AM. ESTATE MGT. v. INTERN. INV. & DEV.

• Decision Date: 29 July 1999
• Docket Number: No. 980264-CA.,980264-CA.
• Citation: 1999 UT App 232,986 P.2d 765
• Parties: 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.
• Court: Utah Court of Appeals

986 P.2d 765

1999 UT App 232

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.

No. 980264-CA.

Court of Appeals of Utah.

July 29, 1999.

Ronald G. Russell, Parr Waddoups Brown Gee Loveless, Salt Lake City, for Appellant.

Merrill F. Nelson and David M. Wahlquist, Kirton & McConkie, Salt Lake City, for Appellees.

Before Judges BENCH, DAVIS, and ORME.

OPINION

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. See Farrell v. Brown, 111 Idaho 1027, 729 P.2d 1090, 1093 (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, 79 A.D.2d 725, 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, 55 N.Y.2d 624, 446 N.Y.S.2d 251, 430 N.E.2d 1304 (1981); Myers v. Thomas, No. 01A01-9111-CH-00412, 1992 WL 56993, at *4, 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...