Stalberg v. Western Title Insurance

Opinion

This appeal arises out of a slander of title action initiated by plaintiffs in June 1983. Plaintiffs prevailed at a jury trial, but this court reversed and remanded for a new trial on defendant’s statute of limitations defense because the trial court had failed to instruct the jury that the knowledge of plaintiffs’ attorney was imputed to plaintiffs. After remittitur, defendant obtained summary judgment on the slander of title cause of action on the basis of the statute of limitations. Plaintiffs challenge this summary judgment. We conclude that the doctrine of equitable tolling applies and therefore reverse the judgment.

Discussion

The background of this long-running dispute is set forth in Stalberg v. Western Title Ins. Co. (1991) 230 Cal.App.3d 1223 [ 282 Cal.Rptr. 43 ]. Appellate review of a summary judgment is de novo. (Stratton v. First Nat. Life Ins. Co. (1989) 210 Cal.App.3d 1071 [ 258 Cal.Rptr. 721 ]; Barisich v. Lewis (1990) 226 Cal.App.3d 12 , 15 [ 275 Cal.Rptr. 331 ].) This slander of title action was initiated in June 1983. The applicable limitations period is three years. (Code Civ. Proc., § 338, subd. (g).) Plaintiffs claim that (1) their cause of action for slander of title did not accrue until 1981, (2) defendants are estopped from asserting the bar of the statute of limitations, and (3) the limitations period should be equitably tolled.

A. Accrual

“[T]he limitations period begins [to run] when the plaintiff suspects, or should suspect, that [it] has been wronged.” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103 , 1114 [ 245 Cal.Rptr. 658 , 751 P.2d 923 ]; cf. Civ. Code, § 19.) “While resolution of the statute of limitations issue is normally a question of fact, where the uncontradicted facts established through discovery are susceptible of only one legitimate inference, summary judgment is proper.” (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1112.) Slander of title occurs when there is an unprivileged publication of a false statement which disparages title to property and causes pecuniary loss. (Gudger v. Manton (1943) 21 Cal.2d 537 , 541-546 [ 134 P.2d 217 ]; Seeley v. Seymour (1987) 190 Cal.App.3d 844 , 858 [ 237 Cal.Rptr. 282 ]; Howard v. Schaniel (1980) 113 Cal.App.3d 256 , 263-264 [ 169 Cal.Rptr. 678 ].)

The undisputed facts support defendant’s claim that in 1979 plaintiffs were aware of facts sufficient to cause them to suspect that defendant had slandered their title. Plaintiffs are downstream property owners. Defendant is their title insurer. Between 1963 and 1974, defendant drafted and

recorded deeds for several upstream property owners which included a fictitious 60-foot wide easement across plaintiffs’ properties. Defendant refused to insure the fictitious easement because it knew that the grantor did not have title to the easement. In 1971, plaintiff Thomson first learned that an upstream owner was claiming a 60-foot wide easement through plaintiffs’ properties. When Thomson asked defendant about this claim, defendant reassured him that there was no such easement over plaintiffs’ properties. In 1972, plaintiffs sought and obtained legal advice on this matter from Attorney Austen Warburton and his law firm. Warburton traced plaintiffs’ chain of title back to the United States Government and found no legal basis for the fictitious easement. In 1975, Warburton purchased one of the downstream properties, and, in 1977, plaintiffs and Warburton initiated a quiet title action against the upstream property owners.

In February 1979 plaintiffs’ attorney became aware that defendant had recorded the upstream property owners’ deeds containing the fictitious easement. In May 1979, plaintiffs’ attorney learned that, although defendant was the title insurer for the upstream property owners, defendant had not insured “any of [the upstream property owners] as having an easement over the plaintiffs’ lands.” In November 1979, plaintiffs’ attorney discovered that the description of the fictitious easement in the upstream property owners’ deeds had probably been drafted by defendant. Plaintiffs were not ultimately required to pay any legal fees for their attorney’s services prior to January 1981. They paid for half of their attorney fees incurred after that date.

The undisputed facts establish that plaintiffs’ attorney was aware, in 1979, that (1) the 60-foot wide easement over plaintiffs’ land was fictitious, (2) defendant had recorded the fictitious easement, and (3) although defendant had insured the upstream property owners’ title, it had not insured the 60-foot wide easement. Since plaintiffs’ attorney ought to have, “in good faith and the exercise of ordinary care and diligence,” communicated this information to plaintiffs, plaintiffs must be charged with knowledge of these facts. (Civ. Code, § 2332; Lazzarevich v. Lazzarevich (1952) 39 Cal.2d 48 , 50 [ 244 P.2d 1 ].) These facts triggered the commencement of the limitations period. Plaintiffs’ imputed knowledge that defendant, their title insurer, had recorded, but not insured, the fictitious easement over their property in deeds to the upstream property owners, who were also insureds of defendant, should have caused plaintiffs to suspect that defendant had slandered their title.

The fact that plaintiffs did not actually pay for litigation costs incurred prior to 1981 does not mean that they did not incur or suspect that they would incur pecuniary costs as a result of defendant’s slander of their title.

In 1979, plaintiffs’ attorney informed plaintiffs that defendant had agreed to pay “50% of the fees and costs of this [quiet title] lawsuit.” Inferentially, plaintiffs remained liable for the remaining fees and costs. Furthermore, the record establishes that plaintiffs actually anticipated litigation costs from the outset even before 1975. In sum, the undisputed facts established that plaintiffs’ cause of action for slander of title accrued no later than 1979.

B. Equitable Estoppel

Plaintiffs assert that defendant should be equitably estopped from asserting the bar of the statute of limitations because of defendant’s “misrepresentations” and “non-disclosures” of pertinent facts to plaintiffs. If, by misrepresenting or concealing the facts, a defendant induces a plaintiff to delay filing an action, the defendant will be estopped from taking advantage of his wrongful conduct. (Pashley v. Pacific Elec. Ry. Co. (1944) 25 Cal.2d 226 , 231 [ 153 P.2d 325 ]; Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674 , 689-690 [ 274 Cal.Rptr. 387 , 798 P.2d 1230 ]; Baker v. Beech Aircraft Corp. (1974) 39 Cal.App.3d 315 , 323 [ 114 Cal.Rptr. 171 , 91 A.L.R.3d 981 ].) “ ‘One cannot justly or equitably lull his adversary into a false sense of security, and thereby cause his adversary to subject his claim to the bar of the statute of limitations, and then be permitted to plead the very delay caused by his course of conduct as a defense to the action when brought.’ ” (Carruth v. Fritch (1950) 36 Cal.2d 426 , 433 [ 224 P.2d 702 , 24 A.L.R.2d 1403 ].)

Plaintiffs claim that they relied to their detriment upon numerous misrepresentations by defendant. We conclude that none of these alleged misrepresentations could have induced plaintiffs to delay filing their slander of title cause of action. In both 1971 and 1978, defendant told plaintiffs that there were no easements recorded over their property in favor of the upstream property owners. Plaintiffs could not have relied upon these statements to their detriment because, even in 1971, plaintiffs were already aware of recorded deeds containing the fictitious easement. Defendant also told plaintiffs, in 1978, that plaintiffs’ attorney’s “continued representation of you shall in no way prejudice any rights or claims you may have against this company pursuant to the terms of our title policy.” In December 1981, defendant wrote to plaintiffs and offered the following explanation for its conduct. “We assumed no responsibility for the [fictitious] easement deed . . . and specifically denied the issuance of any title insurance [to the upstream property owners] as to said easement. We had no duty to inform you of such deed, especially since it would not be in your respective chains of title.”

Defendant’s representations were confined to its obligations as plaintiffs’ title insurer. If this were an action based on defendant’s breach of a duty