Coco v. Jaskunas

• Decision Date: 16 December 2009
• Docket Number: No. 2008–783.,2008–783.
• Citation: 986 A.2d 531,159 N.H. 515
• Court: New Hampshire Supreme Court
• Parties: Kevin COCO and another. v. Doris JASKUNAS.

159 N.H. 515

986 A.2d 531

Kevin COCO and another.

v.Doris JASKUNAS.

No. 2008–783.

Supreme Court of New Hampshire.

Argued: Sept. 10, 2009.

Opinion Issued: Dec. 16, 2009.

McDowell & Osburn, P.A., of Manchester (Mark D. Morrissette on the brief and orally), for the plaintiffs.

Sumner F. Kalman, Attorney at Law, P.C., of Plaistow (Thea S. Valvanis and Sumner F. Kalman on the brief, and Mr. Kalman orally), for the defendant.

CONBOY, J.

The defendant, Doris Jaskunas, appeals from an order of the Superior Court (Lewis, J.) granting summary judgment in favor of the plaintiffs, Kevin and Susan Coco, and awarding them attorney's fees incurred in defending the title to land that they purchased from the defendant. We affirm.

This case is related to Porter v. Coco, 154 N.H. 353, 910 A.2d 1187 (2006). The Porters and the plaintiffs own adjacent parcels of property in Fremont. The plaintiffs purchased their property, a vacant lot constituting approximately five acres (the property), from the defendant and her then-husband, C. Larry Therriault, in 1986 for $11,000, and received a deed with warranty covenants. In 2003, the Porters brought an action against the plaintiffs to quiet title to 2.2 acres of the property. The plaintiffs requested the defendant to defend the action pursuant to the covenants of the warranty deed, but she refused and the plaintiffs took up the defense at their own expense. On August 2, 2004, the plaintiffs filed the present action against the defendant alleging breach of the deed's warranty covenants.

In 2005, the trial court granted summary judgment in favor of the plaintiffs in the Porters' quiet title action against them on the basis of res judicata arising from a 1982 quiet title action brought by the defendant. The trial court then granted the defendant's motion to dismiss this action against her. The trial court reasoned that the warranty deed required the defendant to defend against only "lawful claims," and, because the Porters' claim was unfounded, the defendant was not liable for the plaintiffs' legal fees.

On appeal, however, we reversed the trial court's grant of summary judgment to the plaintiffs in the suit the Porters filed against them. Porter, 154 N.H. 353, 910 A.2d 1187. We held that the Porters were not barred by res judicata from attacking the 1982 quiet title result because their predecessors in interest, the Willeys, were known to have a potential interest in a portion of the property but were not properly noticed regarding the 1982 action. Id. at 357–58, 910 A.2d 1187. We remanded that case for trial. Id. at 359, 910 A.2d 1187.

On the eve of trial, the Porters and the plaintiffs reached a non-monetary settlement wherein they divided the disputed land between them. The defendant and her counsel were kept apprised of the settlement negotiations, but did not participate in them. The court approved the Porter–Coco settlement in April 2007.

The parties then filed cross-motions for summary judgment in the present case on the issue of the defendant's liability for the plaintiffs' defense costs, including attorney's fees, in the Porter–Coco litigation as well as this litigation. The court granted summary judgment in favor of the plaintiffs on their claim for costs and fees incurred in the Porter–Coco litigation, and awarded them $41,775.89. The court denied the plaintiffs fees or costs incurred in this litigation, and the plaintiffs have not appealed that ruling.

"In reviewing the trial court's summary judgment rulings, we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law." N.H. Assoc. of Counties v. Comm'r., N.H. Dep't of Health & Human Servs., 156 N.H. 10, 14, 930 A.2d 400 (2007).

The defendant concedes that she and her husband conveyed the property to the plaintiffs with the standard warranty covenants, including those pertaining to title and defense. She further concedes that she was timely and properly noticed by the plaintiffs regarding the Porters' adverse claim, that she was asked to assume the defense against that claim, and that she refused to do so. She asserts that she was not obligated to defend the plaintiffs' title pursuant to RSA 477:27 (Supp.2008) because the Porters' claim was not "lawful" in that it was settled prior to any judicial adjudication on the merits and that it was unfounded from the outset. She also argues that she is not liable for the plaintiffs' attorney's fees or costs under RSA 477:27 because the plaintiffs failed to claim damages other than the costs of defense. Finally, she asserts that even if she is liable for damages, her liability is limited to a fraction of the 1986 purchase price of $11,000.

The defendant's liability for the plaintiffs' attorney's fees and costs incurred in the Porter–Coco litigation turns on our interpretation of RSA 477:27. "The interpretation of a statute is a question of law, which we review de novo." In the Matter of Liquidation of Home Ins. Co., 154 N.H. 472, 479, 913 A.2d 712 (2006). "We are guided by a number of well-settled principles of statutory construction. Our goal is to apply statutes in light of the legislature's intent in enacting them, and in light of the policy sought to be advanced by the entire statutory scheme." State Employees Assoc. of N.H. v. N.H. Div. of Personnel, 158 N.H. 338, 343, 965 A.2d 1116 (2009) (quotation omitted). "When construing the meaning of a statute, we first examine the language found in the statute, and where possible, we ascribe the plain and ordinary meanings to words used." Id. (quotation omitted). "We interpret statutes not in isolation, but in the context of the overall statutory scheme." Id. (quotation omitted).

RSA 477:27 provides:

A deed in substance following the form appended to this section shall, when duly executed and delivered, have the force and effect of a deed in fee simple to the grantee, heirs, successors and assigns, to their own use, with covenant on the part of the grantor, for himself or herself, heirs, executors and administrators, that, at the time of the delivery of such deed, the grantor was lawfully seized in fee simple of the granted premises, that the said premises were free from all incumbrances, except as stated, that the grantor had good right to sell and convey the same to the grantee, heirs, successors and assigns, and that the grantor will, and the heirs, executors, and administrators shall, warrant and defend the same to the grantee and heirs, successors and assigns, against the lawful claims and demands of all persons.

(Emphasis added.) The parties agree that the deed from the defendant and Therriault to the plaintiffs is a warranty deed subject to the provisions of RSA 477:27. The statute thus provides the plaintiffs a right of defense against all "lawful" claims and demands.

We will first consider the defendant's argument that she was not obligated to defend against the Porters' claim because the claim was settled prior to a judicial determination on the merits. We initially note that a reasonable settlement does not foreclose a court's evaluation of the lawfulness of the underlying claim. See, e.g., Garcia v. Herrera, 125 N.M. 199, 959 P.2d 533, 537 (1998) (trial court may evaluate evidence of title to determine whether settlement is reasonable, and therefore whether the underlying claim subject to warranty covenants was lawful). Furthermore, a grantee who voluntarily yields to a claim of paramount title may nonetheless claim a breach of warranty. Id.

The plaintiffs' request for compensation for their attorney's fees and costs stemming from the defendant's alleged breach of the duty to defend is, in essence, a claim for indemnity. "A right to indemnity arises where one is legally required to pay an obligation for which another is primarily liable." Morrissette v. Sears Roebuck & Co., 114 N.H. 384, 387, 322 A.2d 7 (1974) (citation omitted); see also Druding v. Allen, 122 N.H. 823, 824–25, 451 A.2d 390 (1982) (purchasers were awarded damages for breach of warranty deed covenants, and sellers were entitled to full indemnification, including attorney's fees, from the corporation that sold them the property). "While a prejudgment payment in settlement does not extinguish a right of indemnity, the [indemnitee] must show that the settlement was made under legal compulsion, rather than as a mere volunteer, for indemnity is not available for payment voluntarily made." Morrissette, 114 N.H. at 387, 322 A.2d 7 (citations omitted). Moreover, an "indemnitee's unilateral acts [of settlement], albeit reasonable and undertaken in good faith, cannot bind the indemnitor; notice and an opportunity to defend are the indispensable due process satisfying elements." Id. at 389, 322 A.2d 7 (citation omitted).

If the indemnitor approves the settlement or defends unsuccessfully against the original claim, he cannot later question the indemnitee's liability to the original claimant. If the indemnitor declines to take either course, then the indemnitee will only be required to show potential liability to the original plaintiff in order to support his claim over against the indemnitor.

Id. (citation omitted; emphasis added); see also Chicago, R.I. & P.R. Co. v. Dobry Flour Mills, 211 F.2d 785, 788 (10th Cir.) ("[W]here the indemnitor denies liability under the indemnity contract and refuses to assume the defense of the claim, then the indemnitee is in full charge of the matter and may make a good faith settlement without assuming the risk of being able to prove absolute legal liability or the actual amount of the damage."), cert. denied, 348 U.S. 832, 75 S.Ct. 55, 99 L.Ed. 656 (1954). We likewise stated in Eaton v. Clarke, 80 N.H. 577, 578, 120 A. 433 (1923), that a warrantee's notification to his warrantor and request that the warrantor assume the defense of a claim against title would have been...