Chapter 33 SLANDER OF TITLE

• Jurisdiction: North Carolina

33 SLANDER OF TITLE

A. Definition

Slander of title is an old tort established as early as the sixteenth century that protects the ownership interest of a title holder.¹ It is not an action for libel or slander, but an "action on the case" for special damages.²

Slander of title occurs when someone publishes matter derogatory to title to real property with the malicious intent to injure its owner and which, in fact, does cause injury.³ It concerns interference with a prospect of sale of real property or a proprietary right.⁴

In addition to the common-law tort action, North Carolina has a statute that provides:

No person shall use the privilege of registering notices [under the Real Property Marketable Title Act] for the purpose of asserting false or fictitious claims to real property; and in any action relating thereto if the court shall find that any person has intentionally registered a false of fictitious claim, the court may award to the prevailing party all costs incurred by him in such action, including a reasonable attorney's fee, and in addition thereto may award to the prevailing party treble the damages that he may have sustained as a result of the registration of such notice of claim.⁵

B. Elements

The elements of slander of title are:

(1) Uttering of slanderous words in regard to the title of someone's property,
(2) Falsity of the words,
(3) Malice, and
(4) Special damages.⁶

C. Elements Defined

1. Uttering of Slanderous Words in Regard to Title of Someone's Property

Whether the party claiming slander of title must own the property is unclear. The North Carolina Pattern Jury Instructions identify ownership as an element of the action.⁷ A South Carolina opinion said that an action may only be maintained by a person who has an estate or interest in the affected property.⁸ In any event, the statements made must be about title to property.⁹

Words sufficient to support an action for slander of title are generally those considered derogatory to the title to real property.¹⁰ There are very few cases in North Carolina concerning slander of title, so the exact meaning of "slander" in the context of the tort action is undeveloped. The Restatement of Torts provides some assistance. It uses the term "disparagement" and defines it 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."¹¹ The 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.¹² 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.¹³

The communication may be in writing or oral, or may be implied from conduct.¹⁴ 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 an injurious falsehood, slander of title, but that it remains unclear whether it will.¹⁵ While North Carolina courts have not specifically addressed the need for the slanderous words to be "published" to a third party,¹⁶ that requirement is implicit in the element of damages. The Restatement requires slander of title to be published to a third party.¹⁷

2. Falsity of the Words

The words at issue must be false. For example, in Mecimore v. Cothren,¹⁸ the plaintiffs brought an action to establish an easement across the defendants' property. The defendants counterclaimed, alleging slander of title. They contended that because the plaintiffs filed a complaint and notice of lis pendens at the time defendants were negotiating a sale of their property, they lost the sale. The court found that the plaintiffs provided sufficient evidence tending to show they acquired an easement by prescription over the defendants' property and, therefore, their action against the defendants did not constitute slander of title.¹⁹

In a federal district court case,²⁰ a trustee's deed was recorded that transferred title in plaintiff's property, stating that after notice was provided to plaintiff of a foreclosure sale, the grantor proceeded to sell the property at foreclosure and conveyed it to a third party. However, subsequent to the transfer of title, a state court determined the plaintiff had, in fact, received no notice of the foreclosure sale. That court vacated the trustee's deed. The federal court said that during the time the trustee's deed was in effect and filed with the register of deeds, it falsely stated that notice of foreclosure had been provided and that title properly had been conveyed, when allegedly it had not. Thus, a false statement about the title of the plaintiff's property had been made.

3. Malice

The burden of proving malice is on the plaintiff.²¹ Malice is an essential element of slander of title.²² Malice is established by showing the statement about title was not made in good faith, was made without probable cause for the defendant's belief,²³ or the defendant could not have honestly entertained a belief in the statement.²⁴ Where it was shown a plaintiff filed a lis pendens on the wrong lot, did so to stop the sale of the property, and that defendant suffered damages as a result, the allegations were insufficient to support an action for slander of title.²⁵ In Allen v. Duvall,²⁶ the court said that for a slander of title action to succeed, the plaintiff must prove the defendant uttered the false words maliciously. In other words, there was no probable cause for the defendant's belief. If, said the court, the defendant made the assertion in good faith, no action would lie.²⁷ "A party has the right," said the North Carolina Supreme Court in an early case, "to assert in good faith his own title, although he may be mistaken as to its validity."²⁸ Malice may be implied where the plaintiff shows facts and circumstances that warrant such an inference.²⁹

4. Special Damages

Special damages are pecuniary losses resulting directly and immediately from the effect of conduct of third persons.³⁰ The plaintiff must show that the defendant's words resulted in some special pecuniary loss in order to succeed in an action for slander of title.³¹ It is not clear whether the injured party must identify a particular purchaser who, as a result of the slander, was prevented from purchasing the property.³² However, in an early case, the North Carolina Supreme Court said:

[It is generally] not sufficient to show that the complaining party intended to sell any person who might buy; he should allege and prove that he was in treaty to sell to some particular person, or at least that some one was prevented—deterred—by such false statement or misrepresentation from offering to buy. It is not sufficient to show that the community regarded the land as less valuable; proof must be made that actual damage was sustained.³³

In Selby v. Taylor,³⁴ the plaintiff's property was to be sold at auction. One of the defendants stated in writing that he owned the property claimed by the plaintiff. The writing was read at the sale. The plaintiff contended that as a result of the defendant's statement, potential buyers were discouraged from bidding and the sale was chilled, causing the plaintiff to suffer a loss of $20,000. The defendants argued the plaintiff did not sufficiently allege special damages. The court, however, found the complaint sufficiently alleged a "pecuniary loss of injury." Clearly, said the court, special damages may result when prospective purchasers are prevented from bidding at a public sale.

D. Defenses

The North Carolina Court of Appeals has stated that given the real nature of the action for slander of title and the better-reasoned cases from other jurisdictions, the one-year statute of limitations for personal slander and libel has no application, and instead, the applicable statute of limitations is the one that provides for a limitation of three years "for trespass upon real property."³⁵

Certain absolute or conditional privileges are a defense to an action for slander of title. The Restatement provides that, generally, the rules applicable to privileges in defamation actions apply to an action for slander of title.³⁶ For example, while it does not appear that North Carolina courts have addressed the issue, the South Carolina Court of Appeals held that filing a lis pendens is absolutely privileged in that state, because recording a lis pendens is specifically authorized by statute and has no existence separate and apart from the litigation of which it gives notice. Filing a lis pendens in South Carolina cannot, therefore, form the basis of an action for slander of title.³⁷

As is the case with defamation, truth is a defense.³⁸ The North Carolina Supreme Court in Cardon v. McConnelP³⁹ said that even where a statement is made with malicious intent to injure, if an infirmity of the title exists, an action for slander of title will not lie because no one can be punished in damages for speaking the truth.

E. Remedies

Compensatory damages in actions for injurious falsehood have, according to the Restatement, been consistently limited to harm to interests of the plaintiff having pecuniary value, and to proved pecuniary loss.⁴⁰ Malice is an element of the cause of action, and once malice is established, punitive damages will be an issue. In North Carolina, punitive damages are governed by chapter 1D,⁴¹ which, however, does...