Alleged Slander Spooks Insurer
Anyone who’s ever dreamt of attending an exciting real estate closing should be careful what they wish for. The First Department just green-lighted a slander of title and defamation action that arose from some strong language exchanged at a closing. Weiss v Lowenberg, 2012 NY Slip Op 03366 (First Dept., May 1, 2012).
Buyers allegedly defamed Seller and Seller’s attorney (the “Sellers”) by “accusing them, at a real estate closing at which third parties were present, of signing and filing a perjurious and fraudulent probate petition.” Once the closing blew up, the Sellers brought suit against the Buyers, seeking damages for slander per se,
slander of title and injurious falsehood. For good measure, they also sued the title insurer for wrongful interference with the parties’ contractual relationship. The ad damnum
included $6 million in special damages and $45 million in punitives (you can read the whole complaint here
). Supreme Court dismissed the complaint. The Appellate Division affirmed the dismissal of the injurious falsehood and wrongful interference claims, along with the punitive damages demands, but reversed the dismissal of both slander causes of action.
Most interesting to Constructive Notice is the Court’s rationale for the slander of title claim: “The alleged defamatory statements [Buyers] made about [Sellers], which impugned their ability and intention to pay the appropriate estate taxes on the property to be sold, were sufficient to state a claim for slander of title ... as the statements cast doubt on the validity of title of the property to be sold.” The statements were made about the sellers, not about the title itself. This is somewhat removed from a “typical” slander of title claim where an unfounded instrument casting doubt upon the title is placed on the public record. Or the common law version where the defendant scares off potential buyers by spreading falsehoods about the title. Here, the title is already unmarketable because of the estate tax lien. The disparaging remarks concern the seller’s intention to satisfy the lien. The only one scared off was the title company. Apparently, that’s enough to plead a slander of title claim.