Opinion ID: 2102583
Heading Depth: 1
Heading Rank: 5

Heading: Damage Awards.

Text: At the core of Lowthers' appeal is the trial court's award of damages both to Kendalls and to Unashes. Ironically, the Kendall-Unash boundary line, which was fixed by the trial court for the purpose of equitably quieting title in each neighbor, may well be identical to the boundary line which Lowthers asked the court to fix by reformation or by practical location. Lowthers, of course, urged those theories in an attempt to weaken the Kendall and Unash claims for monetary damages; Lowthers were attempting to establish that their grantees knew and intended that a marked line between their properties was their boundary at the time they purchased their properties. The trial court, however, found that both Kendalls and Unashes were entitled to recover damages not only from the surveyor Brummer because of his negligence but also from the Lowthers based on breaches of the covenant of warranty of title in their deeds conveying the Kendall and Unash properties. Lowthers contend that the trial court erred in finding that they breached the covenant of warranty in their deeds, and they also protest the allowance of attorney fees and litigation expenses as damages. In separately addressing each of these issues concerning the judgments entered against Lowthers for damages, we are mindful that our review is de novo, and that equity jurisdiction permits reach and flexibility necessary for working out the equities among the parties. Moser v. Thorp Sales Corp., 256 N.W.2d 900, 907 (Iowa 1977).
The Lowthers' warranty deed to the Nischwitzes, like the subsequent deed to the Kendalls, contained the following covenant: And we do hereby covenant for ourselves, our heirs and personal representatives with the said above named Grantees and their assigns and the heirs and assigns of the survivor, that we are lawfully seized of the said premises, ... and that we will forever WARRANT AND DEFEND the same against the lawful claims and demands of all persons. (Emphasis added). Lowthers' deed of conveyance to the Unashes contained a substantially similar covenant: ... and said grantors Covenant to Warrant and Defend the said premises against the lawful claims of all persons whomsoever, except as may be above stated. Such a covenant of warranty, the principal covenant found in most deeds, constitutes an agreement by the grantor that upon the failure of the title which the deed purports to convey, either for the whole estate or part only, the grantor will pay compensation for the resulting loss. See generally 20 Am.Jur.2d, Covenants, Conditions and Restrictions §§ 43-53 (1965). Lowthers contend that Kendalls were not damaged by any breach of covenant because they were not actually evicted from their property. In Eggers v. Mitchem, 240 Iowa 1199, 1201-02, 38 N.W.2d 591, 592 (1949), upon which Lowthers rely, our court decided that a grantee should not be allowed to recover on covenants of warranty in a deed when the persons who caused a partial eviction had no lawful or paramount title. We there said: It is generally recognized that an eviction is necessary to constitute a breach of warranty of title or for quiet enjoyment; (citations omitted). But there need not be an actual expulsion of the grantee. A constructive eviction is sufficient. (Citations omitted). The facts here are distinguishable from Eggers. Although Kendalls were not evicted from all of their property, they were evicted from and lost title to the disputed property along their east boundary, title to which was quieted in Unashes. The Unashes' claim was based on what the trial court correctly described as a superior equitable title. It makes no difference that Kendalls had been deeded legal title to that property based on the legal description in the Lowther and Nischwitz deeds. The Unashes' title was what the Eggers case described as a paramount titleone which prevails in an action or is successfully asserted. Id. A mere discrepancy in the amount of land conveyed by deed is not, in itself, sufficient to constitute a breach of warranty of title. See Kitzman v. Carl, 133 Iowa 340, 341, 110 N.W. 587 (1907). Here, however, the trial court's decree effectively evicted Kendalls from a substantial part of the property described in their deed. As a result Kendalls' property is not only smaller by more than one-fourth of an acre but is irregularly shaped, not rectangular as in their deed. The trial court correctly held Lowthers liable to Kendalls for breach of covenant of warranty. B. Unashes Recovery For Breach of Covenant. Neither do we find merit in Lowthers' contention that Unashes should not have been awarded their attorney fees as damages for breach of covenant of warranty. Reasonable counsel fees may usually be recovered by the person who must defend in court the title covenanted. 7 G. Thompson, Commentaries on the Modern Law of Real Property § 3204, at 386 (1962 ed.). It is true that ordinarily a grantee cannot recover for breach of a covenant of warranty when the grantee has successfully defended the title. But this case has exceptional facts. Although Unashes suffered no loss of property as a result of the decree, they were forced to defend their title against the Kendalls' quiet title action. Kendalls presented a tenable, albeit unsuccessful, claim to a portion of the property Unashes were occupying, including the farmhouse which was their home. The Kendall claim was based on a superior legal title. Only by virtue of the lawsuit and decree was the Unash equitable title found to be paramount to the Kendall legal title. Consequently the trial court properly awarded Unashes recovery of their attorney fees and expenses incurred in defending this action, based on the theory that Lowthers had failed to warrant and defend the premises against the Kendalls' claim which was based on a superior legal title. See Meservy v. Snell, 94 Iowa 222, 226, 62 N.W. 767, 769 (1895) (award of attorney fees for breach of covenant absolutely necessary to protect the real against the apparent title). We also find persuasive the Unashes' alternative contention that they should recover their attorney fees from Lowthers because it was Lowthers' negligence in failing to procure a proper survey and deed description that thrust them into this litigation. That contention is consistent with a well-recognized exception to the general rule that attorney fees may not ordinarily be recovered by the prevailing party in a civil action. As we said in Turner v. Zip Motors, 245 Iowa 1091, 1098, 65 N.W.2d 427, 431 (1954): [I]f through the tort of A, B is in good faith involved in litigation with C, the exception comes into play, and B may then recover the reasonable value of his expense for employment of counsel, and other proper items, from A. See also First Fiduciary Corp. v. Blanco, 276 N.W.2d 30, 34 (Minn.1979) (recognizing right to recovery of attorney fees in action based on breach of covenant in warranty deed). We find fair and equitable the trial court's award to Unashes of their costs incurred in defending their title to the land which was placed in jeopardy in this action. C. The Kendall Damage Award. Lowthers contend that the trial court erred in including in its damage award to the Kendalls the sum of $14,056.37 representing attorney fees and $844.24 representing payments to expert witnesses. They first contend that Kendalls did not bring the action in good faith and therefore no attorney fees or other costs of defense should have been included in the damage award to the Kendalls. They also challenge two specific portions of the damage award, contending that the amounts awarded for expert witness expenses and for attorney fees were excessive. On the question whether the action was brought in good faith, we find no merit whatsoever in Lowthers' position. Lowthers complain that Kendalls had taken an unreasonable bargaining position during pre-suit settlement discussions, but Kendalls had no duty to accept Lowthers' settlement proposals. While we encourage parties to negotiate fair settlements, we will not penalize those who prefer a final judicial determination of their rights. We also find no merit in Lowthers' complaint that the trial court should have applied Iowa Code section 622.72 (1983) and limited to $150 per day the expert witness fees and expenses awarded to Kendalls as damages. The cited statute applies only to the determination of taxable court costs. When costs of defense are properly included in a damage award, those costs need not necessarily be limited to the amount which could be assessed as court costs to a losing party. We are satisfied that the amount of $844.24 which Kendalls paid to their expert witnesses was a fair and reasonable cost incurred by them in defending the title to their property. We agree with Lowthers on their final challenge to the decree. The trial court allowed as damages the full amount of attorney fees which Kendalls were billed by their counsel, even though the itemized statement of fees shows that not all of the services related to the title problem. A substantial portion of Kendalls' attorney fees were incurred for services related to the Kendalls' claims for damages against not only the Lowthers but also the Nischwitzes and surveyors who were defendants in this action. On our de novo review of the evidence, we find that the Kendalls' damage award should only have included the sum of $6,500 for attorney fees incurred in connection with the defense of Kendalls' title to the property. The remainder of the fees included in that bill, $6,243.50, represented services incurred in connection with other issues that were litigated. Kendalls have also requested that we include as damages their attorney fees on appeal. We deny that request, because this appeal has concerned primarily Lowthers' attempt to reduce or eliminate the trial court's award of damages, not those portions of the decree in which the trial court fixed a boundary line and quieted title accordingly. The decree of the trial court is therefore modified by reducing from $17,794.11 to $11,550.61 the amount of Kendalls' total judgment against the Lowthers for damages. The decree is otherwise affirmed. AFFIRMED AS MODIFIED.