Am. Estate Management Corp. v. Internat'l Investment & Dev. Corp.
Annotate this Casepublication in the Pacific Reporter.
IN THE UTAH COURT OF APPEALS
----ooOoo----
American Estate Management
Corporation, a Utah corporation,
Plaintiff and Appellant,
v.
International Investment
and
Development Corporation,
a
Utah corporation; and John
Does I-X,
Defendants and Appellees.
OPINION
(For Official Publication)
Case No. 980264-CA
F I L E D
July 29, 1999
1999 UT App 232
-----
Third District, Salt Lake
Department
The Honorable J. Dennis
Frederick
Attorneys:
Ronald G. Russell, Salt
Lake City, for Appellant
Merrill F. Nelson and David
M. Wahlquist, Salt Lake City, for Appellees
-----
Before Judges Bench, Davis, and Orme.
ORME, Judge:
¶1
American Estate Management
Corporation (AEM) appeals the trial court's grant of summary judgment in
favor of International Investment and Development Corporation (IID), arguing
the trial court incorrectly determined that AEM's adverse possession claim
is barred by the claim preclusion branch of res judicata.(1)
AEM claims title by adverse possession to a parcel of land used as a parking
lot adjacent to the Highland Terrace Apartment Complex. AEM acquired the
apartment complex by warranty deed from IID in 1982 and claims the description
of the parking lot parcel was inadvertently omitted from the deed. We conclude
that the trial court's ruling was correct, and we affirm its judgment.
BACKGROUND
¶2
In 1982, business partners
Po and Beatrice Chang and Tony and Sandra Lin agreed to disentangle some
of their joint business enterprises and, to that end, executed a Separation
Agreement. Prior to the separation, AEM and IID had been jointly owned
by the Changs and the Lins. Pursuant to the agreement, the Changs became
the exclusive owners of AEM and the Lins acquired exclusive ownership of
IID.
¶3
The Separation Agreement
further provided that AEM would receive IID's interest in the Highland
Terrace Apartment Complex. IID executed a special warranty deed conveying
the apartment complex parcel to AEM, but the adjacent parking lot parcel
was not described in the deed. Allegedly unaware that the parking lot had
not been deeded, AEM took possession of the complex and the parking lot
parcel and began paying taxes on both. Later the same year, the parties
executed a document entitled "Satisfaction of Debt," agreeing that all
debts owed by IID to AEM were satisfied unless specifically identified
in other documents.
¶4
Several years later, the
parties' business relationship deteriorated, and, in 1990, AEM filed a
complaint against the Lins, owners of IID, raising numerous allegations
of wrongdoing. In 1995, AEM amended its complaint to name IID as a party
and to add and amend claims. One of AEM's claims sought damages for breach
of the 1982 Separation Agreement and another requested specific performance
thereof. AEM alleged in its complaint that IID had breached the Separation
Agreement when it failed to deed certain property to AEM. Answers to interrogatories
referred to the parking lot parcel as one of the properties AEM alleged
should have been deeded. The trial court ultimately granted summary judgment
in favor of the Lins and IID on all claims related to the Separation Agreement,
ruling that the 1982 Satisfaction of Debt "specifically disposed of claims
arising from the Separation Agreement."
¶5
In 1997, AEM instituted
this second action against IID claiming ownership of the parking lot parcel
by adverse possession. The trial court granted summary judgment to IID,
concluding that AEM's adverse possession claim was precluded by the trial
court's judgment in the earlier action.
ISSUES AND STANDARD OF REVIEW
¶6
AEM argues on appeal that
claim preclusion does not bar its adverse possession claim because (1)
the breach of contract claim in the prior action arose out of a different,
earlier transaction or occurrence than the adverse possession claim in
the pending action and (2) the breach of contract action did not result
in a final judgment on the merits.(2) We
review the trial court's grant of summary judgment for correctness, determining
whether the court correctly concluded that no genuine issue of material
fact existed and whether the court correctly applied the governing law.
See Harline v. Barker, 912 P.2d 433, 438 (Utah 1996).
ANALYSIS Claim preclusion bars a cause of action only if the suit in which that cause of action is being asserted and the prior suit satisfy three requirements. First, both cases must involve the same parties or their privies. Second, the claim that is alleged to be barred must have been presented in the first suit or must be one that could and should have been raised in the first action. Third, the first suit must have resulted in a final judgment on the merits. Madsen v. Borthick, 769 P.2d 245, 247 (Utah 1988). Accord Estate of Covington v. Josephson, 888 P.2d 675, 677 (Utah Ct. App. 1994), cert. denied, 910 P.2d 425 (Utah 1995). If these three requirements are met, "the result in the prior action constitutes the full relief available to the parties on the same claim or cause of action." Ringwood v. Foreign Auto Works, Inc., 786 P.2d 1350, 1357 (Utah Ct. App.), cert. denied, 795 P.2d 1138 (Utah 1990). Claim preclusion serves "vital public interests[,] includ[ing] (1) fostering reliance on prior adjudications; (2) preventing inconsistent decisions; (3) relieving parties of the cost and vexation of multiple lawsuits; and (4) conserving judicial resources." Office of Recovery Servs. v. V.G.P., 845 P.2d 944, 946 (Utah Ct. App. 1992).
¶7
AEM does not dispute that
it brought both suits against the same parties, the Lins, and their privy,
IID. Nevertheless, it argues its adverse possession claim is not barred
because the second and third requirements of claim preclusion are not met.
Specifically, AEM argues its adverse possession claim was not brought in
the prior action, nor could or should it have been, and that the first
action did not result in a final judgment on the merits.
A. Adverse Possession Could and Should Have Been Raised
¶8
AEM's adverse possession
claim is barred by the judgment in the prior action if both suits raised
the same claim or cause of action, or if AEM could and should have raised
its adverse possession claim in the prior action. See Madsen,
769 P.2d at 247. While AEM concedes that its entitlement to the parking
lot parcel was at issue in both actions, it argues its prior claim to title
based on the Separation Agreement did not raise the same claim or cause
of action raised in the present action, i.e., to quiet title to the parking
lot parcel on the ground of adverse possession. AEM asserts that the adverse
possession claim did not arise out of the Separation Agreement, the transaction
out of which the prior breach of contract claim arose, and that proof of
the adverse possession claim requires presentation of different facts and
evidence. Further, AEM argues its adverse possession claim was not one
that could and should have been brought in the prior action because AEM
was unaware when it filed its complaint in the prior action that title
to the parking lot parcel remained with IID and because AEM had no duty
to amend its complaint to add the adverse possession claim.
¶9
The Utah Supreme Court has
defined claim or cause of action as
"the aggregate of
operative facts which give rise to a right enforceable in the courts."
A claim is the "situation or state of facts which entitles a party to sustain
an action and gives him the right to seek judicial interference in his
behalf." A claim petitions the court to award a remedy for injury suffered
by the plaintiff. A cause of action is necessarily comprised of specific
elements which must be proven before relief is granted. A claim or cause
of action is resolved by a judicial pronouncement providing or denying
the requested remedy.
Swainston v. Intermountain
Health Care, Inc., 766 P.2d 1059, 1061 (Utah 1988) (citations omitted).
¶10
Defining the scope of a
claim or cause of action is not an exact science and, in fact, is at times
driven by the relative importance of the finality of judgment. Compare
In re J.J.T., 877 P.2d 161, 163-64 (Utah Ct. App. 1994) ("[I]t cannot
be persuasively argued that judicial economy or the convenience afforded
by finality of legal controversies must override the concern for a child's
welfare.") with Office of Recovery Servs., 845 P.2d at 947
("[P]olicies advanced by the doctrine of res judicata have particular importance
in this case because the child's right not to be bastardized far outweighs
defendant's interest in asserting nonpaternity more than six years after
having acknowledged paternity."). When, as in this case, title to real
property is at issue, the need for finality is at its apex. SeeFarrell
v. Brown, 729 P.2d 1090, 1093 (Idaho Ct. App. 1986); 18 Charles Alan
Wright, et al., Federal Practice and Procedure § 4408, at 65
(1981).
¶11
Contrary to AEM's characterization,
both its prior and present actions assert one claim--a claim of title to
the parking lot parcel--albeit under two different legal theories. Other
jurisdictions have so ruled, and have held subsequent suits barred. See,
e.g.,
Blance v. Alley, 697 A.2d 828, 830-31 (Me. 1997) (holding
claim of adverse possession barred by judgments in two prior actions to
establish title to same property via other legal theories); Hyman v.
Hillelson, 434 N.Y.S.2d 742, 745 (N.Y. App. Div. 1980) (ruling subsequent
adverse possession action and prior suit for reformation of deed not separate
and distinct where both involved dispute over conveyance of adjoining lots),
aff'd,
430 N.E.2d 1304 (N.Y. 1981); Myers v. Thomas, No. 01A01-9111-CH-00412,
1992 Tenn. App. LEXIS 260, at *9-10 (Tenn. Ct. App. Mar. 25, 1992) (holding
addition of adverse possession claim insufficient to distinguish later
suit from prior suit involving same property); Green v. Parrack,
974 S.W.2d 200, 203 (Tex. Ct. App. 1998) (holding prior judgment establishing
ownership to strip of land precluded subsequent competing claims to same
strip by same parties under different legal theories).
¶12
Nevertheless, we need not
definitively determine whether AEM has raised one claim or two because
we readily conclude that AEM could and should have brought its adverse
possession claim in the prior suit. Claim preclusion "'reflects the expectation
that parties who are given the capacity to present their "entire controversies"
shall in fact do so.'" Ringwood, 786 P.2d at 1357 (quoting Restatement
(Second) of Judgments § 24 cmt. a (1982)). If a party fails, purposely
or negligently, to "'make good his cause of action . . . "by all proper
means within his control, . . . he will not afterward be permitted to deny
the correctness of that determination, nor to relitigate the same matters
between the same parties."'" Horner v. Whitta, No. 13-93-33, 1994
Ohio App. LEXIS 1248, at *6-7 (Ohio Ct. App. Mar. 16, 1994) (citations
omitted in original),
appeal denied, 637 N.E.2d 12 (Ohio 1994).
¶13
In Ringwood v. Foreign
Auto Works, Inc., Ringwood filed two separate complaints against individuals
to whom he had sold stock in Foreign Auto Works, Inc. See 786 P.2d
at 1352-53. Ringwood's first suit was dismissed because it was based on
a promissory note the trial court found had merged into a later agreement.
See
id. at 1357-58. Ringwood then brought suit for breach of the later
agreement. See id. at 1353. This court reversed the trial court's
ruling that Ringwood's second action was not barred by res judicata, concluding
that any "claim by Ringwood under the November agreement could have been
decided in the prior action, as the agreement was extant and was in default.
The only reason it was not decided was because Ringwood failed to raise
the claim. . . . Therefore, we find that res judicata bars Ringwood's claims[.]"
Id.
¶14
AEM's situation is similar.
When it filed its complaint in the prior action in 1990, it had possessed
the parking lot parcel for the requisite seven years. See Utah Code
Ann. § 78-12-12 (1996). Hence, its adverse possession claim was then
ripe. AEM had a second chance to raise a claim of adverse possession when
it amended its complaint in 1995, but did not. As in Ringwood, the
only reason AEM's claim of adverse possession was not decided in the prior
action is because AEM failed to raise it. And, as in
Ringwood, the
claim preclusion branch of res judicata bars AEM from doing so now. See
Wheadon v. Pearson, 14 Utah 2d 45, 47, 376 P.2d 946, 947-48 (1962)
("Here, we have the same parties litigating the same subject matter--an
asserted right of way over defendants' property. . . . [T]he issue or theory
of implied easement, now urged in this second action, could have been urged
and adjudicated in the first action."). Accord Irving Pulp &
Paper Ltd. v. Kelly, 654 A.2d 416, 418 (Me. 1995) (Adverse possession
was "an issue that might have been tried in the 1951 action. Under the
doctrine of res judicata, [appellee] and his privies are therefore precluded
from having or claiming any right or title adverse to [appellant] for any
period prior to November 1951."); Bagley v. Moxley, 555 N.E.2d 229,
232 (Mass. 1990) ("[P]laintiffs were not entitled to pursue their claim
of ownership through piecemeal litigation, offering one legal theory to
the court while holding others in reserve for future litigation should
the first prove unsuccessful.").(3)
B. The Prior Action Resulted
In a
Final Judgment on the Merits
¶15
Having determined that AEM
could and should have raised its adverse possession claim in the prior
action, we now consider AEM's argument that res judicata does not bar its
current suit for title to the parking lot parcel by adverse possession
because the prior action did not result in a final judgment on the merits.(4)
We also reject this argument.
¶16
First, the trial court's
Memorandum Decision unequivocally granted summary judgment to the defendants
on AEM's claims of breach of the 1982 Separation Agreement. AEM's fifth
claim for relief in its amended complaint alleged, at paragraph 44(g),
that "[t]he Lins have breached the March 1982 Separation Agreement . .
. [b]y failing to deed certain properties to Plaintiffs as contemplated
by the agreement." In an interrogatory, AEM was asked to "[p]rovide the
legal description of all properties you reference in paragraph 44(g)."
AEM responded: "The legal description of these properties will be produced
in connection with the production of documents, but includes a one-foot
strip along the boundary of the Draper property and a parcel of property
associated with the Highland Terrace Apartments." The trial court's Memorandum
Decision, specifically incorporated into its Final Order, stated:
Defendants claim
that they are entitled to dismissal of claim 5 (Breach of Separation Agreement)
under a theory of accord, satisfaction, and release. They contend that
any problems regarding the separation agreement were worked out by the
parties when they signed a March 1, 1982 "Satisfaction of Debt." . . .
Defendants['] argument appears to be well taken. The release specifically
disposed of claims arising from the Separation Agreement. Thus the Court
concludes that the "Satisfaction of Debt" releases this claim and defendants'
motion [for summary judgment] is granted as to this claim.
Summary judgment on the Separation
Agreement claims constituted a judgment on the merits which became final
upon entry of the Final Order.(5)
¶17
Moreover, AEM's claims for
breach of the Separation Agreement were not among those claims voluntarily
dismissed by stipulation, as AEM argues. The trial court's Final Order
indicates specifically which claims were dismissed by stipulation. Claims
relating to the Separation Agreement were not among them. Thus, dismissal
of the breach of Separation Agreement claims was not a voluntary dismissal
without prejudice. See Utah R. Civ. P. 41. The third requirement
of claim preclusion, that the prior action must have resulted in a final
judgment on the merits, is therefore met.
CONCLUSION
¶18
AEM's claim of title to
the parking lot parcel is barred under the claim preclusion branch of res
judicata. AEM could and should have raised its adverse possession claim
in the prior action alleging breach of the 1982 Separation Agreement. Further,
the prior action resulted in a final judgment on the merits. Accordingly,
the trial court correctly granted IID's motion for summary judgment on
res judicata grounds.
¶19
Affirmed.
______________________________
Gregory K. Orme, Judge
-----
¶20
WE CONCUR:
______________________________
Russell W. Bench, Judge
______________________________
James Z. Davis, Judge
1. Although IID styled its motion as a motion to dismiss under Rule 12(b)(6) of the Utah Rules of Civil Procedure, it was properly treated as a motion for summary judgment by the trial court because IID supported its motion with sources outside the pleadings. See Utah R. Civ. P. 12(b); DOIT, Inc. v. Touche, Ross & Co., 926 P.2d 835, 838 n.3 (Utah 1996).
2. Because our ruling on the claim preclusion issue is dispositive, we have no occasion to address the parties' alternative arguments concerning issue preclusion.
3. Many other courts have come to the same conclusion when a second action alleging adverse possession has been brought by the party who failed to prove its entitlement to real property in a prior action premised on some other theory. See, e.g., West Mich. Park Ass'n v. Fogg, 404 N.W.2d 644, 648 (Mich. Ct. App. 1987) ("While it is true that the plaintiffs did not claim the property by adverse possession in [the prior action], that claim could have been made in [the prior action]. It is therefore barred[.]"), appeal denied, No. 80701, 1987 Mich. LEXIS 8492, at *1 (Mich. Aug. 28, 1987); Hangman v. Breuning, 530 N.W.2d 247, 249 (Neb. 1995) ("The theory of adverse possession could have been raised in the earlier quiet title litigation. All matters which could have been litigated in the earlier proceedings are barred by the doctrine of res judicata."); Hyman, 434 N.Y.S.2d at 745 ("At the time the first action for reformation was commenced, the cause of action for adverse possession was also viable and could also have been pleaded in the prior complaint and determined in the prior action.").
4. It is inarguable that a final judgment was entered in the prior action. AEM's contention in this appeal is really that that judgment did not encompass various claims in issue between the parties, including ownership of the parking lot parcel.
5. Because the trial court specifically addressed the breach of Separation Agreement claims and granted summary judgment thereon in favor of the defendants, those claims are not implicated by the trial court's statement in the Final Order that "[a]ll claims of the parties set forth in their pleadings not reduced to summary judgment herein or otherwise dealt with by this Order are hereby dismissed." We therefore have no occasion to consider AEM's argument that the trial court's language concerning these stray claims effected a dismissal without prejudice under Rule 41 of the Utah Rules of Civil Procedure.
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