Spahi v. Hughes-Northwest, Inc.

27 P.3d 1233
CourtCourt of Appeals of Washington
DecidedJuly 30, 2001
Docket46227-0-I
StatusPublished
Cited by18 cases

This text of 27 P.3d 1233 (Spahi v. Hughes-Northwest, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spahi v. Hughes-Northwest, Inc., 27 P.3d 1233 (Wash. Ct. App. 2001).

Opinion

27 P.3d 1233 (2001)

Nader SPAHI, d/b/a Emperor West Associates, Respondent,
v.
HUGHES-NORTHWEST, INC., Appellant.

No. 46227-0-I.

Court of Appeals of Washington, Division 1.

July 30, 2001.

*1234 Russell J. Reid, Davies Roberts Reid, Seattle, for Appellant.

Thomas S. Hayward, Nethercutt & Hayward, Seattle, for Respondent.

BECKER, A.C.J.

At issue is an order divesting Hughes-Northwest of its title to a parcel of property purchased at an execution sale upon a judgment that was later reversed. The order quieted title in respondent Nader Spahi, who had successfully appealed the earlier judgment without superseding it. A litigant who appeals an unsuperseded judgment affecting an interest in property takes the risk that a third party will purchase the property at an execution sale before the judgment can be reversed. Knowledge that the judgment is being appealed does not deprive the third party of protection as a purchaser in good faith; a successful appellant's recourse is against the judgment creditor only. And although Spahi obtained a ruling in another forum that Hughes is not a purchaser in good faith, Hughes was not a party and is not collaterally estopped by that ruling. Accordingly, we reverse and direct that title be quieted in Hughes Northwest.

The United States brought a civil forfeiture action against Nader Spahi in 1990. Spahi's warehouse property in Anacortes was the object of the suit. Spahi did not contest the complaint and agreed to forfeit the land contained in the complaint's legal description.

The United States took possession of the warehouse property and offered it for sale at a forfeiture auction. Appellant Hughes-Northwest, Inc. offered to purchase the property. Before closing the sale, the government discovered that the legal description attached to the forfeiture complaint omitted a small triangle of land known as "Parcel 2". This parcel contained a corner of the warehouse and a railroad right of way.

The United States filed a complaint against Spahi in federal district court to quiet title to Parcel 2. Hughes was not a party to this suit. Following a bench trial, the district court concluded that the United States had established ownership of Parcel 2 by adverse possession or alternatively by easement based on prior use. The court entered judgment quieting title in the United States on October 24, 1997.

Spahi appealed to the Ninth Circuit. The federal rules permit an appellant to obtain from the trial court a stay of judgment during the pendency of an appeal by giving a supersedeas bond. See Fed. R.Civ. P. 62(d); Fed. R.App. P. 7 and 8.[1] Spahi did not supersede the judgment.

*1235 Because there was no stay, the United States executed upon the quiet title judgment and completed its sale of the warehouse property to Hughes in February, 1998 by way of a Marshal's deed, which granted both parcels of the warehouse property to Hughes by quitclaim. The deed stated that the quiet title judgment against Spahi barred him "from asserting any right, title, estate, lien or interest in or to the real property described". Hughes took possession of the property.

In an opinion decided on May 13, 1999, the Ninth Circuit found the district court had erred by concluding that the United States had acquired title to Parcel 2 by adverse possession or easement. United States v. Spahi, 177 F.3d 748, 752 (9th Cir.1999). Although Spahi's opening brief in the Ninth Circuit had asked the court to remand with instructions to return him to ownership of Parcel 2,[2] the court did not address this request, but simply reversed the district court's quiet title judgment. The United States did not appeal further.

Spahi then initiated the present litigation by suing Hughes in Skagit County Superior Court. The suit sought to quiet title to Parcel 2 in Spahi and to eject Hughes. Hughes moved for summary judgment dismissal. Spahi filed a cross-motion to establish his own title by summary judgment. The trial court granted summary judgment quieting title to Parcel 2 in Spahi. Hughes appeals from that order, and also appeals from the trial court's denial of Hughes' motion for summary judgment.

FAILURE TO SUPERSEDE

The appellate court reviews a grant of summary judgment de novo, engaging in the same inquiry as the trial court. Bishop v. Miche, 137 Wash.2d 518, 523, 973 P.2d 465 (1999). Summary judgment is proper if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. CR 56(c). The facts in this case are undisputed. The primary legal issue is whether Spahi's failure to supersede or stay the quiet title judgment obtained by the United States in federal district court precludes him from defeating the title Hughes obtained through the execution sale. We hold that Spahi's failure to supersede is fatal to his claim.

Spahi contends that the title Hughes took from the United States was only as good as the title the United States had. This contention is correct. See Thorstad v. Federal Way Water & Sewer, 73 Wash.App. 638, 642, 870 P.2d 1046 (1994) (a quitclaim deed conveys only the grantor's interest subject to valid encumbrances so that the grantee is in the same position as the grantor). Spahi further contends that when the Ninth Circuit determined that the United States had no interest in the property to convey, the title earlier conveyed by the United States became worthless. "As the result of the 9th Circuit's holding, Hughes-NW acquired nothing by virtue of the quitclaim deed".[3] This contention is incorrect. Under Washington law,[4] a trial court judgment is presumed valid, and unless the judgment is superseded, a judgment creditor has specific authority to execute on that judgment. State v. A.N.W. Seed Corp., 116 Wash.2d 39, 44, 802 P.2d 1353 (1991).[5] Thus, Hughes acquired the valid title the United States held at the time of the execution sale.

By superseding a property judgment while it is on review, an appellant can avoid the risk that a third party will acquire valid title. A supersedeas bond serves two purposes: it serves the interest of the judgment debtor by delaying the execution of the *1236 judgment, and it serves the interest of the judgment creditor by ensuring that the judgment debtor's ability to satisfy the judgment will not be impaired during the appeal process. Lampson Universal Rigging, Inc. v. Washington Public Power Supply System, 105 Wash.2d 376, 378, 715 P.2d 1131 (1986). Thus, if Spahi had superseded the federal district court judgment, he would have prevented the United States from selling Parcel 2, ensuring that it could be restored to him if he obtained reversal of the judgment on appeal.

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Bluebook (online)
27 P.3d 1233, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spahi-v-hughes-northwest-inc-washctapp-2001.