Garcia v. Garcia

• Decision Date: 04 March 1991
• Docket Number: No. 18616,18616
• Citation: 111 N.M. 581,1991 NMSC 23,808 P.2d 31
• Parties: Annie N. GARCIA, Plaintiff-Appellant, v. Sheilah P. GARCIA, individually and as Personal Representative of the Estate of Julian N. Garcia, Defendant-Appellee. IMPORTS LIMITED, INC., New Mexico Corporation, Plaintiff-in-Intervention, v. Annie N. GARCIA and Rio Grande Development Co., a Joint Venture, Defendants-in-Intervention.
• Court: New Mexico Supreme Court

Page 31

808 P.2d 31

111 N.M. 581

Annie N. GARCIA, Plaintiff-Appellant, v. Sheilah P. GARCIA, individually and as Personal

Representative of the Estate of Julian N. Garcia,

Defendant-Appellee.

IMPORTS LIMITED, INC., New Mexico Corporation, Plaintiff-in-Intervention, v. Annie N. GARCIA and Rio Grande Development Co., a Joint

Venture, Defendants-in-Intervention.

No. 18616.

Supreme Court of New Mexico.

March 4, 1991.

Rehearing Denied April 5, 1991.

[111 NM 582] Hooker & Sedillo, Thomas F. Hooker, Jr., Albuquerque, for plaintiff-appellant.

Poole Law Firm, Jason Kent, Albuquerque, for defendant-appellee.

OPINION

MONTGOMERY, Justice.

The parties agree in their briefs that this case can be correctly characterized as a "posthumous land-grab." They disagree, of course, on who is doing the grabbing. We do not resolve this question, but we hold that the trial court permissibly decided that the plaintiff's suit to quiet title was barred by her laches. In so holding, we consider the following issues raised by the plaintiff on appeal: Whether the court's ruling improperly deprived the plaintiff of her right to a jury trial; whether the defendant's defense of laches was good against plaintiff's suit to quiet title, even though her statute of limitations defense was not; and whether the defendant satisfactorily established each of the elements of laches in this case. We affirm the trial court's judgment.

I.

The dispute originated with a real estate contract executed in October 1967. The plaintiff-appellant, Annie N. Garcia, contracted to buy a tract of land in Albuquerque, New Mexico, from her son, Julian (who was then a successful automobile dealer and is now deceased) and his wife, defendant-appellee Sheilah B. Garcia.¹ The tract subject to the contract consisted of three lots acquired by Julian and Sheilah during the early and mid-1960's. One of the lots was improved with a building, which in 1967 housed Julian's Toyota and Honda business and since 1982 has housed the Rio Grande Cantina Restaurant.² An unusual feature of the contract was that it did "not include improvements" and so did not include the building.

A key issue in the eventual litigation between Annie and Sheilah (this case) was whether or not the 1967 contract was a sham. The trial court did not ultimately decide this issue.³ However, in its findings of fact it determined that the contract had been executed in furtherance of a tax avoidance scheme, conceived by Julian, under which the proceeds received by Annie and her late husband, Toby, from the condemnation of some nearby property would be reinvested through the purchase from Julian and Sheilah of the three lots now known as the Cantina property.

Contemporaneously with execution of the real estate contract, Annie executed a fifteen-year lease of the Cantina property and also of two adjoining lots, which had long been owned by Annie and (until his death in early 1967) Toby.⁴ The lessee under the long-term lease was Imports Limited, Inc. (Imports), a corporation wholly owned by Julian and Sheilah. As to the Cantina property, then, the transaction was a sale and leaseback, under which Julian and Sheilah sold the property to Annie, who leased it back to a corporation owned by Julian and Sheilah.

The purchase price under the contract was largely deferred, and the deferred balance was payable in installments of $300 per month. Under the long-term lease, Annie received rent of $600 per month, so she netted $300 per month after making the $300 monthly installment payment to Julian and Sheilah.

The real estate contract was not recorded until two and one-half years after its execution. The portion of the printed-form contract calling for an escrow was not completed, and no deeds were placed in escrow. The long-term lease was misplaced and forgotten; it was not discovered until after Julian's death in October 1984. As developed at trial, Annie believed until that time that the rental payments of $600 per month related to the Parking Lot, not the Cantina property.

During the seventeen years between execution of the contract and Julian's death, the parties, at least outwardly, manifested the understanding that Julian and Sheilah continued to own the Cantina property. An income-tax audit on Annie and Toby took place in early 1970, and the contract was recorded at that time. About a year after completion of this audit, Julian told Annie to discontinue her payments under the contract, stating that it was "all paid." At that time Annie had made thirty of the 135 installments payments called for by the contract. Sometime thereafter, property taxes on all of the property became delinquent, and the different parcels had to be repurchased from the state. Julian attended to these delinquent payments and caused the tax deed to the Parking Lot to be issued in Annie's name and that to the Cantina property in his and Sheilah's names. In 1982, Julian and Sheilah leased the Cantina property to a Mr. Walker, who commenced operating the restaurant in the building.

As noted, Julian died in the fall of 1984. Thereafter, relations between Annie and Sheilah deteriorated. In March 1986, Annie demanded, through an attorney, an increase in the rent on the Parking Lot to $2,000 per month. Sheilah demurred and discontinued her use of the Parking Lot. Annie then commenced this action in March 1987.

Her complaint consisted of four counts. Count I sought a declaratory judgment that the real estate contract was valid and enforceable and a decree of specific performance of the contract. Count II requested that her title to the Cantina property be quieted as against Sheilah and anyone claiming under her. Count III sought an accounting for, and recovery of, rentals received by Sheilah from the operation of the restaurant, and Count IV prayed for damages resulting from Sheilah's alleged slander of Annie's title.⁵ Sheilah filed an answer and counterclaim, raising various defenses, including "waiver, latches [sic] and estoppel," and requesting a declaration that the contract was not intended as a true sale and that title to the property be quieted in her.

The pleadings were completed with a complaint in intervention by Imports against Annie and Rio Grande Development Co., a joint venture in which she was involved for the development of the Parking Lot; an answer in intervention and a counterclaim against Sheilah and Imports; and a reply by Sheilah and Imports to this counterclaim. These pleadings placed in issue the continued effectiveness of the long-term lease until 2012, Sheilah and Imports asserting that if the real estate contract was in effect, then so was the long-term lease and Sheilah and Imports were still entitled to possession of the Parking Lot under it. Annie and Rio Grande claimed that the lease had expired in 1982 and that the options to renew until 2012 had not been effectively exercised.⁶ While the pleadings were being filed, Sheilah timely demanded a trial by jury "on all triable issues in this case including all such issues raised by" the various pleadings.

After voluminous discovery and other pretrial proceedings, the case came on for trial before a jury. On the second day of trial and after Annie had rested her case in chief, Sheilah moved for a directed verdict on various grounds and also for dismissal on the ground of laches. With respect to the latter motion, her counsel said:

[T]his is a motion for dismissal, not a motion for directed verdict. It is addressed to the Court sitting in equity, and as the Court * * * has already considered, this is an unusual case in the sense it involves equitable issues. The equitable issue this motion raises is latches [sic] * * * * [I]t is a matter of equity and not a matter of law as is limitation[s].

There was no comment from either the court or Annie's counsel at this point. Specifically, Annie made no objection to Sheilah's point that her motion on laches could be treated differently than the motions for a directed verdict and that the laches motion was based on facts which should be decided by the court, not the jury.

The court reserved ruling on most of Sheilah's motions⁷ and requested from the defense a memorandum outlining her various motions. In her memorandum, Sheilah again made it clear that her motion on laches was a motion to dismiss addressed to the court sitting in equity. At no point in the trial did Annie object that this issue, even if equitable, should be submitted to the jury. In fact, at one point later in the trial Annie's counsel told the court that the equitable question of who has the better title in a quiet title dispute should be decided by the court, not the jury.

The trial continued. The primary issue, which both parties and the court recognized was for decision ultimately by the jury, was whether or not the real estate contract had been a sham. On the fifth day, after both sides had rested but before Annie had completed her rebuttal case, Annie's counsel moved for a mistrial, complaining that the judge's gestures made counsel "look bad in front of the jury." The court granted a mistrial, following which Sheilah renewed her motions for a directed verdict and to dismiss. The court granted a directed verdict on the ground that Annie's complaint was barred by the statute of limitations and a dismissal on the ground of laches. The court then entered written findings of fact and conclusions of law in Sheilah's favor, finding Annie guilty of laches, and a judgment dismissing the complaint with prejudice and quieting title to the Cantina property in Sheilah.

On appeal, Annie attacks the court's rulings on applicability of the statute of limitations and laches, as well as certain other rulings in Sheilah's favor which need not be reviewed here in light of our disposition of the laches issue.⁸ Her attack is premised essentially on two theories: First, that under the standard of review applicable to directed verdicts the court erred in finding any...