BUTCHER v. MILNER II (1992)

Plaintiff and appellant Dan E. Butcher filed this action to quiet title to real property by adverse possession against defendants and respondents Reese L. Milner II, Robert N. Klein II, and James Hennefer.   The trial court dismissed appellant's action after sustaining respondents' demurrer to the first amended complaint without leave to amend.   We affirm.

Appellant was the owner in fee simple of a parcel of commercially valuable real property in Torrance.   Appellant contracted to sell this property to respondents.   In January 1979, appellant reneged on that contract, and respondents filed a specific performance action to compel appellant to convey the property.   Respondents prevailed in the specific performance action;  on December 30, 1983, the Los Angeles Superior Court in case No. C271033 ordered appellant to deposit a grant deed conveying marketable title to respondents.   Appellant appealed the specific performance judgment.   The specific performance judgment was affirmed by the Court of Appeal on June 17, 1986.  (Hennefer v. Butcher (1986) 182 Cal.App.3d 492, 227 Cal.Rptr. 318.)   After appellant's petition for review was denied by the California Supreme Court, the specific performance judgment became final on October 1, 1986.

Appellant's complaint in the present action for adverse possession was filed February 1, 1990.   Appellant claimed that while the specific performance judgment was on appeal and after it became final, appellant was in actual, open, exclusive, hostile and adverse possession of the property in defiance of the specific performance judgment.

As the trial court correctly observed in sustaining respondents' demurrer, even if one assumes that the legal owner of real property who is under a judgment ordering him to convey the property could theoretically establish a new title by adverse possession by remaining in possession in defiance of the judgment for a sufficient period of time, appellant did not do so because his complaint was filed less than five years after the specific performance judgment became final on October 1, 1986.  (Civ.Code, § 1007, Code Civ.Proc., §§ 319–325.)   There is no merit to appellant's contention that the five-year prescriptive period was running while the specific performance judgment was on appeal, i.e., before that judgment became final.

DISCUSSION

The five-year prescriptive period in which an adverse possessor may obtain title to real property is the counterpart of the owner's statute of limitations for bringing an action to recover the property or possession thereof.  (Civ.Code, § 1007; ¹ Code Civ.Proc. §§ 318–325;  Water Co. v. Richardson (1887) 72 Cal. 598, 600–601, 14 P. 379.)

 It is well established that the filing of litigation before the five-year period has passed interrupts the running of the prescriptive period.   (Estate of Richards (1908) 154 Cal. 478, 488, 98 P. 528;  Alta Land etc. Co. v. Hancock (1890) 85 Cal. 219, 228, 24 P. 645;  Yorba v. Anaheim Union Water Co. (1953) 41 Cal.2d 265, 270, 259 P.2d 2;  Westphal v. Arnoux (1921) 51 Cal.App. 532, 535, 197 P. 395;  Chew v. Leach (1955) 134 Cal.App.2d 91, 92–93, 285 P.2d 93.)

The prescriptive period remains interrupted or tolled during the time such litigation is pending.  (Yorba v. Anaheim Union Water Co., supra, 41 Cal.2d at p. 270, 259 P.2d 2;  Alta Land etc. Co. v. Hancock, supra, 85 Cal. at p. 228, 24 P. 645;  Westphal v. Arnoux, supra, 51 Cal.App. at p. 535, 197 P. 395.)

The litigation which interrupts the running of the prescriptive period remains pending until there is a final judgment in that litigation.  (Alta Land etc. Co. v. Hancock, supra, 85 Cal. at p. 228, 24 P. 645;  Westphal v. Arnoux, supra, 51 Cal.App. at p. 535, 197 P. 395;  Kirsch v. Kirsch (1896) 113 Cal. 56, 63, 45 P. 164.)  Code of Civil Procedure section 1049 expressly provides, “An action is deemed to be pending from the time of its commencement until its final determination upon appeal, or until the time for appeal has passed, unless the judgment is sooner satisfied.”  Code of Civil Procedure section 577 provides, “A judgment is the final determination of the rights of the parties in an action or proceeding.”

Here, the specific performance action, by which respondents sought judgment compelling appellant to convey title to respondents, remained pending while it was on appeal, and did not result in a final judgment until October 1, 1986.   Even assuming that appellant could adversely possess against respondents if respondents slept on their rights and did not enforce the judgment after it became final, it is clear appellant had not done so for five years when he filed his complaint to quiet title by adverse possession on February 1, 1990.²

Kirsch v. Kirsch, supra, 113 Cal. at p. 63, 45 P. 164 is controlling.   In a divorce action the wife contended certain real property was her separate property.   The trial court resolved that question against the wife, determined the property was community property, and awarded it to the husband.   The wife appealed the divorce judgment and remained in possession.   The divorce judgment was affirmed on appeal about two years later.   The husband sought a writ of assistance to recover possession of the property, which was defended by the wife on the ground she had acquired a new title to the property by adverse possession.   The Supreme Court found the wife's argument groundless.  “The judgment entered in March, 1888, was appealed from by Mrs. Kirsch.   In 1890, less than three years before the application for the order here appealed from, that judgment became final by affirmance in this court.   The action was then pending until June, 1890 (Code Civ.Proc., sec. 1049) and while it was pending she could not acquire title by adverse possession, since, during the pendency of the appeal, all rights under the judgment were suspended.   As Kirsch, while the appeal was pending, could enforce no rights under the judgment, per contra, the possession of the wife during that period could not be held to be adverse to her husband.”  (113 Cal. at p. 63, 45 P. 164.)

Appellant attempts to avoid these well-established principles, and to distinguish Kirsch, by interjecting the question whether enforcement of respondents' specific performance judgment was stayed pending appeal.   Appellant contends that under Code of Civil Procedure sections 917.3 and 917.4, enforcement of respondents' judgment was not stayed by appellant's appeal of that judgment.   Appellant contends that if enforcement of the judgment was not stayed pending appeal, respondents could have obtained possession pending appeal and therefore the prescriptive period was not tolled pending appeal.   There is no merit to this contention.³

Appellant contends the divorce judgment in Kirsch was the type the enforcement of which was automatically stayed by appeal pursuant to former Code of Civil Procedure section 946, the predecessor of Code of Civil Procedure section 916.⁴  This distinction is not significant.   The Supreme Court in Kirsch did not cite former section 946 relating to stays, it cited section 1049 which states that an action is deemed to be pending until its final determination upon appeal.   The court said, “[D]uring the pendency of the appeal, all rights under the judgment were suspended.”  (113 Cal. at p. 63, 45 P. 164.)   More recently the Supreme Court used similar language in stating that certain appeals “do not automatically stay enforcement of the order.   But they do suspend the force of the order as a conclusive determination of the rights of the parties.  [Citation.]   This is so, since finality is not accorded a judgment until affirmance in the event of an appeal.”  (Caminetti v. Guaranty Union Life Ins. Co. (1943) 22 Cal.2d 759, 766, 141 P.2d 423.)   In Westphal v. Arnoux, supra, 51 Cal.App. at page 535, 197 P. 395, the court held that litigation between the parties interrupted the prescriptive period for adverse possession until there was a “final determination of the controversy between the parties litigant.”  Westphal cited Feeney v. Hinckley (1901) 134 Cal. 467, 66 P. 580, which stated, “ ‘Until litigation on the merits is ended, there is no finality to the judgment, in the sense of a final determination of the rights of the parties' ” (id. at p. 468, 66 P. 580) and “ ‘[u]ntil final judgment is reached, the proceedings are subject to change and modification, are imperfect and inchoate․’ ”  (Id. at p. 469, 66 P. 580.)

 Essentially appellant's argument is that because respondents allegedly could have obtained possession pending appeal because enforcement of the judgment was not stayed, respondents were required to do so or suffer loss of the property to appellant by adverse possession.   Appellant cites no authority that a party entitled to enforce a judgment pending appeal is required to do so.   Had respondents done so, they would have acted at their own risk, because until the judgment was final on appeal, it was subject to change or reversal, with attendant problems involving restoring the parties “to the positions they occupied before the enforcement of or execution on the judgment or order.”  (Code Civ.Proc., § 908.)

 The doctrine of adverse possession is based on the idea that an owner may lose title to an adverse possessor if the owner “sleeps on his rights” by failing to take action to recover possession of the property during a continuous five-year period.   Respondents were not sleeping on their rights during the pendency of the specific performance appeal.   Respondents filed the specific performance action, won a lower court judgment, and were defending that judgment against appellant's appeal.   The litigation remained pending, and the prescriptive period remained tolled, until final judgment on appeal.⁵

SANCTIONS

Respondents have requested that substantial sanctions be awarded for a frivolous appeal taken solely for delay and harassment.  (Code Civ.Proc., § 907;  Rule 26(a), Cal. Rules of Court.)   Appellant had fair notice and opportunity to be heard on the issue of sanctions, because sanctions were requested in the respondents' brief and were addressed by reply brief and oral argument.  (Young v. Rosenthal (1989) 212 Cal.App.3d 96, 133 and fn. 33, 260 Cal.Rptr. 369.)   Sanctions may be awarded when the appeal “is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit.”  (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650, 183 Cal.Rptr. 508, 646 P.2d 179, emphasis added.)   Although either ground independently will support sanctions, often the two are used together, one providing evidence of the other.  (Id. at p. 649, 183 Cal.Rptr. 508, 646 P.2d 179.)

Both standards are convincingly demonstrated in this case.

 Appellant's legal argument that the prescriptive period for adverse possession was not tolled during the pendency of the appeal of the specific performance judgment is directly contrary to the clear and explicit language of Code of Civil Procedure section 1049 and well-established case law.   It is totally and completely without merit.

 The merits of appellant's argument gain no enhancement by the fact that appellant hired a noted treatise writer to advance them in the opening brief, or that while the appeal was pending the writer changed his treatise to coincide with his argument.  (Compare 5 Miller & Starr, Cal. Real Estate 2d (1989) § 16:20, pp. 655–658 with id. (Dec. 1991 supp.) § 16:20, pp. 54–55.)

Appellant contends sanctions should not be awarded because there are disputed factual issues which should be left for the trial court to resolve.   Appellant refers to the dispute whether there actually was an effective stay of execution during the specific performance appeal, an issue which is immaterial.  (Fn. 3, ante.)   There are no disputed facts which must be resolved to determine that the grounds for appeal are totally without merit.

 Turning to the subjective standard of appellant's intent, we have taken judicial notice as requested by respondents that subsequent to the specific performance judgment appellant filed three other actions attempting to set aside the specific performance judgment.

(1) On September 22, 1986 (shortly after the Court of Appeal announced its decision affirming the specific performance judgment), appellant's wife filed a complaint seeking to set aside the contract by which appellant agreed to convey the property to respondents, on the theory the property was community property and therefore her signature on the contract was required (Super.Ct. L.A. County, 1986, No. C617600).⁶  The trial court dismissed that action in February 1988 after sustaining demurrer without leave to amend.   On July 18, 1989, the Court of Appeal affirmed the order of dismissal, finding as a matter of law on judicially noticed facts that appellant's wife had no community property interest in the property (B036316).   That judgment became final.

(2) On May 27, 1988 (shortly after the dismissal by the trial court of the community property action), appellant filed a complaint listing nine causes of action attempting to set aside the specific performance judgment (Super.Ct. L.A. County, 1988, No. WEC 125732).   Respondents removed the action to the United States District Court because two of appellant's causes of action alleged violations of constitutional rights and the Federal Racketeer Influenced and Corrupt Organizations Act (RICO).   The federal court dismissed appellant's pendent state claims and issued an order to show cause requiring appellant to demonstrate the bases of his federal causes of action (C.D.Cal. Case No. CV88–4066 JMI).   In February 1989 the federal district court dismissed appellant's action with prejudice and awarded attorney's fees pursuant to 42 United States Code section 1988 on the ground appellant's action was frivolous in that it failed to allege that defendants acted under color of state law and was merely an effort to relitigate issues decided against appellant in the affirmance of the specific performance judgment.   The court awarded attorney's fees totaling $44,565.60.   In March 1991 the United States Court of Appeals for the Ninth Circuit affirmed the District Court's dismissal of appellant's civil rights and RICO action and the district court's award of attorney's fees (9th Cir. Nos. 89–55235, 89–55687).   That judgment became final.

(3) On August 11, 1988 (after the federal district court had dismissed appellant's pendent state claims), appellant filed another action (LASC case No. WEC 128115) again asserting nine causes of action under state law attempting to set aside the specific performance judgment.   On October 24, 1989, the superior court sustained a demurrer without leave to amend.   On April 1, 1991, the Court of Appeal affirmed the dismissal of that action (B046609).  The court found that appellant failed to state a cause of action for fraud committed in the course of the specific performance judgment.   Noting that the appeal on the issue of intrinsic versus extrinsic fraud did not challenge the trial court's alternative rulings that the action was barred by statute of limitations, res judicata and collateral estoppel, the appellate court imposed sanctions of $19,113.40 on appellant's counsel, Herbert C. Schulze, for pursuing a frivolous appeal.   That judgment became final.

Appellant's instant complaint for adverse possession is thus the fifth case involving this property and these parties, and the fourth one filed by appellant since appellant lost the trial of the initial specific performance action.   Appellant points out that in this adverse possession case he seeks to establish a “new and different title,” not to relitigate the circumstances of his initial contract to sell the property to respondents.   Although in that sense this appeal is not a direct attack upon the specific performance judgment itself, appellant's motive and purpose in pursuing this appeal is obvious from the prior litigation of the parties.   Appellant's purpose is “to harass the respondent or delay the effect of an adverse judgment.”  (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650, 183 Cal.Rptr. 508, 646 P.2d 179, emphasis added.)   By pursuing this appeal which continues the adverse possession litigation, appellant seeks to delay respondents from achieving the effect of the specific performance judgment which respondents won almost 19 years ago.

 We shall impose sanctions.   We determine an amount of sanctions which bears a rational relationship to the circumstances of the parties.   (Hersch v. Citizens Savings & Loan Assn. (1983) 146 Cal.App.3d 1002, 1012–1013, 194 Cal.Rptr. 628.)   Appellant continues to tie up real property which was determined during the trial of the specific performance action to be worth $1 million in 1979 (Hennefer v. Butcher, supra, 182 Cal.App.3d at pp. 503–504, 227 Cal.Rptr. 318);  indeed, appellant's expert at that trial estimated its value was then $21/212 million.  (Id.;  see Hersch v. Citizens Savings & Loan Assn., supra, [$125,000 sanction for frivolous appeal delaying $1 million judgment].)

 The briefing and motions on this appeal have been unusually long and complex.   Although we find the appeal to be utterly without merit, the opening brief presented appellant's argument in a thorough and scholarly manner, raising several sophisticated arguments with citation to many authorities.   Although we have the power to choose the issue we deem dispositive and decline to address the rest, respondents did not have that luxury;  respondents had to address each of the arguments, answering in kind with similar sophistication and skill.   In addition to his opening brief, reply brief, and supplemental reply brief, appellant filed motions for judicial notice, to produce evidence on appeal and to consolidate this matter with another appeal, all of which were denied after respondents submitted opposition.

Taking into account the value of the property involved and the complexity of this appeal, we find sanctions of $125,000 to be appropriate.

 Respondents have requested that the sanctions be imposed jointly on appellant and appellant's prior counsel, Harry D. Miller.   Even in an ordinary case it is difficult for an appellate court to know exactly the extent to which the client or the attorney is responsible for pursuing a frivolous appeal.   (Custom Craft Carpets, Inc. v. Miller (1982) 137 Cal.App.3d 120, 123, 187 Cal.Rptr. 78.)   That difficulty is compounded here, where Mr. Miller was permitted to withdraw after the filing of the opening brief;  appellant has twice changed attorneys on appeal since then, and those attorneys filed a reply brief, a supplemental reply brief and motions;  and Mr. Schulze was cocounsel throughout.   Thus a total of four different attorneys had their fingerprints on this appeal.   Rather than attempt to apportion the blame in these circumstances, we shall assess the sanctions solely against the client, appellant Dan E. Butcher.   Appellant's multiple law suits and persistent refusal to accept the specific performance judgment show that the blame for this continued misuse of the judicial process is primarily his.  (See Custom Craft Carpets, Inc. v. Miller, supra, 137 Cal.App.3d at p. 123, 187 Cal.Rptr. 78;  Young v. Rosenthal, supra, 212 Cal.App.3d at p. 135 and fn. 37, 260 Cal.Rptr. 369.)

The judgment is affirmed.   Pursuant to Code of Civil Procedure section 907 and rule 26(a), California Rules of Court, appellant Dan E. Butcher is ordered to pay respondents, in addition to costs on appeal, sanctions in the amount of $125,000.

FOOTNOTES

1.   Civil Code section 1007 provides in pertinent part:  “Occupancy for the period prescribed by the Code of Civil Procedure as sufficient to bar any action for the recovery of the property confers a title thereto, denominated a title by prescription, which is sufficient against all․”

2.   We need not decide two other arguments vigorously advanced by respondents opposing even the theoretical possibility of appellant's obtaining title by adverse possession in the circumstances.  (1) Respondents contend that adverse possession runs against the holder of the legal title to real property (Code Civ.Proc., § 321) and that since at all pertinent times appellant was the legal title holder and respondents were merely equitably entitled to require appellant to convey the legal title pursuant to the specific performance judgment, appellant cannot adversely possess against respondents.  (2) Respondents contend that once the specific performance judgment became final after appeal, respondents have ten years to enforce it.  (Code Civ.Proc., § 337.5, subd. (3).)

3.   There is a factual dispute whether appellant satisfied the conditions necessary for staying enforcement of the specific performance judgment pursuant to Code of Civil Procedure sections 917.3 and 917.4.   It is unnecessary to resolve this dispute since we conclude the prescriptive period was tolled whether or not enforcement pending appeal was technically stayed.

4.   Kirsch was decided in 1896.   Appellant cites Code of Civil Procedure section 916, which was not enacted until 1968.  Section 916 is derived, however, from former Code of Civil Procedure section 946, enacted in 1872, amended in 1974.  (Code Am. 1873–1874, ch. 383, § 125, p. 337.)

5.   Because we find the pendency of the specific performance appeal itself sufficient to toll the prescriptive period and defeat appellant's adverse possession claim, we need not consider whether three other law suits filed by appellant attempting to set aside the specific performance decree further tolled the prescriptive period.

6.   Although appellant's wife was the plaintiff, appellant himself cites the community property action as evidence of his hostile possession in defiance of the specific performance judgment.

ASHBY, Associate Justice.

TURNER, P.J., and BOREN, J., concur.