Case Title: Wharton v. Tri-State Drilling & Boring

Citation: 175 Vt. 494, 2003 VT 19, 824 A.2d 531

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2003-02-19T00:00:00Z

Document:
Wharton v. Tri-State Drilling & Boring (2001-520); 175 Vt. 494; 824 A.2d 531

2003 VT 19

[Filed 19-Feb-2003]

                                 2003 VT 19

                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2001-520

                            SEPTEMBER TERM, 2002

  Clyde E. and Vivian Wharton	       }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Essex Superior Court
                                       }	
  Tri-State Drilling & Boring	       }
                                       }	DOCKET NO. 1-1-00 Excv

                                                Trial Judge: Dennis R. Pearson

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Appellant Tri-State Drilling and Boring admits to having
  mistakenly drilled a well on the property of appellees Clyde and Vivian
  Wharton and filed a fraudulent mechanics' lien against the Whartons'
  property in an effort to compel the Whartons to negotiate an easement.  The
  trial court found Tri-State liable for abuse of process and awarded
  compensatory and punitive damages.  Tri-State appeals the trial court's
  denial of Tri-State's motion to dismiss for failure to state a claim and
  award of actual and punitive damages to the Whartons.  Although we find
  that Tri-State's actions in this case did not constitute abuse of process,
  we find that the Whartons proved the elements of slander of title and we
  affirm the trial court's award of compensatory and punitive damages on this
  basis.  

       ¶  2.  The facts of this case are not disputed.  The well had been
  commissioned by the Whartons' neighbors, the Beans.  There was no
  suggestion, and the trial court found no evidence, that the Whartons were
  responsible for the mistake that led to the well being drilled on their
  property. Before the episode with the well began, the Whartons had decided
  to sell their property in Vermont and retire to Tennessee, and they had
  placed a "For Sale" sign at the end of their driveway.  As the Tri-State
  drilling operators were finishing the well, Clyde Wharton returned home and
  realized the well had actually been dug on his property.  A discussion
  ensued between Wharton and the drill-rig operator during which Wharton made
  it clear that he had no intention of paying Tri-State for the well. 
  Approximately one week after completion of the well, a Tri-State employee
  approached the Whartons asking them to grant an easement that would allow
  the well to be hooked up and used by the Beans.  Tri-State offered to pay
  the Whartons for the easement, but the Whartons rejected the offer because
  they were concerned that encumbering their deed with an easement would
  impair their ability to sell their house.  
   
       ¶  3.  On May 24, 1999, Tri-State sent a bill to both the Beans and
  the Whartons for $2,095, the cost of the well.  On the same day, Tri-State
  filed a Notice of Mechanics' Lien against the Whartons' property in the
  amount of $2,095 with the Concord Town Clerk.  The President of Tri-State,
  Neil Faulkner, testified at trial that Tri-State never intended to bring
  suit against the Whartons to perfect the lien.  He stated that the purpose
  of the lien was to obtain "leverage" in order to compel the Whartons to
  grant the easement that they had previously declined to give.  The lien
  expired by law on August 24, 1999 without having been perfected by suit
  against the Whartons.

       ¶  4.  On September 10, 1999, the Whartons entered into an agreement
  to sell their camp to Patricia Branch for $64,000.  Before the closing date
  on October 29, 1999, Branch's attorney, William Neylon, discovered the lien
  filed by Tri-State and advised Branch that the lien clouded title to the
  Whartons' property.  Until Tri-State had formally released and discharged
  the lien, Neylon believed the title to have a constructive, if not actual,
  title defect.  Neylon was unable to persuade any title insurance company to
  insure over the potential defect.  

       ¶  5.  The Whartons' real estate agent had several conversations
  with Tri-State in an effort to convince Tri-State to discharge the lien and
  release its claim against the Whartons.  Tri-State refused.  The Whartons
  then hired a series of attorneys to assist in their effort to resolve the
  lien issue, again to no avail.  The Branch sales agreement was extended to
  November 1999, but the sale ultimately fell through.  The trial court found
  that the Whartons were unable to close the sale to Branch because of
  Tri-State's refusal to formally discharge the expired lien. 

       ¶  6.  In anticipation of selling their home to Branch, the Whartons
  had packed and moved their belongings to Tennessee where they intended to
  retire.  They stayed several additional months in Vermont during the fall
  of 1999 in an effort to salvage the sale of the property to Branch,
  incurring expenses, such as utility bills and pro rata real estate tax,
  that they would not have faced if the sale had closed as planned on October
  28, 1999. 

       ¶  7.  In January 2000, the Whartons reached a tentative agreement
  to sell the property to Bonnie McPhetres for $65,000.  The sale was
  contingent upon the removal of the Tri-State lien.  The Whartons filed this
  action demanding that Tri-State release and discharge its lien and
  underlying claim to enable this sale to take place.  The parties agreed to
  escrow the amount of the Tri-State bill pending the resolution of this
  dispute.  Tri-State then discharged the lien and the sale of the property
  to McPhetres closed.  
        
       ¶  8.  In addition to injunctive and declaratory relief declaring
  Tri-State's lien void on its face and ordering Tri-State to discharge the
  lien, the Whartons sought actual and punitive damages and costs from
  Tri-State.  The trial court found that actual damages the Whartons suffered
  included lost interest as a result of losing the initial sale to Branch,
  additional expenses incurred due to the Whartons' continued residence in
  Vermont after the sale to Branch would have gone through, expenses to
  travel back from Tennessee and stay in Vermont to complete the sale to
  McPhetres, and legal expenses to bring this suit.  The trial court found
  that the Whartons were entitled to compensatory damages of $4409.67, and
  also found that they were entitled under V.R.C.P. 54(a) to court costs of
  $186.08.  Furthermore, the trial court found that Tri-State's improper use
  of the mechanics' lien statute "reprehensible" and awarded the Whartons
  $10,000 in punitive damages. Thus, the total amount that the trial court
  ordered Tri-State to pay was $14,945.75 in actual damages, attorneys' fees,
  punitive damages, and costs.  

                            A. Motion to Dismiss

       ¶  9.  We first address Tri-State's claim that the trial court
  should have granted its motion pursuant to V.R.C.P 12(b)(6) to dismiss for
  failure to state a claim upon which relief may be granted.  Tri-State
  contends that the expiration of the mechanics' lien pursuant to 9 V.S.A. §
  1924 rendered the mechanics' lien void on its face and therefore removed
  any cloud on title as a matter of law.  Tri-State's motion to dismiss
  asserts that "it is beyond dispute that as a matter of law the lien could
  not have been the legitimate basis for the termination of the purchase and
  sales contract."  According to Tri-State, at the time the Whartons filed
  their suit they had no cognizable legal complaint because the lien had
  expired.  The Court is left to wonder, however, why Tri-State refused to
  discharge a lien that had no legal effect upon the marketability of title. 
  Indeed, in a case involving a contractors' lien that had not been perfected
  during the three month statutory period, this Court observed that a
  recorded but unperfected lien can create a cloud upon title:  "[A recorded
  lien], even without attachment, has a practical effect upon alienation, in
  that disclosure is required, 9 V.S.A. § 1922, and a cloud upon title
  created."  Filter Equipment Co., Inc. v. I.B.M. Corp., 142 Vt. 499, 502,