Opinion ID: 2074592
Heading Depth: 1
Heading Rank: 4

Heading: breach of the covenant of warranty

Text: [¶ 19] Jean LeClerc contends that the court erred in refusing to instruct the jury that his damages for Roy's breach of the covenant of warranty included the amount he would be required to pay the Dionnes as damages on their timber trespass claim. The LeClercs also contend that the court erred in refusing to award them the attorney fees and expenses they incurred in defending the Dionnes' action as damages for Roy's breach. They do not challenge the court's determination that their damages included the present value of the land or the jury's finding that the present value was zero. [¶ 20] We have not discussed the measure of damages for breach of the covenant of warranty for over a hundred years. The general rule found in our nineteenth-century cases is that the measure of damages for breach of the covenant of warranty is, in this State, the value of the premises at the time of the eviction with interest, and the expenses reasonably and actually incurred in the defence of the former suit. Hardy v. Nelson, 27 Me. 525, 530 (1847); accord, e.g., Williamson v. Williamson, 71 Me. 442, 447 (1880); Swett v. Patrick, 12 Me. 9, 9-10 (1835). Applying that rule in this case requires us to recognize that, due to the joinder and third-party practice rules of modern civil procedure, see M.R. Civ. P. 14, 18, there was no former suit or previous eviction. Beyond that we see no reason that the law should have changed. The value of the land at the time of eviction here would be the value at the time that the LeClercs were constructively evicted by the judgment declaring the Dionnes to have superior title, which the court reasonably approximated as the present value at the time of trial. That element of the damages is not at issue on appeal. [¶ 21] The issue raised by the LeClercs' argument is the degree to which the amounts paid in an unsuccessful defense related to the title may be recovered as damages for breach of the covenant of warranty. We held in Swett v. Patrick, 12 Me. at 10, that the recoverable expenses include attorney and witness fees and the costs paid to the superior titleholder in the prior action. We affirmed this rule in Ryerson v. Chapman, 66 Me. 557, 562 (1877), stating that in this state, the costs of the former action and the expenses of counsel fees attending it, whether in asserting or defending the title, are a portion of the damages recoverable. [¶ 22] In Ryerson we also held that the recoverable costs and expenses can include damages paid to the holder of the paramount title, and are not limited to those arising from a single action. Id. at 561-62. This was demanded by the nature of the covenant: The covenant of warranty amounts to an agreement of indemnity. The foundation of a claim for damages under it, must be that an eviction, or something equivalent thereto, has properly taken place. The covenantee, who has been evicted, is entitled to have repaid to him all reasonable outlay which he in good faith expends for the assertion or defense of the title warranted to him. Id. at 561. It follows that the covenantee may recover for the damages and costs and expenses of suits brought against him, and also for the costs and expenses of suits brought by him, affecting the title to the estate. Each suit may have been part of the means by which the title was sought to be defended. Id. at 561-62. [¶ 23] We did not explain in detail the elements of Ryerson's damages for breach of the covenant. They apparently included the one dollar in nominal damages that Ryerson had paid to the holder of the paramount title in a prior trespass action, see Carleton v. Ryerson, 59 Me. 438, 440 (1871), but there was no indication in our opinion whether any of the eight other suits that Ryerson lost required him to pay any substantial damages. We reduced Ryerson's damages to $400, from the more than $600 that he claimed, because although multiple suits may have been justified, it appeared that litigating nine separate actions relating to title was unreasonable. 66 Me. at 563-64.
[¶ 24] Applying the holding of Ryerson to this case, we must conclude that the trial court erred in awarding the LeClercs no damages against Roy. The referee's determination that the Dionnes had superior title, which we have affirmed, means that Roy breached his covenant of warranty. As damages for that breach, the LeClercs are entitled to their reasonable expenses, including attorney fees, incurred in unsuccessfully defending their title to the premises covered by the warranty against the Dionnes' declaratory judgment claim. They are not, of course, entitled to any of their expenses for their unsuccessful defense of their title to the land Roy conveyed to them by quitclaim.
[¶ 25] The expenses incurred by the LeClercs in defending the Dionnes' timber trespass claim are a different question. Title was not directly at issue when that claim went to trial, because it had already been decided by the referee. We cannot say, however, that the timber trespass claim was not a suit[] ... affecting the title to the estate. Ryerson, 66 Me. at 562. Jean LeClerc's only real defense to liability on that claim was that he and his wife, and not the Dionnes, held superior title. With that defense foreclosed at trial, he did not contest liability, but his primary defense on damageswhich succeeded in convincing the jury that he had not acted intentionally or knowinglywas that when the trees were cut he believed that he had title. The title issue was thus intertwined with the timber trespass claim even though it was not decided by it. Under Ryerson, because of the breadth of the indemnity offered by the covenant of warranty, it is not necessary that the claim be determinative of title, only that the defense or assertion of the claim have a good-faith relation to the defense or assertion of the title. See id. at 561. As damages for Roy's breach of the covenant, therefore, the LeClercs are entitled to their reasonable expenses, including attorney fees, for their defense of the Dionnes' timber trespass claim, to the extent that that claim is for trespass to the premises covered by the warranty. Again, they are not entitled to any reimbursement insofar as the claim relates to the property conveyed by Roy's quitclaim deed.
[¶ 26] That does not determine whether Jean LeClerc is entitled to have Roy indemnify him for the amount of the timber trespass judgment the Dionnes may obtain against him, including statutory double damages, attorney fees, and other professional fees. Under the principles of Ryerson, it would seem that trespass damages would be recoverable if the trespass merely consisted of entering or remaining on the land in order to assert or defend title. We have never held, however, that trespass damages may be recovered for the breach of the covenant of warranty when the trespass ultimately caused substantial injury to the land in reliance on the warranty of title; nor have we found any cases from other jurisdictions so holding. [¶ 27] There are limits to the reliance on a covenant of warranty that can be considered justifiable. Of course a covenantee is normally justified in defending against a claim of superior title, which explains why litigation expenses are recoverable as damages for breach of the covenant. Before litigation, a covenantee's good-faith reliance on a warranty of title in erecting improvements on the land is protected by the basic measure of damages, which is the value of the land, including improvements, at the time of eviction. See Elder v. True, 32 Me. 104, 109 (1850); see also Cecconi v. Rodden, 147 Mass. 164, 16 N.E. 749, 751-52 (1888). That rule may result in significant liability for the covenantor, but it is well-rooted in the nature of the covenant as it has always been understood in Maine as well as in Massachusetts, Vermont, and Connecticut. See Annotation, Measure of damages for breach of covenants of title in conveyances or mortgages of real property, 61 A.L.R. 10, 30-32, 188 (1929). Our rule is ordinarily more generous than the measure of damages in the majority of states, where only the consideration paid can be recovered, id. at 24, but it is well-rooted in our history. Our law has not, however, historically protected a covenantee's interest in committing a trespass that causes injury to the land in reliance on the warranty of title. A rule allowing the substantial damages paid for such a trespass to be recovered in an action for breach of the covenant of warranty would be, as far as we can tell, a more generous measure of damages than any court has ever allowed. [¶ 28] Such a novel rule could yield particularly disproportionate results in the circumstances of this case. The LeClercs paid Roy only $2400 for the land, but now seek his indemnification for the full amount of damages that Jean LeClerc may have to pay to the Dionnes, which could be over $139,000. We cannot say that the covenant of warranty goes that far. [4] The court did not err in refusing to give the requested jury instruction.