CHFA-Small Properties Inc. v. Elazazy
Reliance on the advice of an attorney can provide a valid defense to an owner’s cause of action for slander of title—even if the advice was “erroneous, misguided, and imprudent.” In 1883, Amos Eno conveyed a 140-acre parcel of property to the Town of Simsbury for “the occupation, maintenance and support of the Town poor.” In 1991, the municipality decided to lease 10 acres of the property from Amos Eno to CIL Housing Inc., pursuant to a 99-year ground lease. CIL Housing assigned its interest in the lease to Eno Farms L.P., and Eno Farms obtained financing from the Connecticut Housing Finance Authority, or CHFA. Allegedly, Eno Farms L.P. defaulted. CHFA filed a foreclosure complaint and obtained judgment of strict foreclosure and title to the property. CHFA assigned its interest in the property to CHFA-Small Properties Inc., which filed summary-process actions to evict tenants. The tenants argued that they had an ownership interest and filed verified claims of interest on the land records, which allegedly prevented CHFA-Small Properties from selling its interest in the property to Equity Management Corp. for $3 million. CHFA-Small Properties filed a complaint to quiet title to the property, pursuant to Connecticut General Statutes §47-31, and requested an injunction, to prevent the defendants from filing documents on the land records. After a bench trial, the court declared CHFA-Small Properties the record owner of the leasehold interest in Eno Farms. The defendants failed to prove they were the intended third-party beneficiaries of “any servitude, dedication for home ownership or other substantive interest” created by the ground lease. The defendants credibly testified they relied on the advice of their attorney when they filed the verified claims on the land records. Although that advice was “erroneous, misguided, and imprudent,” the court was not persuaded that the verified claims were filed with reckless disregard or malice, as required to prove slander of title. The court enjoined the defendants from attempting to record any document on the land records that asserts an interest in Eno Farms. Violations of the court’s order may result in fines of $100 per day.