Title Insurance v. Smith, Debnam, Hibbert & Pahl

Judge Greene

dissenting.

I do not agree that the plaintiff was entitled to nominal damages in this negligence action.

“[0]nce a cause of action is established, plaintiff is entitled to recover, as a matter of law, nominal damages . . . .” Hawkins v. Hawkins, 331 N.C. 743, 745 , 417 S.E.2d 447, 449 (1992). The question in this case is whether the plaintiff, at the close of the evidence, established the cause of action on which its complaint was based. The answer depends on whether actual loss is an essential element of a cause of action for negligent breach of duty by an attorney to a title insurance company.

*623 Negligence actions are in that category of cases where “the plaintiff has no cause of action at all unless and until damages can be shown.” 1 Dan B. Dobbs, Law of Remedies § 3.3(2) (2d ed. 1993) (hereinafter Dobbs); W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 30, at 164-66 (5th ed. 1984) (hereinafter Prosser) (actual loss or damage is element of cause of action based on negligence); The Asheville School v. Ward Constr., Inc., 78 N.C. App. 594, 598 , 337 S.E.2d 659, 662 (1985) (injury and damage listed as elements of cause of action based on negligence), disc. rev. denied, 316 N.C. 385 , 342 S.E.2d 890 (1986). In other words, a cause of action based on negligence is established only if “a legally recognized loss is demonstrated.” Dobbs § 3.3(2). Thus “[n]ominal damages, to vindicate a technical right, cannot be recovered in a negligence action, where no actual loss has occurred.” Prosser § 30, at 165. To hold otherwise, especially in the context of legal malpractice, would “promote unnecessary, expensive and lengthy litigation.” 1 Ronald E. Mallen and Jeffery M. Smith, Legal Malpractice § 16.2 (3d ed. 1989) (hereinafter Mallen). “The cost of a lawsuit to establish a principle is often an unwarranted expense to impose upon adverse parties, the courts and society.” Id.

Our North Carolina courts have, on several occasions, made the general statement that “ [njominal damages may be recovered in actions based on negligence.” E.g., Jewell v. Price, 264 N.C. 459, 461 , 142 S.E.2d 1, 3 (1965); The Asheville School, 78 N.C. App. at 599 , 337 S.E.2d at 662 . These cases do not hold, however, that nominal damages are recoverable in a negligence action in the absence of proof of some actual loss. In each case the facts reveal that the plaintiff had in fact sustained some actual loss. In any event, actual loss or harm is without question an essential element of an action by a third person against a professional person who is alleged to have been negligent in the performance of his contract with his client. 2 Dobbs § 6.11 (cause of action based on lawyer malpractice requires proof of actual damages); see United Leasing Corp. v. Miller, 45 N.C. App. 400, 406 , 263 S.E.2d 313, 318 , disc. rev. denied, 300 N.C. 374 , 267 S.E.2d 685 (1980); see also Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 209, 214 , 367 S.E.2d 609, 614, 617 (1988).

In this case, the plaintiff claims that Debnam, an attorney, was negligent in certifying the title and that as a proximate cause it “has suffered a loss.” Thus, plaintiff is entitled to nominal damages only upon proof of an actual loss and in the absence of such proof a directed verdict for the defendant should have been entered. The evidence, in the light most favorable to the plaintiff and viewed at the *624 close of all the evidence, is that plaintiff had not suffered a loss. Indeed, the majority acknowledges that the “plaintiff suffered no damages” until the Deer deed of trust was cancelled, which did not occur until the jury was in deliberation. At the time the evidence was closed, plaintiff had not paid any monies to its insured nor had it removed the lien which was in violation of the policy of insurance. There is evidence that it did pay monies to purchase the notes and deeds of trust that were superior to First Federal’s lien. In exchange, however, for the purchase of these notes and deeds of trust it received an assignment of the Deer note and deed of trust which remained a valid lien on the property for the full amount of both the Deer lien and the Wachovia lien. There is no evidence that the Deer note and deed of trust had value less than that paid by the plaintiff. Indeed, the plaintiff makes no argument to the contrary in its brief to this Court. Thus, because there is no evidence in this record that plaintiff sustained any loss, the evidence was insufficient to support a verdict for the plaintiff, even for nominal damages, and directed verdict for the defendant should have been granted on this basis.

The fact that at some point after the close of the evidence the plaintiff did cancel the Deer deed of trust cannot affect the ruling on this motion for directed verdict, which must be judged on the basis of the evidence submitted to the trial court before the close of the evidence. See Citrini v. Goodwin, 68 N.C. App. 391, 399 , 315 S.E.2d 354, 360 (1984). Furthermore, any obligation, which may have matured after the close of the evidence, that the plaintiff had to cancel the deed of trust is likewise immaterial.

Accordingly, I would reverse the trial court’s denial of defendants’ directed verdict motion and remand for dismissal of the plaintiff’s claim. 1

. Whether plaintiffs cause of action accrued at the time of the negligent act or at the time the plaintiff sustained actual injury, an issue discussed in the concurring opinion, is not an issue in this case. I do note, however, that “injustices and frequently illogical results from application of the occurrence rule have prompted most courts to add the requirement that there be actual injury before a cause of action accrues for purposes of a statute of limitations.” 2 Mallen § 18.11 (3d ed. Supp. 1989); see Snipes v. Jackson, 69 N.C. App. 64 , 316 S.E.2d 657 (holding that malpractice action in tax matters did not accrue until actual injury), disc. rev. denied and appeal dismissed, 312 N.C. 85 , 321 S.E.2d 899 (1984). In this case there is no dispute that plaintiffs claim was filed within the relevant statute of limitations. Furthermore, any argument that the plaintiff was forced to file its claim prior to the occurrence of any actual injury in order to avoid the running of the statute of limitation or repose, and therefore it should be insulated from the actual injury requirement, cannot be sustained. The occurrence of actual injury in this case, the cancellation of the Deer deed of trust, was totally within the control of the plaintiff.