds assert they had a contractual relationship with Lawyers' Title Insurance Company to purcl~asetitle insurance. They further assert that Attorney Nadeau, as an agent for the ccimpany, intended to "bully and

intimidate" them by preparing the el~dorsemei~t to the original title insurance

policy, and that the interference with the policy caused the title insurer to refuse ~overage.~

Again, the Reeds have asserted the bare minimum to establish a claim for tortious .interference with a prospective economic advantage. The motion to dismiss this claim is DENIED.

Wowever, the Reeds stnte later in the Complaint that Lawyers' Title Insurance Company is still their insurance carrier.

DATE: ld/7i,k2r / Court J L I S ~ < C ~S~iperior ,

Patrick Bedard, Esq. - PL James L. Audiffred, Esq. - DEFS. DONALD E. REED & L O R M I N E 2 . REED Robert M. A. Nadeau, Esq. - THIRD-PARTY DEFENDANTS ROBERT M. A. NADEAU & ASSOCIATES & ROBERT M. A. NADEAU

STATE OF At-41NE SIJPERIOR COURT CIVIL ACTION YORK, ss. DOCKET NO. RE-05-020 -. 'I , .. I ?

OAK HILI, REAT,TY TRT-'ST,

Plaintiff

v. ORDER

DONALD E. REED, et al.,

Defendants

This case comes before the Court on cross Motions for Summary Judgment.

Following hearing, the Plaintiff's Motion for Summary Judgment is Granted and

Defendants' Motion for Summary Judgment is Denicd.

UNDISPUTED FACTS

On August 10, 2004, Donald and Lorraine Reed (the "Reeds") entered into a

purchase and sale agreement with Oak I-Iill Reality Trust ("Oak Hill") for the purchase of Lot 13 on the Well's Assessor's Map. Thc purchase and sale agreement indicates that the purchased lot is 2.5 +/- acrcs.' It refers to a warranty deed for a complete legal description of the lot. Howcver, the wclrranty deed indicates that the size of the lot is 10+/ - acres.

At the closing, the Scller's attorney issued a tjtle insurance policy of $150,000 on behalf of Lawyers' Title Insurance Coinpany for tlie real estate conveyed by the warranty deed.' The complaint alleges tliat the Reeds were aware of Oak Hill's plans

to sl~bdivideand sell the remaining 7.5+,/- acres. After the closing and the recording of -- - P

1 - I he purchase and sale agreement also includes a promise by the seller to complete certain improvements to the structure of a house. 2 At the closing, the Reeds, while represented by counsel u p until that point, asked their attorney not to accompany them to the closing to avoid additional legal fees.

the deed, Oak Hill's attorney realized that a mistake had been made in the warranty

deed regarding the size of the lot. To remedy the mistake, Oak Hill's attorney

unilaterally recorded a corrective warranty deed representing the size of the lot to be

exactly 2,33 acres."

At hearing, Mr. Reed admitted that the negolialions leading up to the purchase

of the property from Oak Hill concerned the purchase of 2.5 I / - acres. (SMF qI 12). Mr.

Reed told friends he was going to receive 2.5+/- acres but he received 10 acres instead.

(SMF 34). A h . Reed also admits that Oak Hill's attorney made a n error in the

preparation of the deed. (SNIF ¶ 36).

DISCUSSION

Oak Hill argues that because the deed contains a mutual mistake in terms of the

number of acres to be conveyed to Mr. Reed, it should be reformed. In response, the

Reeds argue that regardless of whether there was a mistake made in the drafting of the

deed, it was delivered to and accepted by them. Therefore, they argue that reformation

is inappropriate.

Reformation is an equitable remedy by which an instrument may be corrected when a mutual mistake is discovered so as to reflect the real intention of the parties. Jordgn u. Shea, 2002 ME 36, ¶ 18, 791 A.2d 116, 122. A mistake of fact is said to exist when some fact that really exists is unknown, or some nonexistent fact is believed to

exist. M O C L v. O ~ Z 1998 ME 31, q[ 10; 707 A.2d 74, 76. A mutual mistake of fact ~ ~MOLLL~OM,

must be shown by clear and convlncjng evidence. Id.

In Mol~lton,the Plaintiff conveyed properly to his sons "so that the nursing home wouldn't get it." Although the Plaintiff understood that he would retain a life estate, there was no evidence that the sons either understood or agreed to this arrangement.

3 The corrective deed was not delivered to the Reeds.

the mol-ivc Ivr Ll~et r a n s f e r , t h e r e was 110 ml.rtrlal u n c l e r - s t a n d i n g c o n c e r - n i n g t h e d e t a i l s

of the t r a n s i e ~ . ; the f a c t t h a t Plail- tiff il:!e!lcled to r ~ l ~!ii ia, life estate. l ' l ~ e~nistakew a s ,I ~ > l . , . r r . I r l ' . 1 ' I' 1 T I I ~ i d i_iffecii.71 jl~s~ - L ~ ~ ~ ; c ) I ~ c I ! I I !ransfe!-: of ]a\'\;;y1.t. I-lalnrlrr r l - ! ! s i . ! ! ~ ~ ~ ~ ~ r sI ii o ~ l~?);al c)I~~~.! I j(1,

In ctmtrast, h e r e , all p a r t i e s ~ l i l d e r s t o o diii:;t t h e c o n v e y a n c e or' land fr~1-11O a k H i l l i-n the

R e e d s i n v o l v e d b e t w e e n 2 and 3 a c r e s . ! 'l'hc p u r c h a s e a n d s a l e a g r e e m e n t s t a t e s a s

i , m o r e impel-tailtly, Mr. R e e d i~dmitsa s m t r c h . I n l i g h t of l-his e v i d e n c e , t h e m ~ ~ c l and

Cotst fi!,ds tIl.;lt both pal-t!es negc3tiated i?:!?da g r e e d to a cnnveymnc.r3 of h e h ~ r ( ~ c2. 1a~n d 3

acres. As such, t h e d e e d c o n t a i n s a n i u l ~ r a lm i s t a l t e . lk c o n v e y s i0 a c r e s i n s t e a d o f the

b a r g a i ~ i ~f od r 2 to 3 a c r e s . 'To a l l o ~ l vthe Reeds to r e t a i n 10 a c r e s d u e to a n error in the

d r a f t i n g of t h e d e e d w o r ~ l dbe an i n j u s t i c e .

O a k 1-1111 R e a l t y 'l'rust's Motion !:.r S u m m a r y Judgi:lel.tt 1s GRANTED. D e f e n d a n t s ' M o t i o n f o r Summclr:,/ J u d g m e n t is DENIED. The w a r r a n t y d e e d c a n t a i n s a l n u t u a l m ~ s t c l k t r arid m u s t b e r e f o r m e d t<i r e f l e c t t h e 11-1tentic)r.tof the pai-tles a t t l ~ etiiiii o f the t r a n s 2 i t ; o n to ccilivey 2.5 I / - a c r e s G [ l a n d to the R c e d s . C l o u ~ T~I tis still p e n d i n g . , '* I' ! / ,/' 1 ' .' /,,/j / ' :. , , I -' i i ,/ .' ';. ! , [.-?-+I-.,-..... \) . . ..-. . . /, < / i t !.j i f i i , .j DATE: ,'>, m I / ,., . "T.:' -. -- -- i, ....,,,.. ; I '.-) <. - '' 251- .,-...-'.I

i C . ,?rtlTi;r i ; r c ~ l n i $ ~ l i i I Justice, S u ~ - > e n o r C o u r t P a t r i c k R e d a r d , E s q . - PLS J a m e s L. A u d i f f r e d , E s q . - DEFS

4 Mr. Reed argues that this case is ~ o ~ ~ i : . t : l l ~ < I lIr!/nll zt. Br.~.!jer, 665 i? 'Zd 1020 (htle. '1995). T l o ~ v e v e r .LIlr 131yir1~c ; ~ s eis dis11rlg~~islii~ble. 111 li/!jil/~, [lie p;irlie?s cnlered into a purchiise a n d sale agreement fiir i-eal estate i i i i d e i . tlie iiiiiiiially ii-!ii;til<i:ii belief ~ l i a~cci-taiii t icii w a s to be inciiidrd ii-I t;ie s<~le.lielv\~eer~ Ole tir-ne [he p u r c l ~ ~ i sa11il e s i ~ l e'~?i.,?emenl\,\/as e x c c ~ ted c and tile closing tool< piace, [lie parlies \.\/el-ei ~ i f o r ~ u e[!la1 d Ille particular lot ];\/as !lei incl!cdec! i ~ l!ie ? deed. I\!evesllieless, (lie 1)nr.lius wer-~i f o r ~ v ~ ~~ 1 s7 di i l l[-he (:losing. 'I'lre L,aw <:our[ lield ~ i ~ ;I~ecause l: [lie par:-ies were aware of thc omitkeri 101 a1 the time of closirig h ~ l proceeded t to close any\\I,iir, the deed c ~ u l dn o t be reformed OII the theory of mutua! miskake. 111 the case at IIar, the liarties i.\,ei.i: operating intie el. a inatilnl illistake of filct at the time of the closit.lg. '1'11ro~~gh0ut the entire negoti:!\ions, incluilir~g i-he closing, hot11 parties believed tile coilvey,qnce illvolved 2.5-bj- acres. 1 his case pl-c.sc11ls Lhe lact~iiilsettill8 10 \.vluclx the /,'t.yllil c o u r t 7 >

intlicaI-ed tlle remed j~ of reformilticm propc~.!yi)i: al7pl1eii.