Kensington Development Corp. v. Israel, 86-0846
| Decision Date | 01 April 1987 |
| Docket Number | No. 86-0846,86-0846 |
| Citation | 139 Wis.2d 159,407 N.W.2d 269 |
| Parties | KENSINGTON DEVELOPMENT CORPORATION and LRB Associates, Ltd., Plaintiffs-Appellants, v. Scott M. ISRAEL, Derald West, David P. Sweeney and Stephen L. Cleary, Defendants-Respondents. |
| Court | Wisconsin Court of Appeals |
Review Granted.
Thomas D. Georgeson of Johnson, Brendemuehl & Georgeson, Oconomowoc and Mary Anne Gerstner of Burke, Griffin, Chomicz & Wienke, P.C., Chicago, Ill., for plaintiffs-appellants.
James G. Allison of Whyte & Hirschboeck, S.C. Milwaukee, for defendant-respondent, Scott M. Israel.
Edward A. Hannan and Maurita Houren of Godfrey, Trump & Hayes, Milwaukee, for defendant-respondent, Stephen L. Cleary.
Before SCOTT, C.J., BROWN, P.J., and NETTESHEIM, J.
At common law, a publication made in a judicial proceeding enjoys an absolute privilege from later charges of defamation. Because the legislature's slander of title statute, sec. 706.13, Stats., is contradictory to this common law, we hold that the filing of a lis pendens in this case enjoys only a conditional privilege. Since the trial court conferred an absolute privilege, we reverse and remand with directions.
On August 19, 1983, an involuntary petition, pursuant to Chapter 11 of the United States Bankruptcy Code, was filed against Delafield Development. Delafield's major asset is the Heritage Ridge Shopping Center. Two of Delafield's partners were Waukesha Venture and Rubin Associates, both owned by James Flanagan.
In addition to a claim by the Chemical Bank of New York, whose foreclosure action precipitated the bankruptcy action, Delafield also faced unsecured creditor claims totaling approximately one million dollars. A creditor's committee, composed of Scott M. Israel, Derald West and David P. Sweeney, and represented by attorney Stephen L. Cleary, was formed to protect their interest.
During the latter half of 1984, James Flanagan, acting as debtor in possession for Delafield, proposed a plan whereby Chemical's mortgage interest would be purchased by a third party, LRB Associates, Ltd., at a foreclosure sale. LRB would then own the shopping center and related parcels. The specifics of this proposal were explained to the bankruptcy court and the creditor's committee during a hearing on October 22, 1984. During the hearing, Flanagan represented that none of the partners of the debtor had any connection or relationship with LRB. This representation was necessary to ease the court's concern about whether an "insider" was on the purchasing side of the proposed transaction.
Based upon the representations, the bankruptcy court allowed the sale of property to be consummated. The actual buyer was the Kensington Development Corporation which then sold the shopping center to LRB.
A few months later, the creditor's committee filed a complaint in the bankruptcy court alleging that James Flanagan did possess an ownership interest as the purchaser because he was a principal in LRB. The committee requested a "revesting" of title to the property. A lis pendens was filed in connection with the complaint.
Subsequently, Kensington Development and LRB commenced the instant action, alleging, inter alia, that the filing of the lis pendens had created a cloud upon title causing LRB to lose sales of certain limited partnership interests; they also alleged that the committee acted without regard for the truth and with malice toward Kensington and LRB.
The bankruptcy court eventually dismissed the committee's adversary complaint and ordered it to release the notice of lis pendens on the ground that the court lacked jurisdiction. The state circuit court, here, granted summary judgment for the committee, holding that its action in filing the lis pendens was absolutely privileged.
In deciding a motion for summary judgment, the initial question is the same as that on a sec. 802.06(2), Stats., motion to dismiss the complaint for failure to state a claim upon which relief can be granted--namely, whether the complaint states a claim upon which relief can be granted. Prah v. Maretti, 108 Wis.2d 223, 228, 321 N.W.2d 182, 185 (1982). If the complaint states a claim and the pleadings show the existence of factual issues, the court then examines the affidavits and other proof and determines whether there are disputed material facts that entitle the non-moving party to a trial. Id. at 228, 321 N.W.2d at 185-86.
Although the committee does not point to any particular facet of this standard of review, it claims that the facts presented in the pleadings conclusively show plaintiffs' action as having no merit as a matter of law. We conclude that the committee was asking the trial court, and is asking us, to hold that the complaint does not state a claim upon which relief can be granted.
In the complaint, plaintiffs alleged that the adversary complaint and lis pendens were filed "without justification" because the property in issue had been sold for value at the sheriff's sale, the sale having been confirmed by the circuit court and approved by the bankruptcy judge. The complaint alleged that the committee acted without truth, and with malice, and created a cloud upon title. Liberally construed, the complaint alleges an action for slander of title.
The committee appears to argue that the complaint does not state a claim for relief because the committee's actions were absolutely privileged. This raises a question of law which we decide without deference to the trial court. First Nat'l Bank v. Dickinson, 103 Wis.2d 428, 433, 308 N.W.2d 910, 912 (Ct.App.1981).
The issue joined exhibits a tension existing between two well-embedded tenets of common law. On the one hand, parties to judicial proceedings have enjoyed an absolute privilege to make allegedly defamatory statements as long as the defamatory matter is "connected" to the proceedings. Jennings v. Paine, 4 Wis. 372 (358) (1855). The privilege is based upon the public interest in according to all persons the utmost freedom of speech in courts of justice uninfluenced by the possibility of being brought to account in an action for defamation. See Stewart v. Fahey, 14 Ariz.App. 149, 481 P.2d 519, 520-21 (1971). The interest in this freedom from fear of liability is especially strong when one is required by law to do an act. See Restatement (Second) of Torts sec. 592A comment a (1977).
The committee stands behind this facet of common law, claiming that its adversary complaint was a judicial proceeding, as was the accompanying lis pendens. The committee observes further that sec. 840.10, Stats., requires the filing of a lis pendens in any action involving real property as a means to put those with no knowledge of the action on legal notice of pending litigation. Belleville State Bank v. Steele, 117 Wis.2d 563, 575, 345 N.W.2d 405, 411 (1984).
The committee concludes that its action in filing the lis pendens is protected by the longstanding rules of absolute privilege because the lis pendens refers to the subject of the judicial inquiry and is a required act.
On the other hand, common law has long recognized the tort named slander of title. The earliest cases, arising shortly before 1600 A.D., involved oral aspersions cast upon plaintiff's ownership of land, preventing the leasing or selling of it. W. Prosser, Law of Torts sec. 128, at 915 (4th ed. 1971). The tort is part of a considerable body of law relating to the interference with commercial or economic relations. Id. It is not, therefore, realistically a branch of general libel or slander. Id. at 917.
Under a slander of title claim, an individual must show a publication which: (1) results in an injurious falsehood or disparagement of property and includes matters derogatory to the plaintiff's title or business in general, calculated to prevent others from dealing with the plaintiff or to interfere with his relations with others to his disadvantage; (2) has been communicated to a third person; (3) plays a material or substantial part in inducing others not to deal with the plaintiff, and (4) results in special damage. Id. at 919-20.
This common law has been codified by sec. 706.13, Stats. Schlytter v. Lesperance, 62 Wis.2d 661, 666-67, 215 N.W.2d 552, 554-55 (1974). The statute reads as follows:
Slander of title. (1) In addition to any criminal penalty or civil remedy provided by law, any person who submits for filing, docketing or recording, any lien, claim of lien, lis pendens, writ of attachment or any other instrument relating to the title in real or personal property, knowing the contents or any part of the contents to be false, sham or frivolous, is liable in tort to any person interested in the property whose title is thereby impaired, for punitive damages of $1,000 plus any actual damages caused thereby.
(2) This section applies to any person who causes another person to act in the...
To continue reading
Request your trial
-
Reyna v. PNC Bank, N.A.
...that disparaged a plaintiff's right in property, causing special damages.") (citations omitted); Kensington Dev. Corp. v. Israel, 139 Wis. 2d 159, 407 N.W.2d 269, 272 (Wis. Ct. App. 1987).Isobe v. Sakatani, 127 Hawai`i 368, 377-78, 279 P.3d 33, 42-43 (Ct. App. 2012) (italics in original). P......
-
Havilah Real Prop. Servs., LLC v. VLK, LLC, s. 12–CV–403 & 12–CV–542.
...Co., supra, 786 P.2d at 1117–18 ; Belliveau Bldg. Corp. v. O'Coin, 763 A.2d 622, 630 (R.I.2000) ; Kensington Develop. Corp. v. Israel, 139 Wis.2d 159, 407 N.W.2d 269, 270 (Ct.App.1987).11 Further, we note that because infra Part III we hold that a party cannot maintain a claim for malicious......
-
City of Madison v. DEPT. OF WORKFORCE DEV.
...legislation and the common law, the legislation controls as the latest expression of the law. See Kensington Dev. Corp. v. Israel, 139 Wis. 2d 159, 167, 407 N.W.2d 269, 273 (Ct. App. 1987),aff'd,142 Wis. 2d 894, 419 N.W.2d 241 (1988). Accordingly, we conclude that the common law doctrine of......
-
Ringier America, Inc. v. Enviro-Technics, Ltd., ENVIRO-TECHNIC
...v. Perry, 111 Ariz. 382, 531 P.2d 139 (1975); Kropp v. Prather, 526 S.W.2d 283 (Tex.Civ.App.1975). Cf. Kensington Development Corp. v. Israel, 139 Wis.2d 159, 407 N.W.2d 269 (App.1987) (common law modified by Wisconsin statute--conditional privilege and not absolute privilege applied to lis......