Ruiz v. Varan

• Decision Date: 23 August 1990
• Docket Number: No. 18484,18484
• Citation: 110 N.M. 478,1990 NMSC 81,797 P.2d 267
• Parties: Ben RUIZ, d/b/a West Heights Land Investments, Plaintiff-Appellee, v. Cyrus VARAN, individually, Morteza Jafari, individually and Three Springs Limited Partnership, Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 267

797 P.2d 267

110 N.M. 478

Ben RUIZ, d/b/a West Heights Land Investments Plaintiff-Appellee, v. Cyrus VARAN, individually, Morteza Jafari, individually and Three Springs Limited Partnership Defendants-Appellants.

No. 18484.

Supreme Court of New Mexico.

Aug. 23, 1990.

[110 NM 479] Threet & King, Martin E. Threet, David W. King, Albuquerque, for defendants-appellants.

Richard E. Norton, Corrales, for plaintiff-appellee.

OPINION

MONTGOMERY, Justice.

This appeal concerns the measure of damages awarded to a property owner due to interference with his ability to use or dispose of a tract of undeveloped land. The trial court awarded nominal damages, but the owner sought substantial damages based on a discount factor applied to the value of the property before the interference. The owner presented no evidence of actual loss in value or of increased costs resulting from the interference. We hold that the property owner's damages cannot be quantified in this way and that the trial court did not abuse its discretion in awarding only nominal damages.

I.

The property owner is one of the appellants, Three Springs Limited Partnership (Three Springs). In February 1984, the appellee, Ben Ruiz, recorded a notice of lis pendens in Bernalillo County, New Mexico, giving notice of his suit against Three Springs to recover a real estate commission claimed to be due on a transaction between Three Springs and the City of Albuquerque relating to a large tract of undeveloped land in Albuquerque. Ruiz had brought an action in the Bernalillo County District Court for breach of contract and had recorded the notice four months after commencing the lawsuit. In due course Three Springs counterclaimed, charging that the lis constituted an abuse of process and that the partnership was damaged due to its inability to dispose of its property.¹

The trial court conducted a hearing on the merits and found that the lis pendens had been in place from the date of its filing, February 6, 1985, until it had been quashed by a court order on November 3, 1987--a period of about thirty-three months. The court further found that the property in question had a "value of approximately $3,500,000 and was otherwise free and clear" when the lis pendens was filed; that a claim of title was never involved in the litigation between Ruiz and Three Springs; that "the only purpose the filing of the lis pendens served was to place a cloud upon the title * * * to force settlement of the claims of Mr. Ruiz," and that the filing was done with an ulterior motive. Finally, the court found that "[a]s a result of the filing of the Notice of Lis Pendens, Three Springs Limited Partnership was not able to obtain title insurance for the property, utilize the property for loan collateral, or sell the property."

As to damages, the trial court found that Three Springs had suffered "nominal damages" as a result of the filing of the notice of lis pendens. It therefore awarded Three Springs only $5,000. A Three Springs partner had testified that the partnership's damages amounted to "around a million dollars," and an expert witness had expressed the opinion that the damages equaled $471,300. The expert based his figure on the value of the property discounted by a composite discount rate, derived principally from the interest rate on government bonds and bills for a two-year period during which the lis was in effect. Three Springs offered no other evidence of damage.

On appeal, Three Springs attacks the trial court's award of damages as inadequate. It maintains that the testimony of the partner and the expert witness, which was uncontradicted, was binding on the trial court. It says that the trial court should have awarded between $471,000 and one million dollars based on that testimony. Alternatively, it asserts that damages equal to the value of the property times the then authorized "legal" rate of interest--15 percent per annum--for the thirty-three month period should have been awarded. We reject Three Springs' position and, after briefly reviewing the law of damages for the torts of abuse of process and slander of title, hold that the trial court was not bound to accept Three Springs' evidence because its theory was defective and its proof was inadequate.

II.

Our decisions not only recognize a cause of action for the tort of abuse of process, Farmers Gin Co. v. J.A. Ward, 73 N.M. 405, 389 P.2d 9 (1964); we have specifically said that the wrongful filing of a notice of lis pendens may support an action for abuse of process. Superior Constr., Inc. v. Linnerooth, 103 N.M. 716, 720, 712 P.2d 1378, 1382 (1986) (dictum). The elements of the tort were spelled out in Zamora v. Creamland Dairies, Inc., 106 N.M. 628, 747 P.2d 923 (Ct.App.1987):

New Mexico case law requires three elements for an abuse of process claim: (1) the existence of an ulterior motive; (2) an act in the use of process which would not be proper in the regular prosecution of the charge; and (3) the plaintiff must suffer damages (there must be an unlawful interference with the plaintiff's person or property).

Id. at 635, 747 P.2d at 930. Cf. Richardson v. Rutherford, 109 N.M. 495, 501-2, 787 P.2d 414, 420-21 (1990); Hertz Corp. v. Paloni, 95 N.M. 212, 215, 619 P.2d 1256, 1259 (Ct.App.1980). In the instant case, Three Springs proved all elements of the tort to the satisfaction of the trier of fact: Ruiz's ulterior motive of forcing settlement of his claims against the partnership; his filing of the lis pendens, which would not have been proper in the regular prosecution of his claim for a commission; and interference with Three Springs' ability to sell or secure a loan on its property.

The question on this appeal relates to the measure of damages for the tort which the trial court found. The measure of damages for an abuse of process in the case of real property is no different from that for other property torts. The filing of the lis pendens is analogous to:

the wrongful levy of an attachment writ, as by seizure of exempt property not belonging to the defendant, [so that] the measure of damages would be the same as in any other cases of trespass or tortious interference with the owner's possession. If the property is returned to and accepted by the owner, the damages for the detention would include the value of its use, plus any depreciation caused by the defendant, and any reasonable and necessary expense in securing repossession.

C. McCormick, Handbook on the Law of Damages Sec. 109, at 385-86 (1935) (damages for abuse of process). This accords with what Professors Prosser and Keeton say in their discussion of damages for abuse of process--that is, that compensation for loss of use can be a measure of damages. They also indicate that what amounts to nominal damages can be assessed "to vindicate the right [interfered with] itself and to maintain the integrity of the judicial process"--even when "no property is taken at all and where the attempted extortion was wholly unsuccessful." W.P. Keeton, D. Dobbs, R. Keeton, D. Owen, Prosser and Keeton on the Law of Torts Sec. 121, at 900 (5th ed. 1984) ("Abuse of Process"). Thus an abuse of process which interferes with a property right is viewed like a trespass to land.

Under the facts of this case, the tort committed by Ruiz is also akin to slander of title,² a form of tort that Professors Prosser and Keeton call by the generalized name, "injurious falsehood." Prosser & Keeton, supra, Sec. 128. "For the most part the injurious falsehood cases have been concerned with aspersions upon the title to property * * *. Any type of legally protected property interest that is capable of being sold may be the subject of disparagement, including land * * *." Id. at 965. "The gist of the tort is the interference with the prospect of sale or some other advantageous relation." Id. at 966. To establish the existence of the tort of injurious falsehood, among other things, "[t]he plaintiff must prove special damages in the form of pecuniary loss." Id. at 967. "The special damage rule requires the plaintiff to establish pecuniary loss that has been realized or liquidated, as in the case of specific lost sales." Id. at 971. In their note to this point, Prosser and Keeton state that

In slander of title cases "impaired vendibility" of the land is sometimes stated as the special damage for which recovery is permitted. The phrase is ambiguous and may mean (1) the plaintiff sold the land at a lower price because of the falsehood; (2) the plaintiff sold the land at greater effort, expense or time because of the falsehood; or (3) the land's value has dropped on the market * * *. The chief characteristic of special damages is a realized loss. Thus loss of specific contracts to purchase may be required proof.

Id., note 3. This has meant that, as a rule, "the plaintiff must identify the particular purchasers who have refrained from dealing with him, and specify the transactions of which he claims to have been deprived," although "[t]he whole modern tendency is away from any such arbitrary rule." Id. at 972.

The measure of damages for a real property tort can be found in our Uniform Jury Instructions, SCRA 1986, 13-1802 and 13-1819. The first of these instructions, on the general measure of damages, is intended to provide for an "amount of money which will reasonably and fairly compensate" for an injury as established by evidence. Ordinarily this is accomplished by instructing the jury to determine "what was the value of the property immediately before the occurrence and immediately after the occurrence. The difference between these two figures is the legal measure of damages to real property." SCRA 1986, 13-1819. See also Duke City Lumber Co. Inc. v. Terrel, 88 N.M. 299, 540 P.2d 229 (1975) (difference between "before and after" fair market values measures damage to business). But nothing in our case law precludes substituting a "lost use" measure for the standard ...