This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C5-96-1370

Calvin Haasken,

Appellant,

vs.

Richard J. Haefele,

Respondent.

Filed March 25, 1997

Affirmed in Part and Reversed in Part

Davies, Judge

Carver County District Court

File No. C895858

Michael L. Puklich, Chamberlain, Neaton & Johnson, 445 Lake, Suite 303, Wayzata, MN 55391 (for Appellant)

Kay Nord Hunt, Stephen C. Rathke, Lommen, Nelson, Cole & Stageberg, P.A., 1800 IDS Center, 80 S. Eighth St., Minneapolis, MN 55402 (for Respondent)

Considered and decided by Norton, Presiding Judge, Kalitowski, Judge, and Davies, Judge.

U N P U B L I S H E D O P I N I O N

DAVIES, Judge

Appellant, plaintiff in a slander of title and defamation suit, requests a new trial after a $500 verdict in his favor. Respondent, by notice of review, requests reversal of the judgment on the ground that it was based on privileged statements. We affirm the denial of a new trial and reverse the $500 judgment.

FACTS

Underlying the present action is a complicated property dispute between appellant Calvin Haasken, a real estate broker/developer/appraiser, and Alan Mellgren. The dispute arose out of Haasken's attempt to obtain building eligibilities from Mellgren to apply to Haasken's land, which adjoined Mellgren's. Mellgren was having financial difficulties and was threatened with foreclosure at the time that he was dealing with Haasken. Disputes arose, leading to three suits involving Haasken, Mellgren, and other parties.

This case involves claims for slander of title and defamation against Mellgren's attorney, respondent Richard Haefele.[1] The slander of title claim relates to a lis pendens filed by Haefele in conjunction with a quiet title action filed on Mellgren's behalf. The defamation claim is based on three sets of statements made by Haefele (or authorized by him to be made by his associate) during the course of the litigation between Haasken and Mellgren.

The trial court dismissed Haasken's slander of title claim, ruling that the lis pendens had been properly filed and that no damage had been shown. The court also held that two of the three sets of allegedly defamatory statements were absolutely privileged and dismissed the defamation claims related to them. The jury awarded $500 on the remaining defamation claim. Haasken appeals on the grounds discussed below. Haefele, by notice of review, argues that the statements on which the defamation award is based are also privileged and, thus, that the entire suit should have been dismissed.

D E C I S I O N

I. Juror Misconduct

Appellant claims that juror misconduct requires a new trial.

A trial court's decision to deny a motion for a new trial on the basis of jury misconduct will not be overturned absent an abuse of discretion.

State v. Kelley, 517 N.W.2d 905, 910 (Minn. 1994).

During the trial, one of the jurors reported that another juror had commented in the jury room that Haasken did not have a good reputation. When questioned, the commenting juror indicated he had said, in the presence of the other jurors, "that what I knew about [Haasken] wasn't good but that it wasn't much." The trial court dismissed this juror, ruling that he was disqualified because of his claim of knowledge apart from the evidence. The trial court then questioned the other jurors. Four of them had heard the comment, but they each said it would not affect their ability to be fair and impartial. They stated that they "blew it off," "took it with a grain of salt," found it "unusual," or "[didn't] listen to it." The trial court decided that the comment had not affected the jury's ability to be fair and impartial and, therefore, denied Haasken's motion for a new trial. Trial proceeded with an alternate juror. Although Haasken did not make a specific request for a curative instruction, the trial judge told the jury that they should disregard anything they had heard or seen apart from the evidence.

We affirm the denial of Haasken's motion for a new trial. Although the juror's comment was improper, the trial court responded quickly to determine whether the jury had been tainted. The jurors who heard the statement said without reservation that it would not affect their decision-making. The trial court did not abuse its discretion in denying the motion for a new trial.

II. Dismissal of Slander of Title Claim

Slander of title is the "utterance of false and malicious statements disparaging the title to property in which one has an interest." Kelly v. First State Bank of Rothsay, 145 Minn. 331, 332, 177 N.W. 347, 347 (1920). An action for slander of title must allege and prove special damages, i.e., "the loss of a sale to some particular person." Wilson v. Dubois, 35 Minn. 471, 473, 29 N.W. 68, 69 (1886).

Haasken's slander of title claim is based on Haefele's filing of the lis pendens in conjunction with Mellgren's quiet title action. The trial court dismissed the claim, finding that Haefele reasonably believed that the quiet title action affected Haasken's property and holding that the lis pendens had, therefore, been filed according to the requirements of Minn. Stat. § 557.02 (1994). The court also ruled Haasken failed to show special damages because he failed to show that, but for the lis pendens, the property would have been sold to a specific individual.[2]

Minn. Stat. § 557.02 limits use of lis pendens to "actions in which the title to, or any interest in or lien upon, real property is involved or affected." The lis pendens was properly filed here because, at the time of filing, Haasken's company had purchased Mellgren's property from the mortgagees and had filed an unlawful detainer action to force him to vacate the property. Prior to that time, Mellgren and Haasken had executed a purchase agreement providing that Haasken would get the zoning building eligibilities for Mellgren's three wooded lots. Mellgren intended to use the funds he received to save his property from foreclosure. Because the purchase agreement was never fulfilled, there was an issue as to whether Haasken had, in effect, obtained the building eligibilities without consideration. The lis pendens gave notice to potential purchasers that Mellgren's lawsuit related in part to whether the agreement to transfer the building eligibilities to Haasken was enforceable. The lis pendens was valid under Minn. Stat. § 557.02 because there was an "action[] in which * * * [an] interest in * * * real property [was] involved or affected."[3]

Further, Haasken makes no argument against the trial court's ruling that he failed to demonstrate any special damages. Evidence that the property would have been sold to a specific individual, but for the lis pendens, is a necessary element in an action for slander of title. Dubois, 35 Minn. at 473, 29 N.W. at 69. Legal expenses incurred in having a lis pendens removed do not constitute the "special damages" required to sustain an action for slander of title.

III. Defamation Claim

A. Statements Made to Department of Commerce and County Attorney

Haefele's associate, during the pendency of Mellgren's quiet title action and at Haefele's direction, wrote letters to both the Carver County Attorney and the Minnesota Department of Commerce. Haefele's associate testified that Haefele believed these agencies would be of assistance in the investigation of the dispute. The letter to the Carver County Attorney requested an investigation of possible criminal violations in Haasken's dealings with Mellgren, and the letter to the Department of Commerce requested an investigation into whether Haasken, a licensed real estate broker, had violated any real estate regulations. Haefele's associate testified that he believed he had sufficient grounds, based on his own investigation and research, to make the requests.

After receiving a request from the Department of Commerce for more specific information, Haefele's associate sent a second letter essentially restating Mellgren's complaint with some additional details. Haasken responded to a letter from the agency asserting that "the complaint you have before you is but a portion of a 60-page lawsuit against 30 defendants." The Department of Commerce eventually determined that Haasken had violated no regulation.

Haefele also sent one more letter to the county attorney[4] who had, by then, determined that there was insufficient "admissible" evidence to pursue the matter. The letter indicated that no one from the county attorney's office had been present during Haasken's testimony during trial and that, in Haefele's opinion, Haasken had made sufficient admissions during the testimony to support a prosecution. No prosecution was ever instituted.

The trial court dismissed the portion of Haasken's defamation claim that was based on these letters, holding them to be absolutely privileged.

Absolute privilege provides immunity from liability even for maliciously false statements; conditional privilege grants such immunity only if the statements are made in good faith and without malice. Matthis v. Kennedy, 243 Minn. 219, 223, 67 N.W.2d 413, 416 (1954).

An attorney at law is absolutely privileged to publish false and defamatory matter of another in communications preliminary to a proposed judicial proceeding or in the institution of, or during the course and as part of a judicial proceeding in which he participates as counsel, if it has some relation thereto.

Id. at 228, 67 N.W.2d at 419 (quoting Restatement of Torts § 586 (1938)). The same absolute privilege that applies to judicial proceedings extends to quasi-judicial proceedings. Dorn v. Peterson, 512 N.W.2d 902, 906 (Minn. App. 1994). Any question of relevancy or pertinency of a given statement should be resolved in favor of relevancy and pertinency. Hammer v. Forde, 125 Minn. 146, 147, 145 N.W. 810, 811 (1914).

Appellant argues that these communications were not privileged because neither agency was involved in the litigation nor possessed authority to adjudicate the claims, nor did the communications relate to proposed or ongoing judicial proceedings. We disagree.

The communications at issue were indisputably related to Haefele's role in the ongoing civil litigation. Although Haasken points to evidence that Haefele intended the communications to "put pressure" on Haasken, that fact is not dispositive; there is no evidence that refutes the claim that Haefele and his associate were seeking assistance in the investigation of a complicated multi-party lawsuit. The existence of further motives is not relevant to the issue of an attorney's absolute privilege.

B. Statements Underlying the $500 Judgment

Mellgren brought his lawsuit against Haasken and others in May 1993. One of the named defendants was Gaylen Case, a bank officer and mortgagee of Mellgren's property. Shortly after the suit was commenced, Haefele went to the bank to conduct personal business. He ran into Case, and Case invited him into his office to discuss the Mellgren/Haasken situation. Case testified that he did so because he was frustrated that the issues could not be resolved short of litigation.

Case characterized Haefele's comments as follows:

[H]e didn't like the way that Mr. Haasken was doing business, and that [Haasken] had rooked or crooked someone in the past, and didn't go into any details about it but he was going to teach him a lesson.

The defamation claim went to the jury based on these statements alone. The trial court stated that it would have granted absolute privilege as to the statements except that the "rooked or crooked" comment went to issues outside the Mellgren lawsuit. By notice of review, Haefele claims that this comment too is covered by absolute privilege and should not have been submitted to the jury.

Absolute privilege applies only if the statements are made "in office" or, in other words, in the role of attorney. Matthis, 243 Minn. at 223-24, 67 N.W.2d at 417.

Haefele argues that the trial court erred in parsing out the statement about Haasken having "rooked or crooked" someone in the past. In Matthis, our supreme court stated that it is the "occasion on which the communication of the defamatory words was made which determines the privilege." Id. at 223, 67 N.W.2d at 417. Relying on this rule, Haefele argues that all the statements were privileged because he was speaking as Mellgren's attorney.

Considering all the circumstances of the conversation, we agree that Haefele made these statements in the role of attorney. Although the statement at issue was not directly related to a specific legal issue in the underlying lawsuit between Mellgren and Haasken, it was made in a discussion as to why the matter could not be settled. It did relate to Haasken's manner of conducting business, which was a general topic involved in the suit. We reverse the district court and hold that the statements were absolutely privileged. As these statements were the sole basis for the only claim sent to the jury, we reverse the $500 damage award.

We need not address Haasken's claims related to damages.

Affirmed in part and reversed in part.

[ ]1 Mellgren was originally named as a defendant in this suit, but Haasken dismissed the claims against him before trial.

[ ]2 The trial court also held that Haasken waived his slander of title claim by not bringing it at the same time he brought his motion to remove the lis pendens. Because we affirm the trial court's dismissal of the slander claim on other grounds, we do not reach the waiver issue.

[ ]3 Because the lis pendens is simply a notice of a filed civil complaint, it is irrelevant that Haasken won in later judicial proceedings. See Nelson v. Nelson, 415 N.W.2d 694, 698 (Minn. App. 1987) (lis pendens "warn[s] prospective purchasers that title to property is in litigation which impedes * * * owner's right to free alienability").

[ ]4 Because Carver County was a party to the quiet title action, the case was referred to the Scott County Attorney for investigation.