Summary:
Palmetto RTC, LLC, a land entitlement firm, contracted to purchase a 61-acre tract in Union County from the Fielden family, with plans to simultaneously flip it to a third-party developer. When the transaction failed to close before the contractual deadline—and Palmetto’s end buyer never authorized performance—Palmetto attempted to preserve its position by filing suit and a lis pendens. The Fieldens, who had since pursued sale to a different developer, counterclaimed for slander of title.
The trial court dismissed Palmetto’s unjust enrichment claim due to the existence of an express contract, and the jury returned a verdict for the Fieldens, including $152,001 in damages on their slander of title counterclaim. The trial court denied Palmetto’s motion for JNOV or a new trial.
On appeal, the North Carolina Court of Appeals affirmed the dismissal of the unjust enrichment claim, holding that the development efforts Palmetto claimed as extra-contractual were squarely contemplated in the express agreement. The court also affirmed the denial of JNOV, finding that while the Fieldens did not specifically plead the statutory slander of title under the Real Property Marketable Title Act, their notice pleading was sufficient to survive.
However, the court reversed and remanded for a new trial on the slander of title claim. The Court held that the lis pendens filed by Palmetto was not a “registered notice” under N.C. Gen. Stat. § 47B-6, and therefore the statutory slander of title instruction was erroneous. Since a lis pendens is filed with the clerk of court—not the register of deeds—and is merely procedural rather than a substantive claim to title, it cannot support a statutory slander of title cause of action. As such, the case was remanded for retrial on the Fieldens’ slander of title counterclaim, presumably under the common law theory requiring proof of malice and falsity.
Commentary:
The careful parsing of the statutory framework under the Real Property Marketable Title Act by the Court of Appeals shows a subtle but critical clarification: filing a lis pendens is not the same as recording a notice under the Act. Practitioners representing land developers or disgruntled buyers should take heed—not every filing with the court that affects property gives rise to statutory tort liability, particularly under § 47B-6. This would likely also hold true in regards to a judgment lien, since those arise by operation of law and are not recorded either.
From a consumer or bankruptcy attorney’s perspective, this opinion’s implications may be most pronounced when defending against lis pendens abuse. The appellate court signals that litigants cannot short-circuit traditional common law protections by invoking statutory slander of title theories unless the technical filing requirements—specifically recording with the register of deeds—are satisfied. This preserves important safeguards against chilling the use of lis pendens to protect real estate interests during bona fide disputes, a point equally relevant in adversary proceedings involving real property in Chapter 13 and Chapter 11 bankruptcies.
That said, a lien recorded following the filing of a bankruptcy case or an improperly conducted foreclosure, could potentially also give rise to a cause of action for a valid common law slander of title claim, but would need to show the following elements:
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Falsity (the lien is invalid due to stay),
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Malice (intent or reckless disregard),
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Publication (recording the lien),
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Special damages (lost sale, fees, etc.)
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