Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-04141/USCOURTS-ca10-89-04141-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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, FILED 

Uoited States Court of Appeals 

Tenth Cirruit 

UNITED STATES COURT OF APPEALS AUG 2 9 1990 

FOR THE TENTH CIRCUIT 

IN RE: AMERICAN TIERRA CORPORATION and) 

CHARLES MOORE, ) 

Debtors. 

PETER W. BILLINGS, JR., Trustee of 

Granada, Inc . , 

Appellee, 

v. 

AMERICAN TIERRA CORPORATION and 

CHARLES MOORE, 

Appellants. 

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ORDER AND JUDGMENT * 

&OBERT L. HOECKER 

Clerk 

No. 89-4141 

(D.C. No. · 89-C-265J) 

(D. Utah) 

Before SEYMOUR, BRORBY, and EBEL, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P . 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 1 
34(a); 10th Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

Defendants-appellants American Tierra Corporation (ATC) and 

Charles Moore (Moore) appeal from the district court's order of 

October 19, 1989, affirming the bankruptcy court's entry of 

summary judgment in favor of plaintiff-appellee Peter Billings, 

bankruptcy trustee for Granada, Inc. (Granada), in an adversarial 

proceeding. 1 The adversarial proceeding arose out of the sale of 

twenty-eight acres of land in Utah pursuant to a purchase 

agreement executed by and between ATC as seller and Granada as 

buyer. The purchase agreement provided that the purchase price 

was to be paid over time in installments, but did not provide for 

either a mortgage or a deed of trust to secure the payment. 

Granada failed to make the required payments under the 

purchase agreement, so in December of 1981, ATC recorded a "notice 

of interest" which recited the existence and pertinent terms of 

the purchase agreement. In 1986, ATC filed a petition in 

bankruptcy under Chapter 11. In November of that year, Granada 

instituted the underlying adversarial proceeding against ATC to 

quiet title to the property. ATC filed a counterclaim and 

recorded a lis pendens on the property. The parties subsequently 

reached a resolution of their dispute, which they embodied in a 

Revised Settlement Stipulation (RSS). 

1 Although the notice of appeal in this action was filed on 

behalf of both Moore and ATC, as was appellants' brief, 

appellants' counsel stated in the opening of the brief that Moore 

"has no standing in this suit and hence reference to the 

appellants hereafter will be singular." Appellants' Brief at 1. 

Based on counsel's statement that Moore has no standing, we will 

dismiss the appeal as to Moore and consider it only as to ATC. 

2 

Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 2 
The RSS provided that Granada was to make certain payments to 

or on behalf of ATC, in return for which ATC and Moore were to 

execute quitclaim deeds on the property, as well as releases of 

the notice of interest and the lis pendens. ATC's counsel was to 

hold the documents in escrow and surrender them to Granada upon 

the latter's payment of the money. 

The RSS further provided that if either party failed to 

perform, the other party could file a motion for summary judgment 

in the adversarial proceeding and, absent adequate justification 

for the nonperformance, obtain a judgment. The RSS limited the 

remedies available to (1) a judgment for the amount of the money 

Granada was obligated to pay under the RSS or (2) a judgment 

quieting title to the property in a manner equivalent to that 

achieved by the transfer of deeds and releases under the RSS. 

Finally, the RSS provided that it constituted a complete 

release of all liability of any party arising out of the purchase 

agreement, that upon execution of the RSS, the purchase agreement 

would be of no further force and effect except as otherwise 

provided in the RSS, and that the RSS would constitute the entire 

agreement of the parties. 

In the fall of 1986, Granada sold seven of the twenty-eight 

acres to Plum Tree Associates, a joint venture composed of Granada 

and Plum Tree Partnership (PTP). The bankruptcy court approved 

the RSS on February 13, 1987, and sometime in that month, Granada 

also filed a petition in bankruptcy under Chapter 11. Peter 

Billings was appointed the bankruptcy trustee. Thereafter, 

Granada failed to make the payments due under the RSS. 

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Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 3 
\. ... i 

In June of 1987, ATC commenced an action in Utah state court 

against PTP and other lienholders in which it sought to impose an 

equitable mortgage on the property and create a constructive trust 

based on the purchase agreement and the notice of interest. 2 ATC 

did not· sue ·· Granada••because the latter ,was .in . ~bankruptcy , ,and . an_ 

automatic stay was in effect. 

The defendants in the state court action filed a motion for 

summary judgment in which they asserted that ATC had no interest 

in the property arising from the purchase agreement or the notice 

of interest because both were extinguished by the RSS, which 

constituted ' ·a-· ·compl:ete ···accord ... and sabisfaction. ATC argued in 

response that although the RSS constituted an accord, it did not 

constitute a satisfaction because Granada failed to perform 

thereunder. 

ATC also argued that the RSS revived the effect of the 

purchase agreement and the notice of intent until Granada made the 

required payment. ATC accordingly acknowledged that its claims 

for equitable mortgage and constructive trust were "predicated on 

the RSS," and said that it would amend its complaint to add a 

claim specifically based on the RSS if the state court did not 

grant the defendants' motion for summary judgment. At the hearing 

on the summary judgment motion, ATC's counsel said that since the 

original complaint did not specifically base any claim on the RSS, 

2 Although the record and the parties' briefs are unclear as to 

whether the state court suit involved only the seven acres 

conveyed to Plum Tree Associates or whether it involved the entire 

twenty-eight acres, we note that the legal description in ATC's 

state court complaint matches that in the lis pendens ATC recorded 

regarding the adversarial proceeding. 

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Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 4 
the RSS was not before the court as a "sword," but only as a 

"shield." 

After the hearing, the trial court issued a short 

decision in which it concluded, based upon 

examin[ation]" of the purchase agreement and the RSS, 

memorandum 

a "thorough 

that there 

was "no clear intent to create any contractual security interest 

in the property at issue." The court also noted that neither the 

notice of interest nor the lis pendens could create a security 

interest; each only could give notice of a 

The court directed counsel to prepare 

preexisting 

a formal 

interest. 

order for 

submission to the court. This formal order, which ATC's counsel 

approved as to form, held that the purchase agreement, the notice 

of interest, and the lis pendens were "of no legal force or effect 

and [did] not constitute an interest or encumbrance in and to the 

Property." The order further held that ATC had "no right, title 

or interest in and to the Property." ATC did not appeal the state 

court's judgment. 

On November 19, 1987, with the approval of the bankruptcy 

court, Granada sold its interest in the remaining twenty-one acres 

free and clear of all liens and encumbrances. The latter were 

transferred to the proceeds of the sale. In September of 1988, 

ATC and Granada filed cross motions for summary judgment in the 

original adversarial proceeding. ATC asserted in its motion that 

it had a security interest in the property and, therefore, a lien 

on the proceeds of the sale, by reason of the RSS. Granada, on 

the other hand, asserted in its motion that ATC was bound by the 

state court's prior determination that ATC had no interest in the 

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Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 5 
property, and, in any event, that the RSS did not create a 

security interest in the property. Granada maintained that ATC's 

sole remedy was to obtain a judgment for money damages under the 

RSS. 

··· ·~·-" ..... ~"Aft-er- ·a ,,.hear1ng ,on- the ... mot-ions, the,,...bankruptcy. court ...granted 

Granada's motion. The court determined that ATC had no interest 

in either the property or the proceeds of its sale. ATC appealed 

the bankruptcy court's order to the district court, which affirmed 

it. 

The parties raise two issues on appeal: whether either claim 

preclus-ion or ·i'Ssue prec:l:us:ion appld,ed, to -bar ·litigation in the 

adversarial proceeding of the issue of whether the RSS created a 

security interest in the property, and, if not, whether the RSS 

created such a security interest. Since we conclude that both 

claim and issue preclusion applied below, we need not reach the 

issue of whether the RSS did, in fact, create a security interest 

in the property. 

The law is well settled that "a federal court must give to a 

state-court judgment the same preclusive effect as would be given 

that judgment under the law of the State in which the judgment was 

rendered." Migra 

U.S. 75, 81 (1984). 

v. Warren City School Dist. Bd. of Educ., 465 

We therefore look to the law of Utah to 

determine whether the Utah trial court's judgment regarding ATC's 

interest in the property would be given preclusive effect. 

Under Utah law, the doctrine of res judicata (claim 

preclusion) bars parties and their privies from litigating issues 

that were litigated in a prior suit or that could or should have 

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Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 6 
been litigated in a prior suit, if both suits involve the same 

claim or cause of action. See Searle Bros. v. Searle, 588 P.2d 

689, 690 (Utah 1978); State ex rel. Utah State Dep't of Social 

Servs. v. Ruscetta, 742 P.2d 114, 116 (Utah Ct. App. 1987). The 

doctrine · of •"•col!:hat.erail.- estoppeL "( issue ,,.prec,lusi0n), ,. on the other 

hand, bars parties and their privies from litigating only those 

facts and issues that actually were litigated in a prior suit, but 

does not require that both suits be based on the same claim or 

cause of action. See Searle Bros., 588 P.2d at 690; Ruscetta, 742 

P.2d at 116. 

ATC- acknowledges· en ... appeal "that 'Granada 0 •was in , privity with 

PTP and, therefore, could assert a defense based on either claim 

preclusion or issue preclusion. Despite evidence to the contrary, 

ATC insists that it did not assert an interest in the property 

based on the RSS in the state court action. Even if ATC is 

correct, however, since it could have used the RSS as both a 

"sword" and a "shield" in the state court action, the doctrine of 

claim preclusion barred ATC from litigating in the adversarial 

proceeding the issue of whether it had an interest in the property 

based on the RSS. See Ringwood v. Foreign Auto Works, Inc., 786 

P.2d 1350, 1356-58 (Utah Ct. App. 1990)(dismissal with prejudice 

of action based on document that was merged into and nullified by 

second document was res judicata as to later claim based on second 

document). 

Moreover, the facts are undisputed that ATC sought to 

establish in the state court action that it had an interest in the 

property through whatever source, and that the state court held 

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Appellate Case: 89-4141 Document: 010110041658 Date Filed: 08/29/1990 Page: 7 
that ATC had no right, title, or interest in or to the property. 

Therefore, the doctrine of issue preclusion barred ATC from 

relitigating whether it had any interest in the property. 

Since ATC could not assert that it had an interest in the 

,. property, it ,could ,,not claim· a lien against the .. proceeds of the 

sale of the property. Therefore, the bankruptcy court correctly 

ruled in favor of Granada, and the district court properly 

affirmed that ruling. 

Accordingly, this appeal is DISMISSED as to Charles Moore, 

and the judgment of the United States District Court for the 

· ·District of Utah •is, AFFIRMED. 

ENTERED FOR THE COURT 

PER CURIAM 

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