43 Slander of Title

• Library: Elements of Civil Causes of Action (SCBar) (2015 Ed.)

43 Slander of Title

A. Definition

A cause of action for "slander of title" was first recognized by the South Carolina Court of Appeals in Huff v. Jennings;¹ however, English common law has recognized the action for over 400 years.² Slander of title is a false, malicious statement, whether oral or written, disparaging a person's title to property and causing injury.³ It is a tort action that is almost identical to that of product disparagement, except that it involves disparagement of the quality of property.⁴ It is grounded in the tort of injurious falsehood,⁵ and the terms are often used interchangeably. The action should not be confused with personal defamation. The two differ in at least three ways. In slander of title: proof of special harm is required in all cases; there must be proof of a greater amount of fault than negligence regarding the falsity of the statement; disparagement of property may, in a proper case, be enjoined.⁶There is little case law in South Carolina, but the Huff court referenced the Restatement (Second) of Torts which provides substantial guidance.

Generally, an action may only be maintained by a person who has an estate or interest in the affected property.⁷

B. Elements

The elements of a cause of action for slander of title are:

(1) publication of
(2) a false statement
(3) derogatory to plaintiff's title
(4) with malice
(5) causing special damages
(6) as a result of diminished value in the eyes of third parties.⁸

C. Elements Defined

1. Publication

The concept of publication is developed in the law of defamation. There, a statement must have been communicated to someone other than the plaintiff.⁹ Slander of title must also be published to a third party.¹⁰ The communication may be in writing or oral, or may be implied from conduct.¹¹ The Restatement notes that, like defamation at common law, the injurious statement could be one of fact or opinion. That rule has been changed for defamation, and mere opinion is generally no longer actionable. The Restatement commentary opines that the same rule may be applied to injurious falsehood, but that it remains unclear whether it will.¹²

The burden of proving publication is on the plaintiff.¹³ And, where a defendant cannot be reasonably charged with knowledge that a third person might receive the defamatory material, no publication occurs.¹⁴ A communication, however, to a servant or business associate in the ordinary course of business is generally not actionable.¹⁵ Ordinarily, the question of whether publication has occurred is for the jury.¹⁶ Evidence that slanderous remarks were heard by a third party or that third persons were present and close enough to hear the words spoken is sufficient to create a jury question on the issue of publication even if the third person denies having heard the words.¹⁷

2. A False Statement

A defendant who publishes a false statement harmful to the interests of the plaintiff is subject to liability for the resulting pecuniary loss if the defendant knows the statement is false or acts in reckless disregard of its truth or falsity.¹⁸

In one case,¹⁹ a special referee found a bank published a false statement by filing a mortgage to which one undivided co-owner of the property was not privy. The mortgage was a false statement because it was invalid since that co-owner did not in fact owe the bank a debt. The special referee made those findings at a damages hearing after the bank failed to respond to the complaint and a default judgment was entered. The referee awarded damages and the bank filed a motion for reconsideration and to set aside judgment that was denied. On appeal, the bank argued the mortgage was not false. However, since the bank raised the issue in its motions after damages were awarded and the default judgment had been entered, the issue was not preserved for appellate review. Thus, the case is of uncertain precedent on the issue of the second element, although the appellate court did later say in a discussion of damages that "[r]ecording a mortgage that is a nullity should be considered a false statement derogatory to" a title.

3. The Statement Is Derogatory to the Plaintiff's Title

The publication must have a derogatory impact on the plaintiff.²⁰ A publication is derogatory to the plaintiff's title if it disparages or diminishes the quality, condition, or value of the property, and thus a lien may disparage title as it diminishes the value of the property in the eyes of a third party.²¹ The Restatement defines the term disparagement as a "statement ... understood to cast doubt upon the quality of another's land ... or upon the existence or extent of his property in [it], and.. .the publisher intends the statement to cast the doubt, or ... the recipient's understanding of it as casting the doubt was reasonable."²²The Restatement commentary says common forms of disparagement include express denial of the plaintiff's title and indirect denial of title by the assertion of an inconsistent title.²³

However, it is not necessary for the statement to deny ownership. A statement that casts doubts on the extent of a person's ownership by, for example, asserting an easement or lien on land is disparaging against it. Statements that impair vendibility, such as an assertion that building or land use restrictions impede use of the property, may be considered disparaging.²⁴

A plaintiff does not need to demonstrate a permanent affect on the property, only that a third party viewed the property in a dimmer light, even for a short time.²⁵

4. Malice

The malice requirement may be satisfied by showing the publication was made in reckless or wanton disregard to the rights of another, or without legal justification.²⁶ The allegation of malice is subject to the affirmative defense of good faith.²⁷

A special referee found malice where a bank accepted a joint mortgage on a property from the co-owners and then "recklessly" accepted a singular mortgage on behalf of only one of the owners.²⁸ The special referee made that finding at a damages hearing after the bank failed to respond to the complaint and a default judgment was entered. The referee awarded damages and the bank filed a motion for reconsideration and to set aside judgment that was denied. On appeal, the bank argued malice was not pleaded, however, since the bank raised the issue in its motions after damages were awarded and the default judgment had been entered, the issue was not preserved for appellate review. Thus, the case is of doubtful precedent on the question of malice.²⁹

5. Special Damages

Special damages are pecuniary losses resulting directly and immediately from the effect of conduct of third persons.³⁰ Those losses include impairment of vendibility or value and expenses reasonably necessary to counteract the publication, including litigation.³¹ In Huff, money paid to satisfy a lien was an expense necessary to counteract publication and, therefore, constituted special damages. The Huff decision implies that reasonable mitigation costs will usually be recoverable as special damages.³² Other special damages may include attorney's fees incurred in removing a cloud on title and losses resulting from a postponed or lost sale.³³

The court in Solley v. Navy Federal Credit Union, Inc.,³⁴ discusses Huff and seems to confirm that attorney's fees may be special damages. The Solley court cites the Restatement section on the issue with approval, and the Restatement identifies litigation to remove doubt cast on vendibility or value by disparagement as special damages.³⁵ The court also noted that the majority view requires a party to actually suffer a loss, meaning the party sold the property for less than it was worth, was not be able to sell it at all, or was unable to obtain a loan. The court noted that none of these indicators of actual loss was applicable to the case before it. Nonetheless, since the owner of the property and her attorney contacted the bank that allegedly disparaged her title and the bank would not speak to them, she had no choice but to bring suit and was, therefore, entitled to the cost of the litigation: the filing fee and attorney's fees and costs in bringing the action.

6. Diminished Value in the Eyes of Third Parties

Witness testimony about publication is the easiest way to satisfy the element.³⁶However, under South Carolina defamation law, evidence that slanderous remarks were heard by a third party or that third persons were present and close enough to hear the words spoken is sufficient to create a jury...