Opinion
No. 108,825.
2013-08-9
Polly M. RUHLAND, f/k/a Polly Marie (Moore) Grant, Appellant, v. Sue ELLIOTT, Appellant, and Lorena Elliott a/k/a Lorena Annis; Richard Elliott; Suzann Elliott; Roger Elliott; Ryan Elliott; and Eric F. Grant, Appellees.
Appeal from Cloud District Court; Kim W. Cudney, Judge. Don W. Noah, of Noah Law Office, P.A., of Beloit, for appellant Polly Ruhland. Frank G. Spurney, Jr., of Spurney & Spurney, of Belleville, for appellant Sue Elliott.
Appeal from Cloud District Court; Kim W. Cudney, Judge.
Don W. Noah, of Noah Law Office, P.A., of Beloit, for appellant Polly Ruhland. Frank G. Spurney, Jr., of Spurney & Spurney, of Belleville, for appellant Sue Elliott.
Scott R. Condray and William R. Thompson, of Condray & Thompson, LLC, of Concordia, for appellees.
Before GREEN, P.J., PIERRON, J. and BUKATY, S.J.
MEMORANDUM OPINION
PER CURIAM.
Polly M. Ruhland, Sue Elliott, and Suzann Elliott dispute the ownership of 5.5 acres of real estate located in Cloud County. Suzann Elliott, as the daughter and intestate heir of Keith Elliott, claims ownership of the property by adverse possession. On June 14, 1993, Keith and Sue executed a deed to the property in question to Sue's daughter and son-in-law, Polly and Eric Grant. The deed from Keith and Sue to Eric and Polly was recorded on the same date it was executed. The purpose for the transfer of the property to Eric and Polly was to put the property beyond the reach of the claims of Keith's ex-wife or the Internal Revenue Service (IRS). The parties agreed that Eric and Polly would reconvey the property to Keith and Sue once the claims were resolved.
The trial court concluded that “the beginning date for any claim of adverse possession must be June 14, 1993,” the date the property was deeded to Eric and Polly.
On appeal, Polly and Sue argue that the trial court erred when it concluded that Keith had obtained title to the property by adverse possession. We agree. After conveyance of the property to Eric and Polly, Keith's continued possession of the property was presumed to be permissive. Moreover, when Keith conveyed the property to Eric and Polly, Keith did not occupy the property under a claim knowingly adverse, but with the expectation of reacquiring the title to the property from Eric and Polly once the claims of Keith's ex-wife or the IRS were resolved. Based on Keith's expectancy of reacquiring title to the property upon resolving the previously mentioned claims, these facts show that Keith's possession of the property was not under a claim knowingly adverse. Moreover, these facts are consistent with the trial court's ultimate conclusion that Keith's possession of the property was adverse to Polly and Sue. Accordingly, we reverse. In addition, Polly and Sue contend that the trial court erred when it denied their requests for costs, attorney fees, and sanctions. We disagree. Accordingly, we affirm in part and reverse in part.
Generally, the underlying facts of this case are not in dispute. In 1963, Keith and his first wife—JoAnn Elliott—purchased real estate in Cloud County. The subject matter of this appeal involves a 5.5 acre tract of land located on the property. The 5.5 acre tract of land contained a metal farm building with an apartment inside. The property was surrounded by approximately 80 acres which Keith owned and leased out for farming purposes. Keith and JoAnn divorced in 1988. That same year, Keith married Sue Moore. This was a second marriage for both Keith and Sue. Both of them had children from their previous marriages.
When Sue married Keith, they moved to the 5.5 acre tract. On June 14, 1993, Keith and Sue executed a deed to the property to Sue's daughter and son-in-law, Polly and Eric Grant. The deed from Keith and Sue to Eric and Polly was recorded in Cloud County, on the same date it was executed. The purpose of the transfer was not entirely clear. According to a letter written by Sue dated June 16, 1993, she stated that the property was conveyed to Eric and Polly to protect the property from any claims made by Keith's first wife. Once any dispute with Keith's first wife was resolved, then Eric and Polly agreed to deed the property back to Keith and Sue. There was also evidence that the purpose of transferring the property was to avoid attachment by the IRS due to Keith's tax problems.
But regardless of the purpose behind the transfer, it was clear that all parties agreed that the transfer would be temporary and that Eric and Polly would reconvey the property to Keith and Sue once the issues with his first wife or the IRS were resolved. After the transfer, Eric and Polly remained at their primary residence in Colorado. They did not move to the 5.5 acre tract. Moreover, no rent or lease agreement was entered into between the parties, and Keith and Sue did not pay Eric and Polly any rent to remain on the property.
In 1999, Eric and Polly divorced. When dividing their property, they did not include the 5.5 acre tract as part of their marital assets. Instead, Eric and Polly executed a quit claim deed for the property, intending to transfer ownership to Sue. Sue stated that she had no knowledge of the deed, and the deed was not recorded.
The following year, Sue moved to Pittsburg, Kansas, to take care of her deceased parents' home. Sue planned to return to the 5.5 acre tract once her work in Pittsburg was completed. Sue, however, never returned to the property, and she and Keith divorced in 2006. The journal entry of divorce—dated July 10, 2006—stated that Keith and Sue had entered into a settlement agreement for the division of assets and debts. Under the settlement agreement, Keith retained ownership of the 5.5 acre tract.
After the divorce from Sue, Keith continued to live on the property. On April 2, 2008, Keith deeded the 80 acres adjacent to the 5.5 acre tract to Ray Palmer. After the sale, Keith remained on the 5.5 acre tract.
A little more than a year later, on May 8, 2009, Keith died. After Keith's death, his daughter—Suzann Elliott—and other family members maintained and cared for the 5.5 acre tract. Suzann paid all the bills and taxes for the property. After Keith's death, Polly did not claim the property, enter the property, or maintain the property.
While sorting through Keith's personal property after his death, Suzann found a copy of the June 16, 1993, letter from Sue to Eric and Polly. In addition, Suzann found the original 1999 quitclaim deed from Eric and Polly to Sue. On April 12, 2010, Suzann filed and recorded an affidavit with the Cloud County register of deeds, alleging that she owned the 5.5 acre tract through adverse possession.
The case proceeded to a bench trial. After the parties presented their evidence and made their arguments, the trial court took the matter under advisement. The trial court issued its written journal entry of judgment on March 20, 2012. In the journal entry, the trial court held the following:
“Keith Elliott obtained title to the 5.5 acres described above by adverse possession. Keith died on May 9, 2009, and no will was probated. Thus, the property is subject to the laws of intestate succession. The heirs of Keith Elliott are deemed the rightful owners of the 5.5 acre tract described.”
The trial court concluded that any claim for adverse possession began when the property was deeded to Eric and Polly. The trial court further concluded that Keith could not make a claim of good-faith belief of ownership of the property because of the 1993 transfer, but concluded that Keith acquired title through adverse possession because his possession was knowingly adverse because “he continued to assert himself as the owner of the property by his actions.”
After the trial court issued its decision, Polly and Sue moved to alter or amend the judgment. Polly and Sue also moved for costs, attorney fees, and sanctions based on their allegation that Suzann's answer and counterclaim contained frivolous claims. The trial court held a hearing on the posttrial motions. At the conclusion of the hearing, the trial court denied Sue's and Polly's motions to alter or amend and took their requests for costs, attorney fees, and sanctions under advisement. The trial court later denied Polly's and Sue's requests for costs, attorney fees, and sanctions. Did Keith acquire title to the property in question by adverse possession?
On appeal, Polly challenges the trial court's decision granting title in the 5.5 acre tract to Suzann—as Keith's intestate heir—based on adverse possession. The Kansas adverse possession statute, K.S.A. 60–503, states in relevant part the following: “No action shall be maintained against any person for the recovery of real property who has been in open, exclusive and con:inuous possession of such real property, either under a claim knowingly adverse or under a belief of ownership, for a period of fifteen (15) years.” Before the 1964 legislative amendment that added the option of possession under a belief of ownership, possession had to be notorious and hostile. Stark v. Stanhope, 206 Kan. 428, 432, 480 P.2d 72 (1971). Since the amendment, Kansas law has provided that an adverse possession claim may be based on either (1) an adverse or hostile holding or (2) a belief of ownership. 206 Kan. at 432. The possession must still be open, exclusive, and continuous for the 15–year period of time. Further, the parties' belief of ownership must be in good faith and must be reasonable. See Wright v. Sourk, 45 Kan.App.2d 860, 865–66, 258 P.3d 981 (2011), rev. denied 293 Kan. –––– (January 20, 2012).
Generally, whether title is acquired through adverse possession is a question of fact to be determined by the trier of fact. “[A] party seeking title by adverse possession must present clear and convincing evidence of the requisite elements found in K.S.A. 60–503 .” Wright, 45 Kan.App.2d at 866. Moreover, our Supreme Court has stated that when a party seeks title by adverse possession, every presumption is in favor of the holder of the legal title and against the claimant. Kansas law does not allow the property of a person to be taken by another upon slight presumptions or possibilities. Stith v. Williams, 227 Kan. 32, 36, 605 P.2d 86 (1980).
On appeal, an appellate court determines whether the trial court's findings of fact are supported by substantial competent evidence. In doing so, an appellate court does not weigh conflicting evidence, evaluate witness credibility, or redetermine questions of fact. See Wright, 45 Kan.App.2d at 866. “Substantial competent evidence possesses both relevance and substance and provides a substantial basis of fact from which the issues can be reasonably determined.” Frick Farm Properties v. Kansas Dept. of Agriculture, 289 Kan. 690, 709, 216 P.3d 170 (2009). An appellate court, however, has unlimited review of conclusions of law. American Special Risk Management Corp. v. Cahow, 286 Kan. 1134, 1141, 192 P.3d 614 (2008).
In this case, the parties agree that Keith's possession of the property was open and continuous. In addition, the trial court concluded that Keith did not occupy the property under a good-faith belief of ownership. The reasoning behind the trial court's conclusion reads as follows:
“Under the facts of this case, the Court rejects any argument that Keith possessed the property under a reasonable belief of ownership. Keith and Sue delivered and recorded a duly executed and acknowledged warranty deed to Eric and Polly. Accordingly, Keith was well aware he no longer held title to the real estate.”
The record supports the trial court's conclusion that Keith did not occupy the property under a good-faith belief of ownership. As mentioned earlier by the trial court, Keith and Sue delivered and recorded a warranty deed to Eric and Polly in 1993. Keith's execution of the deed to Eric and Polly would be inconsistent with Keith having a good-faith belief of ownership of the property. Indeed, potential buyers would be justified in believing that Eric and Polly were the owners of the property based on their status as record owners.
Because the parties concede that Keith's possession was open and continuous and there is substantial competent evidence to support the trial court's conclusion that Keith did not occupy the property under a good-faith belief of ownership, we are left to answer the following two questions: (1) was Keith in “exclusive” possession of the property for a period of 15 years?; and (2) did Keith possess the property under a claim knowingly adverse to Eric and Polly?
A majority of Polly's adverse possession argument is based on the premise that Keith did not possess the property exclusively for the requisite 15–year time period. But Polly's brief also contends that Keith did not acquire the property by adverse possession because his occupancy on the property was not under a claim knowingly adverse to Eric and Polly. Specifically, Polly argues that “there is really a question of whether the requisite adverse possession by Keith Elliott ever commenced. There is authority for the proposition possession by permission will not ripen into title.” Because the issue of whether Keith's possession was under a claim knowingly adverse to Eric and Polly is dispositive, we will address it first.
Our Supreme Court has been consistent in holding that a party cannot acquire title to property by adverse possession if that party has been granted permission to occupy the property. See, e.g., McCoy v. Cover, 159 Kan. 711, 715, 158 P.2d 380 (1945) (“However, he [occupied the property] by permission of the defendants. Such possession is not adverse.”); Federal Savings & Loan Ins. Corp. v. Urschel, 159 Kan. 674, 680, 157 P.2d 805 (1945) (‘ “One who enters into possession of real property by permission, and whose possession is never adverse or hostile to the owner of the record title, cannot acquire title by adverse possession.’ ”). Thus, if Keith and Sue occupied the property with Eric and Polly's permission, then the occupation was not adverse, and the trial court erred in concluding that Keith had acquired title to the property by adverse possession.
Before determining whether Keith and Sue occupied the property with Eric and Polly's permission, we first must determine whether this issue is properly before the court. Suzann maintains that this issue is not properly before the court because Polly failed to raise it below. Generally, issues not raised before the trial court cannot be raised on appeal. In re Care & Treatment of Miller, 289 Kan. 218, 224–25, 210 P.3d 625 (2009). Suzann's argument concerning Polly's failure to raise the permissive use issue at the trial court level is disingenuous because Polly's motion for summary judgment clearly states the following: “Further, one who enters possession by permission of the owner cannot acquire title by adverse possession.” Moreover, the trial court expressly acknowledged this argument in its memorandum decision when it concluded that “[t]here is no evidence that Eric and Polly granted permission for Keith and Sue to remain on the property.” Because Polly raised this issue below, we have jurisdiction to address this argument on appeal.
The trial court's conclusion regarding the permissive use of the property is flawed. While there might not be direct evidence that Polly and Eric expressly granted Keith and Sue permission to remain on the property, there is circumstantial evidence to support such a finding. Our Supreme Court has long allowed trial courts to base factual findings relevant to adverse possession largely on circumstantial evidence. See Wagner v. Thompson, 163 Kan. 662, 667–70, 186 P.2d 278 (1947) (there was substantial evidence to support adverse possession where findings were based largely on circumstantial evidence). Further, even the highest standard of proof, “beyond a reasonable doubt,” can be proven by circumstantial evidence. See State v. McCaslin, 291 Kan. 697, 710, 245 P.3d 1030 (2011) (conviction of even the gravest offense can be based entirely on circumstantial evidence and the inferences fairly deducible therefrom).
In this case, the facts relied on by the trial court actually support the position that Keith and Sue had permission to remain on the property after the deed was transferred. As mentioned earlier, Keith and Sue transferred the property to Eric and Polly so that Keith could avoid potential claims from either his ex-wife or the IRS. After the transfer, Eric and Polly remained at their primary residence in Colorado instead of moving to the 5.5 acre tract in Kansas. Moreover, no rent or lease agreement was entered into between the parties, and Keith and Sue did not pay Eric and Polly any rent to remain on the property. Indeed, the trial court correctly points out that “no one appeared to believe the transfer was permanent.” This evidence supports the conclusion that Keith and Sue (before her departure) occupied the property with the permission of Eric and Polly.
Moreover, a general rule of adverse possession is that the continued possession of the grantor after a conveyance is presumed to be permissive. As a result, the adverse possession statute will start to run in the grantor's favor only when the grantee is informed as to the adverse claim. William E. Burby, Real Property § 113 (3d ed.1965). Our Supreme Court adopted this general rule in Dotson v. Railway Co., 81 Kan. 816, 106 P. 1045 (1910) where it declared the following:
“In the absence of evidence to the contrary, the possession of the grantor, who has made such a conveyance, is presumed to be temporary and in subservience to the title of his grantee, The possession of a grantor of land is not considered to be adverse to a grantee, who has been vested with the entire title to the premises, and cannot be so regarded until the grantor explicitly renounces the title of his grantee, or positively asserts a hostile claim of title in himself which is brought to the attention of the grantee.”
Here, Suzann failed to present any evidence to rebut the presumption that Keith and Sue's occupancy of the property was not permissive. As stated earlier, the facts support a determination that the transfer of the property was meant to be temporary and that Keith and Sue had permission to remain on the property. In fact, Keith's expectation that the property would be reconveyed to him in the future shows that he did not possess the property under a claim knowingly adverse to Eric and Polly.
Here, the trial court concluded that “the beginning date for any claim of adverse possession must be June 14, 1993,” the date the property was deeded to Eric and Polly. The trial court's conclusion, however, fails to consider the circumstantial evidence that Keith (and Sue before her departure) occupied the property with Eric and Polly's permission. As a result, the June 14, 1993, date could not be the beginning date for an adverse possession claim. The record is silent on whether Keith ever gave notice to Eric and Polly that he was occupying the property adversely to their title.
Moreover, when Keith conveyed the property to Eric and Polly, Keith did not occupy the property under a claim knowingly adverse, but with the expectation of reacquiring the title to the property by Eric and Polly's reconveyance of the property to him once the claims of Keith's ex-wife or the IRS were resolved. The inference is warranted that Keith's occupancy was under a claim not knowingly adverse, but that, once the claims of Keith's ex-wife or the IRS were resolved; Eric and Polly would reconvey the property to Keith. This is quite different from “under a claim knowingly adverse” to Eric and Polly.
We are of the opinion that the subsidiary facts referred to are inconsistent with the trial court's conclusion that Keith's possession of the property was adverse to Eric and Polly. Accordingly, we reverse. Because we have reversed the judgment, it is not necessary that we address whether Keith's possession of the property was exclusive for a period of 15 years. Did the trial court err when it denied Sue's and Polly's requests for costs, attorney fees, and sanctions?
Next, Polly and Sue argue that the trial court erred when it denied their request for costs, attorney fees, and sanctions. The substance of Polly and Sue's argument is not entirely clear based on their brief. Polly and Sue's brief states that “[t]here is authority ... which holds the Court abused its discretion in not holding an evidentiary hearing before deciding not to impose sanctions.... K.S.A. 60–211 as it now appears indicates a hearing is the only reasonable manner for a trial court to make the finding of fact sufficient to withstand an appellate review.” To the extent that Polly and Sue challenge the trial court's decision based on K.S.A. 60–211, our review is unlimited. See Unruh v. Purina Mills, 289 Kan. 1185, 1193, 221 P.3d 1130 (2009) (Interpretation of a statute is a question of law over which appellate courts have unlimited review.).
Polly and Sue's argument concerning the trial court's handling of their motions for costs, attorney fees, and sanctions is flawed. The trial court held a hearing on all of the parties' posttrial motions on May 31, 2012. At the hearing, the trial court listened to over 40 pages worth of argument on the parties' claims for costs, attorney fees, and sanctions. At the conclusion of all the parties' arguments, the trial court denied Polly's and Sue's requests to call opposing counsel as witnesses, denied their request to admit opposing counsels' case file as evidence, and took the remainder of the matter under advisement. When the trial court issued its written journal entry of judgment, it denied Polly's and Sue's motions for costs, attorney fees, and sanctions.
Polly and Sue do not seem to challenge the merits of the trial court's denial of their motions for costs, attorney fees, and sanctions. Instead, Polly and Sue seem to be upset with the trial court for not allowing them to introduce opposing counsels' case file as evidence or allowing them to call opposing counsel as witnesses. Polly and Sue, however, cite to no authority that would allow them to do either of these things. In fact, the information and testimony that they sought from opposing counsel—which in part involved negotiation among the parties—most likely was confidential. See Kansas Rule of Professional Conduct 1.6 (2012 Kan. Ct. R. Annot. 502).
Polly sought sanctions in the form of expenses and attorney fees against Suzann and her counsel in the amount of $26,836.34 for alleged violations of K.S.A.2010 Supp. 60–211(b) and 2010 Supp.60–237(c)(2). Similarly, Sue sought sanctions in the form of costs and attorney fees against Suzann in the amount of $8,287.50 for alleged violations of K.S.A.2010 Supp. 60–211(b).
K.S.A.2010 Supp. 60–211 mandates that every pleading, motion, and other paper signed by an attorney constitutes a certificate that, among other things: (1) the document is not being presented for an improper purpose; (2) the subject matter of the document is warranted by existing law or by a nonfrivolous argument for modification of current law; (3) there is, or there is likely to be, evidentiary support for the factual contentions; and (4) the denials of factual contentions are warranted by evidence or based on lack of information. K.S.A.2010 Supp. 60–211(b). In this case, both Polly and Sue alleged that sanctions were appropriate because Suzann had violated K.S.A.2010 Supp. 60–211(b) based on frivolous claims in her answer and counterclaim.
The statute granting trial court the authority to impose sanctions, K.S.A.2010 Supp. 60–211(c), reads as follows:
“ Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that subsection (b) has been violated, the court may impose an appropriate sanction on any attorney, law firm or party that violated the statute or is responsible for a violation committed by its partner, associate or employee. The sanction may include an order to pay to the other party or parties [the] reasonable expenses, including attorney's fees, incurred because of the filing of the pleading, motion or other paper. A motion for sanctions under this section may be served and filed at any time during pendency of the action, but must be filed not later than 14 days after the entry of judgment.”
In reviewing an imposition of sanctions on appeal, an appellate court's function is to ‘ “determine whether substantial competent evidence supports the trial court's findings of fact that the statutory requirements for sanctions are present.” ‘ Evenson Trucking Co. v. Aranda, 280 Kan. 821, 835, 127 P.3d 292 (2006). To the extent that the trial court may impose sanctions upon a finding that a violation has occurred, we review the trial court's decision for an abuse of discretion. See K.S.A.2010 Supp. 60–211(c); Cf. Evenson Trucking, 280 Kan. at 835–36 (imposition of sanctions under 60–211 is discretionary).
In this case, the trial court issued an exhaustive, carefully reasoned memorandum decision denying Polly's and Sue's requests for sanctions. In addressing Polly's and Sue's requests for sanctions, the trial court stated that “[t]he issues presented were disputed, but required legal analysis. On some claims Defendant Suzann Elliott was successful and some she was not. Under these circumstances, the Court finds no violation of K.S.A. 60–211 and denies the request for sanctions.”
After a thorough review of the appellate record, we find no reversible error in the trial court's decision not to impose sanctions. The trial court's findings are supported by substantial competent evidence; the trial court's memorandum decision adequately explains the ruling; and the trial court did not abuse its discretion in refusing to order sanctions. Accordingly, we summarily affirm the trial court's decision refusing to impose sanctions under Rule 7.042(b)(3), (5), and (6) (2012 Kan. Ct. R. Annot. 63).
As for attorney fees, the parties do not dispute that the trial court had the authority to grant attorney fees. We note, however, that a “court may not award attorney fees absent statutory authority or an agreement by the parties. Without such authority, a trial court's equitable powers do not extend to the awarding of attorney fees.” Unruh, 289 Kan. at 1200; see Hodges v. Johnson, 288 Kan. 56, 70, 199 P.3d 1251 (2009); Idbeis v. Wichita Surgical Specialists, 285 Kan. 485, 495, 173 P.3d 642 (2007) (discussing statutory authority). Here, Polly and Sue cite to no statute, rule, or case to show that the trial court had the authority to award them attorney fees.
But assuming arguendo that the trial court did have authority to award attorney fees based on the underlying facts of this case, Polly and Sue's argument fails. Where the trial court has authority to grant attorney fees, its decision is reviewed under the abuse of discretion standard. Unruh, 289 Kan. at 1200. A judicial action constitutes an abuse of discretion if the action (1) is arbitrary, fanciful, or unreasonable; (2) is based on an error of law; or (3) is based on an error of fact. State v. Ward, 292 Kan. 541, 550, 256 P.3d 801 (2011), cert. denied132 S.Ct. 1594 (2012).
Polly sought $2,113.50 in costs and attorney fees from Suzann and Roger Elliott. Similarly, Sue sought $8,287.50 in costs and attorney fees from Suzann and Roger Elliott. In denying Polly's and Sue's requests for costs and fees, the trial court stated the following:
“[Polly] provided no authority for her position. It is correct that attorney fees are allowable in an interpleader action to the stakeholder, but not automatically awarded. Club Exchange Corp. v. Searing, 222 Kan. 659, 567 P.2d 1353 (1977). In this particular action, Defendant Suzann Elliott was ultimately successful in her adverse possession claim. Accordingly, the Court finds no merit or rational reason to award [Polly] attorney fees for filing a civil action in which she was not successful. Plaintiff's request is denied.”
Although we are reversing Suzann's adverse possession claim, we cannot say that the trial court abused its discretion in denying Sue's and Polly's requests for costs and attorney fees. Even if they would have been successful below, the trial court still would have had discretion to deny their attorney fees request. The same analysis applies for Sue's request for costs and attorney fees.
Affirmed in part and reversed in part.