THERE ARE LEGAL COSTS, AND THEN THERE ARE LEGAL COSTS

Let nothing come between the lawyer and the legal fee.

You might be cynical, and imagine that today’s case is nothing more than a lawyer worried about collecting a large and unwarranted fee. But the case is much more than that.

The facts are rather prosaic. Some landowners failed to carefully mark the common boundary with their neighbor before setting a timber company loose on the property. Sure enough, the cutters harvested some of the neighbor’s trees. That much wasn’t an issue.

When Valarie Garvey sued the Chaceys for timber trespass, property damage, and a collection of related causes of action, the Chaceys hired some aggressive litigators. Their lawyers knew that the best trial defense often is a good pretrial offense. They fought tooth-and-nail before trial, gaining their best tactical high ground when Valerie’s lawyer inexplicably didn’t identify the plaintiff’s timber expert by the pretrial deadlines.

The expert was crucial because he was going to testify as to the value of the timber that had been wrongfully cut. But once the expert established the value of the missing trees, Section 55-332 of the Virginia Code would let Valerie Garvey collect three times the value of the wrongly-cut timber, plus reforestation costs, plus other damages to the property (such as the private road the timber harvesters ripped up) plus “legal costs directly related to the trespass.” In short, it looked like a big payday for Valerie Garvey. She just had to do one thing. She had to prove the value of the stolen timber.

Alas, she screwed it up. Perhaps it would be more appropriate to say her lawyer screwed it up. Without the expert, Valerie had no way to get the value of the timber into evidence. When the jury decided the case, it was able to award her the princely sum of $15,135.00 (only a fraction of the reforestation costs she estimated to be $78,000.)

Valerie’s lawyer, trying to save a case that was going south pretty fast, successfully convinced the trial court that the “directly associated legal costs incurred by the owner of the timber as a result of the trespass” included attorneys’ fees. Valerie claimed she had spent over $135,000 in legal fees, and the trial court awarded even more than that – $165,000 – in fees.

We doubt that Valerie’s lawyer was going to get all of that. In fact, Val had every right to be as mad as a wet hen over counsel’s missing the expert witness deadline. We suspect that the lawyer and client had made a deal to salvage something out of the case, and counsel would have ended up with little more than cab fare (but no malpractice claims). Unfortunately, we’ll never know because on appeal the Chaceys convinced the Virginia Supreme Court that whatever “directly associated legal costs” might be, they are not “attorneys fees.” The Supreme Court was impressed that wherever the legislature intended to authorize the award of attorneys fees – in over 200 statutes in the Code – it was able to clearly say so.

The Chaceys – not satisfied with hitting a triple – swung for the fence. They asked the Supreme Court to rule that where a plaintiff claiming timber trespass did not prove the value of the missing timber, the case should be thrown out. The Supreme Court disagreed. Proving a timber trespass does not require that one prove the value of the purloined pines. Of course, not doing so cuts the plaintiff out of a lot of damages, but the offense does not depend on proven damages. It just requires that a trespass to timber occur, whether the tree is worth anything or not.

As for Valerie’s attorney, we suspect he was on the phone pretty quickly, calling his malpractice carrier.

Chacey v. Garvey, 291 Va. 1, 781 S.E.2d 357, 358 (2015). In 1995, Valerie Garvey bought 50 acres of land from Allan and Susan Chacey. The Chaceys retained ownership of adjacent property, and they reserved to themselves an easement over Garvey’s property as a means for ingress and egress to their property.

At the end of 2012, Garvey sued the Chaceys and Blue Ridge Forestry Consultants, Inc., alleging timber theft and trespass. Garvey said the Chaceys had hired a logging company a few years previously to remove some timber located on their property, and that the company had trespassed on her property and removed timber without her permission. She alleged that she was entitled to damages for timber theft at three times the value of the timber on the stump, as well as reforestation costs not to exceed $450 an acre, the costs of ascertaining the value of the timber, and her attorney’s fees. She also asked for $30,000 for damages to her property caused by the trespass, including damage to the road, fencing, and the stone bridge.

Prior to trial, Garvey attempted to designate an expert witness for the purpose of establishing the monetary value of the timber on the stump at issue in the complaint. However, she did so too late, and the trial court refused to let her expert testify during the three-day jury trial.

While she was testifying at trial, Garvey was asked by her attorney whether she had incurred legal costs in connection with the trespass. The Chaceys objected, but the trial court ruled that legal costs included attorney’s fees. Garvey told the jury that she had incurred more than $135,000 in legal costs, including attorney’s fees, which she claimed were all directly associated with the trespass. She also testified that she had negotiated with Bartlett Tree Services for the restoration of the trees, and she had paid a deposit of $440 towards that work, against a total price of $78,000.

The trial court ruled that Garvey could not recover treble damages since her expert evidence regarding the value of the timber on the stump had been excluded. However, the case could still go to the jury for consideration of damages for reforestation and legal costs.

The Chaceys argued that attorneys’ fees are not recoverable by a prevailing party in an action for timber theft pursuant to the Virginia Code § 55-331. They also contended that Garvey’s timber trespass claim should not have been submitted to the jury, because she had failed to provide any evidence related to the value of the alleged damaged timber. However, the jury found for Garvey on her claims of timber theft, trespass, and property damage. On the timber theft claim, the jury awarded Garvey $135.00 in reforestation costs. The jury also awarded her legal costs. On the trespass count, the jury awarded Garvey $15,000 in damages. The trial court held that Garvey was entitled to $165,135 in “directly associated legal costs incurred by Plaintiff as a result of the trespass, including attorney’s fees, in the amount of $150,000 …”

The Chaceys appealed.

Held: The Virginia Supreme Court split the ticket. It observed that although Virginia Code § 55-331 permits any victim of timber trespass to collect “directly associated legal costs incurred by the owner of the timber as a result of the trespass,” whether Garvey was entitled to attorney’s fees depends upon the meaning of “costs.” Garvey argued that her attorney’s fees are legal costs directly associated with the trespass. The Chaceys argued that Garvey is merely entitled to the costs necessary for the prosecution of her suit.

Tracing the definition of “costs” in other proceedings, the Court held that “the term ‘costs’ is limited to the costs necessary for the prosecution of a suit, and does not include attorney’s fees. The Code of Virginia contains more than 200 instances where the General Assembly has determined a successful litigant is entitled to ‘attorney’s fees and costs’ or ‘costs and attorney’s fees’ … However, the General Assembly did not include the right to recover attorney’s fees in this statute, something it has done in more than 200 other separate instances.”

The Court disagreed with the Chaceys, however, about the timber trespass claim. The Chaceys, no doubt wanting to capitalize on their pretrial success in keeping Garvey’s expert off the stand, argued that the trial court erred in permitting Garvey’s timber trespass claim to proceed to the jury because Garvey failed to provide any evidence related to the value of the alleged damaged timber. Essentially, the Chaceys were contending that evidence related to the value of the damaged timber is a prerequisite to awarding any of the additional damages provided for under Code § 55-332(B).

Virginia Code § 55-332(B) holds that any person who removes timber from the land of another without permission is liable to the rightful owner for “three times the value of the timber on the stump and shall pay to the rightful owner of the property the reforestation costs incurred not to exceed $450 per acre, the costs of ascertaining the value of the timber, and any directly associated legal costs incurred by the owner of the timber as a result of the trespass.” The Court held that there was nothing in the statute that stated that an owner is only entitled to reforestation costs, legal costs, or the costs of ascertaining the value of the timber after he or she had first established the value of the timber that was improperly taken. Instead, the Court said, the statute made clear that the person who removed the timber “shall be liable to pay” all of these damages to the owner. The fact that Garvey was unable to prove the value of the timber on the stump, in this case, did not preclude her from being able to recover the other damages she was entitled to under Code § 55-332(B).

– Tom Root

BUILDING A CASE

Trees falling on vehicles never work out well for the vehicle.

A family’s Christmas – and for that matter, its future – was ruined on a rural Ohio one dark December night. 

Mike and Traci Reed were driving their two kids home from a Christmas celebration. Traci and her 5-year-old son were in her car, following her husband and their daughter in his, because they had picked up her vehicle at her office, where she had left it earlier. When Mike and his daughter Samantha got home, Traci – who had been following them – was no longer behind them. Mike backtracked to find her car crushed by a tree. An EMS worker at the scene told him that his wife was dead and his son was in critical condition.

The wheels of justice ground slowly after the accident. Four years after the accident, the Ohio Court of Claims – which decides questions of the State’s liability – finally decided the question of the Ohio Department of Transportation’s liability. The case is of interest not just because of the dry reduction of human tragedy into the dispassionate allocation of responsibility (although it is interesting for that, too). The findings of fact and conclusions of law handed down by the magistrate (who is kind of an assistant judge) illustrate a well-structured case presented by the plaintiff and a poor rebuttal by ODOT.

One wonders why the State of Ohio didn’t just settle the case if it was going to make such a poor showing. Its own employees made the plaintiff’s case, and its expert pretty much just “phoned it in.” But from the plaintiff’s perspective, the case is a veritable “how-to” try a claim of liability against a state agency in a “danger tree” case.

Reed v. Ohio Dept. of Transportation, 2012-Ohio-1244 (Ct.Cl., Mar. 23, 2012). Traci Reed and her young son, Conner, were driving northward through the hilly eastern Ohio countryside when a tree fell on their car. Traci was killed, and her son was badly injured.

The tree that fell on Traci had shown as “substantial ‘lean’” in the year before the accident, and other trees on the same embankment had fallen during that time. Traci’s husband had observed this, but he had never complained to the Ohio Department of Transportation himself. Rather, he assumed that ODOT knew about the condition because road crews maintained the area throughout the years.

The Court noted that ODOT had a general duty to maintain its highways in a reasonably safe condition for the traveling public, but it is not an insurer of the safety of its highways. ODOT may be held liable for damage caused by defects or dangerous conditions on state highways where it has notice of the condition, either actual or constructive. Actual notice exists where, from competent evidence, the trier of fact can conclude the pertinent information was personally communicated to or received by the party. Constructive notice is notice that the law regards as sufficient to give notice and is regarded as a substitute for actual notice. Under Ohio law, for there to be constructive notice of a nuisance or defect in the highway, that nuisance or defect must have existed for such length of time as to impute knowledge or notice.

The plaintiff (who was the husband of the deceased wife and mother) presented several ODOT employees responsible for vegetation management and hazard abatement along the road in question. He established that some of the employees knew of the tree and believed it to be dangerous, and others – while not recalling the tree ­ – agreed when studying the accident photos that it was dangerous. Plaintiff called a surveyor to establish that the tree had fallen within the state’s right-of-way on the highway and put people on the stand who had lived close to the accident site and who testified that they had seen the tree and thought it was a hazard.

Additionally, the plaintiff produced an urban forestry consultant who was certified by the International Society of Arboriculture as an arborist. The forester prepared for his testimony by reviewing court documents and photographs, visiting the accident site, and examining cut-up tree remnants. He testified that the tree was a 50-year-old red oak and that it contained “reaction wood,” which forms to counter a leaning of the tree. He observed that the pith, the biological center of the tree, was off-center and that the tree’s roots in the embankment showed mild to moderate decay. He concluded that the tree was “hazardous” (as defined by the International Society of Arboriculture Hazard Rating System). His conclusion was based on the tree’s potential to fail and the potential to hit a target, because of its significant lean, its location in a sloped embankment with exposed roots, and the visually obvious deadwood in the crown of the tree. He testified that once a tree is “off vertical” with unstable soil, each progressive year increases the risk of failure. The tree was located on a steep slope, which compromised its stability.

The expert concluded that ODOT failed in its duty to remove a hazardous tree that had several significant defects readily observable from the roadway. He said it was “not a question of if, but a question of when” the tree would fall onto the highway.

ODOT presented the testimony of one of its employees who said he had removed the tree from the road after it fell, and he had been familiar with it prior to that time. He said he had never seen any condition that concerned him, and if he had, he would have reported it. ODOT also presented its own expert, who prepared his testimony in the same manner as did the plaintiff’s expert. He said that the tree has a “classic natural lean,” because the tree was on the edge of the woods and it grew toward the sunlight. According to ODOT’s expert, the center of the tree was asymmetric, but there was no indication that the tree was dead or distressed. The State’s expert opined that the tree falling was “natural, it was not predictable.” However, on cross-examination, he conceded that the tree’s center of gravity was “probably not over the roots” and that a tree does not have to be dead, decayed, or diseased to be a hazard.

The finder of fact – in this case, a magistrate who heard the evidence for the court ­– found the Reeds’ expert to be more persuasive. The evidence about the tree’s shifted center of gravity carried the day; the court concluded that the red oak tree that fell on Traci Reed’s vehicle was a hazard to the motoring public. As for notice, although ODOT said it had received no complaints from either its staff or the public regarding the tree, two of its employees acknowledged that they were aware that the canopy of the tree extended over the roadway. The court found that ODOT had actual knowledge of the hazardous condition, which had existed for more than a year before the accident and which was within the State’s right-of-way.

An “Act of God?”

ODOT argued that the property owner where the tree was located was liable for the tree, but ODOT presented no evidence showing that the landowner had actual or constructive notice. As well, it argued that the tree fell due to an act of God. The court rejected that argument. The evidence showed that there was no weather that night that was sufficiently “unusual and overwhelming as to do damage by its own power” to make the falling tree an Act of God. Even if there had been an adverse weather condition on the night of the accident, the Court said, “it has also been the rule of law that, ‘[i]f proper care and diligence [on a defendant’s part] would have avoided the act, it is not excusable as the act of God.'” ODOT’s failure to exercise proper diligence resulted in the tree falling, the Court said, not an act of God.

ODOT was held liable for the falling tree and Traci Reed’s death.

And after considering the damages showing? The Court awarded the family $4 million.

– Tom Root

DO WE DETECT SOME HOSTILITY HERE?

This looks like hostility… but is it?

We all know the mantra of adverse possession — in order to establish that a party has obtained title to land pursuant to adverse possession, a party has to show that its possession of the land has been open, notorious, exclusive and hostile continuously for a period set by statute (from five to 21 years, depending on state law).

Likewise, we all have notions of what “hostile” means, and often, real life isn’t like that. In today’s case, a small cemetery association had been using a gravel road it had gotten the right to by a poorly-drafted easement in an 1880 deed (the year James Garfield became president). The people who remembered the particulars of the easement were still nearby, although about six feet deeper in the ground than they had been back when it was first written.

The cemetery association had been dumping dirt on the land next to the easement, but stopped doing so when next-door landowner Calvin Coyer asked it to desist, because the cemetery wanted to be a “good neighbor” (and no doubt wanted Calvin to become a tenant as some point in the future. No hostility there. However, the Association still parked cars next to the gravel road, even while giving Cal permission to graze his herds there. But when the cemetery was finally compelled to sue to quiet title under the doctrine of adverse possession, Cal argued that nice guys finish last.

Because the Association always thought it owned the property, Mr. Coyer argued, it couldn’t have possibly possessed the land with any hostility. Not so, the Court of Appeals said. The “hostility” element of the doctrine of adverse possession is satisfied where the possessor thinks he or she owns it, or where he or she knows someone else owns it but intends to possess it anyway.

Thus, Malcolm Forbes was right! “Contrary to the cliché, genuinely nice guys most often finish first or very near it.”

Union Cemetery Ass’n of Crawfordsville v. Coyer, 162 P.3d 1072 (Court of Appeals of Oregon, 2007). The Union Cemetery Association operated a 3.69-acre cemetery surrounded by Calvin Coyer’s 81 acres of grazing land. Coyer’s land connects the cemetery to a 28-foot wide roadway that, in turn, connects to a public road by means of a 14-foot wide gravel road.

The 100-year-old gravel road provides the only access from the public road to the cemetery. The Association received a deed in 1880 for a “right of way for a wagon road” as to a portion of the gravel road in 1880 and to another parcel of property. In the final sentence of the deed, the grantors stated that they “hereby relinquish and quitclaim all our right, title and interest in said premises.” However, the sentence did not specify whether the described “premises” included the “right of way” which became the gravel road or whether the “premises” consisted solely of the other property conveyed under the deed.

Before Coyer acquired the land in 1991, the Association piled dirt on the lot. Coyer asked the Association to stop doing so, and the Association complied, even posting a sign that prohibited dumping. Association members believed the Association owned the subject property and, as a good neighbor, the Association gave Coyer permission to corral cattle and park farm equipment on the property in a way that did not conflict with the use of the road by cemetery traffic.

Inevitably, a dispute arose, and the Association filed an action for quiet title, seeking a declaration that it owned the entire subject property in fee simple based on either a conveyance or adverse possession. After trial, the court found that, by virtue of the 1880 deed, the Association held title to an 18-foot roadway and owned the remaining 22-foot width of the subject property by adverse possession or, in the alternative, that the cemetery had established an easement by prescription over the entire subject property. Coyer appealed, challenging the conclusion that the Association’s possession of the land was hostile.

Held: The Association owned the land by adverse possession. The Court noted that in an adverse possession action, a party seeking to establish ownership by adverse possession must prove by clear and convincing evidence that, for 10 years, it or its predecessors maintained actual, open, notorious, exclusive, hostile, and continuous possession of the property.

The requirement for actual use is satisfied if the plaintiff establishes a use of the land that would be made by an owner of the same type of land, taking into account the uses for which the land is suited. A use is “open and notorious” if it is of such character as to afford the owner the means of knowing of the use and the adverse claim. A use is “hostile” if the plaintiff demonstrates a subjective intent to possess the property, intending to be its owner and not in subordination to the true owner.

To establish hostility, an adverse possession claimant must show either that its possession of the disputed property was under an honest but mistaken belief of ownership, or that the possessor subjectively intended to possess the property, intending to be its owner. Here, the Court ruled, the testimony of the Association’s board members that they believed the Association owned the 40-foot strip of land, but as a good neighbor, gave Coyer permission to corral his cattle and park farm equipment on the strip in a way that didn’t conflict with the Association’s use of the road for cemetery traffic, was sufficient to show that the Association believed — even if mistakenly — that it owned the property. That established hostility for purposes of the adverse possession claim. 

– Tom Root 

LIS BLUDGEONS

If you’re suing a neighbor because you claim title to a piece of her property, the last thing you want to see happen is for her to sell it to the Little Sisters of the Poor before your lawsuit is completed. The neighbor makes off with the money from selling your property, and when you finally win, you have the sticky PR problem of the bailiff dragging a gaggle of nuns off your land while TV crews report your heartlessness live on CNN.

It was for precisely this reason — well, maybe not precisely for this reason — that the law has developed a mechanism known as lis pendens. A lis pendens — literally, “lawsuit pending” – is a filing with the office of the county responsible for deeds (often the county recorder) that places the world on notice that litigation is going on that relates to ownership of the piece of land at issue. Practically speaking, the filing will send prospective buyers and lenders fleeing for the next county.

The purpose of lis pendens is laudable: it keeps wily defendants from transferring interests in land that is subject to a lawsuit, so a plaintiff doesn’t have to endlessly sue new buyers and lessees in order to collect on a judgment. But like with any reasonable and necessary mechanism, there are those who — as the legendary trickster Dick Tuck would have said — want to run it into the ground.

In today’s case, the plaintiff sued the defendant over a large tree on the boundary between their properties, alleging that it had been negligently trimmed to lean onto their property, that it constituted a “spite fence,” and that its size and location constituted a nuisance. Of interest to us was the last allegation, that in a prior lawsuit between the parties, the defendant’s lawyer had filed a lis pendens on the plaintiff’s lot that caused a sale to fall through. The plaintiffs said that the lis pendens — which a court had later thrown out — constituted a tort known as “slander of title.” This was so because the underlying litigation had nothing to do with whether the defendant claimed title or the right to possess the plaintiff’s property. Defendant’s lawyer filed it simply as a club with which to bludgeon the plaintiffs, as part of a take-no-prisoners litigation strategy.

The defendant’s lawyer argued the slander of title had to be dismissed because as counsel for the other side, he owed no duty to the plaintiffs. The California court conceded that he didn’t, but said that was irrelevant: slander of title is an intentional tort (like a judge hauling off and slugging a public defender). Unfortunately, the Court said, the plaintiffs’ pleading wasn’t very well written, and the Court couldn’t be sure that they had alleged malice. The more prudent course, the Court thought, was to offer them a chance to amend their complaint to make clear that they were alleging the defendant’s attorney had acted maliciously.

Castelanellis v. Becker, 2008 Cal. App. Unpub. LEXIS 165 *, 2008 WL 101729 (Cal. App, Jan. 10, 2008). The Castelanellis owned real estate in Humboldt County. They sued the owner of the neighboring home, Kristine Mooney, and her lawyer Thomas Becker, alleging that on the border between their unimproved lot and Mooney’s property, “a large tree” curves from the bottom portion of its trunk toward the Castelanellis’ property and takes up so much space that “the subject property cannot reasonably be developed as a residential property.” They also claimed that Mooney’s house tree blocked light to the tree and caused the tree to grow almost exclusively over their property, and that Mooney had trimmed or negligently maintained the tree to contribute to its “odd and unusual angle.”

The complaint maintained that the tree constituted a spite fence within the meaning of California law, and was “maliciously maintained for the purpose of annoying the plaintiffs and in an attempt to gain ownership of plaintiffs’ land at less than fair value.” The complaint alleged nuisance, trespass, tortious interference with contractual relations, and tortious interference with economic relations. The Castelanellis alleged that Mooney sought to “purchase plaintiffs’ property at below fair market value” and had “threatened legal action if plaintiffs trimmed the subject tree to make their property capable of being developed and sold.” Finally, they alleged that Mooney and Becker published “false statements” in a lis pendens filed as to the Castelanellis’ property, and this lis pendens — later thrown out by another court — had prevented the Castelanellis from selling the property. The trial court agreed that because Mooney and Becker owed the Castelanellis no duty, there could be no slander.

The Castelanellis appealed.

Held: The Castelanellis had made out an adequate cause of action against Attorney Becker. A party to an action who asserts a real property claim may record a notice of pendency of action in which that real property claim is alleged, called a lis pendens. Such a notice places a cloud on the title and effectively keeps any willing buyer from wanting to close on a transaction until the lis pendens is cleared. To be privileged, so that no party may later sue a party or its attorney for filing such a notice, a notice of lis pendens must both (1) identify a specific action “previously filed” with a superior court and (2) show that the previously-filed action affects “the title or right of possession of real property.

In this case, the notice of lis pendens clearly identified that it was signed and filed in conjunction with litigation involving a tree growing upon a shared property line. But nothing in the record enabled the Court to determine that litigation involved the “right of possession” of either of the two properties involved in that litigation. If it did, a litigation privilege clearly applied, and the action against Attorney Becker could not stand.

Becker argued that he had no duty to the Castelanellis, and he could, therefore, not be sued by them. The Court pointed out that this would be true if the action were based on negligence. However, the action was an intentional tort, like the tort of malicious prosecution, and there need not be a duty of care owed to the victim by the perpetrator before an intentional tort can be inflicted. The Court said that while an attorney cannot be liable for negligence to a formerly adverse party, that rule does not exempt the attorney from liability for malicious prosecution.

The tort of slander of title does not rise to the level of either malicious prosecution or abuse of process. The elements of the tort have traditionally been held to be publication, falsity, absence of privilege, and disparagement of another’s land which is relied upon by a third party and results in a pecuniary loss. Slander of title does not include express malice as an intrinsic factor. Here, while the Castelanellis did not specifically plead malicious prosecution in their amended complaint, that complaint does include allegations that the actions “were done knowingly, willfully, and with malicious intent.” The allegations seemed to the Court sufficient to inject into the slander of title cause of action an allegation of malice, even as to attorney Becker.

In any event, the Court said, the law is clear that in evaluating a complaint against a general demurrer, the cause of action doesn’t need to be the one intended by the plaintiff. The test is whether the complaint states any valid claim entitling the plaintiff to relief. Thus, the plaintiff may be mistaken as to the nature of the case, or the legal theory on which he or she can prevail. But if the essential facts of some valid cause of action are alleged, the complaint is good against a general demurrer.

The Court held that the absence of any suggestion in the Castelanellis’ opposition to Becker’s demurrer that they either wished to amend or intended to plead some sort of intentional tort via their fifth cause of action left the Court reluctant to rule that the trial court abused its discretion by sustaining the demurrer without leave to amend. Under all the circumstances, the Court thought the better course of action was to remand this matter to the trial court with instructions to consider whether any intentional tort — as distinguished from a claim of negligence — was in fact pled by the Castelanellis and (2) if not, whether the Castelanellis wish to and can plead a valid intentional tort cause of action against Becker regarding the allegedly improper lis pendens.

– Tom Root

POUNDING ON THE TABLE

The old trial strategy aphorism recommends that “if your case is weak on the law, pound on the facts; if it’s weak on the facts, pound on the law; and if it’s weak on the law AND facts, pound on the table.” 

It doesn’t always work all that well, as our hapless landowners in today’s case, the Wimmers, found out.

“Wimmers” rhymes with “winners,” which is ironic given the outcome in this case. It seems the Wimmers owned land for which they had given the electric utility an easement for its power lines. That’s pretty common – anywhere power or communications lines cross over land, or pipes run under the ground, there’s probably an easement involved. The easement in the Wimmers’ case let Ohio Edison trim and remove trees as needed to keep vegetation clear of the lines.

The Wimmers didn’t want to see much of their foliage cut away, and because trimming and removing trees costs money, the utility didn’t want to do more than was absolutely necessary. Thus, there was a happy confluence of interest that continued for years.

Then came August 14, 2003. Some high-voltage transmission lines owned by the same Ohio Edison – hot from weather and the high electrical demand of the day – sagged into untrimmed trees just south of Cleveland. Three lines shorted out simultaneously. Normally, such a condition would have tripped an alarm at a monitoring center, letting technicians redistribute the load. But a bug in the software permitted what engineers call a “race condition,” and the alarms didn’t sound. The result was a cascading power failure that became the great North American Blackout of 2003, affecting 55 million people on the eastern seaboard and midwestern United States, as well as the province of Ontario.

After that day, everything changed. The public fumed, the media chastised, politicians fulminated. Changes had to be made. Ohio Edison was understandably humiliated by being the utility whose poor vegetation management started it all. Suddenly, occasional and desultory tree trimming became much more scorched earth. For the Wimmers, that meant that the power company’s crews showed up at their place one day to clear-cut the entire easement.

The family took exception to the plan and sued to stop it. While their case was wending its way through the courts – not very satisfactorily to them, because Ohio Edison was winning every step of the way – the Ohio Supreme Court handed down its decision in Corrigan v. Illuminating Co. (which we, being the thorough types that we are) have discussed previously.  Corrigan held that vegetation management issues fell within the exclusive jurisdiction of the Public Utilities Commission of Ohio. Common pleas courts had no authority to decide whether tree trimming and removal within easements was prudent or unduly robust.

The Wimmers recognized a break when they saw one, and promptly took a mulligan. Sadly, they fared no better before PUCO than they had in the state court system. That might be because Ohio Edison rolled out the IEEE standards for vegetation management to an expert witness who had inspected the easement, could identify the individual trees involved, and had facts and figures at her fingertips on the risk each tree posed to the power lines.

There wasn’t any question that the easement permitted Ohio Ed to cut down trees. The only issue was whether it was reasonably necessary. The Wimmers didn’t have any facts to counter the power company’s showing. They didn’t have any compelling legal arguments. All their lawyer could do was pound on the table and argue that it was speculative that the trees would grow to be a hazard to the power lines.

Well, sure… the expert was only speculating that the trees would grow and that they would reach the average height for that kind of tree, and for that matter, that there would ever be a high wind or ice storm that would cause them to ensnare the electric lines. Likewise, it’s speculation that the sun will rise in the morning, based on nothing more than a sheer guess loosely based on the fact that it’s done so for the past 1.6 trillion days since the Earth was formed. You see where this is going?

Neither PUCO nor the Ohio Supreme Court – which reviewed the agency’s denial of the family’s complaint – was impressed with the Wimmers’ defense. “Who are you going to believe – me, or your own eyes?” their lawyer seemed to argue. The Commission and the Court both answered that question. Actual evidence carried the day.

Pound on the table, indeed.

Wimmer v. PUCO, 131 Ohio St.3d 283, 964 N.E.2d 411 (Sup.Ct. Ohio, 2012). Ohio Edison owned a transmission-line easement running over the Wimmers’ property. For years, Ohio Edison – in accordance with the company’s general policy – trimmed and, once in a great while, removed trees growing in the easement. However, its policy changed after the 2003 Northeastern United States blackout. When the company tried to remove all of the trees in the easement, the Wimmers sued to stop it. They went to court, where Ohio Edison won. But before the decision was final, the Ohio Supreme Court ruled in Corrigan v. Illuminating Co. that PUCO, not a court, was required to decide whether removal was reasonable.

The area of North America affected by the 2003 Blackout is marked in red.

The Wimmers then took their complaint to PUCO. After an evidentiary hearing, the commission ruled that Ohio Edison could remove the trees.

The Wimmers appealed.

Held: Ohio Edison was permitted to remove the trees. The Supreme Court held that there was “no question that the company has a valid easement,” that “the tree is within the easement,” and that the easement “grants the company the right to remove any tree within the easement that could pose a threat to the transmission lines.”

The Wimmers nevertheless argued that PUCO’s decision that the circumstances permitted Ohio Edison to remove the trees was not reasonable. They argued that Ohio Edison failed to present evidence that their trees “may interfere with or endanger the utility’s transmission lines.” The Wimmers maintained that the utility’s evidence was “long on Ohio Edison’s fear and speculation and short on hard facts.”

The Court disagreed. It found that evidence presented to the commission showed that “the vegetation in question has the genetic disposition to grow to heights tall enough to potentially interfere with” the power lines, and that Ohio Edison “reasonably determined that this vegetation may interfere or threaten to interfere with the transmission line and should be removed.” The utility had presented an expert witness who had described the trees growing in the right-of-way, which she had personally examined, and explained that their average mature heights were well above the height of the power lines. She had testified that “even with continuous trimming and pruning, at least one tree had already grown to within four feet of the line, in violation of the National Electrical Safety Code, which is published by the Institute of Electrical and Electronics Engineers and sets the industry-accepted safety standards.“

The Wimmers didn’t present any contrary evidence or challenge the Ohio Edison witness’s credentials, but rather just complained that her testimony was speculative. To overturn PUCO’s determination, the Wimmers had to show that the decision was “so clearly unsupported by the record as to show misapprehension, mistake, or willful disregard of duty.” They did not come close to doing that.

The Ohio Supreme Court did, however, “note with approval the commission’s admonition that Ohio Edison’s ‘attempt to minimize the impact to property owners, to the extent possible and without sacrificing safety and reliability, when performing [utility-vegetation-management] activities’.” The Court dryly observed that “Ohio Edison must comply with the commission’s order.”

– Tom Root

OOPSIE!

Anyone can make a mistake. Or two.

Consider today’s case on mutual mistake. Mutual mistake is a doctrine that started with a barren cow with a fancy name, Rose 2nd of Aberlone, in the case of Sherwood v. Walker, the classic case on mutual mistake in contract law. Well, maybe it didn’t start there, but a generation or two of law students think it did. Wherever it started,  the doctrine remains alive and well.

In today’s decision, Mr. Thomas entered into an easement with Ohio Power to let the company string lines across his place to service his neighbor’s new house. But it turned out the house was in another power company’s service area, something no one figured out until after Ohio Power had sliced up Mr. Thomas’s trees. Thomas sued Ohio Power to rescind the easement and for damages, claiming mutual mistake. The trial court disagreed, but the Court of Appeals threw out the easement.

The Court’s most important point was this: maybe Thomas and his neighbor Baker didn’t know where the electric service boundary lay. But after all, they weren’t in the power business. Why should they know? Ohio Power, on the other hand, was just plain sloppy in not recognizing the problem. In Court-speak, “the equities of this situation show that Ohio Power, as the company in the business of providing electric power, was in a much better position than the Thomases to discover the mistake.”

To provide grounds to rescind (undo) a contract, the mistake must be mutual. The Battle of New Orleans was a mutual mistake – Andy Jackson thought we were at war with the British, and British Admiral Thomas Cochrane thought they were still at war with the U.S. Meanwhile, on the mythical planet of Tatooine, it appears that the mistake was not mutual – Obi-wan Kenobi was fully aware that the droids he was with were indeed the droids the stormtroopers were looking for, but he led the storm troopers to believe otherwise. Not a mutual mistake at all.

Thomas v. Ohio Power Co., 2007-Ohio-5350,  Ohio App. LEXIS 4715, 2007 WL 2892029 (Ct. App. Carroll Co., Sept. 27, 2007). The Thomases owned 159 acres of property in Augusta Township. Right next door was land owned by Brent Baker. The Thomas property is within the area served by Ohio Power Company, but the Baker property is served by Carroll Rural Electric Power. Neither of the power companies may provide power to the area assigned to the other without the consent of both companies and the affected customer.

Baker asked Thomas for permission for Ohio Power to take an easement across the Thomas property to bring power to a house Baker planned to build. Thomas agreed. As a result, an easement was executed, and Ohio Power — in reliance on the easement — cut and cleared many trees on the Thomas property and along the neighboring road. But then Baker found out the house wasn’t in the Ohio Power service area, and the other power company wouldn’t permit Ohio Power to provide service to him, frustrating the purpose of the easement. The Thomases sued Ohio Power, seeking rescission of the easement contract and damages. The trial court concluded that the easement was valid and, therefore, not subject to rescission.

The Thomases appealed.

Rose, not barren at all, was worth about 12 times what farmer Sherwood sold her for.

Held: The parties had made a mutual mistake, and the contract should be rescinded. Mutual mistake is grounds for rescission of a contract if there is a mistake made by both parties as to a material part of the contract, and where the party complaining is not negligent in failing to discover the mistake. A mistake is material to a contract when it is “a mistake … as to a basic assumption on which the contract was made [that] has a material effect on the agreed exchange of performances.” Thus, the intention of the parties must have been frustrated by the mutual mistake.”

To claim mutual mistake as a basis for rescinding a contract, a complaint must allege (1) the existence of a contract; (2) a material mutual mistake by the parties when entering into the contract; and (3) no negligence in discovering the mistake on the complainant’s behalf. Here, the Court said, the purpose of the easement was to provide electric power to the Thomases’ neighbor. Both the Thomases and Ohio Power believed that Ohio Power could provide electric power to their neighbor, but they were both mistaken about that fact. Ohio Power was in a better position to know that this belief was mistaken than the Thomases, and thus, the Court held the contract should have been rescinded at the Thomases’ request.

– Tom Root