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Peters Well Drilling Co. v. Hanzula

Decided: May 15, 1990.


On appeal from the Superior Court of New Jersey, Special Civil Part, Monmouth County.

King, Baime and Keefe. The opinion of the court was delivered by King, P.J.A.D.


Plaintiff sued to collect money allegedly due for the replacement of a well. Plaintiff lost at trial and now appeals from the judgment dismissing its complaint and awarding compensatory and punitive damages for slander of title on the counterclaim.

Plaintiff claims that the trial judge erred in finding for defendant on the counterclaim because filing a mechanic's notice of intention is absolutely privileged in all circumstances and cannot be the predicate for a slander of title action. Plaintiff also claims that there was no proof of an essential element of the slander of title claim, special damages. We disagree on both points and affirm.


This is the general background. On June 2, 1987 plaintiff Peters Well Drilling Co. filed a complaint in the Superior Court, Law Division, against defendants Jakob Hanzula (deceased) and Vladimir Jovich, seeking a judgment for money due and owing. Plaintiff alleged that in March 1985 it performed well-drilling services for defendants at an agreed price of $1,604.19. Plaintiff contended that defendants paid $400 on account, leaving a balance of $1,204.19. It sought judgment for that amount with interest.

Defendant Vladimir Jovich, individually and as executor of the estate of co-defendant Jakob Hanzula, filed an answer and counterclaim. We will refer to Vladimir Jovich as defendant, in the singular. The answer included the defense of accord and satisfaction and asserted that defendant had complied with the terms of the agreement between the parties. Defendant alleged in his counterclaim that in March 1985 he employed plaintiff to replace a point well for an agreed price of $385. He alleged that Hanzula paid plaintiff in cash and that plaintiff falsified the bill to alter the amount due from $385 to $1,385. Defendant claimed that, upon inquiring about the falsification of the bill, he was advised by plaintiff's principal, Henry Peters, that Peters had padded it to recover monies defendant owed to a relative. Defendant alleged that in filing the lawsuit plaintiff acted maliciously, caused unnecessary legal expenses and slandered him.

Plaintiff filed a general denial to the counterclaim. In an amended answer and counterclaim defendant added a second count to his counterclaim in which he alleged that plaintiff filed a mechanic's notice of intention after the work was completed and paid for. Defendant alleged that plaintiff never served him with the mechanic's notice of intention. He also contended that plaintiff filed the notice maliciously, at a time when he knew it was ineffective, and that the filing slandered and clouded his title.

The case was tried before Judge Cuff without a jury. At the conclusion of trial, the judge issued an oral decision in which she found that the work was completed on March 16, 1985 and involved the replacement of a well point with new piping only. The judge noted that several of the exhibits submitted by plaintiff into evidence had been obviously "doctored" or altered. She rejected the testimony of plaintiff's principal, Henry Peters, as incredible. She found that the contract price was $426, not $1,385, and that the entire payment had been made to plaintiff in full satisfaction of the work performed. She dismissed plaintiff's complaint. On the counterclaim, the judge awarded the $1,794 held in escrow released to defendant and entered a punitive damage award in the amount of $1,000. Plaintiff's motion for reconsideration pursuant to R. 1:7-4 was denied.


This is what the testimony at trial revealed. On March 12, 1985 the deceased defendant, Hanzula, contacted plaintiff's principal, Henry Peters, about a problem with the well located at a house owned by the defendants, Hanzula and Jovich. They did not live in the house. Peters testified that after inspecting the pump and tank, he quoted a price of $300 to $400 to fix the existing system and $1,200 to $1,300 for a new well, based on a flat price. Peters set forth the higher quote in writing. He later said that he knew from the first day that he would have to replace the well and that he never talked about a price of $300.

At defendants' request, on March 22, 1985, Peters went to defendants' house and started to dig to determine where the old well was located. Peters testified that he informed Hanzula that the well could not be repaired. Hanzula informed Peters that he would talk to Jovich and let Peters know if they decided to put in a new well. Peters testified that Hanzula refused to give him Jovich's number but that Hanzula himself spoke to

Jovich on the phone and then authorized Peters to put in a new well for between $1,200 and $1,300.

Peters began drilling a new well on Saturday, March 23. He testified that he drilled the new well 42 feet into the ground, pumped out water and connected the well. He also stated that on Monday, March 25, he and his men primed and oiled the pump. Peters calculated that he spent about seven to nine hours on the project on Friday, March 22, and eight and one-half hours on Saturday, March 23.

Peters testified that on March 23 he decided that the job would cost between $1,200 to $1,300. He thus prepared what was marked at trial as P-1, which purported to be an invoice for payment due. Peters claimed that the entire document was prepared on the same date, although the bottom portion was not placed on the document until after Hanzula signed it. This, he explained, was also why the writing was done with different colored pens.

Meanwhile, on March 22, 1985, Helen Peters, the wife of Henry Peters, filed a mechanic's notice of intention at the Monmouth County Courthouse in plaintiff's name against the property owned by defendants. She testified that the notice was filed because they were unable to get Jovich's telephone number from Hanzula. She also stated that she visited the site on the same day and observed a drilling rig and men working. Henry Peters testified that he gave a copy of the notice to Hanzula but not to Jovich; he understood that Hanzula would deliver it to Jovich. Peters contended that the notice was filed before all of the work was completed.

On March 27 Peters went to Hanzula's house to collect the remainder of the money he alleged was due. He testified that he was paid in "dribs and drabs" and stated that he received two payments of $50 in cash from Hanzula on March 23 and $250 from Hanzula on March 27. On Friday, March 29, he received $76 from Jovich for a total of $426. Peters said that on March 23, 1985 he told Hanzula that he owed a balance of

$1,240.79. According to Peters' own testimony, this balance would not have become due until Friday, March 29 when, he stated, he received his last payment of $76. The complaint claimed that $400, not $426, had been paid on account.

Jovich presented a completely different description of the events. He testified that he was informed on March 12 that it would cost approximately $300 to change the well point. About March 16, not March 22, plaintiff began work to install the new well point. Jovich remembered the day because it was the day before St. Patrick's Day. Peters came to the house with his son and a man named Gil. They did not have a drilling rig. He used water pressure to put in a new point at a depth of 28 feet. They pulled the old point out and sunk an identical point, finishing in approximately two hours. Peters then went to Hanzula and demanded payment of $385. Apparently, Hanzula was surprised that Peters was finished so quickly and paged Jovich on his beeper. When Jovich arrived, Hanzula gave Peters $200 and Jovich gave him $100. Jovich also borrowed $85 from his employee, Joseph Abadiotakis, to pay Peters, for a total payment of $385. There was an additional balance due of $68 or $76 for tax and extras. Several days later Jovich paid Peters the balance. Jovich testified that he never received a bill for any alleged balance due.

Abadiotakis substantially confirmed Jovich's testimony. He remembered that the point was replaced the day before St. Patrick's Day and that Peters and his men spent about two or three hours completing the job. He stated that Peters dug a hole 28 feet deep to insert a plastic casing. This took about 20 minutes. Abadiotakis connected the point to the house and primed the pump. He also testified that he lent defendant $80 on March 16 and that he recalled the defendants owed plaintiff a small balance of about $30 to $40.

Sometime after the well was repaired, Jovich contacted Peters with regard to purchasing a fitting. At that point, Peters told him that a lawyer had called him from Lakewood and

stated that he was filing a suit against Hanzula. Peters then asked Jovich if Hanzula owed Jovich any money, to which Jovich replied that he did not. No discussion took place with regard to any alleged amount due Peters Well Drilling.

Shortly before the property with the well was sold in 1987, Jovich was contacted by an attorney who informed him that plaintiff had placed a lien on the property. Jovich contacted Peters who told him that he had filed the lien to recover a balance due his son from Jovich. Defendant Jovich then directed his attorney to pay whatever amounts he owed to Peters' son. Jovich testified that Peters assured him that the lien did not involve the replacement of the well on the property owned by defendants.

At the time of the closing on the sale of the property, in January 1987, the matter had not been resolved and the lien had not been discharged. The sum of $1,794.12 was placed in an escrow account and held by plaintiff's attorney until the dispute could be resolved.

Judge Cuff found that work was performed on March 16, 1985 and involved the replacement of a well point with new piping only. She based this conclusion on her observation of the witnesses and an examination of the documents which she found to be "telling." She noted that D-2 and P-3, both of which were supplied by plaintiff, purported to be the same document yet P-3 obviously had been altered. On P-3, the amount of $1,385 appeared in a different color ink. Moreover, the numeral "one (1)" preceding the $385 figure on the top half of the document was in a different color ink. P-2 (which is also the top portion of D-2) was also "doctored," as there were obvious cross-outs of dates in a different color ink. The Judge found that the original dates were Monday, March 18; Tuesday, March 19; Wednesday, March 20; Thursday, March 21 and Friday, March 22. These dates were crossed out to reflect March 25, 26, 27, 28 and 29. The judge found that the original dates conformed with Jovich's testimony as to when he made

the final payment. P-2 was also altered in that "finally paid me at three thirty-five p.m. Friday [March 22]" was in blue ink and "on account" was in black ink.

Thus, the judge concluded that the original amount quoted was $385 plus extras, or a total due of $426, which defendants had paid in full. Plaintiff's complaint was dismissed. On the counterclaim, the Judge found that plaintiff had filed the mechanic's notice of intention after the work had been completed. She also found that the account had been paid in full about 35 minutes after the notice was filed. The mechanic's notice of intention was filed on Friday, March 22 at approximately 3 p.m.; P-2 stated that defendant finally paid plaintiff at 3:35 p.m. on March 22. Thus, she held that failure to discharge the notice was in bad ...

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