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Greg Schwab and Shelly Schwab v. Raymond Zajac

November 27, 2012

GREG SCHWAB AND SHELLY SCHWAB,
PLAINTIFFS AND APPELLEES
v.
RAYMOND ZAJAC,
DEFENDANT AND APPELLANT



Appeal from the District Court of Ransom County, Southeast Judicial District, the Honorable Jay A. Schmitz, Judge.

The opinion of the court was delivered by: Crothers Justice.

N.D. Supreme CourtSchwab v. Zajac,

2012 ND 239

This opinion is subject to petition for rehearing. [Go to Documents]

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AFFIRMED AND REMANDED.

Opinion of the Court by Crothers, Justice.

[¶1] In an action stemming from a failed sale of land from Greg and Shelly Schwab to Raymond Zajac, Zajac appeals from a judgment entered after a jury awarded the Schwabs $4,000 on their slander of title claim against Zajac, the district court ordered disbursement of Zajac's payment of $10,000 in earnest money to the Schwabs and the court ordered Zajac to execute a document disclaiming any interest in the Schwabs' land. Zajac argues the district court erred in not admitting evidence at trial involving the Schwabs' attempt to cure a waterfowl easement on the land as an accommodation to complete the transaction, the court erred in not admitting evidence at trial of the present value of the Schwabs' land and denying him due process and a fair trial by taking over Zajac's self-represented case. We affirm the judgment and remand to the district court to determine the Schwabs' attorney fees on appeal for their slander of title claim.

I

[¶2] In August 2008, Zajac executed a purchase agreement to purchase a tract of land in Ransom County from the Schwabs for $196,000, with $10,000 as an earnest money payment made to an escrow agent. The purchase agreement provided for a closing date before November 12, 2008 and required the Schwabs to convey marketable title by warranty deed to Zajac "subject only to easements and reservations of record." The purchase agreement stated that "[i]f the Seller shall meet all of the obligations imposed upon the Seller by this Offer to Purchase and the Buyer for any reason fails, neglects, or refuses to purchase the property within ten (10) days after fulfillment of the Seller's obligations, then at the Seller's option the earnest money . . . shall be retained by the Seller as liquidated damages." The purchase agreement provided Zajac with a seller's property disclosure statement as an "addenda" that was "part of the Purchase Agreement," in which the Schwabs answered "no" to a question whether they were "aware if the property contains any U.S. Fish or Wildlife easement(s)." According to Greg Schwab, the Schwabs prepared the disclosure statement after receiving it from real estate agent Dale Haugen, who approached them about selling the land. The disclosure statement said the "disclosed information is given to the best of the seller's knowledge. This is not a warranty or guaranty of any kind by the seller(s) or any licensee(s) representing or assisting any party in the transaction(s). Information presented in this form is not intended to be part of any contract between buyer(s) and seller(s)."

[¶3] Zajac's attorney's subsequent review of the abstract of title for the land disclosed a United States Fish and Wildlife waterfowl easement, which was an easement of record on the property. Zajac refused to complete the purchase of the land on the designated closing date. According to Zajac, he agreed to complete the purchase if the Schwabs had the waterfowl easement removed and the Schwabs thereafter attempted to terminate the easement. On January 5, 2009, Zajac recorded an affidavit of interest in the land with the Ransom County Recorder of Deeds, which stated:

"4. Upon receiving a title opinion, I realized that the seller had misrepresented the property in the purchase agreement since there was a government waterfowl easement on the entire quarter and the property was represented as not having a government easement. "5. The seller through their attorney offered to try to correct the misrepresentation by attempting to have the government waterfowl easement terminated. I through my attorney was agreeable to completing the purchase with the termination of the government waterfowl easement. Previously and continually I have and do request the return of my earnest money because of the misrepresentation. As of the date of this affidavit, the seller has not returned my earnest money, corrected the misrepresentation, or paid me damages caused by the misrepresentation."

[¶4] The Schwabs sued Zajac for the earnest money for breach of the purchase agreement, for a determination that Zajac's recorded affidavit of interest in the land was null and void, to quiet title to the land and for special damages for slander of title stemming from Zajac's recorded affidavit of interest in the land. The Schwabs' complaint sought attorney fees and costs under N.D.C.C. § 47-19.1-09.

[¶5] Zajac filed an answer and counterclaim for fraud, claiming the Schwabs fraudulently failed to disclose the wildlife easement, which decreased the value of the land by at least $30,000 and induced him to execute the purchase agreement. He alleged he sought the return of his earnest money and the parties subsequently agreed Zajac would purchase the land after the Schwabs had the wildlife easement removed. He claimed he gave the Schwabs time to remove the easement and he filed the affidavit of interest with the Ransom County Recorder of Deeds in January 2009 to protect his interest in the land. Zajac sought return of his earnest money.

[ΒΆ6] Zajac represented himself during a jury trial. A jury returned a special verdict, finding Zajac failed to prove the Schwabs committed fraud in failing to disclose the waterfowl easement. The jury also found Zajac was liable for slander of title, which caused the Schwabs $4,000 in damages. The district court ordered Zajac to execute a document disclaiming any interest in the Schwabs' land and ordered disbursement of the $10,000 earnest money payment from the escrow agent to the Schwabs. The earnest money was disbursed to the Schwabs, and Zajac executed a document disclaiming any interest in ...


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