Unpublished Disposition, 895 F.2d 1416 (9th Cir. 1984)

MEMORANDUM^* 

This is a diversity case arising out of a longstanding dispute between two brothers. In this case there is much to be said for what was described at oral argument as a Montana aphorism, "let sleeping dogs lie." Nevertheless, we hold that the district court should have granted appellant Truman Ackerson's motion for JNOV on the issue of slander of title, and we remand for additional proceedings as to damages on that claim only. We affirm in all other respects.

The dispute centers on Thelen Place, a parcel of land located in Chouteau County, Montana, originally belonging to Ruth Ackerson, mother to plaintiff-appellant Truman and defendant-appellee Edward Ackerson. Prior to her death in 1983 Ruth apparently gave Thelen Place to Truman. Litigation resolved ownership of the property in Truman's favor.

At some time Edward came into possession of three quitclaim deeds which were blank except for the signature of Truman. Truman had executed these deeds sometime in 1940 before departing for military service in World War II. The parties dispute how Edward came into possession of the deeds; Truman claims Edward found them among his mother's possessions, and Edward claims his mother gave them to him following his son's "rescue" of his mother from maltreatment at the hands of Truman. During this time Truman was negotiating with one Bob Bailey to sell Thelen Place to Bailey.

Cheetham is the part-time county attorney for Chouteau County; he is also a private attorney. In 1984 Cheetham was approached by Edward Ackerson and his son George, given the blank deeds, and asked to complete them by inserting George Ackerson as grantee and inserting the legal description of Thelen Place into the deed. Cheetham filled in at least one deed, dated it, and deposited it at the Clerk and Recorder's Office on May 16, 1984. The Clerk called to his attention that the deed was unacknowledged but Cheetham requested that she file it anyway, and she did so. Edward contends that George also asked Cheetham to file some affidavits prepared by attorney Richard Martin, explaining the circumstances under which Ruth gave Edward the blank deeds. This Cheetham did not do. Edward claims that Cheetham told him the deed could not cloud the title to Thelen Place because it was not a legal document.

Sometime after recordation of the deed, Bailey backed out of the deal to buy Thelen Place. Bailey testified he did so because he feared the recorded deed clouded the title. Truman further claims that the property's value has since then dramatically depreciated and its value remains below what he could have received for it had he sold it to Bailey.

Thereafter, Cheetham filed a quiet title action on behalf of Edward and George to establish the validity of the deed that he had recorded and to establish George as the owner of Thelen Place. Truman filed a cross-claim against George and a third-party complaint against Edward. That action was dismissed without prejudice, following which Truman filed the present action. Truman brought suit against Edward, Cheetham, and Chouteau County, alleging six counts, including negligence on the part of Cheetham in recording an unacknowledged deed, negligence of Chouteau County in failing to supervise Cheetham and the Recorder's Office employees, slander of title to Thelen Place, civil conspiracy among the defendants to deprive Truman of Thelen Place, intentional infliction of emotional distress, and fraud. Edward and Cheetham each cross-claimed against the other.

The district court granted summary judgment against Truman on the counts of Cheetham's negligence, the County's negligence, and emotional distress. Truman settled with Cheetham during trial on the counts of slander of title, civil conspiracy, and fraud. As part of the settlement, Truman agreed not to appeal the summary judgment dismissal of the emotional distress count against Cheetham. The County moved for and was granted summary judgment in its favor on all counts. Truman moved for a directed verdict on the issue of slander of title and tortious interference with a contract. The case went to the jury with Edward as the sole defendant. The jury found in favor of Edward on all counts, and Truman requested a judgment notwithstanding the verdict on those issues for which he had earlier moved for directed verdict.

Truman appeals the grant of summary judgment in favor of Cheetham and the County on the issue of negligence, the conduct of the trial that led to the verdict for Edward, and the district court's refusal to enter judgment for Truman as a matter of law.

DISCUSSION

Attorney's Duty of Care to Third Parties

Truman claims that Cheetham as Edward's attorney owed Truman as well as Edward a legal duty of adequate care in the performance of Cheetham's actions as Edward's lawyer. This claim has no merit. While the Montana courts have never passed on this issue, the parties do not dispute the general rule that attorneys owe no duty of care to adverse parties in litigation. Sheldon Appel Co. v. Albert & Oliker, 765 P.2d 498, 509, 254 Cal. Rptr. 336, 348, 47 Cal. 3d 863 (1989) (in bank). Truman relies upon cases holding that attorneys may owe duties to third parties who are intended beneficiaries of the attorney's services. E.g. Heyer v. Flaig, 74 Cal. Rptr. 225, 228, 449 P.2d 161, 164, 70 Cal. 2d 223, 228 (1969) (putative beneficiaries of a negligently drafted will); Morales v. Field, DeGoff, Huppert & MacGowan, 160 Cal. Rptr. 239, 243-44, 99 Cal. App. 3d 307, 314-15 (1979) (beneficiaries of a negligently managed trust). Even if Montana recognized these cases, Truman could not explain how he could conceivably have been a "beneficiary" of Cheetham's filing of the deed against him.

The County's Supervisory Duty

Truman claims that Cheetham's negligence can be attributed to the County because Cheetham is the County's agent. Truman further claims that the County was negligent in failing to supervise Cheetham's activities and those of the Recorder's office in recording an unacknowledged deed. This claim has no merit. As discussed above, Cheetham owes no duty to Truman for which Cheetham could be said to be negligent. Moreover, there is no indication that Cheetham was acting as county attorney and not as a private attorney when he filed the deed, or that his status as county attorney caused the recorder to file a document she would not otherwise have filed. The deputy Recorder filed an affidavit in which she states that Cheetham's status as county attorney made no difference to her decision to file the deed. Against this affidavit we have only Truman's unsupported allegation that Cheetham was acting as county attorney, which is insufficient. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

In Montana, a county attorney is not supervised by the county board of supervisors, but by the state Attorney General. See Mont.Code Ann. Sec. 2-15-501(5). Further, it was not negligent for the County Recorder to accept the unacknowledged deed for recording, so no negligence exists to impute to the County. The arrangement of the statutes supports the defendants' argument that the statute upon which Truman relies, Mont.Code Ann. Sec. 70-21-203, which provides that an instrument must be acknowledged before being recorded, is not intended to guide the County Recorder in her duties, but rather to establish a requirement for document filers before their documents will be considered recorded. The group of statutes spelling out the duties of the County Recorder, which are codified in a different section from the statute cited by Truman, demonstrate that the County Recorder is required to accept all documents presented for recordation. Mont.Code Ann. Sec. 7-4-2613(1). The statute explicitly requires acknowledgments of leases and abstracts, but only of those two items. Id. Deeds are mentioned as documents which must be recorded, but no requirement of acknowledgment is given for them. See id. Where the statutes impose a requirement on the Recorder before recordation of deeds, such requirements are explicit. See, e.g., Mont.Code Ann. Sec. 7-4-2618 (deeds may not be recorded unless they contain the address of the grantee/mortgagee).

Slander of Title

In Montana, a cause of action lies for "slander of title." Slander of title is a tort requiring proof of four elements: (1) the uttering and publication of the slanderous words by the defendant; (2) the falsity of the words; (3) malice; and, (4) special damages. First Security Bank of Bozeman v. Tholkes, 169 Mont. 422, 427, 547 P.2d 1328, 1331 (1976). There is no question that the deed Cheetham recorded published false words. However, Edward argues that there was no malice in his actions because he was attempting to carry out his mother's donative intent. Moreover, Edward argues Truman suffered no special damages as Bailey backed out of the deal because of a change in the Federal Crop Program, and not as a result of the cloud on Truman's title caused by the recordation of this false deed.

At trial, Bailey testified that he had been ready, able and willing to purchase the Thelen place, but that his sole reason for deciding against it was "because of this deed being filed." By the time Edward cleared his title to Thelen Place, Bailey found he had other obligations. This testimony was uncontradicted, and therefore Edward's assertion that Bailey had other reasons for deciding against purchasing the property is unsubstantiated by the record.

Therefore, Truman has proved as a matter of law that he has suffered special damages that "are the natural and probable consequence of the slander." First Security Bank, supra, 547 P.2d at 1331.

On the issue of malice, the Montana Supreme Court has indicated that 50 Am.Jur.2d, Libel and Slander, Sec. 541 is authoritative on Montana law. Felska v. Goulding, 776 P.2d 530, 535 (Mont.1989). Am.Jur.2d indicates that malice, as a basis of recovery of actual damages in slander of title suits, "means only that the act is deliberate conduct, without probable cause," such as "reasonable ground to suppose himself possessed of the legal title to lands...." Id. Sec. 544 at 1063-64 (1970 & July 1988 Supp.). On the other hand, punitive damages for slander of title require "an intention to vex, injure, or annoy." Id. at 1063. While one who acts in good faith to claim a lien on the wrong property is not guilty of malice, id. at 1064, this proposition is of no aid to Edward. As previous litigation had resolved the issue of the property's ownership in Truman's favor, Edward may not claim that he had a good faith belief in his own legal title to the land. Thus, the filing of the false deed (whether by Edward himself or through his agent) was "deliberate conduct," which will satisfy the requirement of malice for actual damages in a suit for slander of title. Moreover, Edward had no "probable cause" to believe that he was the owner or had an interest in the property. See 50 Am.Jur.2d, id. Thus, the district court was in error in denying Truman his motions for summary judgment and judgment notwithstanding the verdict on this issue. We remand to the trial court to conduct a further proceeding on the issue of Truman's actual damages.

Intentional Interference with Contractual Relations

The jury found for the defendants on this claim. Under Montana law, the elements of interference with contractual or business relations are: (1) intentional and willful acts; (2) calculated to cause damage to the plaintiff in his or her business; (3) done with the unlawful purpose of causing damage or loss, without right or justifiable cause on the part of the actor; and (4) that actual damages and loss resulted. Recently, the Supreme Court of Montana has added: (5) that the defendant acted for an improper purpose. Randolph v. Peterson, Inc. v. J.R. Simplot Co, 778 P.2d 879, 884 (Mont.1989).

In Morrow v. FBS Ins. Montana-Hoiness Labar, Inc., 749 P.2d 1073, 1076 (Mont.1988), the Montana Supreme Court cited approvingly to the Restatement (Second) of Torts, Sec. 767 at 38-39 (1977), as a correct statement of the law in Montana on proper or improper motive.

Comment j to the section notes that

it has been suggested that the real question is whether the actor's conduct was fair and reasonable under the circumstances. Recognized standards of business ethics and business customs and practices are pertinent, and consideration is given to concepts of fair play and whether the defendant's interference is not "sanctioned by the rules of the game."

Id. at 37.

Comment 1 concludes that "when there is room for different views, the determination of whether the interference is improper or not is ordinarily left to the jury, to obtain its common feel for the state of community mores and for the manner in which they would operate upon the facts in question." Id. Sec. 767 P. 39. This specific sentence was quoted favorably by the Montana Supreme Court. Montana-Hoiness, 749 P.2d at 1076.

Therefore, Montana's Supreme Court is inclined to give these factors to a jury, and the district court was proper in doing so. The jury clearly sympathized with Edward, and the evidence does not convince us that as a matter of law, Edward's conduct was inconsistent with community mores. Therefore, on this issue, we affirm.

Trial Rulings

Truman alleges a number of erroneous rulings by the district court. He claims that the trial judge failed to give supplementary instructions in response to questions by the jury in order to guide them. The jury asked three questions during the course of its deliberations, and the trial judge answered all three. The trial judge was rather brief in his answers. The judge in fact felt that brevity was necessary, commenting that "you would have to write a book once you start to comment" on a question like agency.

Price v. Glosson Motor Lines, 509 F.2d 1033 (4th Cir. 1975), does not support Truman's position that a judge must instruct a jury once the jury indicates its confusion on a specific subject. In that case, the jury had forgotten what the central jury instruction had commanded them to do, and they asked the judge to repeat the instruction, which he refused to do. Id. at 1037.

The same case notes that "the form and extent of jury instructions are within the discretion of the court." Id. at 1036 (citing United States v. Bayer, 331 U.S. 532 (1947)). The district court here did not abuse its discretion in choosing to answer only briefly the questions posed by the jury.

Truman's remaining arguments with regard to jury instructions are without merit.

Truman objects to the introduction of evidence of Ruth Ackerson's state of mind. This evidence was relevant to Edward's contention that his conduct was fair and reasonable under the circumstances, thus negating an essential element of the cause of action for tortious interference with contractual relations.

Truman maintains that "when the Court and Counsel were occupied out of [Edward's] presence marking exhibits, [Edward] addressed the jury privately during the five [to] ten minutes in which Court and Counsel were out of hearing." However, the record does not substantiate this assertion, and there was no motion for mistrial. There is no basis for reversal.

Truman also claims that the trial court impermissibly relitigated the issue, decided in the former lawsuit, of Ruth Ackerson's intent. Truman notes that the trial court admitted this evidence to show Edward's "state of mind" when he had the deed recorded. As discussed above, admission of such evidence would be proper in relation to the element of proper motive in a tortious interference of contract action.

To conclude, Truman has satisfied all of the elements of a slander of title cause of action and is entitled to JNOV on this issue with additional proceedings to determine actual damages. In all other respects, the district court is affirmed.

AFFIRMED in part, REVERSED in part, and REMANDED.